Datasets:

joelniklaus

/

legal_case_document_summarization

like 12

In April 2012 the Supreme Court considered a case called Summers v Fairclough Homes Ltd [2012] UKSC 26, [2012] 1 WLR 2004, where the facts were strikingly similar to those here. In that case, as in this one, the claimant suffered an injury at work which was caused by the negligence or breach of duty of his employer. In each case the employer was either held liable (in Summers) or admitted liability (here) as to 80%, the claimant accepting that he was 20% to blame. In each case the claimant dishonestly exaggerated the extent of the consequences of the injury. In Summers the claimant originally claimed damages of over 800,000 but was awarded a total of just over 88,000 on the basis of the true facts, which came to light after undercover surveillance evidence showed that his account of the consequences of his injuries had been grossly and dishonestly exaggerated. In the instant case, the claimant, Mr Colin Hayward, claimed 419,316.59 (exclusive of promotion prospects but discounted for loss of ill health pension). He was ultimately awarded 14,720 after a trial before His Honour Judge Moloney QC (the judge). The reason for the reduction was again partly as a result of undercover surveillance and other evidence that showed that Mr Haywards claim had been grossly and dishonestly exaggerated. In Summers the issue was what remedies were available to the employer and its insurers, whereas in the instant case the issue arises out of a settlement agreement reached between the parties on 3 October 2003, the accident having occurred on 9 June 1998. The agreement was made shortly before the issue of quantum was due to be tried and was incorporated in a Tomlin Order. The employers case was conducted on its behalf by its liability insurer, Zurich Insurance Company Plc (Zurich), which is the appellant in this appeal. The employer (in practice Zurich) agreed to pay 134,973.11, inclusive of CRU of 22,473.11, in full and final settlement of Mr Haywards claim. The Tomlin order was in familiar terms as follows: BY CONSENT IT IS ORDERED THAT All further proceedings in this action be stayed, except for the purpose of carrying such terms into effect. Liberty to apply as to carrying such terms into effect. THE SCHEDULE The claimant accepts in settlement of his cause of action herein the sum of 134,973.11. Upon payment by the defendant of the several sums and costs before mentioned, they be discharged from any further liability to the claimant in relation to the claim herein. 4. In 2005, Mr Haywards neighbours, Mr and Mrs Cox, who had lived next door to him since June 2002, approached the employer to say that they believed that his claim to have suffered a serious back injury was dishonest. From their observation of his conduct and activities, they believed that he had recovered in full from his injury at least a year before the settlement. They were referred to Zurich and made full witness statements to that effect. In February 2009 Zurich commenced the present proceedings against Mr Hayward claiming damages for deceit. Zurich pleaded that both written statements made by Mr Hayward or on his behalf, and his statements of case in the Particulars of Claim and the Schedule(s) of Loss as to the extent of his injury, as well as his accounts given to the medical experts, constituted fraudulent misrepresentations. Damages were claimed equivalent to the difference between the amount of the settlement and the damages that should have been awarded if he had told the truth. The claim was subsequently amended to claim in the alternative rescission of the settlement agreement and the repayment of the sums paid under it. No point has been taken in reliance upon the fact that the action was brought in the name of Zurich rather than the employer. Mr Hayward applied to strike out the proceedings, or for summary judgment in his favour. He contended that the Tomlin Order created an estoppel per rem judicatam and/or by record, alternatively that the action was an abuse of the process because the issue of fraud had been compromised by the settlement. Deputy District Judge Bosman refused to strike out the claim, although he directed Zurich to amend the claim to seek an order that the compromise be set aside rather than an order for damages. Although it was pleaded in the original defence to Zurichs claim that Zurich must satisfy the test in Ladd v Marshall [1954] 1 WLR 1489, that contention was not ultimately pursued following the hearing before the DDJ. His decision was reversed on appeal by Judge Yelton. Zurich appealed to the Court of Appeal (Maurice Kay, Smith and Moore Bick LJJ) and the decision of the Deputy District Judge was unanimously restored: see [2011] EWCA Civ 641. It was held that the settlement gave rise to no estoppel of any kind and that the action was not an abuse of process. It was further held that the fact that Zurich had alleged deliberate exaggeration prior to the settlement did not preclude them from relying on it subsequently as a ground for rescission. In the result, the claim proceeded. I note in passing that Moore Bick LJ said at para 58: If it is to succeed in its action Zurich will have to persuade the court that it was induced to agree to the settlement by fraud on the part of Mr Hayward, a task that may not prove easy, given the fact that it already knew enough to justify the service of a defence in the terms indicated earlier. The trial The trial came before the judge in the Cambridge County Court in November 2012. He heard evidence for Zurich from Zurichs solicitor (Ms Winterbottom) and its claims manager (Mr Birkenshaw), who were responsible for the conduct of the litigation, from Mr and Mrs Cox and from Mr Sharp, who was the orthopaedic expert instructed on behalf of Zurich. Mr Hayward gave evidence together with three members of his family and also called evidence from Mr Varley, who was the orthopaedic surgeon instructed on his behalf. Mr Hayward denied any suggestion that his condition was anything other than genuine or that there was any element of exaggeration. He maintained throughout that he was a seriously disabled individual whose disability arose from the original accident and was such that, ever since, he had not been able to work or carry out normal activities of daily living without assistance. As with the first series of witness statements, Mr Hayward signed the appropriate statements of truth setting out in detail the extent of his disability and presented himself to the medical experts on that basis. Following a four day trial, the judge found that Mr Hayward had deliberately and dishonestly exaggerated the effects of his injury throughout the court process. Of Ms Winterbottom and Mr Birkenshaw, the judge said (at para 2.6 of his judgment quoted in full below) both that: [n]either can be said to have believed the representations complained of to be true and that [t]hey may not themselves have believed the representations to be true; but they did believe that they would be put before the court as true, and that there was a real risk that the court would accept them in whole or part and consequently make a larger award than Zurich would otherwise have considered appropriate. The judge further found that, although Zurich was aware at the time of the settlement of the real possibility of fraud, Mr Hayward had continued his deliberate misrepresentations even after the disclosure of the 1999 video, and that those continuing misrepresentations influenced Zurich into agreeing a higher level of settlement than it would otherwise have done. The judge therefore set aside the compromise. It followed that the issue of quantum in the original action remained to be tried. That issue was heard on 6 September 2013 and, having found that Mr Hayward had made a full recovery from any continuing physical disability by October 1999, the judge thereafter handed down a judgment awarding Mr Hayward damages in the modest sum of 14,720, which was about 10% of the settlement figure. An order was made in the later action directing him to repay the sum paid under the settlement less that amount, namely 97,780, interest of 34,379.45 and 3,951 adjustment for CRU. The appeal to the Court of Appeal Mr Hayward appealed to the Court of Appeal against the decision that the settlement should be set aside but did not appeal against the judges assessment of quantum or (contingent on whether the settlement was set aside) against the order for re payment. Moreover, the judge's findings of fact were not challenged. To my mind, as appears below, this is a critical factor in this appeal. The appeal was heard by Underhill, Briggs and King LJJ. They agreed that the appeal should be allowed. Substantive judgments were given by Underhill and Briggs LJJ. Although King LJ agreed with both judgments, I do not read their reasoning as quite the same. In his para 9 Underhill LJ set out para 2.5 of the judges judgment, where he said that the judge addressed the issue of reliance and dealt with the law. Para 2.5 is in these terms: Lastly, of course, it is necessary that the employer/Zurich should rely on the representations and suffer loss as a result. Here an interesting (and apparently unresolved) question of principle arises. In the ordinary case, sale of goods for example, reliance by the purchaser is effectively equivalent to his belief in the truth of the statement; if he believes the goods are as represented, he will be relying on the representation (and acting on it by his purchase) and if not, not. In the litigation context the position is different. In such a situation, the party to whom the representation is made is by no means likely to believe it to be true at the pre trial stage. At the very least, statements made in the course of litigation will be viewed with healthy scepticism and weighed against the other material available. Often the other party will not be sure, even then, whether the statement is in fact true, and will mainly concern himself with how likely it is to be accepted by the court. Sometimes (a staged road traffic accident for example) the other party may actually be certain from his own direct knowledge that the statement is a deliberate lie. But even then he and his advisers cannot choose to ignore it; they must still take into account the risk that it will be believed by the judge at trial. This situation is quite different from a proposed purchase, where if in doubt one can simply walk away. For these reasons, it appears to me that the many dicta relied on by CH, to the effect that liability requires that the representation must be believed by the other party, are not applicable to a case like the present. The formulation adopted by the editors of Clerk and Lindsell, 20th ed (2010), at 18 34 fits the case better; The claimant must have been influenced by the misrepresentation (my emphasis). I heard the evidence of Ms Winterbottom and Mr Birkinshaw respectively in 2003 Zurichs litigation solicitor and claims handler. Each was aware of the 1999 video and of the real possibility that this was a fraudulent claim. Each was frustrated by the reluctance of their expert, Mr Sharp, to produce a clear supplemental report saying that he now believed CH to have been shamming and to have sustained far less harm than was being claimed. Neither can be said to have believed the representations complained of to be true. But, if the law is as stated at 2.5 above, this does not matter provided the representations influenced them in their decision how much to pay CH in settlement. I am in no doubt that they did. They may not themselves have believed the representations to be true; but After noting that CH was shorthand for Mr Hayward, Underhill LJ set out (also in his para 9), para 2.6 of the judges judgment as follows: they did believe that they would be put before the court as true, and that there was a real risk that the court would accept them in whole or part and consequently make a larger award than Zurich would otherwise have considered appropriate. Acting in reliance on that belief (which, whether or not CH was truthful or honest, was the belief he and his advisers must have wanted them to form on the basis of the statements) they made the payment into court which led to the Tomlin Order settlement. Underhill LJ then set out the substance of the judges ultimate conclusions from para 6.6 in these terms: although Zurich was aware at the time of the settlement of the real possibility of fraud here, CH had continued his deliberate misrepresentations even after the disclosure of the 1999 video, and those continuing misrepresentations did influence Zurich into agreeing a higher level of settlement than it would otherwise have made. The judge added: The conditions required for setting aside the settlement are therefore made out and I so order. Para 6.6 must be put in its context, which includes paras 6.4 and 6.5. Between paras 6.1 and 6.3 the judge explained why he accepted the evidence of Mr and Mrs Cox as credible. He then said this in paras 6.4 and 6.5: 6.4. The choice before me is not the stark one between no pain at all and complete disability. What I have to decide is whether CHs actual level of pain and disability at the time of the representations was materially less than he was representing, and if so whether that misrepresentation was deliberate and dishonest. It is accepted that there was here an injury leading to a measure of pain and disability, at least up to 2002; and Mr Sharp and Mr Varley do not exclude some continuing pain (as opposed to disability) in the period after the settlement. That being so, the records of pain management and analgesic drug treatment which gave me concern are not irreconcilable with Zurichs case. 6.5 There is no special standard of proof for fraud in civil proceedings; the normal test of balance of probability applies, though of course in assessing the probabilities one bears in mind that fraud is an unusual matter. In this case, the evidence, summarised above, that CH was not in fact suffering from the level of pain and disability that he claimed is so strong that it prevails over his innocent explanations. The probability is, and I so find, that CH was experiencing some pain both before and after the settlement, and did want it treated and managed; but at the same time, he also wanted the maximum compensation he could obtain, and to get it he was dishonestly willing to exaggerate his symptoms to the doctors, and to conceal his real level of ability from them and from the world, so as to give the false impression that he was not capable of heavy work when in fact he was. He must have been aware by the time of the 14 October 1999 surveillance video (at the latest) that his physical abilities were considerably greater than he thereafter represented to the doctors and his employers representatives, and I find that his representations made after that date were knowingly false and misleading. Underhill and Briggs LJJ allowed Mr Haywards appeal for similar but not identical reasons. They did so essentially because of the state of mind of Zurich (and the employer) when the settlement was made. They rejected the conclusions of principle expressed in para 2.5 of the judges judgment set out above. The parties to this appeal agreed that the appeal raised two issues. The first was this. In order to set aside a compromise on the basis of fraudulent misrepresentation, to show the requisite influence by or reliance on the misrepresentation: a) must the defrauded representee prove that it was induced into settlement because it believed that the misrepresentations were true; or b) does it suffice to establish influence that the fact of the misrepresentations was a material cause of the defrauded representee entering into the settlement? The second was this. Under what circumstances, if any, does the suspicion by the defendant of exaggeration for financial gain on the part of the claimant preclude unravelling the settlement of that disputed claim when fraud is subsequently established? Discussion Issue 1 Subject to one point, the ingredients of a claim for deceit based upon an alleged fraudulent misrepresentation are not in dispute. It must be shown that the defendant made a materially false representation which was intended to, and did, induce the representee to act to its detriment. To my mind it is not necessary, as a matter of law, to prove that the representee believed that the representation was true. In my opinion there is no clear authority to the contrary. However, that is not to say that the representees state of mind may not be relevant to the issue of inducement. Indeed, it may be very relevant. For example, if the representee does not believe that the representation is true, he may have serious difficulty in establishing that he was induced to enter into the contract or that he has suffered loss as a result. The judge makes this point clearly and accurately in the third sentence of para 2.5 of his admirable judgment. He makes a further point in the same paragraph which is of importance in the context of this somewhat unusual case. It is this. A person in the position of the employer or its insurer may have suspicions as to whether the representation is true. It may even be strongly of the view that it is not true. However, the question in a case like this is not what view the employer or its insurer takes but what view the court may take in due course. This is just such a case, as the judge correctly perceived. As he put it, the employer and its advisers must take into account the possibility that Mr Hayward would be believed by the judge at the trial. That is because the views of the judge will determine the amount of damages awarded. In any event this is not a case in which Zurich or the employer knew that Mr Hayward was deliberately exaggerating the seriousness and long term effects of his injuries. We now know that he was thoroughly dishonest from October 1999 and that he continued to make false claims in the witness box at the trial even when the evidence against him was overwhelming. Each case of course depends upon its own facts but it seems to me to be putting the case too high to say, as Briggs LJ does at para 30, that Zurich went so far as to plead that Mr Hayward was fraudulent and to support it by a statement of truth. He says this at para 31: In my opinion the true principle is that the equitable remedy of rescission answers the affront to conscience occasioned by holding to a contract a party who has been influenced into making it by being misled or, worse still, defrauded by his counterparty. Thus, once he discovers the truth, he must elect whether to rescind or to proceed with the contract. It must follow that, if he already knows or perceives the truth by the time of the contract, he elects to proceed by entering into it, and cannot later seek rescission merely because he later obtains better evidence of that which he already believed, still less if he merely repents of it. This seems to me to be a fortiori the case where, as here, the misrepresentation consists of a disputed claim in litigation, and the contract settles that claim. To my mind that is to put the position too high in favour of fraudsters in general and Mr Hayward in particular. It is true that in its defence dated 30 October 2001 the employer (no doubt through Zurich) stated that the facts stated in the defence were true. The relevant facts were pleaded in paras 6 and 7 as follows: 6. It is admitted that the claimant suffered an injury to his back as a result of the accident. The defendant relies on the medical reports of Mr Sharp dated 11 June 2000, 20 August 2000 and 26 November 2000. The view of the claimants ongoing physical condition from Mr Bracegirdle relied on by the claimant is not accepted by the defendant. As a result of video surveillance obtained Mr Sharp formed the view that the claimants disability was not as great as he had described and he was capable of working full time even if not with heavy lifting. In view of the claimants lack of candour in relation to his physical condition it is not possible to accept that his depressive state, as described, has been consistent, is continuing or will continue into the future. 7. The claimant has exaggerated his difficulties in recovery and current physical condition for financial gain. These pleas show that Zurich was suspicious of Mr Hayward but no very clear allegations were, or could be, made. However, it is not in dispute that Zurich did as much as it reasonably could to investigate the position before the settlement. The evidence was not as good from its point of view as it might have hoped but the fact is that Zurich did not know the extent of Mr Haywards misrepresentations. The case was settled at a time when the only difference between the experts was the likely duration of future loss. The figure agreed was about half way between the respective opinions of the experts. It was not until the advent of Mr and Mrs Cox that Zurich realised the true position. Hence, as the judge expressly found, the amount of the settlement was very much greater than it would have been but for the fraudulent misrepresentations made by Mr Hayward. The small amount ultimately awarded by the judge, which is not challenged, shows the extent of the dishonest nature of the claim. I am not persuaded that the importance of encouraging settlement, which I entirely agree is considerable, is sufficient to allow Mr Hayward to retain moneys which he only obtained by fraud. The authorities I am not persuaded that the authorities lead to any other conclusion. As stated above, the ingredients of the tort of deceit are not in dispute subject to one question, which is whether a claimant alleging deceit must show that he believed the misrepresentation. In my opinion the answer is no. There are many formulations of the relevant principles in the authorities. I take two examples. In Briess v Woolley [1954] AC 333, 353 Lord Tucker said: The tort of fraudulent misrepresentation is not complete when the representation is made. It becomes complete when the misrepresentation not having been corrected in the meantime is acted upon by the representee. Damage giving rise to a claim for damages may not follow or may not result until a later date, but once the misrepresentation is acted upon by the representee the tortious act is complete provided that the representation is false at that date. To like effect, Lord Mustill said in Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd (No 2) [1995] 1 AC 501, 542A: In the general law it is beyond doubt that even a fraudulent misrepresentation must be shown to have induced the contract before the promisor has a right to avoid, although the task of proof may be made more easy by a presumption of inducement. The authorities show that questions of inducement and causation are questions of fact. I would accept the submissions made on behalf of Zurich in support of the proposition that belief is not required as an independent ingredient of the tort. It may however be relevant as part of the courts consideration of the questions whether there was inducement and, if so, whether causation has been established. In this regard I agree with the judge when he said at the end of para 2.5 that Clerk and Lindsells statement in the previous edition fits the case better. It simply said The claimant must have been influenced by the misrepresentation. That is a sub heading to para 18 34 in the 21st ed. In para 18 35 the editors say that, although the claimant must show that he was induced to act as he did by the misrepresentation, it need not have been the sole cause. It is submitted on behalf of Mr Hayward that the claimants mind must be at least partly influenced by the defendants misstatements. In Edgington v Fitzmaurice (1885) 29 Ch D 459, 483 Bowen LJ said: The real question is, what was the state of the plaintiffs mind, and if his mind was disturbed by the misstatement of the defendants, and such disturbance was in part the cause of what he did, the mere fact of his also making a mistake himself could make no difference. In Zurichs written case its argument in support of the position that belief in I see no conflict between the judges approach and those conclusions. Mr Hayward relies upon the references in the textbooks and, indeed, in cases like Edgington v Fitzmaurice to the requirement that the representation must have impacted upon the representees mind. To my mind that simply means that the representee must have been induced to act as he did in reliance upon the representation. the truth of the representation is not required is summarised as follows: (i) Inducement is concerned with causation not the representees credulity. Although one may infer that a representee who believes a misrepresentation has been induced to rely on it, an absence of belief does not mean there was no inducement. This is because what is required for there to be the inducement misrepresentation and the representee making a decision or undertaking a course of action on the basis of that representation. That does not require belief in the misrepresentation itself. (ii) also belief in other inducing causes is irrelevant. Just as belief in the misrepresentation is not required, so is a causal connection between (iii) There is a presumption of inducement, particularly where there is an intention to induce by means of fraud. If the defrauded representee first had to show he believed the misrepresentation, there would be little (or no) utility in having the presumption. (iv) That presumption should not be rebutted merely because the representee is sceptical. Otherwise, the doubting representee would be placed in a worse position than the gullible or trusting one. Given that misgivings and suspicion might be more likely to arise where there is fraud, it would be perverse for the prospects of redress to be extinguished on account of those very doubts. Of all representees, it may be thought the defrauded representee (whether believing or not) should be the most deserving of protection. (v) There is no duty upon the defrauded representee to exercise due diligence to determine whether there are reasonable grounds to believe the representations made. Conversely, the fact that the representee does not in fact wholly credit the fraudster and carries out its own investigations does not preclude it from having been induced by those representations. Qualified belief or disbelief does not rule out inducement, particularly where those investigations were never going to find out the evidence that subsequently came to light. (vi) Whereas proof that the representee had knowledge (or blind eye knowledge) of the falsity suffices, nothing short of that avails the misrepresentor. As to sub para (i), inducement, I would accept the submission on behalf of Zurich that materiality is evidence of inducement because what is material tends to induce. As Hutley JA put it in the Court of Appeal of New South Wales, Gipps v Gipps [1978] 1 NSWLR 454, 460, [t]o state that a person is induced by a statement is to affirm a causal relation which is a question of fact, not of law. See also Downs v Chappell [1997] 1 WLR 426, per Hobhouse LJ at 433. Moreover, albeit by reference to section 18(2) of the Marine Insurance Act 1905, in Pan Atlantic Lord Goff, accepted at 517C and 517E respectively that in gauging materiality it suffices if the misrepresentation (or non disclosure) had an impact on the mind or an influence on the judgment. In the same case Lord Mustill adopted references to inducement not being established where the misrepresentation (at 545E) did not influence the judgment, (at 546C) did not influence the mind or (at 551C) had no effect on the decision. In para 6.6 of his judgment (quoted at para 15 above) the judge held that the continuing representations influenced Zurich into agreeing to a higher level of settlement that it would otherwise have done. The judge was entitled to adopt the proposition in Clerk and Lindsell that the claimant must have been influenced by the misrepresentation. In para 28 of his judgment Briggs LJ said this: In my judgment the authorities on rescission for misrepresentation speak with one voice. For a misstatement to be the basis for a claim to rescind a contract, the claimant must have given some credit to its truth, and been induced into making the contract by a perception that it was true rather than false. Where judges and text book writers have used the word influenced as the touchstone for reliance they have done so in order to allow for belief in the truth of the misrepresentation to be a contributory rather than sole cause of the representees entry into the contract: see for example Clerk and Lindsell on Torts (21st ed) para 18 35. They have not thereby intended to allow in any case where the representee can show that he was influenced into making the contract by the mere making of a representation which he did not believe was true. I would not accept this analysis. As I see it, the representees reasonable belief as to whether the misrepresentation is true cannot be a necessary ingredient of the test, because the representee may well settle on the basis that, at any rate in a context such as the present, he thinks that the representation will be believed by the judge. But it is centrally relevant to the question of inducement and causation. Logically, the representee is more likely to settle for a different reason other than the representation, if his reasonable belief is that it is false. One of the extraneous factors in this case, for example, was the fact that the insurers expert Mr Sharp had failed to produce, in their view, a report which set out the extent of the misrepresentations with sufficient clarity see para 15 above. As to sub para (ii), multiple causes, the text books strongly support the proposition that it is sufficient for the misrepresentation to be an inducing cause and that it is not necessary for it to be the sole cause: see eg Chitty on Contracts, 32nd ed, volume 1, para 7 37. See also, for example, Barton v Armstrong [1976] AC 104, where Lord Cross, delivering the majority advice of the Privy Council in a case involving duress by threats of physical violence, invoked, as an appropriate analogy, the treatment of contributing causes in fraud cases. He said at p 118G H: If it were established that Barton did not allow the representation to affect his judgment then he could not make it a ground for relief. If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision for in this field the court does not allow an examination into the relative importance of contributing causes Lord Hoffmann made much the same point in Standard Chartered Bank Ltd v Pakistan National Shipping Corpn Ltd (Nos 2 and 4) [2003] 1 AC 959, paras 15 16: if a fraudulent representation is relied upon, in the sense that the claimant would not have parted with his money if he had known that it was false, it does not matter that he also had some other negligent or irrational belief about another matter and, but for that belief, would not have parted with his money either. The law simply ignores the other reasons why he paid. Lord Hoffmann then quoted with approval the part of the advice of Lord Cross quoted above and added: This rule seems to me to be based upon sound policy. Finally, reliance is placed upon the decision of the High Court of Australia in Gould v Vaggelas (1984) 157 CLR 215, which was a case of deceit, where Wilson J said at p 236: The representation need not be the sole inducement in sustaining the loss. If it plays some part, even if only a minor part, in contributing to the course of action taken a causal connection will exist. As to sub para (iii), the presumption of inducement, it is not a presumption of law but an inference of fact. For example, Chitty on Contracts, 32nd ed (2015), vol 1, put it thus at para 7 040: Once it is proved that a false statement was made which is material in the sense that it was likely to induce the contract, and that the representee entered the contract, it is a fair inference of fact (though not an inference of law) that he was influenced by the statement, and the inference is particularly strong where the misrepresentation was fraudulent. Lord Mustill put it in this way in Pan Atlantic at p 551. He said that the representor: will have an uphill task in persuading the court that the . misstatement . has made no difference [T]here is a presumption in favour of a causative effect. We were further referred to the decision of Briggs J in a case about fraudulent misrepresentations, namely Ross River Ltd v Cambridge City Football Club Ltd [2007] EWHC 2115 (Ch), [2008] 1 All ER 1004, para 241, where he said: First and foremost, in a case where fraudulent material misrepresentations have been deliberately made with a view (as I find) improperly to influence the outcome of the negotiation of the cont[r]act in favour of the maker and his principal, by an experienced player in the relevant market, there is the most powerful inference that the fraudsman achieved his objective, at least to the limited extent required by the law, namely that his fraud was actively in the mind of the recipient when the contract came to be made. See also Australian Steel & Mining Corpn Pty Ltd v Corben [1974] 2 NSWLR 202 per Hutley JA at 208 209. As to sub para (iv), rebutting the presumption of inducement, the authorities are not entirely consistent as to what is required to rebut the presumption. However, it is not strictly necessary to address those differences in this case because, however precisely the test is worded whether what must be proved is that the misrepresentation played no part at all or that it did not play a determinative part, or that it did not play a real and substantial part I would accept the submission made on behalf of Zurich that the presumption is not rebutted on the facts as found in this case. There can be no doubt on the judges findings of fact that, if Zurich had known the true position as to Mr Haywards state of recovery, it would not have offered anything like as much as it in fact offered and settled for in October 2003. Since the issue was touched on in argument, I would simply say that the authorities seem to me to support the conclusion that it is very difficult to rebut the presumption. As it seems to me, the orthodox view is contained in Sharland v Sharland [2015] 3 WLR 1070. In Smith v Kay (1859) 7 HLC 750, 759 Lord Chelmsford LC asked this question in a rescission case based on an allegation of fraudulent misrepresentation: can it be permitted to a party who has practised a deception, with a view to a particular end, which has been attained by it, to speculate upon what might have been the result if there had been a full communication of the truth? In Sharland v Sharland Baroness Hale observed of Smith v Kay that it indeed held that a party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality or that it actually played a causative part in inducement. This view is supported by Downs v Chappell [1997] 1 WLR 426, 433D E, where Hobhouse LJ said: The judge was wrong to ask how they [the representees] would have acted if they had been told the truth. They were never told the truth. They were told lies in order to induce them to enter into the contract. The lies were material and successful. The judge should have concluded that the plaintiffs had proved their case on causation . See also BP Exploration Operating Co Ltd v Chevron Shipping Co [2003[ 1 AC 197, per Lord Millett at 244H to 245A. The Hon KR Handley wrote an impressive article entitled Causation in Misrepresentation in 2015 LQR 277, where he expressed this view at p 284: The representor must have decided to make the misrepresentation because he or she judged that the truth or silence would not, or might not, serve their purposes or serve them so well. In doing so they fashioned an evidentiary weapon against themselves, and the court should not subject the victim to what if inquiries which the representor was not prepared to risk at the time. As to sub para (v), I would accept the submissions made on behalf of Zurich. In particular I agree that the representee has no duty to be careful, suspicious or diligent in research. As Rigby LJ put it in Betjemann v Betjemann [1895] 2 Ch 474, 482: What is the duty of a man to inquire? To whom does he owe that duty? Certainly not to the person who had committed the concealed fraud. Here Zurich did as much as it reasonably could to investigate the accuracy and ramifications of Mr Haywards representations before entering into any settlement. As explained above, the questions whether Zurich was induced to enter into the settlement agreement and whether doing so caused it loss are questions of fact, which were correctly decided in its favour by the judge. I accept the submission that the fact that the representee (Zurich) does not wholly credit the fraudster (Mr Hayward) and carries out its own investigations does not preclude it from having been induced by those representations. Qualified belief or disbelief does not rule out inducement, particularly where those investigations were never going to find out the evidence that subsequently came to light. That depended only on the fact that Mr and Mrs Cox subsequently came forward. Only then did Zurich find out the true position. As Mr Hayward knew, Zurich was settling on a false basis. I do not think that any of the cases relied upon on behalf of Mr Hayward, or by the Court of Appeal in his favour justifies its decision. They include Kyle Bay Ltd (t/as Astons Nightclub) v Underwriters Subscribing under Policy No 019057/08/01 [2007] EWCA Civ 57; [2007] 1 CLC 164. Underhill LJ stressed, in his analysis in para 24, that Kyle Bay was not on all fours with the present case, but that it was illustrative of a similar principle. To my mind it is of no real assistance because it was a case which, as Neuberger LJ observed in Kyle Bay at para 42, involved unusual facts and in which the approach of the claimant appeared mystifying. That is not the position here. As to further cases that were said to establish a requirement of belief, in the Court of Appeal Underhill LJ referred at para 12 to Sprecher Grier Halberstam LLP v Walsh [2008] EWCA Civ 1324, para 17, Arkwright v Newbold (1881) 17 Ch D 301, p 324, and Strover v Harrington [1988] Ch 390, p 407. However, as Underhill LJ said, none of those cases contains any relevant discussion of a principle to the effect that belief in the representation is required before a settlement such as this can be set aside. As to sub para (vi), knowledge of falsity, as I understand it, it is accepted on behalf of Zurich that, where the representee knows that the representation is false, he cannot succeed. There is some support in the authorities for this view. So, for example Chitty says at para 7 036, The burden of proving that the claimant had actual knowledge of the truth, and therefore was not deceived by the misrepresentation, lies on the defendant; if established, knowledge on the part of the representee is of course a complete defence, because he is then unable to show that he was misled by the misrepresentation. In the 5th ed (2014) of Spencer Bower & Handley on Actionable Misrepresentation at p 122, para 11.07 say this. A representee cannot be misled by a statement which he knew to be false. The representees knowledge of the truth must normally be full and complete. Partial and fragmentary information, or mere suspicion, will not do, suspicion, doubt and mistrust do not have the same consequence as knowledge. A representee who knows that the representation was false to some extent, but acts on it, may establish inducement if the departure from the truth was significantly greater than expected. See also Gipps v Gipps per Hutley JA at p 460. As I said earlier, it cannot fairly be said that Zurich had full knowledge of the facts here. It follows that it is not necessary to express a final view on the question whether it always follows from the fact that the representee knows that the representation is false that he cannot succeed. As explained earlier, questions of inducement and causation are questions of fact. It seems to me that there may be circumstances in which a representee may know that the representation is false but nevertheless may be held to rely upon the misrepresentation as a matter of fact. This very case could have been such a case. The judge considered this possibility in para 2.5 of his judgment (quoted at para 14 above), where he said: At the very least, statements made in the course of litigation will be viewed with healthy scepticism and weighed against the other material available. Often the other party will not be sure, even then, whether the statement is in fact true and will mainly concern himself with how likely it is to be accepted by the court. Sometimes (a staged road traffic accident for example) the other party may actually be certain from his own direct knowledge that the statement is a deliberate lie. But even then he and his advisers cannot choose to ignore it; they must still take into account the risk that it will be believed by the judge at trial. This situation is quite different from a proposed purchase, where if in doubt one can simply walk away. It seems to me that in the kind of case which I have put in italics the claimant may well establish inducement on the facts. This was not however a case in which the judge found that Zurich was certain from its own direct knowledge that Mr Haywards representations contained deliberate lies. Quantum is not in issue. It follows that I would answer the questions posed by the first issue (and set out in para 17 above) in this way. I would answer (a) no and (b) yes and would allow the appeal. Issue 2 The second issue (also set out in para 17 above) is in these terms: Under what circumstances, if any, does the suspicion by the defendant of exaggeration for financial gain on the part of the claimant preclude unravelling the settlement of that disputed claim when fraud is subsequently established? The answer seems to me to follow from the answer to the first question. As I see it, it is difficult to envisage any circumstances in which mere suspicion that a claim was fraudulent would preclude unravelling a settlement when fraud is subsequently established. Conclusion For these reasons I would allow the appeal. LORD TOULSON: (with whom Lord Neuberger, Lady Hale and Lord Reed agree) I agree with the judgment of Lord Clarke. I add this judgment because of the importance of the matter, about which we are differing from the judgment of the Court of Appeal, based on what I respectfully consider to have been an erroneous conclusion drawn from earlier case law. The issue raised by this appeal is important both as a matter of law and for its practical consequences for insurers and dishonest claimants. I gratefully adopt Lord Clarkes account of the facts. Bogus or fraudulently inflated personal injury claims are not new. One of the great advocates of the 20th century, Sir Patrick Hastings, recounted vividly in his memoirs, Cases in Court (William Heinemann Ltd, 1949, pp 4 to 20), how as a young barrister before World War 1 he built up a practice defending insurance companies against such claims. Now as then, they present a serious problem. Personal injury claims usually fall to be met by insurers and the ultimate cost is borne by other policy holders through increased premiums. Insurers may often have grounds for suspicion about a claim but lack the hard evidence necessary to prove fraud. To pursue an allegation of fraud without strong evidence is risky. If in such circumstances insurers settle a claim, not in the belief that it is bona fide but in the belief that it is likely to succeed, and if afterwards they discover evidence which proves that the claim was fraudulent, can they bring proceedings to set aside the agreement and recover damages for deceit? In this case the judge at first instance said yes, but the Court of Appeal said no, because in such circumstances the insurers were not deceived. The question which court gave the right answer is important, both for insurers and for those who advise personal injury claimants. Strike out application The Court of Appeal rightly rejected Mr Haywards application to strike out the action on the ground that the issue was res judicata or that the action was an abuse of the process of the court: [2011] EWCA 641. The claim had been compromised by an agreement but, as Lord Bingham emphasised in HIH Casualty and General Insurance Ltd v Chase [2003] UKHL 6, [2003] 2 Lloyds Rep 61, paras 15 and 16, fraud is a thing apart and unravels all. Once proved, it vitiates judgments, contracts and all transactions whatsoever (per Denning LJ in Lazarus Estates Ltd v Beasley [1956] 1 QB 702, 712, cited by Lord Bingham). I refer to this matter because in his judgment now under review Underhill LJ called into question the correctness of the Court of Appeals earlier judgment, and Mr Haywards arguments on this appeal were similarly flavoured with criticism of it, although it was not open to him to attack it directly. Judgment of the County Court I would like to pay testimony to the judgment of His Honour Judge Moloney QC as a model of clarity and cogency. Lord Clarke has set out at, paras 14 and 15, the judges self direction as to the law (para 2.5) and his application of it to the facts (para 2.6). Judgment of the Court of Appeal Briggs LJs reasoning was short and direct. He held that for a misstatement to be the basis for a claim to rescind a contract, the claimant must have given some credit to its truth and have been induced into making the contract by a perception that it was true rather than false. He said that when judges and text book writers used the word influenced as the touchstone for reliance, they did so in order to accommodate cases where belief in the truth of the statement was a contributory rather than the sole cause of the representees entry into the contract. Underhill LJs reasoning was somewhat different but led him to the same place. His starting point was that when a person enters into a contract to settle a dispute he knowingly takes the risk of making a payment for a claim which may be ill founded, and he pays a sum commensurate with his assessment of that risk. But he said that the risk which a settlor must be taken to have accepted will depend on the circumstances of the case. A settlor will not normally be taken to have accepted the risk that the claimants case is not just ill founded but dishonest. However, if it is sufficiently apparent that the settlor intended to settle notwithstanding the possibility that the claim was fraudulent, he will be held to the settlement. The fact that the insurers had pleaded that the claim was exaggerated for financial gain proved their awareness of the possibility of fraud, but they chose to settle the claim with that awareness, and it was contrary to the public interest in the settlement of disputes for them to be allowed to set aside the settlement. Underhill LJ was conscious that the logic of this reasoning was that Mr Haywards application to strike out the insurers action ought to have succeeded, contrary to the Court of Appeals earlier decision. He described it as a debatable point whether that decision precluded him from deciding the case on the reasoning which he thought should apply, but he considered that it was possible to re cast his reasoning in a form which was perhaps less satisfactory, but which avoided conflict with the earlier decision. He held that although in one sense the misrepresentations operated on the mind of the insurers, that did not constitute reliance in the relevant sense. In deciding whether to settle, the insurers formed their own independent judgment whether the claim was likely to succeed, and there was no relationship of reliance of the kind which was required for the insurers action to succeed. Ultimately, therefore, he allowed the appeal on substantially the same ground as Briggs LJ. Analysis To establish the tort of deceit it must be shown that the defendant dishonestly made a material false representation which was intended to, and did, induce the representee to act to its detriment. The elements essential for liability can be broken down under three headings: (a) the making of a materially false representation (the defendants conduct element); (b) the defendants accompanying state of mind (the fault element); and (c) the impact on the representee (the causation element). Where liability is established, it remains for the claimant to establish (d) the amount of any resulting loss (the quantum element). In this case there is now no issue as to elements (a), (b) and (d). Mr Hayward made false and material representations to the insurers as well as to the court, both directly and through what he told the doctors and his own legal advisers with a view to it being communicated to insurers and to the court. He did so dishonestly, with the intention of inducing the insurers to pay compensation to him on a false basis. The judges assessment of quantum is not challenged. The issue concerns element (c). In the statement of facts and issues, the parties have identified the critical issue in these terms: In order to set aside a compromise on the basis of fraudulent misrepresentation, to show the requisite influence by or reliance on the misrepresentation, (a) must the defrauded representee prove that it was induced into settlement because it believed that the misrepresentations were true; or (b) does it suffice to establish influence that the fact of the misrepresentations was a material cause of the defrauded representee entering into the settlement? The parties have raised an additional question as to the circumstances, if any, in which suspicion by a settlor of exaggeration of the claim precludes unravelling the settlement when fraud is subsequently established; but insofar as the question involves any point of law, it is enveloped by the first issue. Some torts do not require the claimant to have suffered any detriment. Trespass is an example. Deceit is not in that category. It is essential to show that the defendants false representation caused the claimant to act to its detriment. It stands to reason that this should be so. The vice of the defendants conduct consists in dishonestly making a false representation with the intention of influencing the representee to act on it to its detriment. If it does not cause the representee to do so, the mischief against which the tort provides protection will not have occurred. A misrepresentation which has no impact on the mind of the representee is no more harmful than an arrow which misses the target. Inducement is a question of fact. In a typical case the only way in which a dishonest representation is likely to influence the representee to act to its detriment will be if the representee is led to believe in its truth. It is therefore not surprising to find statements by judges in such cases that the misrepresentee must show that he believed or relied on the misrepresentation. Redgrave v Hurd (1881) 20 Ch D 1, to which Underhill LJ referred, is an example. The plaintiff, an elderly solicitor wishing to retire, advertised for someone to enter into partnership with him and to buy his house. The defendant responded to the advertisement and negotiations followed, in which the plaintiff stated that the practice brought him in about 300 a year. In fact it did not bring in anything like that amount. The parties entered into partnership and into a separate contract for the sale of the house, which made no reference to the business. The defendant paid a deposit and was let into possession. On discovering that the practice was not worth what the plaintiff had said, the defendant gave up possession and refused to complete the purchase. It was therefore a classic case of a purchaser who claimed to have entered into the contract in reliance on the truth of a misrepresentation by the seller. The plaintiff sued for specific performance; the defendant counterclaimed for rescission of the contract and damages for deceit. The plaintiff succeeded at first instance before Fry J, who was not satisfied that the defendant had proved that he relied on the misrepresentation. The Court of Appeal upheld the dismissal of the defendants counterclaim in deceit on the ground that he had not sufficiently pleaded or proved dishonesty, but it allowed his appeal on the issue of rescission on the ground that the facts gave rise to an inference that he was induced to enter into the contract by the plaintiffs misrepresentation. Jessel MR said at p 21: If it is a material misrepresentation calculated to induce him to enter into the contract, it is an inference of law that he was induced by the representation to enter into it, and in order to take away his title to be relieved from the contract on the ground that the representation was untrue, it must be shown either that he had knowledge of the facts contrary to the representation, or that he stated in terms, or shewed clearly by his conduct, that he did not rely on the representation. Smith v Chadwick (1884) 9 App Cas 187 was another case of a purchaser who claimed to have entered into the contract in reliance on the truth of a misrepresentation by the seller. The plaintiff claimed damages for deceit through having been induced to buy shares in an iron company by false representations in a prospectus as to the output of the iron works. The House of Lords held that his claim failed because the critical words of the prospectus were ambiguous, and the plaintiff had failed to show that he understood them in a sense which was false. Lord Blackburn surmised, at p 200, that the plaintiffs counsel refrained from asking the plaintiff in examination in chief how he understood the wording for fear of receiving a damaging answer. The case was cited in the present case for the opening passage in the speech of Lord Selborne LC at p 190: My Lords, I conceive that in an action of deceit, like the present, it is the duty of the plaintiff to establish two things; first, actual fraud, which is to be judged by the nature and character of the representations made, considered with reference to the object for which they were made, the knowledge or means of knowledge of the person making them, and the intention which the law justly imputes to every man to produce those consequences which are the natural result of his acts: and, secondly, he must establish that this fraud was an inducing cause to the contract; for which purpose it must be material, and it must have produced in his mind an erroneous belief, influencing his conduct. (Emphasis added) In the same case Lord Blackburn had pertinent things to say about the fundamental link between fraud and damage in an action for deceit, at p 195: In Pasley v Freeman, 2 Smiths Leading Cases 66, 73, 86 (8th ed), Buller J says: The foundation of this action is fraud and deceit in the defendant and damage to the plaintiffs. And the question is whether an action thus founded can be sustained in a court of law. Fraud without damage, or damage without fraud, gives no cause of action, but where these two concur an action lies, per Croke J, 3 Bulst 95. Whatever difficulties there may be as to defining what is fraud and deceit, I think no one will venture to dispute that the plaintiff cannot recover unless he proves damage. In an ordinary action of deceit the plaintiff alleges that false and fraudulent representations were made by the defendant to the plaintiff in order to induce him, the plaintiff, to act upon them. I think that if he did act upon these representations, he shews damage; if he did not, he shews none. So far I have been considering the typical case. But it is possible for a representor to make a false and fraudulent misrepresentation, with the intention of influencing the representee to act on it to its detriment, without the representee necessarily believing it to be true. If the representor succeeds in his object of influencing the representee to act on the representation to its detriment, there will be the concurrence of fraud and deceit in the representor and resulting damage to the representee. In principle, the representee should therefore be entitled to a remedy in deceit. That inducement is a question of fact, necessary to establish causation in all cases but not necessarily in the same way, was recognised and well expressed in the decision of the Court of Appeal of New South Wales in Gipps v Gipps [1978] 1 NSWLR 454. A woman sued her former husband for deceit in relation to a property settlement which they had entered into at the time of their divorce. They were joint shareholders in a private company and as part of the settlement the wife transferred her shares to the husband. The shares were valued by an independent accountant, but the husband dishonestly contrived to see that the valuation was a substantial undervaluation. The wife did not trust the husband and suspected that the shares were worth more than the valuation, but she did not know the extent of the undervaluation. It was submitted on the husbands behalf that if a representee knows that a representation is false in a material particular, as a matter of law he or she cannot sue in respect of it. The court rejected that argument. After referring to various authorities, including particularly the passage from the judgment of Jessel MR in Redgrave v Hurd set out at para 64 above, Hutley JA said (at p 460): The question whether a person has been induced by a statement made to him to enter into an agreement is, in my opinion, a single issue of fact. No doubt pre contractual knowledge that the statement made is not wholly true has a very direct bearing on the resolution of this question of fact but it does not of itself necessarily provide the answer. To say that it does is to formulate a different question. To state that a person is induced by a statement is to affirm a causal relation which is a question of fact, not of law. That being so, it is impossible to apply to any situation a rule which produces a final result. The trial judge or jury have to answer the question: Did the misrepresentation cause the representee to enter into the contract, it being understood that the representation, as was stated in Australian Steel and Mining Corpn Pty Ltd v Corben [1974] 2 NWLR 202, 207, was among the factors which induced the contract. Some assistance may also be had from the judgment of Hobhouse LJ in Downs v Chappell [1997] 1 WLR 426, 433, where he said that for a plaintiff to succeed in the tort of deceit of deceit it is necessary for him to prove that (1) the representation was fraudulent, (2) it was material and (3) it induced the plaintiff to act to his detriment. He added that As regards inducement, this is a question of fact and that The word reliance used by the judge has a similar meaning but is not the correct criterion. I agree with His Honour Judge Moloney QCs analysis in para 2.5 of his judgment. The question whether there has been inducement is a question of fact which goes to the issue of causation. The way in which a fraudulent misrepresentation may cause the representee to act to his detriment will depend on the circumstances. He rightly focused on the particular circumstances of the present case. Mr Haywards deceitful conduct was intended to influence the mind of the insurers, not necessarily by causing them to believe him, but by causing them to value his litigation claim more highly than it was worth if the true facts had been disclosed, because the value of a claim for insurers purposes is that which the court is likely put on it. He achieved his dishonest purpose and thereby induced them to act to their detriment by paying almost ten times more than they would have paid but for his dishonesty. It does not lie in his mouth in those circumstances to say that they should have taken the case to trial, and it would not accord with justice or public policy for the law to put the insurers in a worse position as regards setting aside the settlement than they would have been in, if the case had proceeded to trial and had been decided in accordance with the corrupted medical evidence as it then was. For those reasons, which accord to all intents and purposes with the judgment of Lord Clarke, I too would allow the insurers appeal and restore the order of Judge Moloney. Postscript It was expressly conceded on behalf of the insurers for the purposes of the present appeal that whenever and however a legal claim is settled, a party seeking to set aside the settlement for fraud must prove the fraud by evidence which it could not have obtained by due diligence at the time of the settlement. It makes no difference to the outcome of the present case and the court heard no argument about whether the concession was correct. Any opinion on the subject would therefore be obiter, and since the court has not considered the relevant authorities (including Commonwealth authorities such as Toubia v Schwenke [2002] NSWCA 34) or academic writing, it is better to say nothing about it.

UK-Abs

The respondent, Mr Hayward, suffered an injury at work in June 1998. Mr Hayward brought proceedings and the employer admitted liability, but he deliberately and dishonestly exaggerated the extent of the injury in order to achieve a higher settlement figure of 134,973.11 from the appellant, the employers liability insurer. At the time of the settlement in October 2003, the insurer had video evidence of the exaggeration. But by February 2009, the insurer had gathered further evidence showing that Mr Hayward had fully recovered a full year before the settlement. It sought to set aside the settlement and claimed damages for deceit. Mr Hayward applied for summary judgment on the basis that the claim had already been compromised in the previous proceedings. His application for summary judgment or strike out was successful before the County Court, but overturned by the Court of Appeal. The insurers claim was therefore allowed to proceed. On the claim itself, the judge found that Mr Hayward had deliberately exaggerated the effects of his injury, set aside the settlement agreement, and awarded Mr Hayward a much reduced sum of 14,720. A second Court of Appeal allowed Mr Haywards appeal, holding that the insurer could not be allowed to set aside the settlement agreement since it was aware of Mr Haywards fraud at that time. The Supreme Court unanimously allows the insurers appeal, restoring the judges conclusion that the settlement agreement should be set aside and that Mr Hayward be paid the reduced sum. Lord Clarke gives the lead judgment. Lord Toulson gives a concurring judgment. The other Justices agree with both judgments. The critical issue on appeal is whether, in order to show the requisite influence by or reliance on the misrepresentation in a claim to set aside a compromise on the basis of fraudulent misrepresentation, the defrauded representee (i.e. the insurer in this case) must prove that it settled because it believed that the misrepresentations were true. The answer is no. There is no authority supporting a freestanding requirement of belief that the misrepresentations are true. The representees state of mind is instead relevant to, but not necessarily decisive of, the courts consideration of inducement into the settlement agreement, and causation [18, 23, 25]. There may be factual circumstances in which a representee knows that a representation is false but nevertheless relies on it, but this is not such a case. The insurer in this case did not know that Mr Hayward was deliberately exaggerating his injuries to such an extent as later became clear, and did everything that it could to investigate. Qualified belief in a misrepresentation does not rule out the conclusion that the insurer was induced by it [20 22, 40]. Lord Toulson, concurring, adds that the issue in this case is whether a suspicious insurer, who nevertheless settles the claim on the basis that it is likely to succeed but then later discovers a fraud, can set aside that settlement and recover damages for deceit [52]. It must be shown that the false representation caused the insurer to act to its detriment, but such inducement is always a question of fact going to the issue of causation. Mr Haywards misrepresentation induced the insurer to enter into the settlement agreement in this case [70]. It is not necessary to decide whether knowledge of the falsity of a representation would always prevent a representee from nevertheless proving that he was induced by it [40 48].

This case concerns the circumstances in which sentences passed on assisting offenders (that is, offenders who have given assistance to prosecuting authorities) should be referred back to the sentencing court under section 74 of the Serious Organised Crime and Police Act 2005. The Divisional Court in Northern Ireland ([2015] NIQB 33, Morgan LCJ, Weir J and Treacy J) concluded that the decision of a member of the Public Prosecution Service (PPS) not to refer to the original sentencing court the sentences passed on Robert and David Stewart should be quashed. PPS appeals that decision. The relevant facts Robert and David Stewart are brothers. They had been, by their own admission, members of a loyalist paramilitary organisation in Northern Ireland for several years. On 4 August 2008, they went to a station of the Police Service of Northern Ireland (PSNI) in Antrim. There they admitted having been involved in the murder of a man called Thomas English. Mr English had been killed on 30 October 2000. After many interviews with police officers, the Stewart brothers entered into agreements with a specified prosecutor, Mr Raymond Kitson. A specified prosecutor is a person nominated in section 71(4) of the 2005 Act or a person designated for the purposes of the section by one of the nominated individuals. Mr Kitson, who was a member of the PPS, was duly designated as a specified prosecutor under this provision. The agreements were made on 15 October 2008. Among other things, they required the Stewarts to assist in the investigation being conducted by the Police Service of Northern Ireland into offences relating to the murder of Thomas English on 31 October 2000 . and into other offences connected and unconnected with [that] incident . The agreements also required that the Stewarts participate in a debriefing process, that they should provide all information available to them and give a truthful account of the activities of all others involved. It was further stipulated that the Stewarts plead guilty to the offences to which they had admitted. It was also required that they maintain continuous and complete co operation throughout the investigation and any consequent court proceedings and that they give truthful evidence in any court proceedings arising from the investigation. The agreements stated that failure to comply with their terms could result in any sentence the Stewarts might receive being referred back to the court for review pursuant to section 74 of the 2005 Act. On 10 February 2010, the Stewarts duly pleaded guilty to various offences, including murder, and on 5 March 2010, they were sentenced to life imprisonment. Hart J, a very experienced criminal judge, stated that, in normal circumstances, the tariff for these offences would be 22 years. He applied a 75% reduction on that notional tariff, taking account of the Stewarts assistance under the 2005 Act. The judge then further reduced the period to be served in light of their guilty pleas and personal circumstances. The final effect was that the Stewarts were required to serve a minimum term of three years before they could be considered for release on licence. Taking into account the period that they had served on remand, they were both released on life licence on 18 August 2011. As a result of the interviews with the Stewarts, a number of persons were charged with various offences. Following a lengthy trial before Gillen J, all but one were acquitted of the charges. The single defendant to be convicted was found guilty on the basis of evidence other than that given by the Stewarts. The respondent, Jason Loughlin, was one of the accused who was acquitted. He applied for judicial review of the decision not to refer the case of the Stewarts back to the sentencing court and it was his application which succeeded before the Divisional Court. A number of observations can be made about the trial: (i) There were 14 defendants and 37 counts on the indictment comprising five episodes or instances of alleged criminal behaviour. By any standards, this was a case of considerable complexity which would have presented substantial challenges to all involved in it, including the principal witnesses; (ii) The Stewarts gave evidence over 26 and 30 days respectively. They were each subject to cross examination by no fewer than 14 sets of counsel for the accused; clearly, the opportunity to exploit even minor differences in evidence and recollection will increase as testimony about a significant number of historical events is repeatedly albeit entirely properly challenged and scrutinised; (iii) An application for a direction of no case to answer on all counts was made to the trial judge at the end of the Crown case. Gillen J held that the proper test to be applied was that outlined in R v Courtney [2007] NICA 6, which had applied the principles set out in R v Galbraith 73 Cr App R 124, R v Shippey (1998) Crim LR 767 and Chief Constable v Lo [2006] NICA 3. The judge therefore held that he must look at all the evidence whether supportive of the Stewart brothers or otherwise and ask myself whether that evidence is not so weak or so discredited that it could not conceivably support a guilty verdict para 15 of the judgment on the application for a direction [2012] NICC 3. He refused an application on all but two counts. (iv) None of the accused gave evidence on their trial; (v) The judge expressed himself as not having the slightest difficulty [in] accepting in general terms the statement by the Stewarts throughout their evidence that a variety of circumstances had contributed to faulty recollections on their part para 252 of his principal judgment [2012] NICC 5; (vi) The judge concluded that the Stewarts had lied to the police and to the court. He conducted a wide ranging, painstaking examination of their evidence. Frequently, in his judgment, he acknowledged the extreme difficulty in reaching conclusions about whether accounts he found to be unreliable were the product of imperfect memory, the ravages that alcohol and drug consumption had wrought on both witnesses, the circumstance that both had been engaged in long careers of criminal offending, a natural inclination to understate their own role and to exaggerate that of others, or plain fabrication. But it is unquestionably true that in a number of instances, the judge found that the Stewarts had not been truthful. The 2005 Act The background to the 2005 Act is well explained in the judgment of the Court of Appeal in R v P and Blackburn [2007] EWCA Crim 2290. At para 22 the court said this: There never has been, and never will be, much enthusiasm about a process by which criminals receive lower sentences than they otherwise deserve because they have informed on or given evidence against those who participated in the same or linked crimes, or in relation to crimes in which they had no personal involvement, but about which they have provided useful information to the investigating authorities. However, like the process which provides for a reduced sentence following a guilty plea, this is a longstanding and entirely pragmatic convention. The stark reality is that without it major criminals who should be convicted and sentenced for offences of the utmost seriousness might, and in many cases, certainly would escape justice. Moreover, the very existence of this process, and the risk that an individual for his own selfish motives may provide incriminating evidence, provides something of a check against the belief, deliberately fostered to increase their power, that gangs of criminals, and in particular the leaders of such gangs, are untouchable and beyond the reach of justice. The greatest disincentive to the provision of assistance to the authorities is an understandable fear of consequent reprisals. Those who do assist the prosecution are liable to violent ill treatment by fellow prisoners generally, but quite apart from the inevitable pressures on them while they are serving their sentences, the stark reality is that those who betray major criminals face torture and execution. The solitary incentive to encourage co operation is provided by a reduced sentence, and the common law, and now statute, have accepted that this is a price worth paying to achieve the overwhelming and recurring public interest that major criminals, in particular, should be caught and prosecuted to conviction. The 2005 Act placed the common law position on a statutory footing. In its material parts, section 73 of the Act, dealing with reductions in sentences which may be passed on assisting offenders provides: 73. Assistance by defendant: reduction in sentence (1) This section applies if a defendant (a) following a plea of guilty is either convicted of an offence in proceedings in the Crown Court or is committed to the Crown Court for sentence, and (b) has, pursuant to a written agreement made with a specified prosecutor, assisted or offered to assist the investigator or prosecutor in relation to that or any other offence. (2) In determining what sentence to pass on the defendant the court may take into account the extent and nature of the assistance given or offered. If the court passes a sentence which is less than it (3) would have passed but for the assistance given or offered, it must state in open court that it has passed a lesser sentence than it (a) would otherwise have passed, and (b) what the greater sentence would have As the facts of this case illustrate, substantial reductions in sentences, even for the most serious crimes, may be achieved under this section. Indeed, as the Divisional Court pointed out, section 73(5) of the 2005 Act permits the sentencing court to decide on a reduction which would have the effect of imposing a sentence of less than the minimum term that is otherwise prescribed by law. Since sentences passed on those who have entered agreements under section 74 will, at least usually, be imposed before any assessment of their adherence to the terms of the agreement can be made, it is unsurprising that the 2005 Act provides for possible review of the sentences passed. The circumstances in which such a review may take place are provided for in section 74 which, so far as is material, provides: 74. Assistance by defendant: review of sentence (1) This section applies if the Crown Court has passed a sentence on (a) a person in respect of an offence, and (b) the person falls within subsection (2). (2) A person falls within this subsection if (a) he receives a discounted sentence in consequence of his having offered in pursuance of a written agreement to give assistance to the prosecutor or investigator of an offence but he knowingly fails to any extent to give assistance in accordance with the agreement (3) A specified prosecutor may at any time refer the case back to the court by which the sentence was passed if the person is still serving his sentence, and the specified prosecutor thinks it is in the (a) (b) interests of justice to do so. (4) A case so referred must, if possible, be heard by the judge who passed the sentence to which the referral relates. (5) If the court is satisfied that a person who falls within subsection (2)(a) knowingly failed to give the assistance it may substitute for the sentence to which the referral relates such greater sentence (not exceeding that which it would have passed but for the agreement to give assistance) as it thinks appropriate Two aspects of this section deserve special mention. First, so far as the Stewarts are concerned, it was a prerequisite of consideration whether to refer their sentences that they knowingly failed to give assistance in accordance with the agreement. (Sub paragraphs (b) and (c) of section 74(2) prescribe other circumstances in which a referral may be made but they are not relevant here.) Unless, therefore, it is concluded that the Stewarts had knowingly failed to comply with the agreements, they do not come within section 74(2) and the section does not apply to them. The second feature of the section which should be noted is that, even when it is concluded that assisting offenders such as the Stewarts have knowingly failed to give the assistance in accordance with the agreement, the specified prosecutor must address the question whether it is in the interests of justice to make the reference. It is only when she or he thinks that it is in the interests of justice that this should happen, that the reference may be made. Before the Divisional Court, some debate was engaged about whether the test was that the interests of justice required that the sentences be referred. For reasons that I will give presently, I do not consider that it is useful to approach the question of what is in the interests of justice as one of necessity. But it is equally undesirable, in my view, to constrain the specified prosecutors consideration of whether the interests of justice indicate one course or the other, by reference to a test which has not been referred to in the statute, such as whether the circumstances have changed from those in which the original sentences were passed. Again, I will give my reasons for that conclusion later in this judgment. The specified prosecutors consideration of whether to refer Pamela Atchison was the deputy Director of Public Prosecutions for Northern Ireland at the time that consideration was undertaken as to whether the sentences passed on the Stewarts should be referred to the original sentencing court. She was designated as the specified prosecutor to consider whether such a reference should be made. Mrs Atchison took the advice of experienced senior counsel on some aspects of her decision but she has stated that the conclusion that she reached was hers alone. The reasons she decided not to refer the Stewarts case were outlined by Mrs Atchison in a lengthy document of some 260 paragraphs. In it, she explained that she had concluded that both Stewarts had knowingly failed on a number of occasions to give the assistance which they had undertaken to provide. Her conclusions broadly reflected those in which Gillen J had decided that the witnesses evidence was deliberately mendacious. The respondent has claimed that this fell impermissibly short of the proper examination of this issue. In effect, the respondent argued that the specified prosecutor was required to examine minutely every conceivable aspect of the Stewarts accounts, both during their evidence in court and in their interviews before the trial. The Divisional Court did not accept that argument. Nor do I. Quite apart from the impossible logistical burden which this would have imposed on the specified prosecutor, the respondents argument rested mainly on the proposition that, because the trial judge had referred in general terms at various points in his judgment to the Stewarts having lied, this should have prompted the specified prosecutor to examine their accounts intensely to decide whether there were instances of a failure to comply with the agreements into which they had entered and which had not been referred to by the judge. The lack of realism of this submission is exposed when one considers that Gillen Js judgment on the application for a direction of no case to answer consisted of 85 paragraphs and his final judgment ran to 556 paragraphs. Both judgments were carefully considered by Mrs Atchison and every specific instance in which the judge found that the Stewarts had lied was analysed by her in detail. It was entirely reasonable for her to conclude that the judge had examined meticulously all the evidence on the question of whether the Stewarts had lied. The specified prosecutor was therefore perfectly entitled to concentrate on those passages of the judgments which dealt directly with that issue. On the question of whether it was in the interests of justice that the case be referred to the sentencing court, the specified prosecutor outlined a number of reasons which led her to the conclusion that it should not be. Of the five breaches by David Stewart of the undertakings that he had given, she said that these either did not attribute criminal conduct to the accused (beyond that which had otherwise been alleged) or were self serving lies which undermined his credibility rather than imputing criminal conduct to an innocent individual. To put the significance of Stewarts lies further in context, Mrs Atchison at para 247 of her decision document said this: the issue of lies was only one of several issues that impacted negatively upon the credibility of [David Stewart]. Further issues, all of which were significant, included his previous bad character, his abuse of alcohol and drugs, the possibility of contamination, his difficulties with memory, and his tendency to confuse incidents and the details of those participating in them. In these circumstances, I do not consider it possible to conclude that the breaches per se were in any way determinative of the outcome of the trial. In other words, even if David Stewart had not told lies about these incidents, the other frailties in his testimony were just as likely to lead to the same result. In a word, it was impossible to conclude that the fact of lying was in any way pivotal. Mrs Atchison identified five factors which, she said, were of primary importance in deciding not to refer David Stewarts case to the court which had sentenced him. These were: a. The nature and extent of the assistance provided. She concluded that David Stewart had given very significant evidence to the police and that this was a factor in his favour. The time which had elapsed since the original sentence had been b. passed. The duration of any return to custody, if ordered, was likely to be short, in her estimation, given the nature and materiality of the breaches and the fact that more than 18 months had elapsed between his release from prison and her consideration of whether to refer the case back to the sentencing court. (Her report was prepared in April 2013.) c. Whether the imposition of a revised sentence might be considered oppressive. In this context, medical evidence suggested that, if he was returned to prison, there was a risk to David Stewarts life. While Mrs Atchison accepted that this consideration was not determinative of whether the case should be referred, it was a factor of some weight against taking that course. The potential damage to public confidence in the justice system if a d. referral was not made. The specified prosecutor accepted that public confidence might be undermined if it was perceived that an assisting offender had failed to comply with undertakings on which a discounted sentence was based. But this was offset by the consideration that the failure to comply did not result per se in the acquittal of the defendants. Moreover, in light of the risk that a referral would not result in an increase in the sentences, there was a chance that, so far from increasing confidence in the 2005 Act regime, it would have the opposite effect. The prospects of a successful application to the reviewing court. e. Mrs Atchison pointed out that, section 74(5) invests the reviewing court with a discretion as to what, if any, sentence it should substitute where there had been a breach of the section 73 agreement. The court was likely to have regard to the same or similar factors which had influenced her decision. The prospects of a referral resulting in a change in sentence were low, therefore, in her view. The specified prosecutor carried out a similar analysis in relation to Robert Stewart. In his case, only two instances of deliberate untruths were identified. For similar reasons to those expressed in relation to his brother, Mrs Atchison decided that his case should not be referred. The Divisional Courts judgment Central to the Divisional Courts decision was its consideration of R v P and Blackburn [2007] EWCA Crim 2290. The court considered that the critical passage from the Court of Appeals judgment was para 33. This is what Morgan LCJ said about it in para 56 of his judgment: At para 33 the court indicated that a review under section 74 is a fresh process which takes place in new circumstances. We consider that this analysis is helpful in understanding how the prosecutor should approach the interests of justice test in section 74(3)(b) of the 2005 Act. If the prosecutor concludes that the failure to give assistance is such that the court could not conclude that the circumstances had altered as a result, the interests of justice would rarely require referral. If, as is generally likely to be the case where there has been a failure or refusal to provide assistance, the court could take the view that the circumstances had changed the interests of justice would point towards a referral unless there were countervailing considerations. It is with those principles in mind that we examine the approach of the prosecutor in this case. This statement suggests that, absent countervailing considerations, where there had been a change in circumstances, a referral to the original sentencing court should occur. That proposition, if correct, would involve a radical circumscription of the specified prosecutors consideration of where the interests of justice lay. A close examination of what the Court of Appeal in fact said in P and Blackburn is therefore necessary. Before conducting that examination, it should be observed that passages from the Divisional Courts judgment put beyond doubt that the critical question for that court was whether circumstances had changed. At paras 63 and 64 of his judgment, the Lord Chief Justice said that the first task of the prosecutor is to determine whether the court [to which the sentence might be referred] could conclude that the circumstances had changed and [t]he prosecutor did not ask whether the court could conclude that the circumstances had changed. These statements suggest (i) that the specified prosecutor, in deciding where the interests of justice lay, must first address the question whether it was possible that the sentencing court might conclude that there had been a change in circumstances from those which obtained when the original discounted sentence had been passed; and (ii) that if she decided that such a possibility existed, unless there were countervailing circumstances, she was bound to conclude that it was in the interests of justice that the cases be referred to the original sentencing court. For reasons that I will give later, I do not consider that either of these propositions is right. R v P and Blackburn In the case of P, he had been charged with offences arising from the importation of controlled drugs. While awaiting trial, he instructed his solicitor to contact police officers investigating a murder, which had occurred some years earlier. A meeting was arranged between the applicant and a senior investigating police officer. During the meeting, P provided information relating to the murder. He also told police about unrelated criminal activity by a major drug dealer. In due course, he pleaded guilty to various charges. All of this took place before the coming into force of the 2005 Act and, although the trial judge was informed of Ps co operation, it was clear that this had not led to any police investigation of the crimes which P had told the police about nor to any particular risk to him. A sentence of 17 years was imposed. After he had been sentenced, P contacted the police again. He provided information relating to a current murder investigation and agreed to give evidence against those persons alleged to be responsible for the murder, as well as detailing the criminal offences which he had personally committed. The led to a document being prepared by a senior police officer for the purposes of Ps appeal against sentence. As a result his sentence was reduced to 15 years imprisonment. Again, this took place before the coming into force of the 2005 Act. After that Act came into force in April 2006, P entered an agreement with a specified prosecutor. This was in similar terms to the agreements made with the Stewart brothers in this case. P not only supplied information about the criminal activity of others, he admitted to a series of offences which had not been involved in his earlier appearances before the courts. He and his family were considered to be at serious risk as a consequence of the information which he supplied about crimes committed by others. P came before the criminal courts again, firstly, to be sentenced in relation to the offences that he had lately admitted but also on a reference back under section 74(3) of SOCPA by the specified prosecutor for a review of the sentence of 15 years imprisonment, as substituted by the Court of Appeal for the original sentence. This, then, was the converse of the situation in which a reference back to the original sentencing court in the case of the Stewarts was considered. As a result of the further co operation given by P, plainly the specified prosecutor considered that a reduction of the sentence of 15 years should be considered. The judge agreed. As well as sentencing P for the newly admitted offences, he reviewed the sentence of 15 years and substituted for this one of five years imprisonment. The Court of Appeal did not disturb this sentence but it reduced the sentence for the offences to which P had been required to admit as a result of his involvement in the agreement made under the 2005 Act. Blackburns case is less directly relevant to the issues which arise in this appeal. He had entered an agreement under the 2005 Act with a specified prosecutor before he appeared before Simon J. He was sentenced to four years imprisonment and his appeal was, essentially, confined to the argument that this did not entirely reflect the appropriate discount for the assistance which he had given and that the overall starting point was too high. The Court of Appeal accepted those arguments and reduced the sentence to two and a half years imprisonment. A clear insight into the circumstances in which the Court of Appeal considered that it should review the substituted sentence is critical to the outcome of this appeal. Did it suggest that a change in circumstances from those which existed at the time that the originally discounted sentence was passed would normally call for a reference back to the sentencing court? The answer to that question must begin with an examination of what the Court of Appeal actually said in para 33: 33. Ps appeal raises a specific question relating to the involvement of this court. The original 17 year sentence was reduced to 15 years when this court exercised its powers under section 9 of the Criminal Appeal Act 1968. The jurisdiction to conduct a review of sentence on the basis of post sentence assistance is vested in the Crown Court. Its decision on the review is subject to appeal to this court. Therefore, the review itself is not an appeal against sentence, whether imposed in the Crown Court or this Court. It is a fresh process which takes place in new circumstances. Accordingly, the process of review is not inhibited by the fact that this court has already heard and decided an appeal against the original sentence, whether the sentence is varied on appeal or not. This Court may be required to address either a sentence imposed in the light of the written section 73 agreement, or a review conducted in accordance with section 74, or, as here in the case of P, where the assistance provided may impinge on both decisions. From this passage, it is clear that the Court of Appeal was referring to the fresh process in order to distinguish it from a conventional appeal against sentence and to make the point that the review could proceed, unconstrained by the fact that an earlier appeal had taken place. The court did not suggest that a change in circumstances should normally precipitate a referral to the sentencing court. In fact, of course, in the case of P there was a change in circumstances in that he had latterly decided to give useful information to the police and had agreed to testify against former colleagues. It was this which had prompted the decision to refer. Clearly, Ps change of heart and his willingness to assist in the police operation against serious criminals was considered to warrant the referral. But it is wrong to extrapolate from this that, where a change in circumstances (such as a failure to comply fully with an agreement made with a specified prosecutor) occurs, this will inevitably, or even usually, lead to a decision to refer. As I have said earlier, Ps case was the obverse of the Stewarts. The enhanced level of his co operation prompted a referral in order to secure a greater discount on his sentence. In the case of the Stewarts, the question was whether their failure to live up to the expectations generated by the agreement required a referral in the interests of justice. In a case such as the Stewarts, it is difficult to think of a situation in which a referral back to the sentencing court would be contemplated unless circumstances had changed. Indeed, from the statements contained in paras 63 and 64 of the Divisional Court (referred to in para 20 above) it is clear that the court considered that, if the specified prosecutor believed that there was a possibility that the sentencing court might consider that the circumstances had changed, it was her duty to refer. In effect, any lapse from the co operation expected of an assisting offender would require the specified prosecutor to refer. How otherwise could she conclude that there was no possibility that the sentencing court would conclude that circumstances had not changed? If the Divisional Courts formulation was correct, the decision of the specified prosecutor as to whether it was in the interests of justice to refer the case back to the sentencing court would have no meaningful content. If there was the merest deviation by the assisting offender from the agreement made with the specified prosecutor, the case would have to be referred. Discussion The Divisional Courts view that the predominant factor in deciding where the interests of justice lay was whether a change in circumstances had occurred between those which obtained at the time that the agreement with the specified prosecutor was made and the time at which consideration of whether to refer the case back to the original sentencing court took place cannot be upheld. Consideration of the interests of justice in this context involves an open ended deliberation. Section 74(3) imposes no explicit constraint on how the specified prosecutor should approach the question and there is no warrant, in my opinion, for implying a fetter on the exercise of the unrestricted discretion for which the statute clearly provides. It is not difficult to envisage a wide range of factors beyond the question of whether circumstances had changed which might be pivotal in deciding if the original sentence should be referred back to the court which imposed it. Reasons for a failure to strictly adhere to the terms of the agreement with the specified prosecutor could range over a broad spectrum of possibilities. If a change of circumstances is considered to occur when the assisting offender gives testimony which is at odds with the account that he originally gave to the police, what if, despite this, a number of the accused were convicted on the basis of his evidence? Could it be said that the interests of justice inevitably require referral back to the sentencing court? Or, if the witness, because of a well established fear of attack on his family, recants on the evidence that he had agreed to give, is that to be left out of account in deciding whether the interests of justice demand that there be a referral to the original sentencing court? It is not suggested that the factors which Mrs Atchison took into account were irrelevant to a consideration of where the interests of justice lay, provided that consideration is untrammelled by the precondition which the Divisional Court believed should apply. Hers was an open examination of that question. In my view, she was not only entitled to approach the issue in that way, she was obliged to do so. I consider that her report demonstrates a careful, perfectly legitimate investigation of the question of the interests of justice in these particular cases and that her conclusions cannot be impeached. Other incidental arguments The appellant submitted that the challenge in this case was to a species of prosecutorial decision, analogous to that as to whether to instigate criminal proceedings. Mr McGleenan QC argued that cases such as R v Director of Public Prosecutions, Ex p Manning [2001] QB 330; Mohit v Director of Public Prosecutions of Mauritius [2006] UKPC 20; [2006] 1 WLR 3343; In re Lawrence Kincaid [2007] NlQB 26; Sharma v Brown Antoine [2007] 1 WLR 870; McCabe [2010] NIQB 58; and In re Mooneys Application [2014] NIQB 48 all impelled reticence on the part of a court in reviewing any prosecutorial decision. I do not feel it necessary to address this argument. The decision under challenge here is certainly one taken by a prosecutor. Whether it is truly analogous with a decision whether to instigate criminal proceedings (as in the cited cases) is significantly less clear. Many considerations which touch on the question of whether proceedings should be instituted are not relevant in the present context. For the respondent, Mr Scoffield QC submitted that the overweening consideration in the interests of justice consideration was that an appropriate sentence be passed on the Stewarts for their admitted egregious crimes and that this should be primarily a matter for a court, rather than the specified prosecutor, to decide. I reject this argument principally because of its implicit premise which replicates the approach of the Divisional Court that the specified prosecutor should defer to the sentencing courts possible view that a different sentence would be appropriate. The specified prosecutor may well have to consider many factors which would not be directly relevant to a conventional sentencing exercise. Factors quite extraneous to the personal circumstances of the individuals who might be subject to a referral might properly influence the specified prosecutors decision. It might well be relevant, for instance, that a decision to refer could affect the possibility of others offering the type of assistance which assisting offenders such as the Stewarts said that they were prepared to provide. It was argued that, at various points in the document in which Mrs Atchison explained why she had decided not to refer the Stewarts case, she had stated that the interests of justice did not require that the cases be referred. It was suggested that this betokened a view that unless the interests of justice positively required a referral, it should not take place. The specified prosecutor repudiated that suggestion. She explained that this was merely a form of words which she customarily used when reaching a decision as to where the interests of justice lay. There is no reason to invest the use of these words with the significance that the respondent has sought to ascribe to them. Conclusion I would allow the appeal and dismiss the respondents application for judicial review.

UK-Abs

This case concerned the circumstances in which sentences passed on offenders who have given assistance to prosecuting authorities should be referred back to the sentencing court under section 74 of the Serious Organised Crime and Police Act 2005 (the 2005 Act). In August 2008 Robert and David Stewart, former members of a loyalist paramilitary organisation in Northern Ireland, arrived unexpectedly at a police station in Northern Ireland. They informed police about their involvement in offences including a murder in October 2000. They also supplied police with information concerning the alleged involvement of others in those offences. On foot of the information which they provided, the Stewarts entered into agreements with the prosecuting authorities to provide information and assist with ongoing investigations. They also undertook to provide truthful evidence at trial and to plead guilty to the offences they had committed. These agreements stated that failure to comply with the terms could result in any sentence received being referred back to the sentencing court for review pursuant to section 74 of the 2005 Act. In recognition of their assistance, the tariff for their life sentences was reduced by 75% and they both served 3 years in prison. A number of people were charged with different offences as a result of the information given by the Stewarts. Following a long trial, only one person was convicted but this was not because of evidence given by the Stewarts. Jason Loughlin was one of those acquitted. He applied for a judicial review of the decision of the prosecutor not to refer the case of the Stewarts back to the sentencing court. His application succeeded before the Divisional Court. The prosecutor appealed to this court against the Divisional Court's decision. The Supreme Court allows the appeal and dismisses the application by the Respondent, Mr Loughlin, for judicial review. Lord Kerr gives the judgment with which all other members of the panel agree. Section 74 of the 2005 Act requires that, before deciding to refer a sentence passed on an assisting offender back to the original sentencing court a prosecutor must be satisfied that the assisting offender had knowingly failed to comply with the terms of the agreement made with the prosecuting authorities and that a reference was in the interests of justice [11 12]. The Court rejected the Respondents argument that the prosecutor was required to carefully examine every conceivable aspect of the Stewarts accounts. This would have placed an impossible logistical burden on the prosecutor [15 16]. The prosecutor considered that it would not be in the interests of justice to refer the decision back to the sentencing court. She identified five factors relevant to her decision: (i) the nature and extent of assistance provided; (ii) the time which had elapsed since the original sentence had been passed; (iii) whether the imposition of a revised sentence might be considered oppressive; (iv) the potential damage to public confidence in the justice system if a referral was not made; and (v) the prospects of a successful application to the reviewing court. Having analysed these factors in relation to the Stewarts, the prosecutor concluded that the case should not be referred [17 19]. The Divisional Court had considered the key question to be whether circumstances had changed since the original sentence had been passed, suggesting that (i) the prosecutor must first consider whether there had been a change of circumstances; and (ii) if such a change had occurred, unless there were countervailing circumstances, she was bound to conclude that it was in the interests of justice that the case be referred [21 22]. The Court rejected this conclusion. To require the prosecutor to refer a sentence back where there had been a change of circumstance would entail a reference in any instance of deviation by the assisting offender from the agreement. The requirement that the referral be in the interests of justice would then have no meaningful content. Consideration of the interests of justice involves an open ended deliberation section 74(4) does not impose any constraints on how the prosecutor should approach the question [29 31].

On 17 May 2011, the respondent, Ms Tiffany Moreno, a United Kingdom resident, was on holiday in Greece. Walking along the verge of a road, she was struck from behind by a vehicle registered in Greece driven by a Ms Kristina Beqiri. Ms Beqiri had neither a valid driving licence nor it appears any insurance and is admitted to have been responsible for the accident. Sadly, Ms Moreno suffered very serious injuries, which included loss of her right leg requiring her to use a wheelchair, continuing pain and psychological reaction, as well as loss of earnings. The preliminary issue the subject of this appeal is whether the scope of her claim to damages is to be determined in accordance with English or Greek law. Ms Morenos claim is against the Motor Insurers Bureau of the United Kingdom (the UK MIB). That it can be pursued against the UK MIB is the result of a series of Council Directives of the European Economic Community (now Union) dating back to 1972 and culminating in a codified Sixth Directive 2009/103/EC of 16 September 2009. These Directives are in part transposed into English law by The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 (SI 2003/37) (the 2003 Regulations). The 2003 Regulations were enacted prior to the codifying Sixth Directive and therefore refer to the earlier Directives. The expressed and obviously beneficial purpose of the arrangements introduced by the Directives and Regulations is to ensure that compensation is available for victims of motor accidents occurring anywhere in the Community (now the Union) and to facilitate their recovery of such compensation. With British exit from the Union, this will, no doubt, be one of the many current arrangements requiring thought. In the present case, the effect of the arrangements is that Ms Moreno is entitled to pursue the UK MIB, rather than pursue Ms Beqiri or search for some (evidently non existent) insurer of Ms Beqiri or pursue the Greek body responsible for providing compensation in respect of uninsured vehicles involved in Greek accidents. Under the Sixth Directive the UK MIB will, once it has compensated Ms Moreno, be able to claim reimbursement from the Greek compensation body, which will in turn be subrogated to Ms Morenos rights against Ms Beqiri. The issue is, as stated, whether the scope of the UK MIBs liability to Ms Moreno is be measured according to English or Greek law. Ms Morenos concern is that Greek law would yield a lesser measure of compensation than English law. It is accepted however that in other contexts the reverse might be the case. There is, for example, evidence that Irish personal injuries damages can be significantly higher than English, and that Italian law can in fatal accident cases award significantly more (and, if relevant, to a broader range of persons) than English law. Ms Morenos case, advanced on her behalf by Mr Daniel Beard QC, is that the Regulations provide for English law to govern the measure of recovery, and that there is nothing in the Sixth Directive to the contrary or precluding this. Submissions to like effect were accepted in 2010 by the Court of Appeal (Laws, Moore Bick and Rimer LJJ), overruling Owen J, in Jacobs v Motor Insurers Bureau [2010] EWCA Civ 1208; [2011] 1 WLR 2609. The Court of Appeals decision in Jacobs was followed in Bloy v Motor Insurers Bureau [2013] EWCA Civ 1543; [2014] 1 Lloyds Rep IR 75. In the present case, Gilbart J on 17 April 2015 rightly also held himself bound by the decision in Jacobs, but saw very considerable force in a contrary conclusion. On 23 April 2015 he granted the UK MIBs application for a leap frog certificate under section 12 of the Administration of Justice Act 1969, and the appeal comes before the Supreme Court accordingly, with its permission granted 28 July 2015. Prior to the Directives, there was already in existence the Green Card System established by Internal Regulations and an Inter Bureaux Agreement covering states both within and outside the then European Economic Community. Under this System, still effective in the form of Internal Regulations (as adopted by the UN General Assembly in Crete on 30 May 2002 and revised in Lisbon on 29 May 2008 and in Istanbul on 23 May 2013) and in force in substance since 1 July 2008, the insurers of vehicles in participating states issue Green Cards guaranteeing compensation to victims of motor accidents caused by the driving of such vehicles abroad, and bureaux set up in each such state guarantee that the foreign insurer will abide by the law applicable in that country and compensate injured parties within its limits. Article 3(4) headed Handling of Claims further provides: All claims shall be handled by the bureau with complete autonomy in conformity with legal and regulatory provisions applicable in the country of accident relating to liability, compensation of injured parties and compulsory insurance Article 5(1) provides for the local bureau which has thus settled a claim arising out of an accident to be able to demand reimbursement of the sums paid as compensation, together with costs and a handling fee, from the member of the bureau (ie the relevant insurer) which issued the Green Card or policy of insurance or, if appropriate, from the foreign bureau itself, while under article 6(1) each bureau guarantees the reimbursement by its members (ie the insurers) of any amount so demanded. The Directives start with the First Council Directive 72/166/EEC of 24 April 1972 requiring each member state under article 3(1) to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance, which must also under article 3(2) cover any loss or injury caused in the territory of another member state. Equivalent provision is now made in article 3 of the codifying Sixth Directive. Articles 2(2) and 7 of the Directive (now, articles 2 and 4 of the Sixth Directive) contemplated that the requirement for a vehicle based in one member state to produce a Green Card on entry into another member state would cease from a date to be fixed by the Commission once it ascertained that an agreement had been concluded between the national insurance bureaux established under the Green Card System in member states whereby each such bureau (elsewhere sometimes described as a guarantee fund): guarantees the settlement, in accordance with the provisions of its own national law on compulsory insurance, of claims in respect of accidents occurring in its territory caused by vehicles normally based in the territory of another member state, whether or not such vehicles are insured. The relevant Convention complmentaire entre Bureaux nationaux was entered into on 12 December 1973. Article 3(a) provides that it modifies pro tanto the Inter Bureaux Agreement, the terms of which otherwise remain in force. Domestic effect is currently given to the requirement in article 1(4) of the Second Directive 84/5/EEC of 30 December 1983 for a guarantee by the Uninsured Drivers Agreement dated 3 July 2015 made between the Secretary of State for the Environment, Transport and the Regions and the UK MIB. The Second Directive specified in article 1(1) that the insurance referred to in article 3(1) of the First Directive should cover compulsorily both property damage and personal injuries, up to specified minimum amounts (article 1(2)). Equivalent provision is made in the Sixth Directive in articles 3 and 9. Further it was provided by article 1(4) of the Second Directive (or now article 10 of the Sixth Directive) that each member state should: set up or authorize a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 [or article 3 of the Sixth Directive] has not been satisfied. Article 1(4) of the Second Directive (now article 10(4) of the Sixth Directive) continued: . [E]ach member state shall apply its laws, regulations and administrative provisions to the payment of compensation by this body, without prejudice to any other practice which is more favourable to the victim. The intention of the legislature in passing the Second Directive was to entitle victims of damage or injury caused by unidentified or insufficiently insured vehicles to protection equivalent to, and as effective as, that available to persons injured by identified and insured vehicles: Evans v Secretary of State for the Environment, Transport and the Regions (Case C 63/01) [2004] RTR 32, para 27. The Fourth Directive 2000/26/EC of 16 May 2000 carried matters further, most notably by giving victims of foreign motor accidents various possibilities of recourse in their home states of residence. Article 1(1) stated that: The objective of this Directive is to lay down special provisions applicable injured parties entitled to compensation in respect of any loss or injury resulting from accidents occurring in a member state other than the member state of residence of the injured party which are caused by the use of vehicles insured and normally based in a member state. to Injured party was by article 2(d) defined as stated in article 1(2) of the First Directive, that is as any person entitled to compensation in respect of any loss or injury caused by vehicles, a definition repeated in article 1(2) of the Sixth Directive. The special provisions included: (a) a provision that injured parties should enjoy a direct right of action against the insurer covering the responsible person against civil liability: article 3 (now article 18 of the Sixth Directive); (b) a requirement on member states to ensure that motor liability insurers appoint a claims representative in each member state other than that in which they received their authorisation, to be responsible for handling and settling accident claims: article 4 (now article 21(1) of the Sixth Directive); (c) a requirement that each member state establish or approve an information centre responsible for keeping a register containing information including the registration numbers of vehicles normally based in that state, the numbers of the insurance policy covering their use and their expiry date, if past: article 5(1) (now article 23(1) of the Sixth Directive); (d) a requirement that each member state establish or approve a compensation body responsible for providing compensation to injured parties in the cases referred to in article 1: article 6(1) (now article 24(1) of the Sixth Directive), coupled with a provision entitling such injured parties to present a claim to the compensation body in their member state of residence if within three months the insurer or its claims representative has not provided a reasoned reply to their claim, or the insurer has not appointed a claims representative in the injured partys state of residence (unless the injured party has taken legal action directly against the insurer); (e) a provision entitling an injured party to apply for compensation to the compensation body in the member state if it is impossible to identify the vehicle or if, within two months following the accident, it is impossible to identify the insurance undertaking: article 7 (now article 25(1) of the Sixth Directive). Article 7 goes on to provide that The compensation shall be provided in accordance with the provisions of article 1 of the Second Directive (as to which see para 7 above). Article 25(1) says that it will be provided in accordance with the provisions of articles 9 and 10 of the Sixth Directive, which relate respectively to the requirements on member states to ensure compulsory insurance in minimum amounts and to set up or authorise a compensation body to cover property damage or personal injuries caused by an unidentified or uninsured vehicle (see para 7 above). The special provisions described in sub paragraphs (d) and (e) of the previous paragraph mean that liability was in the first instance imposed on compensation bodies in the member state of the victims residence which would otherwise have been expected to be borne by someone else, ie the person responsible for the accident, his or her insurer or an insurance bureau or guarantee fund in the state where the relevant vehicle was normally based. For that reason, both articles 6 and 7 of the Fourth Directive (now articles 24(10) and 25(1) of the Sixth Directive) contain provisions in articles 6(2) and 7 (now articles 24(2) and 25) regarding reimbursement, aimed at passing responsibility on to the insurer (where one can be identified) or guarantee fund described in this context in recital (31) to the Fourth Directive (recital (53) to the Sixth Directive) as the ultimate debtor, coupled with further provision for subrogation rights against the person responsible for the accident. Thus article 6(2) read: The compensation body which has compensated the injured party in his member state of residence shall be entitled to claim reimbursement of the sum paid by way of compensation from the compensation body in the member state of the insurance undertakings establishment which issued the policy. The latter body shall then be subrogated to the injured party in his rights against the person who caused the accident or his insurance undertaking in so far as the compensation body in the member state of residence of the injured party has provided compensation for the loss or injury suffered. Each member state is obliged to acknowledge this subrogation as provided for by any other member state. Subject to very minor linguistic differences, article 24(2) of the Sixth Directive is identical. Article 7 (now article 25(1)) read: The compensation body shall then have a claim, on the conditions laid down in article 6(2) of this Directive: (a) where the insurance undertaking cannot be identified: against the guarantee fund provided for in article 1(4) of [the Second] Directive 84/5/EEC in the member state where the vehicle is normally based; (b) in the case of an unidentified vehicle: against the guarantee fund in the member state in which the accident took place; in the case of third country vehicles: against the (c) guarantee fund of the member state in which the accident took place. Under article 6(3) of the Fourth Directive (article 24(3) of the Sixth Directive), the operation of both articles 6 and 7 (now articles 24(1) and 25(1)) was also suspended until: (a) after an agreement has been concluded between the compensation bodies established or approved by the member states relating to their functions and obligations and the procedures for reimbursement; (b) from the date fixed by the Commission upon its having ascertained in close cooperation with the member states that such an agreement has been concluded. An agreement between compensation bodies and guarantee funds was reached on 29 April 2002. On that basis, the Commission by decision of 27 December 2002 determined that article 6 (and so also article 7) of the Fourth Directive should take effect as from 20 January 2003. In the United Kingdom, the UK MIB acts both as the bureau or guarantee fund contemplated by article 1(4) of the Second Directive (article 10 of the Sixth Directive) and, under regulation 10 of the 2003 Regulations, as the compensation body required under articles 6 and 7 (now articles 24(1) and 25(1) of the Sixth Directive). But in some states they are different bodies, a fact recognised in the agreement which deals separately with articles 6 and 7 accordingly. In relation to the two situations in which article 7 applies (an unidentified or uninsured vehicle), the agreement provides: 7.1. In either of the situations referred to , the Compensation Body which has received a claim must immediately inform, depending on the circumstances, either the Guarantee Fund defined in article 1 of [the Second] Directive 84/5/EEC of the member state in which the accident took place or the Guarantee Fund of the member state in which the road traffic vehicle which caused the accident is normally based. 7.2. When it makes a compensation payment to an injured party, the Compensation Body shall: reply to requests for information enabling the claim to be assessed, which it receives from the final paying body for reimbursement (Guarantee Fund), apply, in evaluating liability and assessing compensation, the law of the country in which the accident occurred, comply with the provisions of article 1 of Directive 84/5/EEC. 8.1. When a Compensation Body has compensated upon request an injured party, it is entitled to receive, depending on the circumstances of the accident, either from the Guarantee Fund of the member state in which the accident took place or from the Guarantee Fund of the member state in which the road traffic vehicle which caused the accident is normally based, reimbursement containing, to the exclusion of everything else, the following: 8.1.1. the amount paid in compensation to the injured party or his/her beneficiaries; specifying the amounts paid as material damage and as bodily injury; 8.1.2. the sums paid for external services such as, for example, experts, lawyers or doctors fees inherent in the instruction and the in or out of court settlement of the claim; 8.1.3. the handling fees covering all other costs as defined by clause 8.3 hereof. 8.2. The amount to be reimbursed may only be disputed by the final paying Guarantee Fund if the Compensation Body which settled the injured partys claim has ignored objective material information given to it or has not observed the rules of applicable law. Articles 6 and 7 of the Fourth Directive were transposed into English law by the 2003 Regulations using section 2(2) of the European Communities Act 1972. The Explanatory Note states simply that These Regulations give effect to articles 5, 6 and 7 of the Fourth Motor Insurance Directive. There is no indication in the Lord Chancellors Departments transposition note or elsewhere that anything was intended other than straightforward implementation of the United Kingdoms European obligations under the Directives. Addressing the subject matter of article 6 of the Fourth Directive, now article 24(1) of the Sixth Directive, (ie the situation where no reasoned reply has been received from an insurer or its claims representative within three months or where no claims representative has been appointed), regulation 12(3) and (4) provides: If the injured party satisfies the compensation body as to the matters specified in paragraph (4), the compensation body shall indemnify the injured party in respect of the loss and damage described in paragraph (4)(b). The matters referred to in paragraph (3) are that a person whose liability for the use of the (a) vehicle is insured by the insurer referred to in regulation 11(1)(c) is liable to the injured party in respect of the accident which is the subject of the claim, and (b) the amount of loss and damage (including interest) that is properly recoverable in consequence of that accident by the injured party from that person under the laws applying in that part of the United Kingdom in which the injured party resided at the date of the accident. Addressing the subject matter of article 7 of the Fourth Directive, now article 25(1) of the Sixth Directive, (ie an unidentified or uninsured vehicle), regulation 13(2) provides: (2) Where this regulation applies the injured party may make a claim for (a) compensation from the compensation body, and (b) the compensation body shall compensate the injured party in accordance with the provisions of article 1 of the second motor insurance directive as if it were the body authorised under paragraph 4 of that article and the accident had occurred in Great Britain. Moore Bick LJ, giving the sole reasoned judgment in Jacobs, expressed the view at para 21 that: The scheme [of articles 6 and 7 of the Fourth Directive] appears to proceed on the assumption that the existence of the driver's liability and the determination of the amount of compensation payable to the injured party will be governed by the same principles at all stages of the process, but the Fourth Directive does not go so far as to provide that such questions are to be determined by reference to the law of the country in which the accident occurred. He noted (para 22) that, at the date of the Fourth Directive, there was no universal rule governing the question what law should govern liability and damages in tort, and that at that date the position in English law was that: issues of liability and heads of recoverable damages were normally determined by reference to the law of the place where the accident occurred, but the assessment of damages was determined by English law as the lex fori, as subsequently confirmed by the decision of the House of Lords in Harding v Wealands [2007] 2 AC 1. He also noted (para 23) that, if a victim could recover from the compensation body in his or her own country more than he or she could have recovered from the driver responsible for the accident or the drivers insurer, that might be regarded as anomalous, but did not ultimately think (para 30) that this anomaly, such as it is, provides sufficient grounds for giving a domestic regulation a meaning it does not naturally bear. Turning to the 2003 Regulations, he said correctly (para 23) that it was from them that the domestic right of an injured person to make a claim against the compensation body derives. Examining regulation 12(4)(b), he found himself driven to the conclusion that in the case of the insured driver the bureau is obliged to pay compensation assessed in accordance with English, Scots or Northern Irish law, as the case may be (para 29). He noted that this might mean that the injured party was able to recover from the UK compensation body (the UK MIB) more or less than the compensation that he could have recovered in, for example, an action against the person responsible for the accident or his or her insurer (or, one could add, the bureau or fund of the state of the accident) (paras 29). But he said that, although this: may at first sight appear to be inconsistent with the scheme of the Fourth Directive, the Directive itself does in fact contemplate the existence of such arrangements, since article 10(4) provides: Member states may, in accordance with the Treaty, maintain or bring into force provisions which are more favourable to the injured party than the provisions necessary to comply with this Directive. Article 10(4) is now article 28(1) of the Sixth Directive. A problem about Moore Bick LJs observation in this connection is that it overlooks the previously mentioned possibility that the level of compensation under English law can be less favourable than that provided under the law of the state of the accident. Turning to regulation 13, directly in issue in Jacobs and now on the present appeal, Moore Bick LJ concluded first that it must contemplate the victim being able to show the existence of liability on the part of the person responsible for the accident. The answer on this point lay, he considered, in the words shall compensate the injured party in accordance with the provisions of article 1 of the Second Directive. He went on (para 32): I think it is reasonably clear from the recitals to the Second Directive that its purpose was to assimilate the position of the victim of an unidentified or uninsured driver or vehicle to that of the victim of an identified and insured driver or vehicle; it is not its purpose to require the establishment of a system of no fault compensation. It is, therefore, implicit in the scheme of the Second Directive that the victim must be able to establish that the driver is liable to him in respect of his injuries, but whether that requires proof of fault will depend on the law of the country in which the accident occurred. The reference in regulation 13(1)(c)(ii) to an insurance undertaking which insures the use of the vehicle assumes the existence of a liability on the part of the driver which ought to be, but is not, covered by insurance. It follows, in my view, that the obligation imposed on the bureau by regulation 13(2)(b) to compensate the injured party in accordance with the provisions of article 1 of the Second Directive carries with it the implicit proviso that the injured party must be able to show that the driver is liable to him. As in the case of a claim under regulation 12, that is a question to be determined by reference to the applicable law identified in accordance with the appropriate conflicts of laws rules. At the time the 2003 Regulations were made the applicable rules were those of the Private International Law (Miscellaneous Provisions) Act 1995, but since the introduction of Rome II, the rules set out in that Regulation will apply and will normally lead to the application of the law of the country in which the accident occurred. There is no reason to differ from this analysis. Nor is there any reason to differ from Moore Bick LJs further analysis in paras 33 34 of the basic reasoning behind the expression in regulation 13(2) as if it were the body authorised under paragraph 4 of that article and the accident had occurred in Great Britain. Moore Bick LJ pointed out a difference between the Uninsured Drivers Agreement (see para 6 above) and the Untraced Drivers Agreement dated 7 February 2003 made between the Secretary of State for Transport and the UK MIB. The former Agreement covers the use in Great Britain or elsewhere in the European Union of British registered vehicles, which are, under article 3 of the First Directive (article 3 of the Sixth Directive) to which effect is given by sections 143 145 of the Road Traffic Act 1988, required to be insured in respect of such use throughout the European Union. The latter Agreement is limited in its scope to accidents occurring in Great Britain. Once the United Kingdom became obliged under article 7 of the Fourth Directive to have a compensation body to which victims of foreign motor accidents resident in the United Kingdom could apply for compensation, specific language was accordingly required to expand the UK MIBs liability to cover such victims when the vehicle responsible for the foreign accident was untraced. Hence, in Moore Bick LJs words, the somewhat complicated language of regulation 13(2)(b) was designed to achieve that result (para 34). The UK MIB, which acted as the guarantee fund for Great Britain pursuant to article 1(4) of the Second Directive, has also been designated as the United Kingdoms compensation body required by the Fourth Directive, and the language was necessary to impose on the bureau in its capacity as compensation body an obligation of the kind that it already bore as guarantee fund, including a liability in respect of accidents occurring abroad (para 33). However, Moore Bick LJ continued at the end of para 34 and in para 35: 34. It does not necessarily follow, however, that it does not have the effect for which Mr Layton contended. A legal fiction may have consequences beyond its immediate purpose. 35. The mechanism by which the bureaus obligation to compensate persons injured in accidents occurring abroad involving uninsured or unidentified drivers is established is to treat the accident as having occurred in Great Britain, but in the absence of any provision limiting its scope it is difficult to see why it should not also affect the principles governing the assessment of damages, particularly in the absence at the time of complete harmonisation throughout the EEA of the conflicts of laws rules governing that issue. Although Moore Bick LJ went on immediately to say that the matter was nonetheless not free from difficulty and to return to the recitals to the Fourth Directive to see whether they pointed to a different conclusion, he regarded the recitals as showing concern as primarily directed to the ability of injured parties to obtain compensation, not to the amount of that compensation, and found nothing there to support either partys case or to change his view (para 36). He also regarded his view as having the incidental merit of ensuring that the measure of compensation recoverable under regulation 13 is likely to be broadly the same as that recoverable under regulation 12 (para 37). Finally, Moore Bick LJ regarded the provisions of Regulation (EC) No 864/2007 of 11 July 2007 on the law applicable to non contractual obligations (Rome II), in force from 11 January 2009, as irrelevant on the basis that regulation 13(2)(b) is defining the existence and extent of the UK MIBs obligation as a compensation body, rather than determining the liability of the wrongdoer (para 38). Before the Supreme Court Mr Beard representing Ms Moreno supports the reasoning and conclusions of the Court of Appeal in Jacobs. He accepts, as did Moore Bick LJ, that this may lead to some apparent anomalies, but submits that they are either capable of satisfactory resolution or insignificant and that the domestic legislator can be taken in the 2003 Regulations to have adopted a measure of recovery which reflected the basis of recovery under English law in respect of a foreign tort at the relevant times, and would have been seen as both convenient and favourable to the claimant. In construing the 2003 Regulations, the starting point is that they should, so far as possible, be interpreted in a sense which is not in any way inconsistent with the Directives: Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106/89) [1990] ECR I 4135. It was however open to the domestic legislator, as Moore Bick LJ noted (para 19 above), to introduce provisions more favourable to the injured party. But it is unlikely that it would do so by including a provision which could in some circumstances also prove less favourable to the injured party, and so put the United Kingdom in breach of the Directives. A second point to be borne in mind is that the 2003 Regulations were made under section 2 of the European Communities Act 1972 (as amended subsequently by sections 27 and 33 of the Legislative and Regulatory Reform Act 2006 and sections 3 and 8 of and Part I of the Schedule to the European Union (Amendment) Act 2008). Section 2(2) authorises regulations making provision (so far as relevant): (a) for the purpose of implementing any EU obligation of the United Kingdom, or enabling any such obligation to be implemented ; or (b) related to any such obligation for the purpose of dealing with matters arising out of or No question of vires has been raised in this case, and the 2003 Regulations must be approached on the basis that they implement or enable the implementation of the United Kingdoms EU obligations or deal with matters arising out of or related thereto. In so far as any of the Directives is: in general terms leaving member states freedom to decide on the precise means for its implementation, provisions which the United Kingdom makes within the scope of such freedom will on the face of it fall within section 2(2)(a), as being for the purpose of implementing or enabling the implementation of the Directive. See United States of America v Nolan [2015] UKSC 63; [2016] AC 463, para 63. But, in so far as the Directives prescribe a particular approach, the interpretive presumption, based on Marleasing (above), is that this was what the domestic legislator intended to be achieved. Third, there is no suggestion in the 2003 Regulations or the Explanatory Note or elsewhere of any intention on the part of the domestic legislator to do anything other than faithfully implement and give effect to the Directives. Fourth, on that basis, two questions are central to this appeal. One is whether the Directives prescribe any particular approach to the scope or measure of recovery applicable in a claim against a compensation body under article 7 of the Fourth Directive (article 25(1) of the Sixth Directive). The other is whether, if they do, the language of regulation 13(2)(b) reflects this approach, or mandates some different approach, whatever the Directives may have required. Taking the first question, the Court of Appeal in Jacobs looked too narrowly, in my opinion, at the scheme created and represented by the Directives. Viewing its development holistically, it can be seen to be a scheme of which the constant aim has been to improve the prospects and ease with which injured parties can recover the compensation to which they are entitled in respect of any loss or damage caused by vehicles. This follows from the original definition of injured party in the First Directive. The first and Second Directives aim to ensure such compensation by providing for compulsory insurance, with the back up of the guarantee (covering cases of non insurance) provided by each national motor insurance bureau in accordance with article 1(4) of the Second Directive. The aim follows through into the special provisions applicable to injured parties entitled to compensation, in respect of loss or injury in motor accidents occurring in a member state other than that of their residence, introduced by the Fourth Directive (see article 1(1)). These give injured parties, inter alia, a direct right of action against any insurer (article 3), a right to have a local claims representative of such insurers in their own state to handle and settle their claims (article 4) and a right to look to a compensation body in their own state if an insurer fails to provide a reasoned reply to the claim or to appoint a claims representative there (article 6) or if the accident is caused by an uninsured or unidentifiable vehicle (article 7). The injured parties, claims and compensation referred to throughout these articles are the injured parties who are entitled to and so claim the compensation in respect of loss or damage, to which article 1(1) of the Fourth Directive refers. The inference is that, to whichever special provision of the Fourth Directive the victim of a motor accident may have to have recourse, the compensation to which he or she is entitled is and remains the same. It is the same compensation as that to which the victim is entitled as against the driver responsible, or his or her insurer, or, that failing, as against the guarantee fund of the state of the accident. The compensation remains the same if and when the victim has recourse instead to the compensation body established in his own state of residence under article 6 or 7. On the analysis accepted by the Court of Appeal in Jacobs, however, the measure of compensation could vary according to the happenchance of the route to recovery which the victim chose or was forced to pursue. If the victim chose or was led to pursue the responsible driver or a direct action against his or her insurer or a claim against the insurers local claims representative, the measure would be that applicable in the state of the accident. If, on the other hand, the insurer did not respond appropriately or failed to appoint a claims representative, the victim could pursue the local compensation fund for whatever measure of compensation might be provided in this context by the local legislator or law but would have (under article 6(1) of the Fourth Directive) to revert to looking to the insurer or its claims representative if even then one of these belatedly produced a reasoned reply. If, however, no insurer or vehicle could be identified, then the victim could without more recover whatever might be the measure of compensation provided in this context by his or her local legislator or law. In the case of a claim against the driver responsible or his or her insurer or the guarantee fund of the state of the accident, such compensation would normally be measured in and under the law of the state of the accident. Under the predecessor international Green Card scheme, article 3(4), described in para 5 above, it was expressly provided that Green Card bureaux would handle claims in conformity with the legal provisions applicable in the country of accident relating to both liability and compensation. This is a provision which continued in force under article 3(a) of the Convention complmentaire entre Bureaux nationaux dated 12 December 1973, made pursuant to article 1(4) of the Second Directive. Under the First Directive, each national insurers bureau was also to guarantee the settlement, in accordance with the provisions of its own national law on compulsory insurance, of claims in respect of accidents occurring in its territory caused by [foreign based] vehicles (article 2(2)). Under the Second Directive, article 1(4), each member state was to establish a guarantee fund to provide compensation in cases of unidentified or uninsured vehicles, applying its own laws to the payment of such compensation, without prejudice to any other practice more favourable to the victim. Counsel were agreed that this provision was solely directed to accidents in the territory of the member state in question, as it certainly must be in relation to unidentified vehicles. In essence, it was formalising and generalising at a Community (now Union) level the requirement for a local guarantee fund which up to that point only existed under the international Green Card scheme and the agreement between Community insurers bureaux contemplated by article 2(2) of the First Directive. On this basis, the reference to applying the laws of the member state to the payment of compensation is further confirmation of an intention that that the law of the state of the accident should govern liability and the measure of compensation. Next, as recorded in para 14 above, clauses 7.2 and 8.2 of the Agreement between Compensation Bodies and Guarantee Funds expressly provided that the compensation body established to give effect to those articles was to apply, in evaluating liability and assessing compensation, the law of the country in which the accident occurred, and, further, indicated that the final paying guarantee fund might refuse reimbursement to the extent that the compensation body had not observed the rules of applicable law. Gilbart J referred to this Agreement as a private agreement that cannot be used to interpret the Directives or the Regulations, and Mr Beard pointed out that it post dated the Fourth Directive. This is in my opinion to under value the role of the Agreement and to view matters over technically. Clauses 7.2 and 8.2 of the Agreement introduced in relation to compensation bodies provisions paralleling those applicable under the predecessor Green Card and motor insurance bureaux schemes. The making and approval by the European Commission of the Agreement containing such clauses were pre conditions to the coming into force of articles 6 and 7 of the Fourth Directive. They can and in my opinion should be seen as part of a consistent scheme, to be viewed and construed as a whole. A further indication of the way in which the scheme was intended to operate is provided by clause 7.3 of the agreement. According to clause 7.3: The Guarantee Fund of the member state in which the accident took place, even though it is not responsible for the reimbursement described in Section III below, shall provide, upon request, to the Compensation Body to which a claim for compensation has been made, all necessary advice assistance and information in particular on the content of the applicable law and all documents it has available relating to the accident which this body wishes to obtain. Section III deals with reimbursement procedures, from the Guarantee Fund either of the member state in which the accident took place or of the member state in which the road traffic vehicle which caused the accident is normally based. The rationale behind clause 7.3 is clearly that the Guarantee Fund of the member state of the accident will be able to provide the necessary information about the applicable law of that state to enable the Compensation Body in the victims state to be able to settle the victims claim in accordance with that law. It would not be consistent with the scheme of the precursor Green Card System or with the scheme of the series of European Directives and associated agreements from 1972 onwards, for the compensation body established and acting under article 6 or 7 of the Fourth Directive to provide compensation other than in accordance with the law of the state of the accident. Further confirmation of this intention is present in the express provisions of articles 6 and 7. First, the provision in article 7 for compensation to be provided in accordance with the provisions of the Second Directive requiring each member state to ensure compulsory insurance in minimum amounts and to set up or authorise a guarantee fund to cover property damage or personal injuries caused by unidentified or uninsured vehicles is a yet further pointer towards the intended link between the compensation available in the state of the accident and that available from the victims local compensation body. Second, the provisions of article 6 and 7 regarding reimbursement are significant. Under article 6(2) what is clearly envisaged is that the compensation body in the state of the victims residence should be able to recover from the compensation body in the state of the insurer the whole sum that the former compensation body has paid out to the victim. The latter compensation body is then subrogated to the victims rights against the responsible driver or his insurer in so far as the compensation body in the member state of residence of the injured party has provided compensation. But, on the analysis accepted by the Court of Appeal in Jacobs and supported on this appeal by Mr Beard, there is no necessary correlation between the amounts paid out by the compensation body of the state of the victims residence and that recoverable from the compensation body of the state of the insurer or that to which that latter compensation body is subrogated. Clauses 7.2 and 8.2 of the Agreement between Compensation Bodies and Guarantee Funds would bar the compensation body which paid the victim from recovering more from the compensation body of the state of the insurer than was payable in respect of the claim under the law of the state of the accident. As to subrogation, even if that bar could be overcome, it is impossible to be subrogated to a victims claim unless and except to the extent that the victim could him or herself pursue such a claim. A similar point applies under article 7. On its face, it envisages that the compensation body meeting the victims claim will be able to recover from the guarantee fund of either the state where the vehicle was normally based or, in case of an unidentified (or a third country) vehicle, the state in which the accident took place. But the Court of Appeals analysis in Jacobs would leave the compensation body without reimbursement to the extent that it had under (eg) English law to pay compensation on a basis more favourable than would be recovered under the law of the state of the accident. Conversely, as Mr Beard accepted, to the extent that English law was in some respect less favourable than the law of the state of the accident, the victim would suffer a shortfall in recovery. Mr Beard suggested that the victims remedy then would be to make a further top up claim direct against the guarantee fund established under article 1(4) of the Second Directive (now article 10(1) of the Sixth Directive) in the state where the vehicle was normally based in the case of an uninsured vehicle or the state of the accident in the case of an unidentified vehicle. But the need to avoid having to pursue proceedings in either of those states is the reason for articles 6 and 7. I conclude, in these circumstances, that the scheme of the Directives is clear, and that they do not leave it to individual member states to provide for compensation in accordance with any law that such states may choose. On the contrary, they proceed on the basis that a victims entitlement to compensation will be measured on a consistent basis, by reference to the law of the state of the accident, whichever of the routes to recovery provided by the Directives he or she invokes. In consequence, it also makes no difference to the measure of liability of the body or person ultimately responsible, which route is chosen. Since the position as a matter of European Union law is in all these respects clear, there is no need to contemplate a reference to the Court of Justice. The next question is whether the 2003 Regulations give effect to this scheme, or have to be read as mandating a different approach, even if it is one which is potentially inconsistent with the Directives. The Court of Appeal in Jacobs started with regulation 12(4)(b), before moving to regulation 13(2)(b) and finding some incidental merit in a conclusion that it provided a measure of compensation likely to be broadly the same as that recoverable under regulation 12. The wording of regulations 12(4)(b) and 13(2)(b) is however notably different, and even the Court of Appeal does not appear to have regarded the two as having, necessarily, the same effect. I prefer to start with regulation 13(2)(b) which is the one directly in issue on this appeal. As I have already indicated (para 21 above), the Court of Appeal in Jacobs was in my opinion correct in its identification of the basic reasoning behind the expression in regulation 13(2)(b) as if it were the body authorised under paragraph 4 of that article and the accident had occurred in Great Britain. Where it went wrong, in my opinion, was in concluding (paras 22 23 above) that this did not exhaust the rationale of that expression. Regulation 13(2)(b) can and should in my opinion be read as having a purely mechanical or functional operation. Once it is concluded that the scheme of the Directives is to provide a consistent measure of compensation, whatever the route to recovery taken by the victim, there is certainly no need to regard regulation 13(2)(b) as having any further purpose or effect. The Court of Appeal in Jacobs was right to conclude that regulation 13(2)(b) carried with it the implicit proviso that the injured party must be able to show that the driver is liable to him (para 32: see para 20 above). But it was wrong to draw on the old common law distinction recognised (not uncontroversially) in Harding v Wealands and now removed from our law by Rome II (see eg Cox v Ergo Versicherung AG [2014] UKSC 22; [2014] AC 1379) between liability and heads of damage on the one hand and measure of compensation on the other; and it was wrong to find this distinction reflected in regulation 13(2)(b). Regulation 12(4)(b) is more specific and less easy to fit within the scheme of the Directives which I have identified. The loss and damage recoverable from the UK MIB in its role as compensation body is said to be that properly recoverable in consequence of that accident by the injured party from [the insured] person under the laws applying in that part of the United Kingdom in which the injured party resided at the date of the accident. The most obvious purpose of this is to determine which of the United Kingdoms three legal systems should apply in proceedings which might, conceivably (subject to considerations of forum conveniens), be brought in any one of them. On this basis, the provision may well not have been aimed at prescribing the measure of recovery in such proceedings. This would and could then be left to and derived from the scheme of the Directives, as it is to be under regulation 13(2)(b). Again, I doubt whether the legislator, when drafting regulation 12(4)(b), was intending to draw a distinction between liability and heads of recovery (subject implicitly to the law of the state of the accident) and the measure of compensation. Even if the legislator had been, the distinction has with Rome II now been abolished. If regulation 12(4)(b) is dealing with the governing law at all, which I doubt, it could in my view also be read as embracing the conflicts of laws applying in that part of the United Kingdom in which the victim resided at the date of the accident, which would, at least normally, yield a result consistent with the scheme of the Directives, by identifying the law of the State of the accident: see Rome II, article 4(1). It follows from the above that it is unnecessary to address further submissions that were, briefly, addressed to the Supreme Court on the Rome II Regulation. The decisions in Jacobs v Motor Insurers Bureau [2010] EWCA Civ 1208; [2011] 1 WLR 2609 and Bloy v Motor Insurers Bureau [2013] EWCA Civ 1543; [2014] 1 Lloyds Rep IR 75 should be overruled in relation to the meaning of regulation 13(2)(b). The UK MIBs present appeal should be allowed and the answer to the preliminary issue declared to be that the scope of the UK MIBs liability to Ms Moreno is to be determined in accordance with the law of Greece.

UK-Abs

Ms Moreno is a UK resident. In May 2011, whilst on holiday in Greece, she was hit by a car. The car was registered in Greece and driven by an uninsured driver. It is not disputed that the driver was responsible for the accident. Ms Moreno suffered very serious injuries. Ms Moreno has claimed damages from the UK Motor Insurers Bureau (UKMIB), pursuant to a series of Council Directives (collectively, the Directives), culminating in a Sixth Directive 2009/103/EC (the Sixth Directive). The Directives are transposed into English law by The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 (SI 2003 No 37) (the 2003 Regulations). The purpose of the arrangements introduced by the Directives and the 2003 Regulations is to ensure that compensation is available for victims of motor accidents occurring anywhere in the European Union and to facilitate their recovery of such compensation. They establish a scheme whereby, amongst other things, victims of a motor accident which occurs in one member state can in certain circumstances claim compensation directly from a body in their own member state of residence. The UKMIB is the designated body in the United Kingdom against which such claims can be made. The operation of the relevant part of the Directives was conditional on the conclusion of a subsequent agreement between compensation bodies and guarantee funds (the Agreement), which was reached in April 2002. The preliminary issue the subject of this appeal is whether the scope of Ms Morenos claim to damages is to be determined in accordance with English or Greek law. Her concern is that Greek law would yield a lesser measure of compensation than English law. At first instance, Gilbart J considered that he was bound by previous Court of Appeal authority (Jacobs v Motor Insurers Bureau [2010] EWCA Civ 1208) to hold that the damages are to be determined by English law. Gilbart J granted a leapfrog certificate under section 12 of the Administration of Justice Act 1969, which allows for cases to move directly from the High Court to the Supreme Court with its permission, which was granted in July 2015. The Supreme Court unanimously allows the appeal by the Motor Insurers Bureau. Lord Mance gives the lead judgment with which the other Justices agree. The 2003 Regulations should, so far as possible, be interpreted in a sense which is not in any way inconsistent with the Directives: Marleasing v La Comercial Internacional de Alimentacin (Case C 106/89) [26]. There is no suggestion in the 2003 Regulations or elsewhere, that the domestic legislator intended to do anything other than faithfully implement and give effect to the Directives [28]. Two questions are central to this appeal. The first is whether the Directives prescribe any particular approach to the scope or measure of recovery applicable in a claim against a compensation body under article 7 of the Fourth Directive (article 25(1) of the Sixth Directive). The second is if they do, whether the language of Regulation 13(2)(b) of the 2003 Regulations reflects this approach, or mandates some different approach, whatever the Directives may have required [29]. As to the first question, viewed as a whole, the Directives were and are a scheme of which the constant aim has been to improve the prospects and ease with which injured parties can recover the compensation to which they are entitled in respect of any loss or damage caused by vehicles [6 30]. The inference is that the victim of a motor accident is entitled to the same compensation, whether against the driver responsible, his or her insurer, or, that failing, against the motor insurance bureau of the State of the accident or indeed the compensation body established in the victims state of residence [31]. Clauses 7.2 and 8.2 of the Agreement provided that the compensation body in the victims country of residence was to apply, in evaluating liability and assessing compensation, the law of the country in which the accident occurred. The Agreement needs to be viewed as part of the wider scheme, which in turn needs to be construed as a consistent whole [33]. The Directives do not leave it to individual member states to provide for compensation in accordance with any law that such states may choose. On the contrary, they proceed on the basis that a victims entitlement to compensation will be measured on a consistent basis, by reference to the law of the state of the accident, whichever of the routes to recovery provided by the Directives he or she invokes. In consequence, it also makes no difference which route is chosen to the measure of liability of the body or person ultimately responsible. Since the position as a matter of European Union law is clear, there is no need for a reference to the Court of Justice [35 39]. As to the second question, the 2003 Regulations were consistent with the scheme of the Directives [40 41]. The loss and damage recoverable from the UKMIB is said in Regulation 12(4)(b) to be that properly recoverable in consequence of that accident by the injured party from [the insured] person under the laws applying in that part of the United Kingdom in which the injured party resided at the date of the accident. The most obvious purpose of this is to determine which of the United Kingdoms three legal systems should apply, rather than prescribing the measure of recovery in such proceedings [42]. The decisions in Jacobs v Motor Insurers Bureau [2010] EWCA Civ 1208; [2011] 1 WLR 2609 and Bloy v Motor Insurers Bureau [2013] EWCA Civ 1543, [2014] 1 Lloyds Rep IR 75 should be over ruled in relation to the meaning of regulation 13(2)(b) [43].

These proceedings arise from the fact that the foundation structures of two offshore wind farms at Robin Rigg in the Solway Firth, which were designed and installed by MT Hjgaard A/S (MTH), failed shortly after completion of the project. The specific issue to be determined is whether MTH are liable for this failure. As Jackson LJ said in the Court of Appeal, the resolution of that issue turns on how the court should construe the somewhat diffuse documents which constituted, or were incorporated into, the design and build contract in this case. Accordingly, I turn first to consider the relevant provisions of the contractual documentation. The relevant provisions of the Technical Requirements and J101 In May 2006, the appellants, two companies in the E.ON group (E.ON), sent tender documents to various parties including MTH, who in due course became the successful bidders. The tender documents included Employers Requirements, Part I of which included the Technical Requirements (the TR). Section 1 of the TR set out the General Description of Works and Scope of Supply. Part 1.6 set out the so-called Key Functional Requirements, which included this: The Works, together with the interfaces detailed in Section 8, shall be designed to withstand the full range of operational and environmental conditions with minimal maintenance. The Works elements shall be designed for a minimum site specific design life of twenty (20) years without major retrofits or refurbishments; all elements shall be designed to operate safely and reliably in the environmental conditions that exist on the site for at least this lifetime. Section 3 of the TR was concerned with the Design Basis (Wind Turbine Foundations). Part 3.1 was entitled Introduction, and it included the following (divided into sub-paragraphs for convenience): (i) It is stressed that the requirements contained in this section and the environmental conditions given are the MINIMUM requirements of [E.ON] to be taken into account in the design. (ii) It shall be the responsibility of [MTH] to identify any areas where the works need to be designed to any additional or more rigorous requirements or parameters. There were other references elsewhere to the stated requirement being a minimum. Para 3.1.2 of the TR required MTH to submit a detailed Foundation Design Basis document, which was required to contain, among other things, a statement as to the Contractors design choices, including, but not limited to, departures from, or aspects not covered by, standards, if any. Part 3.2 of the TR was headed Design Principles, and para 3.2.2 was concerned with General Design Conditions, para 3.2.2.1 being directed to the Tender Stage Design, and para 3.2.2.2 to the Detailed Design Stage. Para 3.2.2.2 is of central importance for present purposes, and, for convenience, I shall treat it as divided into numbered sub-paragraphs. Para 3.2.2.2(i) required MTH to prepare the detailed design of the foundations in accordance with a document known as J101, using the integrated analysis method (which was one of the four methods addressed in J101). Para 3.2.2.2(ii) went on to state that: The design of the foundations shall ensure a lifetime of 20 years in every aspect without planned replacement. The choice of structure, materials, corrosion protection system operation and inspection programme shall be made accordingly. J101 was a reference to an international standard for the design of offshore wind turbines published by Det Norske Veritas (DNV), an independent classification and certification agency based in Norway. J101 included a statement that its objectives included the provision of an internationally acceptable level of safety by defining minimum requirements for structures and structural components, as well as being a contractual reference document, and a guideline. Section 2 of J101 contained design principles which were, among other things, aimed at limiting the annual probability of failure to be in the range of one in 10,000 to one in 100,000 - para C201. Section 7 of J101 dealt with the design of steel structures, and para K104 provided: The design fatigue life for structural components should be based on the specified service life of the structure. If a service life is not specified, 20 years should be used. Section 9 of J101 dealt with the design and construction of grouted connections. Part A included reference to shear keys, which, it was explained, can reduce the fatigue strength of the tubular members and of the grout. Part B of section 9 set out a number of equations applicable to such a design, including one (the Equation) which showed how the interface shear strength due to friction is to be calculated, namely: Precisely what the Equation actually means need not be spelled out. What is important for present purposes is that it was stated beneath the Equation that should be taken as 0.00037 Rp for rolled steel surfaces (Rp being the outer radius of the pile, and being the height of surface irregularities). Para 3.2.3.2 of the TR required MTHs design to accord with international and national rules, circulars, EU directives executive orders and standards applying to the Site and it went on to state that a defined hierarchy of standards shall apply, as listed. Ignoring those standards which were irrelevant or not in force, the first in the list was J101. Para 3.2.5 required the contractor to design and construct grouted connections in accordance with J101. Para 3.2.6 stated that [a]ll parts of the Works, except wear parts and consumables, shall be designed for a minimum service life 20 years (sic). Meteorological Mast. Para 3b.5.1 stated: Section 3b of the TR was headed Design Basis for Offshore Substations and The design of the structures addressed by this Design Basis shall ensure a lifetime of 20 years in every aspect without planned replacement. The choice of structure, materials, corrosion protection system operation and inspection programme shall be made accordingly. Para 3b.5.6 provided that [a]ll parts of the Works, except wear parts and consumables shall be designed for a minimum service life 20 years. Section 4 of the TR dealt with Approvals and Certification. Para 4.4.3 provided that MTH should obtain a Foundation Design Evaluation Conformity Statement from the Certifying Authority within six months of the commencement date. Section 10 of the TR covered Structural Design and Fabrication (Wind Turbine Foundations), and para 10.1.1 required MTH to appoint an accredited Certifying Authority to independently evaluate the adequacy of his foundation design. Para 10.5.1 was in these terms: The Contractor shall determine whether to employ shear keys within the grouted connection. If shear keys are used, the design and detailing shall take due account of their presence for both strength and fatigue design to the satisfaction of the Certifying Authority and the Engineer. If shear keys are to be omitted then the Contractor shall demonstrate with test data that the grouted connection is capable of transmitting axial loads at the grout/steel interface without dependence upon flexural (normal) contact pressures, which may not always be present, to the satisfaction of the Certifying Authority and the Engineer. Such demonstration shall also account for joint performance under different temperature conditions. Para 10.24.9 of the TR stated that the recorded potential difference exceedance was not so great as to cause accelerated anode depletion to such extent that the anode material provided is fully utilised before the end of the structure operational 20 year life. Having been selected as the contractor for the works, MTH duly set about preparing its tender in accordance with Employers Requirements and J101. MTHs design provided for (i) monopiles with a diameter of just over four metres, (ii) transition pieces about eight metres long, weighing approximately 120 tonnes, and (iii) grouted connections without shear keys. MTH explained at the time that no shear keys were specified because, taking as 0.00037 Rp, application of the Equation indicated that the grouted connections, as designed, had more than sufficient axial capacity to take the axial load. After E.ON had accepted MTHs tender, MTH duly commenced design work, and in November 2006 it submitted a detailed Foundation Design Basis document, as required by para 3.1.2 of the TR. The relevant provisions of the contract On 20 December 2006 E.ON and MTH entered into a written contract (the Contract) under which MTH agreed to design, fabricate and install the foundations for the proposed turbines. Part C of the Contract contained a List of Definitions. Fit for Purpose was defined as fitness for purpose in accordance with, and as can properly be inferred from, the Employers Requirements. Employers Requirements was stated to include the TR, which were themselves attached as Part I of the Contract. And Good Industry Practice meant those standards, practices, methods and procedures conforming to all Legal Requirements to be performed with the exercise of skill, diligence, prudence and foresight that can ordinarily and reasonably be expected from a fully skilled contractor who is engaged in a similar type of undertaking or task in similar circumstances in a manner consistent with recognised international standards. Clause 2.1 of Part D of the Contract provided that any failure by the Engineer or his Representative to spot defects or mistakes by the contractor would not exempt the contractor from liability. Clause 5.3 of Part D stated that in the event of inconsistencies, the order of precedence of the contractual documents should be as follows: (a) (b) (c) and draft programme; (d) (e) (f) volumes 2A, 2B and 3 of the contractors tender return. the form of agreement; the conditions of contact and the List of Definitions; the commercial schedules and the schedule of prices, payment profile the Employers Requirements; the annexes to the Employers Requirements; Clause 8.1 of Part D required MTH in accordance with this Agreement, [to] design, manufacture, test, deliver and install and complete the Works in accordance with a number of requirements, including (iv) in a professional manner in accordance with modern commercial and engineering, design, project management and supervisory principles and practices and in accordance with internationally recognised standards and Good Industry Practice; (viii) so that the Works, when completed, comply with the requirements of this Agreement ; (ix) so that [MTH] shall comply at all times with all Legal Requirements and the standards of Good Industry Practice; (x) so that each item of Plant and the Works as a whole shall be free from defective workmanship and materials and fit for its purpose as determined in accordance with the Specification using Good Industry Practice; (xv) so that the design of the Works and the Works when Completed by [MTH] shall be wholly in accordance with this Agreement and shall satisfy any performance specifications or requirements of the Employer as set out in this Agreement. Clause 30 of Part D of the Contract was headed Defects after taking over. Clause 30.2 provided that MTH shall be responsible for making good any defect or damage arising from defective materials, workmanship or design, any breach by [MTH] of his obligations under this Agreement or Works not being Fit for Purpose, which may appear or occur before or during the Defects Liability Period. That period was defined in clause 30.1 as being a period of 24 months from the date E.ON takes over the Works from MTH. Clause 30.3 required E.ON to give notice forthwith of any such defects to MTH. Clause 30.4 extended that Period in certain limited circumstances. Clause 30.10 required E.ON to produce a Defects Liability Certificate once the Defects Liability Period has expired and MTH has satisfied all its obligations under clause 30. Clause 33.9 of Part D of the Contract entitled MTH to apply, within 28 days of the issue of a Defects Liability Certificate, for a Final Certificate of Payment, and to accompany the application with a final account; clause 33.10 provided for the consequential issue of a Final Certificate of Payment; and clause 33.11 provided the Final Certificate of Payment is conclusive. Clause 42.3 of Part D of the Contract stated that: [E.ON] and [MTH] intend that their respective rights, obligations and liabilities as provided for in this Agreement shall alone govern their rights under this Agreement. Accordingly, the remedies provided under this Agreement in respect of or in consequence of: any breach of contract; or (a) any negligent act or omission; or (b) (c) death or personal injury; or (d) loss or damage to any property, are, save in the case of Misconduct, to be to the exclusion of any other remedy that either may have against the other under the law governing this Agreement or otherwise. Subsequent events MTH duly proceeded with the design and construction of the two wind farms (the Works), and, on its instructions, Rambll Danmark A/S supplied in June 2007 a detailed design for the grouted connections, which did not include shear keys. Pursuant to para 10.1.1 of the TR, MTH appointed DNV as the Certifying Authority, and DNV evaluated and approved MTHs foundation designs. Pursuant to para 4.4.3 of the TR, DNV issued Foundation Design Evaluation Conformity Statements for the various phases of the works. MTH began the installation of foundations in the Solway Firth in December 2007, and completed the Works in February 2009. During 2009 a serious problem came to light at Egmond aan Zee wind farm, where the grouted connections did not have shear keys. Those connections started to fail, and the transition pieces started to slip down the monopiles. DNV carried out an internal review during late summer 2009, and discovered that there was an error in the value given for in the note to the Equation mentioned in para 7 above. It was wrong by a factor of about ten. This meant that the axial capacity of the grouted connections in wind farm foundations at various locations including Egmond aan Zee and Robin Rigg had been substantially over-estimated. On 28 September 2009, DNV sent a letter to MTH and others in the industry, alerting them to the situation (and DNV subsequently revised J101 to correct the error). In April 2010 the grouted connections at Robin Rigg started to fail, as they had done a year earlier at Egmond aan Zee, and the transition pieces began to slip down the monopiles. Very sensibly E.ON and MTH deferred any legal dispute and set about finding a practical solution to the problem. It was agreed between the parties that E.ON would develop a scheme of remedial works. Those remedial works were commenced in 2014. In order to ascertain who should bear the cost of the remedial works, the parties embarked upon the present proceedings. In very summary terms, the parties respective positions were as follows. MTH contended that it had exercised reasonable skill and care, and had complied with all its contractual obligations, and so should have no liability for the cost of the remedial works. By contrast E.ON contended that MTH had been negligent and also had been responsible for numerous breaches of contract, and they claimed declarations to the effect that MTH was liable for the defective grouted connections. The parties in due course agreed the cost of the remedial works in the sum of 26.25m, leaving the court to decide which of them should bear that cost. The case came before Edwards-Stuart J, and after an eight-day hearing in November 2013, he gave judgment in April 2014 - [2014] EWHC 1088 (TCC). He rejected the suggestion that MTH had been negligent, and he also rejected a number of allegations of breach of contract made by E.ON. However, he found for E.ON primarily on the ground that (i) clause 8.1(x) of the contract required the foundations to be fit for purpose, (ii) fitness for purpose was to be determined by reference to the TR, and (iii) para 3.2.2.2(ii) (and also para 3b.5.1) of the TR required the foundations to be designed so that they would have a lifetime of 20 years. He also held that this conclusion was also supported by clauses 8.1(viii) and (xv). MTH appealed to the Court of Appeal, and after a two-day hearing in February 2015, they handed down their decision two months later, allowing the appeal for reasons given by Jackson LJ, with whom Patten and Underhill LJJ agreed - [2015] EWCA Civ 407. Jackson LJ accepted that, if one was confined to the TR, para 3.2.2.2(ii) appeared to be a warranty [on the part of MTH] that the foundations will function for 20 years. However, in the light of the provisions of the Contract, he said that there was an inconsistency between [paras 3.2.2.2(ii) and 3b.5.1 of the TR] on the one hand and all the other contractual provisions on the other hand, and that the other contractual provisions should prevail. He went on to describe paras 3.2.2.2(ii) and 3b.5.1 of the TR as too slender a thread upon which to hang a finding that MTH gave a warranty of 20 years life for the foundations. The meaning of para 3.2.2.2(ii) of the TR The central question on this appeal is whether, in the light of para 3.2.2.2(ii) (and para 3b.5.1) of the TR, which refer to ensuring a life for the foundations (and the Works) of 20 years, MTH was in breach of contract, despite the fact that it used due care and professional skill, adhered to good industry practice, and complied with J101. Before turning to that issue, however, it is appropriate to deal with an argument raised by Mr Streatfeild-James QC in the course of his excellent submissions on behalf of MTH. He suggested that it was unlikely that the parties could have intended that there should be what Jackson LJ characterised as a warranty that the foundations will function for 20 years, in the light of those parts of clauses 30, 33 and 42 of the Contract set out in paras 18 to 20 above. In summary, he argued that (i) the effect of clause 30 was that, subject to some relatively limited exceptions in clause 30.4, MTH was obliged to rectify any defect in the Works which occurred within 24 months of the Works being handed over, (ii) the effect of clause 42.3 was that any claim by E.ON in respect of a defect appearing thereafter was barred, and (iii) the notion that there was no room for claims outside the 24-month period was reinforced by clauses 33.9 and 33.10. In my opinion, there is no answer to that analysis so far as it is directed to the effect of clauses 30, 33 and 42 of the Contract. Clause 42.3 makes it clear that the provisions of clause 30 (and any other contractual term which provides for remedies after the Works have been handed over to E.ON) are intended to operate as an exclusive regime. And that conclusion appears to me to be supported by the terms of clause 33.9 and 33.10, because they tie in very well with the notion that there should be no claims after the Final Certificate, which is to be issued very shortly after the 24-month period. Accordingly, if, as E.ON argue, para 3.2.2.2(ii) of the TR amounts to a warranty that the foundations will last for 20 years, there would be a tension between that provision and clauses 30, 33 and 42 of the Contract. However, I do not consider that the tension would be so problematic as to undermine the conclusion that para 3.2.2.2(ii) amounted to warranties as described by Jackson LJ. In the light of the normal give and take of negotiations, and the complex, diffuse and multi-authored nature of this contract, it is by no means improbable that MTH could have agreed to a 20-year warranty provided that it could have the benefit of a two-year limitation period, save where misconduct was involved. It would simply mean that the rights given to E.ON by paras 3.2.2.2(ii) were significantly less valuable than at first sight they may appear, because any claim based on an alleged failure in the foundations which only became apparent more than two years after the handover of the Works would normally be barred by clause 42.3. In this case, of course, there is no problem, because the foundations failed well within the 24-month period. However, in my view, although it would therefore be possible to give effect to para 3.2.2.2(ii) of the TR as a 20-year warranty as described by Jackson LJ, the points canvassed in paras 27 to 29 above justify reconsidering the effect of para 3.2.2.2(ii). It appears to me that there is a powerful case for saying that, rather than warranting that the foundations would have a lifetime of 20 years, para 3.2.2.2(ii) amounted to an agreement that the design of the foundations was such that they would have a lifetime of 20 years. In other words, read together with clauses 30 and 42.3 of the Contract, para 3.2.2.2(ii) did not guarantee that the foundations would last 20 years without replacement, but that they had been designed to last for 20 years without replacement. That interpretation explains the reference in para 3.2.2.2(ii) to design, and it obviates any tension between the terms of para 3.2.2.2(ii) and the terms of clauses 30 and 42.3. Rather than the 20-year warranty being cut off after 24 months, E.ON had 24 months to discover that the foundations were not, in fact, designed to last for 20 years. On the basis of that interpretation, E.ONs ability to invoke its rights under para 3.2.2.2(ii) would not depend on E.ON appreciating that the foundations were failing (within 24 months of handover), but on E.ON appreciating (within 24 months of handover) that the design of the foundations was such that they will not last for 20 years. That, of course, raises the question as to what, on that reading, was precisely meant by ensur[ing] a lifetime of 20 years, given that the forces of nature, especially at sea, are such that a lifetime of 20 years, or any other period, could never in practice be guaranteed. The answer is to be found in J101. As explained in para 7 above, J101 requires the annual probability of failure to be in the range of one in 10,000 to one in 100,000, and specifically provides that, if a service life is not specified in a contract 20 years should be used, which ties in with the proposition, agreed between the parties, that an offshore wind farm is typically designed for a 20-year lifetime. This aspect could be expanded on substantially by reference to the detailed terms, requirements and recommendations of J101. In particular, one of the two so-called Limit States in terms of loadbearing requirements, FLS, is calculated by reference to the design life of the structure in question: hence para C201 of section 2 and para K104 of section 7 referred to in para 7 above. However, the simple point is that J101, while concerned with making recommendations and requirements linked to the intended life of a structure to which it applies, makes it clear that there is a risk, which it quantifies, of that life being shortened. That risk is, in my view, the risk which should be treated as incorporated in para 3.2.2.2(ii) - if it is indeed concerned with the designed life of the Works. I turn then to the central issue on this appeal. It is unnecessary to decide whether para 3.2.2.2(ii) is a warranty that the foundations will have a lifetime of 20 years or a contractual term that the foundations will be designed to have such a lifetime. The former meaning has been taken as correct by the parties and by the courts below, but, for the reasons given in paras 28 to 31 above, I am currently inclined to favour the latter meaning. On the other hand, as the TR were produced and, to an extent, acted on before the Contract was agreed, it may be questionable whether it would be right to interpret the TR by reference to clauses of the Contract. However, it is clear that, if para 3.2.2.2(ii) is an effective term of the Contract, it was breached by MTH whichever meaning it has, and therefore the issue need not be resolved. The enforceability of para 3.2.2.2(ii) according to its terms: introductory E.ONs case is that para 3.2.2.2(ii) of the TR is incorporated into the Contract, because (i) clause 8.1(x) of the Contract required the Works to be fit for purpose, (ii) Part C of the Contract equated fitness for purpose with compliance with the Employers Requirements, (iii) Part C also defined Employers Requirements as including the contents of the TR, and (iv) the TR included para 3.2.2.2(ii), which specifically refers to the foundations having a life of 20 years. On that basis, E.ON argues that para 3.2.2.2(ii) was clearly infringed, and, as it was a term of the Contract, it must follow that MTH is, as Edwards-Stuart J held, liable for breach of contract. By contrast, MTH supports the reasoning of Jackson LJ, and contends that it is clear that the Contract stipulated that the Works must be constructed in accordance with the requirements of J101 (and with appropriate care), and it is unconvincing to suggest that a provision such as para 3.2.2.2(ii) of the TR renders MTH liable for faulty construction, given that the Works were constructed fully in accordance with J101 (and with appropriate care). MTH contends that the references to a 20-year life in various provisions of the TR, including para 3.2.2.2(ii), ultimately do no more than reflect the fact that, as envisaged by J101, Part 1.6 of the TR specifies a design life for the Works. MTH also adopts Jackson LJs description of the contractual documentation as being of multiple authorship [and] contain[ing] much loose wording, and that it includes many ambiguities, infelicities and inconsistencies (quoting Lord Collins in In re Sigma Finance Corp (in administrative receivership) [2010] 1 All ER 571, para 35). More specifically, MTH makes the points that the TR are in their nature technical rather than legal, and that if the parties had intended MTH to warrant that the foundations would have a 20-year lifetime, or that they would be designed to have a 20-year life, a term to that effect would have been included in plain terms, probably as a Key Functional Requirement in para 1.6 of the TR. As already explained, it appears to me that, if one considers the natural meaning of para 3.2.2.2(ii) of the TR, it involved MTH warranting either that the foundations would have a lifetime of 20 years (as Jackson LJ accepted) or agreeing that the design of the foundations would be such as to give them a lifetime of 20 years. As Mr Streatfeild-James realistically accepted, the combination of the terms of clause 8.1(x) of the Contract and the definitions of Employers Requirements and Fit for Purpose result in the provisions of the TR being effectively incorporated into the Contract - unsurprisingly as they are included in the contractual documentation as Part I. In those circumstances, I consider that there are only two arguments open to MTH as to why the paragraph should not be given its natural effect (and while they are separate arguments, they can fairly be said to be mutually reinforcing). The first argument is that such an interpretation results in an obligation which is inconsistent with MTHs obligation to construct the Works in accordance with J101. The second argument is that para 3.2.2.2(ii) is simply too slender a thread on which to hang such an important and potentially onerous obligation. The enforceability of para 3.2.2.2(ii) according to its terms: inconsistency with J101 There have been a number of cases where courts have been called on to consider a contract which includes two terms, one requiring the contractor to provide an article which is produced in accordance with a specified design, the other requiring the article to satisfy specified performance criteria; and where those criteria cannot be achieved by complying with the design. The reconciliation of the terms, and the determination of their combined effect must, of course, be decided by reference to ordinary principles of contractual interpretation (as recently discussed in Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095, paras 8 to 15 and the cases cited there), and therefore by reference to the provisions of the particular contract and its commercial context. However, it is worth considering some of the cases where such an issue has been discussed. Thorn v The Mayor and Commonalty of London (1876) 1 App Cas 120 has been treated as the first decision on this point (including in the judgments discussed in paras 39 to 43 below), although it seems to me to be only of indirect relevance. The contractor successfully tendered for work involving the replacement of the existing Blackfriars Bridge pursuant to an employers invitation, which stated that the work was to be carried out pursuant to a specification. The specification included wrought iron caissons which were to form the foundations of the piers as shewn on [certain] drawings (p 121). It subsequently turned out that the caissons as designed would not answer to their purpose, and the plan of the work was altered, causing consequential expense and delay to the contractor (p 122). The contractors claim was based on the contention that the employer had impliedly warranted that the bridge could be built according to the specification. The unanimous rejection of the existence of such a warranty by the House of Lords does not directly relate to the issue in this case. However, it is worth noting that, as reconstruction of the bridge had been completed, the employer was not responsible for the contractors losses and expenses flowing from the defective specification (at least on the basis of an implied warranty). Rather more to the point, the speeches of Lord Chelmsford (at pp 132 to 133) and Lord OHagan (at p 138) strongly indicate that a contractor who bids on the basis of a defective specification provided by the employer only has himself to blame if he does not check their practicality and they turn out to be defective. The Hydraulic Engineering Co Ltd v Spencer and Sons (1886) 2 TLR 554 appears to me to be more directly in point. In that case, the defendants contracted to make and deliver to the plaintiffs 15 cast iron cylinders. The contract provided that the cylinders would be cast according to specifications and plans provided by the plaintiffs, and also that the cylinders would be able to stand a pressure of 25 cwt per square inch. The Court of Appeal, upholding Coleridge CJ, rejected the defendants contention that, because the flaw was the inevitable result of the plan upon which the plaintiffs ordered them to do the work the defendants could not be held liable for a defect caused by that plan (to quote from the report of counsels argument). Lindley LJ said that it was manifest that the defendants thought that they could cast the cylinders on [the] pattern [sent by the plaintiffs] without defects. Although he accepted that the defect was unavoidable, he said that [t]here was no doubt that it was a defect and the [defendants] were therefore liable. Lord Esher MR and Lopes LJ agreed. A similar view was taken in Scotland by the Inner House in A M Gillespie & Co v John Howden & Co (1885) 22 SLR 527, where a customer ordered a ship from shipbuilders pursuant to a contract which required the ship to carry 1,800 tons deadweight, and which also required the ship to be built according to a model approved by the customer. The ship as built was unable to carry 1,800 tons deadweight, and the shipbuilders argued that they should not be liable for damages because it would have been impossible to construct a ship capable of carrying 1,800 tons according to the model approved by the customer. Upholding the Sheriff- Substitute, Lord Rutherfurd-Clark (with whom Lords Craighill and Young agreed) said at p 528 that this [was] no defence, as [t]he fact remains that the [shipbuilders] undertook a contract which they could not fulfil and they are consequently liable in damages for the breach. The issue has also come up in the courts of Canada. In The Steel Company of Canada Ltd v Willand Management Ltd [1966] SCR 746, the respondents were claiming for repair work to three defective roofs on buildings which they had constructed for the appellants. The respondents argued that the defects were not their fault, as they had constructed the buildings under a contract which required them to comply with the requirements of the appellants, and the defects resulted from defects in those requirements. Reversing the Ontario Court of Appeal, the Supreme Court of Canada rejected this argument on the ground that the contract also contained a term that the respondent guaranteed that all work would remain weather tight and that all material and workmanship would be first class and without defect. In the course of giving the judgment of the court, Ritchie J at p 751 rejected the respondents contention, which was supported by a decision of the courts of New York, that they guaranteed only that, as to the work done by it, the roof would be weather-tight in so far as the plans and specifications with which it had to comply would allow, and at pp 753 to 754 approved a statement in the then current (8th) edition of Hudsons Building and Engineering Contracts, p 147, to this effect: generally the express obligation to construct a work capable of carrying out the duty in question overrides the obligation to comply with the plans and specifications, and the contractor will be liable for the failure of the work notwithstanding that it is carried out in accordance with the plans and specification. Nor will he be entitled to extra payment for amending the work so that it will perform the stipulated duty. The reasoning of the Canadian Supreme Court was fairly recently applied by the Court of Appeal for British Columbia in Greater Vancouver Water District v North American Pipe & Steel Ltd 2012 BCCA 337, where a clear and unambiguous provision whereby a supplier warrant[ed] and guarantee[d] that the supplied goods were free from all defects arising from faulty design was held to apply in full, notwithstanding the immediately preceding warranty by the supplier that the goods would conform to all applicable specifications, and that those specifications were unsatisfactory and led to the defect complained of. The law on the topic was well summarised by Lord Wright in Cammell Laird and Co Ltd v The Manganese Bronze and Brass Co Ltd [1934] AC 402, 425, where he said that [i]t has been laid down that where a manufacturer or builder undertakes to produce a finished result according to a design or plan, he may be still bound by his bargain even though he can show an unanticipated difficulty or even impossibility in achieving the result desired with the plans or specification. After referring to Thorn as being [s]uch a case, he mentioned Gillespie v Howden (1885) 12 R 800, where the Court of Session held it was no defence to a shipbuilder who had contracted to build a ship of a certain design and of a certain carrying capacity, that it was impossible with the approved design to achieve the agreed capacity: the shipbuilder had to answer in damages. Lord Wright then went on to explain that [t]hough this is the general principle of law, its application in respect of any particular contract must vary with the terms and circumstances of that contract. Where a contract contains terms which require an item (i) which is to be produced in accordance with a prescribed design, and (ii) which, when provided, will comply with prescribed criteria, and literal conformity with the prescribed design will inevitably result in the product falling short of one or more of the prescribed criteria, it by no means follows that the two terms are mutually inconsistent. That may be the right analysis in some cases (and it appears pretty clear that it was the view of the Inner House in relation to the contract in A M Gillespie). However, in many contracts, the proper analysis may well be that the contractor has to improve on any aspects of the prescribed design which would otherwise lead to the product falling short of the prescribed criteria, and in other contracts, the correct view could be that the requirements of the prescribed criteria only apply to aspects of the design which are not prescribed. While each case must turn on its own facts, the message from decisions and observations of judges in the United Kingdom and Canada is that the courts are generally inclined to give full effect to the requirement that the item as produced complies with the prescribed criteria, on the basis that, even if the customer or employer has specified or approved the design, it is the contractor who can be expected to take the risk if he agreed to work to a design which would render the item incapable of meeting the criteria to which he has agreed. Turning to the centrally relevant contractual provisions in the instant case, it seems to me that MTHs case, namely that the obligation which appears to be imposed by para 3.2.2.2(ii) is inconsistent with the obligation imposed by para 3.2.2.2(i) to comply with J101, faces an insurmountable difficulty. The opening provision of Section 3, para 3.1, (i) stresse[s] that the requirements contained in this section are the MINIMUM requirements of [E.ON] to be taken into account in the design, and (ii) goes on to provide that it is the responsibility of [MTH] to identify any areas where the works need to be designed to any additional or more rigorous requirements or parameters. In those circumstances, in my judgment, where two provisions of Section 3 impose different or inconsistent standards or requirements, rather than concluding that they are inconsistent, the correct analysis by virtue of para 3.1(i) is that the more rigorous or demanding of the two standards or requirements must prevail, as the less rigorous can properly be treated as a minimum requirement. Further, if there is an inconsistency between a design requirement and the required criteria, it appears to me that the effect of para 3.1(ii) would be to make it clear that, although it may have complied with the design requirement, MTH would be liable for the failure to comply with the required criteria, as it was MTHs duty to identify the need to improve on the design accordingly. As to the facts of the present case, para 3.2.2.2(i) could indeed be said to require that (as recorded in the note to the Equation in J101) should be taken as 0.00037 Rp for rolled steel surfaces, and, as explained above, this was a mistake, in that it substantially over-estimated the connection strength. However, given the terms of para 3.1(i), this figure for was a MINIMUM requirement, and, if para 3.2.2.2(ii) was to be complied with, the value of stipulated by J101 had to be decreased (as it happens by a factor of around ten). Furthermore, para 3.1(ii) makes it clear that MTH should have identified that there was a need for a more rigorous requirement than being taken as 0.00037 Rp to ensure that the design was satisfactory, or at least complied with para 3.2.2.2(ii). It is right to add that, even without para 3.1(i) and (ii), I would have reached the same conclusion. Even in the absence of those paragraphs, it cannot have been envisaged that MTH would be in breach of its obligations under para 3.2.2.2(i) if it designed the foundations on the basis of being less than 0.00037 Rp for rolled steel surfaces. Accordingly, at least in relation to the Equation, it represented a minimum standard even in the absence of paras 3.1(i) and (ii), and therefore there would have been no inconsistency between para 3.2.2.2(i) and 3.2.2.2(ii). I also draw assistance in reaching that conclusion from the cases discussed in paras 38 to 43 above. The notion that the Contractor might be expected to depart from the stipulations of J101, where appropriate, is also supported by para 3.1.2 of the TR, which specifically envisages that the Contractors Foundation Design Basis document may include departures from standards, and J101 is expressly treated as a standard in para 3.2.3.2. In addition, given that satisfaction of the Equation is required to justify the absence of shear keys, E.ONs contention is assisted by the terms of para 10.5.1, which starts by stating that MTH shall determine whether to employ shear keys within the grouted connection; had shear keys been provided, the problems which arose would, it appears, have been averted. The enforceability of para 3.2.2.2(ii) according to its terms: too slender a thread MTH relies on a number of factors to support the contention that para 3.2.2.2(ii) of the TR is too weak a basis on which to rest a contention that it had a liability to warrant that the foundations would survive for 20 years or would be designed so as to achieve 20 years of lifetime. First, it is said that the diffuse and unsatisfactorily drafted nature of the contractual arrangements, with their ambiguities and inconsistencies, should be recognised and taken into account. The contractual arrangements are certainly long, diffuse and multi-authored with much in the way of detailed description in the TR, and belt and braces provisions both in the TR and the Contract. However, that does not alter the fact that the court has to do its best to interpret the contractual arrangements by reference to normal principles. As Lord Bridge of Harwich said, giving the judgment of the Privy Council in Mitsui Construction Co Ltd v Attorney General of Hong Kong (1986) 33 BLR 7, 14, inelegant and clumsy drafting of a badly drafted contract is not a reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language that they have used interpreted in the light of the relevant factual situation in which the contract was made, although he added that the poorer the quality of the drafting, the less willing any court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention. In this case, para 3.2.2.2(ii) is clear in its terms in that it appears to impose a duty on MTH which involves the foundations having a lifetime of 20 years (although, as discussed in paras 27 to 32, there is room for argument as to its precise effect). I do not see why that can be said to be an improbable [or] unbusinesslike interpretation, especially as it is the natural meaning of the words used and is unsurprising in the light of the references in the TR to the design life of the Works being 20 years, and the stipulation that the requirements of the TR are minimum. Secondly, MTH argues that it is surprising that such an onerous obligation is found only in a part of a paragraph of the TR, essentially a technical document, rather than spelled out in the Contract. Given that it is clear from the terms of the Contract that the provisions of the TR are intended to be of contractual effect, I am not impressed with that point. Thirdly, MTH suggests that, given the other obligations with regard to design, manufacture, testing, delivery, installation and completion expressly included, or impliedly incorporated, in clause 8.1 of the Contract, it is unlikely that an additional further and onerous obligation was intended to have been included in the TR. The trouble with that argument is that it involves saying that para 3.2.2.2(ii) adds nothing to other provisions of the TR or the contract. I accept that redundancy is not normally a powerful reason for declining to give a contractual provision its natural meaning especially in a diffuse and multi-authored contract (see In re Lehman Bros International (Europe) (in administration) (No 4) [2017] 2 WLR 1497, para 67). However, it is very different, and much more difficult, to argue that a contractual provision should not be given its natural meaning, and should instead be given no meaning or a meaning which renders it redundant. Fourthly, MTH argues that, if the parties had intended a warranty or term such as is contended for by E.ON, it would not have been tucked away in para 3.2.2.2 of the TR, but would, for instance, have been a Key Functional Requirement in Section 1.6 of the TR. Section 1.6 is concerned with general provisions about the two proposed wind farms, and there is no reference in it to any specific component, in particular the foundations. In any event, as mentioned in para 4 above, the Key Functional Requirements include a requirement for a minimum site specific design life of twenty (20) years without major retrofits or refurbishments, and there is no definition of that expression. Jackson LJ said below, in para 91, If a structure has a design life of 20 years, that does not mean that inevitably it will function for 20 years, although it probably will. Assuming (without deciding) that that is correct, it seems to me that there is a powerful case for saying that, given a Key Functional Requirement is that there is a minimum 20-year design life, it is scarcely surprising that a provision dealing with the General Design Conditions at the Detailed Design Stage includes a provision which has the effect for which E.ON contends in this case. Fifthly, MTH contends that the TR are concerned in a number of places (eg paras 1.6, 3.2.6 and 3b.5.6) with emphasising that the design life of the Works or various components of the Works should be 20 years, which does not carry with it a warranty that the Works, or foundations, will last for 20 years or that they will be designed to last for 20 years, and so it is unlikely that para 3.2.2.2(ii) was concerned with imposing a greater obligation on MTH. The points I have already made at the end of para 49 and the end of para 50 above appear to me to answer this contention. Sixthly, MTH points out that para 3.2.2.2(ii) was concerned with planned maintenance and should not be given the sort of broad effect which E.ONs case involves. It appears to me that the reference to planned maintenance at the end of the first sentence of para 3.2.2.2(ii) emphasises that the design of the foundations should not simply be such as to last for 20 years, but should be able to do so without the need for planned maintenance. Conclusion In these circumstances, I would allow E.ON’s appeal and restore the order made at first instance by Edwards-Stuart J.

UK-Abs

This appeal arises from the fact that the foundation structures of two offshore wind farms at Robin Rigg in the Solway Firth, which were designed and installed by the respondent, MT Hjgaard A/S (MTH), failed shortly after completion of the project. The dispute concerns who bears the remedial costs in the sum of 26.25m. In May 2006, the appellants, two companies in the E.ON group (E.ON), sent tender documents to various parties including MTH, who in due course became the successful bidders. The tender documents included E.ONs Technical Requirements. The Technical Requirements laid out minimum requirements that were to be taken into account by the contractor, i.e. ultimately MTH. Amongst other things, the Technical Requirements called for the foundations to be in accordance with a document known as J101. J101 was a reference to an international standard for the design of offshore wind turbines published by an independent classification and certification agency. J101 provides for certain mathematical formulae to calculate aspects of the foundation structures. One such formula included , which was given a specific value. Only later, a review showed that the value given for was wrong by a factor of about ten. This error meant that the strength of the foundation structures had been substantially over estimated. Having been selected as the contractor for the works, MTH duly set about preparing its tender in accordance with E.ONs requirements and J101. Finally, E.ON and MTH entered into a contract under which MTH agreed to design, fabricate and install the foundations for the proposed turbines. Clause 8.1(x) of this contract stated that MTH should carry out the works so that they shall be fit for its purpose. Fit for Purpose was ultimately defined in a way that it included adherence to the Technical Requirements. The parties agreed to carry out remedial work immediately after the foundation structures started failing. These proceedings concern the question as to who should bear the cost of the remedial works. The High Court found for E.ON that Clause 8.1(x) of the contract ultimately referred to the Technical Requirements. Para 3.2.2.2 of the Technical Requirements and another provision, para 3b.5.1, required the foundations to be designed so that they would have a lifetime of twenty years. As they were not, MTH was held liable. On appeal, the Court of Appeal found otherwise. There was an inconsistency between paras 3.2.2.2 (and para 3b.5.1) of the Technical Requirements on the one hand and other contractual provisions (in particular adherence to J101) on the other hand. The Court of Appeal ruled that the other contractual provisions should prevail. The Supreme Court unanimously allows E.ONs appeal. Lord Neuberger gives the judgment, with which Lord Mance, Lord Clarke, Lord Sumption, and Lord Hodge agree. The central issue in this appeal is whether para 3.2.2.2 (and para 3b.5.1) of the Technical Requirements was infringed [27, 33]. The second limb of para 3.2.2.2 reads: The design of the foundations shall ensure a lifetime of twenty years in every aspect without planned replacement. Taking into account other aspects of the Technical Requirements, this can be read in two ways: either as a warranty that the foundations will actually have a lifetime for twenty years, or as an undertaking to provide a design that can objectively be expected to have a lifetime of twenty years. Although there is some force in the latter argument, especially in the contracts (exclusive) remedies regime [27 32], the question does not warrant an answer in this appeal. The foundations neither had a lifetime of twenty years, nor was their design fit to ensure one [24 32]. Therefore, the effect of para 3.2.2.2 according to its terms would be to render MTH liable. The reference to J101, the international design standard, which included the flawed value attributed to , does not require a different construction which would deviate from the natural language of para 3.2.2.2. Both J101 and para 3.2.2.2. are part of the same contract. The reconciliation of various terms in a contract, and the determination of their combined effect must be decided by reference to ordinary principles of contractual interpretation [37, 48]. While each case must turn on its own facts, the courts are generally inclined to give full effect to the requirement that the item as produced complies with the prescribed criteria, even if the customer or employer has specified or approved the design. Thus, generally speaking, the contractor is expected to take the risk if he agreed to work to a design which would render the item incapable of meeting the criteria to which he has agreed [38 44]. The Technical Requirements expressly prescribe only a minimum standard. It was the contractor, i.e. MTHs, responsibility to identify areas where the works needed to be designed in a more rigorous way (para 3.1.(1)). Further, it was contemplated that MTH might go beyond certain standards, including J101 (para 3.1.2) [45 47]. Finally, para 3.2.2.2 of the Technical Requirements is not too weak a basis on which to rest a contention that MTH had a liability to warrant that the foundations would survive for twenty years or would be designed so as to achieve twenty years of lifetime. Applying the ordinary principles of interpretation, in a complex contract, this interpretation gives way to the natural meaning of para 3.2.2.2 and is not improbable or unbusinesslike [48 51].

On 20 October 2010, following a trial before a judge and jury at Belfast Crown Court, Angeline Mitchell was convicted of the murder on 11 May 2009 of Anthony Robin. Ms Mitchell and Mr Robin had been partners and had lived together for about three years. They had separated some time before May 2009 but they continued occasionally to meet and spend time together. On 10 May 2009 they met at a Belfast hotel at about 3pm. They had something to eat and they drank alcohol there during the remainder of the afternoon and into the evening. They then went to Mr Robins flat in Fitzroy Avenue, Belfast, where they continued to drink alcohol. A friend of Mr Robin, Michael McGeown, and Mr McGeowns girlfriend, Jacqueline Cushnan, were also staying at the flat. All four watched a film on television together and then played some music. At about 12.15am on 11 May 2009. Mr Robin received a telephone call from the home of a former partner, Rosena Oliver. She and Mr Robin were the parents of two sons, Anthony junior and Thomas. The sons lived with their mother. After receiving the telephone call, Mr Robin went to Ms Olivers home. Ms Mitchell accompanied him. While they were there, Anthony junior was arrested by police officers. Apparently, this was because of a dispute that he had had with his mother. It was then decided that Mr Robin and Ms Mitchell should return to the flat at Fitzroy Avenue and that they should bring the younger son, Thomas, with them. On their return to the flat, Mr Robin and Ms Mitchell discussed Anthony juniors arrest with Mr McGeown and Ms Cushnan for a short time. After that Mr McGeown and Ms Cushnan went to bed. Ms Mitchell continued to talk to Mr Robin about his sons arrest and repeatedly told him that he should go to the police station to which Anthony junior had been taken. He told her to mind her own business. Exchanges between them became more heated. There is a dispute as to what happened next but it is accepted that, at some stage, Ms Mitchell obtained a knife. It is also accepted that she stabbed Mr Robin. He sustained five knife wounds, one of which caused his death. This was a wound to the left side of the chest which was approximately 20 centimetres deep. Other wounds suffered by Mr Robin were to the left side of the scalp, to the right parietal area of the scalp and to the upper thoracic region of the back. Mr Robins son, Thomas, claimed to have witnessed the attack on his father. He said that he saw Ms Mitchell going with a knife at Mr Robin and that he was crying out as she did so. Thomas said that his father turned away from Ms Mitchell and she continued to attack him. When questioned by police at the scene of the killing, Ms Mitchell claimed that there had been a fight between Mr Robin and a Swedish girl who had just left the flat. After speaking to others present, however, police officers arrested Ms Mitchell on suspicion of the attempted murder of Mr Robin. She was cautioned. In response she said that she had tried to help Mr Robin and now she was getting the blame. The trial During her trial, the story about the Swedish girl was not repeated. Ms Mitchell did not dispute that she had stabbed Mr Robin but said that she had acted in self defence. She also claimed that she had been provoked and that she did not have the intention to kill or cause really serious harm to Mr Robin. Before the trial began, the prosecution had intimated an intention to apply to the judge for permission to lead evidence of Ms Mitchells previous bad character. This was said to be for the purpose of showing that she had a propensity to use knives in order to threaten and attack others. None of the episodes to which the proposed evidence related had resulted in a conviction. In relation to two of the incidents, it was agreed between the prosecution and the defence that statements settled between them should be read to the jury. The first of these involved an incident in 2003. The agreed statement contained the following sentence, During the course of a dispute about mobile telephones, Angeline Mitchell chased Andrew McAuley and James People with two knives and tried to stab them. The second agreed statement related to an incident in December 2007 and was in these terms: On 7 December 2007 a dispute arose between Donna Clarke and Angeline Mitchell whilst both were present at flat two, 78 Fitzroy Avenue. During that dispute Angeline Mitchell produced a knife and was disarmed. Angeline Mitchell then obtained two knives and during a struggle stabbed Lorraine Gallagher in the left calf and the left thigh. She also stabbed Donna Clarke in the right leg. As well as allowing the agreed statements to be read to the jury, the trial judge permitted the prosecution to adduce evidence of five other incidents involving Ms Mitchell. Two of these related to attempts to attack Michael McGeown with a knife. Two concerned the concealment of knives to prevent possible use of them by her. Evidence was also given about a conversation between Ms Mitchell and Mr McGeown in which she was alleged to have told him that she was going to stab Mr Robin and that before she did so, she would stab Mr McGeown because she knew that he would try to intervene and go to Mr Robins aid. Despite having authorised her legal advisers to agree that the statements be read to the jury, in the course of giving evidence, Ms Mitchell did not accept that events had occurred in the way described in the statements. The judge dealt with this part of her evidence in the following passage from his charge to the jury: Now, when the accused was in the witness box she appeared to renege on [the statements] and didnt agree that these things had happened or had happened in that way, or that she had stabbed these people. And she refused to accept any fault on her part in connection with these On the question of how the jury should treat the bad character evidence, it is agreed that the judge did not direct them on whether they required to be satisfied of the truth of the evidence. Nor did he indicate to the jury that they had to be satisfied that the bad character evidence had established the particular propensity on the part of Ms Mitchell which the prosecution had alleged. It appears that counsel who appeared for the prosecution and the defence at the trial did not invite the judge to give any particular form of direction on these topics. Perhaps understandably, therefore, his charge contained no reference to these matters. This is what he said to the jury about the evidence: that [evidence] may or may not help you. Take it into account or leave it out of account as you consider appropriate. But do not make an assumption because a person behaves that way that that means that shes guilty of murder and had the necessary intent just because of those events. The appeal Some three years and three months after her trial, Ms Mitchell applied for leave to appeal against her conviction. An extension of time within which to appeal was granted on 6 March 2014 and subsequently Maguire J gave Ms Mitchell permission to appeal on one ground only viz that the trial judge had failed to direct the jury properly on the purpose of the bad character evidence or the standard of proof to which the jury had to be satisfied before any member of the jury could take the bad character evidence into account in any way. She was refused leave to appeal on other grounds. Ms Mitchell renewed her application for leave to appeal on those grounds but that application was refused by the Court of Appeal in Northern Ireland (Girvan, Coghlin and Gillen LJJ) on 30 April 2015. The grounds on which leave to appeal was refused have not featured in the appeal before this court and nothing need be said about them. The Court of Appeal allowed Ms Mitchells appeal on the single ground on which she had been given leave to appeal and quashed her conviction. Subsequently they ordered that she should face a retrial. This took place in April 2016. Ms Mitchell pleaded not guilty to murder on the ground of diminished responsibility and pleaded guilty to manslaughter. She was acquitted of murder and sentenced to ten years imprisonment for the manslaughter of Mr Robin. Gillen LJ, who delivered the judgment of the Court of Appeal, said, at para 50 of his judgment, that the correct legal position had been stated by the authors of the 2015 edition of Archbold, Criminal Pleading Procedure and Practice at para 13 68: Where non conviction evidence is being relied on to establish propensity and the evidence is disputed, the jury must be directed not to rely on it unless they are sure of its truth: R v Lafayette [2009] Crim LR 809 and R v Campbell [2009] Crim LR 822, CA. This passage does not distinguish between two distinct but potentially overlapping issues: the need, on the one hand, to establish to the requisite criminal standard the facts said to provide evidence of propensity and, on the other, the existence of such a propensity. Should the jury be directed that they have to be satisfied beyond reasonable doubt of the veracity and accuracy of the individual facts which, it is claimed, provide evidence of misconduct on the part of the defendant? Alternatively, is the real issue not this: what requires to be proved is that the defendant did have a propensity? Or must both issues be addressed? Subsidiary questions arise which will be discussed later in this judgment. These include: should a preliminary evaluation be carried out by the jury of the truth and accuracy of the matters alleged before the question of the existence of propensity is examined or is the proper approach to consider all the evidence about the various instances of misconduct before deciding whether (i) they have been individually established; and (ii) particular instances of misconduct can serve as supportive of evidence in relation to other incidents. The Court of Appeal in this case referred to two decisions of the English Court of Appeal which, it was suggested, supported the statement in Archbold. The first was R v Ngyuen [2008] EWCA Crim 585; [2008] 2 Cr App R 9. In that case only one incident of previous misconduct was involved, so that proof of propensity might be said to have merged with proof of the facts involved in that incident. The second case was R v ODowd [2009] EWCA Crim 905; [2009] 2 Cr App R 16. Three alleged incidents of previous misconduct were involved in ODowd. The Court of Appeal in that case, at para 65, paraphrased with approval a statement by Moses LJ in R v DM [2008] EWCA 1544; [2009] 1 Cr App R 10 that the jury would need to consider with as much detail and concentration all the facts in relation to the three allegations as they would in relation to the offences of which the appellant was charged. It concluded, at para 83, that because it had proved necessary to scrutinise the evidence concerning the three disputed allegations the trial had been unnecessarily prolonged and rendered unduly complex. The convictions were therefore quashed. This was essentially a decision prompted by the view that the trial judge should not have admitted the evidence because allowing it to be given made the jurys task too difficult. Beatson Js judgment certainly assumed that the jury was required to examine separately the question whether facts relevant to each incident of misconduct had been established But to say that the jury must examine the evidence of each previous incident relied upon does not answer the question asked in this case, namely whether it must consider in independent compartments whether each such incident has been proved to the criminal standard, or whether it is enough that, having examined all the evidence, it is satisfied that a propensity to behave as charged has been established. Both Ngyuen and ODowd will be considered in greater detail below. It is sufficient to say at this stage that the Court of Appeals endorsement of them in this case would appear to indicate their approval of an approach which involves the individual consideration of the facts of each specific instance of misconduct said to establish a propensity on the part of the defendant. The correctness of that approach will also be considered. The Court of Appeal was asked by the Crown to give permission to appeal to this court and to certify a question for this courts opinion. Permission to appeal was refused but the following question was certified: Is it necessary for the prosecution relying on non conviction bad character evidence on the issue of propensity to prove the allegations beyond a reasonable doubt before the jury can take them into account in determining whether the defendant is guilty or not? The way in which this question is framed reinforces the impression that the Court of Appeal considered that the facts of each incident said to establish propensity had to be proved to the criminal standard before the jury could have regard to it. The hearing in this court Mr McCollum QC, who appeared for the prosecution (the appellant before us), submitted that evidence in relation to propensity did not call for any special examination by the jury. In particular, it should not be placed in a special compartment requiring consideration in isolation from other evidence in the case. It was in the nature of this form of trial that all relevant evidence should be assessed by the jury so as to allow them to determine whether they had been brought to the point of conviction of the defendants guilt. It was inimical to that fundamental aspect of jury trial that a particular issue be segregated from the generality of the evidence and a pre emptive decision be made in relation to that issue, before the question of the guilt or innocence of the accused was tackled. Dealing with all the evidence together was, Mr McCollum said, not only the principled way to proceed, it was necessary in order to avoid the unsatisfactory situation encountered in the ODowd case where a number of incidents required the jury to conduct what was in effect a series of individual trials. Moreover, there was nothing in the legislation authorising the admission of bad character evidence (in this case the Criminal Justice (Evidence) (Northern Ireland) Order 2004 (SI 2004/1501)) which expressly or by necessary implication required the incidents which are said to have constituted evidence of propensity to be proved beyond reasonable doubt. For Ms Mitchell (the respondent in this court) Mr ODonoghue QC claimed that before the enactment of the 2004 Order the common law rule was that where evidence of bad character was disputed, it had to be proved beyond a reasonable doubt before it could be taken into account by a court or jury. That rule was not abolished by the 2004 Order, he suggested; to the contrary, the Order clearly contemplated that it was the function of the jury to evaluate the evidence of bad character in a conventional way. Facts supporting the claim that the defendant had a particular propensity had to be proved beyond reasonable doubt. It was inconceivable, Mr ODonoghue argued, that a jury could entertain a reasonable doubt as to the accuracy or veracity of the evidence said to underpin such a propensity and, nevertheless, accept that evidence as sufficient to establish its presence. The law before the 2004 Order At common law, as a general rule, evidence of the bad character of an accused person was not admissible in a criminal trial. There were exceptions to this. One of these was similar fact evidence. An early and notable example of the admission of this type of evidence was the case of Makin v Attorney General for New South Wales [1894] AC 57. In that case, the Lord Chancellor, Lord Herschell, while acknowledging the general rule that the prosecution may not adduce evidence that tended to show that an accused person was guilty of criminal acts other than those with which he had been charged, stated that, in appropriate circumstances it was legitimate to allow evidence to be admitted which was relevant to an issue in the case. Thus, in Makin where the accused had been charged with the murder of an infant who had been given into their care by the childs mother after payment of a fee, evidence that several other infants had been received by the accused persons from other mothers and that their bodies were found buried in gardens of houses occupied by the prisoners, was admissible. Makin, together with the later cases of R v Kilbourne [1973] AC 729, R v Boardman [1975] AC 421 and Director of Public Prosecutions v P [1991] 2 AC 447, established the common law rule that, in order to be admissible, similar fact evidence had to go beyond simply demonstrating a criminal tendency (or propensity). It had to show sufficient pattern of behaviour, underlying unity or nexus to exclude coincidence and thus have probative force in proving the indicted allegation. In Scotland the same distinction was long recognised: see Moorov v HM Advocate 1930 JC 68. Clearly, the evidence in Makin was relevant in that, if accepted, it had, at least, the potential to show that the defendants were more likely to have killed the child. The decision in that case does not address the issue which is central to this appeal, however, since the question of how evidence of similar facts, if properly admitted, should be treated, did not arise. The case is of interest only as part of the background to the exception to the general common law rule that evidence of antecedent misconduct is not admissible unless shown to be directly relevant to an issue in the trial. Since, as I shall discuss below, evidence of propensity or similar fact evidence is, essentially, extraneous to that which is directly probative of the accuseds guilt of the charges on which he stands trial, the case can be made that it should be subject to the conventional criminal standard requirement of proof beyond reasonable doubt. And, it may be said, this is especially so where the claims in relation to similar fact evidence or propensity are disputed. In R v Armstrong [1922] 2 KB 555 the accused, a solicitor, was charged with the murder of his wife by giving her arsenic. His defence was that he had not administered the poison, although he admitted that he had arsenic which, he said, he used as a weed killer. He claimed that his wife had either committed suicide or had taken the arsenic by accident. The prosecution was permitted to call evidence that another solicitor, a Mr Martin, had visited the accuseds home eight months after his wifes death and had suffered an episode of arsenic poisoning that evening. The purpose of calling evidence about the attempt to poison Mr Martin was, the prosecution said, to rebut the suggestion that Mrs Armstrong had either committed suicide or taken the arsenic by accident. The trial judge, Darling J. directed the jury that, unless it was proved that Armstrong had given arsenic to Martin with intent to injure him, the evidence had no bearing whatever upon this case. That direction was not disapproved by the Court of Appeal when it affirmed the accuseds conviction. It was argued on behalf of the present respondent, therefore, that this case supported the proposition that the common law rule was that the prosecution had to prove to the criminal standard the truth of all similar fact evidence irrespective of the purpose for which it was admitted. This claim must be viewed against the background that Armstrong involved a single instance of similar fact evidence. If there was doubt about the truth or accuracy of the evidence relating to the Martin episode, one can readily understand why it would have to be disregarded by the jury. The purpose of introducing the evidence was to show that Armstrong was prepared to use arsenic on another individual. If the jury was not convinced that he had administered poison to Mr Martin, self evidently, that incident could not be used as proof of a propensity on the part of Armstrong to use arsenic to poison others. What of the situation where there are several disparate instances of alleged antecedent conduct, said to demonstrate propensity or evidence of similar facts? Must each incident be the subject of a compartmentalised examination designed to determine whether the constituent elements of each have been established beyond reasonable doubt? Or should consideration of these various instances partake of a rounded evaluation to see whether, taken as a whole, the antecedent evidence establishes a propensity or that the alleged similar facts may properly be described as such and that they tend to support the prosecutions case that the defendant is guilty of the charges which he or she faces? It will be necessary to explore these issues later in this judgment. Hints of a different approach can be detected in R v Kilbourne [1973] AC 729. In that case the respondent was convicted of sexual offences against two groups of boys. The trial judge directed the jury that they would be entitled to take into account the uncorroborated evidence of the second group as supporting evidence given by the first group. At p 741, Lord Hailsham of St Marylebone LC said: A considerable part of the time taken up in argument was devoted to a consideration whether such evidence of similar incidents could be used against the accused to establish his guilt at all, and we examined the authorities in some depth from Makin v Attorney General for New South Wales [1894] AC 57, through Lord Sumners observations in Thompson v The King [1918] AC 221, to Harris v Director of Public Prosecutions [1952] AC 694. I do not myself feel that the point really arises in the present case. Counsel for the respondent was in the end constrained to agree that all the evidence in this case was both admissible and relevant, and that the Court of Appeal was right to draw attention [1972] 1 WLR 1365, 1370 to the striking features of the resemblance between the acts alleged to have been committed in one count and those alleged to have been committed in the others and to say that this made it more likely that John was telling the truth when he said that the appellant had behaved in the same way to him. In my view this was wholly correct. With the exception of one incident. each accusation bears a resemblance to the other and shows not merely that [Kilbourne] was a homosexual, which would not have been enough to make the evidence admissible, but that he was one whose proclivities in that regard took a particular form [1972] 1 WLR 1365, 1369. I also agree with the Court of Appeal in saying that the evidence of each child went to contradict any possibility of innocent association. As such it was admissible as part of the prosecution case, and since, by the time the judge came to sum up, innocent association was the foundation of the defence put forward by the accused, the admissibility, relevance, and, indeed cogency of the evidence was beyond question. The word corroboration by itself means no more than evidence tending to confirm other evidence. In my opinion, evidence which is (a) admissible and (b) relevant to the evidence requiring corroboration, and, if believed, confirming it in the required particulars, is capable of being corroboration of that evidence and, when believed, is in fact such corroboration. The primary issue in Kilbourne was, of course, whether evidence which required, as a matter of law, corroboration could be verified by other evidence which itself, again as a matter of law, had to be corroborated. The case is interesting in the present context, however, because of the assertion by Lord Hailsham LC that evidence which is admissible and relevant, if believed, could properly be taken into account as corroborative of the case against the accused. Counsel for the respondent in this appeal accepted that the use of the phrases if believed and when believed in the passage quoted did not suggest that Lord Hailsham LC was proposing that proof beyond reasonable doubt of each of the other incidents was required. But, nor did it mean, he suggested, that it could be left to the jury to treat the evidence, once admitted, in whatever manner they chose. The jury was required, he submitted, to make some evaluation of the truth of the similar fact evidence and the speech of Lord Hailsham LC was not necessarily inconsistent with that evidence having to meet a requirement of proof beyond reasonable doubt before it could play a part in their deliberations. Lord Hailsham LC dealt again with the issue of similar fact evidence in R v Boardman [1975] AC 421. He made a passing reference (at p 453) to its being a matter for the jury to decide on the degree and weight to attach to such evidence, if admitted. This does not provide much in the way of authoritative guidance as to the standard of proof to be applied to similar fact evidence. Likewise, in R v Scarrott [1978] QB 1016 Scarman LJ referred to the need for similar fact evidence to be believed and the need for the jury to accept the evidence. These allusions cannot begin to constitute a statement of commanding clarity as to how a jury should assess such evidence. Consideration of these authorities (and R v Z [2000] 2 AC 483 to which the respondent also referred) leads inevitably to the conclusion that before the enactment of the 2004 Order (and its England and Wales counterpart, the Criminal Justice Act 2003) there was no clear, definitive statement on the issue now raised as to how juries should treat evidence of similar facts or propensity. The 2004 Order Article 4(1) of the 2004 Order (mirroring section 99 of the 2003 Act) abolished the common law rules governing the admissibility in criminal proceedings of evidence of bad character. The Order significantly expanded the circumstances in which bad character evidence could be admitted and the rules which previously restricted admission of such evidence now have no part to play in the decision as to whether it should be received. Article 6(1) sets out a number of what have come to be known as gateways for the admission of evidence of a defendants bad character. It provides: 6(1) In criminal proceedings evidence of the defendants bad character is admissible if, but only if all parties to the proceedings agree to the it is important explanatory evidence, it is relevant to an important matter in issue (a) evidence being admissible, (b) the evidence is adduced by the defendant himself or is given in answer to a question asked by him in cross examination and intended to elicit it, (c) (d) between the defendant and the prosecution, (e) it has substantial probative value in relation to an important matter in issue between the defendant and a co defendant, (f) by the defendant, or (g) persons character. the defendant has made an attack on another it is evidence to correct a false impression given Article 8 deals specifically with propensity. It relates back to gateway (d) of article 6(1). Article 8(1) provides: Matter in issue between the defendant and the prosecution 8. (1) For the purposes of article 6(1)(d) the matters in issue between the defendant and the prosecution include (a) the question whether the defendant has a propensity to commit offences of the kind with which he is charged, except where his having such a propensity makes it no more likely that he is guilty of the offence; (b) the question whether the defendant has a propensity to be untruthful, except where it is not suggested that the defendants case is untruthful in any respect. (2) Where paragraph (1)(a) applies, a defendants propensity to commit offences of the kind with which he is charged may (without prejudice to any other way of doing so) be established by evidence that he has been convicted of an offence of the same description as the one with (a) which he is charged, or (b) which he is charged. an offence of the same category as the one with (3) Paragraph (2) does not apply in the case of a particular defendant if the court is satisfied, by reason of the length of time since the conviction or for any other reason, that it would be unjust for it to apply in his case. (4) For the purposes of paragraph (2) (a) two offences are of the same description as each other if the statement of the offence in a complaint or indictment would, in each case, be in the same terms; (b) two offences are of the same category as each other if they belong to the same category of offences prescribed for the purposes of this article by an order made by the Secretary of State. (5) A category prescribed by an order under paragraph (4)(b) must consist of offences of the same type. (6) Only prosecution evidence is admissible under article 6(1)(d). Thus mere propensity to commit offences of the kind charged may now be admissible. It may be proved by convictions for offences of the same description or category, but also by other evidence, such as that of complainants or observers, or by past admissions where there has not been a conviction. In this case the grounds on which the admission of evidence of the respondents bad character was sought to be introduced were stated to be that (i) it was relevant to an important matter between the defendant and the prosecution (article 6(1)(d)). The important matter was said to include the propensity of the respondent to use knives to wound others; (ii) it was important explanatory evidence of the character of the respondent (article 6(1)(c)); (iii) it corrected a false impression given by the respondent about herself (article 6(1)(f)); and (iv) it was admissible because the respondent had attacked the character of another person, namely, the victim, Anthony Robin. We have not seen the trial judges ruling on the application to admit evidence of bad character. The Court of Appeal dealt with the matter shortly in para 28 where Gillen LJ observed that counsel for the respondent had accepted that the prosecution was entitled to call evidence of her bad character under article 6(1)(d) and 6(1)(g). He also said that Mr ODonoghue had accepted that it was at least arguable that the evidence [of bad character] may have been capable of establishing that the [respondent] had a propensity to arm herself with a knife and to use the knife for the purpose of and with the intention of inflicting serious bodily harm. If admission had been solely under articles (c), (f) or (g), it would have been necessary to consider at the end of the evidence whether propensity had become a legitimate issue, and how the jury should be directed as to the use which could be made of it. But whether or not it was also admitted under article 6(1)(f), this evidence was plainly admissible under article 6(1)(d), and thus propensity to offend as charged was a relevant matter which the Crown could seek to establish. It was no part of the respondents case that the evidence was wrongly admitted. What the respondent does assert, however, is that the law before the enactment of the 2003 Act and the 2004 Order was that the prosecution was required to prove to the criminal standard the truth and accuracy of evidence said to constitute similar facts or propensity. For the reason given in para 31 above, I do not accept that claim. The respondent is unquestionably right in the submission that neither the 2003 Act nor the 2004 Order stipulates that only the common law rules as to the admissibility of bad character evidence have been abrogated. Common law rules as to how such evidence should be evaluated have not been affected, the respondent says. But, for the reasons earlier given, there are no clear rules on that question. The debate as to how evidence of bad character admitted under the relevant legislation should be regarded by the jury is not assisted by a consideration of the common law position. It is common case between the parties that the legislation concerning the admission of bad character evidence is silent on the question of whether that evidence must meet the requirement of proof beyond reasonable doubt before it can be taken into account. On one view, this is indicative of a legislative intention that this species of evidence should not be subject to a special regime of independent proof. That it should simply combine with the other evidence in the case for evaluation as to whether the guilt of the accused has been established to the requisite standard. The contrary view is that whether someone has a propensity to engage in activity such as that which constitutes the crime charged or whether they have been involved in acts of a similar nature stands apart from direct evidence of their actual involvement in the crime charged. On that account, so the argument runs, the question whether they have such a propensity or have been involved in events claimed to comprise similar facts, calls for consideration separate from the evidence which directly implicates the accused in the offence for which they are being tried. Propensity the correct question/what requires to be proved? A distinction must be recognised between, on the one hand, proof of a propensity and, on the other, the individual underlying facts said to establish that a propensity exists. In a case where there are several incidents which are relied on by the prosecution to show a propensity on the part of the defendant, is it necessary to prove beyond reasonable doubt that each incident happened in precisely the way that it is alleged to have occurred? Must the facts of each individual incident be considered by the jury in isolation from each other? In my view, the answer to both these questions is no. In the case of Ngyuen [2008] 2 Cr App R 9 the appellant had been convicted of murder. On 23 December 2005 in a public house in Woolwich he had struck the victim in the neck with a glass and this caused fatal injuries. The prosecution alleged that this had been a deliberate attack. The appellant claimed that he was acting in self defence. On 7 December 2005 he had been involved in a similar incident at a different public house which was called The Great Harry. On that occasion he had broken a glass and used it to cause injuries to three men. The Crown applied for leave to admit evidence of the incident in The Great Harry. In acceding to that application, the judge said that the jury will have to be sure of the facts before they can use them, applying the criminal burden and standard of proof. In directing the jury about the earlier incident, she said that the prosecution relied on three relevant matters that the appellant had deliberately broken a glass; that he used it with the intention of causing really serious harm; and that he had done so unlawfully. The judge then said, If you are not sure of any of those facts, the events in The Great Harry are irrelevant to your deliberations on the charge of murder. The propriety of the judges charge was confirmed by the Court of Appeal. It should be noted, of course, that no challenge to its wording was made by the prosecution or the defence. The appeal, so far as concerns the judge, was based on the claim that she had been wrong to admit the evidence of The Great Harry incident and that the direction on that incident, although fair, was too much for the jury to apply faithfully and conscientiously. It is significant that the only bad character evidence in Ngyuen related to a single previous incident. In order to be convinced that the appellant in that case was possessed of the propensity which the prosecution alleged, it is not surprising that the judge considered that it was necessary for the jury to be persuaded that The Great Harry incident had taken place as alleged. If the jury needed to be sure that the appellant had the alleged propensity (and I am of the view that this was certainly required, if they were to take it into account), how could they, in the circumstances of that particular case, be brought to the necessary point of conviction unless they were convinced that the incident had indeed taken place in the manner that the Crown said that it had? Otherwise, there was simply no factual basis on which to found a conclusion that a propensity existed. The proper issue for the jury on the question of propensity in a case such as Ngyuen and the present appeal is whether they are sure that the propensity has been proved. In Ngyuen the only way in which they could be sure was by being convinced that the sole incident said to show propensity had been proved to the criminal standard. That does not mean that in cases where there are several instances of misconduct, all tending to show a propensity, the jury has to be convinced of the truth and accuracy of all aspects of each of those. The jury is entitled to and should consider the evidence about propensity in the round. There are two interrelated reasons for this. First the improbability of a number of similar incidents alleged against a defendant being false is a consideration which should naturally inform a jurys deliberations on whether propensity has been proved. Secondly, obvious similarities in various incidents may constitute mutual corroboration of those incidents. Each incident may thus inform another. The question impelled by the Order is whether, overall, propensity has been proved. As I have said, the existence of a propensity must be proved to the conventional criminal standard. I do not accept the appellants argument that it does not call for special treatment, if by that it is meant that the existence of a propensity need not be established beyond reasonable doubt. This issue stands apart from the evidence which speaks directly to the defendants guilt or innocence of the offences charged. Evidence about a propensity or tendency to commit a specific type of crime or engage in a particular species of misconduct is not in pari materia with testimony that touches on the actual events said to constitute the particular crime involved. It is right, therefore, that the jury should be directed that before they take this into account, they must be convinced that propensity has been proved. That is not to say that the jury must be unanimous on the question of whether it exists. As the judge said in Ngyuen, jurors are at liberty to follow their own evidential track. But the jury should be directed that, if they are to take propensity into account, they should be sure that it has been proved. This does not require that each individual item of evidence said to show propensity must be proved beyond reasonable doubt. It means that all the material touching on the issue should be considered with a view to reaching a conclusion as to whether they are sure that the existence of a propensity has been established. In the case of R v Lafayette [2008] EWCA Crim 3238; [2009] Crim LR 809 the defendant was convicted of murder, having stabbed his victim with a knife. He claimed that the victim had produced the knife and that, in self defence, he had grabbed the victims hand and accidentally caused the knife to enter his body. Cross examination of some of the eye witnesses called by the prosecution about their criminal records led to an application by the prosecution for permission to cross examine the defendant about his own previous convictions including one in 2003 for criminal damage to a window in a flat occupied by his partner. The application was granted. The partner had made a statement to the police that during this incident he had threatened to slit her throat. He had not been charged with making that threat. He denied having made it. As it happened, his partner gave evidence on the defendants behalf on his trial for murder. She was asked about the threat alleged to have been made in 2003. She claimed that she was not able to remember it. On the appeal against his conviction for murder, counsel for Lafayette accepted that the jury would have been entitled to conclude that the partner had adopted the written statement that she had made in 2003 in which reference to the threat to kill had been made. The Court of Appeal said (in para 36 of its judgment) that the judge should have directed the jury that they should not rely on the allegation that he had threatened to kill his partner unless they were sure that [he] had made the threat. One can understand why this conclusion was reached. A very specific threat had been imputed to the defendant and the evidence about it was, at best, equivocal. The incident to which the evidence related was not similar to other instances of criminal conduct which were referred to by the Crown, in support of its claim that the defendant had a general propensity to crimes of violence. If the judgment of the Court of Appeal can be interpreted as suggesting that the jury should consider this item of evidence completely separately from other alleged incidents of violence in the defendants past and should leave it entirely out of account unless satisfied that all aspects of the incident were proved to the criminal standard, I would not agree with it. The evidence relating to the threat required to be considered by the jury along with other evidence which was called to establish propensity and a determination ought to have been made on whether all that testimony, taken in combination, proved the claimed propensity. Each item of evidence in relation to individual instances of alleged propensity must be examined and conclusions on the primary facts should be reached but, in its deliberations as to whether propensity has been proved, the jury should consider the evidence on the subject as a whole rather than in individual compartments. The practical difficulties in dealing with each avowed instance of bad character tending to show propensity or similar facts are well demonstrated in the case of ODowd [2009] 2 Cr App R 16. In that case the trial of a single defendant on charges relating to one victim lasted six and a half months. He had been convicted of falsely imprisoning, raping, sexually assaulting and poisoning a woman. The Court of Appeal stated that a major reason for the length of the trial was the introduction of bad character evidence. This concerned three allegations of rape, two of which related to events that had occurred 22 and 17 years before the indicted charges. The first of the allegations resulted in an acquittal, the second in a conviction and the third was stayed on the ground of abuse of process. Interestingly, it had originally been argued on behalf of the defendant that the trial judge was wrong to have directed the jury that the bad character allegations were capable of mutually supporting the truth of other allegations. Beatson J, who delivered the judgment of the court, dealt with that argument in para 6 of his judgment: The second ground upon which leave to appeal was granted concerned the judges directions as to the use the jury could make of the bad character evidence. This ground has two limbs. The first concerns the direction that the bad character allegations were capable of mutually supporting the truth of the other allegations. [Counsel] did not pursue the first limb. He was right not to do so. It was unarguable in the light of the decisions of this court in [R v Wallace [2007] 2 Cr App R 30; R v DM [2009] 1 Cr App R 10, and R v Freeman [2009] 1 WLR 2723]. In light of what I have said at para 43 above, I obviously agree with this. It would be misleading and confusing for a jury to be instructed that they should ignore the significance of one incident tending to show propensity when they come to form their views about another. Indeed, it would be unrealistic to expect that they perform the counter intuitive intellectual exercise of segregating various incidents for separate consideration without considering the possible impact of one on the other. Decisions about propensity should not be the product of a review of facts about separate episodes in hermetically sealed compartments. In para 32 of his judgment Beatson J set out the case made by the defendant that the evidence of bad character should not be admitted. He said this: At the pre trial hearing the defence submitted that admitting evidence of the bad character allegations by the three women would make a simple case complicated and would expand it out of all proportion and would be unjust. It would expand the case because the appellant denied the allegations, two of which had not resulted in a conviction, and the Crown would have to prove them. It would be unjust to admit the allegations because the defence would be handicapped in dealing with them. What Beatson J characterised as the most serious difficulty in acceding to the Crowns application to have the bad character evidence admitted was described in para 55 of his judgment. He said that proof of the alleged misconduct would require the trial of three collateral or satellite issues as part of the trial . This perceived difficulty led to the Court of Appeals conclusion (at para 65) that a trial of those collateral issues was required. It was in this context that the statement of Moses LJ in DM (referred to in para 16 above) was quoted with approval. Beatson J said that the jury would have to be sure those allegations were true before relying on them in relation to the index offence. Because, in effect, the trial was lengthened by a considerable period because of the perceived need to conduct what were in effect three mini trials, the Court of Appeal considered that the fairness of the proceedings was irredeemably compromised and the convictions were quashed. I can understand why the Court of Appeal reached the decision that it did. Three trials of the earlier incidents were in fact conducted and the appellate court had to deal with that unalterable fact. But I am of the clear view that it was inappropriate for the jury to be directed that it had to examine in insulated compartments the evidence in relation to each previous incident and that it had to be sure that each incident had been proved before it could take any account of it. It was, of course, necessary to lead evidence of the three incidents. The jury should have been directed to consider whether the sum of that evidence established to the criminal standard that the defendant was possessed of the propensity which was alleged. The evidence in relation to those incidents should have been considered cumulatively, not as separate aspects of the case for a propensity, isolated one from the other. ODowd nevertheless illustrates an important consideration which must be borne in mind by trial judges when determining applications to adduce evidence of propensity under articles 6(1)(d) and 8(1)(a). The jury is not asked to return a verdict on any previous allegations relied upon, and indeed should be reminded that the defendant is not on trial for them. It should be told to focus on the indicted offence(s). Reliance on cumulative past incidents in support of a case of propensity may indeed illuminate the truth of the currently indicted allegations, but excessive recourse to such history may skew the trial in a way which distracts attention from the central issue. Article 6(3) requires the judge to consider actively whether the effect of admitting the bad character evidence will have such an adverse effect on the fairness of the trial that it ought to be excluded. That species of adverse effect can arise through the sheer weight of disputed evidence on other uncharged allegations. And that can happen even though the jury will in due course be directed to consider propensity cumulatively, if the volume of evidence received is sufficiently strong to support a conviction. It is a truism that satellite litigation is often inimical to efficient trial. Conclusions In so far as the Court of Appeal in the present case has suggested that each incident claimed by the prosecution to show a propensity on the part of the defendant required to be proved to the criminal standard. I would not agree with it. For the reasons that I have given, the proper question to be posed is whether the jury is satisfied that a propensity has been established. That assessment depends on an overall consideration of the evidence available, not upon a segregated examination of each item of evidence in order to decide whether it has been proved beyond reasonable doubt. It is necessary to emphasise, however, that propensity is, at most, an incidental issue. It should be made clear to the jury that the most important evidence is that which bears directly on the guilt or innocence of the accused person. Propensity cannot alone establish guilt and it must not be regarded as a satisfactory substitute for direct evidence of the accuseds involvement in the crime charged. It is clear in the present case, however, that the trial judge failed to give adequate directions as to how the question of propensity should be approached by the jury. On that account the conviction was unsafe and it was properly quashed. The current Bench Books for Northern Ireland and England and Wales contain specimen directions which might be considered to suggest that juries require to be directed that they need to be satisfied of the truth of every allegation of propensity before they may take it into account. For the reasons that I have given, I consider that such a suggestion is misconceived. It will be for the authors of those works to reflect on whether an amendment to the relevant sections of the Bench Books is required.

UK-Abs

The respondent Ms Mitchell was convicted of the murder on 11 May 2009 of her former partner Anthony Robin. At the trial, she did not dispute that she had stabbed Mr Robin, but said she had acted in self defence. She also claimed that she had been provoked and that she did not have the intention to kill him or cause him really serious harm. The prosecution applied to adduce evidence of Ms Mitchells previous bad character for the purpose of showing that she had a propensity to use knives in order to threaten and attack others. The evidence related to two incidents in 2003 and 2007 in which she was said to have threatened and stabbed others with knives. None of the previous alleged incidents had resulted in a conviction. It was agreed between the prosecution and the defence that statements which contained details of the earlier incidents would be read out during the trial. The judge directed the jury to take [this evidence] into account or leave it out of account as you consider appropriate, but not to make any assumptions based on it as to Ms Mitchells guilt. On appeal, Ms Mitchell argued that the trial judge had failed to direct the jury properly on the purpose of the bad character evidence or the standard of proof to which the jury had to be satisfied before they could take it into account. The Court of Appeal allowed her appeal, quashed the conviction and ordered a re trial. At the re trial Ms Mitchell pleaded guilty to manslaughter and was acquitted of murder. The prosecution appealed to the Supreme Court against the quashing of the murder conviction. The Court of Appeal certified the following question of law: Is it necessary for the prosecution relying on non conviction bad character evidence on the issue of propensity to prove the allegations beyond a reasonable doubt before the jury can take them into account in determining whether the defendant is guilty or not? The Supreme Court unanimously dismisses the appeal and upholds the decision of the Court of Appeal to quash Ms Mitchells conviction for murder. In his judgment Lord Kerr (with whom Lord Clarke, Lord Hughes, Lord Toulson and Lord Hodge agree) clarifies how juries should treat evidence of similar facts or propensity. The prosecution argued that evidence in relation to propensity did not call for any special examination by the jury. It should be considered along with all the other relevant evidence so as to allow the jury to determine whether the defendants guilt was established to the criminal standard. It was not necessary that the issue of propensity be segregated from the generality of the evidence and a pre emptive decision made in relation to that issue, before the question of guilt or innocence of the accused was tackled [19]. The respondent argued that facts supporting the claim that the defendant had a particular propensity had to be proved beyond reasonable doubt. It was inconceivable that a jury could have a reasonable doubt as to the accuracy or veracity of the evidence said to underpin such a propensity and, nevertheless, accept that evidence as sufficient to establish its presence. [21] The Court recognises that there is a distinction between, on the one hand, proof of a propensity and, on the other, the individual underlying facts said to establish that a propensity exists. In a case in which several incidents are relied on by the prosecution to show a propensity on the part of the defendant, it is not necessary to prove beyond reasonable doubt that each incident happened in precisely the way that it is alleged to have occurred. Nor must the facts of each individual incident be considered by the jury in isolation from each other [39]. The proper issue for the jury in a case such as this is whether they are sure, beyond reasonable doubt, that the propensity has been proved. The jury is entitled to and should consider the evidence about propensity in the round [43]. This is both because the improbability of a number of similar incidents being false is a consideration for the jury and secondly because obvious similarities in various incidents may constitute mutual corroboration for those incidents. Nevertheless, the existence of propensity must be proved to the criminal standard. The Court rejects the prosecutions argument that propensity does not call for special treatment. The jury should be directed that if they are to take propensity into account, they should be sure that it has been proved. This does not require that each individual item of evidence said to show propensity must be proved beyond reasonable doubt. It means that all the material touching on the issue should be considered with a view to reaching a conclusion as to whether they are sure that the existence of a propensity has been established [44]. There is no need for the jury to consider each incident in hermetically sealed compartments [49]. In so far as the Court of Appeal in the present case suggested that each incident claimed by the prosecution to show a propensity on the part of the defendant required to be proved to the criminal standard, it was wrong. The proper question is whether the jury is satisfied that a propensity has been established. That assessment depends on an overall consideration of the evidence available, not upon a segregated examination of each item of evidence in order to decide whether it has been proved beyond reasonable doubt [54]. The trial judge failed to give adequate directions as to how the question of propensity should be approached by the jury, however. On that account the conviction was unsafe and had been properly quashed [56]. The Court emphasises, however, that propensity is, at most, an incidental issue. It should be made clear to the jury that the most important evidence is that which bears directly on the guilt or innocence of the accused person. Propensity cannot alone establish guilt [55].

This appeal arises out of an application for judicial review of a decision taken by the Scottish Criminal Cases Review Commission (the Commission) under section 194B(1) of the Criminal Procedure (Scotland) Act 1995, as amended (the 1995 Act). That subsection provides, so far as material: The Commission on the consideration of any conviction of a person . who has been convicted on indictment or complaint may, if they think fit, at any time, and whether or not an appeal against such conviction has previously been heard and determined by the High Court . refer the whole case to the High Court and, subject to section 194DA of this Act, the case shall be heard and determined, subject to any directions the High Court may make, as if it were an appeal under Part VIII or, as the case may be, Part X of this Act. The grounds for a reference under section 194B(1) are set out in section 194C: (1) The grounds upon which the Commission may refer a case to the High Court are that they believe that it is in the interests of justice that a reference that a miscarriage of justice may have occurred; (a) and (b) should be made. (2) In determining whether or not it is in the interests of justice that a reference should be made, the Commission must have regard to the need for finality and certainty in the determination of criminal proceedings. It is also relevant to note section 194DA. So far as material, it provides: (1) Where the Commission has referred a case to the High Court under section 194B of this Act, the High Court may, despite section 194B(1), reject the reference if the Court considers that it is not in the interests of justice that any appeal arising from the reference should proceed. (2) In determining whether or not it is in the interests of justice that any appeal arising from the reference should proceed, the High Court must have regard to the need for finality and certainty in the determination of criminal proceedings. Sections 194C(2) and 194DA were inserted into the 1995 Act by the Criminal Procedure (Legal Assistance, Detention and Appeals) (Scotland) Act 2010 (the 2010 Act), a piece of emergency legislation which was enacted on the day after this court gave judgment in Cadder v HM Advocate [2010] UKSC 43; 2011 SC (UKSC) 13; [2010] 1 WLR 2601. These proceedings arise out of the Commissions consideration of the appellants conviction for rape. The Commission decided not to refer his case to the High Court of Justiciary. They accepted that a miscarriage of justice might have occurred, but they did not believe that it was in the interests of justice that a reference should be made. The condition laid down in section 194C(1)(b) was therefore not met. The appellant challenges that decision on the basis that the Commissions decision was vitiated by errors of law. The appellants application for judicial review was refused by the Lord Ordinary, Lord Pentland. That decision was upheld by an Extra Division (Lord Menzies, Lady Clark of Calton and Lord Wheatley). The present appeal against their decision was brought before the introduction of a requirement that permission to appeal should be obtained. The factual background to the appeal On 12 August 2001 the appellant had sexual intercourse with a woman who then reported to the police that she had been raped. She was medically examined, and vaginal swabs were taken from her for forensic examination. The following day, the appellant was informed by the police that the allegation had been made. As requested, he went to a police station and was interviewed by police officers. At the beginning of the interview he was cautioned. He confirmed that he fully understood the caution and that he had attended the police station voluntarily. He was asked if he wished to have a solicitor advised, but declined. In accordance with practice at the time, and the law as then understood, he was not offered the option to consult a solicitor before the interview, and no solicitor was present during it. When questioned, he freely admitted having had sexual intercourse with the complainer at his flat, and maintained that it had taken place with her consent. As a result of his admission, the semen found on the vaginal swabs was not subjected to DNA analysis. That also was in accordance with the usual practice at the time, when the fact that sexual intercourse had taken place between an accused and a complainer was not in dispute. The appellant was subsequently charged with the rape of the complainer, and also with indecent assaults on two other women. The subsequent trial took place between 30 August and 5 September 2002. At the trial, the appellant was represented by a highly experienced Queens Counsel. He pled guilty to one of the charges of indecent assault, and the other charge of indecent assault was withdrawn. In relation to the charge of rape, the Crown relied on the appellants admission as corroboration of the complainers evidence that sexual intercourse had occurred, that being an element of the offence which must be proved by corroborated evidence. A videotape of the appellants interview was therefore played to the jury as part of the Crown case, without objection. Corroboration of the complainers evidence as to the other essential element of the offence, namely that she had not consented to sexual intercourse, was provided by other Crown witnesses, who gave evidence of her being in a state of shock and distress shortly after her encounter with the appellant, and of injuries which were found when she was medically examined. There was also evidence that a decorative chain on her trousers had been broken, although her clothing was otherwise undamaged. In cross examination, the complainer accepted that she had initially given the police an untrue account of where the incident occurred, when she had stated that she had been raped in a lane near the nightclub where she met the appellant, rather than at his flat, some miles away. She explained that she had been disorientated. In relation to the evidence of her being distressed, the line of cross examination sought to attribute her distress to her consumption of alcohol and medication, and to the appellants having rejected her at the end of their encounter. It was also established that the complainer initially told the police that she had been taken from the nightclub forcibly, but later said that she left it willingly. She had explained her earlier account by saying that she had been embarrassed to admit that she had gone home with a man she had only just met. The appellant elected not to give evidence, but relied on the interview as setting out his defence to the charge, namely that the sexual intercourse had been consensual. As a result, he avoided having his version of events subjected to cross examination. The appellant was convicted. He was sentenced to five years imprisonment on the rape charge and admonished for the indecent assault. The sentence was completed long ago. The appellants case is fairly typical of rape cases of that period. It was usual for persons accused of rape to be interviewed by the police without having the opportunity to consult a solicitor. It was common for them to accept that sexual intercourse had taken place and to maintain that it was consensual. It was common, in those circumstances, for the police not to complete forensic examination of samples which might have provided independent corroboration of the fact of sexual intercourse, since the accuseds admission at interview rendered such examination unnecessary. It was usual for the Crown then to rely on the admission as part of the Crown case at the trial. It was common for the accused to rely on the exculpatory part of the interview in his defence. The first appeal The appellant appealed against his conviction for rape on three grounds. The first was defective representation. He claimed that evidence should have been led from a number of witnesses who could have given evidence about such matters as his kissing the complainer in the night club prior to their going to his flat, and the lack of noise from his flat at the material time. The second ground was that the jury had been directed on the law of rape in accordance with the decision in Lord Advocates Reference (No 1 of 2001) 2002 SCCR 435, which post dated the incident. The third ground concerned the prejudicial effect of pre trial publicity. Each ground was considered at first sift (by a single judge) on 20 June 2003. Leave to appeal was refused, the first sift judge giving detailed reasons for his decision. However, at second sift (by three judges) on 23 December 2003, leave to appeal was granted, but only on the defective representation ground. Notwithstanding that decision, on 30 April 2004 the court allowed the appellant to lodge two additional grounds of appeal. The new grounds related to the adequacy of corroboration, and to the directions given on mens rea. At the hearing of the appeal on 29 September 2004, it was only the new grounds which were relied upon. The appeal was refused: Gordon v HM Advocate 2004 SCCR 641. The second appeal The appellant applied to the Commission to have his case referred back to the High Court on a number of grounds, namely prejudicial pre trial publicity, the effect of the development in the law of rape between the incident and the trial, the sufficiency of the evidence, misdirection on the law of rape, failure by the Crown to disclose that the complainers clothing had been seized by the police, and police misconduct and failures in relation to the investigation of the incident, the gathering of evidence and the disclosure of evidence. In April 2007 the Commission referred the case back to the High Court, primarily on the basis that (1) the police investigation had been defective in a number of respects, (2) there had been a failure by the Crown to disclose a statement taken from the complainer in which she said that she shouted during the incident, contrary to her evidence at the trial (although the defence knew at the trial that such a statement had been made, and the complainer was cross examined on the basis that she had made such a statement), and (3) the Commission had discovered evidence that the complainer had previously been in a relationship with one of the witnesses who had given evidence of her distress. In accordance with section 194B(1) of the 1995 Act, the referral was dealt with as a second appeal. On 20 April 2007 the appellant made a further application to the Commission, on the basis that there had been an imbalance between men and women on the jury. The Commission rejected the application on the ground that the case had already been referred, and the matter could be raised as a ground of appeal. In the event, the matter was not pursued. The appellants grounds of appeal were lodged in June 2007. They concerned the matters identified by the Commission, and also a failure to disclose that the complainer had been charged by the police with child neglect in relation to an occasion several months after the incident involving the appellant, when her estranged husband reported that their 11 year old daughter had been left at home on her own. The charge had not been pursued. The appeal had an extended procedural history, described in the judgment of Lord Carloway in Gordon v HM Advocate [2009] HCJAC 52; 2009 SCCR 570. In the light of that judgment, in July 2009 the appeal was set down for a hearing on 26 28 January 2010. On those dates the appellant appeared on his own behalf, having parted company (not for the first time) with his legal representatives. He sought to have the hearing discharged in order to instruct fresh counsel and solicitors, but that application was refused in view of the protracted procedural history and the age of the conviction, amongst other matters. The appeal was refused on 6 May 2010: Gordon v HM Advocate [2010] HCJAC 44; 2010 SCCR 589. In its opinion, delivered by Lord Carloway, the court considered each of the grounds of appeal with meticulous care. Its conclusion reflected its evaluation of the likely effect on the jurys verdict of the additional or undisclosed evidence, and of the potential evidence which was unavailable because of defects in investigation: The points raised in this appeal are essentially matters of fact which the appellant maintains might, or perhaps would, have made a difference in the jurys deliberations. But the reality is that this was a complainer who was demonstrated to have given different accounts to the police and others after the occurrence of the incident. The defence brought out a number of points in favour of the defence position, including the lack of damage to the clothing. There was ample material available at the trial which could have persuaded the jury that there was a reasonable doubt about the guilt of the appellant. But, the jury had no reasonable doubt and it is easy to see why. Although there were substantial variations in the complainers early accounts, she ultimately spoke clearly to leaving the nightclub, ending up at the appellants flat and being raped by him. [T]he evidence of the bruising to the complainers breast, arms, thighs and buttocks must have seemed to the jury, as it does to this court, to be of some note. The ornamental chain of her trousers was broken. In addition, it was not disputed that the complainer had left the appellants flat abruptly. She did not go home, as might have been anticipated after a consensual event, but went first to a male friends house in the early hours of the morning in a distressed state. When she left his flat, she still did not go home, but called a female friend to pick her up from a shopping centre some time around 3.30 am, when she was witnessed still to be in a state of distress. In addition, there was the appellants own account where, at parts of his interview, he accepts that he escorted the complainer to his flat when he knew she was in a drunken state. He admitted that things got a wee bit out of control at some point, albeit that he had an alternative explanation for this. He admitted that he did not provide the complainer with his name or address, so that she could telephone a taxi. The jury would have been entitled to regard these admissions as highly supportive of the complainers account and not consistent with an episode of consensual intercourse. The evidence therefore fully entitled the jury to reach the verdict they did and nothing in the grounds of appeal or otherwise has persuaded the court that a miscarriage of justice did occur, or even might have occurred, in this case. (paras 105 107) The Cadder decision On 26 October 2010, several months after the appellants second appeal had been refused, this court gave judgment in the case of Cadder v HM Advocate. It held that the right under article 6 of the European Convention on Human Rights not to incriminate oneself implied that a suspect should be permitted access to legal advice prior to and during interrogation by the police, unless there were compelling reasons in the particular circumstances of the case which justified a restriction on the right of access to a solicitor; and that, as a general rule, answers to police questioning conducted without the opportunity of access to legal advice ought not to be admitted in evidence. However, their admission in evidence did not in itself make the trial unfair. A conviction would only be quashed if (per Lord Hope at para 64) it was clear that there was insufficient evidence for a conviction without the evidence of the police interview or that, taking all the circumstances of the trial into account, there was a real possibility that the jury would have arrived at a different verdict had they not had that evidence before them. This decision was not unexpected. There had however been considerable concern about its practical implications, partly because of an apprehension that the resultant change in understanding of the law might form the basis of appeals by the large numbers of persons who had previously been convicted on the basis of evidence obtained at interviews conducted without their having had access to a solicitor. Such persons had been properly convicted under the law as it was understood at the time of their trial and any subsequent appeal, but they might, following Cadder, argue that they were the victims of a miscarriage of justice. There was little if any authority on the approach which the High Court should take to applications for extensions of time to lodge notices or notes of appeal, based upon developments in the law. If the ordinary approach to applications for extensions were adopted, then it appeared that such applications might be granted in large numbers of cases, since the lateness of the application would generally be excusable. There was also uncertainty as to whether the refusal of applications would in any event be compatible with Convention rights. Even if the court adopted a restrictive approach, the refusal of applications might simply result in a flood of references by the Commission. In Cadder, this court considered the retroactive effect of its own decision in an effort to address those concerns. Lord Hope, in a judgment with which the other members of the court agreed, referred to dicta in earlier decisions of this court, to the effect that it has an inherent power to limit the retrospective effect of its decisions. The Convention principle of legal certainty suggested that there would be no objection to this on Convention grounds. He concluded, however, that the exercise of that power was precluded in this context by the statutory regime created by the Scotland Act 1998. Furthermore, the relevant Strasbourg authority (Salduz v Turkey (2008) 49 EHRR 19) had not laid down a new principle: far from making a ruling that was not applicable to acts or situations that pre dated its judgment, it ruled that the applicants Convention rights were violated in 2001, when the relevant events took place. Nevertheless, Lord Hope considered that there were strong grounds for ruling, on the basis of the principle of legal certainty, that the decision in Cadder did not permit the re opening of cases which had been finally determined. After referring to judgments of the European Court of Human Rights concerned with the principle of legal certainty in the application of the Convention, to the decision of the Supreme Court of Ireland in A v Governor, Arbour Hill Prison [2006] IESC 45; [2006] 4 IR 88, and to that of the Court of Appeal in England in R v Budimir [2010] EWCA Crim 1486; [2011] QB 744, Lord Hope stated: In the light of these authorities I would hold that convictions that have become final because they were not appealed timeously, and appeals that have been finally disposed of by the High Court of Justiciary, must be treated as incapable of being brought under review on the ground that there was a miscarriage of justice because the accused did not have access to a solicitor while he was detained prior to the police interview. The Scottish Criminal Cases Review Commission must make up its own mind, if it is asked to do so, as to whether it would be in the public interest for those cases to be referred to the High Court of Justiciary. It will be for the Appeal Court to decide what course it ought to take if a reference were to be made to it on those grounds by the commission. (para 62) The reference to the public interest in that passage, and in a similar passage in the judgment of Lord Rodger (para 103), should be understood as referring to the interests of justice, in accordance with section 194C(1) of the 1995 Act. Lord Rodger, in a judgment with which the other members of the court also agreed, observed (para 101) that guidance could be derived from the judgment of Murray CJ in A v Governor, Arbour Hill Prison at paras 36 38: [T]he retrospective effect of a judicial decision is excluded from cases already finally determined. This is the common law position . No one has ever suggested that every time there is a judicial adjudication clarifying or interpreting the law in a particular manner which could have had some bearing on previous and finally decided cases, civil or criminal, that such cases be reopened or the decisions set aside. It has not been suggested because no legal system comprehends such an absolute or complete retroactive effect of judicial decisions. To do so would render a legal system uncertain, incoherent and dysfunctional. Such consequences would cause widespread injustices. Lord Rodger considered that Murray CJs description of the effect of a decision which alters the law as previously understood could be applied to Scots law, and that such an approach was also compatible with the Convention: For instance, in Smith v Lees 1997 JC 73 the Court of Five Judges overruled Stobo v HM Advocate 1994 JC 28 and thereby laid down a more restrictive test for corroboration in cases of sexual assault. The new test applied to the appellants case and to other cases that were still live. But it could never have been suggested that the decision meant that convictions in completed cases, which had been obtained on the basis of the law as laid down in Stobo, were ipso facto undermined or invalidated. Similarly, in Thompson v Crowe 2000 JC 173, the Full Bench overruled Balloch v HM Advocate 1977 JC 23 and re established the need to use the procedure of a trial within a trial when the admissibility of statements by the accused is in issue. But, again, this had no effect on the countless completed cases where convictions had been obtained on the basis of evidence of such statements by the accused which judges had admitted in evidence without going through that procedure. So, here, the courts decision as to the implications of article 6(1) and (3)(c) of the Convention for the use of evidence of answers to police questioning has no direct effect on convictions in proceedings that have been completed. To hold otherwise would be to create uncertainty and, as Murray CJ rightly observes [in A v Governor, Arbour Hill Prison A v Governor, Arbour Hill Prison, para 38], cause widespread injustices. And the Strasbourg court has pointed out that the principle of legal certainty is necessarily inherent in the law of the European Convention (Marckx v Belgium (1979) 2 EHRR 330, para 58). In A v Governor, Arbour Hill Prison (para 286) Geoghegan J said that he was satisfied . that it would be wholly against good order if convictions and sentences which were deemed to be lawful at the time they were decided had to be reopened. I emphatically agree. And that policy is, of course, embodied in section 124 of the 1995 Act which makes interlocutors and sentences pronounced by the Appeal Court final and conclusive and not subject to review by any court whatsoever, except in proceedings on a reference by the Scottish Criminal Cases Review Commission. (para 102) In the subsequent cases of Lang and Hastie v United Kingdom (2012) 55 EHRR SE 7, in which applications were made to the European Court of Human Rights by persons who had been refused extensions of time to appeal on a Cadder basis, the court referred approvingly to the legal certainty the Supreme Court properly sought to introduce when it limited the effect of its ruling in Cadder (para 32). The 2010 Act A legislative response to Cadder had been prepared in anticipation of this courts decision, and as earlier explained, the 2010 Act was immediately enacted. As well as amending the legislation governing the rights of persons arrested or detained by the police, so as to provide them with a right of access to a solicitor, and making consequential amendments to legal aid legislation, it amended the provisions of the 1995 Act relating to references by the Commission as explained earlier. As a result, in determining whether or not it was in the interests of justice that a reference should be made, the Commission was required to have regard to the need for finality and certainty in the determination of criminal proceedings. The High Court was also given the power to reject references if it considered that it was not in the interests of justice that any appeal arising from the reference should proceed; and in that regard it also was required to have regard to the need for finality and certainty in the determination of criminal proceedings. Although the immediate occasion for the enactment of the provisions of the 2010 Act concerning references by the Commission was the case of Cadder, it is important to appreciate that those provisions have a wider significance. They are not confined either to Cadder type cases or to other cases concerned with changes in the law. It is inherent in the role of the Commission that it qualifies the principle of finality in criminal proceedings, otherwise secured by statutory provisions concerning the time limits for bringing appeals and the finality of the disposal of appeals by the High Court. The justification for that inroad into finality and legal certainty is the need to provide a mechanism for the review of cases where a possible miscarriage of justice comes to light after the exhaustion of rights of appeal. This is necessary not only in the interests of the potential victim of a miscarriage of justice but also in order to maintain public confidence in the administration of justice. Certainty and finality nevertheless remain important considerations for any system of criminal justice: the re opening of cases which have been completed has significant implications for the victims of crime, and the families of deceased victims, as well as for those who have been convicted. Public confidence in the administration of justice is also damaged if the outcome of completed proceedings appears to be merely provisional. There are in addition more pragmatic considerations. In a legal system with limited resources, the public interest requires priority generally to be given to dealing with current cases. In order for these considerations to be taken into account, it is necessary that the Commission should not merely ask itself whether a miscarriage of justice may have occurred, but also whether it is in the interests of justice that the case should be referred to the High Court; and that, in deciding the latter question, it should have regard to the need for finality and certainty in the determination of criminal proceedings. The post Cadder application to the Commission On 7 May 2010, the day after the refusal of his second appeal, the appellant made another application to the Commission, raising matters relating to forensic findings. On 29 October 2010 the appellant also sought to have his case referred on the basis of the Cadder decision, issued three days earlier. The Commission declined to make a reference on the grounds relating to forensic findings, saying in a statement of reasons dated 25 February 2011 that they did not believe that a miscarriage of justice might have occurred. In relation to Cadder, the Commission decided to defer their decision until judgment had been given in a number of appeals to this court. No issue is taken with that decision in this appeal. In response to further submissions on behalf of the appellant, relating to scientific matters and also making allegations of unfairness and oppression at the hearing of the second appeal, the Commission declined to make a reference on those grounds in a supplementary statement of reasons dated 30 September 2011. No issue is taken with that decision in this appeal. Following the giving of judgment by this court in the case of Ambrose v Harris [2011] UKSC 43; 2012 SC (UKSC) 53; [2011] 1 WLR 2435 and related appeals, the Commission addressed the Cadder ground in a statement of reasons dated 27 January 2012. They considered that, since the Crown had relied upon the appellants admission that sexual intercourse had occurred as corroboration of the complainers evidence in that regard, and no other corroborative evidence existed, there might have been a miscarriage of justice. The remaining question was whether it was in the interests of justice that a reference should be made. In that regard, the Commission noted the requirement to have regard to the need for finality and certainty in the determination of criminal proceedings, in accordance with section 194C(2) of the 1995 Act. They noted that the appellant had been convicted in 2002, long before the decision in Cadder or the judgments of the European Court of Human Rights on which it was based. They noted the history of the previous applications and appeals. They stated that they considered the following matters to be relevant: (1) The amount of time that had passed since the conviction. (2) That the appellant had never disputed that he had sexual intercourse with the complainer, and had relied on the interview at his trial in order to present his defence of consent. (3) That, in so far as the Crown had used the interview not only as corroboration of sexual intercourse having taken place, but also to undermine the appellants credibility, no objection had been taken at the trial (whereas objection had been taken, successfully, to the admissibility of a further interview). (4) That no issue had been raised in the two appeals as to the fairness of the manner in which the interview was conducted. In the light of these considerations, the Commission concluded that it was not in the interests of justice to refer the case back to the High Court. In the light of further submissions on behalf of the appellant, the Commission confirmed their decision in a supplementary statement of reasons dated 27 April 2012. The submissions argued that the appellants case should be regarded as exceptional, particularly because he had been unrepresented at the hearing of the second appeal and had lacked the necessary knowledge to raise a Cadder point. The Commission accepted, as they had in their earlier statement of reasons, that the appellant could not be criticised for raising the point only after the decision in Cadder, and considered that the reasons for his not having raised the point earlier were not relevant to the question of whether it was in the interests of justice to refer his case. In relation to that question, the Commission adhered to their earlier reasoning. They emphasised in particular the fact that the appellant had at no stage disputed the veracity of what he said to the police, together with the fact that he relied upon the interview in order to present his defence of consent. The proceedings below On 13 September 2012 the appellant commenced proceedings for judicial review of the Commissions decision not to refer his case back to the High Court on the Cadder ground. It was argued that the Commission had erred in taking account of the amount of time that had passed since the conviction, or had in any event attached undue weight to that consideration. It was also argued that the Commission should have given greater weight to the adverse impression which might have been created in the minds of the jury by the appellants attitude towards women, as revealed by the interview: an attitude described as one of flippancy, coarseness, indelicacy and selfishness. Finally, it was argued that notwithstanding what had been said by this court in Cadder about the need for finality in criminal proceedings, the appellants case should have been treated as exceptional, particularly since he had been unrepresented when his appeal was heard, and the Cadder appeal had then been pending. In those circumstances, it was argued, the High Court should have advised him to seek an adjournment of the hearing of his appeal. On 24 January 2013 the Lord Ordinary refused the application: [2013] CSOH 13. In a careful judgment, Lord Pentland considered fully the various points made on behalf of the appellant, and rejected each of them. His decision was upheld by the Extra Division on 6 November 2013: [2013] CSIH 101. The present appeal The issues raised by the appellant in the present appeal are stated to be whether the Commission erred in law in taking into account the following considerations, when, had Cadder applied, the interview that provided the corroboration of the Crown case would have been inadmissible and the appellant would not have been convicted: that the appellant had not disputed the truth of what he told the (1) police at interview; (2) that the appellant had not challenged the fairness of the police interview or its use at his trial in that, before Cadder, there was no basis upon which to do so; and (3) that the appellant made use of the interview at trial, when this was a course of action decided upon in circumstances forced on the appellant, namely that the interview was already before the jury. In relation to the first of these matters, Lord Pentland said: [I]t was clearly relevant for the respondents to recognise that the petitioner has never disputed the truth of what he told the police in his interview and, in particular, that he has never suggested that he did not have sexual intercourse with the complainer. What he now seeks to do is to take advantage of a subsequent change in the law rendering inadmissible evidence which was not in dispute at the trial, videlicet evidence that he admitted having intercourse with the complainer. It would, in my opinion, be repugnant to the interests of justice if the petitioner were now to be permitted to invoke Cadder for the purpose of ruling out uncontested evidence that was essential to the technical sufficiency of the Crown case at his trial. To do so would allow the petitioner to transform what was a non issue at the trial into an issue of critical importance years later. That would run counter to the principle of finality and certainty that is central to the fair working of the criminal justice system. I respectfully agree. The fact that the evidence in question was and remains undisputed is plainly relevant to an evaluation of whether it is in the interests of justice to make a reference. It would not normally be in the interests of justice to quash a conviction merely because, under the law as now understood, there was a lack of admissible corroboration of a fact which had never been in dispute. Counsel for the appellant submitted that, if the appellant had been offered the opportunity to consult a solicitor, and if (1) he had taken advantage of that opportunity, (2) he had been advised on corroboration, self incrimination and his right to remain silent, and (3) he had exercised his right to remain silent, then he might not have admitted having sexual intercourse, in which event the interview would not have provided the necessary corroboration that sexual intercourse had occurred. That also is a relevant consideration. So too, for that matter, are factors affecting the likelihood of each of those conditions being satisfied: for example, the fact that the appellant actually declined to have intimation of his being interviewed given to any solicitor (para 7 above), the fact that other potentially corroborative evidence was available, in the form of the semen found on vaginal swabs (para 7 above), and the fact that a person accused of rape might have been advised that the only defence, if sexual intercourse could be proved to have taken place, was one of consent, and that the credibility of such a defence would be enhanced if it were put forward at the earliest opportunity. The fact that it was because of the answers given at interview, and the admissibility of those answers under the law at that time, that the semen was not subjected to examination so as potentially to provide other corroborative evidence, is also relevant. The relevance of considerations such as these does not, however, in any way detract from the relevance of the fact that the truth of what was said at interview about sexual intercourse taking place was and remains undisputed. In relation to the second matter, Lord Pentland said: I also consider that it was plainly important for the respondents to acknowledge that in the course of two full appeals against his conviction the petitioner never challenged the fairness of the manner in which the police conducted the interview. Nor did he seek to argue on appeal that the use made of the interview by the Crown at his trial was unfair. I again agree. Counsel for the appellant argued that there was no basis on which the appellant could have challenged the fairness of the interview or its use at his trial, before Cadder. But that misses the point. The decision in Cadder established a new basis on which evidence of answers to police questioning might be inadmissible, but there were already other well established grounds of objection, including unfairness in the conduct of the interview or in the use made of it at the trial. The short point being made by the Commission was that, in the appellants case, unlike some others, the fairness of the conduct of the interview and the use made of it at the trial had not been challenged. That was plainly relevant to an evaluation of where the interests of justice lay. The third matter was not raised in quite the same way before the courts below, but Lord Pentland accepted that the fact that the appellant had chosen to rely on his police interview to present his defence to the jury was a relevant consideration. Again, I agree. Counsel for the appellant argued that this was a course of action decided upon in circumstances forced upon the appellant, namely that the interview was already before the jury. That is not a complete answer. Given that the appellants admission that sexual intercourse had taken place was admissible under the law as it then stood, he was entitled to have the whole of the interview placed before the jury, as a matter of fairness, so that the jury were aware that the admission was made in the context of his also maintaining that intercourse had been consensual. The result was that, although he was entitled to give evidence in his own defence, he did not have to do so in order for his defence to be placed before the jury: they had already heard his account to the police. He did not, therefore, have to expose his account to cross examination. That afforded him an opportunity which would not have existed if the interview had been inadmissible. In the event, he availed himself of that opportunity. That was a matter which could properly be taken into account by the Commission when evaluating the course of action which the interests of justice required. Counsel for the appellant also argued that the approach to the application of the interests of justice test in section 194C of the 2009 Act which had been adopted by the Commission in the present case was inconsistent with the approach to the application of the corresponding test in section 194DA by the High Court in M v HM Advocate; Gallacher v HM Advocate [2012] HCJAC 121; 2012 SCL 1027. It was argued that the case of Chamberlain Davidson v HM Advocate [2013] HCJAC 54; 2013 SCCR 295 was a good illustration of the approach proposed by the appellant. There are a number of difficulties with these arguments. One arises from the fact that the High Court has not itself seen its task in applying the interests of justice test in section 194DA as identical to that of the Commission applying the corresponding test under section 194C. In M v HM Advocate; Gallacher v HM Advocate, Lord Justice General Hamilton, delivering the opinion of the court, considered the role of the Commission and its relationship with the court, and stated: Although this court has been given the power to reject a reference in language that replicates the provision applicable to the Commission (section 194DA(1), (2)), it cannot be right for us simply to duplicate the Commissions function and give effect to our own view. In light of the impressive record of the Commission, it is unlikely that we will have cause to differ from its judgment on this point. I think that we are entitled to assume, unless the contrary is apparent, that the Commission has considered the criteria set out in section 194C and has duly made its independent and informed judgment on them. In my view, we should reject a reference only where the Commission has demonstrably failed in its task; for example, by failing to apply the statutory test at all; by ignoring relevant factors; by considering irrelevant factors; by giving inadequate reasons, or by making a decision that is perverse. (para 33) As the Lord Justice General pointed out in that passage, the Commission makes an independent judgment. It is therefore possible, as was noted in the Report of the Carloway Review (2011), that there may be cases in which the SCCRC and the High Court could reach a different decision on where the interests of justice may lie (para 8.2.11). A further difficulty with the argument is that the expression the interests of justice, which appears in both section 194C and section 194DA, is not susceptible of a precise legal definition which can be applied mechanically. It requires an evaluation of a broad nature, based on an assessment of the particular circumstances of individual cases. Thanks to the thoroughness of the Commissions reports and the High Courts judgments in the present case, this court has access to a wealth of information about the facts which led the Commission to conclude that a reference was not in the interests of justice. Its knowledge of the other cases relied on in argument is derived entirely from the judgments of the High Court in those cases, and is more limited. Certain points of distinction are however readily apparent. The cases of M v HM Advocate and Gallacher v HM Advocate, which were decided together, raised the question whether the court should reject two references under section 194DA. Each reference concerned the admission of a police interview prior to Cadder. In the case of M v HM Advocate (the subsequent stage of which is reported as RMM v HM Advocate [2012] HCJAC 157; 2013 JC 153), where the appellant had been convicted of rape, the statements made during the interview went to the issue of consent: in relation to that issue, the appellant gave several potentially incriminating answers to questions put to him. At his trial, he did not accept the truth of those answers, and gave evidence in his own defence. The interview was then used in cross examination, and in the prosecutors speech to the jury, to attack his credibility. There was also a lack of clarity in the verdict. The appellant was still serving his sentence. In Gallacher v HM Advocate, the appellant made admissions during a police interview which could be held to show special knowledge of a series of sexual offences. He claimed that the police had bullied him and briefed him as to the answers he should give to their questions. That, he maintained, was how he came to show special knowledge. The court allowed the references to proceed. In each of those cases, the circumstances were very different from those of the present case. None of the factors referred to in para 37 above appears to have been present. Most importantly, the statements in question in those cases went to an issue which was in dispute at the trial and remained in dispute. Their veracity was not accepted. The case of Chamberlain Davidson v HM Advocate was concerned with a conviction for attempted rape, where the appellant had told the police at interview that he had met the complainer in the street, had said hello, and had grabbed her wrists when she started to scream. The latter admission was the only corroboration of the complaint of assault. The Commission made a reference on grounds concerned with misdirection. They declined to make a reference on a Cadder ground, for similar reasons to those given in the present case: the appellant had served his sentence; all parties had proceeded in good faith on the understanding that the interview had been conducted fairly and that its contents were admissible; the appellant had never denied the veracity of the incriminating statement he had made; and he had relied on his police interview by way of his defence. The court decided not to reject the reference under section 194DA: [2012] HCJAC 120. Subsequently, in the exercise of its power under section 194D(4B) of the 1995 Act to grant leave for the appellant to found the appeal on additional grounds, the court allowed additional grounds of appeal to be received, including a ground raising a question as to the retroactive effect of the decision in Cadder: [2012] HCJAC 122. In the event, that point was not discussed at the hearing of the appeal. The Crown conceded that, if there was not a sufficiency of evidence without the police interview, the appeal must succeed. It succeeded on that basis. Nothing in that case suggests that the Commission erred in taking account of the matters mentioned in para 37 above. of, as the courts below correctly held. Conclusion It follows that the Commission did not err in any of the respects complained For these reasons, I would dismiss the appeal.

UK-Abs

The appeal arises out of an application for judicial review of a decision taken by the Scottish Criminal Cases Review Commission (the Commission) under s.194B(1) of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act) not to refer the appellants rape conviction to the High Court of Justiciary. In 2001 the appellant had sexual intercourse with a woman who then reported to the police that she had been raped. The appellant was interviewed by the police, and in accordance with practice and the law as it was understood at the time, he was not offered the option to consult a solicitor before the interview, and no solicitor was present during it. During the interview, he admitted having had sexual intercourse with the complainer, but maintained that it had been consensual. As a result of his admission, semen found on vaginal swabs was not subjected to DNA analysis. At trial, the appellant elected not to give evidence but relied on the interview as setting out his defence of consent. The appellant was convicted and sentenced to 5 years imprisonment. The appellant appealed against his conviction unsuccessfully. His case was also referred by the Commission, again without success. The appellant then applied to the Commission for a second referral of his case. Following the decision of the Supreme Court in Cadder v HM Advocate that article 6 of the European Convention on Human Rights required suspects to be permitted access to legal advice prior to and during interrogation by the police the appellant also sought to have his case referred on that basis. The Commission declined to make a reference on any of the grounds advanced. In relation to the Cadder ground, the Commission considered that since the Crown had relied upon the appellants admission that sexual intercourse had occurred as corroboration of the complainers evidence in that regard, and no other correlative evidence existed, there might have been a miscarriage of justice. However, the Commission did not believe it was in the interests of justice that a reference should be made, given the time that had passed since conviction, and that the appellant did not dispute the veracity of the interview or the fairness of the manner in which it had been conducted, and had relied on it at trial. The grounds for a reference set out in s.194C(1) were therefore not met. The appellant applied for judicial review of the Commissions decision. That application was refused by the Lord Ordinary and the ruling was upheld by the Extra Division. The appellant appealed to the Supreme Court. The Supreme Court unanimously dismisses Mr Gordons appeal. Lord Reed gives the judgment, with which the rest of the Court agrees. The Extra Division and the Lord Ordinary were correct to conclude that the Commission did not err in law in any of the ways suggested by the appellant. The Commission was right to take into account the fact that the appellant had not disputed the veracity of what he had told the police in the interview. The fact that the evidence in question was and remains undisputed is plainly relevant to whether it is in the interests of justice to make a reference. It would not normally be in the interests of justice to quash a conviction merely because, under the law as now understood, there was a lack of admissible corroboration of a fact which had never been in dispute. While it is a relevant consideration that if the appellant had been offered the opportunity to consult a solicitor, matters might have taken a different course, and the interview might not have provided the necessary corroboration that sexual intercourse had occurred, it is also relevant that it was because of the answers given at interview, and the admissibility of those answers under the law at the time, that the semen found on the swabs were not submitted to examination, so as potentially to provide other corroborative evidence. These considerations do not however detract from the relevance of the fact that the truth of what was said at interview was and remains undisputed. [37 39] The Commission was also correct to take into account the fact that the appellant had not challenged the fairness of the way in which the interview had been conducted or its use at the trial. Prior to Cadder there were well established grounds of objection on which the appellant could have relied in the event of unfairness in the conduct of the interview or the use made of it at the trial, and his failure to do so was plainly relevant to where the interests of justice lay. [40] It was also a relevant consideration that the appellant had relied on the interview in order to present his defence to the jury. The appellants argument was that this course of action was forced upon him. Although the appellants admission that sexual intercourse had taken place was admissible under the law as it then stood, he was entitled to have the whole of the interview placed before the jury so that they were aware that the admission was made in the context of his contention that the sexual intercourse had been consensual. The result was that, although the appellant was entitled to give evidence in his own defence, he did not have to do so in order for his defence to be placed before the jury. He could therefore avoid exposing his defence to cross examination. That afforded him an opportunity which would not have existed if the interview had been inadmissible. In the event, he availed himself of that opportunity. [41] The Commissions approach to the interests of justice test in s.194C of the Act was not inconsistent with the application in the case law of the corresponding test in s.194DA, which applied to the High Court. The High Court has not treated its decision under s.194DA as identical to that of the Commission under s.194C; although the power to refer is couched in the same language, the role of each body is different. Further, the authorities relied on by the appellant in any event concerned different circumstances. [42 50]

This appeal raises two issues relating to the deportation of foreign criminals as defined in the UK Borders Act 2007. The first concerns the significance of sections 32 and 33 of that Act in appeals relating to deportation which are based on article 8 of the European Convention on Human Rights. The second concerns the significance, in the same context, of changes to the Immigration Rules which came into effect in July 2012. The statutory framework It is convenient to begin by considering the principal elements of the legislative framework, as it stood at the time of the events with which this appeal is concerned. It is unnecessary to consider more recent amendments to the legislation, including those effected by the Immigration Act 2014. The Immigration Act 1971 Section 3(5) of the Immigration Act 1971 provides that a person who is not a British citizen is liable to deportation from the United Kingdom if (a) the Secretary of State deems his deportation to be conducive to the public good, or (b) another person to whose family he belongs is or has been ordered to be deported. Section 3(6) provides that, without prejudice to the operation of section 3(5), a person who is not a British citizen shall also be liable to deportation if, after he has attained the age of 17, he is convicted of an offence for which he is punishable by imprisonment and on his conviction is recommended for deportation by a court empowered by the Act to do so. Section 5(1) provides that, where a person is liable to deportation under section 3(5) or (6), the Secretary of State may make a deportation order against him. A deportation order is defined as an order requiring the person to leave and prohibiting him from entering the UK. Section 5(5) gives effect to the provisions of Schedule 3 with respect to the removal from the United Kingdom of persons against whom deportation orders are in force. In particular, paragraph 1 of Schedule 3 provides that, where a deportation order is in force against any person, the Secretary of State may give directions for his removal to a country or territory specified in the directions. The Nationality, Immigration and Asylum Act 2002 Section 82(1) of the Nationality, Immigration and Asylum Act 2002 provides a right of appeal to the First tier Tribunal against an immigration decision. That expression is defined by section 82(2), and includes a decision to make a deportation order under section 5(1) of the 1971 Act (section 82(2)(j)). The giving of removal directions under Schedule 3 to the 1971 Act, following the making of a deportation order, is not an immigration decision, and is therefore not subject to appeal. In terms of section 82(3A) of the 2002 Act (as inserted by section 35(3) of the UK Borders Act 2007), section 82(2)(j) does not apply to a decision to make a deportation order which states that it is made in accordance with section 32(5) of the 2007 Act (to which it will be necessary to return). However, section 82(3A)(a) provides that a decision that section 32(5) applies is itself an immigration decision, with the consequence that an appeal lies under section 82(1). The grounds on which an appeal can be brought under section 82(1) are set out in section 84(1). So far as material, they are: that the decision is not in accordance with immigration (a) rules . (c) that the decision is unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Human Rights Convention) as being incompatible with the appellants Convention rights . (e) law; (g) that removal of the appellant from the United Kingdom in consequence of the immigration decision would breach the United Kingdoms obligations under the Refugee Convention or would be unlawful under section 6 of the Human Rights Act 1998 as being incompatible with the appellants Convention rights. that the decision is otherwise not in accordance with the On an appeal, the tribunals task is not merely to review the decision made by the Secretary of State. It reaches its decision after hearing evidence, and on the basis of its own findings as to the facts. Under section 86(3), it is required to allow the appeal in so far as it thinks that: (a) a decision against which the appeal is brought or is treated as being brought was not in accordance with the law (including immigration rules), or a discretion exercised in making a decision against (b) which the appeal is brought or is treated as being brought should have been exercised differently. An appeal against a decision of the First tier Tribunal lies to the Upper Tribunal, on a point of law, under section 11 of the Tribunals, Courts and Enforcement Act 2007. A further appeal lies under that Act to the Court of Appeal, or the equivalent courts in Scotland and Northern Ireland, and ultimately to the Supreme Court. The UK Borders Act 2007 Section 32(4) of the 2007 Act provides that, for the purposes of section 3(5)(a) of the 1971 Act, the deportation of a foreign criminal is conducive to the public good. The liability of foreign criminals to deportation, under section 3(5)(a) of the 1971 Act, does not therefore depend on any assessment by the Secretary of State: it is automatic. The expression foreign criminal is defined by section 32(1) of the 2007 Act as meaning a person who is not a British citizen, who is convicted in the United Kingdom of an offence, and to whom one of the conditions in section 32(2) and (3) applies. The first of those conditions is that the person is sentenced to a period of imprisonment of at least 12 months. The second is that the offence is specified by an order made by the Secretary of State, and the person is sentenced to a period of imprisonment. No such order has yet been made. Section 32(5) provides that the Secretary of State must make a deportation order in respect of a foreign criminal (subject to section 33). Section 33 provides, so far as material: (1) Section 32(4) and (5) (a) do not apply where an exception in this section applies (subject to subsection (7) below) . (2) Exception 1 is where removal of the foreign criminal in pursuance of the deportation order would breach a persons Convention rights, or the United Kingdoms obligations under the (a) (b) Refugee Convention . (7) The application of an exception (a) does not prevent the making of a deportation order; (b) results in it being assumed neither that deportation of the person concerned is conducive to the public good nor that it is not conducive to the public good; but section 32(4) applies despite the application of Exception 1 or 4. It follows from the concluding words of section 33(7) that the fact that the removal of a foreign criminal would breach his Convention rights does not affect the application of section 32(4), in terms of which his deportation is conducive to the public good. Nor does it prevent the making of a deportation order. On the other hand, it results in the disapplication of section 32(5) of the 2007 Act. Parliament made that clear in section 33(2)(a), read with section 33(1)(a). The Secretary of State is therefore under no duty to make a deportation order. It may seem puzzling that a person may be liable to deportation even when he cannot be deported, but a possible explanation is that the circumstances which may render deportation incompatible with the Convention can be temporary. For example, the risk of a breach of article 3 in the country to which the person would be deported may disappear following a change of regime, or be removed as a result of negotiated guarantees. Section 32(4) keeps open the possibility of automatic deportation under section 32(5) in the event of a material change of circumstances. If the Secretary of State accepts that removal would breach a foreign criminals Convention rights, then she will not make a deportation order: the Immigration Rules have stated since October 2000 that a deportation order will not be made if the persons removal pursuant to the order would be contrary to the UKs obligations under the Convention. If, on the other hand, the Secretary of State rejects a claim that removal would breach the foreign criminals Convention rights, she must decide to make a deportation order as required by section 32(5). As explained earlier, an appeal lies under section 82(1) and (3A) of the 2002 Act against the decision that section 32(5) applies, on the ground that the decision, or removal, is unlawful under section 6 of the Human Rights Act 1998, or on the ground that the decision is not in accordance with immigration rules, or is otherwise not in accordance with the law. Sections 32 and 33 were enacted in response to Parliamentary and public concern about failures to deport large numbers of foreign citizens who had committed serious offences in the UK, due partly to the practices followed by the Home Office at that time (under which there was not, until July 2006, any presumption in favour of deportation), and partly to delays and uncertainty affecting the procedures for deportation. The level of that concern, and the justification for it, are apparent from the documents forming the background to the 2007 Act: see, in particular, Immigration Control, House of Commons Home Affairs Committee, Fifth Report for 2005 06, HC 775 I, paras 516 535, and Fair, effective, transparent and trusted: Rebuilding confidence in our immigration system, Home Office, July 2006. (One might observe, in parenthesis, that the present appeal illustrates the extent to which delays and uncertainty continue to affect the system: a deportation order was made in 2010, and the appeal proceedings have not yet been completed). Sections 32 and 33 make clear Parliaments view that there is a strong public interest in the deportation of foreign nationals who have committed serious offences, and that the procedures for their deportation should be expeditious and effective. The strength of that public interest is reflected in Laws LJs observation that for a claim under article 8 of the ECHR to prevail, it must be a very strong claim indeed: SS (Nigeria) v Secretary of State for the Home Department [2013] EWCA Civ 550; [2014] 1 WLR 998, para 54. The Immigration Rules Decision making in relation to immigration and deportation is not exhaustively regulated by legislation. It also involves the exercise of discretion, and the making of evaluative judgments, by the Secretary of State and her officials. A perennial challenge, in such a situation, is to achieve consistency in decision making while reaching decisions which are appropriate to the case in hand. The solution generally lies in the adoption of administrative policies to guide decision making: something which the courts have accepted is legitimate, provided two general requirements are met. First, discretionary powers must be exercised in accordance with any policy or guidance indicated by Parliament in the relevant legislation: Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. In relation to the deportation of foreign offenders, the relevant legislation includes sections 32 and 33 of the 2007 Act. Secondly, decision makers should not shut their ears to claims falling outside the policies they have adopted: British Oxygen Co Ltd v Minister of Technology [1971] AC 610). As Lord Reid observed in that case at p 625, there may not be any great difference between a policy and a rule: some policies may constitute more or less flexible guidance, but others may be more formal and prescriptive. The Immigration Rules are an example of policies of the latter kind. They are unusual in having a statutory basis, in requiring the approbation of Parliament, and in being published as House of Commons papers. Section 1(4) of the 1971 Act refers to the rules laid down by the Secretary of State as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons not having the right of abode. Section 3(2) requires the Secretary of State to lay before Parliament statements of the rules, or any changes in the rules, laid down by him as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter. As was said in R (Munir) v Secretary of State for the Home Department [2012] UKSC 32; [2012] 1 WLR 2192, para 29, the point of this provision is to give Parliament a degree of control over the practice to be followed by the Secretary of State in the administration of the 1971 Act for regulating immigration control. The Rules are not law (although they are treated as if they were law for the purposes of section 86(3)(a) of the 2002 Act: see para 8 above), but a statement of the Secretary of States administrative practice: see Odelola v Secretary of State for the Home Department [2009] UKHL 25; [2009] 1 WLR 1230, paras 6 and 7; Munir, para 37; Mahad v Entry Clearance Officer [2009] UKSC 16; [2010] 1 WLR 48, para 10; R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2011] UKSC 45; [2012] 1 AC 621, para 61; and R (Alvi) v Secretary of State for the Home Department [2012] UKSC 33; [2012] 1 WLR 2208, paras 32 and 33. They do not therefore possess the same degree of democratic legitimacy as legislation made by Parliament: Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167, para 17. Nevertheless, they give effect to the policy of the Secretary of State, who has been entrusted by Parliament with responsibility for immigration control and is accountable to Parliament for her discharge of her responsibilities in this vital area. Furthermore, they are laid before Parliament, may be the subject of debate, and can be disapproved under the negative resolution procedure. They are therefore made in the exercise of powers which have been democratically conferred, and are subject, albeit to a limited extent, to democratic procedures of accountability. The Secretary of State has a wide residual power under the 1971 Act to grant leave to enter or remain in the UK even where leave would not be given under the Rules: Munir, para 44. The manner in which that power should be exercised is not, by its very nature, governed by the Rules. There is a duty to exercise the power where a failure to do so is incompatible with Convention rights, by virtue of section 6 of the Human Rights Act 1998. The July 2012 changes to the Rules Prior to July 2012, the Rules did not specifically address the requirements of article 8. From October 2000 onwards, rule 2 instructed the relevant officials to carry out their duties in compliance with the provisions of the Human Rights Act 1998. There were also specific rules dealing with deportation, which set out in rule 364 a non exhaustive list of factors to be taken into account, and provided in rule 380 that a deportation order would not be made if removal would be contrary to the UKs obligations under the Refugee Convention or the ECHR. With effect from July 2006, rule 364 was amended so as to provide that, subject to rule 380, where a person was liable to deportation the presumption should be that the public interest required deportation. All relevant factors were to be taken into account in considering whether the presumption was outweighed in any particular case, but it was said that it would only be in exceptional circumstances that the public interest in deportation would be outweighed in a case where it would not be contrary to the ECHR or the Refugee Convention to deport. Rule 364A, introduced after the enactment of the 2007 Act, disapplied rule 364 where section 32(5) of that Act applied. On 13 June 2012 the Secretary of State laid before Parliament a Statement of Changes in Immigration Rules (HC 194), which (so far as material) deleted a number of the previous rules, including rules 364, 364A and 380, and inserted a number of new rules (which will be referred to as the new rules). The new rules were formally made under the negative resolution procedure, and came into force on 9 July 2012. There was also a debate in the House of Commons on 19 June 2012, in which the changes to the Rules were discussed, on a motion that this House supports the Government in recognising that the right to respect for family or private life in article 8 of the European Convention on Human Rights is a qualified right and agrees that the conditions for migrants to enter or remain in the UK on the basis of their family or private life should be those contained in the Immigration Rules. The motion was agreed without a vote (Hansard (HC Debates) 19 June 2012, cols 760 823). It is apparent from the documents which accompanied the Statement of Changes that the changes to the Rules were intended to promote consistency, predictability and transparency in decision making where issues under article 8 arose, and to clarify the policy framework. The changes were said to reflect the Governments and Parliaments view of how, as a matter of public policy, the balance should be struck between the right to respect for private and family life and the public interest in public safety by protecting the public from foreign criminals: Statement of Intent: Family Migration, Home Office, June 2012, para 33. The changes were also intended to align the Rules with the body of case law concerning article 8, and in particular to reflect a consideration of the proportionality of deportation in accordance with article 8: paras 36 38. In relation to the deportation of foreign offenders, in particular, it was explained in the Statement of Intent that the Secretary of State considered that there were some offenders who should almost always be removed because of the seriousness of their crime and the overwhelming public interest in their deportation, despite their family or private life in the UK, and some other offenders who should normally be deported but who might be able to argue in individual cases that their family or private life outweighed the public interest in deportation. There were also cases where the level of criminality was below the automatic deportation threshold, but the offending was so harmful or persistent that deportation would normally be proportionate. The Government believed that a custodial sentence of four years or more represented such a serious level of offending that it would almost always be proportionate that it should outweigh private or family life, even taking into account that the best interests of a child were a primary consideration. Deportation would normally be proportionate where the foreign offender had received a sentence of between 12 months and four years, or where the sentence was of less than 12 months but, in the view of the Secretary of State, the offending had caused serious harm or the person was a persistent offender who showed a particular disregard for the law. Deportation would not, however, be proportionate if the offender had a parental relationship in the UK with a child who was a British citizen or had lived in the UK for the last seven years, the child could not reasonably be expected to leave the UK, and there was no other family member able to care for the child in the UK. Nor would it be proportionate if the offender had a relationship with a partner in the UK who was a British citizen or was in the UK with refugee leave or humanitarian protection, the offender had lived in the UK with valid leave for the last 15 years, and there were insurmountable obstacles to family life with the partner continuing overseas. Nor would it be proportionate if the offender had been continuously resident in the UK for the last 20 years, or was aged under 25 and had spent at least half his life in the UK, and in either case had no ties with his country of origin. Those policies were given effect by the new rules, which provide: 396. Where a person is liable to deportation the presumption shall be that the public interest requires deportation. It is in the public interest to deport where the Secretary of State must make a deportation order in accordance with section 32 of the UK Borders Act 2007. 397. A deportation order will not be made if the persons removal pursuant to the order would be contrary to the UKs obligations under the Refugee Convention or the Human Rights Convention. Where deportation would not be contrary to these obligations, it will only be in exceptional circumstances that the public interest in deportation is outweighed. 398. Where a person claims that their deportation would be contrary to the UKs obligations under article 8 of the Human Rights Convention, and the deportation of the person from the UK is (a) conducive to the public good because they have been convicted of an offence for which they have been sentenced to a period of imprisonment of at least four years; the deportation of the person from the UK is (b) conducive to the public good because they have been convicted of an offence for which they have been sentenced to a period of imprisonment of less than four years but at least 12 months; or (c) the deportation of the person from the UK is conducive to the public good because, in the view of the Secretary of State, their offending has caused serious harm or they are a persistent offender who shows a particular disregard for the law, the Secretary of State in assessing that claim will consider whether paragraph 399 or 399A applies and, if it does not, it will only be in exceptional circumstances that the public interest in deportation will be outweighed by other factors. 399. This paragraph applies where paragraph 398(b) or (c) applies if (a) the person has a genuine and subsisting parental relationship with a child under the age of 18 years who is in the UK, and (i) the child is a British Citizen; or (ii) the child has lived in the UK continuously for at least the seven years immediately preceding the date of the immigration decision; and in either case (a) it would not be reasonable to expect the child to leave the UK; and there is no other family member (b) who is able to care for the child in the UK; or (b) the person has a genuine and subsisting relationship with a partner who is in the UK and is a British Citizen, settled in the UK, or in the UK with refugee leave or humanitarian protection, and (i) the person has lived in the UK with valid leave continuously for at least the 15 years immediately preceding the the date of immigration decision (discounting any period of imprisonment); and there are insurmountable obstacles to (ii) family life with that partner continuing outside the UK. 399A. This paragraph applies where paragraph 398(b) or (c) applies if the person has lived continuously in the UK for (a) at least 20 years immediately preceding the date of the immigration decision (discounting any period of imprisonment) and he has no ties (including social, cultural or family) with the country to which he would have to go if required to leave the UK; or (b) the person is aged under 25 years, he has spent at least half of his life living continuously in the UK immediately preceding the date of the immigration decision (discounting any period of imprisonment) and he has no ties (including social, cultural or family) with the country to which he would have to go if required to leave the UK. The Strasbourg jurisprudence The Human Rights Act 1998 requires public authorities to act compatibly with Convention rights, and requires courts or tribunals to take into account the case law of the European Court of Human Rights. The Convention rights include the right set out in article 8, which provides: 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic wellbeing of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. The question whether the deportation of a foreign offender would be incompatible with article 8 has been considered by the European court in numerous judgments. In cases concerning settled migrants, that is to say persons who have been granted a right of residence in the host country, the court has accepted that the withdrawal of that right may constitute an interference with the right to respect for private and/or family life within the meaning of article 8. If there is an interference, it must be justified under article 8(2) as being in accordance with the law, as pursuing one or more of the legitimate aims set out in that paragraph, and as being necessary in a democratic society, that is to say justified by a pressing social need and proportionate to the legitimate aim pursued. The court has treated the legitimate aim pursued by deportation, on the basis of a persons conviction of a criminal offence, as the prevention of disorder or crime (although there are also a small number of cases in which public safety has been accepted to be an additional aim): see, for example, AA v United Kingdom [2012] Imm AR 107, paras 53 54. In practice, the critical issue is generally whether the necessity test is met. In that regard, the court has often said that the task of the court or tribunal applying article 8(2) consists in ascertaining whether the decision struck a fair balance between the relevant interests, namely the applicant's right to respect for his private and family life, on the one hand, and the prevention of disorder or crime, on the other. In a well known series of judgments the court has set out the guiding principles which it applies when assessing the likelihood that the deportation of a settled migrant would interfere with family life and, if so, its proportionality to the legitimate aim pursued. In Boultif v Switzerland (2001) 33 EHRR 50, para 48, the court said that it would consider the nature and seriousness of the offence committed by the applicant; the length of the applicants stay in the country from which he or she is to be expelled; the time elapsed since the offence was committed and the applicants conduct during that period; the nationalities of the various persons concerned; the applicant's family situation, such as the length of the marriage, and other factors expressing the effectiveness of a couples family life; whether the spouse knew about the offence at the time when he or she entered into a family relationship; whether there are children of the marriage, and if so, their age; and the seriousness of the difficulties which the spouse is likely to encounter in the country to which the applicant is to be expelled. Two further factors were mentioned in ner v Netherlands (2006) 45 EHRR 14, para 58: the best interests and well being of the children, in particular the seriousness of the difficulties which any children of the applicant are likely to encounter in the country to which the applicant is to be expelled; and the solidity of the social, cultural and family ties with the host country and with the country of destination. In Maslov v Austria [2009] INLR 47, paras 72 75, the court added that the age of the person concerned can play a role when applying some of these criteria. For instance, when assessing the nature and seriousness of the offences, it has to be taken into account whether the person committed them as a juvenile or as an adult. Equally, when assessing the length of the person's stay in the country from which he or she is to be expelled and the solidity of the social, cultural and family ties with the host country, it makes a difference whether the person came to the country during his or her childhood or youth, or was even born there, or whether he or she only came as an adult. Some of the factors listed in these cases relate to the strength of the public interest in deportation: that is to say, the extent to which the deportation of the person concerned will promote the legitimate aim pursued. Others relate to the strength of the countervailing interests in private and family life. They are not exhaustive. As the Grand Chamber noted in Jeunesse v Netherlands (2014) 60 EHRR 17, para 105, these criteria cannot be transposed automatically to the situation of a person who is not a settled migrant but an alien seeking admission to a host country: a category which includes, as the facts of that case demonstrate, a person who has been unlawfully resident in the host country for many years. The court analysed the situation of such a person, facing expulsion for reasons of immigration control rather than deportation on account of criminal behaviour, as raising the question whether the authorities of the host country were under a duty, pursuant to article 8, to grant the person the necessary permission to enable her to exercise her right to family life on their territory. The situation was thus analysed not as one in which the host country was interfering with the persons right to respect for her private and family life, raising the question whether the interference was justified under article 8(2). Instead, the situation was analysed as one in which the person was effectively asserting that her right to respect for her private and family life, under article 8(1), imposed on the host country an obligation to permit her to continue to reside there, and the question was whether such an obligation was indeed imposed. In addition to identifying the issue in Jeunesse as concerning a positive obligation under article 8(1) rather than a negative obligation under article 8(2), the court also identified a number of factors as being relevant: factors which overlapped with those mentioned in the Boultif line of cases, but were also different in some respects. Factors to be taken into account were said in Jeunesse to include the extent to which family life would effectively be ruptured, the extent of the ties in the contracting state, whether there were insurmountable obstacles (or, as it has been put in some other cases, major impediments: see, for example, Tuquabo Tekle v Netherlands [2006] 1 FLR 798, para 48, and IAA v United Kingdom (2016) 62 EHRR SE 19, paras 40 and 44) in the way of the family living in the country of origin of the alien concerned, and whether there were factors of immigration control (for example, a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion (para 107). Another important consideration was said to be whether family life was created at a time when the persons involved were aware that the immigration status of one of them was such that the persistence of that family life within the host state would from the outset be precarious. Where this is the case, the court has said that it is likely only to be in exceptional circumstances that the removal of the non national family member will constitute a violation of article 8 (Jeunesse, para 108). The court has found there to be exceptional circumstances in situations where, notwithstanding the importance of that consideration, removal failed to strike a fair balance between the competing interests involved. In the Jeunesse case, for example, a prolonged delay in removing the applicant from the host country, during which time she had developed strong family and social ties there, constituted exceptional circumstances leading to the conclusion that a fair balance had not been struck (paras 121 122). Where children are involved, their best interests are said by the court to be of paramount importance (by which it does not mean to say that they are determinative: see Jeunesse, para 109). Whilst alone they cannot be decisive, they must be afforded significant weight. Accordingly, national decision making bodies should in principle advert to and assess evidence in respect of the practicality, feasibility and proportionality of any removal of a non national parent in order to give effective protection and sufficient weight to the best interests of the children directly affected by it (Jeunesse, paras 108 109). Counsel for the Secretary of State submitted in the appeal against the decision of the Court of Appeal in Agyarko v Secretary of State for the Home Department [2015] EWCA Civ 440; [2016] 1 WLR 390, heard after the present appeal, that in the light of this approach, the deportation of a foreign criminal unlawfully resident in the UK should similarly be analysed as raising the question whether the state is under a positive obligation to permit him to remain in the UK, applying the Jeunesse criteria, rather than whether his deportation can be justified under article 8(2), applying the Boultif criteria. The court was asked to treat those submissions as applying to the present case, and agreed to do so, counsel for the appellant being given an opportunity to respond in writing. Considering first the question whether a positive or a negative obligation is in issue, liability to automatic deportation under section 32(5) of the 2007 Act is distinct from the regime governing admission to the UK. The aim pursued is more specific than the wider social and economic aims pursued by controls on admission. Nevertheless, it is a measure of immigration control, in that it involves the use of the instruments of immigration control to enforce the expectation that foreign citizens living in the UK should respect the criminal law, and risk having their right to stay withdrawn or denied if they fail to do so. Those foreign criminals who are residing in the UK unlawfully, and who resist their deportation on the basis of article 8, are in substance asserting that their right under article 8 to respect for their private and family life imposes on the UK an obligation to permit them to continue to reside here. They are, in that respect, in a similar position to the applicants in cases such as Jeunesse. Whether the situation is analysed in terms of positive or negative obligations is, however, unlikely to be of substantial importance. Whether the person concerned enjoys private or family life in the UK depends on the facts relating to his relationships with others: whether, for example, he is married or has children. Where he does enjoy private or family life in the UK, he has a right under article 8 to respect for that life, whatever his immigration status may be (although that status may greatly affect the weight to be given to his article 8 right, as Jeunesse makes clear). Whether one poses the question whether, striking a fair balance between the interests of the individual in his private or family life and the competing interests of the community as a whole, his right to respect for his private and family life entails an obligation on the part of the state to permit him to remain in the UK; or whether, striking a fair balance between the same competing interests, his deportation would be a disproportionate interference, one is asking essentially the same question. It is true, as counsel pointed out, that the onus is on the state to justify an interference, whereas there is no such onus on the state to demonstrate the absence of a positive obligation, but questions of onus are unlikely to be important where the relevant facts have been established. Ultimately, whether the case is considered to concern a positive or a negative obligation, the question is whether a fair balance has been struck. Considering next the factors which should be taken into account, those mentioned in the Boultif line of cases have a bearing on the proportionality of the deportation of foreign offenders, whether they are settled migrants or not. Where they are not settled migrants, it will also be necessary to have regard to the factors mentioned in Jeunesse, so far as relevant and not already taken into account: notably, whether there are insurmountable obstacles or major impediments in the way of the family living in the country of origin of the alien concerned; whether there are factors of immigration control, such as a history of breaches of immigration law; and whether the family life was created at a time when the persons involved were aware that the immigration status of one of them was such that the persistence of that family life within the host state would from the outset be precarious. Those factors were mentioned in Jeunesse in a context where family life was relied on to defeat immigration control at the point of admission to the host country. But it is also relevant to consider, in the context of liability to deportation because of criminal behaviour, whether the offender has a bad immigration history, or whether there are major impediments to continuing family life in his country of origin, or whether family life was established in the knowledge that, because of the immigration status of one of the persons involved, its continuation in the UK was uncertain. If that were not so, the perverse consequence would follow that these matters would be liable to carry greater weight if a non offender were sought to be removed on account of his irregular immigration status than if an offender with the same immigration status were sought to be removed on account of serious criminal conduct. It is, however, necessary to bear in mind that whether the continuation of family life in the UK is uncertain may be a more complex question than it might appear at first sight. For example, where a person was residing in the UK unlawfully at the time when the relationship was formed, but would have been permitted to reside here lawfully if an application were made from outside the UK, the latter point should be taken into account. That example illustrates how the distinction between settled migrants and aliens residing in the host country unlawfully may be, in some situations, of limited practical importance when translated into the context of UK immigration law (see, for example, Chikwamba v Secretary of State for the Home Department [2008] UKHL 40; [2008] 1 WLR 1420). While the European court has provided guidance as to factors which should be taken into account, it has acknowledged that the weight to be attached to the competing considerations, in striking a fair balance, falls within the margin of appreciation of the national authorities, subject to supervision at the European level. The ECHR can thus accommodate, within limits, the judgments made by national legislatures and governments in this area. Administrative decision making Considering the new rules in the light of the guidance given by the European court, rule 397 makes it clear that a deportation order is not to be made if the persons removal would be incompatible with the ECHR. Where article 8 claims are made by foreign offenders facing deportation, rule 398 explains that the Secretary of State will first consider whether rule 399 or 399A applies. Those rules, applicable where offenders have received sentences of between 12 months and four years, provide guidance to officials as to categories of case where it is accepted by the Secretary of State that deportation would be disproportionate. The fact that a claim under article 8 falls outside rules 399 and 399A does not, however, mean that it is necessarily to be rejected. That is recognised by the concluding words of rule 398, which make it clear that a claim that deportation would be contrary to article 8 will not be rejected merely because rules 399 and 399A do not apply, but that it will only be in exceptional circumstances that the public interest in deportation will be outweighed by other factors. How is the reference in rule 398 to exceptional circumstances to be understood, compatibly with Convention rights? That question was considered in the case of MF (Nigeria) v Secretary of State for the Home Department [2013] EWCA Civ 1192; [2014] 1 WLR 544. The Court of Appeal accepted the submission made on behalf of the Secretary of State that the reference to exceptional circumstances (an expression which had been derived from the Jeunesse line of case law) served the purpose of emphasising that, in the balancing exercise, great weight should be given to the public interest in deporting foreign criminals who did not satisfy rules 398 and 399 or 399A, and that it was only exceptionally that such foreign criminals would succeed in showing that their rights under article 8 trumped the public interest in their deportation (paras 40 and 41). The court went on to explain that this did not mean that a test of exceptionality was being applied. Rather, the word exceptional denoted a departure from a general rule: The general rule in the present context is that, in the case of a foreign prisoner (sic) to whom paragraphs 399 and 399A do not apply, very compelling reasons will be required to outweigh the public interest in deportation. These compelling reasons are the exceptional circumstances. (para 43) The court added that the exceptional circumstances to be considered in the balancing exercise involve the application of a proportionality test as required by the Strasbourg jurisprudence (para 44). As explained in the next paragraph, those dicta summarise the effect of the new rules, construed compatibly with Convention rights. The implication of the new rules is that rules 399 and 399A identify particular categories of case in which the Secretary of State accepts that the public interest in the deportation of the offender is outweighed under article 8 by countervailing factors. Cases not covered by those rules (that is to say, foreign offenders who have received sentences of at least four years, or who have received sentences of between 12 months and four years but whose private or family life does not meet the requirements of rules 399 and 399A) will be dealt with on the basis that great weight should generally be given to the public interest in the deportation of such offenders, but that it can be outweighed, applying a proportionality test, by very compelling circumstances: in other words, by a very strong claim indeed, as Laws LJ put it in SS (Nigeria). The countervailing considerations must be very compelling in order to outweigh the general public interest in the deportation of such offenders, as assessed by Parliament and the Secretary of State. The Strasbourg jurisprudence indicates relevant factors to consider, and rules 399 and 399A provide an indication of the sorts of matters which the Secretary of State regards as very compelling. As explained at para 26 above, they can include factors bearing on the weight of the public interest in the deportation of the particular offender, such as his conduct since the offence was committed, as well as factors relating to his private or family life. Cases falling within the scope of section 32 of the 2007 Act in which the public interest in deportation is outweighed, other than those specified in the new rules themselves, are likely to be a very small minority (particularly in non settled cases). They need not necessarily involve any circumstance which is exceptional in the sense of being extraordinary (as counsel for the Secretary of State accepted, consistently with Huang [2007] 2 AC 167, para 20), but they can be said to involve exceptional circumstances in the sense that they involve a departure from the general rule. Appellate decision making The nature of appellate decision making in the context of immigration cases involving article 8 was authoritatively considered in the case of Huang. The appellants in that case had entered the UK and were seeking leave to remain on the basis that their removal would violate their rights under article 8. They did not qualify for leave to remain under the Rules as they then stood. The opinion of the Appellate Committee, delivered by Lord Bingham of Cornhill, made five important points. First, Lord Bingham recognised the importance of the Rules for administrative purposes, noting the general administrative desirability of applying known rules if a system of immigration control is to be workable, predictable, consistent and fair as between one applicant and another (para 16). He acknowledged that the Rules, and the supplementary administrative directions, must draw a line somewhere in order to be administratively workable. The rule under which Mrs Huang failed to qualify was unobjectionable. Secondly, appellate decision making was not governed by the Rules, but the Rules were nevertheless relevant to the determination of appeals: [A]n applicants failure to qualify under the rules is for present purposes the point at which to begin, not end, consideration of the claim under article 8. The terms of the rules are relevant to that consideration, but they are not determinative. (para 6) Thirdly, an appeal under the 2002 Act was not equivalent to an application for judicial review: [T]he task of the appellate immigration authority is to decide whether the challenged decision is unlawful as incompatible with a Convention right or compatible and so lawful. It is not a secondary, reviewing, function dependent on establishing that the primary decision maker misdirected himself or acted irrationally or was guilty of procedural impropriety. The appellate immigration authority must decide for itself whether the impugned decision is lawful and, if not, but only if not, reverse it . [T]he appellate immigration authority . is not reviewing the decision of another decision maker. It is deciding whether or not it is unlawful to refuse leave to enter or remain, and it is doing so on the basis of up to date facts. (paras 11 and 13) Fourthly, the first task of the appellate immigration authority was to establish the relevant facts, which might well have changed since the original decision was made, and which the authority was in any event much better placed to assess than the original decision maker (para 15). Fifthly, in considering the issue arising under article 8 in the light of its findings of fact, the appellate authority should give appropriate weight to the reasons relied on by the Secretary of State to justify the decision under appeal. In that connection, Lord Bingham gave as examples a case where attention was paid to the Secretary of States judgment that the probability of deportation if a serious offence was committed had a general deterrent effect, and another case where weight was given to the Secretary of States judgment that the appellant posed a threat to public order. He continued: The giving of weight to factors such as these is not, in our opinion, aptly described as deference: it is performance of the ordinary judicial task of weighing up the competing considerations on each side and according appropriate weight to the judgment of a person with responsibility for a given subject matter and access to special sources of knowledge and advice. That is how any rational judicial decision maker is likely to proceed. (para 16) It may be helpful to say more about this point. Where an appellate court or tribunal has to reach its own decision, after hearing evidence, it does not, in general, simply start afresh and disregard the decision under appeal. That was made clear in Sagnata Investments Ltd v Norwich Corpn [1971] 2 QB 614, concerned with an appeal to quarter sessions against a licensing decision taken by a local authority. In a more recent licensing case, R (Hope & Glory Public House Ltd) v City of Westminster Magistrates Court [2011] PTSR 868, para 45, Toulson LJ put the matter in this way: It is right in all cases that the magistrates court should pay careful attention to the reasons given by the licensing authority for arriving at the decision under appeal, bearing in mind that Parliament has chosen to place responsibility for making such decisions on local authorities. The weight which magistrates should ultimately attach to those reasons must be a matter for their judgment in all the circumstances, taking into account the fullness and clarity of the reasons, the nature of the issues and the evidence given on the appeal. These observations apply a fortiori to tribunals hearing appeals against deportation decisions. The special feature in that context is that the decision under review has involved the application of rules which have been made by the Secretary of State in the exercise of a responsibility entrusted to her by Parliament, and which Parliament has approved. It is the duty of appellate tribunals, as independent judicial bodies, to make their own assessment of the proportionality of deportation in any particular case on the basis of their own findings as to the facts and their understanding of the relevant law. But, where the Secretary of State has adopted a policy based on a general assessment of proportionality, as in the present case, they should attach considerable weight to that assessment: in particular, that a custodial sentence of four years or more represents such a serious level of offending that the public interest in the offenders deportation almost always outweighs countervailing considerations of private or family life; that great weight should generally be given to the public interest in the deportation of a foreign offender who has received a custodial sentence of more than 12 months; and that, where the circumstances do not fall within rules 399 or 399A, the public interest in the deportation of such offenders can generally be outweighed only by countervailing factors which are very compelling, as explained in paras 37 38 above. The approach adopted in Huang has been followed in later decisions of the House of Lords and of this court, including EB (Kosovo) v Secretary of State for the Home Department [2008] UKHL 41; [2009] AC 1159, Zoumbas v Secretary of State for the Home Department [2013] UKSC 74; [2013] 1 WLR 3690, and R (Bibi) v Secretary of State for the Home Department [2015] UKSC 58; [2015] 1 WLR 5055. The latter case is particularly relevant for its consideration of the case of Jeunesse. In her judgment, Lady Hale noted the distinction drawn by the European Court between cases where lawfully settled migrants are facing deportation or expulsion, and cases where an alien is seeking admission to a host country. She also noted that, although the criteria developed in the first context cannot be transposed automatically into the second, the applicable principles are nonetheless similar. She went on at para 29 to state that, although Strasbourg analysed cases in the second category in terms of a fair balance, domestic courts had, at least since Huang, applied the proportionality approach described in Aguilar Quila. That approach was criticised by counsel for the Secretary of State in the present case as being premised on the assumption that there was an interference with the right to respect for private and family life, whereas in cases where the individual was not lawfully resident in the UK the issue was whether the right gave rise to a positive obligation. The structured approach to proportionality which has been adopted in the domestic law of the UK makes provision for consideration of the elements involved in an assessment of fair balance in the context of immigration and deportation, whether the assessment arises in relation to a potential positive obligation or in relation to an interference. It can be said that the first of the four stages of the analysis, as described in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700, para 74 (whether the objective of the measure is sufficiently important to justify the limitation of a protected right), and in similar language in Aguilar Quila and other cases, is not entirely apt where the question is whether a positive obligation is imposed, since the language used presumes that the right in question is being limited. But the point is of no practical importance where, as in the context of immigration and deportation, there is no doubt as to the importance of the objective. What has now become the established method of analysis can therefore continue to be followed in this context. The adoption of that method does not, of course, determine the outcome of the assessment. It is necessary to feed into the analysis the facts of the particular case and the criteria which are appropriate to the context, and, where a court is reviewing the decision of another authority, to give such weight to the judgment of that authority as may be appropriate. In that way, relevant differences between, for example, cases where lawfully settled migrants are facing deportation or expulsion, and cases where an alien is seeking admission to a host country, can be taken into account. In summary, therefore, the tribunal carries out its task on the basis of the facts as it finds them to be on the evidence before it, and the law as established by statute and case law. Ultimately, it has to decide whether deportation is proportionate in the particular case before it, balancing the strength of the public interest in the deportation of the offender against the impact on private and family life. In doing so, it should give appropriate weight to Parliaments and the Secretary of States assessments of the strength of the general public interest in the deportation of foreign offenders, as explained in paras 14, 37 38 and 46 above, and also consider all factors relevant to the specific case in question. The critical issue for the tribunal will generally be whether, giving due weight to the strength of the public interest in the deportation of the offender in the case before it, the article 8 claim is sufficiently strong to outweigh it. In general, only a claim which is very strong indeed very compelling, as it was put in MF (Nigeria) will succeed. A complete code? In MF (Nigeria) [2014] 1 WLR 544 the Court of Appeal described the new rules set out in para 23 above as a complete code for article 8 claims (para 44). That expression reflected the view that the concluding words of rule 398 required the application of a proportionality test in accordance with the Strasbourg jurisprudence, taking into account all the article 8 criteria and all other factors which were relevant to proportionality (para 39). On that basis, the court commented that the result should be the same whether the proportionality assessment was carried out within or outside the new rules: it was a sterile question whether it was required by the rules or by the general law (para 45). The idea that the new rules comprise a complete code appears to have been mistakenly interpreted in some later cases as meaning that the Rules, and the Rules alone, govern appellate decision making. Dicta seemingly to that effect can be found, for example, in LC (China) v Secretary of State for the Home Department [2014] EWCA Civ 1310; [2015] Imm AR 227, para 17, and AJ (Angola) v Secretary of State for the Home Department [2014] EWCA Civ 1636, para 39. As explained at para 17 above, the Rules are not law (although they are treated as law for the purposes of section 86(3)(a) of the 2002 Act), and therefore do not govern the determination of appeals, other than appeals brought on the ground that the decision is not in accordance with the Rules: see para 7 above. The policies adopted by the Secretary of State, and given effect by the Rules, are nevertheless a relevant and important consideration for tribunals determining appeals brought on Convention grounds, because they reflect the assessment of the general public interest made by the responsible minister and endorsed by Parliament. In particular, tribunals should accord respect to the Secretary of States assessment of the strength of the general public interest in the deportation of foreign offenders, and also consider all factors relevant to the specific case before them, as explained at paras 37 38, 46 and 50 above. It remains for them to judge whether, on the facts as they have found them, and giving due weight to the strength of the public interest in deportation in the case before them, the factors brought into account on the other side lead to the conclusion that deportation would be disproportionate. The present appeal The facts of the present appeal, as found by the Upper Tribunal, are as follows. The appellant is an Iraqi national. He left Iraq in 1988, at the age of 12. With the exception of a few visits prior to 2000, he has not lived there since then. He lived unlawfully in Jordan until 2000, when he was 24 years of age. He then entered the UK unlawfully, and has lived in the UK unlawfully ever since. No attempt appears to have been made to remove him as an illegal immigrant. In 2002 he applied for asylum, but his application was refused, and his appeal against that decision was unsuccessful. In November 2005 he was convicted of possession of class A and C drugs and was fined. He had a serious drugs problem at that time. In March 2006 he was arrested and later charged with two counts of possession of class A drugs (11.1 grams of cocaine and 59 tablets of ecstasy) with intent to supply. In December 2006 he pleaded guilty and was sentenced to four years imprisonment. In the meantime he had begun to address his drug taking. He was released from custody in January 2009. He had by then stopped taking drugs, and has remained drug free since then. When he completed his sentence, in January 2011, his probation officer reported that he had complied with his licence conditions and that he was considered to present a low risk of re conviction and a low risk of harm. In April 2014 he pleaded guilty to a count of driving while uninsured and with excessive alcohol in his system. He was fined and disqualified from driving for 12 months. He is not, and never has been, permitted to take employment in the UK. He has nevertheless worked in a variety of occupations. In February 2005 he began a relationship with a British woman, Ms Harwood, who has lived all her life in the UK. They have had periods of cohabitation but were no longer cohabiting at the time when the appellants appeal came before the Upper Tribunal. It is agreed that they nevertheless saw each other almost every day and spent most nights together. It is agreed that they wished to marry and have children. It is agreed that they have not done so as a result of the appellants immigration status, his inability to take lawful employment, and a lack of finances. The appellant is also the father of two children who probably reside in the UK, and who were born before he began his relationship with Ms Harwood. He has no contact with either child. He has no remaining family in Iraq. In September 2007 the Secretary of State notified the appellant that she was considering his immigration status and that he was liable to removal. In response, his solicitors made a fresh claim to the effect that he was at risk of ill treatment in Iraq, and that his deportation would also be contrary to article 8. In January 2008 the Secretary of State made a decision to make a deportation order, but in March 2008 withdrew that decision on the basis that the appellants nationality was unclear. In April 2008 a nationality interview was conducted. In January 2010 an asylum interview was conducted. On 5 October 2010 the Secretary of State decided to make a deportation order in respect of the appellant on the basis that section 32(5) of the 2007 Act applied to him. She found that he did not fall within any of the exceptions in section 33. She rejected his claim to be at risk in Iraq, and also rejected his claim under article 8. She found that he had failed to demonstrate that he was in a subsisting relationship with Ms Harwood, and that in any case the relationship, if it existed, had been entered into at a time when they should both have been aware that it might not be possible to continue it in the UK. She accepted that deportation might interfere with the appellants private life, but considered that this was proportionate to the aim of preventing disorder or crime and the maintenance of effective immigration control. Under the heading Proportionality, the decision letter stated that the reason why the interference with the appellants private life was not considered to be disproportionate was that: Although you have been resident in the United Kingdom for a number of years you spent your youth and formative years in Iraq. In view of this it is not considered unreasonable to expect you to be able to readjust to life in Iraq. The appellant appealed to the First tier Tribunal. On 10 February 2011 the appeal was dismissed. The appellant then appealed to the Upper Tribunal. On 16 March 2012, the decision of the First tier Tribunal was set aside. On 18 January 2013 the Upper Tribunal re heard the appeal. By that stage, the only remaining ground of appeal was that the appellants removal would breach the Refugee Convention and articles 3 and 8 of the ECHR. The new rules had by then come into force. On 11 February 2013 the Upper Tribunal allowed the appeal on the ground that the appellants removal would be incompatible with article 8. The judge found that the appellant was not a danger to the community: his last offence (at that time) had been almost seven years earlier, in March 2006. He had put drug taking behind him. His relationship with Ms Harwood was genuine, and she could not reasonably be expected to live in Iraq. The judge identified the central issue as being whether the interference with private and family life which would result from the appellants removal to Iraq was proportionate to the proper purpose of deporting foreign criminals for the purpose of the prevention of disorder or crime. He acknowledged that the appellant had committed very serious offences, but concluded that the period of time which had elapsed since the appellants last offence, the unlikelihood of his committing further offences, the strength of his relationship with Ms Harwood, and the weakness of the appellants current links with Iraq, were in combination compelling, so that deportation would be disproportionate. In reaching that conclusion, he explained that he accepted that there was an interest in the appellants being removed: Parliament had said so in section 32(4) of the 2007 Act. The judge explained that he had not had regard to the new rules, stating that the Rules did not assist him with the proper application of the appellants human rights. For the reasons explained earlier, they were a relevant and important consideration. He also does not appear to have taken account of the fact that the appellants relationship with Ms Harwood had been formed at a time when his immigration status was such that the persistence of family life within the UK was uncertain. As was explained earlier, that also was an important consideration. The judge noted in his summary of the evidence that the appellant and Ms Harwood had acknowledged these circumstances, but they were not mentioned in the reasons which he gave for his decision. The Secretary of State then appealed to the Court of Appeal on the grounds that the Upper Tribunal had erred (i) in failing to consider the new rules, (ii) in failing to recognise the importance of the public interest in deporting foreign criminals, (iii) in failing properly to apply the guidance established in ner, and (iv) in allowing the appeal in circumstances in which no reasonable tribunal could have done so. On 22 July 2014 the Court of Appeal (Sullivan, Black and Richards LJJ) [2015] Imm AR 207 allowed the appeal on grounds (i) and (ii). The court found it unnecessary to consider grounds (iii) and (iv), and remitted the appeal for re consideration by a differently constituted Upper Tribunal. In relation to grounds (i) and (ii), the Court of Appeal proceeded on the basis, at para 27, that the new rules tell the decision taker what weight they should give to the public interest in deporting foreign criminals. As counsel for the appellant submitted, that might be understood as meaning that the Rules determined the weight which tribunals must give to the public interest in deportation in all cases. For the reasons already explained, that would be an overstatement of the significance of the new rules to appellate decision making by tribunals. That does not, however, undermine the courts conclusion. As explained above, the reasoning of the Upper Tribunal failed to take any account of the new rules, and also failed to take account of the important fact that the appellants family life had been established when his immigration status was known to be precarious. In addition, no assessment of the compatibility of removal with article 8 has been carried out by reference to the facts currently known, as distinct from those which were known at the time of the hearing before the Upper Tribunal (AA v United Kingdom [2012] Imm AR 107, para 67). In the circumstances, it is appropriate that the appeal should be remitted for reconsideration, as the Court of Appeal ordered. This court should therefore forbear from further comment on the merits of the appeal. Conclusion For these reasons, I would dismiss the appeal against the decision of the Court of Appeal, and remit the appeal against the decision of the Secretary of State for reconsideration by a differently constituted Upper Tribunal. LORD WILSON: This is an important day in the life of our court. For it is the first occasion upon which either we or our predecessors in the House of Lords have had occasion to address the interface between the power of the Secretary of State to deport a foreign criminal and the latters ability to resist deportation by reference to his right to respect for his family or private life under article 8 of the ECHR. It is a subject which generates strong views in our society. MR, giving the judgment of the Court of Appeal, said at para 43: In the MF (Nigeria) case, cited by Lord Reed at para 37 above, Lord Dyson The general rule in the present context is that, in the case of a foreign [criminal] to whom paragraphs 399 and 399A [of the Immigration Rules in force on 9 July 2012] do not apply, very compelling reasons will be required to outweigh the public interest in deportation. Of the numerous issues raised in this appeal, the central issue is whether the Court of Appeals exposition of what it called the general rule was correct. I subscribe to the majority view that it was indeed correct. I agree with the judgment of Lord Reed and I concur in the dismissal of the appeal. A person is a foreign criminal under section 32(1) and (2) of the 2007 Act only if, not being a British citizen, he was convicted in the UK of an offence for which he was sentenced to imprisonment for at least 12 months. So the misleadingly entitled automatic deportation, for which the section provides, applies in effect only to a serious offence. Subsection (4) provides that the deportation of a foreign criminal is conducive to the public good for the purpose of section 3(5)(a) of the 1971 Act, in other words with the result that he should be liable to deportation. So it is only the liability to deportation, not the deportation itself, which the section makes automatic. Section 33 (7) of the 2007 Act, set out at para 11 above, provides, at first sight surprisingly, that the deportation of a foreign criminal remains conducive to the public good even when his rights under article 8 bar his removal. At para 12 above Lord Reed convincingly explains the provision: for the barrier to his removal arising from his rights under article 8 may prove to be temporary so there is no harm in maintaining his liability in principle to deportation by continuing to regard it as conducive to the public good. But there is a further feature of the subsection which is less easy to explain: for the effect of limb (a) of it is that the barrier to a foreign criminals deportation arising from his rights under article 8 does not prevent the making of a deportation order. Like Lord Kerr in his dissenting judgment at para 128 below, I have failed to make any sense of this further feature. In para 14 above Lord Reed suggests that sections 32 and 33 of the 2007 Act were enacted in response to public concern about, in particular, the procedures for the deportation of foreign offenders. But it is clear to me that there was equal, if not greater, dissatisfaction with the decisions themselves, in particular when they rejected deportation. Why, in particular, did the people of the UK, by their elected representatives, take the unusual step of pre empting the ministers decision whether a deportation was conducive to the public good by making a formal resolution in section 32(4) that the deportation of a foreign criminal was conducive to it? No doubt they did so primarily because of the strength of their wish to protect themselves from disorder and crime, which, of course, is an aim specifically recognised in paragraph 2 of article 8 of the ECHR and which the Strasbourg court has consistently considered [to be] the legitimate aim pursued by deportation: para 53 of the AA case, cited at para 25 above. This means, says Lord Kerr at para 96 below, that, customarily, the risk of re offending will be of predominant importance. Indeed Lord Kerr proceeds to ask: If an individual is unlikely to commit crime or be involved in disorder, how can his expulsion on that ground be said to be rationally connected to the stated aim? But, with respect, might Lord Kerrs analysis be too narrow? Might not the deterrent effect upon all foreign citizens (irrespective of whether they have a right to reside in the UK) of understanding that a serious offence will normally precipitate their deportation be a more powerful aid to the prevention of crime than the removal from the UK of one foreign criminal judged as likely to re offend? See DS (India) v Secretary of State for the Home Department [2009] EWCA Civ 544; [2010] Imm AR 81, para 37, Rix LJ. In the Court of Appeal in OH (Serbia) v Secretary of State for the Home Department [2008] EWCA Civ 694, [2009] INLR 109, I stated, at para 15(c): A further important facet [of the public interest in deportation] is the role of a deportation order as an expression of societys revulsion at serious crimes and in building public confidence in the treatment of foreign citizens who have committed serious crimes. By his counsel, the appellant mounts a sustained objection to my statement and I am constrained to agree with part of it. I regret my reference there to societys revulsion at serious crimes and I accept Lord Kerrs criticism of it at para 168 below. Societys undoubted revulsion at certain crimes is, on reflection, too emotive a concept to figure in this analysis. But I maintain that I was entitled to refer to the importance of public confidence in our determination of these issues. I believe that we should be sensitive to the public concern in the UK about the facility for a foreign criminals rights under article 8 to preclude his deportation. Even though, for the purposes of the present appeal, we must ignore section 19 of the Immigration Act 2014, the depth of public concern had earlier been made manifest not only in section 32(4) of the 2007 Act but also in the amendments to the immigration rules introduced on 9 July 2012 to which I will turn in the next paragraph. Laws serve society more effectively if they carry public support. Unless it lacks rational foundation (in which case the courts should not pander to it), the very fact of public concern about an area of the law, subjective though that is, can in my view add to a courts objective analysis of where the public interest lies: in this context it can strengthen the case for concluding that interference with a persons rights under article 8 by reason of his deportation is justified by a pressing social need. In the document entitled Statement of Intent: Family Migration, dated 12 June 2012, the Home Office sought to explain the forthcoming changes to the immigration rules. It said: 37. previous Secretaries of State have asserted that if the courts think that the rules produce disproportionate results in a particular case, the courts should themselves decide the proportionate outcome on the facts before them rather than hold that the rule itself is incompatible with article 8. The courts have accepted this invitation to determine proportionality on a case by case basis and do not indeed cannot give due weight systematically to the Governments and Parliaments view of where the balance should be struck, because they do not know what that view is. 38. The new Immigration Rules are intended to fill this public policy vacuum by setting out the Secretary of States position on proportionality and to meet the democratic deficit by seeking Parliaments agreement to her policy. The rules will state how the balance should be struck between the public interest and individual rights, taking into account relevant case law, and thereby provide for a consistent and fair decision making process. Accordingly rule 398, as was then introduced, provided that, other than in the narrow situations in which paras 399 or 399A applied, it will only be in exceptional circumstances that the public interest in deportation will be outweighed by other factors in the determination of an article 8 claim by a person liable to deportation. Provided that the phrase is not misunderstood, there is nothing wrong with an analysis in certain contexts that exceptional circumstances will be necessary for a claim under article 8 to prevail. In certain situations, the public interest in a persons removal from the UK will be inherently so strong, and in other situations his claim to respect for his private and family life will be inherently so weak, that it is appropriate to identify a need for exceptional circumstances before his claim can prevail. An example of the first type of situation is extradition. The public interest in a persons extradition in accordance with domestic law is inherently strong. In Norris v Government of the United States of America (No 2) [2010] UKSC 9; [2010] 2 AC 487, Lord Phillips of Worth Matravers, with whom all eight of the other members of the court agreed, said: 56. The reality is that only if some quite exceptionally compelling feature, or combination of features, is present that interference with family life consequent upon extradition will be other than proportionate to the objective that extradition serves. That, no doubt, is what the commission had in mind in Launder v United Kingdom (1997) 25 EHRR CD 67, 73 when it stated that it was only in exceptional circumstances that extradition would be an unjustified or disproportionate interference with the right to respect for family life. An example of the second type of situation is where the appellants family life with another person developed at a time when, to his knowledge, his immigration status rendered his ability to remain living in the UK precarious. In this situation his claim to respect for his family life is inherently weak. It is therefore legitimate to describe it as likely to prevail only in exceptional circumstances. The court in Strasbourg has said so. Thus in Rodrigues Da Silva, Hoogkamer v Netherlands (2006) 44 EHRR 34, the Strasbourg court said: 39. where this is the case it is likely only to be in the most exceptional circumstances that the removal of the non national family member will constitute a violation of article 8. Two years ago, in Jeunesse v Netherlands, cited at para 27 above, the Grand Chamber at para 108 indorsed, almost word for word, the reference to the need in that situation for exceptional circumstances. In the MF (Nigeria) case the Secretary of State informed the court that, in referring to the need for exceptional circumstances in the new rule 198, she was borrowing the phrase from the Strasbourg court, which had used it in certain article 8 cases: see para 34 of the judgment. Although its application by the Strasbourg court had been to situations other than deportation, the Secretary of State was in my view entitled to borrow the phrase and, by the rule, to commend it to her case workers. For deportation is another example of the first type of situation to which I have referred at para 73 above: the public interest in the deportation of a foreign criminal is inherently so strong, arguably even stronger than in the case of extradition, that it is appropriate to identify a need for exceptional circumstances before his claim under article 8 can prevail. There is, however, a well recognised danger that a decision maker will misunderstand the significance of the phrase. It may lead him to slide away from the requisite inquiry into the degree of strength of the public interest in the deportation of this particular foreign criminal, strong though that will always be; and from inquiry into the gravity of the proposed interference with the exercise of his family life, judged in the light of all the factors upon which he relies insofar as they are relevant to it; and therefore from inquiry into the justification or otherwise for the proposed interference. It may lead him instead simply to ask himself are these circumstances exceptional? Even worse, it may even lead him simply to ask himself are these circumstances unusual? The House of Lords has itself been constrained to recognise that use of the word exceptional is capable of being misunderstood. In R (Razgar) v Secretary of State for the Home Department [2004] UKHL 27; [2004] 2 AC 368, Lord Bingham said: 20. Decisions taken pursuant to the lawful operation of immigration control will be proportionate [for the purposes of article 8] in all save a small minority of exceptional cases, identifiable only on a case by case basis. But in the Huang case, cited at para 17 above, Lord Bingham, on this occasion giving the opinion of the committee, said: 20. It is not necessary that the appellate immigration authority, directing itself along the lines indicated in this opinion, need ask in addition whether the case meets a test of exceptionality. The suggestion that it should is based on an observation of Lord Bingham in Razgar, para 20. He was there expressing an expectation that the number of claimants not covered by the rules and supplementary directions but entitled to succeed under article 8 would be a very small minority. That is still his expectation. But he was not purporting to lay down a legal test. When it analysed the reference to exceptional circumstances in the new rule 398, the Court of Appeal in the MF (Nigeria) case had well in mind the risk that the phrase might be misunderstood. It concluded at paras 41 and 42, in my view correctly, that the rule was no more laying down a test of exceptionality than had been Lord Bingham in the Razgar case or indeed than had been the Strasbourg court in its analysis of the situation where family life was precarious. It continued: Rather [the rule means] that, in approaching the question of whether removal is a proportionate interference with an individuals article 8 rights, the scales are heavily weighted in favour of deportation and something very compelling (which will be exceptional) is required to outweigh the public interest in removal. Then, at para 43, the Court of Appeal articulated the general rule which I have set out at para 66 above and by which in effect it substituted the phrase very compelling reasons for that of exceptional circumstances. In my view its substitution was wise and, as I have said, its general rule was correct. In July 2014, when introducing changes to the rules to accompany the coming into force of the 2014 Act, the Secretary of State made a corresponding amendment to rule 398 so as, among other things, to substitute the words very compelling for the word exceptional. In the MF (Nigeria) case, however, the Court of Appeal proceeded to make an insignificant but unfortunate error. It held at para 44 that the new rules were a complete code which fell to be applied not only by the Secretary of States case workers but on appeal by the First tier Tribunal. It is one thing to suggest that the Secretary of States rule 398 is relevant to the weight which the tribunal should give to the public interest. By doing so, the tribunal would do no more than, in the words of Lord Bingham in the Huang case, para 16, to accord appropriate weight to the judgment of a person with responsibility for a given subject matter and access to special sources of knowledge and advice. But it is another thing altogether to suggest that the rules provide the legal framework within which the tribunal should determine the appeal. Both Lord Reed at para 53 and Lord Kerr at para 163 powerfully demonstrate that it is a constitutional solecism for an appellate body to evaluate a persons human rights by the application of a rubric (however sound) which the Secretary of State has chosen to incorporate into her rules. Crucially, however, the Court of Appeal hastened to add: 45. Even if we were wrong about that, it would be necessary to apply a proportionality test outside the new rules as was done by the [Upper Tribunal]. Either way, the result should be the same. In these circumstances, it is a sterile question whether this is required by the new rules or it is a requirement of the general law. What matters is that it is required to be carried out if paragraphs 399 or 399A do not apply. This error in the MF (Nigeria) case was therefore insignificant. We should not allow it to distract us from the validity of the general rule which it articulated. I have come belatedly to realise that the use of a clich can be a quick way of effectively communicating a point. So I make no apology for concluding that we should resist the appellants invitation to us, by reference to this error on the part of the Court of Appeal, to throw the baby out with the bath water. On the contrary we should lift the general rule carefully out of the bath and embrace it. LORD THOMAS: I agree with the judgment of Lord Reed and in particular the matters he sets out at paras 37 38, 46 and 50. I add three paragraphs of my own simply to emphasise the importance of the structure of judgments of the First tier Tribunal in decisions where article 8 is engaged. Judges should, after making their factual determinations, set out in clear and succinct terms their reasoning for the conclusion arrived at through balancing the necessary considerations in the light of the matters set out by Lord Reed at paras 37 38, 46 and 50. It should generally not be necessary to refer to any further authority in cases involving the deportation of foreign offenders. One way of structuring such a judgment would be to follow what has become known as the balance sheet approach. After the judge has found the facts, the judge would set out each of the pros and cons in what has been described as a balance sheet and then set out reasoned conclusions as to whether the countervailing factors outweigh the importance attached to the public interest in the deportation of foreign offenders. The use of a balance sheet approach has its origins in Family Division cases (see paras 36 and 74 of the decision of the Court of Appeal In re B S (Children) (Adoption Order: Leave to Oppose) [2014] 1 WLR 563). It was applied by the Divisional Court in Polish Judicial Authority v Celinski [2016] 1 WLR 551 to extradition cases where a similar balancing exercise has to be undertaken when article 8 is engaged see paras 15 17. Experience in extradition cases has since shown that the use of the balance sheet approach has greatly assisted in the clarity of the decisions at first instance and the work of appellate courts. LORD KERR: (dissenting) I agree with much of the legal analysis in Lord Reeds judgment. There are, however, some important differences of emphasis in our approaches to the proper application of article 8 in cases such as this. Strasbourg jurisprudence concerning expulsion of foreign criminals In a series of cases, Strasbourg has given close attention to, and generally applicable guidance on, the requirements of article 8 of the European Convention on Human Rights and Fundamental Freedoms (ECHR) in the context of the expulsion of foreign criminals. The court has recognised that the removal of a person from a country where close members of his family are residing may infringe his right to respect for family life (Boultif v Switzerland (2001) 33 EHRR 50, para 39), and that even where there is no family life, the expulsion of a settled migrant constitutes an interference with his private life (ner v Netherlands (2006) 45 EHRR 14, para 59). The facts of these and subsequent cases, and the legal analysis applied to them, is illuminating of the approach required to be undertaken by domestic decision makers when considering making a deportation order after conviction. As Lord Bingham noted in Huang v Secretary of State for the Home Department [2007] 2 AC 167, para 18, these cases are valuable in demonstrating where the European Court of Human Rights (ECtHR), as the ultimate guardian of Convention rights, has drawn the line in a number of different factual scenarios, thus guiding national authorities in making their own decisions. (i) Boultif v Switzerland (2001) 33 EHRR 50 Mr Boultif arrived in Switzerland from Algeria in 1992. He married a Swiss woman in 1993. In 1997 his conviction of offences of robbery and damage to property was confirmed by the Swiss Court of Appeal. Those offences had been committed in 1994. In May 1998 he began a period of imprisonment which the appeal court had imposed. In the same month it was decided that his residence permit would not be renewed. His appeal against that decision was dismissed despite his wife having complained that if he was returned to Algeria she could not be expected to follow him. Ultimately, Mr Boultif complained to the ECtHR that his expulsion from Switzerland was in violation of his rights under article 8 ECHR. The court agreed that it was. That decision was reached notwithstanding the courts conclusion that expelling Mr Boultif from Switzerland was in accordance with law and was rationally connected to the legitimate aim of preventing disorder and crime. The court then addressed the question whether the undoubted interference with Mr Boultifs article 8 rights was necessary in a democratic society. It immediately acknowledged, in para 48, that previously it had only considered this question to a limited extent. Mr Boultifs case required it to establish guiding principles on this question. The court then proceeded to set out with some precision what those principles should be. It said this: In assessing the relevant criteria in such a case, the court will consider the nature and seriousness of the offence committed by the applicant; the length of the applicants stay in the country from which he is going to be expelled; the time elapsed since the offence was committed as well as the applicants conduct in that period; the nationalities of the various persons concerned; the applicants family situation, such as the length of the marriage; and other factors expressing the effectiveness of a couples family life; whether the spouse knew about the offence at the time when he or she entered into a family relationship; and whether there are children in the marriage, and if so, their age. Not least, the court will also consider the seriousness of the difficulties which the spouse is likely to encounter in the country of origin, though the mere fact that a person might face certain difficulties in accompanying her or his spouse cannot in itself exclude an expulsion. Lord Reed has listed those criteria at para 26 of his judgment, but the preface given by the Grand Chamber to this outline of the relevant criteria is particularly important. These were to be guiding principles. Although the weight to be given to them was determined by an examination of their application to Mr Boultifs case, they were precisely what they were stated to be: guiding principles. In other words, principles which should be taken into account in all cases where the propriety of expelling or deporting someone from a member state of the Council of Europe had to be decided. (ii) ner v Netherlands (2006) 45 EHRR 14 Mr ner came to the Netherlands in 1981 at the age of 12. Until then he had lived in Turkey where he was born. He obtained a permanent residence permit in 1988. In 1991 he formed a relationship with a Dutch national and this produced in 1992 and 1996 two children. Mr ner was found guilty of relatively minor offences in 1989, 1990 and 1992. In 1994, however, he was convicted of wounding one man and the manslaughter of another. He was sentenced to seven years imprisonment. While in prison, Mr ner was visited regularly by his partner and children. He undertook various courses and qualified as a sports instructor. Despite his progress in prison his permanent residence permit was withdrawn. Throughout a number of appeals and other hearings that decision was confirmed and he was deported to Turkey. He claimed that he had virtually no familial contacts there and he returned illegally on a number of occasions to the Netherlands. He was deported again, finally in May 2006. On an application to ECtHR, Mr ner claimed that his expulsion represented a breach of his article 8 rights. The court disagreed. But it repeated and confirmed, setting them out in tabular form, what it described as the Boultif principles. At para 58 it referred to two criteria in particular. It said this: The court would wish to make explicit two criteria which may already be implicit in those identified in the Boultif judgment: the best interests and well being of the children, in particular the seriousness of the difficulties which any children of the applicant are likely to encounter in the country to which the applicant is to be expelled; and the solidity of social, cultural and family ties with the host country and with the country of destination. As to the first point, the court notes that this is already reflected in its existing case law (see, for example, Sen v Netherlands (2003) 36 EHRR 7, para 40; Tuquabo Tekle v Netherlands [2006] 1 FLR 798, para 47) and is in line with the Committee of Ministers Recommendation Rec (2002) 4 on the legal status of persons admitted for family reunification (see para 38 above). As to the second point, it is to be noted that, although the applicant in the case of Boultif was already an adult when he entered Switzerland, the court has held the Boultif criteria to apply all the more so (a plus forte raison) to cases concerning applicants who were born in the host country or who moved there at an early age (see Mokrani v France (2005) 40 EHRR 5, para 31). Indeed, the rationale behind making the duration of a persons stay in the host country one of the elements to be taken into account lies in the assumption that the longer a person has been residing in a particular country the stronger his or her ties with that country and the weaker the ties with the country of his or her nationality will be. Seen against that background, it is self evident that the court will have regard to the special situation of aliens who have spent most, if not all, their childhood in the host country, were brought up there and received their education there. Although the court identified these two particular criteria as being of especial importance, the matter of significance (so far as the present appeal is concerned) is the courts proclamation that the Boultif criteria are fundamental in the examination of whether article 8 has been breached. Different emphasis might be placed on some of those criteria in different cases. Particular importance (as in Mr ners case) may be accorded to some of them, reflecting the specific circumstances of an individual. But, the relevance of the factors in article 8 cases involving expulsion is not left in doubt. Their status as guiding principles, to be considered and, where appropriate, applied in all such cases, is clearly affirmed. That was emphasised again by the Grand Chamber in Maslov v Austria [2009] INLR 47. I agree with Lord Reeds analysis at para 26 of his judgment as to the effect of that decision. In particular, I would stress that some of the Strasbourg criteria (such as the nature and seriousness of the offence) will be relevant to the weight to be afforded to the public interest in deportation, and that other criteria will go to the strength of the individuals private and family life. A consequence of the detailed guidance given by the ECtHR in these cases is that the domestic margin of appreciation is narrower than in many other contexts where article 8 is engaged. (iii) AA v United Kingdom [2012] Imm AR 107 In this case the applicant came to the United Kingdom in 2000 at the age of 13. In 2007, when he was 15 years old he was convicted with others of the rape of a girl aged 13. He was sentenced to four years detention at a Young Offenders Institution. While there, it was assessed that he posed a low risk of re offending or of causing harm to the public. Despite this, he was served with a deportation order. This was said to be necessary for the prevention of disorder and crime and for the protection of health and morals. When the application came before ECtHR, the government argued that AAs deportation would serve the aims of public safety and the protection of the rights of others, as well as the aims already referred to in the deportation order. Interestingly, the court observed in para 53 that it had consistently considered that the legitimate aim [in this type of case] was the prevention of disorder and crime citing Bouchelkia v France (1997) 25 EHRR 686; Boujlifa v France (1997) 30 EHRR 419; Boultif and Maslov; Omojoudi v United Kingdom (2009) 51 EHRR 10. While this statement may not amount to a final conclusion by the ECtHR that the only legitimate aim possible for the expulsion of foreign criminals is the prevention of disorder and crime, it must be taken as an indication that that aim will normally be the basis on which deportation is to be justified. Indeed it is doubtful, in cases involving persons who hold indefinite leave to remain in the United Kingdom, whether immigration control (insofar as it is relevant to the economic well being of the country under article 8(2)) is a legitimate aim under which deportation can be justified. This means that, customarily, the risk of re offending will be of predominant importance. If the risk of re offending is low, it will be more difficult to justify an interference with a persons article 8 rights on the basis that this is necessary in order to prevent disorder and crime. If an individual is unlikely to commit crime or be involved in disorder, how can his expulsion on that ground be said to be rationally connected to the stated aim? On the question of whether the expulsion of the applicant was necessary in a democratic society the court said this at para 56: The assessment of whether the impugned measure was necessary in a democratic society is to be made with regard to the fundamental principles established in the courts case law and in particular the factors summarised in ner, cited above, paras 57 85, namely: the nature and seriousness of the offence committed by the applicant; the length of the applicants stay in the country from which he or she is to be expelled; the time which has elapsed since the offence was committed and the applicant's conduct during that period; the nationalities of the various persons concerned; the applicants family situation, such as the length of any marriage and other factors expressing the effectiveness of a couples family life; whether the spouse knew about the offence at the time when he or she entered into a family relationship; whether there are children of the marriage, and if so, their age; the seriousness of the difficulties which the spouse is likely to encounter in the country to which the applicant is to be expelled; the best interests and well being of any children, in particular the seriousness of the difficulties which any children of the applicant are likely to encounter in the country to which the applicant is to be expelled; and the solidity of social, cultural and family ties with the host country and with the country of destination. This constitutes a restatement of the principles and guidelines in Boultif and ner. It is important to note that these are expressed as a generally applicable set of fundamental principles which constitute a prescriptive set of rules to be applied in all cases involving expulsion of what are described as foreign criminals. Foreign criminals are defined in section 32(1) (3) of the UK Borders Act 2007 as persons who are not British citizens, who are either convicted in the United Kingdom of an offence and sentenced to at least 12 months imprisonment, or are sentenced to a period of an imprisonment for an offence which is specified as serious by the Secretary of State under section 72(4)(a) of the Nationality, Immigration and Asylum Act 2002. As it happens and as the cases above demonstrate, to describe all who might be subject to deportation as foreign criminals can be misleading. Some have lived most of their lives in the countries from which it is proposed that they be expelled. Indeed, in the case of the United Kingdom, some so called foreign criminals may even have been born here or hold permanent residency in this country but, because they do not have British citizenship, they are liable to expulsion. Given the wide category of persons who can be expelled after having been found guilty of criminal offences, it is unsurprising that Strasbourg has given prominence, in the article 8 assessment, to the length of time that an individual who claims breach of that provision has spent in the host country and whether that person is a settled migrant, in other words someone who has been granted a right of residence (even if temporary) in the host country. (iv) Jeunesse v Netherlands (2014) 60 EHRR 17 This case does not involve a decision to deport a foreign criminal but it is worth considering because of the difference that is said to apply between settled migrants (ie persons with a right of residence, whether temporary or permanent), and those who do not have a right of residence. Although Jeunesse did not feature quite so prominently on the hearing of this appeal as in the subsequent case of R (Agyarko) v Secretary of State for the Home Department [2016] 1 WLR 390, it is relied on by the Secretary of State to advance a proposition that a person who is not a settled migrant, in order to rely on article 8, is obliged to establish a positive obligation on the part of the state to grant a right of residence. Absent such an obligation, no right to respect for a family or private life arose. If this proposition is correct, it follows that a foreign criminal who is not a settled migrant and who cannot show that there was a positive obligation to grant him permission to reside, cannot rely on article 8. On that basis, discussion of interference with article 8 or justification of any such interference would be irrelevant. Some consideration of the circumstances of Jeunesse is needed. The applicant and her partner were born and lived in Suriname. They had cohabited there. In October 1991 the applicants partner went to stay in the Netherlands with his father and was granted Netherlands nationality. In March 1997 the applicant was granted a visa for the Netherlands for a short period to visit a relative. She entered the country on 12 March 1997 and did not return to Suriname when her visa expired. She had lived in the Netherlands since then. She made various applications for a residence permit, all of which were refused. In June 1999 the applicant married her partner and their first child was born in September 2000 and was a Netherlands national. She renewed her applications for a residence permit and, apart from a short lived success in obtaining an injunction against removal, her applications were refused. In December 2005 she had a second child, again a Netherlands national. Further applications for residence followed again with no success. Finally, in April 2010, while pregnant with her third child, the applicant filed a fifth request for a residence permit in order to stay with her children. This was also rejected, it being decided that the refusal did not contravene article 8. The relevant minister attributed decisive weight to the fact that the applicant had never resided lawfully in the Netherlands and that there was no indication that it would be impossible to exercise family life in Suriname. Although the argument was not raised in the present appeal, in the subsequent case of R (Agyarko) v Secretary of State for the Home Department it was submitted for the Secretary of State that the effect of Jeunesse was that it was necessary for an applicant who was not a settled migrant to show that his or her circumstances were sufficiently weighty to oblige the state to allow him or her to remain before article 8 was engaged in their case. In other words, the applicant had to show that the state was under a positive obligation to admit the applicant. Implicit in this argument was that, in the case of someone who was not a settled migrant, the question of a states negative obligation not to act in violation of that persons article 8 rights did not arise because access to those rights could only be obtained by such a person by showing that the state had a positive obligation to grant leave to remain. Reference was made to paras 103 108 of the Grand Chambers judgment in Jeunesse. It is not necessary to set out all of these passages but para 103 sets the scene: Where a contracting state tolerates the presence of an alien in its territory thereby allowing him or her to await a decision on an application for a residence permit, an appeal against such a decision or a fresh application for a residence permit, such a contracting state enables the alien to take part in the host countrys society, to form relationships and to create a family there. However, this does not automatically entail that the authorities of the contracting state concerned are, as a result, under an obligation pursuant to article 8 of the Convention to allow him or her to settle in their country. In a similar vein, confronting the authorities of the host country with family life as a fait accompli does not entail that those authorities are, as a result, under an obligation pursuant to article 8 of the Convention to allow the applicant to settle in the country. The court has previously held that, in general, persons in that situation have no entitlement to expect that a right of residence will be conferred upon them. It is important to note that the Grand Chamber did not say that an applicant for permission to remain who prays article 8 in aid of his or her application must show, as a prerequisite to reliance on the rights enshrined in that provision, that the state is obliged to allow him or her to remain. The burden of the Grand Chambers reasoning is that a person who has been allowed to remain while applications for a right of residence are being dealt with cannot expect that the period accumulated by those processes will automatically bring entitlement to a right to reside. Likewise, the creation of a family and the presentation of that circumstance to state authorities as a fait accompli carries no automatic right to the grant of leave to remain. And there is no general obligation to respect a married couples choice of country for their matrimonial residence (para 107). It is also relevant that, at the time that family life was created, the persons involved were aware that the immigration status of one of them was such that family life being permitted to continue in the host state was precarious. In para 108 of Jeunesse the Grand Chamber said that where this was the case, it was likely only to be in exceptional circumstances that the removal of the non national family member would constitute a violation of article 8. It is important to understand, however, that none of these considerations has been expressed by the Strasbourg court as determinative. Each, provided it is relevant to the particular circumstances of the individual case, must be taken into account. But the weight to be attached to them will depend upon the significance that they have according to those circumstances. The fact that an applicant is or is not a settled migrant a settled migrant being someone who has been granted some form of residence, whether temporary or indefinite is likewise a relevant factor. On that account, the Grand Chamber, in para 104, drew a distinction between Ms Jeunesses case and those of settled migrants. As was pointed out, withdrawal of a right to residence inevitably involves an interference with family or private life. The same is not true in the case of someone who is not a settled migrant. The factual and legal situation of a settled migrant and that of an alien seeking admission to a host country are, self evidently, not the same see para 105. As the Grand Chamber there pointed out: the question to be examined is whether, having regard to the circumstances as a whole, the Netherlands authorities were under a duty pursuant to article 8 to grant her a residence permit, thus enabling her to exercise family life on their territory. (emphasis supplied) The conjunction of the obligation to grant a residence permit and the facilitation of the exercise of family life in the host state is critical. The flaw in the argument made by the Secretary of State is the suggestion that these two issues should be considered disjunctively and, moreover, that the duty to grant a residence permit should be considered by way of anterior inquiry to the question of whether the article 8 rights of the individual are engaged and should prevail over the community interests at stake. It is true that the Grand Chamber in Jeunesse said that the case was to be seen as one involving an allegation of failure on the part of the respondent state to comply with a positive obligation under article 8 of the Convention (para 105), but that does not mean that it is to be considered in isolation from the conventional approach to the question of whether a right to respect for family and private life is engaged. Showing that the state is under a positive obligation to grant permission to reside must not be regarded as a gateway to reliance on article 8 rights. On the contrary, examination of the particular circumstances of the individual who seeks to rely on article 8 and which are claimed to constitute family life is central to the question of whether the article is engaged. This cannot be determined by some extraneous, abstract assessment of whether the state is under a positive obligation to grant a right to reside. The Secretary of State, while acknowledging that the distinction between positive and negative obligations had recently tended to be downplayed by Strasbourg in many contexts, argued in the subsequent case of Agyarko v Secretary of State for the Home Department that, in cases such as that of Mr Ali, it was of especial significance. Unless it could be shown that there was a positive obligation to grant a right to remain, the question of whether there was an interference with article 8 did not arise, she argued. This does not chime well with observations of the Grand Chamber in para 106 of Jeunesse, where it said that: the boundaries between the states positive and negative obligations under [article 8] do not lend themselves to precise definition. The applicable principles are, nonetheless, similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole This passage, which confirms the approach taken in Nunez v Norway (2011) 58 EHRR 17, para 69, exposes the essential nature of the debate. It is not a question of an applicant for leave to reside showing that they are owed a positive obligation to be allowed to remain before they can rely on article 8. Rather, what is required is an open ended examination of the interests of the individual pitted against those of the community as a whole. In the Jeunesse case the interests of the community as a whole were, principally, control of immigration. In the present appeal the community interests are the prevention of disorder and crime. But the following passage from para 107 of Jeunesse is pertinent for either context: in a case which concerns family life as well as immigration, the extent of a states obligations to admit to its territory relatives of persons residing there will vary according to the particular circumstances of the persons involved and the general interest. Factors to be taken into account in this context are the extent to which family life would effectively be ruptured, the extent of the ties in the contracting state, whether there are insurmountable obstacles in the way of the family living in the country of origin of the alien concerned and whether there are factors of immigration control (for example, a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion. The striking of a fair balance between general community interests and the particular circumstances of the persons involved is the cornerstone on which the dispute is to be resolved, so far as Strasbourg jurisprudence is concerned. Expressed in that way, one can recognise the distinction between, on the one hand, the generally constant, if not unalterable, nature of the community interests and, on the other, the potentially infinitely variable importance of individual family and private life interests. The distinction between positive and negative obligations has not been thought to be significant by our domestic courts. As Lord Bingham held in Huang, whether an article 8 claim involves a complaint of interference or a lack of respect, the ultimate question is proportionality: In most cases where the applicants complain of a violation of their article 8 rights, in a case where the impugned decision is authorised by law for a legitimate object and the interference (or lack of respect) is of sufficient seriousness to engage the operation of article 8, the crucial question is likely to be whether the interference (or lack of respect) complained of is proportionate to the legitimate end sought to be achieved. (para 18) Domestic law has developed somewhat differently from the Strasbourg jurisprudence in relation to the approach to be taken to the question of proportionality, as Lord Reed has explained in paras 47 50 of his judgment. But this does not affect the question of whether someone who is not a settled migrant must show, as a preliminary step, that he or she is owed a positive obligation by the state to grant leave to remain before they can canvass the normal factors that constitute article 8 entitlement. The statement in the passage quoted at para 111 above whether there are insurmountable obstacles in the way of the family living in the country of origin of the alien concerned is not of prominent importance to the issues arising in this appeal. But the expression insurmountable obstacles does appear in rule 399 of the 2012 Rules, and is discussed below, at para 150. The message provided by the Strasbourg cases A consistent thread running through the cases which I have discussed (and others which preceded them such as Benhebba v France (Application No 53441/99) (unreported) 10 July, 2003 and Mehemi v France (1997) 30 EHRR 739) is the need to review and assess a number of specifically identified factors in order to conduct a proper article 8 inquiry. Another theme is that this examination must be open textured so that sufficient emphasis is given to each of the factors as they arise in particular cases. Of their nature factors or criteria such as these cannot be given a pre ordained weight. Any attempt to do that would run counter to the essential purpose of the exercise. This can be readily exemplified: a significant prison sentence may be offset by the strength of family ties or progress on the part of the offender post conviction, for instance. Or expulsion might be justified where the offending is relatively minor but the length of time spent in the host country is short and there are no strong family ties there. The application of the various factors as opposed to the recognition of their relevance involves a holistic, open minded approach. For this reason, giving pre emptive, indicative weight to particular factors on a generic basis is impermissible if it distorts the proper assessment of these in their peculiar and individual setting. ECtHR jurisprudence does not expressly forbid the making of policies in relation to the normal circumstances in which expulsion of foreign criminals should take place but it has not sanctioned the setting of policy standards as to how article 8 might be applied. In Boultif the court said at para 46: The court recalls that it is for the contracting states to maintain public order, in particular by exercising their right, as a matter of well established international law and subject to their treaty obligations, to control the entry and residence of aliens. To that end they have the power to deport aliens convicted of criminal offences. However, their decisions in this field must, in so far as they may interfere with a right protected under paragraph 1 of article 8, be necessary in a democratic society, that is to say justified by a pressing social need and, in particular, proportionate to the legitimate aim pursued. Likewise in ner the court said this in para 54: The court reaffirms at the outset that a state is entitled, as a matter of international law and subject to its treaty obligations, to control the entry of aliens into its territory and their residence there [see, among many other authorities, Abdulaziz v United Kingdom (1985) 7 EHRR 471, para 67; Boujlifa v France (1997) 30 EHRR 419, para 42]. The Convention does not guarantee the right of an alien to enter or to reside in a particular country and, in pursuance of their task of maintaining public order, contracting states have the power to expel an alien convicted of criminal offences. The Grand Chamber in Maslov, at para 68, quoted paras 54 to 58 of the ner judgment in full, stating, at para 69, that in this judgment, as well as in Boultif, the court had taken care to establish the criteria which were so far implicit in its case law to be applied when assessing whether an expulsion measure is necessary in a democratic society and proportionate to the legitimate aim pursued. The entitlement of an individual state to set policy standards as to when deportation should normally occur must not be confused with a power to prescribe how article 8 is to be applied in its territory. Rules as to when deportation should generally take place may be unexceptionable, so long as they yield to an uninhibited assessment of an individuals article 8 right, where that right is claimed. The ECtHR cases do not permit a national policy which limits or dictates the weight to be given to the Boultif factors in the article 8 balancing exercise. This is clear from, for example, the courts judgment in ner where in para 60 it said that all the [Boultif] factors should be taken into account in all cases concerning settled migrants who are to be expelled and/or excluded following a criminal conviction. When it comes to applying article 8, therefore, as opposed to following a purely domestic policy, it is not open to the state to say that some of the Boultif factors should not be taken into account or should be subservient to others. If those factors are relevant to a potential deportees situation, they must be taken into account and they must be given the weight that they deserve, following an open ended and rounded evaluation of the case. This approach is also endorsed in Maslov where, at para 70, the Grand Chamber said: The court would stress that while the criteria which emerge from its case law and are spelled out in the Boultif and ner judgments are meant to facilitate the application of article 8 in expulsion cases by domestic courts, the weight to be attached to the respective criteria will inevitably vary according to the specific circumstances of each case. Moreover, it has to be borne in mind that where, as in the present case, the interference with the applicants rights under article 8 pursues, as a legitimate aim, the prevention of disorder or crime (see para 67 above), the above criteria ultimately are designed to help evaluate the extent to which the applicant can be expected to cause disorder or to engage in criminal activities. (emphasis added) It follows that such of the criteria from Boultif and ner as are relevant to a particular article 8 claim must be taken into account and evaluated according to the circumstances of the individual case rather than by reference to some preconceived weighting accorded to them by national rules. This was again made clear in AA v United Kingdom [2012] Imm AR 107 where, at para 57, the court said: The court reiterates that these criteria are meant to facilitate the application of article 8 in expulsion cases by domestic courts and that the weight to be attached to the respective criteria will inevitably vary according to the specific circumstances of each case. Further, not all the criteria will be relevant in a particular case. It is in the first instance for the domestic courts to decide, in the context of the case before them, which are the relevant factors and what weight to accord to each factor. This, then, is the setting in which the relevant immigration legislation and the status and effect of the Immigration Rules 2012 (which are the rules which were applied in Mr Alis case) must be considered. The Immigration Act 1971 Lord Reed has set out the relevant provisions of the Immigration Act 1971 at paras 3 and 4 of his judgment. Under this Act deportation was a two stage process requiring: (i) a person to be liable to deportation under the provisions of the Act; and (ii) the Secretary of State, in the exercise of her discretion under section 5(1), to have decided whether a deportation order should be made in respect of him. If the deeming provision in play was (as here) section 3(5)(a), therefore, the Secretary of State, before deciding whether to make a deportation order, had to make a judgment that the deportation of the person concerned was conducive to the public good. If she made that judgment, she then had to exercise a discretion as to whether the deportation order should be made. These functions underwent significant change as a result of the enactment of the UK Borders Act 2007. UK Borders Act 2007 The purpose of the UK Borders Act 2007 was stated to be to make deportation the presumption for foreign criminals (p 11 of the Immigration and National Directorate review in July 2006, Fair, effective, transparent and trusted: Rebuilding confidence in our immigration system). Deportation of certain foreign criminals was to become mandatory. As noted above, (at para 98) foreign criminals are defined in section 32(1) (3) of the Act. By section 32(4) the deportation of those coming within that category is stated to be conducive to the public good. Effectively, therefore, this provision removes from the Secretary of State the function of deciding whether the deportation of someone who meets the criteria for designation as a foreign criminal conduces to the public good. But it goes further than that. The terms of the provision, that the deportation of a foreign criminal is conducive to the public good, purport to foreclose any legal debate as to whether the deportation of anyone who comes within that category can be other than conducive to the public good. Thus, the deportation of a person convicted of a criminal offence and sentenced to more than 12 months imprisonment is to be considered as immutably in the public good, irrespective of, for instance, any philanthropy or other worthy endeavours in which he may have engaged since his incarceration. The second major change brought about by the 2007 Act was the requirement in section 32(5) that the Secretary of State must make a deportation order against a foreign criminal unless he came within one or more of the exceptions stipulated in section 33. This transformed the open ended discretion that the Secretary of State had under section 5(1) of the 1971 Act into a circumscribed judgment as to whether the person to be deported came within any of the exceptions in section 33 of the 2007 Act. Sub sections (2) to (6A) of section 33 (as amended by section 146 of the Criminal Justice and Immigration Act 2008) contain six exceptions. The only one relevant to this appeal is the first. It is to the effect that section 32(4) and (5) do not apply where deportation would breach a persons rights under the ECHR. The disapplication of section 32(4) and (5) of the 2007 Act, provided for in section 33(1), is made subject to section 33(7), however. It provides: The application of an exception (a) does not prevent the making of a deportation order; (b) results in it being assumed neither that deportation of the person concerned is conducive to the public good nor that it is not conducive to the public good; but section 32(4) applies despite the application of Exception 1 or 4. So, even if a deportation order would, under the first exception provided for in section 33(2), breach a persons Convention right, section 33(7) states that this would not prevent its being made. This is difficult to reconcile with section 6 of the Human Rights Act 1998 (HRA) which provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right. If the Secretary of State (a public authority) made a deportation order in the case of someone whose Convention right would thereby be breached, she would inevitably act in contravention of her section 6 HRA duty. In these circumstances, it appears to me that it would be problematic for the Secretary of State to have recourse to this particular power. Moreover, it would not be easy to square the preservation of the operation of section 32(4) (that the deportation of a foreign criminal is conducive to the public good) with the breach of a potential deportees Convention rights. For how could it be said to conduce to the public good to do something which conflicts with the Secretary of States legal obligation not to act in a way which is incompatible with a Convention right? These difficulties may be theoretical rather than practical, however. It has not been suggested that the Secretary of State has used or would use her powers under section 32 in a way that would bring her into conflict with her duty under section 6 of HRA. Indeed, after the hearing of the appeal in this case, the court received a letter dated 21 January 2016 from the Government Legal Department. This gave the Secretary of States view as to how section 33(7) would be applied when it is accepted that a persons deportation would breach the UKs obligations under the ECHR. The letter referred to the fact that, since at least 2000, para 380 of the Immigration Rules had provided that a deportation order would not be made against any person whose removal would be contrary to the United Kingdoms obligations under ECHR. That paragraph was deleted in July 2012, although replaced by the new para 397 which was to the same effect. The letter asserted that the Secretary of State would not make a deportation order in the majority of cases where there is a protection or human rights barrier to deportation because it would not be right to do so, and in any event could not be enforced. The letter went on to say, however, that a deportation order might be made, despite the existence of an ECHR barrier to deportation when it is known that the barrier will fall away. Two examples of when this might arise were given: This could be because the breach (on the basis of article 8, for example) is known to be time limited or because [the Secretary of State] will obtain reliable assurances from the country of return that the person will not be subjected to treatment that would breach the ECHR Another example of when the [Secretary of State] might consider that a deportation order could be made would be where the foreign criminal decides to leave the UK of his own accord or the person waives his or her rights In such circumstances the deportation order would not be enforced but the foreign criminal would comply with the requirement to leave the UK and the order would serve as preventing re entry to the UK while it is in force. There are two principal difficulties in the examples given by the Secretary of State. In the first place, the distinction between making a deportation order and enforcing it does not signify when one is considering a Convention right. The imperative in section 6 HRA is not to act in a way which is incompatible with a Convention right. If deporting someone would conflict with his article 8 right, I cannot see how it can be said to be compatible with that right to make an order for his deportation, irrespective of whether, at the time of the making of the order, it is not intended to enforce it. Moreover, it is not the enforcement of an immigration order which is in contravention of a Convention right that animates a right of appeal but the making of the order or the refusal to revoke it see section 82 of the Nationality, Immigration and Asylum Act 2002. The second difficulty with the Secretary of States examples is that, properly analysed, most of these do not involve any conflict with a Convention right at all and do not come within the first exception in section 33. Thus, for instance, if the Secretary of State receives assurances on which she can properly rely that the deported persons Convention rights will not be violated in the country to which he is deported, then no Convention right is in play. Likewise, if the ECHR barrier to deportation has fallen away, self evidently, the Convention right no longer exists. And if the Convention right has been waived, there is no question of the Secretary of State acting in contravention of it. That does not mean that the Secretary of State may deport in anticipation of a Convention right disappearing. So long as the right is in existence no public authority may act in a way that is incompatible with it. Plainly, to deport someone in contravention of a subsisting Convention right which is expected to vanish (but has not done so) is just as much a breach of section 6 of HRA as is acting in violation of a right which, it is believed, will endure. Although these difficulties may be no more than theoretical, they demonstrate the error of the approach taken by the Court of Appeal in SS (Nigeria) v Secretary of State for the Home Department [2013] EWCA Civ 550; [2014] 1 WLR 998, where at para 54 Laws LJ suggested that the effect of section 33(7) was to demonstrate the strength of the public interest in deportation. The 2012 Immigration Rules The 2012 rules were made under Section 3(2) of the 1971 Act. On 12 June 2012 the Secretary of State published her Statement of Intent: Family Migration. Explaining the reasons for making the new rules she said, in paragraph 7, that they would reflect fully the factors that weigh for and against an article 8 claim. Paragraph 11 stated: The Immigration Rules will reflect all the factors which, under current statutes and case law, can weigh in favour of an article 8 claim, eg a childs best interests, or against an article 8 claim, eg criminality and poor immigration history. The courts will continue to determine individual cases according to the law but, in doing so, they will be reviewing decisions taken under Immigration Rules which expressly reflect article 8. If an applicant fails to meet the requirements of the new Immigration Rules, it should only be in genuinely exceptional circumstances that refusing them leave and removing them from the UK would breach article 8. It is interesting to note two of the themes from this passage. First, the claim that the rules would reflect all the factors engendered by applicable statute and case law. Secondly, that, although courts would determine individual cases according to the law, they would be reviewing decisions under rules that expressly reflected article 8. The somewhat Delphic nature of the latter of these statements can be viewed in at least two ways. On the one hand, it might appear to recognise the courts autonomous function in applying the law, independent of any guidance that the rules purported to give. On the other, there is more than a hint that it was expected of judges that, in their review of immigration decisions, they should acknowledge and give due weight to the fact that those decisions had been informed by consideration of what was claimed to be a complete charter of all relevant Convention factors. Moreover, the statement that removing from the UK an applicant who fails to meet the requirements of the rules would only breach article 8 in exceptional circumstances is not expressed to be for the guidance of immigration officers only. Paragraph 12 reiterates that where article 8 is prayed in aid, whether under the Immigration Rules or on an asylum application, or if it is raised in the course of an appeals or enforcement process, the applicant is expected to meet the requirements of the Immigration Rules in order to be granted leave on article 8 grounds. This again indicates an intention that the article 8 assessment should be contained within and conducted according to the precepts of the 2012 rules, rather than as an exercise freestanding of them. The 2012 rules took effect on 9 July 2012. So far as concerns the present appeal, the relevant provisions are contained in rules 396 399A. Rule 396 expresses an important presumption and makes a significant statement about the public interest. It stipulates that where a person is liable to deportation, it is to be presumed that the public interest requires deportation. And where the Secretary of State must make a deportation order in accordance with section 32 of the 2007 Act, it is in the public interest to deport. Rule 397 provides that a deportation order will not be made if the persons removal would be contrary to the UKs obligations under the Refugee Convention or ECHR. Where, however, it would not be contrary to those obligations, it is stated that the public interest in deportation is only to be outweighed in exceptional circumstances. Rule 398 makes provision for circumstances where a person claims that their deportation would be contrary to the UKs obligations under article 8 but their deportation is deemed to be conducive to the public good because they have been convicted of an offence for which they have been sentenced to a period of imprisonment of at least four years (sub paragraph (a)); or a period of imprisonment of less than four years but at least 12 months (sub paragraph (b)); or because, in the view of the Secretary of State, their offending has caused serious harm or they are a persistent offender who shows a particular disregard for the law (sub paragraph (c)). In any of the specified circumstances, the Secretary of State, in assessing the claim, is required to consider whether paragraph 399 or 399A applies and if neither does, it is stated that the public interest in deportation will only be outweighed by other factors in exceptional circumstances. Rules 399 and 399A need to be set out in full. They are in these terms: 399. This paragraph applies where paragraph 398(b) or (c) applies if (a) the person has a genuine and subsisting parental relationship with a child under the age of 18 years who is in the UK, and the child is a British Citizen; or (i) the child has lived in the UK continuously (ii) for at least the seven years immediately preceding the date of the immigration decision; and in either case (a) it would not be reasonable to expect the child to leave the UK; and (b) there is no other family member who is able to care for the child in the UK; or (b) the person has a genuine and subsisting relationship with a partner who is in the UK and is a British Citizen, settled in the UK, or in the UK with refugee leave or humanitarian protection, and the person has lived in the UK with valid (i) leave continuously for at least the 15 years immediately preceding the date of the immigration decision (discounting any period of imprisonment); and (ii) there are insurmountable obstacles to family life with that partner continuing outside the UK. 399A. This paragraph applies where paragraph 398(b) or (c) applies if (a) the person has lived continuously in the UK for at least 20 years immediately preceding the date of the immigration decision (discounting any period of imprisonment) and he has no ties (including social, cultural or family) with the country to which he would have to go if required to leave the UK; or (b) the person is aged under 25 years, he has spent at least half of his life living continuously in the UK immediately preceding the date of the immigration decision (discounting any period of imprisonment) and he has no ties (including social, cultural or family) with the country to which he would have to go if required to leave the UK. These complicated provisions require to be unravelled. It is probably easiest to consider them as a series of categories. The first category arises under rule 398(a). This relates to persons liable to deportation who have been sentenced to at least four years imprisonment. Paragraphs 399 and 399A do not apply to this category of persons (see the opening words of each of those provisions), although it is clear from ECtHR jurisprudence that persons falling within this category may be able to succeed in resisting deportation under article 8. A number of recent cases involving the UK exemplify this: Omojudi v United Kingdom (2009) 51 EHRR 10, AW Khan v United Kingdom (2010) 50 EHRR 47, AA v United Kingdom (2011) Imm AR 107. The effect of rule 398 is that, notwithstanding a claim by such persons that their deportation would contravene their article 8 rights, the public interest in having them deported can only be outweighed by other factors in exceptional circumstances. This means that the article 8 assessment in relation to this class of persons is necessarily skewed. Their claim that deportation would disproportionately interfere with their right to respect for private and family life will only avail if they are able to demonstrate exceptional circumstances. Otherwise, the compulsorily assumed public interest in having them deported will prevail. The threshold imposes two requirements. In addition to demonstrating exceptional circumstances, the factors which such persons can call upon to substantiate their article 8 claim are factors other than those in paragraphs 399/399A. A similar two fold threshold applies in the 2014 Rules: the public interest in deportation will only be outweighed by other factors where there are very compelling circumstances over and above those described in paragraphs 399 and 399A. The second category relates to those who are liable to deportation and who have been sentenced to a period of at least 12 months but less than four years imprisonment and who have a genuine and subsisting parental relationship with a child under the age of 18 years. Several requirements as to the condition of the child are stipulated. First he or she must be a British citizen. So a child with leave to remain, but without British citizenship, will not bring a parent within the provision. Alternatively, the child must have lived in the UK continuously for at least seven years before the date of the immigration decision. In either case, in order to come within para 399, it must be established that it would not be reasonable to expect the child to leave the UK and that there is no other family member able to care for the child in the UK. It goes without saying that vibrant family life can exist in circumstances other than those specified in this second category. It is not difficult to envisage tight knit families where it would be possible under the rules to separate a parent from his or her child if that child is not a British citizen or is less than seven years old or where there is another family member who might care for her or him. But whether to bring about a separation in those circumstances would violate the right of the parent and the child to respect for his or her family life is an entirely different matter. Family life is not to be defined by the application of a series of rules. Disturbance of that precious aspect of existence is not avoided by a limited set of exemptions. While a limited area of discretionary judgment must be allowed the government in the matter of justification of an interference with the rights enshrined in article 8(1) of ECHR, it is important, as a first step in an examination of whether there has been a breach of that article, that one should recognise that family life and the requirement to respect it are not susceptible to verification solely by a system of checks against a set of prescriptive rules. It is crucial, also to draw attention here to the obligation under section 55 of the Borders, Citizenship and Immigration Act 2009, incorporating article 3(1) of the United Nations Convention on the Rights of the Child, to treat the childs best interests as a primary consideration (as discussed in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166). The rules do not permit consideration of the best interests of the children concerned. Indeed, insofar as they envisage that where an alternative family member can care for a child deportation will be proportionate, the rules positively disregard the childs interests. The third category involves those who have a genuine and subsisting relationship with someone who comes within one of the groups specified in para 399(b): British citizens, persons with indefinite leave to remain, and those who have been granted refugee or humanitarian protection. Again, conditions are applied in order to qualify for the exemption provided for in this sub paragraph. The person with whom the relationship exists must have lived in the UK for at least 15 years and there must be insurmountable obstacles to continuing family life with that partner outside the UK. Similar observations about these requirements may be made as those that pertain to the second category. Some comment in particular is required on the use of the phrase insurmountable obstacles. In the article 8 contexts, our domestic courts have repeatedly emphasised that the test for whether a family can be expected to relocate abroad to continue their family life is whether relocation would be reasonable. In Huang at para 20, Lord Bingham refers to circumstances where the life of the family cannot reasonably be expected to be enjoyed elsewhere; in EB (Kosovo) v Secretary of State for the Home Department [2009] 1 AC 1159, para 12, whether the spouse can reasonably be expected to follow the removed spouse to the country of removal, (see also para 18); and in ZH (Tanzania), where Lady Hale at para 15 observes that of particular importance is whether a spouse or a child can reasonably be expected to follow the removed parent to the country of removal (see also para 29). The issue was laid to rest in VW (Uganda) v Secretary of State for the Home Department [2009] EWCA Civ 5; [2009] Imm AR 436 (paras 19, 24)). The ECtHR, although it uses the phrases insurmountable obstacles, major impediments, serious impediments or, in the French version of certain judgments, merely obstacles, looks in substance at the difficulties facing families and whether it is reasonable to expect family members to relocate. This is so, not only in cases involving settled migrants (see Boultif, paras 48, 52 55) but also in cases involving a precarious immigration status. For example, in Mokrani v France (2003) 40 EHRR 5, which involved a relationship commenced after a deportation order had been issued, the court, noting that the applicant could not have been unaware of the relative precariousness of his situation went on to say, in finding a violation of article 8, it is hardly conceivable that the wife, a French national who has never lived in Algeria and who has no links with that country, should be expected to follow the applicant to Algeria (para 34). The fourth and fifth categories under para 399A (the article 8 private life provisions, whilst para 399 purports to deal with family life) involve those who have been living in the UK for a prescribed number of years or who are less than 25 years old and have spent at least half their life in the UK and have no ties with the country to which they would be deported. This is an extremely high threshold to meet. Despite having lived in the UK for many years, a person may continue to speak the language of their country of origin, or may have family who remain living there. But this does not mean that their deportation would not be disproportionate. Furthermore, the rules do not take into account the personal, cultural, linguistic and economic ties that a person has with the United Kingdom, or assess their degree of integration in this country, factors which are indisputably relevant to an article 8 assessment. One can accept that all five categories describe groups of people who may readily be supposed to have established a family or private life in the UK. It cannot be said, however, that these groups are comprehensive of all whose circumstances might properly come within that rubric. Indeed, the rules also make the mistake of addressing family and private life separately, rather than recognising that the impact of expulsion on private and family life must be considered cumulatively (Maslov para 63; AA v United Kingdom [2012] Imm AR 107, para 49). Many who fall outside the categories set out in the rules enjoy a full family or private life in every sense. The significance of that inescapable truth is that, under the 2012 Immigration Rules, anyone who does not come within any of the specified categories and who is liable to deportation as a result of their status as a foreign criminal must demonstrate exceptional circumstances in order to outweigh the statutorily imposed public interest in their deportation. That requirement runs directly counter to a proper assessment of whether an interference with the right to respect for family or private life on the part of those who do not come within one of the exemptions is justified. Exceptional circumstances In requiring exceptional circumstances to be established for a claim made by someone who does not come within one of the narrowly prescribed exemptions in the various categories described above, the Immigration Rules are contrary to a long line of authority, beginning with Huang. At paras 39 to 44 of his judgment in this case, Lord Reed has set out the background to the appeal in Huang and quoted a number of passages from the speech of Lord Bingham which, as Lord Reed has said, remain entirely pertinent to the issues in the present appeal. It is of supreme importance to recognise two features of the Huang decision. The first of these is that consideration of whether an individuals article 8 rights will be infringed by a decision to deport her or to refuse her permission to reside in this country, notwithstanding her article 8 right, does not lend itself naturally to the application of a series of rules. The essential nature of the inquiry into whether (i) the article 8 right is engaged; (ii) there has been an interference with it; and (iii) if so, the interference is justified, inevitably involves a fact sensitive focus. Of course, Immigration Rules, in order to be administratively workable, must contain a series of checks or filters. But two points need to be made about this. First, the primary function of such checks should be to determine whether the applicant qualifies under the rules. And the second is that failure to qualify under the rules should not inhibit the open minded examination of whether article 8 mandates that a decision to grant leave to enter or remain or, as in this case, to refuse to make a deportation order, should be made. The second feature of the Huang decision mirrors the second point made above. At para 20 of Huang Lord Bingham said: In an article 8 case the ultimate question for the appellate immigration authority is whether the refusal of leave to enter or remain, in circumstances where the life of the family cannot reasonably be expected to be enjoyed elsewhere, taking full account of all considerations weighing in favour of the refusal, prejudices the family life of the applicant in a manner sufficiently serious to amount to a breach of the fundamental right protected by article 8. If the answer to this question is affirmative, the refusal is unlawful and the authority must so decide. It is not necessary that the appellate immigration authority, directing itself along the lines indicated in this opinion, need ask in addition whether the case meets a test of exceptionality. So, the ultimate question is whether the refusal of leave to enter or remain (or, as in this case, the decision to make a deportation order) prejudices the family or private life of the individual sufficiently seriously to amount to a breach of the article 8 right. That quest should not be encumbered by pre emptive considerations of exceptionality. It is, in essence, a simple exercise. Of course, the fact that the person liable to deportation has committed a criminal offence looms large in the considerations weighing in favour of the refusal. But that consideration is no more than a factor to be accorded the weight that the particular circumstances of the case warrant. It must not be an intrinsic impediment of unvarying significance which creates a hurdle of identical weight in all cases and which can only be overcome by the existence of closely defined exceptional circumstances. A proper understanding of the role of the appellate immigration authority, on an appeal from a decision to refuse leave is, as Lord Reed has pointed out (in paras 42 43), vital to an appreciation of how it is to perform its function. It is not a reviewing body. It is not inhibited by findings previously made. On the contrary, it is its duty to find facts for itself and these must include, where relevant, circumstances which have arisen since the original findings were made. For this reason, although the Upper Tribunal in the present case was bound to take account of the Secretary of States reasons for making a deportation order, that was only because these were relevant considerations to which appropriate weight should be given. The fact that the Secretary of State had decided to make a deportation order has no significance for the Upper Tribunal beyond that. Lord Reed refers at para 45 to a licensing decision case, Sagnata Investments Ltd v Norwich Corpn [1971] 2 QB 614, which quotes, at p 637, from a much older licensing case, Stepney Borough Council v Joffe [1949] 1 KB 599, 603. I question the relevance of those decisions in the present context. In a human rights appeal, the function of the Tribunal is to anxiously scrutinise the decision of the Secretary of State, and to assess the proportionality of the interference with the individuals rights for itself. I find myself unable to agree with the statement, in the human rights context, that a court ought not lightly to reverse the Secretary of States decision. My view that this is not the correct approach is reinforced by the existence of a statutory appeal right on human rights grounds. As Lord Reed has observed at para 47, Huang has been followed and developed in such cases as EB (Kosovo) v Secretary of State for the Home Department [2008] UKHL 41; [2009] 1 AC 1159; Zoumbas v Secretary of State for the Home Department [2013] UKSC 74; [2013] 1 WLR 3690, para 13, and R (Bibi) v Secretary of State for the Home Department [2015] UKSC 58; [2015] 1 WLR 5055. Observations made by Lord Bingham in EB (Kosovo) as to the impossibility of subjecting article 8 assessments by appellate tribunals to general rules are reflected in the more recent cases referred to, and are thus worthy of particular emphasis: Thus the appellate immigration authority must make its own judgment and that judgment will be strongly influenced by the particular facts and circumstances of the particular case. The authority will, of course, take note of factors which have, or have not, weighed with the Strasbourg court . [T]here is in general no alternative to making a careful and informed evaluation of the facts of the particular case. The search for a hard edged or bright line rule to be applied to the generality of cases is incompatible with the difficult evaluative exercise which article 8 requires. (para 12) I agree with Lord Reeds rejection at para 48 of counsel for the Secretary of States criticism of the decision in Bibi. For the reasons given earlier, although the fact that a person resisting deportation is not a settled migrant is relevant, it does not mean that they are debarred from relying on the same type of circumstances as would a settled migrant in advancing an article 8 claim. And as Lady Hale said in Bibi the applicable principles are similar in both instances. Moreover, as Lord Reed has explained, the analytical structure by which the proportionality of a decision or measure should be assessed can, with modest modification, be applied to the present circumstances. That structure has been developed and refined through such cases as Huang; R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2011] UKSC 45; [2012] 1 AC 621, and Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700. It is now firmly established as the appropriate means by which the proportionality of an impugned decision should be determined and it comprehends the fair balance element. It should be applied in this case. MF (Nigeria) v Secretary of State for the Home Department and later cases In MF (Nigeria) the Secretary of State had asserted (in a statement produced during the hearing of the appeal and at the request of the court) that the new rules sought to reflect the Strasbourg jurisprudence when applied to the deportation of foreign criminals: see para 34. In as much as the Court of Appeals statement in MF (Nigeria), at para 44, that the new rules were a complete code suggests that article 8 factors which are not covered by the rules need not be considered, I would strongly disagree. As I have said, the primary function of the checks which the rules contain is to determine whether the applicant qualifies under them. They cannot be regarded as a comprehensive means by which a persons article 8 rights are determined and, indeed, on the hearing of this appeal, Ms Giovanetti made no such claim. In the words of Lord Bingham, an applicant's failure to qualify under the rules is the point at which to begin, not end, consideration of the claim under article 8 (Huang, para 6). The approach to proportionality can be structured; indeed, the formulation of the correct approach in such cases as Aguilar Quila and Bank Mellat is positively helpful in ensuring that examination of whether a decision or measure is proportionate is conducted in a controlled way. But the content of Convention rights and whether interference with them can be said, in any given context, to be proportionate cannot be prescribed. Indeed, although the ECtHR has set out a number of factors that will frequently require to be examined, these do not purport to be exhaustive of the circumstances in which a Convention right is in play or whether interference with such a right is proportionate. Nor will all of those factors be relevant in every conceivable situation. Much less will it be appropriate to attempt to attach a particular weight to individual factors in any general, pre emptive way. For these reasons, the suggestion (made in AJ (Angola) v Secretary of State for the Home Department [2014] EWCA Civ 1636, para 39) that an official or a tribunal should seek to take account of any Convention rights of an appellant through the lens of the new rules themselves, rather than looking to apply Convention rights for themselves in a free standing way outside the new rules cannot be accepted. Nor can it be accepted, as was said in Secretary of State for the Home Department v AQ (Nigeria) [2015] EWCA Civ 250; [2015] Imm AR 990, para 70, that national policy as to the strength of the public interest in the deportation of foreign criminals is a fixed criterion. That proposition cannot be accepted if it was intended to convey that this was a factor of unvarying, immutable weight. The public interest The strength of the public interest in favour of deportation must depend on such matters as the nature and seriousness of the crime, the risk of re offending, and the success of rehabilitation, etc. These factors are relevant to an assessment of the extent to which deportation of a particular individual will further the legitimate aim of preventing crime and disorder, and thus, as pointed out by Lord Reed at para 26, inform the strength of the public interest in deportation. I do not have trouble with the suggestion that there may generally be a strong public interest in the deportation of foreign criminals but a claim that this has a fixed quality, in the sense that its importance is unchanging whatever the circumstances, seems to me to be plainly wrong in principle, and contrary to ECtHR jurisprudence. It is important for the decision maker to scrutinise the elements of public interest in deportation relied upon in an individual case, and the extent to which these factors are rationally connected to the legitimate aim of preventing crime and disorder. That exercise should be undertaken before the decision maker weighs the public interest in deportation against the countervailing factors relating to the individuals private or family life, and reaching a conclusion on whether the interference is proportionate. Three component factors of the public interest in deportation were discussed in OH (Serbia) v Secretary of State for the Home Department [2008] EWCA Civ 694; [2009] INLR 109, para 15): risk of re offending, deterrence and societal revulsion towards the commission of criminal offences. I have touched upon the risk of re offending at para 96 above. Where an individual is assessed to pose a low risk of re offending, interference with his article 8 rights on the basis that it is necessary to prevent crime and disorder is more difficult to justify, and the weight to be attached to the public interest in deportation in such a case will be reduced. As to deterrence, Lord Bingham at para 16 of Huang acknowledged the need to discourage non nationals admitted to the country temporarily from believing that they can commit serious crimes and yet be allowed to remain. This observation posits an appropriate distinction between migrants admitted temporarily to the United Kingdom, and persons who hold permanent residence or who have resided in this country for a substantial period of time, for example, children who have lived in this country all or most of their lives. It is at least open to question whether deterrence is a relevant component of the public interest in deportation so far as this latter group is concerned. Where the threat of a custodial sentence has failed to deter such persons from offending, one must query whether the threat of deportation would have any greater effect. No evidence has been presented to support such a contention. Expression of societal revulsion, the third of the factors applied in OH (Serbia), should no longer be seen as a component of the public interest in deportation. It is not rationally connected to, nor does it serve, the aim of preventing crime and disorder. Societal disapproval of any form of criminal offending should be expressed through the imposition of an appropriate penalty. There is no rational basis for expressing additional revulsion on account of the nationality of the offender, and indeed to do so would be contrary to the spirit of the Convention. Much has been said of the public interest in the deportation of foreign national criminals. But the public interest is multi faceted, and there are other important factors which contribute to the positive development of our society and are thus matters in the general public interest. These factors may be a relevant consideration in the article 8 proportionality assessment, and have a free standing value, independent of that which attaches to the individual facing deportation. For example, there is a public interest in families being kept together, in the welfare of children being given primacy, in valuing a person who makes a special contribution to their community, and in encouraging and respecting the rehabilitation of offenders. These factors all play a role in the construction of a strong and cohesive society. They are recognised outwith the immigration context, and certain factors are given statutory recognition. Where relevant they should be part of the proportionality equation. The proceedings I agree with and gratefully adopt Lord Reeds account of the proceedings, save for his review of the Upper Tribunals consideration of the appellants circumstances. Lord Reed has said (in para 60) that it is not apparent that the judge took account of the fact that the appellants relationship with Ms Harwood had been formed at a time when his immigration status was such that the persistence of family life within the UK was precarious and that its continuance after his release from prison took place when he was facing deportation proceedings. At para 42 of the judges reasons he recorded that the appellant had accepted that his relationship with [Ms Harwood] developed when his immigration status was uncertain. And at para 64, the judge observed that Ms Harwood had learned of the appellants precarious immigration status following his involvement in criminal offences. At para 70, Ms Harwood is recorded as having said that she wanted to marry the appellant and have a proper wedding but that this was difficult because of his uncertain immigration status. Quite apart from these items of evidence and the judges express reference to them, the appellants precarious immigration status and the fact that he was facing deportation proceedings when he was released from prison are indisputable facts. I find it hard to believe in these circumstances that the judge did not attach weight to them. The fact that they were not discussed prominently among the welter of matters that the judge was required to consider does not mean that they were left out of account. On the contrary, his mention of the appellants and Ms Harwoods awareness of them seems to me to suggest that he had them well in mind in reaching his conclusion. Lord Reed also considers that the Upper Tribunal erred in failing to take any account of the new rules on the basis that they did not assist with the proper assessment of the applicants human rights (paras 60 and 63). I do not consider that the Upper Tribunals failure to take account of the rules impaired its approach to the article 8 proportionality assessment. In my opinion, the Upper Tribunal succinctly, but correctly, expressed the proper approach to article 8, apart from its reference to societys disapproval as a basis on which deportation could be justified. (Since the Upper Tribunal found that the decision to deport was disproportionate, however, this error does not signify.) At para 95 of his Determination and Reasons the judge said: I have to decide if the interference in (sic) the private and family life consequent on removal is proportionate to the proper purpose of deporting foreign criminals for the purposes of the prevention of disorder and crime. I have to do that knowing that it is unlikely that this appellant will commit further offences. The point is the deterrent effect or general expression of societys disapproval of foreign criminals, rather than preventing further trouble from this particular man, that is important in this case. The judge also recognised that the 2007 Act had expressed a legitimate public interest in the deportation of foreign criminals and acknowledged that he was bound to respect the policy as set out in section 32(5) of the 2007 Act (para 96), and subsequently referred to the imperative of removal in his discussion (paras 98 and 102). He then set out a number of reasons which, taken in combination, led him to the conclusion that his deportation would be disproportionate. These included that the appellant had no family in Iraq and had not lived there since the age of 12 (this was not determinative, but a factor against removal para 100); the appellants length of stay in the UK and positive attitude to future behaviour were significant factors to weigh in the balance against the imperative of removal (para 102); and his genuine, strong and important relationship with his fiance (paras 94, 99), whose being required to relocate to Iraq would not be reasonable (para 88). This is precisely the type of fact sensitive proportionality assessment that both ECtHR jurisprudence and binding domestic authority requires and I cannot fault it. The Court of Appeal decision The Court of Appeals basic error was its misunderstanding of the significance of sections 32 and 33 of the 2007 Act, and its conclusion that MF (Nigeria) [2014] 1 WLR 544 and SS (Nigeria) [2014] 1 WLR 998 required tribunals to give preponderant weight to the public interest in the deportation of foreign criminals at the expense of a proper examination of the circumstances of individual cases. All article 8 claims had to be refused if they fell outside rules 399 and 399A unless they could identify exceptional or compelling circumstances. The inevitable circumscription of a proper article 8 inquiry that such an approach entails cannot be upheld for the reasons earlier given. The second ground of appeal (that the Upper Tribunal had failed to recognise the importance of the public interest in deporting foreign criminals) is plainly unsustainable once the correct approach to sections 32 and 33 is understood. As I pointed out in para 172 above, the judge actually overstated the scope of the public interest but, for the reasons given, this had no impact on the otherwise correct decision that he reached. Grounds (iii) and (iv) (which the Court of Appeal found it unnecessary to consider in light of its conclusion on grounds (i) and (ii)) are unarguable, in my opinion. Ground (iii) averred that the Upper Tribunal had failed to apply the guidance given in ner. I need not repeat my discussion of the guidance to be derived from that case. There is nothing in that guidance which is in conflict with the approach of the Upper Tribunal. Since, for the reasons that I have given as to the general propriety of the Upper Tribunals approach, I consider that ground (iv) is unsustainable. Conclusion I would allow the appeal and restore the decision of the Upper Tribunal.

UK-Abs

These proceedings challenge a deportation order made in respect of the appellant, an Iraqi national who has lived unlawfully in the UK since 2000. He made an asylum claim in 2002, which was rejected, and his subsequent appeal was dismissed. In November 2005 he was convicted of Class A and C drug possession and was fined. On 4 December 2006, he was convicted of two counts of Class A drug possession with intent to supply, and sentenced to four years' imprisonment. Upon completion of his sentence in January 2011 he was considered to present a low risk of re offending. He has been in a relationship with his fiance, a British citizen, since 2005. The appellant has two children who probably reside in the UK, and with whom he has no contact. He has no remaining family in Iraq. On 5 October 2010 the Secretary of State made an automatic deportation order under s.32(5) of the UK Borders Act 2007. S.32(5) requires deportation orders to be made in respect of foreign criminals unless one of the exceptions in s.33 applies, which include breach of ECHR rights. A foreign criminal is defined in s.32(1) as a person who is not a British citizen, who is convicted in the UK of an offence and is sentenced to a period of imprisonment of at least 12 months. The Secretary of State found that the appellant did not fall within any of the exceptions in s.33: she accepted that deportation might interfere with the appellants ECHR article 8 rights to private and family life, but considered that this was proportionate to the aim of preventing disorder or crime and the maintenance of effective immigration control. The appellant appealed the Secretary of States decision, but the First tier Tribunal dismissed his appeal. The appellant then appealed to the Upper Tribunal, which set aside the First tier Tribunals decision and re heard the appeal, allowing it on the ground that a s.33 exception applied: the appellants removal would be incompatible with his rights under article 8. The Court of Appeal allowed the Secretary of States appeal on the ground that the Upper Tribunal had failed, in its assessment of proportionality, to take into account the new Immigration Rules which had come into force in July 2012, and had failed to recognise the importance of the public interest in deporting foreign criminals. The Court of Appeal remitted the appeal for re consideration by a differently constituted Upper Tribunal. This is the appeal against the decision of the Court of Appeal to remit. The Supreme Court dismisses Mr Alis appeal by a majority of 6 to 1. Lord Reed gives the lead judgment (with which Lord Neuberger, Lady Hale, Lord Wilson, Lord Hughes and Lord Thomas agree). Lord Wilson and Lord Thomas each add a concurring judgment. Lord Kerr gives a dissenting judgment. The Immigration Rules (the Rules) were a relevant and important consideration which the Upper Tribunal ought to have taken into account when assessing the proportionality of the interference with the appellants article 8 rights. It should also have taken into account that his relationship with his partner was formed at a time when his immigration status was such that the persistence of family life within the UK was uncertain [60]. The European Court of Human Rights has provided guidance to the factors which should be taken into account in the balancing exercise (for example in Boultif v Switzerland (2001) 33 EHRR 50, Maslov v Austria [2009] INLR 47, Jeunesse v Netherlands (2014) 60 EHRR 17). These factors involve wide ranging consideration of the appellants circumstances including the nature of his private and family life in the UK, his links to the destination country, and the likelihood of him re offending [26 33]. The weight to be attached to each factor in the balancing exercise falls within the margin of appreciation of the national authorities [35]. The Rules set out the Secretary of States assessment of the weight generally to be afforded to some of these factors. In particular, the Rules prescribe a presumption that the deportation of foreign criminals is in the public interest, except where specified factors are present which the Rules accept outweigh that interest. Outside of those specified factors (for example in every case where a custodial sentence of 4 years of more has been imposed, as here), the Rules state that exceptional circumstances that is, compelling reasons are required to outweigh the public interest in deportation. The Rules are not law, but do have a statutory basis and require the approval of Parliament. It is within the margin of appreciation to adopt rules reflecting the assessment of the general public interest made by the Secretary of State and endorsed by Parliament. [15 23, 36 39]. As an appellate body, the Upper Tribunals decision making process is not governed by the Rules, but should nevertheless involve their consideration. The Upper Tribunal must make its own assessment of the proportionality of deportation, on the basis of its own consideration of the factors relevant to the particular case, and application of the relevant law. But in doing so, it must not disregard the decision under appeal. Where the Secretary of State has adopted a policy in relation to the assessment of proportionality, set out in the Rules and endorsed by Parliament, the Upper Tribunal should give considerable weight to that policy. In this case that policy was that a custodial sentence of four years or more represents such a serious level of offending that the public interest in the offenders deportation almost always outweighs countervailing considerations of private or family life [39 50, 60 64]. Lord Wilson adds that public concern (as reflected in the Rules endorsed by Parliament) can assist a courts objective analysis of where the public interest lies [65 81]. Lord Thomas emphasises the importance of clear reasoning at first instance through a structured balance sheet approach [82 84]. In a dissenting judgment, Lord Kerr would have allowed the appeal and upheld the decision of the Upper Tribunal. He concluded that the application of the Rules, and their prescription of the weight to be given to the public interest in the deportation of foreign criminals, were not compatible with the balancing exercise that had to be undertaken in considering the relevant factors arising under article 8 in a particular case. It had been sufficient for the Upper Tribunal to take into account those relevant factors. Undue or unique reliance on the Rules, at the expense of a comprehensive survey of the pertinent article 8 factors was not appropriate.

SeaFrance SA was a subsidiary of the French state rail group SNCF. It operated a ferry service between Dover and Calais until 16 November 2011, when it went into liquidation in France and its operations ceased. On 2 July 2012, in circumstances which I will describe more fully below, substantially all of its assets were acquired by Groupe Eurotunnel SE (which I shall call GET). GET is the parent company of the group which operates the Channel Tunnel between the United Kingdom and France. It acquired the assets as part of an arrangement with Socit Cooprative de Production SeaFrance SA (or SCOP), a workers cooperative formed to secure the continuance of the ferry service and thus the jobs of SeaFrances employees. The essence of this arrangement was that while the ferry service would be operated by GET or a subsidiary of GET, the ships would be operated and crewed by SCOP. The service was subsequently resumed on this basis on 20 August 2012 using three of the same ships and operated by employees almost all of whom had previously worked for SeaFrance. In September 2014 the Competition and Markets Authority, after an investigation of the impact of the transaction on competition on the cross Channel routes, prohibited GET from operating any ferry service from Dover using the passenger ships acquired from SeaFrance for a period of ten years. Its jurisdiction to do this depended on whether GETs acquisition of the SeaFrance assets created a relevant merger situation for the purpose of the Enterprise Act 2002. The question at issue on this appeal is whether that condition was satisfied. This in turn depends on whether what GET and SCOP acquired on 2 July 2012 was an enterprise or merely the assets of a defunct enterprise. The Authority considered that what GET acquired was an enterprise and that accordingly a merger situation existed. The Competition Appeal Tribunal, sitting as a court of judicial review, held that they were entitled to reach that conclusion. But the Court of Appeal allowed the appeal by a majority (Tomlinson LJ and Sir Colin Rimer, Arden LJ dissenting: [2015] EWCA Civ 487). In their view what had been acquired was not the enterprise formerly carried on by SeaFrance, but only the means to construct a similar but new enterprise. Accordingly no merger situation had been created and there was no jurisdiction to impose remedies. They held that that it had been irrational for the Authority, on the facts which it had found, to reach any other conclusion. The statutory framework The statutory control of the competition aspects of mergers has been one of the more stable parts of the United Kingdoms competition law. It was introduced by the Monopolies and Mergers Act 1965, at a time when the only other country with a comprehensive system of merger control was the United States, and its broad outlines have remained unchanged ever since. The current statutory framework is in Part 3 of the Enterprise Act 2002. Before 1 April 2014, merger control had been the responsibility of the Office of Fair Trading and, successively, the Monopolies and Mergers Commission and the Competition Commission. On that date important organisational changes came into effect as a result of the amendment of the Act by Parts 3, 4 and 5 of the Enterprise and Regulatory Reform Act 2013. The Office of Fair Trading and the Competition Commission were abolished and the relevant functions of both were transferred to a new body, the Competition and Markets Authority. These changes occurred while the reference which has given rise to the present appeal was in progress. But they do not affect the issues before us. I shall therefore refer to the Act throughout in its amended form. The purpose of merger control is to regulate in advance the impact of concentrations on the competitive structure of markets. Some merger regimes, notably that of the United States, apply to any acquisition which is liable to bring about such a concentration. It is, however, a fundamental feature of the United Kingdoms scheme that it distinguishes between the acquisition of assets constituting a business and the acquisition of bare assets. Concentrations arising from the acquisition of bare assets are not subject to statutory merger control ex ante, even if they have potentially adverse effects on competition, although they may be subject to heightened regulation ex post under Part 1, Chapter II of the Competition Act 1998 (Abuse of Dominant Position). The reason for the distinction is that it is thought to be inappropriate to inhibit the organic growth of businesses simply because it is achieved by means of factors of production previously employed in another business, if control of the other business has not itself been achieved. Part 3, Chapter 1 of the Enterprise Act, deals separately with completed and anticipated mergers. Under section 22(1), which is concerned with completed mergers, the Competition and Markets Authority must, subject to limited exceptions, refer arrangements or transactions to a specially constituted group of panellists if it believes that it is or may be the case that: (a) a relevant merger situation has been created; and (b) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services. Once a reference has been made, the Authority is required by section 35(1) to decide (among other things) whether a relevant merger situation has been created, and if it has whether the stipulated effects on competition have resulted or may be expected to result. What constitutes a relevant merger situation depends on section 23. Under section 23(2)(a), a relevant merger situation has been created if two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24, provided that the enterprise being taken over had a specified minimum turnover in the accounting period preceding the date when it ceased to be a distinct enterprise: see sections 23(1)(b), 28(3) and the Enterprise Act 2002 (Merger Fees and Determination of Turnover) Order SI 2003/1370, articles 2(c) and 11. Under section 26(1): for the purposes of this Part any two enterprises cease to be distinct enterprises if they are brought under common ownership or common control For this purpose, associated persons and any bodies corporate which they or any of them control are to be treated as one person: section 127(1). Associated persons include persons acting together to secure or exercise control over any enterprise or assets: section 127(4)(d). Of critical importance to these provisions, and to the issues on this appeal, are the definitions of enterprise and business in section 129(1). An enterprise means the activities, or part of the activities, of a business. A business includes a professional practice and includes any other undertaking which is carried on for gain or reward or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge. There is no statutory definition of activities. It is, finally, necessary to refer to the provisions of sections 24 and 27. These deal with the timing of any reference. The effect of section 24 is that a reference must be made within four months of the relevant enterprises ceasing to be distinct or (if later) within four months of the transaction being made public or notified to the Authority. Section 27 provides that where the relevant arrangements or transaction take effect in stages, then two enterprises are deemed to have ceased to be distinct when the parties to the relevant arrangements or transaction become bound to such extent as will result in their ceasing to be distinct: sub section (2). By sub sections (5) and (6), if the enterprises cease to be distinct by virtue of each of a number of successive events occurring within a period of two years, the Authority may, for the purposes of a reference, treat successive events to which this subsection applies as having occurred simultaneously on the date on which the latest of them occurred. The facts The question whether GET acquired an enterprise or the bare assets of a defunct enterprise turns on exactly what happened to the business of SeaFrance during the hiatus of seven and a half months between its cessation of operations and the transaction of 2 July 2012. Since the Authoritys conclusion on this point is said to be irrational, it is necessary to examine with some care the facts on which it was based. The following summary is based on the Authoritys report and on the earlier report issued by the Competition Commission. I shall come back to the circumstances in which a second report was required. Before going into liquidation, SeaFrance had operated the ferry service with four vessels. There were three passenger ferries, the Rodin, the Berlioz and the Molire, and a freight ship, the Nord Pas de Calais. They were all owned by SeaFrance except for the Molire, which was operated by SeaFrance on a bareboat charter. The Molire was redelivered to its owners when the company went into liquidation and for present purposes can be ignored. The service was overmanned, dogged by poor labour relations and unprofitable, and by the spring of 2010 SeaFrance was insolvent. On 28 April 2010, it applied to the Tribunal de Commerce de Paris for protection from its creditors. On 30 June it was placed by the court in the hands of court appointed administrators. They continued to operate the ferry service, while trying without success to sell the business. No acceptable offers having been received, on 16 November 2011 the French Court made what amounted to a provisional order for the liquidation of SeaFrance. The court ruled that for the time being the ferry service could continue, but in fact it ceased from that date. The ships were placed in hot lay up while further attempts were made to find a buyer. This was a minimal operating mode which would enable their condition to be maintained so that they could become fully operational in a short time if a buyer was found. It is, however, plain that a maintenance programme of this kind was a substantial undertaking. It required the services of 190 employees. On 9 January 2012, the French Court formally placed the company in liquidation and ordered it to cease trading. Under French law, the consequence of this order was that all of the SeaFrance employees had to be made redundant within 15 days, apart from those required for the purposes of the liquidation. The latter included the staff engaged in maintaining the vessels in hot lay up. The court minutes record that the dismissals were not the end of the road: On pronouncement, the liquidator under the control of the bankruptcy judge and the court must undertake any discussions that are necessary with the interested parties. Clearly, there must be a trade off between the value of the assets, which are mainly the vessels, and the continuance of employment contracts. The market exists; the vessels are quite new and even the business may be sold later on. He will ensure that the bodies governing the proceedings are particularly attentive to the dramatic social company aspects and to do this he knows that SNCF will do its duty regarding its Group obligations and its capacity to reclassify collaborators under conditions to be negotiated. Among the steps which the liquidator was directed to take was: Reclassification of the business as a competitive and competent organisation in the sea transportation business with enhancement of the assets This was to be achieved by a Plan de Sauvegarde de lEmploi (known as PSE3). Such a plan was required by French law to be prepared by the employer during the 15 day period allowed for the redundancies, with a view to safeguarding the employment of those made redundant. Accordingly, the liquidator began negotiations with the SeaFrance works council to agree a plan. On 23 January 2012, agreement was reached. An important feature of the plan agreed was that SeaFrances parent, SNCF, would make an incentive payment to any alternative employer for each ex SeaFrance employee whom it took on. The amount of the payment would vary from 3,600 to 25,000 according to the nature of the alternative employment. The highest payment, 25,000, would be made for any ex SeaFrance employee who was ultimately re employed on the SeaFrance vessels in operations similar to those carried on by SeaFrance before its liquidation. Subsequently, the liquidator invited sealed bids for the SeaFrance assets by 4 May 2012. A number of bids were received, which were opened in court on 10 May 2012. GET bid 65m for all the assets other than customer contracts, an exception which the Commission regarded as insignificant. The assets acquired included the vessels, the logos, brands and trade names, the computer software, websites and domain names, IT systems and hardware, the office equipment, the customer lists and records, and the inventory of technical and spare parts. It was an integral part of GETs proposal that it would enter into a long term relationship with SCOP under which SCOP would provide the crews and shore staff for the vessels, using as many as possible of the redundant former employees of SeaFrance. The bid documents put the point in this way: The project for which Groupe Eurotunnel is signing up is intended, however, to allow a partnership with the former SeaFrance employees who will be involved as part of a SCOP, so as to revive the operations previously undertaken by SeaFrance. The liquidator recommended the GET bid because, among other reasons, the arrangement with SCOP meant that it was the only one which would safeguard the jobs of at least a substantial part of the workforce. On 11 June 2012, the court accepted the liquidators recommendation, and the acquisition of the SeaFrance assets was completed on 2 July 2012. On 20 August 2012 a subsidiary of GET, MyFerryLink SAS, recommenced the ferry service with the three vessels acquired from SeaFrance. SCOP operated the service under contract with MyFerryLink (or MFL). Between 80% and 90% of those employed in the service, whether on board or ashore, were former SeaFrance employees, although because MFL ran three ships instead of four and at manning levels lower than those of SeaFrance, this accounted for a smaller proportion of those who had been made redundant. The reference to the Competition Commission and the Competition and Markets Authority On 29 October 2012, the Office of Fair Trading referred the acquisition of the SeaFrance assets to the Competition Commission under the legislation then in force. The Commission reported on 6 June 2013 that a relevant merger situation existed which could be expected substantially to lessen competition in the market for ferry services across the Channel. The Commission considered that the question whether the assets acquired constituted an enterprise depended on which assets of the enterprise could be said to constitute the activities or part of the activities of its business. For some businesses the activities are enabled by physical assets alone. In others, such as skilled service industries, key staff may constitute an enterprise (paragraph 4.10). The Commission considered that the enterprise of SeaFrance was constituted essentially by the combination of the vessels, the employees and to a limited extent the brand and goodwill. It approached the acquisition of these three classes of asset on the footing that the extent of the co operation between GET and SCOP made it appropriate to treat them together as associated persons for the purpose of section 127 of the Act, and thus as a single acquirer of all three classes of asset. The Commission thought that the hiatus in SeaFrances operations before the acquisition by GET and SCOP was of some importance, but was outweighed by the indications of continuity. In paragraph 7 of its summary, the Commission explained its decision on the jurisdictional condition as follows: We considered whether the transaction was a relevant merger situation within the meaning of the Enterprise Act 2002 (the Act), in particular whether the transaction, as structured, meant that an enterprise had been acquired. Our assessment turned on the ease and speed with which the Vessels were put back into operation; the fact that GET and the SCOP acted together to secure control of the Vessels and other assets and/or that GET had material influence over the SCOP; the fact that a large proportion of the staff provided by the SCOP to run the MFL service were previously employed by SeaFrance; and the fact that GETs bid had assigned some value to the brand and goodwill. We concluded that, in the context of the particular industry concerned, these elements met the statutory definition of an enterprise, and constituted the activities, or part of the activities, of a business. In the light of the subsequent course of the proceedings, it should be noted that the Commission made only brief and oblique reference to PSE3. They simply remarked (paragraph 3.29) that it was public knowledge in France that under the terms of the liquidation agreed between SeaFrances owner (SNCF), the court and the SCOP, the SCOP would receive an indemnity of 25,000 for each SeaFrance employee that it employed. GET and SCOP challenged this part of the decision before the Competition Appeal Tribunal (CAT), along with other parts which are no longer relevant. The CAT gave judgment on 4 December 2013. This judgment has been referred to in these proceedings as Eurotunnel I [2013] CAT 30, and I shall follow the same convention. At paras 105 106, the CAT set out the principle on which the acquisition of an enterprise fell to be distinguished from an acquisition of bare assets: 105. The key to distinguishing between bare assets and an enterprise lies in: (a) Defining or describing exactly what, over and above bare assets, the acquiring entity obtained; and (b) Asking whether and if so how this placed the acquiring entity in a different position than if it had simply gone out into the market and acquired the assets. The question, then, is whether this difference is capable of constituting what would otherwise be bare assets into something that may properly be described as the activities of a business. Inevitably, this is a question of fact and degree, and there will be no single criterion giving a clear answer. However, if a guiding principle is sought, then we consider that it lies in an understanding of what an enterprise the activities or part of the activities of a business does. An enterprise takes inputs (assets of all forms) and by combining them transforms those inputs into outputs that are provided for gain or reward. It thereby also may generate intangible but valuable assets such as know how or goodwill. It is in this combination of assets that the essence of an enterprise lies. In those cases where the acquiring entity takes over the business of the acquired entity, the answer will be self evident: the same enterprise is simply continuing, albeit under different ownership or control. The difficult case arises where the combination of assets is fractured, such that the assets are no longer, or no longer to the same extent, being used in combination. This case is a particularly good one, where what was clearly once an enterprise was wound down: the difficult question is whether, even though the business of SeaFrance had been wound down to a very considerable extent, there still remained the embers of an enterprise. 106. In this context, it is necessary to make two points: (a) First, it is perfectly possible for an enterprise to wind down, and to wind down to such an extent that it ceases to be an enterprise. The mere fact that in the past the activities of a business were being carried on by an entity does not necessarily mean that, as at the time of the merger, that entity was an enterprise. Of course, it is also important to recognise that some businesses (eg those involved in tourism) trade for some periods and not for others (eg during the low season). Such a hiatus does not preclude the existence of an enterprise. Continuous trading is not essential. (b) Secondly, the fact that the acquiring entity emulates the business of the acquired entity, and even uses that entitys assets, does not necessarily mean that the acquiring entity has acquired an enterprise. As regards the question of whether a relevant merger situation exists, the statutory test is not whether the acquiring entity is carrying out the same activity that was once carried out by the acquired entity, even with the same assets. The statutory test is not satisfied if the acquiring entity reconstructs a business that was once conducted by a different entity, even if the assets of that entity were used to do so. The statutory test in section 26(1) turns on two enterprises ceasing to be distinct because they are brought under common ownership or common control. It is critical that there are two enterprises, not one enterprise (the acquiring enterprise) and a collection of assets. The CAT expressed some doubt about whether the transaction as described by the Commission amounted to any more than an acquisition of bare assets. The reason for its doubt was that the CAT regarded the transfer of the employees as a critical part of the Commissions analysis. But it found no evidence in the Commissions report to show that what had happened amounted to a transfer of the employees, as opposed to their mere re engagement. Referring to the redundancies of January 2012, the CAT remarked that on the face of the Commissions analysis the employees contracts of employment were terminated with no thought as to how they might be employed in the future (para 115). But they pointed to the potential significance of the inducement payments of 25,000 per ex SeaFrance employee, to which the Commission had briefly referred at paragraph 3.29 of its report (quoted above), and noted that this might, if fully explored, provide the necessary link between their employment by SeaFrance and their re employment by SCOP. It also observed that the Commission had failed to explain how the maintenance of the vessels in hot lay up and the employment of ex SeaFrance crews had contributed to the ability of the purchaser to resume the service. It therefore remitted the matter to the Commission so that it could address these points. The reference was subsequently taken over by the Competition and Markets Authority when the functions of the Office of Fair Trading and the Commission were transferred to the Authority on 1 April 2014. On 27 June 2014 the Authority issued its decision on the remittal. The Authority reiterated the conclusion of the Commission that a relevant merger situation existed. At paragraph 2.12, it observed: In making a judgment as to whether or not the acquisition by GET/SCOP of certain SeaFrance assets has resulted in enterprises ceasing to be distinct under the Act, we have had regard to the substance of the arrangements rather than merely their legal form. We did not find that one single factor was determinative in reaching our conclusion; instead we based this on the totality of all the relevant considerations, taking into account the nature of the industry and the particular characteristics of the assets that were acquired (as well as those that were not acquired) in that context. The substance of this report is specifically focused on what we understand the CAT asked us to address. The Authoritys report dealt in detail with the history of the successive attempts to save or sell the business after it had been put into administration in April 2010. In particular it described PSE3 and the role that it had played in the liquidation of SeaFrance, in the dismissal of the employees and in the courts decision to accept GETs bid. The Authority found that the object of PSE3 and the court procedures for the sale of the assets was to achieve some form of business continuity: while various transactions involving one or both of the parties were considered, they all had the aim of continuing SeaFrances activities in some form and providing employment to SeaFrance employees. We noted that many of those involved in the various stages of the sale process, including the liquidator and the French Court, sought to ensure the re employment of ex SeaFrance staff in the Dover Calais region, preferably on the SeaFrance vessels. One reflection of this is the successful negotiation by the SeaFrance works council of an indemnity payment funded by SNCF which was substantially higher in the event that the ex SeaFrance staff were re employed on the SeaFrance vessels used in a similar operation and which ultimately provided the SCOP with a substantial amount of working capital. (para 3.49) The Commission concluded: Overall, we consider that a review of the background to the transaction shows that there is considerable continuity and momentum between the time of SeaFrances operation of the Dover Calais ferry and the commencement of MFLs operation of the same ferries on that route involving ex SeaFrance employees. This is not a situation where a collection of assets (used at some point in the past to carry on a business activity) comes to the market, and a buyer is successful in acquiring them, and then uses them to set up a business similar to the one for which the assets were originally used. For reasons set out above, the circumstances of this case are fundamentally different. (para 3.54) Accordingly, the Commission rejected the suggestion of the CAT that the employees had been dismissed with no thought as to how they might be employed in the future: The indemnity that SNCF SeaFrances parent company at the time agreed to pay created a strong incentive for ex SeaFrance employees to be employed on the SeaFrance Berlioz, SeaFrance Rodin and SeaFrance Nord Pas de Calais in similar operations to those of SeaFrance. It creates a link between the vessels and the employees and it was aimed at ensuring, and ultimately did ensure, to the extent possible , that a significant number of employees transferred from SeaFrance to the operator of the vessels. We consider that this shows that a large proportion of the SeaFrance workforce effectively transferred from SeaFrance to the SCOP. (para 3.107) Turning to the CATs criticism that the Commission had failed to explain how the hot lay up and the continuity of personnel had contributed to the prompt resumption of the service after the acquisition by GET, the Authority pointed out that the vessels were efficient modern vessels specifically designed to operate on the Dover Calais route, and of a size and configuration designed to permit economies of scale. They were not readily replaceable by other, comparable vessels. Their maintenance in hot lay up was the cheapest and most efficient way of enabling them to be brought back into service in the shortest possible time. In addition, the availability of ex SeaFrance crews already trained to operate these vessels was a material advantage enabling a purchaser to restart operations quickly. These points were supported by an extensive analysis of the alternative ways in which the ferry service might have been resumed by another entity after the liquidation of SeaFrance. At paras 4.19 4.20, the Authority expressed its conclusions as follows: 4.19 We therefore conclude that: The combination of acquired assets (in particular, but not limited to, the vessels and employees) means that what was acquired was more than a bare asset in that it enabled the acquirer to establish ferry operations, more quickly, more easily, more cheaply and with less risk than if the relevant assets had been otherwise acquired in the market. Although, in light of the period of inactivity, GET/SCOP did not acquire the SeaFrance assets as a going concern, in reality they obtained much of the benefit of so acquiring them. That is because, in our view, the commercial operability and coherence of the assets used by SeaFrance for the Dover Calais ferry service was actively maintained, and thus impairment was minimised, during the period of inactivity. The result of the combination of steps taken in relation to the vessels and the staff was that substantially the same business activities as had previously been undertaken by SeaFrance were able to be, and were in fact, resumed within a very short period of time following the acquisition. The intention, for good and understandable commercial and employment reasons, was to seek to preserve the former business or something as closely approximating to it as possible. That intention was achieved. Moreover, GET was significantly motivated to acquire the assets that it did by the advantages of continuity (and the consequent ability to resume substantially the same operations as had previously been undertaken by SeaFrance on the Dover Calais route) that those steps had preserved. 4.20 We conclude that the collection of tangible and intangible assets (including the transferred ex SeaFrance employees) that GET/SCOP acquired meets the legal definition of an enterprise in that together they constitute the activities or part of the activities of a business. There was then a further appeal to the CAT, which gave judgment on 9 January 2015. Like the parties, I shall call this Eurotunnel II [2015] CAT 1. It is unnecessary to summarise its reasoning at any length. The CAT reviewed the findings of the Commission and the Authority in the two reports and held that on those findings the Authority had been entitled to reach the conclusion it did. The decision of the Court of Appeal SCOP appealed from the decision in Eurotunnel II to the Court of Appeal. GET did not appeal. In the Court of Appeal, the leading judgment for the majority was delivered by Sir Colin Rimer, with whom Tomlinson LJ agreed. Sir Colin thought (para 167) that the definition of an enterprise as meaning the activities or part of the activities of a business showed that Parliaments intention was focused only on the case in which the acquiring entity takes over another business as a going concern. He thought it possible that activities could be regarded as continuing even during a period when they were not being carried on, for example where a seasonal business traded from May to October and was sold in December, or where a scheme was devised for the suspension of the activities before the transaction with a view to evading the operation of the Act. But the present case was different because when SeaFrance was ordered finally to cease its trading activities in January 2012 there was no prospect of their being resumed in the future. Their continuation was judicially prohibited, SeaFrances ferry activities were therefore at an end and it was anyway incapable of carrying them on. All that remained to be done was for the liquidator to dismiss its employees as redundant, dispose of its assets and, presumably, then to give SeaFrance its final quietus under French law. (para 158) However, Sir Colin did not decide the case on this ground, because the CAT had held in Eurotunnel I that even in these circumstances a hiatus in the activities of a business might be consistent with the subsistence of the enterprise. That judgment had not been appealed, and the correctness of the guidance given in it had not been challenged. He therefore confined himself to the application of the CATs test to the facts. Sir Colin held that the facts found by the Commission and the Authority did not disclose that GET and SCOP had acquired the enterprise of SeaFrance. He approached the matter on the footing, which was common ground before us, that the Authoritys conclusion could be supported only if GET and SCOP had acquired both the vessels and their crews. They had unquestionably acquired the vessels, but had they acquired the crews? Sir Colin thought not. In his view, they would in all probability have acquired the crews if the SeaFrance assets had been acquired from the liquidator before 9 January 2012 when the French Court directed the company to cease operations and to dismiss most of the employees. But that event had made all the difference. It finally and irreversibly brought the relevant activities of SeaFrance to an end, together with the relationship between SeaFrance and its employees. GET and SCOP had merely started up a similar business after 2 July 2012 by hiring ex SeaFrance employees whose services had become available on the market in consequence of their redundancy. His reasons are encapsulated in paras 198 200 of his judgment: 198. The effect of the court order of 9 January 2012 was that the activities in which the workforce had formerly been engaged were finally to cease and that the employees must be dismissed within 15 days as redundant, as they were. At the point of dismissal, the employees connections with SeaFrance were finally severed. It is also true that, at such point, PSE3 was already in place. It was a statutory job saving plan directed at assisting the dismissed employees to find re employment elsewhere than with SeaFrance; and paragraph 3.3.3, its most generous provision, of course raised a high likelihood that they, or most of them, would obtain re employment with any purchaser of the SeaFrance vessels which proposed to use them for ferry operations similar to SeaFrances. 199. PSE3 was, however, in no manner directed at preserving any connection between the employees and SeaFrance, let alone its activities (which had ceased), nor did it do so. In the event, following the successful GET bid, many of the former employees were later re engaged by the SCOP. There is no sustainable basis for any conclusion that such engagements by SCOP resulted from, or were referable to, or were explained by any transfer, or by what was said to be in effect a transfer, by SeaFrance to GET/SCOP as part of the GET/SCOP acquisition. That is not what happened as a matter of law or according to any rational assessment of the facts or by reference to the supposed reality of the situation. Nor would any objective observer of the scene at the time that PSE3 was adopted have considered that if, at some future stage, there were to be a mass re employment of the ex employees by a purchaser of the SeaFrance vessels, such re employment could at that point be characterised as, in reality, a transfer of the employees to the purchaser by SeaFrance together with the purchased vessels. They would foresee such re employment as being simply that which it was, namely a true re employment of employees whose services were available for hire in the market, albeit a re employment incentivised by the terms of PSE3. 200. The CMAs different finding that upon such mass re employment there was in reality a transfer, or a transfer in effect by SeaFrance, is one that I therefore regard as irrationally wrong. It is one that could not properly have been made. Arden LJ dissented, essentially on the ground that a hiatus in the business activities of the enterprise being acquired was not legally decisive, and that in those circumstances its significance was a matter of fact and degree, for evaluation by the Authority as the tribunal of fact. The present appeal On 31 July 2015, shortly after this court gave permission for the present appeal, SCOP went into liquidation. Its liquidator subsequently indicated that it did not propose to participate in the appeal. In the absence of the respondent we have been greatly assisted by Ms Kelyn Bacon QC, who appeared as Advocate to the Court, and by Mr Richard Gordon QC who appeared for GET as Intervener. Their participation, together with the able submissions of Ms Demetriou QC for the Authority, enabled the issues to be fully examined before us. The approach to construction It is necessary to deal first with a threshold issue. To what extent should the question whether a relevant merger situation exists be treated as lying within the specialised expertise of the Competition and Markets Authority? I hope that it will not be thought disrespectful of the learning deployed on this issue, if I deal with it shortly. Under sections 22(1) and 35(1) the existence of a relevant merger situation is a precondition of the Authoritys jurisdiction to proceed with a reference. Section 35 requires the Authority to decide in the first instance whether such a situation has been created, subject to review by the CAT and appeal from the CAT to the Court of Appeal. But the test for determining what are the relevant activities whose absorption by another enterprise founds the jurisdiction of the Authority is a question of law. It depends on the construction of the Enterprise Act. Of course, the process of construction must necessarily be informed by the purpose of these provisions, and to that extent the economic implications of different interpretations may be relevant. Moreover, once the test has been identified its application to particular facts may call for expert economic judgments by the tribunal of fact, in this case the Authority. But otherwise the Authoritys expertise and the specialised nature of its functions do not clothe it with any wider power to determine its statutory jurisdiction than is enjoyed by other administrative decision makers, and its conclusions on the point are entitled to no greater deference on a review or appeal. The legal relevance of a cessation of trading The starting point is the relevance (if any) of the fact that SeaFrance was not actively trading on the date of the transaction by which GET acquired its assets. It was common ground before us, as it had been in the Court of Appeal, that the merger control provisions of the Act were not limited to the acquisition of a business as a going concern. Therefore, it did not necessarily follow from the cessation of the ferry service that SeaFrance had no activities to be acquired in July 2012. Sir Colin Rimer expressed doubts about this, at any rate as a general proposition. But I think that it was correct, and that it is of some importance to understand why. Under section 23(2)(a), what must cease to be distinct in order to create a relevant merger situation are the two enterprises of SeaFrance and GET, ie their business activities. The reason for defining an enterprise by reference to its activities is to show that the merger control regime depends on the merger of business activities, as opposed to the merger of the entities that carry them on. It is no part of the purpose of the definition of an enterprise to fix the time at which the relevant enterprise must actually be performing these activities. Nor is there any other provision of the Act that requires the activities to have been performed at any particular time. Part 3 of the Act does contain provisions relating to timing, but they are limited to determining the latest time after the enterprises have ceased to be distinct when the matter may be referred to the Authority for assessment and possible action. The result is that the possession of relevant activities is simply a descriptive characteristic of an enterprise. It may be characteristic of the enterprise notwithstanding that the activities are not actually being performed at the moment of the transaction, provided that there still exists the capacity to carry them on as part of the same business, whether in the hands of the existing proprietor or of someone else. That is why Sir Colin Rimer was right in his instinctive view that the sale of a seasonal business out of season would in principle be subject to statutory merger control. This is consistent with the purpose of Part 3 of the Act. Merger control is the principal weapon in the laws armoury for pre empting concentrations liable adversely to affect the structure of markets before they do so. Whether an enterprises activities are being carried on at the moment when it ceases to be distinct is likely to depend on adventitious factors, such as the timing of the execution of documents, the rhythm of the business, and so on. It does not necessarily tell us anything about the nature of the business. If the merger control regime is incapable of applying to anti competitive concentrations where the relevant activities are not actually being carried on at the moment when the concentration is achieved, then the result will be a significant limitation of the scope and efficacy of the statutory scheme. That limitation cannot be related to the economic rationale of the legislation, or to any discernible purpose which the legislature can sensibly be thought to have had in mind. The point may be illustrated by considering two situations in addition to the case of the seasonal business which has already been mentioned. One is the familiar situation, one of the commonest occasions for a merger, where a business goes into liquidation and is temporarily mothballed by the liquidator in the hope that a buyer can be found for the whole concern. It would be surprising if the mere fact of the suspension of its business were to remove the possibility of merger control, regardless of the adverse effect of a subsequent purchase on the competitive structure of the relevant market. The other example is the case where the proprietor of a business suspends its activities shortly before selling it to a competitor, in a deliberate attempt to avoid statutory merger control. This is not particularly common, but only because the practice of the competition authorities is to treat a temporary suspension of a firms business activities as inconclusive. The paradigm case is the decision of the Monopolies and Mergers Commission in AAH Holdings Plc and Medicopharma NV (1992), which involved a scheme of just this kind. The Commission rejected the suggestion that the scheme was a sham. It nevertheless considered that the relevant merger situation existed. Once a transaction of this kind is recognised as genuine, it is not easy to see how the intent to avoid the Act could make any difference to the analysis. Either the suspension of the activities did avoid the operation of the Act or it did not. If it did not, it must be by reference to some principle which declines to treat a suspension as decisive whatever the motive for it. Common control of an enterprise: the test The next question is in what circumstances may a firm be said to acquire an enterprise whose activities are no longer actively being carried on. Of course, a hiatus in those activities before the acquisition will usually be relevant even if it is not decisive. But if it is not decisive, its significance must necessarily vary according to its duration, its economic impact, and all the other relevant surrounding circumstances. Under section 106 of the Enterprise Act, the Authority is required to publish general advice and information about (among other things) the making and consideration of references under section 22. In January 2014, it published Mergers: Guidance on the CMAs Jurisdiction and Procedure. In the relevant respects, this broadly corresponds to the guidance formerly issued by the Office of Fair Trading. The implications of a cessation of business are discussed at paras 4.10 4.11: 4.10 The fact that a target business may no longer be actively trading does not in itself prevent it from being an enterprise for the purposes of the Act. In such cases, while the relevant criteria may vary according to the particular circumstances of a case, the CMA will consider, for example: the period of time elapsed since the business was last trading; the extent and cost of the actions that would be required in order to reactivate the business as a trading entity; the extent to which customers would regard the acquiring business as, in substance, continuing from the acquired business; and whether, despite the fact that the business is not trading, goodwill or other benefits beyond the physical assets and/or site themselves could be said to be attached to the business and part of the sale. 4.11 None of these factors, individually, is likely to be conclusive. The CMA will assess all relevant circumstances (including whether there is evidence that the closure of the business was designed to avoid merger control), with a view to determining whether the target business constitutes an enterprise under the Act. This is not so much a test as a list of potentially relevant factors. So what is the underlying principle? The first point to be made is that in applying a scheme of economic regulation of this kind, the Authority is necessarily concerned with the economic substance of relevant transactions and not just with their legal form. Any situation in which an enterprise (call it the target enterprise) ceases to be distinct will involve a transfer of control over assets, whether tangible or intangible. The phrase bare assets does not appear in the Act, and simply as a matter of language may not convey much. But it is a useful concept when it comes to analysing the purpose of this legislation. The object of distinguishing between bare assets and assets amounting to an enterprise is to prevent the merger control regime from capturing an acquisition of assets which simply serve as factors of production in a new enterprise or as a means of achieving organic growth. It is designed to distinguish a case in which the acquirer acquires a business exploiting a combination of assets and a case where he acquires no more than he might have acquired by going into the market and buying equipment, hiring employees, and so forth separately. In the latter case, the fact that the equipment or the employees were previously employed in the target enterprise is irrelevant. He has got no more than he would have done if they had not been. So if the assets of which he acquires control are to be regarded as constituting an enterprise, (i) they must give him more than he might have acquired by going into the market and buying factors of production, and (ii) the extra must be attributable to the fact that the assets were previously employed in combination in the activities of the target enterprise. Plainly, the longer the interval between a target enterprises cessation of trading and the acquisition of control of its assets, the less likely it is that either criterion will be satisfied. The alternative is to conclude that the target enterprise has ceased to exist because its business is no longer characterised by any activities capable of being continued by someone else. Ultimately the question turns on what Ms Bacon, rightly to my mind, called economic continuity. This is substantially the principle stated at paras 105 106 of the CATs judgment in Eurotunnel I, which I have set out above. Put crudely, it depends on whether at the time of the acquisition one can still say that economically the whole is greater than the sum of its parts. While I would wish to guard against any attempt to state a single governing test to answer every case, I consider that the CATs statement of the principle is correct as applied to the generality of cases, including this one. Irrationality The Authority directed itself according to the principle set out by the CAT in Eurotunnel I, which I have held to be correct. Once that point is reached, the application of the principle to the facts is a matter of expert evaluation. In these circumstances, the Authoritys evaluation could not properly be discarded by a court of review unless it was irrational. Sir Colin Rimer found that it was. He considered that the Authority had erred in principle because the facts which it had found did not logically lead to the conclusion that the employees were transferred from SeaFrance to the business operated by GET and SCOP after 2 July 2012. That was also the essence of the case made by Ms Bacon and Mr Gordon. I think that this criticism is unjustified. GET and SCOP acquired substantially all the assets of SeaFrance, including the trademarks and goodwill. The assets included ships specially designed for the particular route, which had been continuously maintained by the liquidator in a condition which enabled the service to be resumed significantly faster and at lower cost and commercial risk than would have been the case if GET had acquired suitable ships elsewhere. The arrangement with SCOP enabled the service to be resumed with substantially the same personnel, again with a substantial advantage in terms of time and operational efficiency. Moreover, each employee came with a dowry of 25,000 paid by SeaFrances parent for the specific purpose of encouraging the re employment of its former crews and shore staff. The payments created a link between the vessels and the employees, and between the old employees and the new. The Authoritys evaluation was that in these circumstances, there was considerable continuity and momentum between the activities carried on by SeaFrance before 16 November 2011 and those carried on with its assets after 2 July 2012. Although GET and SCOP did not acquire the ferry business as a going concern, they did acquire much of the benefit of doing so. This was because the commercial operability and coherence of the assets used by SeaFrance for the Dover Calais ferry service was actively maintained, and thus impairment was minimised, during the period of inactivity paragraph 26(b). These conclusions seem to me to follow logically from the Authoritys findings. The Authoritys conclusion that there still remained what the CAT had called the embers of an enterprise capable of passing under the control of GET and SCOP, was unimpeachable. The essential reason why Sir Colin Rimer thought otherwise was that in his view the order of the French Court on 9 January 2012 directing the dismissal of the employees terminated the link between them and SeaFrance. This, he thought, meant that their future re employment by GET could not amount to a transfer, even when the arrangements embodied in PSE3 were taken into account. In point of form, this was so. But as a matter of economic substance it was not. True it is that the employees were not directly transferred from SeaFrance to SCOP. They were re employed by SCOP after some months in which they had been unemployed or had found other work. However, the question was not whether the dismissals severed the connection between the employees and SeaFrance. The question was whether it severed their connection with a business that could be acquired and operated by someone else. One may test this by asking how the position would have differed if instead of making the employees redundant SeaFrance had kept them on but sent them on gardening leave. The result would have been legally different but its economic implications for what GET and SCOP acquired on 2 July 2012 would have been the same. It is in this context that one must view the impact of PSE3. The connection between the employees and the business was not severed by the court ordered redundancies, because the court directed the redundancies on the express basis, required by French law, that a plan would be prepared within 15 days to safeguard their future employment. PSE3, the plan which emerged, provided a significant financial inducement for any acquirer of the ships to re employ their former crews and shore staff to operate them in the same service as before. The Authority regarded this as a significant pointer to the economic continuity of the business. I think that they were right to do so, but it is enough for present purposes to say that it was a conclusion that they were entitled to reach. This court has recently emphasised the caution which is required before an appellate court can be justified in overturning the economic judgments of an expert tribunal such as the Authority and the CAT: British Telecommunications Plc v Telefnica and others [2014] UKSC 42; [2014] Bus LR 765; [2014] 4 All ER 907 at paras 46, 51. This is a particularly important consideration in merger cases, where even with expedited hearings successive appeals are a source of additional uncertainty and delay which is liable to unsettle markets and damage the prospects of the businesses involved. Concepts such as the economic continuity between the businesses carried on by successive firms call for difficult and complex evaluations of a wide range of factors. They are particularly sensitive to the relative weight which the tribunal of fact attaches to them. Such questions cannot usually be reduced to simple points of principle capable of analysis in purely legal or formal terms. In this case, the majority of the Court of Appeal sought to reduce the question of economic continuity to the single question whether the legal effect of the decisions of the French Court in January 2012 was definitively to terminate the employment relationship between SeaFrance and its crews. In my opinion this led them to take an unduly formal approach to the issue before them, and to discount the depth of economic analysis which underlay the Authoritys original conclusion. Conclusion For these reasons, which substantially correspond to those given by Arden LJ in her dissenting judgment, I would allow the appeal.

UK-Abs

SeaFrance SA, a French company, operated a ferry service between Dover and Calais until it ceased operations on 16 November 2011. It was formally liquidated on 9 January 2012, and most of its employees were dismissed. Groupe Eurotunnel SA (GET), the parent company of the Group operating the Channel Tunnel, and Socit Cooprative De Production SeaFrance SA (SCOP), a workers co operative incorporated by a number of former SeaFrance employees to secure the continuance of the ferry service, acquired substantially all of SeaFrances assets on 2 July 2012. This included three of the four SeaFrance vessels, trademarks, IT systems, goodwill and customer lists. GET and SCOP resumed ferry services on 20 August 2012 through GETs subsidiary company, MyFerryLink SAS. The vessels were operated by employees who had almost all worked for SeaFrance. The reemployment of those employees had been incentivised by a statutory Plan de Sauvegarde de lEmploi (known as the PSE3), by which SeaFrances parent company SNCF would provide payments to employers for employing ex SeaFrance employees. The acquisition was referred to the Competition Commission, the regulator at the time. It concluded that there was a relevant merger situation for the purpose of the merger control provisions of the Enterprise Act 2002, which could be expected to result in a substantial lessening of competition in the cross Channel market. The enterprise of SeaFrance continued since its activities continued, even though there had been a hiatus of over seven months in its operations. The Commission imposed restrictions on the operation of the service by GET and SCOP, including a ban on using the ex SeaFrance vessels for ferry services from Dover for 10 years. On appeal to the Competition Appeal Tribunal, the Tribunal gave guidance on the meaning of enterprise in the Eurotunnel I judgment, and remitted the question of jurisdiction back to the new regulator, the Competition and Markets Authority. Upon the remission, the Competition and Markets Authority (which had assumed the functions of the Commission) considered that what had been acquired was an enterprise, and therefore that a relevant merger situation existed. Accordingly they confirmed the restrictions previously imposed by the Commission. That decision was upheld by the Competition Appeal Tribunal in the Eurotunnel II judgment. The Court of Appeal allowed an appeal by a majority, holding that GET and SCOP had not acquired an enterprise, but only the means of constructing a new (but similar) one. In particular, this was because they had not acquired SeaFrances crews. They concluded that it was irrational for the Competition and Markets Authority to reach any other conclusion on the facts. The Supreme Court unanimously allows the appeal by the Competition and Markets Authority, thereby reinstating the decision of the Competition Appeal Tribunal in Eurotunnel II. Lord Sumption gives the judgment of the Court. The merger control provisions of the Enterprise Act 2002 are not limited to the acquisition of a business that is a going concern. The possession of activities is a descriptive characteristic of an enterprise under the Act. An enterprise is subject to merger control if the capacity to perform those activities as part of the same business subsists. [32 35] The test is one of economic continuity. An Acquirer acquiring assets acquires an enterprise where (i) those assets give the Acquirer more than might have otherwise been acquired by going into the market and buying factors of production and (ii) the extra is attributable to the fact that the assets were previously employed in combination in the activities of the target enterprise. The period of time between cessation of trading and acquisition of control of the assets may be a relevant factor, but is not necessarily decisive. [36 40] This was substantially the same principle set out by the Competition Appeal Tribunal in Eurotunnel I, which the Competition and Markets Authority applied in this case. [40 41] The Court of Appeals finding that the Authoritys evaluation was irrational was unjustified. GET and SCOP acquired substantially all the assets of SeaFrance, including trademarks, goodwill, specialist vessels maintained in a serviceable condition, and substantially the same personnel. The Authoritys conclusion that this demonstrated considerable continuity and momentum and the embers of an enterprise, which could be passed to GET and SCOP, was unimpeachable. The order of the French Court of 9 January 2012 to dismiss the employees did not disrupt that continuity and momentum because the order was made on terms that the PS3 preserved the prospect of employment on the ships for the dismissed crew members. [41 43] The majority of the Court of Appeal was wrong to narrow the question of economic continuity to the legal effect of the decision of the French Court in January 2012 and whether this terminated the employment relationship between SeaFrance and its employees. The Competition and Markets Authority is not entitled to any special level of deference: the test for determining whether there is a relevant merger situation and relevant activities is a legal question. [31] But the Authority undertook a broader economic analysis, concluding that there was economic continuity. That evaluation was complex and sensitive to a whole range of factors. It was not a purely legal enquiry. Its economic analysis should be respected. [44 45]

These appeals are concerned with applications made by foreign nationals, residing unlawfully in the UK, for leave to remain here as the partners of British citizens with whom they have formed relationships during the period of their unlawful residence. The appellants rely primarily on the duty imposed on the Secretary of State by the Human Rights Act 1998 to act compatibly with the right to respect for family life guaranteed by article 8 of the ECHR. In each case, the Secretary of State concluded that the appellant did not qualify for leave to remain under the applicable provisions of Appendix FM to the Immigration Rules (the Rules), and that, applying the Immigration Directorate Instructions, Family Members Under the Immigration Rules, Section FM 1.0, Partner & ECHR Article 8 Guidance (the Instructions), there were no exceptional circumstances warranting the grant of leave to remain outside the Rules. The appeals focus primarily on (1) paragraph EX.1(b) of Appendix FM, which imposes on applicants for leave to remain as a partner, where the applicant is in the UK in breach of immigration laws, a requirement that there are insurmountable obstacles to family life with that partner continuing outside the UK; and (2) a requirement in the Instructions that there must be exceptional circumstances for leave to remain to be granted in such cases outside the Rules. They also raise an issue under EU law, relating to the effect of the judgment of the Court of Justice in Ruiz Zambrano v Office national de lemploi (Case C-34/09) [2012] QB 265, as well as some other issues under domestic law. Rules and Instructions It may be helpful to begin by explaining the nature and status of the Rules and the Instructions. Decision-making in relation to immigration, as in relation to other areas of government, is not exhaustively regulated by legislation. It involves the exercise of discretion and the making of evaluative judgments. In such a situation, it is usual, and legitimate, for the Secretary of State to adopt administrative policies in order to guide decision-making, and to issue instructions to officials. Unusually, in the context of immigration Parliament has enacted legislation under which it exercises oversight of these aspects of administrative decision-making. Section 3(2) of the Immigration Act 1971 requires the Secretary of State to lay before Parliament statements of the rules, or any changes in the rules, laid down by him as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter. The Rules are subject to Parliamentary approval, and are published as House of Commons papers. Their legal significance was reflected, at the time of the proceedings with which these appeals are concerned, in the fact that an appeal could be brought against an immigration decision on the ground that it was not in accordance with the Rules: Nationality, Immigration and Asylum Act 2002, section 84(1)(a). Section 86(3) of the 2002 Act also included the Rules in the law to which the tribunal must have regard when determining an appeal. The Secretary of State also has a discretionary power under the 1971 Act to grant leave to enter or remain in the UK even where leave would not be given under the Rules: R (Munir) v Secretary of State for the Home Department [2012] UKSC 32; [2012] 1 WLR 2192, para 44. The manner in which that discretion is exercised may be the subject of a policy, which may be expressed in guidance to the Secretary of States officials. The discretion may also be converted into an obligation where the duty of the Secretary of State to act compatibility with Convention rights is applicable. Giving effect to Convention rights In the exercise of her functions under the 1971 Act, including the making of rules and the giving of instructions, the Secretary of State has always been under a duty to comply with requirements imposed by the common law: notably, to act consistently with the intentions of Parliament, and to exercise her powers in accordance with the law and in a rational manner. The Human Rights Act additionally imposed on the Secretary of State a statutory duty not to act incompatibly with Convention rights, including the right guaranteed by article 8. The same duty is also imposed on tribunals and courts considering an appeal against the decision of the Secretary of State, but their role does not absolve the Secretary of State of her own duty to act compatibly with Convention rights. Unlike the ECHR itself, which imposes a duty under international law on the United Kingdom as a contracting party, and is therefore not concerned with failures to comply with Convention rights by one organ of the state which are fully corrected by another, the Act imposes a duty on every public authority, subject to specified exceptions. The fact that an act of a public authority may be subject to review by the courts, and therefore does not in itself inevitably result in a breach of the Convention, does not mean that the act cannot be incompatible with Convention rights. Such a reading of the Act would deprive it of most of its content, since virtually all acts of public authorities are susceptible to appeal or review before the courts. It would therefore be inconsistent with the intention of Parliament. How the Secretary of State ensures that her acts in the exercise of her functions under the 1971 Act are compatible with Convention rights is, in principle, a matter for her. The Secretary of States initial response to the entry into force of the material provisions of the Human Rights Act in October 2000 was to insert into the Rules a direction to officials to carry out their duties in compliance with the provisions of that Act (rule 2). As the Home Office noted in 2012, however, there was no change to the family life part of the Rules to reflect any consideration of proportionality under article 8, and there has been no attempt since to align the rules with developing article 8 case law (Statement of Intent: Family Migration, Home Office, June 2012). The Rules frequently offered no more than broad guidance as to how discretion was to be exercised in different typical situations. In that situation, it was primarily through the exercise of her residual discretion to deal with cases outside the Rules that the Secretary of State sought to comply with article 8. That is no longer true. Over time, increasing emphasis has been placed on certainty rather than discretion, on predictability rather than flexibility, on detail rather than broad guidance, and on ease and economy of administration. The increased numbers of applications, the increasing complexity of the system, and the increasing use of modern technology for its administration, have necessitated increasingly detailed Rules and instructions. In some areas, the apparent aim is for the decision-making process to involve as little discretion or judgment as can be achieved consistently with the duty to respect Convention rights. The present context appears to be an example, as explained below. The position was different at the time when the House of Lords decided the leading case of Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167. At that time, the Rules did not reflect an assessment of the proportionality of decision-making in relation to article 8. In that context, Lord Bingham of Cornhill said at para 6 that the rule under which the appellant failed to qualify for leave to remain was unobjectionable, but that her failure to qualify under the Rules was the point at which to begin, not end, consideration of her claim under article 8. The Rules with which this appeal is concerned form part of the Secretary of States response to Huang. They were included in the Statement of Changes in Immigration Rules published in June 2012 (HC 194), and laid before Parliament pursuant to section 3(2) of the 1971 Act. The new rules set out in that Statement were the subject of debates in both Houses of Parliament, as well as being examined by the Secondary Legislation Scrutiny Committee of the House of Lords. They came into force on 9 July 2012. Their rationale was explained in the Home Office documents which accompanied the Statement of Changes, comprising the Statement of Intent: Family Migration, and the Statement by the Home Office, Grounds of Compatibility with Article 8 of the European Convention on Human Rights. The Statement of Intent announced that the changes to the Rules would comprehensively reform the approach taken towards ECHR article 8 in immigration cases (para 10). They would achieve this by themselves reflecting an assessment of all the factors relevant to the application of article 8: The new rules will reflect fully the factors which can weigh for or against an article 8 claim. They will set proportionate requirements that reflect, as a matter of public policy, the Governments and Parliaments view of how individual rights to respect for private or family life should be qualified in the public interest to safeguard the economic well-being of the UK by controlling immigration and to protect the public from foreign criminals. This will mean that failure to meet the requirements of the rules will normally mean failure to establish an article 8 claim to enter or remain in the UK, and no grant of leave on that basis. (para 7) In consequence, if an applicant failed to meet the requirements of the new Rules, it should only be in genuinely exceptional circumstances that refusing them leave and removing them from the UK would breach article 8 (para 11). One particular respect in which the new rules were to reflect an article 8 assessment concerned family life established when the parties knew one or both of them lacked a valid basis of stay in the UK. The fact that family life established in those circumstances carries less weight under Strasbourg case law ... is reflected in the new Immigration Rules (para 32). The Statement of Intent also explained that the new rules were intended to result in a change of approach on the part of the courts. In the past, it was said, the lack of a clear public policy framework had effectively left the courts to develop public policy (para 30). They could not give due weight to the Governments and Parliaments view, because they did not know what it was (para 37). The new Rules were intended to fill this public policy vacuum by setting out the Secretary of States position on proportionality and to meet the democratic deficit by seeking Parliaments agreement to her policy (para 38). The Statement on Grounds of Compatibility with Article 8 of the European Convention on Human Rights was intended to address issues arising under article 8 in relation to the new rules. It explained that the current rules did not provide a comprehensive framework for considering family life, and that currently family life applications are first considered under the Rules and, if the application does not meet the requirements of the Rules, the decision-maker then considers whether the decision is compatible with A8 [and, if not,] ... leave is granted outside the Rules (para 3). It acknowledged that this two-stage approach had one advantageous consequence: A policy of keeping proportionality decisions outside of the Rules can be helpful in forming the basis of an argument that the Rules can never be incompatible with the ECHR. (para 16) The Statement also noted, however, the serious disadvantages which had flowed from that approach. The approach adopted in Huang, in requiring the compatibility of individual decisions with article 8 to be considered on a case-by-case basis, rather than assessing the compatibility of the Rules themselves with article 8, has led to unpredictability and inconsistency which are anathema to good administration (para 11). The conclusion drawn was that it would be better if proportionality were determined according to provisions in the Rules (para 18). The thinking behind the new rules, therefore, was that if the Rules are proportionate, a decision taken in accordance with the Rules will, other than in exceptional cases, be compatible with A8 (para 20). As a result, the role of the courts should shift from reviewing the proportionality of individual administrative decisions to reviewing the proportionality of the Rules (para 22). Appendix FM Appendix FM, Family Members, begins with a general statement which explains that it sets out the requirements to be met by those seeking to enter or remain in the UK on the basis of their family life with a person who is a British citizen, is settled in the UK, or is in the UK with limited leave as a refugee or person granted humanitarian protection (para GEN.1.1). It is said to reflect how, under article 8, the balance will be struck between the right to respect for private and family life and the legitimate aims listed in article 8(2). The Appendix nevertheless contemplates that the Rules will not cover all the circumstances in which a person may have a valid claim to enter or remain in the UK as a result of his or her article 8 rights. Paragraphs GEN.1.10 and GEN.1.11 both make provision for situations where an applicant does not meet the requirements of this Appendix as a partner or parent but the decision-maker grants entry clearance or leave to enter or remain outside the Rules on article 8 grounds. Section R-LTRP sets out the requirements for limited leave to remain as a partner. Certain requirements apply in all cases: for example, that the applicant meets suitability requirements relating to such matters as his or her criminal record. Other requirements depend on the applicants circumstances. In particular, under paragraph R-LTRP.1.1(d), the applicant must not be in the UK on temporary admission or temporary release, or in breach of immigration laws (disregarding an overstay of 28 days or less), unless paragraph EX.1 applies. That paragraph applies if either of two conditions is satisfied. The first applies to persons applying for leave to remain as parents, and is not relevant to the present appeals. The second applies to persons, such as the appellants, who apply for leave to remain as partners: (b) the applicant has a genuine and subsisting relationship with a partner who is in the UK and is a British citizen, settled in the UK or in the UK with refugee leave or humanitarian protection, and there are insurmountable obstacles to family life with that partner continuing outside the UK. At the time when the present cases were considered, the Rules did not define the expression insurmountable obstacles. A definition was however introduced with effect from 28 July 2014, when paragraph EX.2 was inserted into Appendix FM by the Statement of Changes in Immigration Rules (HC 532, 2014): For the purposes of paragraph EX.1(b) insurmountable obstacles means the very significant difficulties which would be faced by the applicant or their partner in continuing their family life together outside the UK and which could not be overcome or would entail very serious hardship for the applicant or their partner. Paragraph EX.2 applies only to applications decided on or after 28 July 2014. The Instructions The Instructions, in the version effective from 9 July 2012 which was in force when these cases were before the Secretary of State and the courts below, state that failure to meet the requirements of the Rules will normally mean failure to establish an article 8 claim (para 1.1). There is a statement, in relation to applications for leave to enter or remain as a partner on the basis of family life, that if the applicant does not meet the requirements of the Rules, the application should be refused (para 3). That statement is, however, implicitly qualified by later provisions. In relation to the eligibility requirements relating to immigration status, the Instructions state that, for leave to remain, the applicant must not have overstayed by more than 28 days, unless paragraph EX.1 applies (para 3.2.4). Provision is made for exceptional circumstances which prevented the applicant from applying within the first 28 days of overstaying. In relation to assessing whether there are insurmountable obstacles, as required by paragraph EX.1(b), the Instructions direct the decision maker to consider the seriousness of the difficulties which the applicant and his or her partner would face in continuing their family life outside the UK, and whether they entail something that could not (or could not reasonably be expected to) be overcome, even with a degree of hardship for one or more of the individuals concerned (para 3.2.7c). Relevant factors are said to include the ability of the parties to enter and stay lawfully in the country concerned; cultural and religious barriers; and the impact of a mental or physical disability. In relation to the second of these, the Instructions reiterate that the barrier must be one which either cannot be overcome or which it is unreasonable to expect a person to overcome. The Instructions state that although refusal of an application will normally be appropriate where the applicant does not meet the requirements of the Rules, leave can be granted outside the Rules where exceptional circumstances apply. In that regard, the Instructions state: Exceptional does not mean unusual or unique. Whilst all cases are to some extent unique, those unique factors do not generally render them exceptional. For example, a case is not exceptional just because the criteria set out in EX.1. of Appendix FM have been missed by a small margin. Instead, exceptional means circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that refusal of the application would not be proportionate. That is likely to be the case only very rarely. (para 3.2.7d) In determining whether there are exceptional circumstances, the decision maker is instructed to consider all relevant factors. Some examples are given: The circumstances around the applicants entry to the UK and the proportion of the time they have been in the UK legally as opposed to illegally. Did they form their relationship with their partner at a time when they had no immigration status or this was precarious? Family life which involves the applicant putting down roots in the UK in the full knowledge that their stay here is unlawful or precarious, should be given less weight, when balanced against the factors weighing in favour of removal, than family life formed by a person lawfully present in the UK. It is also pointed out that cumulative factors should be considered. In particular, although under the Rules family life and private life are considered separately, when considering whether there are exceptional circumstances both private and family life can be taken into account. The facts: Agyarko Ms Agyarko is a national of Ghana. She entered the UK as a visitor in 2003, when she was aged 40. Her leave to enter expired later that year. She has nevertheless remained in the UK ever since. Following the expiry of her leave to enter she began a relationship with Mr Benette, a naturalised British citizen of Liberian origin who has lived in the UK for almost all his life and is in full time employment. They married by proxy under Ghanaian customary law in 2012. They live together. They have no children together. Ms Agyarko has three children living in Ghana, but has not visited them since 2003. In September 2012 Ms Agyarko applied for leave to remain in the UK. Her application conceded that her case fell outside the Rules, and submitted that it was an appropriate case for the grant of discretionary leave, consistently with article 8. It was said that she was settled in the UK and had developed strong social ties there, that her family ties in Ghana had been weakened by her long absence and that most of her friends there had moved abroad. The application disclosed that she had a mother, three children by a former husband, and two siblings living in Ghana. The effect of removal to Ghana upon her family life was addressed in the following terms: Our client and her husband would be seriously disadvantaged in the sense that she may be separated from him and therefore the family life that they have established in the United Kingdom would be interrupted. Most disturbingly our client is likely to face an inordinate delay in obtaining an entry clearance to the UK if she were asked to do so and there is also a risk that her application would be refused due to the fact that she is a previous overstayer. The application was refused by a notice of decision dated 7 October 2013. The decision considered separately whether Ms Agyarko qualified for leave to remain under the partner route provisions of Appendix FM (ie Section R-LTRP) or under the private life provisions of the Rules (which are not in issue in these appeals), and whether her application gave rise to any exceptional circumstances which might warrant consideration of a grant of leave outside the Rules pursuant to article 8. fulfil paragraph EX.1(b): In relation to Appendix FM, the decision stated that Ms Agyarko failed to You have a genuine and subsisting relationship with your British partner. Whilst it is acknowledged that your partner has lived in the UK all his life and is in employment here, this does not mean that you are unable to live together in Ghana. Although relocating there together may cause a degree of hardship for your British partner, the Secretary of State has not seen any evidence to suggest that there are any insurmountable obstacles preventing you from continuing your relationship in Ghana. The application under the partner route was therefore refused. Ms Agyarko was also found to fail to qualify for leave to remain on the basis of her private life. Finally, the decision stated that it had been considered whether the application raised any exceptional circumstances which, consistently with article 8, might warrant consideration of a grant of leave to remain outside the requirements of the Rules. It had been decided that it did not. The refusal of Ms Agyarkos application was not appealable. She sought permission to apply for judicial review of the Secretary of States decision, but that was refused by the Upper Tribunal. She was granted permission to appeal to the Court of Appeal against that refusal, but her appeal was dismissed. The judgment of the court is considered below. The facts: Ikuga Ms Ikuga is a national of Nigeria. She lived there until she entered the UK as a visitor in 2008, when she was aged 33. Her leave to enter expired in 2009. She has nevertheless remained in the UK ever since. At some point following the expiry of her leave to enter, she began a relationship with Mr Ijiekhuamhen, a British citizen. They have never married, and have no children together. It should be recorded that, in the course of this appeal, Ms Ikuga claimed that she was granted an extension of her leave to enter in 2010. That has not been verified. In September 2012 Ms Ikuga applied for leave to remain in the UK on the basis that her removal to Nigeria would be in breach of article 8. It was said by the solicitors acting on her behalf that she cohabited with her partner, Mr Ijiekhuamhen, and that they had been trying to conceive a child, but that due to her medical issues this had been very difficult. The letter also said that their relationship could not be maintained and enjoyed in Nigeria as she is trying to conceive, and that Mr Ijiekhuamhen had been responsible for her medical bills while she was receiving private medical treatment. The letter also referred to her close relationship with her sister and her children, who lived in the UK, and with Mr Ijiekhuamhens daughter, who lived with her mother but visited her father. It was said that Ms Ikuga had no family ties in Nigeria, and that most of her friends were now settled in the UK. It was also said that Ms Ikuga had been a regular visitor to the UK without breaching its immigration rules until she was taken seriously ill and admitted to hospital in September 2009. A supporting letter from Mr Ijiekhuamhen gave a different address from that given by Ms Ikuga. He stated that they had lived together at his address for two years, that she was still not well, and that she relied on him for assistance with her daily needs. He did all the washing, cooking and shopping, and above all he maintained her financially and was her major carer. He had a full time job in the UK and could not leave the UK for Nigeria. He also stated that no-one else could provide the care Ms Ikuga needed, and that there was no medical care for her needs in Nigeria. Medical documentation submitted with included correspondence from Lewisham Hospital and Kings College Hospital, dating from 2010 and 2011, indicating that Ms Ikuga had a prolonged admission in 2009, during which she was treated in the intensive care unit, and that she underwent further investigations and treatment as a private patient during 2010 and 2011. There was also a letter from a consultant haematologist dated 19 January 2010, giving a provisional diagnosis that Ms Ikuga suffered from Adult Stills disease, and stating that she had been referred to a consultant rheumatologist, and a letter from a consultant rheumatologist dated 2 December 2010, stating that Ms Ikuga had musculo-skeletal pains and intermittent muscle weakness, with a likely diagnosis of an auto-immune organising pneumonia as part of an anti-synthetase syndrome, or alternatively of Adult Stills disease. In response to the application, the Secretary of State requested documentary evidence that Ms Ikuga had been living with her partner, and letters from a GP or consultant detailing her current medical condition, her current medication or treatment, and her ability to travel. She was informed that, if she failed to provide the additional information requested, her application would be decided on the basis of the information currently available. the application In their response, dated 24 October 2013, Ms Ikugas solicitors submitted a household bill addressed to both herself and Mr Ijiekhuamhen at the address which he had given, and a print-out dated 24 October 2013 of Ms Ikugas GP records, which recorded the hospital admission in 2009, investigations during 2009 and 2010, and consultations during 2012 in respect of tonsillitis and fertility problems. The most recent entry was dated 3 August 2012, and related to a skin rash. The application was refused by a notice of decision dated 29 October 2013. The decision addressed the issues in the same order as that in Ms Agyarkos case. In relation to the partner route, it stated that Ms Ikuga had provided no evidence to show that she had been living at the same address as Mr Ijiekhuamhen. She did not therefore have a partner as defined in Appendix FM. Ms Ikuga was also found to fail to qualify for leave to remain on the basis of her private life. Finally, the decision stated that it had been considered whether the application raised any exceptional circumstances which, consistently with article 8, might warrant consideration of a grant of leave to remain outside the requirements of the Rules. It had been decided that it did not. Although she claimed to be suffering from medical conditions, she had been unable to provide any documentary evidence to show any recent conditions or treatment. Her claimed conditions had therefore been deemed not to be life threatening, or compelling and compassionate enough to grant leave outside the Rules. Ms Ikuga was refused permission to apply for judicial review of the Secretary of States decision. Although the Upper Tribunal judge accepted that there had been a failure to give proper consideration to the question whether Ms Ikuga and Mr Ijiekhuamhen lived together, he considered that her application for leave to remain was bound to fail in any event. Under the Rules, she would have to establish insurmountable obstacles within the meaning of paragraph EX.1(b), but the matters put forward on her behalf could not possibly persuade any decision-maker that there were insurmountable obstacles to family life continuing in Nigeria. In that regard, the judge observed that the fact that Ms Ikugas partner would have to change jobs was not an insurmountable obstacle; nor was Ms Ikugas wish to continue fertility treatment in the UK. An application outside the Rules was also bound to fail: the matters put forward did not come close to establishing that it would be unjustifiably harsh to require her to return. An argument founded on Chikwamba v Secretary of State for the Home Department [2008] UKHL 40; [2008] 1 WLR 1420 was not capable of succeeding on the facts of the case. Ms Ikuga was granted permission to appeal to the Court of Appeal, where her appeal was heard together with that of Ms Agyarko, and was likewise dismissed. The judgment of the Court of Appeal The Court of Appeal dismissed the appeals for reasons given in the judgment of Sales LJ, with which Longmore and Gloster LJJ agreed. Sales LJ considered first an argument based on the phrase insurmountable obstacles, used in paragraph EX.1(b) of Appendix FM. Sales LJ accepted that the phrase was intended to have the same meaning as in the jurisprudence of the European Court of Human Rights, where it originated. It imposed a stringent test, illustrated by Jeunesse v The Netherlands (2015) 60 EHRR 17, para 117, where the court found that there were no insurmountable obstacles to the applicants family settling in Suriname, although they would experience a degree of hardship if forced to do so. It was to be interpreted, both in the European case law and in the Rules, in a sensible and practical rather than a purely literal way. On the facts of Ms Agyarkos case, the Secretary of States conclusion that there were no insurmountable obstacles to relocation, and that paragraph EX.1(b) was therefore not met, was not irrational: The statement made in Mrs Agyarkos letter of application of 26 September 2012 that she may be separated from her husband was very weak, and was not supported by any evidence which might lead to the conclusion that insurmountable obstacles existed to them pursuing their family life together overseas. There was no witness statement from Mrs Agyarko or Mr Benette to explain what obstacles might exist. The mere facts that Mr Benette is a British citizen, has lived all his life in the United Kingdom and has a job here - and hence might find it difficult and might be reluctant to relocate to Ghana to continue their family life there - could not constitute insurmountable obstacles to his doing so. (para 25) On the facts of Ms Ikugas case, Sales LJ agreed with the Upper Tribunal judges assessment that the factors relied upon by Mrs Ikuga could not possibly persuade any decision-maker that there were insurmountable obstacles to family life continuing in Nigeria, within the meaning of [paragraph EX.1(b)] (para 50). The alternative argument in each case was that the refusal to grant leave to remain outside the Rules was in breach of article 8. It was argued that it was disproportionate to remove each of the appellants in circumstances where her husband or partner would have to follow her overseas if they wished to continue their family life together, especially when he was a British citizen; or, alternatively, because an out-of-country application for leave to enter would inevitably be granted, so that her removal served no good purpose. In relation to the latter argument, reliance was placed on the case of Chikwamba. These arguments were rejected. In the case of Ms Agyarko, Sales LJ stated that, since her family life was established in the knowledge that she had no right to be in the UK and was therefore precarious in the sense in which that term had been used in the European and domestic case law, it was only if her case was exceptional for some reason that she would be able to establish a violation of article 8. On the facts of Ms Agyarkos case, Sales LJ considered that there were no exceptional circumstances. The fact that Ms Agyarkos spouse was a British citizen did not make the case exceptional: several of the European cases in which applications were rejected had involved a partner or spouse who was a national of the state from which the applicant was to be removed. So far as Chikwamba was concerned, the House of Lords had found that there would be a violation of article 8 if the applicant for leave to remain in that case were removed from the UK and forced to make an out-of-country application for leave to enter which would clearly be successful, in circumstances where the interference with her family life could not be said to serve any good purpose. In Sales LJs view, Ms Agyarkos case was very far from a Chikwamba type of case. She had not asked the Secretary of State to consider whether leave to remain should be granted on the basis of Chikwamba. This was not an argument of such obviousness that the Secretary of State had been obliged to consider it regardless of whether it was mentioned. Accordingly, the Secretary of State could not be said to have erred in law in failing to grant leave to remain on that basis. In any event, the materials submitted by Ms Agyarko did not demonstrate that an out-of-country application for leave to enter would succeed. On the contrary, the information provided about her and Mr Benettes financial circumstances, for example, indicated that she had no income and that he earned less than the minimum income requirement specified in Appendix FM. Sales LJ considered that the Secretary of States decision letter in the case of Ms Agyarko left something to be desired regarding the clarity of the reasoning, but had addressed the substance of her case under the Rules. There was no arguable case for leave to be granted outside the Rules which required to be addressed separately. In relation to Ms Ikugas appeal in respect of refusal of leave to remain outside the Rules on the basis of article 8, Sales LJ again considered that the Upper Tribunal judges assessment could not be faulted. Ms Ikugas case involved precarious family life, with no children. No compelling medical circumstances had been shown to exist. The claim for leave to remain had not been put to the Secretary of State on the basis of Chikwamba, and in any event no materials were submitted which might show that leave to enter would have to be granted under Appendix FM if applied for. Although the Secretary of State had not considered the issue on the correct factual basis as regards Ms Ikugas relationship with her partner, this was very far from being a case in which exceptional circumstances could be found to exist, even on a correct understanding of the facts. Even if Ms Ikugas application were remitted to be reconsidered by the Secretary of State on the footing that Ms Ikuga and Mr Ijiekhuamhen cohabited and had a genuine subsisting relationship, there was no prospect whatever that the outcome would be a grant of leave to remain. The present appeals The issues raised in the appeals can be summarised as follows: (1) What is the correct approach to the application of article 8 to the removal of a non-settled migrant? (2) How is the insurmountable obstacles requirement in paragraph EX.1(b) of Appendix FM to be interpreted, prior to the 2014 changes to the Rules? Is it in accordance with article 8? (3) How should precariousness be interpreted, and what role does it play in the article 8 assessment? (4) Is the question whether there are exceptional circumstances one which the Secretary of State can properly ask when considering whether to grant leave to remain outside the Rules to a non-settled migrant with a precarious family life? (5) Is Appendix FM unlawful under EU law, or under section 1(1) of the 1971 Act, insofar as it is based on the expectation that a British citizen with a non-national partner can relocate to the partners country of origin unless there are insurmountable obstacles to their doing so? (6) Were the Secretary of States decisions lawful on the facts? The correct approach to the removal of non-settled migrants The European Court of Human Rights has considered in a number of judgments the application of article 8 to the removal of non-settled migrants (that is, those without a right of residence) who have developed a family life with a partner while residing unlawfully in the host state. In Jeunesse v Netherlands, the Grand Chamber analysed the situation of such a person, consistently with earlier judgments of the court, as raising the question whether the authorities of the host country were under a duty, pursuant to article 8, to grant the person the necessary permission to enable her to exercise her right to family life on their territory. The situation was thus analysed not as one in which the host country was interfering with the persons right to respect for her private and family life, raising the question whether the interference was justified under article 8(2). Instead, the situation was analysed as one in which the person was effectively asserting that her right to respect for her private and family life, under article 8(1), imposed on the host country an obligation to permit her to continue to reside there, and the question was whether such an obligation was indeed imposed. In the light of this approach, counsel for the Secretary of State submitted that the refusal of leave to remain in the UK to persons unlawfully resident here should similarly be analysed as raising the question whether the state is under a positive obligation to permit the applicant to remain in the UK rather than whether the refusal of the application can be justified under article 8(2). As the European court has noted, the boundary between cases best analysed in terms of positive obligations, and those best analysed in terms of negative obligations, can be difficult to draw. As this court explained in its judgment in Hesham Ali (Iraq) v Secretary of State for the Home Department [2016] UKSC 60; [2016] 1 WLR 4799, para 32, the mode of analysis is unlikely to be of substantial importance in the present context. Ultimately, whether the case is considered to concern a positive or a negative obligation, the question for the European court is whether a fair balance has been struck. As was explained in Hesham Ali at paras 47- 49, that question is determined under our domestic law by applying the structured approach to proportionality which has been followed since Huang. Insurmountable obstacles In Jeunesse, the Grand Chamber identified, consistently with earlier judgments of the court, a number of factors to be taken into account in assessing the proportionality under article 8 of the removal of non-settled migrants from a contracting state in which they have family members. Relevant factors were said to include the extent to which family life would effectively be ruptured, the extent of the ties in the contracting state, whether there were insurmountable obstacles in the way of the family living in the country of origin of the non-national concerned, and whether there were factors of immigration control (for example, a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion (para 107). It appears that the European court intends the words insurmountable obstacles to be understood in a practical and realistic sense, rather than as referring solely to obstacles which make it literally impossible for the family to live together in the country of origin of the non-national concerned. In some cases, the court has used other expressions which make that clearer: for example, referring to un obstacle majeur (Sen v The Netherlands (2003) 36 EHRR 7, para 40), or to major impediments (Tuquabo-Tekle v The Netherlands [2006] 1 FLR 798, para 48), or to the test of insurmountable obstacles or major impediments (IAA v United Kingdom (2016) 62 EHRR SE 19, paras 40 and 44), or asking itself whether the family could realistically be expected to move (Sezen v The Netherlands (2006) 43 EHRR 30, para 47). Insurmountable obstacles is, however, the expression employed by the Grand Chamber; and the courts application of it indicates that it is a stringent test. In Jeunesse, for example, there were said to be no insurmountable obstacles to the relocation of the family to Suriname, although the children, the eldest of whom was at secondary school, were Dutch nationals who had lived there all their lives, had never visited Suriname, and would experience a degree of hardship if forced to move, and the applicants partner was in full-time employment in the Netherlands: see paras 117 and 119. Domestically, the expression insurmountable obstacles appears in paragraph EX.1(b) of Appendix FM to the Rules. As explained in para 15 above, that paragraph applies in cases where an applicant for leave to remain under the partner route is in the UK in breach of immigration laws, and requires that there should be insurmountable obstacles to family life with that partner continuing outside the UK. The expression insurmountable obstacles is now defined by paragraph EX.2 as meaning very significant difficulties which would be faced by the applicant or their partner in continuing their family life together outside the UK and which could not be overcome or would entail very serious hardship for the applicant or their partner. That definition appears to me to be consistent with the meaning which can be derived from the Strasbourg case law. As explained in para 16 above, paragraph EX.2 was not introduced until after the dates of the decisions in the present cases. Prior to the insertion of that definition, it would nevertheless be reasonable to infer, consistently with the Secretary of States statutory duty to act compatibly with Convention rights, that the expression was intended to bear the same meaning in the Rules as in the Strasbourg case law from which it was derived. I would therefore interpret it as bearing the same meaning as is now set out in paragraph EX.2. By virtue of paragraph EX.1(b), insurmountable obstacles are treated as a requirement for the grant of leave under the Rules in cases to which that paragraph applies. Accordingly, interpreting the expression in the same sense as in the Strasbourg case law, leave to remain would not normally be granted in cases where an applicant for leave to remain under the partner route was in the UK in breach of immigration laws, unless the applicant or their partner would face very serious difficulties in continuing their family life together outside the UK, which could not be overcome or would entail very serious hardship. Even in a case where such difficulties do not exist, however, leave to remain can nevertheless be granted outside the Rules in exceptional circumstances, in accordance with the Instructions: that is to say, in circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that refusal of the application would not be proportionate. Is that situation compatible with article 8? In considering that question, it is important to appreciate that the Rules are not simply the product of a legal analysis: they are not intended to be a summary of the Strasbourg case law on article 8. As was explained at para 10 above, they are statements of the practice to be followed, which are approved by Parliament, and are based on the Secretary of States policy as to how individual rights under article 8 should be balanced against the competing public interests. They are designed to operate on the basis that decisions taken in accordance with them are compatible with article 8 in all but exceptional cases. The Secretary of State is in principle entitled to have a policy of the kind which underpins the Rules. While the European court has provided guidance as to factors which should be taken into account, it has acknowledged that the weight to be attached to the competing considerations, in striking a fair balance, falls within the margin of appreciation of the national authorities, subject to supervision at the European level. The margin of appreciation of national authorities is not unlimited, but it is nevertheless real and important. Immigration control is an intensely political issue, on which differing views are held within the contracting states, and as between those states. The ECHR has therefore to be applied in a manner which is capable of accommodating different approaches, within limits. Under the constitutional arrangements existing within the UK, the courts can review the compatibility of decision-making in relation to immigration with the Convention rights, but the authorities responsible for determining policy in relation to immigration, within the limits of the national margin of appreciation, are the Secretary of State and Parliament. The Rules therefore reflect the responsible Ministers assessment, at a general level, of the relative weight of the competing factors when striking a fair balance under article 8. The courts can review that general assessment in the event that the decision-making process is challenged as being incompatible with Convention rights or based on an erroneous understanding of the law, but they have to bear in mind the Secretary of States constitutional responsibility for policy in this area, and the endorsement of the Rules by Parliament. It is also the function of the courts to consider individual cases which come before them on appeal or by way of judicial review, and that will require them to consider how the balance is struck in individual cases. In doing so, they have to take the Secretary of States policy into account and to attach considerable weight to it at a general level, as well as considering all the factors which are relevant to the particular case. This was explained in Hesham Ali at paras 44-46, 50 and 53. The Secretary of States view that the public interest in the removal of persons who are in the UK in breach of immigration laws is, in all but exceptional circumstances, sufficiently compelling to outweigh the individuals interest in family life with a partner in the UK, unless there are insurmountable obstacles to family life with that partner continuing outside the UK, is challenged in these proceedings as being too stringent to be compatible with article 8. It is argued that the Secretary of State has treated insurmountable obstacles as a test applicable to persons in the UK in breach of immigration laws, whereas the European court treats it as a relevant factor in relation to non-settled migrants. That is true, but it does not mean that the Secretary of States test is incompatible with article 8. As has been explained, the Rules are not a summary of the European courts case law, but a statement of the Secretary of States policy. That policy is qualified by the scope allowed for leave to remain to be granted outside the Rules. If the applicant or his or her partner would face very significant difficulties in continuing their family life together outside the UK, which could not be overcome or would entail very serious hardship, then the insurmountable obstacles test will be met, and leave will be granted under the Rules. If that test is not met, but the refusal of the application would result in unjustifiably harsh consequences, such that refusal would not be proportionate, then leave will be granted outside the Rules on the basis that there are exceptional circumstances. In the absence of either insurmountable obstacles or exceptional circumstances as defined, however, it is not apparent why it should be incompatible with article 8 for leave to be refused. The Rules and Instructions are therefore compatible with article 8. That is not, of course, to say that decisions applying the Rules and Instructions in individual cases will necessarily be compatible with article 8: that is a question which, if a decision is challenged, must be determined independently by the court or tribunal in the light of the particular circumstances of each case. Precariousness In Jeunesse, the Grand Chamber said, consistently with earlier judgments of the court, that an important consideration when assessing the proportionality under article 8 of the removal of non-settled migrants from a contracting state in which they have family members, is whether family life was created at a time when the persons involved were aware that the immigration status of one of them was such that the persistence of that family life within the host state would from the outset be precarious. Where this is the case, the court said, it is likely only to be in exceptional circumstances that the removal of the non-national family member will constitute a violation of article 8 (para 108). Domestically, officials who are determining whether there are exceptional circumstances as defined in the Instructions, and whether leave to remain should therefore be granted outside the Rules, are directed by the Instructions to consider all relevant factors, including whether the applicant [formed] their relationship with their partner at a time when they had no immigration status or this was precarious. They are instructed: Family life which involves the applicant putting down roots in the UK in the full knowledge that their stay here is unlawful or precarious, should be given less weight, when balanced against the factors weighing in favour of removal, than family life formed by a person lawfully present in the UK. That instruction is consistent with the case law of the European court, such as its judgment in Jeunesse. As the instruction makes clear, precariousness is not a preliminary hurdle to be overcome. Rather, the fact that family life has been established by an applicant in the full knowledge that his stay in the UK was unlawful or precarious affects the weight to be attached to it in the balancing exercise. Whether the applicant is in the UK unlawfully, or is entitled to remain in the UK only temporarily, however, the significance of this consideration depends on what the outcome of immigration control might otherwise be. For example, if an applicant would otherwise be automatically deported as a foreign criminal, then the weight of the public interest in his or her removal will generally be very considerable. If, on the other hand, an applicant - even if residing in the UK unlawfully - was otherwise certain to be granted leave to enter, at least if an application were made from outside the UK, then there might be no public interest in his or her removal. The point is illustrated by the decision in Chikwamba v Secretary of State for the Home Department. It is also necessary to bear in mind that the cogency of the public interest in the removal of a person living in the UK unlawfully is liable to diminish - or, looking at the matter from the opposite perspective, the weight to be given to precarious family life is liable to increase - if there is a protracted delay in the enforcement of immigration control. This point was made by Lord Bingham and Lord Brown of Eaton-under-Heywood in EB (Kosovo) v Secretary of State for the Home Department [2008] UKHL 41; [2009] AC 1159, paras 15 and 37. It is also illustrated by the judgment of the European court in Jeunesse. Finally, in relation to this matter, the reference in the instruction to full knowledge that their stay here is unlawful or precarious is also consistent with the case law of the European court, which refers to the persons concerned being aware that the persistence of family life in the host state would be precarious from the outset (as in Jeunesse, para 108). One can, for example, envisage circumstances in which people might be under a reasonable misapprehension as to their ability to maintain a family life in the UK, and in which a less stringent approach might therefore be appropriate. Exceptional circumstances As explained in para 49 above, the European court has said that, in cases concerned with precarious family life, it is likely only to be in exceptional circumstances that the removal of the non-national family member will constitute a violation of article 8. That reflects the weight attached to the contracting states right to control their borders, as an attribute of their sovereignty, and the limited weight which is generally attached to family life established in the full knowledge that its continuation in the contracting state is unlawful or precarious. The court has repeatedly acknowledged that a state is entitled, as a matter of well-established international law, and subject to its treaty obligations, to control the entry of non- nationals into its territory and their residence there (Jeunesse, para 100). As the court has made clear, the Convention is not intended to undermine that right by enabling non-nationals to evade immigration control by establishing a family life while present in the host state unlawfully or temporarily, and then presenting it with a fait accompli. On the contrary, where confronted with a fait accompli the removal of the non-national family member by the authorities would be incompatible with article 8 only in exceptional circumstances (Jeunesse, para 114). That statement reflects the strength of the claim which will normally be required, if the contracting states interest in immigration control is to be outweighed. In the Jeunesse case, for example, the Dutch authorities tolerance of the applicants unlawful presence in that country for a very prolonged period, during which she developed strong family and social ties there, led the court to conclude that the circumstances were exceptional and that a fair balance had not been struck (paras 121-122). As the court put it, in view of the particular circumstances of the case, it was questionable whether general immigration considerations could be regarded as sufficient justification for refusing the applicant residence in the host state (para 121). The European courts use of the phrase exceptional circumstances in this context was considered by the Court of Appeal in MF (Nigeria) v Secretary of State for the Home Department [2013] EWCA Civ 1192; [2014] 1 WLR 544. Lord Dyson MR, giving the judgment of the court, said: In our view, that is not to say that a test of exceptionality is being applied. Rather it is that, in approaching the question of whether removal is a proportionate interference with an individuals article 8 rights, the scales are heavily weighted in favour of deportation and something very compelling (which will be exceptional) is required to outweigh the public interest in removal. (para 42) Cases are not, therefore, to be approached by searching for a unique or unusual feature, and in its absence rejecting the application without further examination. Rather, as the Master of the Rolls made clear, the test is one of proportionality. The reference to exceptional circumstances in the European case law means that, in cases involving precarious family life, something very compelling ... is required to outweigh the public interest, applying a proportionality test. The Court of Appeal went on to apply that approach to the interpretation of the Rules concerning the deportation of foreign criminals, where the same phrase appears; and their approach was approved by this court, in that context, in Hesham Ali. That approach is also appropriate when a court or tribunal is considering whether a refusal of leave to remain is compatible with article 8 in the context of precarious family life. Ultimately, it has to decide whether the refusal is proportionate in the particular case before it, balancing the strength of the public interest in the removal of the person in question against the impact on private and family life. In doing so, it should give appropriate weight to the Secretary of States policy, expressed in the Rules and the Instructions, that the public interest in immigration control can be outweighed, when considering an application for leave to remain brought by a person in the UK in breach of immigration laws, only where there are insurmountable obstacles or exceptional circumstances as defined. It must also consider all factors relevant to the specific case in question, including, where relevant, the matters discussed in paras 51-52 above. The critical issue will generally be whether, giving due weight to the strength of the public interest in the removal of the person in the case before it, the article 8 claim is sufficiently strong to outweigh it. In general, in cases concerned with precarious family life, a very strong or compelling claim is required to outweigh the public interest in immigration control. The expression exceptional circumstances appears in a number of places in the Rules and the Instructions. Its use in the part of the Rules concerned with the deportation of foreign offenders was considered in Hesham Ali. In the present context, as has been explained, it appears in the Instructions dealing with the grant of leave to remain in the UK outside the Rules. Its use is challenged on the basis that the Secretary of State cannot lawfully impose a requirement that there should be exceptional circumstances, having regard to the opinion of the Appellate Committee of the House of Lords in Huang. As was explained in para 8 above, the case of Huang was decided at a time when the Rules had not been revised to reflect the requirements of article 8. Instead, the Secretary of State operated arrangements under which effect was given to article 8 outside the Rules. Lord Bingham, giving the opinion of the Committee, observed that the ultimate question for the appellate immigration authority was whether the refusal of leave to enter or remain, in circumstances where the life of the family could not reasonably be expected to be enjoyed elsewhere, taking full account of all considerations weighing in favour of the refusal, prejudiced the family life of the applicant in a manner sufficiently serious to amount to a breach of article 8. If the answer to that question was affirmative, then the refusal was unlawful. He added: It is not necessary that the appellate immigration authority, directing itself along the lines indicated in this opinion, need ask in addition whether the case meets a test of exceptionality. The suggestion that it should is based on an observation of Lord Bingham in Razgar [R (Razgar) v Secretary of State for the Home Department [2004] UKHL 27; [2004] 2 AC 368], para 20. He was there expressing an expectation, shared with the Immigration Appeal Tribunal, that the number of claimants not covered by the rules and supplementary directions but entitled to succeed under article 8 would be a very small minority. That is still his expectation. But he was not purporting to lay down a legal test. (para 20) It remains the position that the ultimate question is how a fair balance should be struck between the competing public and individual interests involved, applying a proportionality test. The Rules and Instructions in issue in the present case do not depart from that position. The Secretary of State has not imposed a test of exceptionality, in the sense which Lord Bingham had in mind: that is to say, a requirement that the case should exhibit some highly unusual feature, over and above the application of the test of proportionality. On the contrary, she has defined the word exceptional, as already explained, as meaning circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that the refusal of the application would not be proportionate. So understood, the provision in the Instructions that leave can be granted outside the Rules where exceptional circumstances apply involves the application of the test of proportionality to the circumstances of the individual case, and cannot be regarded as incompatible with article 8. That conclusion is fortified by the express statement in the Instructions that exceptional does not mean unusual or unique: see para 19 above. EU and British citizenship It was submitted on behalf of the appellants that it was unlawful under EU law for the Secretary of State to adopt Rules and Instructions which took as their premise that the British partner of a non-national could relocate to the non-nationals country of origin, in the absence of insurmountable obstacles or exceptional circumstances. The practical result, it was submitted, was to place pressure on an EU citizen to reside outside the EU, contrary to the judgment of the Court of Justice in Ruiz Zambrano. Although this submission was not advanced before the Court of Appeal, this court will nevertheless address it. The appellants British partners enjoy, under article 20 TFEU, the status of Union citizen, and may therefore rely on the rights pertaining to that status, including the right to move and reside freely within the territory of the member states, subject to the limitations and restrictions laid down by the Treaty and the measures adopted for its implementation. Article 20 precludes national measures which have the effect of depriving Union citizens of the genuine enjoyment of the substance of the rights conferred by virtue of their status as Union citizens. On the other hand, the Treaty provisions on citizenship of the Union do not confer any autonomous right on third- country nationals. Any rights conferred on third-country nationals are derived from those enjoyed by the Union citizen. The purpose and justification of those derived rights are based on the fact that a refusal to allow them would interfere with the Union citizens freedom of movement: Secretary of State for the Home Department v CS (Case C-304/14), judgment of 13 September 2016, paras 24-28. In that connection, the Court of Justice has held: that there are very specific situations in which, despite the fact that the secondary law on the right of residence of third-country nationals does not apply and the Union citizen concerned has not made use of his freedom of movement, a right of residence must nevertheless be granted to a third-country national who is a family member of his since the effectiveness of citizenship of the Union would otherwise be undermined, if, as a consequence of refusal of such a right, that citizen would be obliged in practice to leave the territory of the European Union as a whole, thus denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status. (Secretary of State for the Home Department v CS, para 29) The Courts case law indicates the specificity of the situations in question. The case of Ruiz Zambrano concerned the refusal of a right of residence and a work permit in a member state to the third-country parents of dependent minor children who were citizens of that state, with the inevitable consequence that the parents would have to leave the EU and the children would have to accompany their parents. The principle established in that case has been applied and developed in other cases concerned with third-country parents of minor dependent children, such as Alokpa and Moudoulou v Ministre du Travail, de lEmploi et de lImmigration (Case C- 86/12), judgment of 10 October 2013, and Secretary of State for the Home Department v CS. Those judgments can be distinguished from others in which the same relationship of complete dependence between the EU citizen and the third-country national was not present. The case of Dereci v Bundesministerium fr Inneres (Case C-256/11) [2011] ECR I-11315, concerned the refusal of a residence permit to a third-country national who had entered Austria unlawfully, married an Austrian citizen, and had three minor children who were Austrian citizens. His challenge to the refusal of the residence permit on the basis of Ruiz Zambrano was rejected by the Grand Chamber. It derived from Ruiz Zambrano that the criterion relating to the denial of the genuine enjoyment of the substance of the rights conferred by virtue of EU citizen status refers to situations in which the Union citizen has, in fact, to leave not only the territory of the member state of which he is a national but also the territory of the Union as a whole (para 66). That criterion was not satisfied on the facts of Dereci, since the refusal of the residence permit to the third-country national would not necessitate the rest of the family leaving the EU: the children and their mother could remain in Austria without him. The Grand Chamber stated: Consequently, the mere fact that it might appear desirable to a national of a member state, for economic reasons or in order to keep his family together in the territory of the Union, for the members of his family who do not have the nationality of a member state to be able to reside with him in the territory of the Union, is not sufficient in itself to support the view that the Union citizen will be forced to leave Union territory if such a right is not granted. (para 68) As the court made clear, that finding was distinct from the consideration of the case under article 8 of the ECHR or, if applicable, the corresponding provision (article 7) of the Charter of Fundamental Rights. That approach was also applied in Iida v Stadt Ulm (Case C-40/11), judgment of 8 November 2012, and Ymeraga v Ministre du Travail, de lEmploi et de lImmigration (Case C-87/12), judgment of 8 May 2013. The first of these cases concerned, like Dereci, a third-country national who had married an EU citizen and had a minor child who was likewise an EU citizen. The second case was concerned with family reunification: it was brought by a naturalised citizen of Luxembourg whose complaint was that his Kosovan parents and brothers were unable to join him there. In both cases, arguments based on article 20 TFEU were rejected. In the light of these cases, this ground of challenge to the Rules and Instructions cannot be upheld. In the event that a situation were to arise in which the refusal of a third-country nationals application for leave to remain in the UK would force his or her British partner to leave the EU, in breach of article 20 TFEU, such a situation could be addressed under the Rules as one where there were insurmountable obstacles, or in any event under the Instructions as one where there were exceptional circumstances. Typically, however, as in the present cases, the British citizen would not be forced to leave the EU, any more than in the case of Dereci, and the third-country national would not, therefore, derive any rights from article 20. Counsel also referred to the right of a British citizen, under section 1(1) of the 1971 Act, to live in ... the United Kingdom without let or hindrance except such as may be required under and in accordance with this Act to enable their right to be established or as may be otherwise lawfully imposed on any person. This does not advance the argument. The entitlement conferred by section 1(1) is an important right, but it does not entitle a British citizen to insist that his or her non-national partner should also be entitled to live in the UK, when that partner may lawfully be refused leave to enter or remain. The Secretary of States decisions on the facts Having concluded that the Rules and Instructions applied in these cases were consistent with the proper application of article 8, and having rejected the ground of challenge based on EU law, it remains to consider whether the Secretary of States decisions on the facts were otherwise lawful. Considering first whether the decision in the case of Ms Agyarko was compatible with article 8, the court has to bear in mind that this was a case of precarious family life, and that therefore, having regard to the Strasbourg case law, a very strong or compelling claim was required to outweigh the public interest in immigration control. The court has also to give due weight to the Secretary of States policy, expressed in the Rules and the Instructions, that the public interest in immigration control can be outweighed, when considering an application for leave to remain under the partner route brought by a person in the UK in breach of immigration laws, only where there are insurmountable obstacles or exceptional circumstances as defined. There was no evidence placed before the Secretary of State on which a conclusion that there were insurmountable obstacles to relocation in Ghana could reasonably have been reached. There was nothing to suggest that there were exceptional circumstances as defined in the Instructions, that is to say, circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that the refusal of the application would not be proportionate. Considering all relevant factors, Ms Agyarkos claim could not be regarded as very strong or compelling. Nor was there anything to indicate that Ms Agyarko might come within the scope of Chikwamba. Counsel pointed out that some parts of Ms Agyarkos notice of decision were in similar terms to Ms Ikugas, with only factual details differing from one to the other. The use of standard forms of words was criticised as formulaic, and as being inconsistent with anxious scrutiny. It was also pointed out that the decision in relation to the issue of exceptional circumstances contained no reference to any specific aspects of Ms Agyarkos application. It is true that the decision was briefly expressed and, in relation to the issue of exceptional circumstances, did not discuss the matters raised in the application. The notice of decision nevertheless addressed the relevant issues in Ms Agyarkos case, demonstrated that the most important points put forward on her behalf (her length of residence in the UK, her weakened family ties to Ghana, her relationship with her husband, his British citizenship, his full-time employment in the UK, and the difficulties which he might encounter in relocating to Ghana) had been considered, and explained why, notwithstanding those points, her application was refused. The use of standardised reasons is characteristic of modern decision-making practices in fields of public administration where large numbers of applications can be processed more efficiently by employing information technology, using decision templates, drop-down menus and other software. It is also often designed to facilitate internal auditing and management processes. The potential implications of this development for the law relating to the giving of reasons have not been considered in these appeals; nor has the manner in which the decision notices in question were produced. For present purposes, it is sufficient to say that the use of standard phrases is not in itself legally objectionable, provided the reasons given continue to explain adequately why the decision has been taken. Ms Ikugas application under the partner route was refused on the ground that she had provided no evidence to show that she had been living at the same address as Mr Ijiekhuamhen. It is accepted that that decision was erroneous: Ms Ikuga had in fact provided evidence that she and Mr Ijiekhuamhen lived at the same address. It follows that the Secretary of State has not yet considered Ms Ikugas case on a correct understanding of all the material facts. In those circumstances, it would usually follow that the Secretary of States decision should be quashed, and the application re-considered. The courts jurisdiction to quash being discretionary, however, it is open to it to decline to quash if satisfied that the decision, if re-taken, would inevitably be the same. It was on that basis that the Upper Tribunal and the Court of Appeal declined to grant permission to apply for judicial review. In relation to this matter, this court has no basis for interfering with the decision of the specialist judge of the Upper Tribunal, affirmed by the Court of Appeal. So far as the application under the Rules was concerned, the judge correctly identified that Ms Ikuga would have to satisfy the insurmountable obstacles test in paragraph EX.1(b), and explained convincingly why she could not do so on the basis of the information which she had placed before the Secretary of State: see the summary of his reasoning at para 32 above, and the summary of the material which Ms Ikuga had provided, at paras 26-28 and 30 above. Nothing in the discussion of that test in this judgment places in question his conclusion, with which the Court of Appeal agreed, that the test could not possibly be met on the basis put forward on Ms Ikugas behalf: in summary, that her partner was in full-time employment in the UK, and she was undergoing fertility treatment. So far as leave to remain was sought outside the Rules, there is similarly nothing in this judgment which undermines his conclusion, with which the Court of Appeal agreed, that Ms Ikuga had not put forward anything which might constitute exceptional circumstances as defined in the Instructions, that is to say, unjustifiably harsh consequences for the individual such that the refusal of the application would not be proportionate. Conclusion For these reasons, I would dismiss the appeals.

UK-Abs

These proceedings relate to applications made by two foreign nationals, Ms Agyarko and Ms Ikuga, residing unlawfully in the UK, for leave to remain in the UK as partners of British citizens with whom they have formed relationships during the period of their unlawful residence. The Secretary of States decision in each case was that the applicant did not qualify for leave to remain under Immigration Rules (the Rules). Paragraph EX.1(b) of Appendix FM of the Rules required applicants to have a genuine subsisting relationship with a partner who is in the UK and is a British citizen, and for there to be insurmountable obstacles to family life with that partner continuing outside the UK. The Secretary of State found that no evidence had been provided of insurmountable obstacles in either case, and that in the case of Ms Ikuga she had not provided evidence of a shared address in order to show she that had a partner within the meaning of the Rules. The Immigration Directorate Instructions (the Instructions) state that where an applicant does not meet the requirement of the Rules, leave can be granted outside the Rules where exceptional circumstances apply, in order to ensure compatibility with the applicants rights under article 8 of the European Convention on Human Rights. The Secretary of State found that there were no exceptional circumstances in the case of either applicant to warrant consideration of a grant of leave outside the Rules. Both Ms Agyarko and Ms Ikuga sought permission to apply for judicial review of the Secretary of States decisions. In each case permission was refused by the Upper Tribunal, and the Court of Appeal upheld that refusal. The Supreme Court unanimously dismisses the appeals. Lord Reed gives the judgment, with which the rest of the Court agrees. The Secretary of States decisions on the facts were lawful. The ultimate question in article 8 cases is whether a fair balance has been struck between the competing public and individual interests involved, applying a proportionality test. The Rules and Instructions do not depart from that position, and are compatible with article 8. It is within the margin of appreciation for the Secretary of State to adopt policies which set out the weight to be attached to the competing considerations in striking a fair balance, including that family life established while the applicants stay in the UK is known to be unlawful or precarious should be given less weight, when balanced against the factors weighing in favour of removal, than family life formed by a person lawfully present in the UK [46 53]. Although the requirement of insurmountable obstacles to a continuing relationship is a stringent test to be met, rather than one relevant factor to be taken in account, this does not make it incompatible with article 8. The phrase insurmountable obstacles was not defined by the Rules when the present cases were considered, but it is reasonable to infer that it was intended to have the same meaning as in the jurisprudence of the European Court of Human Rights. It imposed a stringent test and was to be interpreted in a sensible and practical way rather than as referring solely to obstacles which make it literally impossible for the family to live together in the applicants country of origin. This is consistent with the guidance on assessing insurmountable obstacles contained in the Instructions, and the definition of that phrase introduced subsequently in the Rules, effective from 28 July 2014 [42 48]. The exceptional circumstances question is also one that the Secretary of State may legitimately ask. Appendix FM is said to reflect how the balance will be struck under article 8 between the right to respect for private and family life, and the legitimate aims listed in article 8(2), so that if an applicant fails to meet the requirements of the Rules it should only be in genuinely exceptional circumstances that refusing them leave and removing them from the UK would breach article 8. The Instructions state that exceptional does not mean unusual or unique, but means circumstances in which refusal would result in unjustifiably harsh consequences for the individual such that refusal of the application would not be proportionate. This is an application of a test of proportionality, consistent with the references to exceptional circumstances in European case law and cannot be regarded as incompatible with article 8 [54 60]. On the facts of each case, there was no basis to challenge the conclusions of the Upper Tribunal judge, that no evidence was placed before the Secretary of State from which the conclusion could be reached that there were insurmountable obstacles to each applicants relationship continuing in their countries of origin. Although in the case of Ms Ikuga the case was considered on an erroneous basis of fact that she was not in a genuine relationship, the insurmountable obstacles test was bound to fail in any event. Further, neither applicant had put forward anything which might constitute exceptional circumstances as defined in the Instructions. There was also an argument, advanced for the first time on appeal, that refusal of leave to remain served no good purpose because the applicants were otherwise certain to be granted leave to enter if the application was made from outside the UK. There was nothing to suggest that this would be the case for either appellant. [69 74]. The effect of refusal of leave in the applicants cases was not a breach of EU law. The Secretary of States decisions in these cases did not compel an EU citizen to reside outside the EU. These cases fell outside the situations of dependency to which the Zambrano principle of EU law applies [61 68].

The appellant, Kevin Maguire, was a defendant in criminal proceedings in the Crown Court in Belfast. By the issue of a legal aid certificate dated 7 June 2012, he became entitled to public funding to instruct a solicitor and two counsel to appear on his behalf in those proceedings. The certificate was issued under article 29(2) of the Legal Aid, Advice and Assistance (Northern Ireland) Order 1981 (the 1981 Order). The appellants first trial, before a judge sitting with a jury, began on 28 November 2012 at Belfast Crown Court. He was represented by Mark Barlow of counsel (described in these proceedings as leading junior counsel) and Clive Neville, a solicitor advocate who is a member of the firm of Trevor Smyth & Co, solicitors. They received instructions to appear for Mr Maguire from Chris Mitchell who is a solicitor in the same firm as Mr Neville, Trevor Smyth & Co The jury in the first trial were unable to reach a verdict and they were discharged. The appellant was tried again. That re trial was originally scheduled to begin on 13 November 2013. Mr Maguire again wished to have Mr Barlow as his leading counsel. In the meantime, however, Mr Barlow had appeared before a summary panel of the Bar Council, convened by the professional conduct committee of the council in relation to two other cases in which he had appeared as leading counsel. In both cases a solicitor advocate had acted as Mr Barlows junior. Mr Barlow is not Queens Counsel. He was called to the Bar of England and Wales in 1992 and to the Bar of Northern Ireland in 2006. He is junior counsel in both jurisdictions. His appearance before the committee, therefore, was to answer charges that he had been in breach of rule 20.11 of the code of conduct for the Bar of Northern Ireland. At the material time this rule stated that: In criminal cases where legal aid has been granted for two barristers one should be a senior counsel. Where, exceptionally, a senior counsel is unavailable, it is permissible for a junior to lead. This junior should be experienced and be of not less than 15 years standing. After some discussion before the summary panel as to the extent of the exceptionality provided for by this rule, Mr Barlow admitted that he had been in breach of it. In neither of the two cases had it been established that senior counsel was not available. Following this, Mr Barlow informed the appellant that he could not act as his leading counsel. The appellant, and subsequently his current solicitors, engaged in correspondence with the Bar of Northern Ireland about this. The solicitors asserted that if Mr Barlow was not permitted to appear as the appellants leading counsel, this would constitute a violation of Mr Maguires rights under article 6 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). The respondent rejected this claim. Mr Maguires retrial duly proceeded in January 2015. He was acquitted of seven of the 11 counts on which he had been charged. The jury failed to reach a verdict on the remaining four counts. The prosecution has indicated that it is not intended that the appellant be required to stand trial again on those counts. The judicial review application The appellant applied for leave to issue judicial review proceedings on 9 June 2014. He claimed that the Bar Councils decision to impede his choice of lead advocate violated his rights under article 6.3(c) of ECHR. He asserted that his right to choose counsel was limited only by the interests of justice test articulated in that provision. Leave to apply for judicial review was granted on 6 October 2014. Following a hearing before a Divisional Court (Sir Declan Morgan LCJ, Coghlin and Gillen LJJ), judgment was delivered on 19 January 2015, dismissing the appeal (Neutral Citation No [2015] NIQB 4). All three members of the Divisional Court gave judgments. Morgan LCJ considered that the right to choose ones counsel; was a qualified right para 36; the defendants wish to have particular legal assistance may be overridden where there are sufficient grounds for concluding that this is necessary in the interests of justice. Coghlin LJ considered that rule 20.11 of the code of conduct was fair and proportionate, designed as it was to provide a basic generic safeguard for a defendant, victims and the general public. That safeguard ensured that in cases involving a charge of murder or where there were exceptional difficulties, legal representation should comprise senior and junior counsel. The overall purpose of the code of conduct was to guarantee that the lay client was represented by the most able and experienced counsel available para 5. No breach of article 6.3 had occurred para 12. Gillen LJ held that the code of conduct accorded with the triangulation of interests those of the accused, those of the victim and his or her family and the interests of the public identified by Lord Steyn in Attorney Generals reference (No 3 of 1999) [2001] 2 AC 91, 118. There was therefore no violation of article 6.3(c) para 23. The statutory regime Article 29(1) of the 1981 Order provides that any person returned for trial on certain indictable offences, as specified in the sub article, is entitled to free legal aid in the preparation and conduct of his defence at the trial. For that purpose, he has solicitor and counsel assigned to him according to rules made under article 36, if a criminal aid certificate is granted in accordance with the succeeding provisions of article 29. The relevant rules are the Criminal Aid Certificates Rules (Northern Ireland) 2012 (the 2012 Rules). Rule 4(1) of these provides for the assigning of a solicitor and rule 4(5) makes provision about counsel as follows: A criminal aid certificate granted under article 29 of the Order (a) includes representation by one counsel; and (b) may include representation by two counsel only in the cases specified and in the manner provided for by the following provisions of this rule. Rule 4(6) provides that where the charge is one of murder, or the case presents exceptional difficulties, the certifying authority may certify that in its opinion the interests of justice require that the assisted person shall have the assistance of two counsel. (The certifying authority in this context is a court article 29(2) of the 1981 Order. In this case, the certificate for two counsel was issued by a district judge.) Exceptionality for the purposes of rule 4(6) is defined in rule 4(7) as where the case for or against the assisted person involves substantial novel or complex issues of law or fact, such that it could not be adequately presented by one counsel. Rule 4(11) provides: Without prejudice to paragraphs (6) and (7), where a judge of the court before which the assisted person is to be tried is of the opinion that in the interests of justice a criminal aid certificate in respect of two counsel must be granted in order to protect the assisted persons rights under the Human Rights Act 1998, the judge shall grant such a certificate. The grant of a certificate is therefore mandatory where required for the protection of an accused persons Convention rights and discretionary where the offence is murder or one which comes within the exceptional category. Where, on either account, a certificate under rule 4(5)(b) for two counsel is granted, rule 4(3) becomes relevant: Any member of the Bar who is practising in Northern Ireland and is willing to appear as counsel for legally aided persons in criminal cases may be instructed, on behalf of the assisted person, by the solicitor assigned under paragraph (1), and, in any case in which the certifying authority has granted a certificate as provided for under paragraph (5)(b), one such member of the Bar and a member of the Bar, being one of Her Majestys Counsel who is practising in Northern Ireland or a senior counsel practising outside of Northern Ireland, may be so instructed. The Legal Aid for Crown Court Proceedings (Costs) Rules (Northern Ireland) 2005 (the 2005 Rules) made provision for the payment of costs in legally aided proceedings in the Crown Court. The 2005 Rules were amended by the Legal Aid for Crown Court Proceedings (Costs) (Amendment) Rules (Northern Ireland) 2011 (the 2011 Rules). Rule 2 of the 2005 Rules, as amended by rule 6 of the 2011 Rules, provides that counsel means counsel assigned under a criminal aid certificate granted under article 29 of the [1981] Order, or counsel who undertook the defence of a person at the request of the judge under article 36(2) of the Order. Rule 4A of the 2005 Rules deals with the payment of enhanced costs where a solicitor conducts a trial or hearing in the Crown Court. Paragraphs 1 and 4 are the relevant provisions. They provide: (1) Where a solicitor exercising his right of audience under section 50 of the Judicature (Northern Ireland) Act 1978 conducts a trial or hearing without counsel he shall be entitled to an enhancement of his costs in accordance with this rule. (4) This rule also applies where a criminal aid certificate was granted for two counsel and a solicitor conducts the trial or hearing with or without a second counsel. In the course of the appeal before this court, a question arose concerning the use of the term solicitor advocate in the relevant legislation and rules. In written submissions made by the respondent after the hearing, the following information and explanations were provided. There is no reference to the term in the 1981 Order. Rule 2 of the 2005 Rules (as made) provided that the term advocate included a solicitor exercising a right of audience under section 50 of the Judicature (Northern Ireland) Act 1978 (the 1978 Act) (which gave a general right of audience to solicitors to conduct proceedings in the Crown Court, whether or not he has been certified by the Law Society as an advanced advocate). The term solicitor advocate appeared several times in the 2005 Rules, as they were originally made. The term also appeared in the Legal Aid for Crown Court Proceedings (Costs) (Amendment) Rules (Northern Ireland) 2009 (the 2009 Rules), within a rates for payment table inserted in the 2005 Rules by rule 17 of the 2009 Rules. The 2011 Rules amended the 2005 Rules by substituting counsel for advocate where that term had appeared in the latter rules. It also provided for the omission of the definition of advocate which had been contained in rule 2 of the 2005 Rules. The 2011 Rules also provided that Schedule 1 to the 2005 Rules be amended and that Schedule 2 should be removed. The upshot of all this is that no reference to solicitor advocate remains within the 2005 Rules. The relevant terms are simply counsel or solicitor. As regards the present appeal, therefore, this means that Mr Neville, when appearing for the appellant in the Crown Court, fell to be paid by the legal aid authorities as a solicitor and in no other capacity. A solicitor has rights of audience under section 50 of the 1978 Act but is not included in the expression counsel for the purpose of calculating payment of legal aid, nor for the purpose of the two counsel provision in rule 4(3) of the 2012 Rules. Article 6 of ECHR Article 6.1 of ECHR provides: In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law The context for the more explicit rights contained in the succeeding paragraphs of article 6 is set by this overarching provision. The emphasis is on the need for fairness. Trial by an independent and impartial tribunal is obviously vital to the achievement of the goal of fairness. Likewise, the presumption of innocence provided for in para 6.2 and the requirements stipulated in article 6.3(a) that everyone charged with a criminal offence must be informed promptly and in detail of the nature and cause of the accusation against him. So too, the obligation in article 6.3(b) that a person charged with a criminal offence must have adequate time and facilities for the preparation of his defence and the requirement in article 6.3(d) that an accused person be permitted to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him. These requirements, together with that contained in article 6.3(e) to the effect that, if necessary, the accused person should have the free assistance of an interpreter, were obviously conceived as what is described in the prefatory words of article 6.3 as minimum rights to be essential safeguards for a fair trial. It is against that background that the provision which is critical in this appeal, article 6.3(c) of ECHR, falls to be considered. It provides that every person charged with a criminal offence shall have the right to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require. Sensibly, Mr ONeill QC for the appellant accepts that this does not confer an absolute right on an accused person to insist upon public funding of the services of a lawyer of his choice to defend him. He argues, however, that the right is one which, in common with other qualified rights under the Convention, should only be interfered with in circumstances which can be shown to be justified. Thus, argues Mr ONeill, the appellant is entitled to demand that he be defended by Mr Barlow and Mr Neville, unless it can be shown by the public authority that would seek to refuse that demand, that their refusal was justified. The appellants case is therefore cast as entitlement to a right to choose not only his lawyers but also that they be paid at public expense unless there is a proportionate justification for denying him that entitlement. Moreover, his claim extends to being entitled to allocate the role to be played by Mr Barlow as soi disant leading counsel in his trial. For respondent, Mr Scoffield QC contends the justification/proportionality analysis is inapt. This is not a case, he argues, where an admitted interference with a qualified Convention right calls for justification. Rather, he says, it is one where the rules governing representation of the appellant at his criminal trial (specifically that which requires that, in other than exceptional circumstances, he be represented by senior and junior counsel) be examined in order to ascertain whether they infringe his right to a fair trial. Thus, it is not a case of the appellant having entitlement to the full panoply of the particular type of representation that he wishes to have and that this entitlement can only be denied where justification for interference with it can be shown. The appellants claim fails, Mr Scoffield argues, at the anterior stage of the inquiry, viz whether there is anything that the about the rule embodied in rule 20.11 of the code of conduct which impinges on Mr Maguires right to a fair trial. In order to decide which of these fundamentally different approaches to the application of article 6.3(c) should prevail, it is necessary to examine the jurisprudence of the European Court of Human Rights (ECtHR). The case law of ECtHR In Correia de Matos v Portugal (Application No 48188/99) the applicant had been committed for trial in Portugal for insulting a judge. The judge investigating that charge assigned a lawyer to represent him. Mr de Matos objected. He wanted to represent himself. He relied on article 6.3(c) of the Convention. He appealed against the order of committal. His appeal was declared inadmissible because it had not been lodged by a lawyer and because he was forbidden to defend himself in person. An appeal to the Constitutional Court was dismissed for the same reason. The Strasbourg court observed that the European Commission on Human Rights (ECmHR) had ruled on a number of occasions that article 6.3(c) did not invest an accused person with the right to decide how the fair trial of the charge against him should be secured. In particular, in X v Norway (decision of 30 May 1975, DR 3, p 43) ECmHR had held that although this provision guarantees that proceedings against the accused will not take place without adequate representation for the defence, it does not give the accused the right to decide himself in what manner his defence should be assured. The decision as to whether the applicant will defend himself in person or be represented by a lawyer of his own choosing, or in certain circumstances one appointed by the court, depends upon the applicable legislation or rules of court. The court in Correia de Matos saw no reason to depart from previous case law. It said: in this area it is essential for applicants to be in a position to present their defence appropriately in accordance with the requirements of a fair trial. However, the decision to allow an accused to defend himself or herself in person or to assign him or her a lawyer does still fall within the margin of appreciation of the Contracting States, which are better placed than the Court to choose the appropriate means by which to enable their judicial system to guarantee the rights of the defence. It should be stressed that the reasons relied on for requiring compulsory representation by a lawyer for certain stages of the proceedings are, in the Courts view, sufficient and relevant. It is, in particular, a measure in the interests of the accused designed to ensure the proper defence of his interests. The domestic courts are therefore entitled to consider that the interests of justice require the compulsory appointment of a lawyer. (emphasis supplied) The importance of this decision and the jurisprudence of ECmHR on which it draws lies in the recognition that the test is what the interests of justice require to ensure that an accused person is properly defended, rather than simply what his own particular wishes may be as to the manner of his defence. This points to the need for a wider consideration of the need for fairness of the trial procedure rather than on an emphasis on the predilections of the accused person as to the choice of counsel. This theme can be detected in the case of K v Denmark (Application No 19524/92, 5 May 1993), again a decision of ECmHR. In that case a lawyer, Mr Reindel, was appointed by the High Court to act as defence counsel for the applicant. It was then discovered that Mr Reindel was to be called as a witness and his appointment was rescinded and another lawyer was appointed in his stead. At para 2 ECmHR said this in relation to article 6.3(c): The Commission recalls that the right to legal representation of ones own choosing ensured by this provision is not of an absolute nature (cf for example No 5923/72, Dec 30.5.75, DR 3, p 43) and it does not guarantee the right to choose an official defence counsel who is appointed by the court (cf No 6946/75, Dec 6.7.76, DR 6, p 114). In examining this question under article 6 para 3(c) (article 6 3 c) of the Convention the Commission must take account of the situation of the defence as a whole rather than the position of the accused taken in isolation, having regard in particular to the principle of equality of arms as included in the concept of a fair hearing. Thus article 6 para 3(c) (article 6 3 c) of the Convention guarantees that the proceedings against the accused shall not take place without adequate representation for the defence, but does not give the accused the right to decide himself in what manner his defence should be assured (cf for example No 8295/78, Dec 9.10.78, DR 15 p 242). (emphasis supplied) Here again the emphasis was on the adequacy of the representation rather than on the freedom of choice of the accused person as to the identity of counsel by whom he should be represented. This is because the gravamen of the right guaranteed by article 6.3(c) lies in its conducing to a fair trial, rather than its championing of the freedom of the individual defendant to choose the lawyer by whom he should be represented. The article 6.3(c) right can thus be contrasted with, for instance, the rights under article 8 of ECHR which can be characterised as intensely personal and intimately connected to the wishes of the individual on whose behalf they are asserted. In Mayzit v Russia (2006) 43 EHRR 38 the applicant wished to be represented by his mother and sister. His request that they be permitted to appear for him was refused on the basis that the case required special legal knowledge and professional experience. At paras 65 and 66 the court said: 65. Article 6(3)(c) guarantees that proceedings against the accused will not take place without an adequate representation for the defence, but does not give the accused the right to decide himself in what manner his defence should be assured. The decision as to which of the two alternatives mentioned in the provision should be chosen, namely the applicants right to defend himself in person or to be represented by a lawyer of his own choosing, or in certain circumstances one appointed by the court, depends upon the applicable legislation or rules of court. 66. Notwithstanding the importance of a relationship of confidence between lawyer and client, the right to choose ones own Counsel cannot be considered to be absolute. It is necessarily subject to certain limitations where free legal aid is concerned, and also where it is for the courts to decide whether the interests of justice require that the accused be defended by Counsel appointed by them. When appointing defence Counsel, the national courts must certainly have regard to the defendants wishes. However, they can override those wishes when there are relevant and sufficient grounds for holding that this is necessary in the interests of justice. The most significant observation in these passages is that the accused person does not have the right to decide in what manner his defence should be assured. The right is to be represented by sufficiently experienced counsel of ones choice but the role to be played by that counsel cannot be dictated by the defendant. Thus, in the present case, Mr Maguire was entitled to ask that Mr Barlow represent him but he was not entitled to insist upon the status that should be conferred on Mr Barlow in his conduct of the defence. Dzankovic v Germany (Application No 6190/09, 8 December 2009) was an admissibility decision. The applicant complained that his request for his chosen representative to be designated official defence counsel had been refused. The court held that the interests of justice did not require that the applicants chosen counsel be appointed official defence counsel. The application was declared inadmissible. The applicant was still represented by the same counsel whom he wished to have designated as official defence counsel. The reason behind the request related to the payment of counsels fees from public resources. But that made no difference. What was important was, in the words of the judgment, that he had not put forward any grounds making a different procedural approach necessary to ensure [that his] rights of defence were secured. Likewise, in the present case, the appellant has not advanced any grounds that Mr Barlow should be designated leading counsel so as to ensure that his rights of defence would be assured. As the respondent has pointed out, Mr Barlow could continue to act for Mr Maguire but as junior counsel, either with senior counsel, or, if senior counsel was not available, alone. Mr Maguire was not deprived of the services of Mr Barlow by operation of rule 20.11 of the code of conduct. The deprivation, if there was one, was the denial of an enhanced payment to Mr Barlow acting as leading counsel. There are four applicable designations of counsel for the purposes of determining rates of payment in accordance with the 2005 Rules. These rates of payment relate to the categories of Queens Counsel; leading junior counsel; sole junior counsel; and led junior counsel. All permutations of cases where two counsel have been assigned and permissible under the code of conduct are provided for in terms of legal aid payment. The provision of potential rates of payment for a leading junior counsel is, the respondent accepts, appropriate, since junior counsel may lead in the exceptional circumstances described in rule 20.11 of the code of conduct. It is notable, however, that the designation of leading junior counsel appears in the relevant statutory framework only for the purposes of identifying an appropriate rate of payment in costs rules. If Mr Barlow had been able to act as leading junior counsel, therefore, he would have been entitled to an enhanced fee. But this has nothing whatever to do with the issue of a guarantee of a fair trial for Mr Maguire. The wishes of a defendant as to his choice of counsel must be taken into account but these are properly subordinate to the overall aim of achieving a fair trial. Thus, it is not a question of the defendant enjoying a right to choose his own counsel which is freestanding of the fair trial goal. Rather it is as an element of the objective of a fair trial that the right to have counsel of ones choice arises. For this reason, it is not appropriate to apply the same analysis to the question of infringement of the right as obtains in an examination of an admitted interference with a right such as arises under article 8. This is clear from such seminal cases as Croissant v Germany (1992) 16 EHRR 135, 151, para 29 where ECtHR said: [I]t is for the courts to decide whether the interests of justice require that the accused be defended by counsel appointed by them. When appointing defence counsel the national courts must certainly have regard to the defendants wishes; indeed, German law contemplates such a course. However, they can override those wishes when there are relevant and sufficient grounds for holding that this is necessary in the interests of justice. The exercise involved here is one of the courts deciding what the interests of justice require, not whether an interference with an individuals Convention right has been justified. Of course, the wishes of a defendant may be pertinent to the question of where the interests of justice lie but that is not because they have an intrinsic value. It is because the desire of an accused person to be represented by someone in whom he reposes trust may be directly relevant to the promotion of the interests of justice aim. Essentially the same message is conveyed in Dvorski v Croatia (2016) 63 EHRR 7 where the Grand Chamber said at para 76: As the Court has already held in its previous judgments, the right set out in article 6.3(c) of the Convention is one element, among others, of the concept of a fair trial in criminal proceedings contained in article 6.1 (see Imbrioscia v Switzerland (1994) 17 EHRR 441, 24 November 1993, paras 36 and 37, Series A no 275, and Salduz v Turkey [GC], no 36391/02, para 50, ECHR 2008) (emphasis supplied) It is clear from this review of the relevant authorities that the essence of the right to choose ones counsel lies in the contribution that the exercise of that right makes to the achievement of the ultimate goal of a fair trial. It is not an autonomous right which falls to be considered outside that context. On that account, the circumstances in which and the reasons that Mr Maguire expressed the wish to have Mr Barlow as his leading counsel are of obvious importance and require close examination. Informed choice The reasons that Mr Maguire wished to have Mr Barlow as his leading counsel were expressed pithily in his affidavit. At para 6, he said: Due to the level (sic) of consultations that took place between myself, counsel and solicitors and the work that was undertaken by counsel and solicitor my wish was to instruct Mr Barlow BL as my lead counsel in the retrial. This was due to the fact that I had confidence in Mr Barlow to appear as my lead counsel due to his knowledge of my case. The question of advice to an accused person about his representation at a criminal trial was considered by the High Court of Justiciary in Addison v HM Advocate 2015 JC 105. At paras 25 and 26, the Lord Justice General said: 25. The Law Society of Scotland Practice Rules 2011 provide that if a case requires appearance in a superior court, the solicitor must advise his client that it is for the client to decide whether a solicitor advocate or counsel is instructed (rule B8.4.l(b)). That is a sound rule as far as it goes; but the decision of the client on [whether a solicitor advocate or counsel is instructed] must be an informed decision. To make such a decision the client must be advised of his options for representation. A mere recital of those options is no more than a formality if it is not supplemented by advice, a point on which the Practice Rules are silent. In my view, it is the duty of the accuseds solicitor to take all reasonable steps to ascertain which members of the Bar and solicitor advocates experienced in this area are, or may be, available to conduct the defence. Only then can a worthwhile decision on representation be made. 26. The observance of these duties may present the accuseds solicitor with a conflict of interest, especially if he is a solicitor advocate or if a senior member of his firm is a solicitor advocate. This court has already adverted to the latter problem in Woodside v HM Advocate 2009 SCCR 350 (at paras 71 74). It is a matter for concern that it continues. Even where there is no such obvious conflict of interest, the solicitor may nonetheless find it difficult to give wholly objective advice as to the choice of defender from those who are available. In the event, any advice that he gives may be thought to lack the appearance of objectivity. Although this admonition was based on a rule which has no equivalent in Northern Ireland, it seems to me to contain sound guidance on how solicitors should ensure that accused persons have sufficient information to make a proper choice as to how they should be represented, particularly when a certificate for two counsel has been issued. There is nothing in the evidence as to the circumstances in which Mr Maguire made his choice to indicate that he received advice of the nature outlined by the Lord Justice General. He should have received such advice. Of course, in the particular circumstances of this case, even if Mr Maguire had received that advice, it does not follow that he would have been entitled to insist that Mr Barlow act as his leading counsel. For the reasons given, he was in any event not entitled to insist on that course. The observations in these paragraphs are made to reinforce the message given by the High Court of Justiciary in Addison that it is the professional obligation of solicitors to give clear advice to accused persons of the options available to them when a certificate for two counsel has been granted. Conclusions Rule 20.11 of the code of conduct is obviously designed to ensure that proper representation of accused persons should be guaranteed when a certificate for two counsel has been issued. Imposing a requirement that senior counsel be engaged, unless none is available, is entirely consonant with that aim. There is no question of interference with the appellants right under article 6. To the contrary, the rule is designed to promote and vindicate that right. In light of that conclusion, it is unnecessary to embark on an examination of the interesting issues raised by the respondent about whether the Bar Council is a hybrid public authority and its entitlement to regulate representation of accused persons in the conduct of criminal trials. Article 6 does not invest an accused person with the right to demand that he have counsel of his choice at public expense, independently of the requirements of the interests of justice. If it can be shown that the interests of justice will best be served by having a requirement that, where a certificate for two counsel is issued, it will, in general, be better for an accused to be represented by both senior and junior counsel, a requirement that this be so cannot give rise to any violation of article 6. That the interests of justice will be best served in this way is beyond serious dispute, in my opinion. Senior counsel obtain that rank on the basis of an objective assessment of their professional expertise and experience. Rule 20.11 does no more than give effect to the desirability that defendants be represented at the highest possible standard, just as rule 4(3) of the 2012 Rules does. The circumstance that that aspiration finds expression in a rule contained in the code of conduct of the Bar does not sound on the question of the appellants article 6 rights. So far from impinging on those rights, the rule is plainly designed to uphold and vindicate them. The source of the rule is therefore irrelevant to any possible violation of article 6.3(c). That simply does not arise.

UK-Abs

The appellant was a defendant in criminal proceedings in the Crown Court in Belfast. A legal aid certificate entitled him to public funding to instruct a solicitor and two counsel to appear on his behalf in those proceedings. During his first trial, he was represented by a barrister, Mark Barlow (described as leading junior counsel) and a solicitor advocate, Clive Neville. The jury were unable to reach a verdict and they were discharged. The appellant was tried again. He again wished to have Mr Barlow as lead counsel. In the meantime, however, Mr Barlow had been disciplined by the Bar Council of Northern Ireland (the respondent in these proceedings) on the basis that where a certificate had been granted for two counsel, unless there were exceptional circumstances meaning that a senior counsel was not available, he could not act as leading counsel. Mr Barlow therefore informed the appellant that he could not act as leading counsel. The appellant claimed that if Mr Barlow was not permitted to appear as his leading counsel, this would constitute a violation of his rights under article 6 of the European Convention on Human Rights (ECHR). The respondent Bar Council rejected this claim. The appellants re trial proceeded and he was acquitted on seven counts, with the jury failing to reach a verdict on the other four counts. The prosecution indicated that it does not propose that the appellant be tried again on the counts on which the jury failed to agree. The appellant applied for judicial review of the Bar Councils decision on the basis that it impeded his choice of lead counsel and therefore violated his right under article 6 ECHR. He asserted that his right to choose counsel was limited only by the interests of justice test within article 6.3 ECHR. The Divisional Court dismissed his application. The issue was whether, in cases where public funding for two counsel has been granted and where the accused wishes to retain a particular junior counsel, the requirement of the Bar Council that he must instruct an available senior counsel or proceed with junior counsel alone is not compatible with the accuseds right under article 6.3 to defend himself through legal assistance of his own choosing. The Supreme Court dismisses the appeal. Lord Kerr gives the judgment with which all the other Justices agree. Article 6 ECHR provides the right to a fair trial. The relevant provision is article 6.3(c), which states that every person charged with a criminal offence shall have the right to defend himself in person or through legal assistance of his own choosing. The appellant argued that this entitled him to choose which lawyers could defend him, unless the Bar Council could show that the refusal was justified [18 21]. The court examined the relevant case law of the European Court of Human Rights, which emphasises adequacy of representation over freedom of choice as to the identity of counsel. The fundamental basis of the right guaranteed by article 6.3(c) is that the legal representation should be conducive to a fair trial, rather than conferring complete freedom to an individual defendant to choose the lawyer by whom to be represented [28]. A defendant does not have the right to decide in what manner his defence should be assured the right is to be represented by sufficiently experienced counsel of ones choice, but the role to be played by that counsel cannot be dictated by the defendant [30]. In the present case, the appellant has not advanced any grounds why Mr Barlow should be designated as leading counsel so that his rights of defence would be assured. As the respondent has pointed out, Mr Barlow could continue to act for Mr Maguire but as junior counsel, either with senior counsel, or, if senior counsel was not available, alone. Mr Maguire was not deprived of the services of Mr Barlow by operation of the Bar Council code of conduct. The deprivation, if there was one, was the denial of an enhanced payment to Mr Barlow acting as leading counsel [32]. The exercise involved here is one of the courts deciding what the interests of justice require, not whether an interference with an individuals Article 6 right has been justified. Of course, the wishes of a defendant may be pertinent to the question of where the interests of justice lie but that is not because they have an intrinsic value [36]. It is clear from the relevant authorities that the essence of the right to choose ones counsel lies in the contribution that the exercise of that right makes to the achievement of the ultimate goal of a fair trial. It is not an autonomous right which falls to be considered outside that context [38]. Article 6 does not give a defendant the right to demand that he have counsel of his choice at public expense, independently of the requirements of the interests of justice. So far from impinging on the appellants rights under article 6.3(c), the relevant provision in the Bars code of conduct is designed to uphold and vindicate them [44].

This is a challenge by application for judicial review to the legality of the comprehensive ban on smoking at the State Hospital at Carstairs which the State Hospitals Board for Scotland (the Board) adopted by a decision taken at a meeting on 25 August 2011 and implemented on 5 December 2011. The appellant, Mr McCann, does not challenge the ban on smoking indoors. His challenge relates only to the ban on smoking in the grounds of the State Hospital and on home visits, which, by creating a comprehensive ban, prevents detained patients from smoking anywhere. Mr McCann suffers from a mental disorder. After committing a number of offences which were prosecuted on summary complaint, he was detained without limit of time in the State Hospital under orders made originally under the Criminal Procedure (Scotland) Act 1975 (and more recently under the Criminal Procedure (Scotland) Act 1995 (the 1995 Act)) in December 1995. He remained in detention in the State Hospital until March 2014. He was then transferred to a medium secure unit in Glasgow, called the Rowanbank Clinic, where he remains in the care of NHS Greater Glasgow (NHSGG). NHSGG has decided to introduce a comprehensive smoking ban at the Rowanbank Clinic. Mr McCann has challenged that decision in separate proceedings for judicial review but his application remains sisted (stayed), pending the outcome of this appeal. Mr McCann raises three principal issues in his challenge. First, he argues that the impugned decision is invalid at common law on the ground of ultra vires because, when so deciding, it did not adhere to the principles laid down in section 1 of the Mental Health (Care and Treatment) (Scotland) Act 2003 (the 2003 Act) (which I set out in para 22 below) or comply with the requirements of subordinate legislation made under the 2003 Act. Secondly, he submits that the impugned decision was unlawful because it unjustifiably interfered with his private life and thereby infringed his right to respect for his private life under article 8 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). Thirdly, founding on article 14 of ECHR in combination with article 8, he argues that the Board, by implementing the comprehensive smoking ban, has treated him in a discriminatory manner which cannot be objectively justified when compared with (i) people detained in prison, (ii) patients in other hospitals (whether detained or not) or (iii) members of the public who remain at liberty. After setting out the factual background and the relevant legislation and summarising the proceedings in the courts below, I will address each challenge in turn. The factual background For many years public authorities in Scotland and elsewhere in the United Kingdom have sought to discourage smoking because of concerns about its effects on the health of the smokers and of those exposed to second hand smoke, by so called passive smoking. Section 4 of the Smoking, Health and Social Care (Scotland) Act 2005 empowered the Scottish Ministers to make regulations prescribing classes of premises in which smoking would be prohibited and also the premises to be excluded from that ban. Among the premises which the Prohibition of Smoking in Certain Premises (Scotland) Regulations 2006 (SSI 2006/90) prescribed as no smoking premises were hospitals, hospices, psychiatric hospitals, psychiatric units and healthcare premises. Open areas, such as hospital grounds, were not so specified. Among the premises exempted from the smoking ban were designated rooms in psychiatric hospitals and psychiatric units. Over time, public authorities have sought to extend the smoking ban. Between 2007 and 2011 the buildings at the State Hospital were redeveloped and modernised. The business case for the redevelopment, which the Scottish Government approved, proposed that the State Hospital would be a smoke free environment and that there would be no provision for smoking either indoors or in the gardens and grounds. In accordance with that policy, the new buildings contain no indoor smoking rooms or facilities which would allow patients to take advantage of the exemption in the Regulations. The Board then had to consider whether, and if so for how long, it would continue to allow smoking in the grounds of the State Hospital. The process by which the Board came to take the impugned decision is set out in a document published by NHS Scotland in February 2012 called Working towards a smoke free environment: an account of the journey undertaken at the State Hospital. Mr McCann founded on this document in his written pleadings (statement 5) as the factual background to the impugned decision. In summary, on 28 October 2010 the Board considered a report by its medical director and resolved to work towards a comprehensive smoking ban with effect from May 2011. After the judgment of the Court of Session in L v Board of State Hospital 2011 SLT 233, in which Lady Dorrian held that the Board had failed to consult with patients (as it had conceded it was required to do by section 1 of the 2003 Act) on its decision to ban visitors from bringing food parcels into the State Hospital and to ban patients from ordering in food, the Board reconsidered its policy concerning smoking at a meeting on 17 February 2011. It agreed to allow smoking to continue in the existing smoking rooms and to conduct a consultation on the options of a partial or comprehensive smoking ban. The Board conducted the consultation between 1 March and 31 May 2011. It presented two options: a partial ban which permitted smoking only in designated open air areas within the grounds or a complete ban both internally and within the grounds. 86% of the patients who responded favoured the partial ban. The Board met again on 23 June to consider a report on the consultation which recommended that smoking be permitted in designated external areas in the grounds. The Board accepted that proposal subject to further consideration of how the partial ban would work in practice. The Board also confirmed its commitment to working towards a smoke free hospital. At a further meeting on 5 July 2011 the Board confirmed that position. Because the patients were soon to move to the new building, the Board decided to close the smoking rooms in the existing buildings and to prohibit smoking in the ward gardens as from 1 August 2011, leaving only the designated external areas for smoking. The Board agreed to review its decision in November 2011. The Board conducted a further consultation in mid August 2011 in which it asked for responses to the same options of a partial ban or a comprehensive ban. 64% of patients favoured a partial ban and 36% a comprehensive ban. The Boards chief executive prepared a report on the operation of the partial ban which the Board considered at a meeting on 25 August 2011. At that meeting the Board made the impugned decision to implement a comprehensive smoking ban in December 2011. The patients moved into the new buildings on 21 September 2011. On 5 December 2011 the comprehensive smoking ban came into force. In his petition for judicial review Mr McCann initially called for the Board to produce the minute of the meeting of 25 August 2011 in order to disclose the reasons for the impugned decision. After the minute was produced, he founded on it to challenge the impugned decision for its failure to apply the principles set out in section 1 of the 2003 Act. The minute of the meeting of the Board on 25 August 2011 recorded the reasons for the decision in these terms: [The Boards Chief Executive] outlined the activity following the Boards decision and the considerable problems experienced in operationalising the process, eg increasing numbers of higher risk patients had been referred for consideration of grounds access. The Senior Team had discussed a draft operational policy at their meeting on 27 July 2011 and agreed that from a practical point of view, patients would be permitted to smoke in existing ward gardens at eight set points during each day. The clinical team would agree the set points during each day. Members were asked to consider: (i) The feedback received over the first month of the restrictions on the appendix received (ii) To allow smoking to continue in the grounds, with further limitations, until 30 November 2011 (iii) A full non smoking environment as of 1 December 2011 Members noted that the decision taken in June 2011 was to be reviewed in November 2011. The documented feedback which had been received over the course of August 2011 from staff, as well as smoking and non smoking patients was reviewed. The discussion that followed centred around the difficulties encountered with the partial cessation of smoking at the Hospital in relation to issues of safety and security, operational and clinical disruption, time demands on staff, fairness of the partial restrictions, and the inconsistencies around the set points in the day when smoking was permitted. In light of the difficulties discussed and the importance of the operational managements view, Members agreed that the partial cessation of smoking at the Hospital had proved to be unworkable despite the best efforts of staff involved. It was agreed that the State Hospital would be a full non smoking environment as of 1 December 2011. Support to patients in their smoking cessation attempts would continue and be accelerated. The document, Working towards a smoke free environment , to which I referred in para 7 above contains more details of the problems that became apparent in August and September 2011. Patients tended to power smoke in the few opportunities they had to smoke and some reverted back to previous institutionalised behaviour such as clock watching. Staff who attended them complained about daily exposure to passive smoking. The document also spoke of significant operational and security risks. After the move to the new buildings, concerns were expressed about patients congregating outside in breach of grounds access rules. The impugned decision had several elements. It prohibited a detained patient from smoking or possessing tobacco products in the State Hospital, including in its grounds, and from smoking on home visits. It also prohibited visitors from bringing tobacco products and tobacco related products (such as electronic cigarettes or lighters) into the hospital. Search and screening procedures were established to search both patients and visitors for such products. Tobacco products which the patients possessed on 1 December 2011 had to be posted to an external address. The impugned decision was taken against the backdrop of a developing policy of the Scottish Government to control the use of tobacco and to prevent smoking at NHS facilities. The Scottish Ministers have continued to pursue that policy. In March 2013 they published a document entitled Creating a Tobacco free Generation: A Tobacco Control Strategy for Scotland. In that publication Ministers proposed (pp 26 27) (a) that mental health services should make sure that indoor facilities were smoke free by 2015 and (b) that all NHS Boards would implement and enforce smoke free hospital grounds by March 2015, by removing any designated smoking areas in NHS buildings or grounds. Ministers excluded mental health facilities from the latter policy. But since then some health boards have extended the comprehensive ban to such facilities. The relevant legislation (i) National Health Service (Scotland) Act 1978 Under section 102(1) of the National Health Service (Scotland) Act 1978, the Scottish Ministers are charged with the duty of providing such hospitals as appear to [them] to be necessary for persons subject to detention under the 1995 Act or the 2003 Act, which hospitals are described in subsection (2) as state hospitals. Under subsection (4) the Scottish Ministers are empowered to provide for the management of a state hospital to be undertaken on their behalf by among others a special health board. Under that provision the Board acts as the delegate of the Scottish Ministers in managing the State Hospital. The Board contends that, in deciding upon and implementing the comprehensive smoking ban and measures to enforce that ban, it has acted solely under its power of management in this section. (ii) Mental Health (Care and Treatment) (Scotland) Act 2003 Until the enactment of the 2003 Act, the care and treatment of mental health patients were governed by the Mental Health (Scotland) Act 1984. Over time, concerns emerged that the legislation did not adequately protect the rights of patients who were subjected to compulsory detention. One of the factors which led to these concerns was the increased emphasis on personal autonomy which resulted from the influence of the ECHR and the incorporation of the ECHR in our domestic law, first by the Scotland Act 1998 and then by the Human Rights Act 1998. In 1999 the Scottish Ministers commissioned a review of mental health legislation by a committee under the chairmanship of the Rt Hon Bruce Millan, who had formerly been the Secretary of State for Scotland. In January 2001 the Scottish Ministers laid the report, New Directions: Report on the review of the Mental Health (Scotland) Act 1984, before the Scottish Parliament. The report sought to promote greater awareness of the need to respect human rights and the adoption of the least restrictive alternative in the compulsion of mental health patients. It also sought to make sure that any compulsory intervention was tailored to the particular needs and circumstances of the individual (Introduction, paras 1 and 4). It recommended that a new Act should be based on principles which were stated on the face of the Act itself (Introduction, para 2; Chapter 3). This gave rise to section 1 of the 2003 Act, which I set out in para 22 below. In chapter 11 of the report the committee addressed, among other things, the searching of patients, an issue which lies at the heart of the first ground on this appeal. It observed that the 1984 Act contained no specific framework for searches. The report (para 44) referred to the judgment of Potts J in R v Broadmoor Hospital Authority, Ex p S The Times, 5 November 1997, in which he held that a general power to conduct random searches must necessarily be implied as part of the Broadmoor Hospital Authoritys duty to create and maintain a safe and therapeutic environment. The committee recommended that a Code of Practice should set out the parameters of search policies as it was important that the rights of patients were clear in relation to this (para 46). The Scottish Executive did not accept all of the recommendations of the Millan Committee. In its White Paper, Renewing Mental Health Law Policy Statement, the Executive accepted the committees recommendation as the framework for a future Bill while modifying some of its recommendations in relation to offenders with mental disorders. It accepted both the inclusion of a statement of principles (p 5) and a Code of Practice to give guidance on the operation of the new statutory powers, including the regulation of searches (p 69). The 2003 Act includes in section 1 a statement of principles for the discharge of functions under the Act; and it also contains in section 286 a provision for the making of regulations for safety and security in hospitals, including the searching of detained patients and the placing of restrictions on what detained persons and visitors may have with them. The Policy Memorandum to the Bill in discussing the relevant clause which became section 286 stated: 255. The Bill makes provision to regulate any interference by hospitals of certain civil rights of detained patients, including withholding correspondence, monitoring or restricting other forms of communication, searching patients or their belongings, and restricting access to visitors. 259. The Bill also sets up a framework for regulations authorising measures in connection with the use of telephones, searches, surveillance and restrictions on patients or visitors. The intention is that hospitals be required to develop policies setting out how any such security measures will be applied, recorded and monitored, and that the Executive and the Mental Welfare Commission will monitor the terms of these policies and their operation. (1) Subsections (2) to (4) below apply whenever a person is discharging a function by virtue of this Act in relation to a patient who has attained the age of 18 years. (2) In discharging the function the person shall, subject to subsection (9) below, have regard to the matters mentioned in subsection (3) below in so far as they are relevant to the function being discharged. (3) The matters referred to in subsection (2) above are Section 1 of the 2003 Act, which is headed Principles for discharging certain functions, provides, so far as relevant: (a) the present and past wishes and feelings of the patient which are relevant to the discharge of the function; (b) the views of (i) the patients named person; (ii) any carer of the patient; (iii) any guardian of the patient; and (iv) any welfare attorney of the patient, which are relevant to the discharge of the function; (c) the importance of the patient participating as fully as possible in the discharge of the function; the importance of providing such information (d) and support to the patient as is necessary to enable the patient to participate in accordance with paragraph (c) above; (e) case; (f) benefit to the patient; the need to ensure that, unless it can be shown (g) that it is justified in the circumstances, the patient is not treated in a way that is less favourable than the way in which a person who is not a patient might be treated in a comparable situation; the importance of providing the maximum the range of options available in the patients (h) the patients abilities, background and characteristics, including, without prejudice to that generality, the patients age, sex, sexual orientation, religious persuasion, racial origin, cultural and linguistic background and membership of any ethnic group. (4) After having regard to the matters mentioned in subsection (3) above; such other matters as are relevant in the (a) and (c) circumstances, the person shall discharge the function in the manner that appears to the person to be the manner that involves the minimum restriction on the freedom of the patient that is necessary in the circumstances. (9) The person need not have regard to the views of a person mentioned in subsection (3)(b) above in so far as it is unreasonable or impracticable to do so. Unsurprisingly, the 2003 Act does not define the functions which a person discharges by virtue of the Act. But I would interpret subsection (1) as meaning that a person discharges such a function when he or she exercises a power conferred by the 2003 Act or by subordinate legislation made under the Act. Section 286 of the 2003 Act, which is headed Safety and security in hospitals, provides, so far as relevant: (1) Regulations may authorise (a) the search of such persons detained in hospital by virtue of this Act or the 1995 Act as may be specified in the regulations and of anything they have with them in the hospital in which they are detained; (c) the placing of restrictions on the kinds of things which those persons may have with them in the hospitals in which they are detained and the removal from them of articles kept in breach of such restrictions; (d) the placing of prohibitions and restrictions on the entry into and the conduct while in those hospitals of persons (visitors) visiting those persons or otherwise entering or seeking to enter those hospitals and on the kinds of things which visitors may bring with them into those hospitals; (f) with them into those hospitals, the search of visitors and of anything they bring and make that which is authorised subject to conditions specified in the regulations. The Scottish Ministers prepared regulations to give effect to section 286, which the Scottish Parliament approved by affirmative resolution: the Mental Health (Safety and Security) (Scotland) Regulations 2005 (SSI 2005/464) (the 2005 Regulations). In their consultation on the draft regulations in 2004 the Scottish Ministers explained (paras 54 55) that hospitals had policies prohibiting certain articles and substances being brought into or retained in hospital and on searching patients and visitors. The Ministers stated (para 56): [t]he aim of these regulations is to put these policies on a firm legislative footing, to ensure that there is proper recording and monitoring of decisions to use powers to search patients or visitors and to prevent certain substances and articles being brought into hospitals. The 2005 Regulations (regulation 4) authorise measures such as the placing of restrictions on the kind of things that specified persons may have with them in hospitals and the removal from them of articles kept in breach of those restrictions. Regulation 4 authorises similar restrictions on visitors, and the search of both specified persons and visitors. Regulation 2 provides that a person detained in, among others, the State Hospital and the Rowanbank Clinic is a specified person if the hospital managers have (a) informed the patient and his or her named person and the Mental Welfare Commission for Scotland that he or she is a specified person and (b) informed the patient and his or her named person that he or she is subject to the regulation 4 measures and also that the specified person has a right of re assessment under regulation 5(b). Consistently with the philosophy of the least restrictive alternative, regulation 5 sets out general conditions for the measures. Condition (a) is that measures may only be applied to a specified person if the persons responsible medical officer (RMO) is of the opinion that not to apply them would pose a significant risk to the health, safety or welfare of any person in the hospital or the security or good order of the hospital. Condition (b) requires the RMO to re assess the risk mentioned in condition (a) at the specified persons request and empowers the RMO to reverse the decision to apply the measure. Condition (c) requires that the reasons for and outcome of applying a measure shall be recorded in the specified persons medical records and that the hospital managers make a separate record; and condition (d) requires, as a general rule, that the named person shall be given notice of the entry in the medical records. Regulations 6 and 10 set out specific conditions for the searching of specified persons and visitors. Regulation 8, which again is consistent with the philosophy of the least restrictive alternative, imposes a condition that restrictions shall be placed on having any article so as to minimise the impact on the freedom of the specified person compatible with the general condition in regulation 5(a) (ie condition (a) above). Section 274 of the 2003 Act requires the Scottish Ministers to publish a code of practice giving guidance to any person discharging functions by virtue of the Act. Subsection (4) requires any person discharging functions by virtue of the 2003 Act to have regard (so far as they are applicable to the discharge of those functions by that person) to the provisions of any code of practice published under subsection (1) above for the time being in force. Chapter 12 of the Code of Practice, which the Scottish Ministers published under section 274 of the 2003 Act, gave guidance on procedures for restrictions on patients correspondence and use of telephones and also for measures to ensure the safety and security of hospitals, staff, patients and visitors. It advised that the restrictions and measures must be applied in a way which respects patients rights and dignity and is commensurate with any perceived risk to the health, safety or welfare of the patient or any other person. Para 50 of that chapter repeated the requirement of regulation 8 of the 2005 Regulations (above) to minimise the impact of the restriction on the patient. As I discuss below, in relation to the application of the 2003 Act, central questions in this part of the appeal include (a) whether the Board, in imposing the comprehensive smoking ban, was exercising a function under the 2003 Act so as to bring into play the section 1 principles and (b) whether the prohibition of possession of tobacco products and the power of search and confiscation, which were components of the impugned decision, fall within the 2005 Regulations or are excluded on the basis that they do not relate to safety and security. The legal proceedings Mr McCann raised judicial review proceedings in which he sought the reduction (annulment) of the decision, a declarator of the breach of his Convention rights and also damages as just satisfaction. As I have stated in para 7 above, he founded on the document, Working towards a smoke free environment in pleading the factual background to the impugned decision. He initially complained about the Boards failure to disclose the minute which recorded the decision, but, having received the minute in the course of the proceedings, founded on it to amend his written pleadings in order to plead a case (statement 15 of his petition) that the Board had failed to take account of relevant factors, and in particular to apply the principles set out in section 1 of the 2003 Act (the 2003 Act principles). At the First Hearing the Lord Ordinary, Lord Stewart, heard oral submissions on both the facts and the law. Counsel presented their cases by referring to the documents for the factual background. No affidavits were produced, no oral evidence was led and accordingly no challenge was made to the contents of the documents in cross examination. As Mr McCann based his challenge on those documents, the absence of other evidence is not surprising. The parties should have complied with good practice by entering into a joint minute agreeing the documents and dispensing with probation; but that was implicitly what they did. The Lord Ordinary in his opinion narrated the events which the documents disclosed and which gave rise to the impugned decision. In his interlocutor dated 27 August 2013 the Lord Ordinary declared that the impugned decision was unlawful so far as it affected Mr McCann both because it was not taken in accordance with the 2003 Act principles and also because it breached his Convention rights under articles 8 and 14 of the ECHR. The Lord Ordinary did not award damages but ruled that the finding of the breach of those articles was just satisfaction in terms of article 41 of the ECHR. The Board appealed that decision by a reclaiming motion which was heard by the Second Division of the Inner House (the Lord Justice Clerk (Lord Carloway), Lady Paton and Lord Brodie). The Board submitted that the 2003 Act principles did not apply to the impugned decision, that Mr McCanns article 8 right to respect for his private life was not engaged, or, if it was, the impugned decision was a proportionate one which did not infringe his article 8 right. The Lord Justice Clerk gave the leading opinion, with which Lord Brodie agreed, in which he allowed the appeal and refused the prayer of the petition. He held that the Board was exercising its powers of management under the 1978 Act when it made the impugned decision. The 2003 Act was concerned with the care and treatment of the individual patient and the impugned decision did not involve the discharge of a function under that Act. Accordingly, the 2003 Act principles had no application to the decision. In relation to the article 8 challenge, the Lord Justice Clerk referred to the decision of the Strasbourg court (the ECtHR) in Munjaz v United Kingdom [2012] MHLR 351; [2012] ECHR 1704, which (a) emphasised the principle of personal autonomy in article 8, (b) ruled that detained persons were presumed to enjoy all the fundamental rights and freedoms guaranteed by the ECHR, except the right to liberty, where the detention was lawfully imposed in accordance with article 5 of the ECHR and (c) required any restriction of those rights to be justified in each individual case. He sought to apply those principles in this case. In agreement with the Divisional Court and the majority of the Court of Appeal of England and Wales in the case concerning the statutory ban on smoking at Rampton Hospital, R (N) v Secretary of State for Health [2008] HRLR 42 and [2009] HRLR 31 (also reported as R (G) v Nottingham Healthcare NHS Trust [2009] PTSR 218 and [2010] PTSR 674) (the Rampton Hospital case), he held that a comprehensive smoking ban on persons detained in an institution did not have a sufficiently adverse effect on a detainees integrity and autonomy as to merit protection under article 8. He ruled (para 93) that the comprehensive smoking ban did not engage article 8. If article 8 were engaged, he held that the impugned decision was justified under article 8(2) as the comprehensive ban was proportionate to the legitimate aim of promoting the health of both the detained patients and staff. On the same hypothesis, he rejected the article 14 challenge (a) as prisons could not be compared with the therapeutic environment of the State Hospital and (b) as the Scottish Government was proposing to introduce a comprehensive prohibition against smoking in all hospitals in the relatively short term. Lady Paton agreed with the opinion of the Lord Justice Clerk except in one respect. She opined that article 8 was engaged. She drew support from Keene LJs dissenting judgment in the Rampton Hospital case and expressed the view that smoking was an addictive activity which was very much part of an individuals personal autonomy. But she agreed that the impugned decision was justified under article 8(2) and that there had been no discrimination under article 14. Discussion of the challenges the 2003 Act i) The impugned decision involves not only a comprehensive ban on smoking, which extends to smoking in the grounds of the State Hospital and on visits to a detained persons home, but also a policy of searching both detained patients and visitors for and confiscating tobacco. While the power to search for and confiscate tobacco is a necessary component of the decision as it is the means by which the comprehensive ban can be enforced, I am not persuaded that the comprehensive ban itself falls within the scope of the 2003 Act. In my view the Board is correct in its submission that the comprehensive ban, viewed on its own, involves the exercise of a power of management under the 1978 Act. But, for the reasons which I set out below, I have come to the view that the supporting prohibition on possession of tobacco products and the power to search for and confiscate such products fall within the scope of the 2003 Act and the 2005 Regulations. First, I do not accept the submission that the 2003 Act is concerned only with the treatment of individual patients and that it does not impinge on more general management policies. That Act, which replaced the 1984 Act, provides, among other things, for the detention of and the giving of care and treatment to mental health patients. Many sections of the 2003 Act relate to the making of such provision to the individual patient. But the discharge of functions under the 2003 Act is not confined to individual care and treatment. In Part 18 of the Act (which is headed Miscellaneous) there are a series of sections (sections 281 286) which provide either directly or through regulations for the withholding of correspondence and the regulation of the use of telephones, as well as for the functions with which this appeal is concerned, namely the placing of restrictions on the kinds of things which specified persons may have in a hospital, searches and confiscation. The regulations made in support of those provisions, namely the 2005 Regulations to which I have referred in paras 24 and 25 above and also the Mental Health (Definition of Specified Person: Correspondence) (Scotland) Regulations 2005 (SSI 2005/466) and the Mental Health (Use of Telephones) (Scotland) Regulations 2005 (SSI 2005/468), are subject to conditions (a) as a general rule that the detained patient, his or her named person and the Mental Welfare Commission for Scotland are informed that he or she is a specified person and (b) that the detained person is informed of the restriction. Thus interested parties must be informed of measures which affect individual patients, whether as a result of general management policies or of individual targeting of patients. The relevant regulations also require records to be kept of any decisions to search a specified person and to prohibit or restrict the use of telephones by such a person. While the further requirement in the 2005 Regulations (regulation 5(c)) to record a measure in an individual patients medical records may seem unnecessary where a measure is of general application, that is not, in my view, a sufficient indication of an intention to confine section 286 and the 2005 Regulations to individually targeted measures. The requirements in each of the sets of regulations mentioned in para 35 above are consistent with the policy underlying section 286 of the 2003 Act that the Scottish Government and the Mental Welfare Commission should monitor the terms of policies for such measures and their operation: para 21 above. I can see no rationale for excluding measures of general application from this supervision, nor did counsel suggest any. I recognise that some of the matters mentioned in section 1(3) of the 2003 Act are not relevant to the discharge of these functions, especially when the measures are not targeted at individual detained patients; but section 1(2) and (9) provide for that. Secondly, the 2005 Regulations do not set limits on the things, the possession of which may be prohibited or restricted, and for which specified persons or visitors may be searched. Both the heading of section 286 of the 2003 Act and the title of the 2005 Regulations refer to safety and security, but there is no provision in either the section or the 2005 Regulations which confines the things to items such as weapons which might threaten the safety of others. Section 286 also provides for the taking of samples from persons, including swabs and blood (subsection (1)(b)) and the surveillance of specified persons or visitors (subsection (1)(e)). Thirdly, the focus of the section and the regulations made under it is on the regulation of activities which impinge on the autonomy of individuals. That focus on the detained patients autonomy is consistent with the Millan reports emphasis on the need to respect human rights. It manifests itself in greater transparency by legislative provision for such policies, and through the informing of interested parties of the regulated measures, the maintenance of records of such measures, and the supervision by the Scottish government and the Mental Welfare Commission. The devising of policies and the carrying out of such measures have thus become functions under the 2003 Act. The principles in section 1 of that Act apply to such measures in so far as they are relevant. One principle which is clearly relevant is the obligation in section 1(4) to discharge the function in the manner that involves the minimum restriction on the freedom of the patient that is necessary in the circumstances an obligation to which the Code of Practice draws attention. The Board did not purport to act under the 2003 Act in instituting the policy of prohibiting the possession of tobacco products, searching for such products and confiscating them. It may be the case that the consultation exercises which the Board carried out during 2011 were sufficient to comply with the obligations in section 1(2) and (3) of the 2003 Act. But there appears to have been no consideration of the obligation under section 1(4) nor compliance with the obligations to inform and record in the 2005 Regulations. This is not surprising as the Board considered that it was acting under the 1978 Act. As a result, the prohibition on having tobacco products and the related powers to search and confiscate are in my view illegal and fall to be annulled. Although Mr McCanns counsel argued that the component parts of the impugned decision were not severable and counsel for the Board made no submissions to the contrary, I would prefer to invite submissions on the form of order which this court should make before making such an order. ii) Article 8 of the ECHR As is well known, article 8 of the ECHR protects the right to respect for private and family life and provides: 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. In my view, the prohibition against having tobacco products, and the power to search patients in and visitors to the State Hospital for such products and confiscate them, infringe Mr McCanns right under article 8 of the ECHR because I consider (a) for the reasons discussed below, that they interfere with his article 8 right, and (b) for the reasons discussed above, that they do not comply with the 2003 Act and thus cannot meet the requirement of article 8(2) that they are in accordance with the law. As it is likely that the problem of compliance with the 2003 Act is remediable, I set out why, contrary to the view of the majority of the Second Division, I have concluded that the comprehensive ban itself amounts to such interference, which has therefore to be justified. I also set out my view as to why, but for the problem of the domestic legal basis of part of the decision (which I have discussed above), I consider that the impugned decision (comprising both the comprehensive ban on smoking and the supportive measures of the prohibition of possession and powers of search and confiscation) would have been a proportionate response to the legitimate aim of the protection of health, which is recognised in article 8(2), through its promotion and safeguarding of the health of both patients and staff at the State Hospital. The scope of article 8: I adopt as a general statement Lord Binghams description of the purpose of article 8: It is to protect the individual against intrusion by agents of the state, unless for good reason, into the private sphere within which individuals expect to be left alone to conduct their personal affairs and live their personal lives as they choose: R (Countryside Alliance) v Attorney General [2008] AC 719, para 10 (Countryside Alliance). But it is notoriously difficult and may be impossible to determine the boundaries of the personal sphere and thus of the article 8 right to respect for private life. The ECtHR has identified values which the article protects but has rejected the possibility or necessity of attempting an exhaustive definition of the notion of private life: Niemietz v Germany (1992) 16 EHRR 97, para 29. Judicial formulations of the values are inevitably influenced by the facts of the particular case and, in particular, by the nature of the states intervention or failure to intervene in the life of the claimant. The House of Lords, when examining the boundaries of such values in Countryside Alliance in the context of the hunting ban, expressed differing and inconsistent views. The concept encompasses securing a sphere within which an individual can freely pursue the development and fulfilment of his personality and to a certain degree the right to establish and develop relationships with other people: Brggemann and Scheuten v Federal Republic of Germany (1977) 3 EHRR 244 (the Human Rights Commission) paras 55 57. More recently, emphasis has been placed on personal autonomy. Thus in Pretty v United Kingdom (2002) 35 EHRR 1, which concerned the statutory ban on assisted suicide, the ECtHR summarised its jurisprudence (para 61): [T]he concept of private life is a broad term not susceptible to exhaustive definition. It covers the physical and psychological integrity of a person. It can sometimes embrace aspects of an individuals physical and social identity. Elements such as, for example, gender identification, name and sexual orientation and sexual life fall within the personal sphere protected by article 8. Article 8 also protects a right to personal development, and the right to establish and develop relationships with other human beings and the outside world. Though no previous case has established as such any right to self determination as being contained in article 8 of the Convention, the Court considers that the notion of personal autonomy is an important principle underlying the interpretation of its guarantees. The ECtHR recognised that a persons autonomy could extend to the pursuit of activities which caused him or her harm. In para 62 it stated: The court would observe that the ability to conduct ones life in a manner of ones own choosing may also include the opportunity to pursue activities perceived to be of a physically or morally harmful or dangerous nature for the individual concerned. The idea of personal autonomy can also be seen in von Hannover v Germany (2004) 40 EHRR 1, para 50 (in the context of press intrusion into private life) and Munjaz v United Kingdom (above), para 78 (in the context of solitary confinement). Also relevant to this appeal is the protection which article 8 gives to the home as Mr McCann submits that as a result of his long term detention the State Hospital had become his home. In article 8 home is an autonomous concept. In Giacomelli v Italy (2007) 45 EHRR 38 (a case concerning environmental pollution) the ECtHR stated that a home will usually be the place, the physically defined area, where private and family life develops. It continued: The individual has a right to respect for his home, meaning not just the right to the actual physical area, but also to the quiet enjoyment of that area (para 76). Similarly, in Harrow London Borough Council v Qazi [2004] 1 AC 983 Lord Hope cited the opinion of Sir Gerald Fitzmaurice on the scope of article 8 in Marckx v Belgium (1979) 2 EHRR 330 and stated (para 50): The emphasis is on the persons home as a place where he is entitled to be free from arbitrary interference by the public authorities. This court is not bound by the judgments of the ECtHR; section 2 of the Human Rights Act 1998 requires us to do no more than to take account of such decisions. But in Countryside Alliance (above) the majority of the speeches in the House of Lords appear to have accepted the relevance of the concept of personal autonomy at least in certain contexts: Lord Bingham (para 10), Lord Hope (para 54), and Lord Brown (paras 138 139). The concept is also consistent with Lady Hales identification of one of the values reflected in article 8, being the inviolability of the personal and psychological space within which each individual develops his or her own sense of self and relationships with other people (para 116). She continued in the same paragraph by stating that article 8 protected that private space but opined that that falls some way short of protecting everything they might want to do even in that private space. Lord Brown (para 139) expressed the wish that jurisprudence would extend to encompass a broad philosophy of live and let live, allowing people to engage in whatever pursuits they wish that were central to their well being unless there was a good and sufficient reason to forbid them. But he also recognised that article 8 had not been interpreted as going that far. So how should one apply article 8 to a detained patient in the State Hospital? Does a detained patient such as Mr McCann have a private space, in which his wish to smoke is protected? The majority of the Second Division held he did not and reasoned as follows (paras 89 93). First, they said that a detainees right to respect for private life extended only to protection against interference beyond the concomitants of lawful detention. They then considered that institutions such as the State Hospital would be unmanageable without some restriction of the scope of the right to respect for private life of detained persons to that beyond the ordinary restrictions pursuant to lawful detention. Thirdly, they agreed with the majority of the Court of Appeal in the Rampton Hospital case (para 32 above) that a comprehensive smoking ban in such an institution did not have a sufficiently adverse effect on a persons physical or psychological integrity or his right to personal development as to merit protection. I respectfully disagree with the third stage of that analysis. Lawful deprivation of liberty involving long term detention in an institution inevitably curtails a detainees private sphere and constraints which are a necessary part of the detention would not fall within the ambit of article 8. But it seems to me that the degree of constraint which lawful detention imposes on the detained patients private sphere works in the opposite direction from the third stage of that analysis because it requires the court assiduously to uphold the right to respect for what little remains of that sphere. My starting point is the recognition in our domestic law that a person who is compulsorily detained by the state enjoys all the civil rights which are not taken away expressly or by implication as a result of that detention. The House of Lords so held in the English case of Raymond v Honey [1983] 1 AC 1, 10 per Lord Wilberforce, and both Lord Glennie and the First Division of the Inner House have affirmed the same principle in Scots law: Potter v Scottish Prison Service 2007 SLT 1019, para 25. The Grand Chamber of the ECtHR has taken a similar approach in relation to fundamental rights in Hirst v United Kingdom (No 2) (2006) 42 EHRR 41, in which it stated (para 69): prisoners in general continue to enjoy all the fundamental rights and freedoms guaranteed under the Convention save for the right to liberty, where lawfully imposed detention expressly falls within the scope of article 5 of the Convention. See also Munjaz v United Kingdom (above) para 79, in which the Fourth Section repeated this analysis and added: Any restriction on those rights must be justified in each individual case. The detained patients ability to conduct his or her life as he or she chooses is inevitably severely curtailed by compulsory detention in the State Hospital. For sound therapeutic reasons, many things which are available to a person at liberty in his or her private home cannot be made available to a detained patient. The circumstances of therapeutic detention may require the control of things which the detained patient may possess, including things that might be used as weapons against others or to self harm; the possession and consumption of alcohol may be prohibited; and many social activities, such as eating meals in the company of other patients, may have to be conducted only under close supervision. Routine and random searches may be an incident of therapeutic detention and treatment: the Court of Appeal treated them as such in R v Broadmoor Hospital Authority, Ex p S [1998] COD 199. In these ways and others, the loss of liberty entailed in therapeutic detention restricts the scope of the private sphere and therefore the protections available under article 8, as the Second Division held. Further, I agree with Lady Hale (in Countryside Alliance para 116) that article 8 does not protect everything that people may want to do in their private space. But where therapeutic detention has severely curtailed a detained patients private space in the institution in which he or she must reside, the limited areas in which a patient has freedom of choice become all the more precious to him or her and more readily form a core part of his or her life, as Lord Rodger used the phrase in Countryside Alliance (paras 95 106). In L v Board of State Hospital (above) Lady Dorrian stated (para 26) that for people detained in the State Hospital the freedom to receive food parcels from visitors and to make purchases from an external source are some of the few areas in which they may exercise some sort of personal autonomy or choice. She concluded that article 8 was engaged by an interference with that choice and that such interference had to be justified. Because restrictions on food parcels and external purchases of food are not inherent in the loss of liberty occasioned by therapeutic detention, I agree; and I see an analogy in the comprehensive smoking ban. It is not necessary to decide whether a comprehensive ban on smoking by people at liberty, or at least a ban outside their homes, would so interfere with their private lives as to require justification under article 8. Such people can exercise personal autonomy in many other ways. But there is a need to protect the residual autonomy of a person who has been subjected to long term therapeutic detention by requiring this further intrusion into his private life to be justified. In this regard I agree with Keene LJ in his dissenting judgment in the Rampton Hospital case (para 101) and Lady Paton in this case (para 106). I do not consider the addictive nature of smoking, which Lady Paton emphasises, is a decisive factor, not least because it militates against the persons autonomy. But it may be said to reinforce the role that smoking can play in some peoples lives. I also do not find it necessary to decide whether the State Hospital falls to be treated as Mr McCanns home for the purposes of article 8. If it were, my analysis would essentially be the same as the one which I have adopted based on the concept of personal autonomy. I therefore conclude that a comprehensive ban on smoking is within the ambit of article 8 of the ECHR, that it interferes with Mr McCanns right to respect for his private life and therefore that the Board must justify it. Justification: As is well known, justification under article 8(2) requires that the measure which interferes with the right (i) is in accordance with the law, (ii) pursues a legitimate objective, (iii) is rationally connected to the legitimate objective and (iv) is proportionate. I have already discussed the requirement that the interference be in accordance with the law and have concluded that the part of the impugned decision relating to the prohibition of possession, searches for and confiscation of tobacco products, did not meet that requirement because of the failure of the Board to address the requirements of section 1(4), and the regulations made under section 286, of the 2003 Act. But because the Board may seek to introduce such measures in accordance with the 2003 Act, I address the other tests. I address first the tests of legitimate objective and rational connection. In the Rampton Hospital case both the Divisional Court and the Court of Appeal cited public documents which recorded (a) that in 1998 it was estimated that smoking in the United Kingdom caused each year 46,500 deaths from cancer and 40,300 deaths from circulatory diseases, (b) that those who smoke regularly and then die of smoking related disease lose on average 16 years from their life expectancy when compared with non smokers and (c) that in 2005 second hand smoking caused at least 12,000 deaths a year in the United Kingdom. Having regard to the adverse effects that smoking can have on the health of smokers and others exposed to tobacco smoke, I have no difficulty in agreeing with the Second Division that the comprehensive smoking ban pursued the legitimate aim of the protection of health which is recognised in article 8(2). The aim is to protect the detained patient from the health risks of his smoking and other people from the health risks of second hand smoke. The comprehensive smoking ban clearly has a rational connection with the pursuit of that desirable goal. Finally, in order to be necessary in a democratic society in the interests of public health the interference must be proportionate. Again, as is well known, the tests for proportionality (in addition to the tests of the importance of the legitimate objective and the rational connection of the measure to that objective) are (i) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective and (ii) whether a fair balance has been struck between the rights of the individual and the interests of the community having regard to (a) the severity of the impact of the measure on the individuals rights and (b) the contribution of the measure to the achievement of the objective: Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 20 per Lord Sumption, para 74 per Lord Reed. No challenge is made to the ban on smoking indoors, where the danger of exposing other patients and supervising staff in designated smoking areas is obvious. The minute (para 12 above) and the document discussed in para 7 above both record that the impugned decision which led to the comprehensive ban resulted from the operational difficulties which the Board faced in operating the partial ban which allowed supervised smoking within the hospital grounds. Those problems threatened to compromise the health of the supervising staff, the welfare of the patients and the security of both. Mr McCann did not challenge the account of events in those documents, which, in my view, this court must treat as the accepted factual background to the impugned decision. Faced with such difficulties, I am satisfied that the Board did not act disproportionately in imposing the comprehensive smoking ban when it did. If there is to be a comprehensive smoking ban, it is likely that the managers of the Board will need to prohibit the possession of tobacco products and also have powers to search for and confiscate such products. As counsel for Mr McCann does not dispute that the introduction of such measures in accordance with the 2003 Act, the Code of Practice, and the 2005 Regulations would comply with the ECHR, it is not necessary further to consider the justification of those measures if they are introduced in that way. Accordingly, but for the illegality under our domestic law of the prohibition of possession of tobacco products, the searches and the confiscation of tobacco products which are part of the impugned decision, I would have held that the decision was not contrary to Mr McCanns article 8 right to respect for his private life. Article 14 of the ECHR Because the impugned decision fell within the ambit of article 8, it is necessary to address briefly the challenge under article 14 of the ECHR that the Board has treated Mr McCann in a discriminatory manner which cannot be justified. I am satisfied that this challenge fails for three principal reasons. First, the Scottish Government is committed to extending the ban on smoking to all NHS facilities over time and also to extending the ban to prisons. As a result, secondly, the differences in treatment between detained patients in the State Hospital on the one hand and patients in other NHS facilities or prisoners detained in prison are a matter of timing rather than policy. The circumstances of individual public institutions will vary and each enjoys an area of discretion on how and at what speed it implements its anti smoking policy. Thirdly, the explanation for the timing of the impugned decision is the documented difficulties of the partial smoking ban in the State Hospital which justified the introduction of the comprehensive smoking ban when it occurred. It is therefore unnecessary to consider the differences between the circumstances of Mr McCann on the one hand and the circumstances of these groups of people on the other. Further, I am not persuaded that there is any unjustified discrimination when detained patients are compared with the general public at liberty. The circumstances of such members of the public are radically different as (i) they have opportunities to smoke in places which do not expose others to second hand smoke, and (ii) the public authorities do not have any legal duty of care to create a safe therapeutic environment for them or to protect their own staff from injury to health when they are in the public sphere and not acting in the course of their employment. The documents to which I referred in paras 7 and 12 above reveal the problems of allowing smoking out of doors in a secure hospital. Such problems do not occur among the general public. The differences between the anti smoking policies applied to them and the comprehensive ban in the State Hospital can readily be justified. It may be that the effects of smoking on patients with certain mental illnesses provide a further ground of distinction between mental health patients and those with whom Mr McCann wishes to be compared. The Board referred in its written case to the strong association between poor mental health and smoking (which was also discussed in the evidential findings in the Rampton Hospital case) and there was a suggestion in the documents which suggested that smoking reduced the efficacy of clozapine, a drug for treating schizophrenia. This was not explored in any detail in this appeal but I do not need to rely on it in reaching my view. The article 14 challenge therefore fails. Conclusion I would allow the appeal but only to the extent that the prohibition on having tobacco products and the search and confiscation regime in the impugned decision are unlawful under our domestic law because they do not comply with the 2003 Act and the 2005 Regulations (paras 40 and 41 above). In consequence, the impugned decision infringes Mr McCanns article 8 rights but only because the decision is not in accordance with our domestic law (para 62 above). Otherwise I would dismiss the appeal. I would invite parties to provide written submissions on the appropriate form of order within 21 days of the handing down of this judgment.

UK-Abs

Mr McCann suffers from a mental disorder and was detained in the State Hospital at Carstairs following his conviction for a number of offences. On 5 December 2011 the State Hospital Board for Scotland (the Board) implemented a comprehensive smoking ban in the State Hospital. A partial ban had previously been implemented allowing smoking in the grounds but this had created operational difficulties. The comprehensive ban prohibited a detained patient from smoking or possessing tobacco products in the State Hospital, including in its grounds, and from smoking on home visits. The ban also prohibited visitors from bringing tobacco products into the hospital. Procedures were established to search both patients and visitors for such products. Mr McCanns challenge relates only to (a) the ban on smoking in the grounds and on home visits, which, by creating a comprehensive ban, prevents detainees from smoking anywhere and (b) the ban on possession and powers of search and confiscation. Mr McCann challenges the legality of the comprehensive smoking ban on three grounds. First, he argues the decision to implement the smoking ban was unlawful as it did not adhere to the principles in section 1 of the Mental Health (Care and Treatment) (Scotland) Act 2003 (the 2003 Act) or comply with the requirements of the Mental Health (Safety and Security) (Scotland) Regulations 2005 (the 2005 Regulations). Section 1 of the 2003 Act contains a statement of principles for the discharge of functions under that Act, which include an obligation to minimise restrictions on the freedom of the patient. The 2005 Regulations were made under section 286 of the 2003 Act which is headed Safety and security in hospitals. The 2005 Regulations authorise the placing of restrictions on items that specified patients and their visitors may have in hospital and the removal from them of prohibited items. They require that the specified patient must be informed when any measure is to be applied to them and that records are kept of any searches. The Board contends that in deciding upon and implementing the smoking ban and measures to enforce that ban, it acted solely under its power of management in section 102(4) of the National Health Service (Scotland) Act 1978 (the 1978 Act). As such, it submits that it was not required to comply with the 2003 Act section 1 principles. Secondly, Mr McCann submits that the decision unjustifiably interfered with his right to respect for his private life under Article 8 of the European Convention on Human Rights (ECHR). Thirdly, he argues that the Board, by implementing the smoking ban, treated him in a discriminatory manner contrary to Article 14 ECHR when taken with Article 8 EHCR. He submits that the discriminatory treatment cannot be objectively justified when compared with (i) people in prison, (ii) patients in other hospitals (whether detained or not) or (iii) members of the public at liberty. The Supreme Court unanimously allows Mr McCanns appeal but only to the extent that the part of the impugned decision, which relates to the prohibition from possession of tobacco products and the powers of search and confiscation, does not comply with the 2003 Act and 2005 Regulations. Lord Hodge gives the lead judgment, with which the other Justices agree. Mental Health (Care and Treatment) (Scotland) Act 2003 The Board is correct that the comprehensive ban, viewed on its own, involves the exercise of a power of management under the 1978 Act. However, the supporting prohibition from possession of tobacco products and the power to search for and confiscate such products fall within the scope of the 2003 Act and the 2005 Regulations [34]. The 2005 Regulations do not set limits on the items which may be prohibited or searched for. The focus of section 286 and the 2005 Regulations is on the regulation of activities which impinge on the autonomy of individuals [38]. The devising of such policies which concern the detained patients autonomy and the carrying out of such measures have thus become functions under the 2003 Act and the section 1 principles apply to such measures in so far as they are relevant [38 39]. One relevant principle is the obligation in section 1(4) to discharge the function in a manner that involves the minimum restriction on the freedom of the patient that is necessary in the circumstances [39]. In instituting the comprehensive smoking ban there was no consideration of this principle by the Board nor was there compliance with the obligations to inform and record in the 2005 Regulations [40]. As a result, the prohibition on having tobacco products and the related powers to search and confiscate are illegal and fall to be annulled [41]. Article 8 Mr McCanns Article 8 right to privacy has been infringed [43]. The smoking ban is within the ambit of Article 8 [57]. Where therapeutic detention has severely curtailed a detained patients private space, there is a need to protect this residual autonomy by requiring further intrusion into his private life to be justified [55]. The decision is not in accordance with law as the Board failed to address the requirements of section 1(4) of the 2003 Act and the 2005 Regulations in relation to the part of the ban relating to the prohibition of possession, searches and confiscation of tobacco products [58]. But for this illegality, the decision would not have been contrary to Article 8 [62]. The smoking ban pursued the legitimate aim of the protection of public health and was rationally connected to that aim [59]. Faced with the difficulties of implementing a partial ban, the Board did not act disproportionately in imposing the comprehensive smoking ban when it did [60]. Article 14 The Article 14 challenge fails. The differences in treatment between detained patients in the State Hospital and patients in other NHS facilities or prisoners are a matter of timing rather than policy as the Scottish Government has committed to extending the ban. The earlier implementation of the comprehensive smoking ban in the State Hospital is due to the difficulties faced by the State Hospital in operating the partial ban. It is therefore unnecessary to consider the differences between the circumstances of Mr McCann and those of the other groups [64]. Further, there is no unjustified discrimination when detained patients are compared with the general public at liberty as the circumstances of members of the public are radically different [65].

This appeal and cross appeal raise a number of points of insolvency law, which arise out of the collapse of the Lehman Brothers group of companies (the Group) in 2008. Introductory The basic facts The Groups main trading company in Europe was Lehman Brothers International (Europe) (LBIE), which is an unlimited company. Its share capital consists of a number of ordinary shares as well as a number of redeemable shares. All these shares, except for one ordinary share, are held by LB Holdings Intermediate 2 Ltd (LBHI2), whose sole function was to act as LBIEs immediate holding company. The remaining ordinary share is held by Lehman Brothers Ltd (LBL), which was the service company for the Groups operations in the UK, Europe and Middle East. LBIE and LBL have been in administration since September 2008, and LBHI2 has been in administration since January 2009. The purpose of the administrations of these companies has been the realisation of their respective assets to best advantage, rather than the preservation of the companies as going concerns. Contrary to many peoples expectations when LBIE went into administration, it now appears that it is able to repay all its external creditors in full. Under the provisions of the Insolvency Act 1986 as amended (the 1986 Act), an administrator of a company is permitted to make distributions to creditors of the company. Once an administrator gives notice of an intention to make a distribution, the administration is commonly referred to as a distributing administration. Since 2 December 2009, LBIE has been in distributing administration, but LBHI2 and LBL have not been. In November 2012, the joint administrators of LBIE declared and paid a first interim dividend to LBIEs unsecured creditors of 25.2 pence in the pound, totalling some 1.611bn. Lehman Brothers Holdings, Inc (LBHI) is the ultimate parent of the Group. In September 2008, it began Chapter 11 bankruptcy proceedings in the United States Bankruptcy Court, and it emerged from those proceedings in March 2012. LBHI is an indirect creditor of many companies in the Group, and its primary interest relates to LBHI2s assets, including its right to recover subordinated loans made to LBIE and other issues relating to those subordinated loans. The LBIE administrators received proofs of debt from various unsecured creditors including LBL and LBHI2. LBLs initial proof was for 363m, and LBHI2 submitted a proof for an unsecured claim of around 1.254bn in respect of sums advanced to LBIE under three subordinated debt agreements made in November 2006 (together with a separate unsecured claim of around 38m). The LBL administrators received proofs from LBHI2 in the sum of 257m, and from LBIE for 10.4bn. The proof from LBIE included 10bn, which was the LBIE administrators estimate of LBLs contingent liability to LBIE as a contributory under section 74 of the 1986 Act. This claim led to LBL seeking leave to amend its proof in LBIEs administration from 363m to 10.934bn. It is also relevant to mention that some of the proofs submitted to LBIEs administrators were in respect of debts denominated in foreign currencies. In February 2013, the administrators of LBIE, of LBL and of LBHI2 issued proceedings seeking the determination of the court on a number of questions arising out of the administrations. On 14 March 2014, David Richards J delivered a judgment (reported at [2015] Ch 1) dealing with those questions, and he subsequently made consequential declarations, which were set out in paras (i) to (x) of an order. The declarations in paras (i) to (ix) were challenged on appeal or cross appeal, and the Court of Appeal (Moore Bick, Lewison and Briggs LJJ) upheld most, but varied some, of them in a decision which is reported at [2016] Ch 50. The order made by David Richards J is set out in an appendix to the judgment of the Court of Appeal, and the contents of paras (i) to (ix) have now been the subject of argument in this Court. It is sensible to address them in the same order as they were discussed in the judgments in the Court of Appeal. Before turning to the issues, however, it is right to set out the principally relevant legislative provisions. It is also right to pay tribute to the well expressed and illuminating judgments below, which helped to ensure that the arguments were developed in this Court in a disciplined and clear way. Hereafter, unless the contrary is stated, all references to sections and Schedules are to sections of and Schedules to the 1986 Act, and all references to rules are to those in the Insolvency Rules 1986 (SI 1986/1925) as amended (the 1986 Rules). (It is right to add that the 1986 Act was preceded by the Insolvency Act 1985 and the Companies Act 1985 which between them contained the great majority of the provisions now to be found in the 1986 Act. It was decided to repeal those 1985 statutes and consolidate all insolvency law in the 1986 legislation. For present purposes, the changes effected in 1985 can be elided with those in 1986, and accordingly I shall disregard the 1985 Act when describing the changes to insolvency law effected in the 1980s.) The 1986 Act and the 1986 Rules: introductory The 1986 Act and the 1986 Rules (the 1986 legislation) were introduced following the publication of the 1982 Report of the Review Committee on Insolvency Law and Practice (Cmnd 8558) (the Cork Report), and a 1984 Government White Paper, A Revised Framework for Insolvency Law (Cmnd 9175). Para 1 of the White Paper acknowledged the thorough analysis contained in the Cork Report, which is accurately characterised by Sealy and Milman in their Annotated Guide to the Insolvency Legislation, 19th ed (2016), vol 1, p 1, as [t]he main inspiration for the reforms contained in the 1986 legislation. Para 2 of the White Paper described the objectives of the proposed new legislation, which included establish[ing] effective and straightforward procedures for dealing with and settling the affairs of corporate and personal insolvents in the interests of their creditors. In para 3 of the White Paper it was stated that the law of corporate insolvency had altered very little over the past century, and that there was an urgent need to reform, update and strengthen the insolvency legislation so that the objectives set out in para 2 can be met. Para 4 set out six objectives for the proposed changes which became the 1986 Act and the 1986 Rules. The third of those objectives was To simplify wherever possible corporate and personal insolvency procedures. And the fifth included the introduction of a new insolvency mechanism, known as the administrator procedure, designed to facilitate the rehabilitation and re organisation of companies faced by insolvency but where there are reasonable prospects for a return to profitability. The 1986 legislation consolidated in a single statute and set of rules the legislative provisions regarding both personal insolvency and corporate insolvency. Until then, they had been dealt with in separate legislation most recently the Bankruptcy Act 1914 (the 1914 Act) and the Bankruptcy Rules 1952 (SI 1952/2113), which covered personal insolvency, and the Companies Act 1948 (the 1948 Act) and the Companies (Winding Up) Rules 1949 (SI 1949/330) (the 1949 Rules), which applied to corporate insolvency. Nonetheless, the 1986 legislation contains almost entirely separate regimes for personal insolvency and corporate insolvency. Thus, in the 1986 Act, sections 1 to 251 deal with company insolvency, sections 251A to 385 with insolvency of individuals, and the remaining sections, 386 to 444, while applicable to both types of insolvency, are concerned with matters such as insolvency practitioners and subordinate legislation. And this is reflected in the 1986 Rules: Parts 1 to 4 are concerned with company insolvency, Parts 5 and 6 deal with insolvency of individuals, and Parts 7 to 13 are of general application, being concerned with court procedures, notices, meetings and a few common definitions. In many ways, there was greater overlap between personal and corporate insolvency in the preceding legislative regimes, because section 317 of the 1948 Act provided that the principles applicable in bankruptcy with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities applied [i]n the winding up of an insolvent company. As anticipated in the White Paper, the 1986 legislation represents a comprehensive overhaul of the insolvency legislation, adding new procedures and new rules and rewriting many of the established procedures and rules. Most, indeed probably all, fundamental principles apply just as they always have done the pari passu principle is an obvious example. However, when it comes to less fundamental procedures and rules, it cannot be assumed that judicial decisions, even at the highest level, relating to previous insolvency legislation necessarily hold good in relation to the 1986 legislation. Where the wording of a provision in the 1986 legislation has not changed from that of a provision in previous legislation, then, at least prima facie, it may normally be assumed that the effect of the provision was intended to be unaltered, but where the language has been significantly changed, such an assumption may easily lead to error. Further, despite its lengthy and detailed provisions, the 1986 legislation does not constitute a complete insolvency code. Certain long established Judge made rules, albeit developed at a time when the insolvency legislation was far less detailed, indeed by modern standards sometimes positively exiguous, nonetheless survive. Recently invoked examples include the anti deprivation principle (see Perpetual Trustee Co Ltd v BNY Corporate Trustee Services Ltd [2012] 1 AC 383), the rule against double proof (discussed in In re Kaupthing Singer & Friedlander Ltd (in administration) (No 2) [2012] 1 AC 804, paras 8 to 12), the rule in Cherry v Boultbee (1839) 4 My & Cr 442 (also discussed in Kaupthing (No 2) [2012] 1 AC 804, paras 13 to 20), and certain rules of fairness (alluded to in In re Nortel GmbH [2014] AC 209, para 122). Provided that a Judge made rule is well established, consistent with the terms and underlying principles of current legislative provisions, and reasonably necessary to achieve justice, it continues to apply. And, as Judge made rules are ultimately part of the common law, there is no reason in principle why they cannot be developed, or indeed why new rules cannot be formulated. However, particularly in the light of the full and detailed nature of the current insolvency legislation and the need for certainty, any judge should think long and hard before extending or adapting an existing rule, and, even more, before formulating a new rule. One of the reforms introduced by the 1986 legislation and foreshadowed by the White Paper is the administration procedure. It was introduced as part of the so called rescue culture which has been described as a philosophy of reorganising companies so as to restore them to profitable trading and enable them to avoid liquidation Goode, Principles of Corporate Insolvency Law, 4th ed (2011), para 11 03. The procedure was less successful than had been hoped. Accordingly, the provisions of the 1986 legislation relating to administration were substantially amended as a result of the Enterprise Act 2002 (the 2002 Act). Among the changes introduced by the 2002 Act were the conferring of a power on an administrator to make distributions to unsecured creditors and a greater flexibility of exit routes from administration. Schedule B1 to the 1986 Act contains provisions dealing with administration. Para 53 of that Schedule provides for a creditors meeting to approve the proposals of an administrator following his appointment. Paras 65 and 66 empower an administrator to make distributions to creditors, normally only with the prior consent of the court. Para 67 requires an administrator to take custody of the companys assets, and para 68 enables him to carry on the companys business in accordance with proposals approved under para 53. Para 69 states that [i]n exercising his functions under this Schedule the administrator of a company acts as its agent. Paras 76 to 86 of Schedule B1 provide for various routes by which the company can exit from administration. Paras 76 to 81 set out a number of different ways in which the company can, in effect, be restored to its pre administration status. Para 82 provides for a public interest winding up. Para 83 entitles an administrator to move the company from administration to creditors voluntary liquidation where, in summary terms, there are sufficient assets to pay the companys liabilities in full. And para 84 enables the company to pass straight from administration to dissolution, but only where it has no property which might permit a distribution to its creditors (a potentially narrower restriction, which should probably be construed widely). The provisions of the 1986 Rules governing distributing administrations were introduced by the Insolvency (Amendment) Rules 2003 (SI 2003/1730) (the 2003 Amendment Rules). In a distributing administration, as in a liquidation, the duty of the office holder, whether administrator or liquidator, is to gather in and realise the assets of the company and to use them to pay off the companys liabilities (see sections 107 and 143 in relation to liquidators and paragraphs 65 to 67 of Schedule B1 in relation to administrators). I summarised the priorities in relation to such payments by a liquidator or a distributing administrator in the following terms in In re Nortel GmbH [2014] AC 209, para 39: In a liquidation of a company and in an administration (where there is no question of trying to save the company or its business), the effect of insolvency legislation , as interpreted and extended by the courts, is that the order of priority for payment out of the companys assets is, in summary terms, as follows: (1) Fixed charge creditors; (2) Expenses of the insolvency proceedings; (3) Preferential creditors; (4) Floating charge creditors; (5) Unsecured provable debts; (6) Statutory interest; (7) Non provable liabilities; and (8) Shareholders. This description of what is known as the waterfall is a generalised summary of the distribution priorities in an insolvency. It was not intended to be treated as some sort of quasi statutory statement of immutable legal principle, and it would have been better if I had said so at the time. The centrally relevant provisions of the 1986 Rules I turn then to describe provisions of the 1986 Rules which apply to administrations, and which play a part in relation to the issues which have to be resolved on this appeal. Part 2 of the 1986 Rules is concerned with Administration Procedure, and Chapter 10 of that Part (Chapter 10 of Part 2), which includes rules 2.68 to 2.105, deals with Distributions to Creditors. The rules in Chapter 10 of Part 2 are very similar indeed to, and were no doubt based on, the rules concerned with proof of debts in a liquidation, which are to be found in Chapter 9 of Part 4 of the 1986 Rules. Rule 2.68(1) provides that Chapter 10 applies where the administrator makes, or proposes to make, a distribution to any class of creditors . Rule 2.69 provides that provable debts rank equally between themselves and are paid in full unless the assets are insufficient to meet them, in which case they abate in equal proportions between themselves. This embodies the fundamental principle of equality, which applies similarly to liquidations see rule 4.181. Rules 2.72 to 2.80 set out the machinery for proving debts, including the submission of a proof, its admission or rejection by the administrator and appeals against the administrators decision. Rule 2.72 (which is in very similar terms to rule 4.73, which applies in a liquidation) is headed Proving a debt, and it provides: (1) A person claiming to be a creditor of the company and wishing to recover his debt in whole or in part must (subject to any order of the court to the contrary) submit his claim in writing to the administrator. (2) A creditor who claims is referred to as proving for his debt and a document by which he seeks to establish his claim is his proof. The remaining paragraphs of this rule set out the machinery by which a debt should be proved. Rule 2.77 provides that a proof may be admitted for payment of a dividend in whole or in part, and rule 2.78 contains appeal procedures where a proof is refused or not admitted in its full amount. Rule 2.79 permits a proof to be withdrawn or varied by agreement with the administrator, and rule 2.80 enables the court to expunge a proof or reduce the amount claimed on the application of the administrator where he thinks the proof has been improperly admitted, or ought to be reduced or on the application of the creditor, if the administrator declines to interfere in the matter. The equivalent provisions applicable in a liquidation are rules 4.82 to 4.85. Rules 2.81 to 2.94, 2.102, 2.103 and 2.105 are concerned with quantifying claims made in paying administrations. With one exception, namely rule 2.88 (whose equivalent is to be found in the 1986 Act rather than the 1986 Rules, as explained in para 28 below), these rules are very similar indeed in their language to (and were no doubt based on) rules 4.86 to 4.99, which relate to claims in liquidations. Rule 2.81 requires the administrator to estimate the value of any debt which, by reason of its being subject to a contingency or for any other reason, does not bear a certain value, and the rule goes on to provide that he may revise any estimate previously made by reference to any change of circumstances or to any information becoming available to him. He is also required to inform the creditor as to his estimate and any revision to it. (Rule 4.86 is the equivalent provision in liquidations.) Rule 2.83 entitles a secured creditor, who has realised his security, to prove for such part of his debt which remains unsatisfied. And rule 2.90 entitles a secured creditor who has proved for his debt on the basis of putting a value on his security to amend that value with the agreement of the administrator or the court. (Rules 4.88 and 4.95 have similar effect in liquidations.) Rule 2.85 provides for mutual credits and set off of debts as at the date that the administrator gives notice that he proposes to make a distribution, and such a notice is provided for in rule 2.95. Rule 2.85(3) read together with rule 2.85(2) provides that, as at the date on which an administrator gives notice of his intention to make a distribution, there should be a set off in respect of what is owing between the company and any [proving] creditor of the company in respect of mutual dealings between them. Mutual dealings are defined in rule 2.85(2) as mutual credits, mutual debts or other mutual dealings, subject to exceptions all of which relate to events which arise after the administration date. Rule 2.85(4) states that rule 2.85 applies, inter alia, to future, contingent or other quantifiable liabilities, and rules 2.81, 2.86, 2.88 and rule 2.105 apply for the purposes of rule 2.85. (Rule 4.90, which applies in liquidations, is in very similar terms to rule 2.85, save that the date by reference to which set off is to be effected is the liquidation date.) Rule 2.86 provides: (1) For the purpose of proving a debt incurred or payable in a currency other than sterling, the amount of the debt shall be converted into sterling at the official exchange rate prevailing on the date when the company entered administration or, if the administration was immediately preceded by a winding up, on the date that the company went into liquidation. Rule 2.86 is virtually identical in its terms to rule 4.91, which applies to proving a debt incurred or payable in a foreign currency in a liquidation. Rule 2.88 deals with interest. Rule 2.88(1) provides that Where a debt proved in the administration bears interest, that interest is provable as part of the debt except in so far as it is payable in respect of any period after the company entered administration. Para (1) was amended by the Insolvency (Amendment) Rules, 2005 (SI 2005/527) (the 2005 Amendment Rules) by adding the words or, if the administration was immediately preceded by a winding up, any period after the date that the company went into liquidation. Rule 2.88(7) states that: Any surplus remaining after payment of the debts proved shall, before being applied for any purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the company entered administration. Para (8) states that all interest so payable ranks equally, and para (9) provides that the rate of such interest is to be the higher of the judgment debt rate or the rate applicable to the debt apart from the administration. Virtually identical provisions to rule 2.88(7) to (9) are contained in section 189(2) to (4) which applies to post liquidation interest on debts proved in a liquidation. Section 189(2) plays a significant part in some of the arguments on this appeal, and it should be set out in full: Any surplus remaining after the payment of the debts proved in a winding up shall, before being applied for any other purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the company went into liquidation. Rule 2.89 permits a creditor whose debt is not yet due for payment to prove subject to rule 2.105. Rule 2.105 provides that, in the case of such a debt, [f]or the purpose of dividend (and no other purpose) the amount of the creditors admitted proof shall be reduced by applying [a specified] formula, which basically represents a discount for early payment, calculated by reference to the date of administration (or, if relevant, the date of any preceding liquidation). In practice this means that the debt is reduced by 5% for each year between the administration and the contractual due date. Similar provisions for future debts in liquidations are to be found in rules 4.94 and 11.13. Rule 2.95 provides that an administrator who is proposing to make a distribution should give 28 days notice of that fact. Rule 2.97 permits, indeed it enjoins, an administrator thereafter to declare the dividend to one or more classes of creditor. Rule 2.98 deals with notification, and rule 2.99 with payment. Rule 2.101 applies where the amount claimed by a creditor is increased after a dividend has been paid, and rule 2.102 applies where a creditor re values his security after a dividend has been declared. There are fairly similar rules for liquidations in Part 11 of the 1986 Rules. Reference should also be made to two rules which contain definitions applicable generally to the 1986 Rules. Rule 13.12(1) states that in relation to the winding up of a company, the word debt means: (a) any debt or liability to which the company is subject at the date on which it goes into liquidation; any debt or liability to which the company may become (b) subject after that date by reason of any obligation incurred before that date; and (c) any interest provable as mentioned in rule 4.93(1). Rule 13.12(4) defines liability as meaning [in] any provision of the [1986] Act or the Rules about winding up: a liability to pay money or moneys worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment, and any liability arising out of an obligation to make restitution. Rule 13.12(3) explains that a debt or liability for this purpose can be present or future, certain or contingent, fixed or liquidated, capable of being ascertained by fixed rules or as a matter of opinion. Rule 13.12(5) applies these definitions to a case where a company is in administration, so the references in these definitions to winding up and rule 4.93(1) must respectively be taken to be to administration and rule 2.88(1). Rule 12.3(1) provides: Subject as follows, in administration, winding up and bankruptcy, all claims by creditors are provable as debts against the company or, as the case may be, the bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages. There are certain specified exceptions to this definition, but rule 12.3(3) makes it clear that they are not exhaustive. However, as is clear from the strikingly wide words of rules 13.12(1) and (3) and 12.3(1), the statutory policy, which Briggs J rightly identified at first instance in In re Nortel GmbH [2011] Bus LR 766, paras 102 103, and which is supported by the Supreme Court in the same case at [2014] AC 209, paras 92 93, is that claims should, if at all possible, be admitted to proof rather than being excluded from proof. Nonetheless, some non provable liabilities, not specified in rule 12.3, still survive. The most obvious examples are claims which only arise after the date a company goes into administration or liquidation (see In re Nortel GmbH at [2014] AC 209, para 35), such as damages for personal injury in an accident which occurred after that date. The issues on this appeal The first issue on this appeal concerns the ranking in the waterfall summarised in para 17 above which can be claimed by LBHI2 in its capacity as holder of the three subordinated loans made to LBIE. The second issue arises from the fact that LBIEs creditors who have debts denominated in foreign currency, will be paid out on their proofs at the rate of exchange prevailing at the date LBIE went into administration (the administration date), and, in some cases, sterling depreciated on the foreign exchange markets between that date and the date of payment. Those foreign currency creditors contend that they are entitled to claim the shortfall. The third issue raises the question whether, if interest which should have been paid during an administration under rule 2.88(7) was not in fact so paid, it can nonetheless be claimed in a subsequent liquidation. The remaining four issues arise because LBIE is an unlimited company and therefore its members can be called upon to make contributions pursuant to section 74 of the 1986 Act to meet liabilities if LBIE is in liquidation. The fourth issue is whether such contributions can be sought in respect of liability for interest under rule 2.88(7) and for liabilities of LBIE which are not provable. The other three issues arise because LBHI2 and LBL are not only creditors of LBIE, but are also members of LBIE and liable to contribute as such. The fifth issue is whether LBIE can prove in the administrations of LBHI2 and of LBL in respect of those respective companies contingent liabilities to make contributions in LBIEs prospective liquidation. If they can, it is conceded that LBIE can set off its provable claims for contributions against the proofs lodged by LBHI2 and LBL in LBIEs administration. If LBIE cannot so prove, the sixth issue is whether LBIE can nonetheless exercise such a right of set off. The seventh issue, which only arises if LBIE loses on the fifth and sixth issues, is whether LBIE can nonetheless invoke the so called contributory rule which applies in a liquidation, namely that a person cannot recover as a creditor of a company in liquidation until he has discharged his liability as a contributory. I turn now to address these issues. The ranking of the subordinated debt Introductory As mentioned above, there were three subordinated loan agreements (the Loan Agreements) made by LBHI2 to LBIE, under which a substantial sum of money remains outstanding. As recorded in para (i) of the order which he made, David Richards J decided that the aggregate debt due under the Loan Agreements (the subordinated debt) was provable, but that it was subordinated to provable debts, statutory interest and non provable liabilities, all of which must be paid in full before LBHI2 is entitled to prove and require the LBIE administrators to admit such proof in respect of its claims under [the Loan]. The Court of Appeal upheld this order in so far as it decided that the subordinated debt was provable and subordinated to provable debts, statutory interest and non provable liabilities. However, they disagreed with the Judges view that LBHI2 was not entitled to prove until all other proving creditors had been paid in full. On this appeal, while accepting that the subordinated debt ranks behind other provable debts, the LBHI2 administrators argue that the courts below were wrong to hold that the subordinated debt ranked behind statutory interest or non provable liabilities. By contrast, the LBIE administrators contend that the Court of Appeal ought to have concluded that the Judge was right to hold that LBHI2 was not entitled to prove for the subordinated debt until all liabilities, including statutory interest and non provable liabilities, had been paid in full. The Loan Agreements were revolving credit facilities made under agreements which contained certain Variable Terms and certain Standard Terms. Clause 9 of the Variable Terms provided for repayment subject always to [clause] . 5 . of the Standard Terms. Clause 1 of the Standard Terms (clause 1) contained some definitions. Insolvency Officer meant any person duly appointed to administer and distribute [LBIEs] assets in the course of [its] Insolvency, and the term Insolvency extended to administration as well as liquidation. Liabilities were defined as all present and future sums, liabilities and obligations payable or owing by [LBIE] (whether actual or contingent, jointly or severally or otherwise howsoever), a wide definition. Excluded Liabilities were Liabilities which are expressed to be, and in the opinion of the Insolvency Officer of [LBIE], do, rank junior to the Subordinated Liabilities [defined in turn as liabilities under the Loan] in any Insolvency of [LBIE]. Senior Liabilities were all Liabilities except the Subordinated Liabilities and Excluded Liabilities. Clause 4 of the Standard Terms (clause 4) dealt with repayment, and it was expressed to be subject in all respects to clause 5. Clause 4(4) provided that in the event of certain defaults in repayment LBHI2 could, subject to giving prior notice, enforce payment by instituting proceedings for the Insolvency of [LBIE]. Clause 4(7) stated that: No remedy against [LBIE] other than as specifically provided by this [clause] 4 shall be available to [LBHI2] whether for the recovery of amounts owing under this Agreement or in respect of any breach by [LBIE] of any of its obligations under this Agreement. Clause 5 of the Standard Terms (clause 5) contained two sub clauses of relevance which provided as follows: (1) Notwithstanding the provisions of [clause] 4, the rights of [LBHI2] in respect of the Subordinated Liabilities are subordinated to the Senior Liabilities and accordingly payment of any amount (whether principal, interest or otherwise) of the Subordinated Liabilities is conditional upon (if an order has not been made or an effective (a) resolution passed for the Insolvency of [LBIE] ) [LBIE] being in compliance with not less than 120% of its Financial Resources Requirement immediately after payment by [LBIE] ; and [LBIE] being solvent at the time of, and (b) immediately after, the payment by [LBIE] and accordingly no such amount which would otherwise fall due for payment shall be payable except to the extent that [LBIE] could make such payment and still be solvent. (2) For the purposes of sub [clause] (1)(b) above, [LBIE] shall be solvent if it is able to pay its Liabilities (other than the Subordinated Liabilities) in full disregarding (a) obligations which are not payable or capable of being established or determined in the Insolvency of [LBIE], and (b) the Excluded Liabilities. Clause 7 of the Standard Terms (clause 7) included undertakings by LBHI2 not without the consent of the Financial Services Authority (now the Prudential Regulatory Authority) to: (d) attempt to obtain repayment of any of the Subordinated Liabilities otherwise than in accordance with the terms of this Agreement; (e) take or omit to take any action whereby the subordination of the Subordinated Liabilities or any part of them to the Senior Liabilities might be terminated, impaired or adversely affected. As explained above, the LBHI2 administrators contend that the subordinated debt ranks ahead of statutory interest and non provable liabilities (ie categories (6) and (7) in the waterfall set out in para 17 above). Their case in relation to non provable liabilities is that, although they are Liabilities within clause 1, they are not payable or capable of being established or determined in the Insolvency of [LBIE] within the meaning of clause 5(2)(a), and therefore their existence does not prevent repayment of the subordinated debt. So far as statutory interest is concerned, the LBHI2 administrators primary case is that it is not one of the Liabilities within clause 5(2)(a), because, although very widely defined, the term Liabilities in clause 1 is limited to obligations payable or owing by [LBIE], and statutory interest is payable and owing by LBIE pursuant to rule 2.88(7), which does not render its payment the responsibility of the company in administration. The LBHI2 administrators alternatively contend that, if statutory interest is nonetheless within Liabilities, it is excluded from clause 5(2)(a) for the same reason as non provable liabilities. I turn first to deal with statutory interest, and will then deal with non provable liabilities. Finally, I will discuss the question of proving for the subordinated debt. Subordination to statutory interest It is convenient to discuss this issue in relation to liquidations, although the analysis that follows in paras 47 to 55 below is equally applicable to administrations unsurprisingly, given that, as explained in para 28 above, rule 2.88(7), (8) and (9) are in effectively the same terms as section 189(2), (3) and (4) respectively. The effect of section 189 is that a company in liquidation ceases to be liable for contractual interest which falls due after it goes into liquidation, and instead, in the event of a surplus, there is a liability for statutory interest. LBHI2s first contention is that statutory interest is not payable in the Insolvency of LBIE within the meaning of clause 5(2)(a) ie in an insolvency process of LBIE, as the LBHI2 administrators put it in argument. As a matter of ordinary language, it is hard to see any satisfactory basis for this contention. It is clear, indeed it is common ground, that statutory interest is payable by a liquidator pursuant to the provisions of section 189, and it is in respect of interest on debts which have been indubitably proved and paid in the Insolvency. Briggs LJ rightly said in the Court of Appeal, at [2015] Ch 50, para 190, that payment of statutory interest is plainly a part of the winding up scheme, and that it is therefore not easy to see why statutory interest is not payable in the Insolvency. The LBHI2 administrators, however, argue that the expression obligations which are not payable in the Insolvency in clause 5(2)(a) effectively means obligations which are not capable of being the subject matter of a proof. That does not seem to me to accord with the natural meaning of the expression in the Insolvency. Further, I can see no good commercial reason to exclude statutory interest from the obligations which fall within clause 5(2)(a). Contractual interest on provable claims falling due before the administration date or liquidation date (ie the date on which the company concerned goes into administration or liquidation as the case may be) would undoubtedly be such an obligation, and it is hard to see any business sense in excluding interest which falls due after that date from the expression, bearing in mind the overall commercial purpose of the Loan. The fact that interest falling due after the liquidation date is treated somewhat differently in the insolvency legislation, and therefore in the waterfall, does not seem to me to be a good reason for treating it differently for the purposes of clause 5. Of course, clause 5 could have been expressed in a way which had such an effect, but my point is that given that, as drafted, it does not naturally read as having that effect, there is no commercial reason for rejecting its natural meaning. The LBHI2 administrators also argue that the need for consistency in the application of clause 5(2) supports its contended interpretation, because statutory interest would, as it were, be excluded from any solvency test if LBIE was not subject to insolvency proceedings. I accept that factual premise, but I do not accept that it assists the LBHI2 administrators argument. The fact that an expression has a single meaning self evidently does not prevent it from producing different outcomes in different circumstances. There are inevitable and often substantial differences between a company which is in insolvency proceedings and a company which is not. The conclusion reached by the courts below did not involve giving a different meaning to clause 5(2) when applied to a company in insolvency proceedings from that which it would have when applied to a company not in such proceedings. If LBIE, not being in such proceedings, had failed to pay interest on a debt due, its liability for interest would be an obligation; and it seems consistent with this that, if LBIE is in insolvency proceedings, any interest payable on a sum due until payment is also an obligation. Nor do I consider that the LBHI2 administrators derive any assistance from the fact that Insolvency includes a foreign insolvency. The second contention raised by the LBHI2 administrators is that any statutory interest is not payable or owing by [LBIE] within the definition of Liabilities in clause 1. Statutory interest cannot give rise to a provable debt, as it is only payable out of a surplus after payment of proven claims in full, but that would not prevent it being within the expression Liabilities. More powerfully, the LBHI2 administrators argue that section 189(2) (which is set out in para 28 above) is worded in such a way as to make it clear that the liability to pay statutory interest is not an obligation on the part of the company concerned, and that any such obligation is imposed on the liquidator. The LBHI2 administrators point to the fact that, when a company is in liquidation, its assets are under the custody, control and management of the liquidator, who has statutory duties, including the duty to comply with section 189(2). It is true that the company in liquidation cannot be sued for the purpose of enforcing section 189, and indeed that no claim can be made against the company if section 189 is infringed, because the relevant claim should be made against the liquidator: see the discussion in In re HIH Casualty & General Insurance Ltd [2006] 2 All ER 671, paras 115 121. However, in my judgment, that does not mean that statutory interest is not payable or owing by the company concerned, at least so far as the meaning of the contractual definition of Liabilities in clause 1 is concerned. Section 189(2) effectively confirms that interest, which would, in the absence of the liquidation, normally be expected to be contractually payable by the company from the liquidation date until repayment of the principal, is payable in the liquidation, but only if there is a surplus. Possibly because the effect of a liquidation is thought to be like that of a judgment in that it stops contractual interest running, or possibly as compensation for such interest ranking below unsecured provable debts, section 189(4) gives a creditor the option of claiming such interest at the judgment debt rate rather than the contractual rate. Given that the creditor is owed the debt until the date of repayment, and given that the company would normally expect to pay interest on the debt to the creditor until that date, it would, as mentioned in paras 49 and 50 above, be surprising if the liability for this interest was not treated as that of the company. Further, the LBHI2 administrators case proves too much. If payment of interest pursuant to section 189(2) is not treated as payable and owing by the company, because it is payable and owing by the liquidator, then it would appear to follow that even provable debts are not payable and owing by a company in a winding up. As Millett LJ explained in Mitchell v Carter, In re Buckingham International Ltd [1997] 1 BCLC 673, 684, the making of a winding up order divests the company of the beneficial ownership of its assets, and those assets become subject to a statutory scheme for distribution among the creditors and members, who have the right to have them administered by the liquidator in accordance with the statutory scheme. When a company goes into liquidation and a creditor proves in respect of a debt, it seems to me that the logic of the case advanced by the LBHI2 administrators would be that the debt is no longer payable and owing by the company: there is a proof which is payable and owing out of the assets got in by the liquidator. If, as it must be, that argument is rejected, it would be on the basis that a payment out of the assets of the company by the liquidator of a proof which statutorily replaces a debt of the company should be treated as satisfying a liability payable and owing by the company. If that is so, it seems to me very hard to justify a different conclusion in relation to payment of statutory interest by a liquidator under section 189. If payment of interest under section 189(2) involves paying a sum or meeting a liabilit[y] which is payable or owing by the company concerned within the meaning of clause 1, payment of interest by an administrator under rule 2.88(7) seems to me to be a fortiori. As Lewison LJ pointed out at [2016] Ch 50, para 45, when paying the interest, the administrator acts as agent of the company pursuant to paragraph 69 of Schedule B1, and, as in the case of a company in liquidation, legal title to the assets from which the interest is paid remains vested in the company. Accordingly, I consider that under the terms of the Loan Agreements statutory interest enjoys priority over the repayment of the subordinated debt. In any event, in the light of my conclusion in para 63 below as to the priorities as between the non provable liabilities and the subordinated debt, it seems to me that statutory interest must take priority over the subordinated debt as explained in paras 65 and 66 below. Subordination to non provable liabilities In the Court of Appeal at [2016] Ch 50, para 60, Lewison LJ accepted that a non provable liability was neither determined nor established in the Insolvency of [LBIE]. However, he said that, as a liquidators duties continue until the moment comes to make a distribution to members [and] non provable liabilities rank higher than members, the liquidator must pay those claims before making a distribution to members, and accordingly those claims are payable in the Insolvency. Moore Bick and Briggs LJJ not only agreed that non provable liabilities were payable, but also considered that they were established or determined, in the Insolvency of LBIE. In my judgment, a liquidator who meets a non provable liability of the company is making a payment in the Insolvency, in the sense in which those words are used in clause 5(2)(a). It is true that there is no express reference to non provable liabilities, and therefore inevitably no mention of any duty to meet such liabilities, in the 1986 legislation. However, section 107 states that, in a voluntary liquidation, the liquidator must apply the companys assets in satisfaction of the companys liabilities prior to distributing them to members; and section 143 requires a liquidator in a winding up by the court to distribute the assets of the company to the companys creditors, and, if there is a surplus, to the persons entitled to it. As Briggs LJ pointed out at [2016] Ch 50, paras 185 to 189, these stipulations, properly interpreted, require a liquidator to meet the companys non provable liabilities out of any assets remaining after paying proven debts and statutory interest in full, before paying over any outstanding sum to the members of the company. In In re T & N Ltd [2006] 1 WLR 1728, paras 106 and 107, David Richards J explained that, although there was no express reference in the 1986 legislation to non provable liabilities, once all liabilities for which statutory provision has been made have been met by a liquidator, anyone with a non provable claim would no longer be precluded from enforcing it by proceedings. Accordingly, a liquidator will in practice have to pay off non statutory liabilities out of the companys remaining assets before distributing to shareholders any surplus remaining after payment of provable debts and statutory interest. Thus, while it is true that there is no provision in the 1986 legislation which specifically requires a liquidator to pay non provable liabilities, he is in practice obliged to pay off any such claims. Otherwise, if there would still be a surplus after paying off non provable liabilities in full, he could not distribute that remaining surplus to members, and, even if there would be no such remaining surplus, he would be in an impossible position, able neither to pay the money he held to satisfy the non provable liabilities nor to pay it over to members. Support for that conclusion may be found in a number of first instance cases, including Gooch v London Banking Association (1886) 32 Ch D 41, 48, per Pearson J, In re Fine Industrial Commodities Ltd [1956] Ch 256, 262, per Vaisey J, and In re Islington Metal & Plating Works Ltd [1984] 1 WLR 14, 23 24, per Harman J, and also in the Court of Appeal in In re Lines Bros Ltd (In Liquidation) [1983] Ch 1, 21, per Brightman LJ. At [2016] Ch 50, para 185, Briggs LJ said that, although the statutory scheme provides no detailed machinery for dealing with non provable liabilities, they have always been dealt with in accordance with Judge made principles. Given that the company concerned remains in liquidation, that the duties of the liquidator have not been completed (as payment to members of any final surplus is part of his express duty), and that, before they can be completed, he must in practice satisfy any non provable liability by making a payment, it appears to me that such a payment would be effected in the Insolvency even if sections 107 and 143 did not have the effect described in para 58 above. The proposition that a liquidator is liable to pay off non provable liabilities if there is a surplus after paying statutory interest is an example of a principle of Judge made law which survives despite the increasingly full codification of insolvency law. Not merely is there nothing inconsistent with the principle in the 1986 legislation: the principle is effectively necessarily implied by the provisions of the legislation, and those responsible for drafting the legislation must have been well aware of the long standing and consistent judicial approval of the principle. The same conclusion must apply to a distributing administration, although it is fair to say that an administrator would not necessarily face the quandary identified in para 60 above. Whether a person to whom a company in administration has a non provable liability would be a creditor for the purposes of paragraph 65 of Schedule B1 was not argued, and I prefer to leave the point open. It is unnecessary to decide the point because it seems to have been accepted in argument that, if non provable liabilities are payable in a liquidation, they are payable in the Insolvency of [LBIE] within the meaning of clause 5(2)(a). In my view, that is plainly right. Insolvency in clause 5(2)(a) would appear to be a generic expression. In any event, if an administrator cannot pay off non provable liabilities, then, where there is a surplus once he has paid off all proofs and all statutory interest, he would have to put the company into liquidation, whereupon the liquidator would have to pay off any non provable liabilities. Accordingly, in agreement with the Court of Appeal and the Judge, I consider that the non provable liabilities are payable in the Insolvency. It is unnecessary to resolve the small difference between Moore Bick and Briggs LJJ and Lewison LJ as to whether they are also established or determined in the insolvency. Conclusion as to priorities Looking at the issue from a broader, purposive, perspective, the conclusion that both statutory interest and non provable liabilities have priority over the subordinated debt seems to me to accord both with the eponymous nature of the subordinated debt, and with what a reasonable reader would expect from the general thrust of the terms of the Loan Agreements. The purpose of the parties to those agreements was to ensure that all those with claims on LBIE would have priority over the holders of the subordinated debt. In summary terms, the perception of the reasonable reader would be that the holders of the subordinated debt were to be at the end of the queue and, in the event of an Insolvency, at the bottom of the waterfall. As to the two categories over which LBHI2 claims priority, the only difference between non provable liabilities and statutory interest in the present connection is that statutory interest is specifically provided for in the 1986 legislation, whereas non provable liabilities are not. However, they are both categories of liabilities which have to be met after paying out proofs in full and before any balance can properly be used for another purpose (ie paid over to the members, or rendered subject to a liquidation). It would therefore be surprising if they were treated differently for the purposes of a provision such as clause 5(2)(a). Even if (contrary to my conclusion in para 56 above) statutory interest were not payable or owing by [LBIE], then, because non provable liabilities rank ahead of the subordinated debt, I would nonetheless have concluded that statutory interest should rank ahead of the subordinated debt. It would not, in my view, be legally possible for the subordinated debt to rank ahead of statutory interest but behind non provable liabilities. The legislative provisions (as interpreted and, arguably, as extended, by judges) make it clear that statutory interest must be paid off before non provable liabilities; and the terms of the Loan Agreements, as contractual documents, cannot vary the order in which statutory interest and non provable liabilities are payable in accordance with the waterfall (unless all those who would thereby be prejudiced have agreed, and there is no public policy reason against giving effect to the variation). Although it may at first sight appear to be equally arguable in terms of narrower logic that the subordinated debt should, in these circumstances, rank ahead of statutory interest and non provable liabilities, I do not consider that that could possibly be right. Once it is accepted that the terms of the Loan Agreements mean that the subordinated debt ranks behind non provable liabilities, it must necessarily follow that it ranks behind statutory interest. In agreement with all the parties on this appeal, I can see no objection to giving effect to a contractual agreement that, in the event of an insolvency, a contracting creditors claim will rank lower than it would otherwise do in the waterfall. James LJs dictum in Ex p McKay, Ex p Brown; In re Jeavons (1873) LR 8 Ch App 643, 647 that a person is not allowed, by stipulation with a creditor, to provide for a different distribution of his effects in the event of bankruptcy from that which the law provides is correct, albeit that it should be treated as subject to two qualifications. First, that it does not apply where the different distribution involves the creditor in question ranking lower in the waterfall than the law otherwise provides. Secondly, even if the different distribution involves him ranking higher than he otherwise would, the dictum would not apply if all those who are detrimentally affected by his promotion have agreed to it (unless there was some public policy reason not to accede to the different distribution). Finally, it is right to acknowledge that this conclusion involves giving little, if any, meaning to the expression in the Insolvency in clause 5(2)(a); the argument that it was intended to exclude claims which were unenforceable as a matter of general law (eg statute barred claims or foreign tax demands) is not very attractive. However, the fact that an expression in a sentence, especially in a very full document, does not, on analysis, have much, if any, effect if it is given its natural meaning is not, at least on its own, a very attractive or a very convincing reason for giving it an unnatural meaning. As Lord Hoffmann put it in Beaufort Developments (NI) Ltd v Gilbert Ash NI Ltd [1999] AC 266, 274, the argument from redundancy is seldom an entirely secure one. The fact is that even in legal documents (or, some might say, especially in legal documents) people often use superfluous words. And, if one has to choose between giving a phrase little meaning or an unnatural meaning, then, in the absence of a good reason to the contrary, the former option appears to me to be preferable. When can LBHI2 lodge a proof? The LBIE administrators contend that it would not be open to LBHI2 to lodge a proof in LBIEs administration for the subordinated debt until all Senior Liabilities have been paid in full. David Richards J accepted that contention, on the ground that clause 7(d) and/or (e) had the effect of precluding the lodging of a proof. The Court of Appeal disagreed, and considered that LBHI2 could prove for the subordinated debt at any time. However, they said that, until the Senior Liabilities had been paid in full, the subordinated debt would be a contingent debt, and because of the terms of the Loan, the correct value to ascribe to such a proof before the Senior Liabilities have all been paid would be nil, as nothing could be paid on the proof. If and when the Senior Liabilities were met in full, the Court of Appeal said that the proof in respect of the subordinated debt would be revalued pursuant to rule 2.79 see at [2016] Ch 50, para 41. In my judgment, David Richards Js view on this point is to be preferred. The Court of Appeals view appears to me to raise a logical problem. If, at the time such a proof was lodged, there was a chance that the Senior Liabilities would be paid in full, then, as with any other debt which rests on a contingency that may occur, a valuation of that proof would not be nil: it would have to be a figure which discounted the sum due, in order to allow for the contingency not occurring. However, if the proof is ascribed a valuation greater than nil, it would have to be paid out on any distribution made prior to the satisfaction in full of other proved claims (unless there was one payment of 100%). As David Richards J said, that would appear to fall foul of clause 7. Further, any dividend would be paid out before any statutory interest or any non provable liabilities had been paid off, which would be inconsistent with the conclusions I have just expressed. It therefore follows that, in my view, it would not be open to LBHI2 to lodge a proof in respect of the subordinated debt until the non provable liabilities have been paid in full, or at least until it is clear that, after meeting that proof in full and paying any statutory interest due on it, the non provable liabilities could be met in full. As soon as that has happened, there would, subject to what I say in the next paragraph, be nothing to stop LBHI2 lodging a late proof. On the face of it at any rate, it seems a little strange that a proof can be, or has to be, lodged for a debt which ranks after statutory interest (which can only be paid out of a surplus) and non provable liabilities. It may be that the proper analysis is that the subordinated debt is a non provable debt which ranks after all other non provable liabilities. It is unnecessary to decide that point, and, as it was not argued, I say no more about it. Accordingly, I would restore para (i) of the order made by David Richards J, because, although I agree with the Court of Appeal that he was right as to the ranking of the subordinated debt, I disagree with the Court of Appeal, and agree with the Judge, as to when the subordinated creditors can prove for the subordinated debt (assuming that they can prove). The currency conversion claims Introductory Many of LBIEs creditors were owed unsecured debts payable in foreign currencies. Rule 2.86 applies to such debts and it is set out in para 26 above. In effect, it provides that such debts are to be converted into sterling at the official rate on the administration date. As also explained in para 26 above, rule 4.91 is in effectively identical terms in relation to proving foreign currency debts in liquidations. Given that LBIE is able to pay all external creditors in full, it is rightly common ground that its foreign currency creditors must be paid in full on proved claims, which have to be converted into sterling by reference to the exchange rates prevailing at the date LBIE went into administration. However, in a case where sterling has depreciated against the relevant foreign currency between the administration date and the date (or dates) on which the proved debt is paid, CVI GVF (Lux) Master SARL (CVI), effectively representing the foreign currency creditors of LBIE, contends that there would be a contractual shortfall, which they should be able to recover as a non provable debt. The LBHI2 administrators, on the other hand, contend that there is no room for any such claim, on the ground that the foreign currency debts should be treated as satisfied when the proved claims based on those debts have been paid in full. CVI argues that there is a distinction between the rights of creditors inter se and the rights of creditors as against the company. The purpose of the regime contained in Chapter 10 of Part 2, runs the argument, is to ensure that the creditors of a company (or, to be more precise, those creditors falling in category (5) in the waterfall described in para 17 above) in a distributing administration are treated equally, and that distributions to them are effected in an orderly and equitable manner. In particular, it is said that, as between the creditors it is important to have a date by reference to which all debts and claims are valued, and that is the reason for rule 2.86. According to CVIs argument, at least in the absence of express words or necessary implication, the provisions of Chapter 10 of Part 2, and in particular of rule 2.86, do not impinge on the underlying contractual debt between the company and a creditor. If this is right, then so long as an administrator is unable to meet the creditors proofs in full, no question of an effective claim for the currency shortfall could arise as there would be no money to meet it, but, if there is money left over after all the creditors and all statutory interest have been paid in full, the foreign currency creditors should be entitled to claim for any shortfall. By contrast, the LBHI2 administrators contend that payment in full of a proof based on a foreign currency debt in accordance with rule 2.86 (as with rule 4.91) satisfies the underlying debt. That contention may be advanced on two bases. The primary, narrower, basis simply relies on the effect of rule 2.86, or rule 4.91, read in its context in the 1986 Rules. Thus, the primary contention is that rule 2.86 mandatorily converts the foreign currency debt into sterling, and renders the sterling equivalent of the debt provable in the administration, so that payment in full of the proved, sterling, sum, together with statutory interest, satisfies the claim of the creditor, who has no further claim against any surplus. The alternative, wider, basis for the LBHI2 administrators case is that payment in full of a proved debt, as assessed in accordance with any of the provisions of Part 10 of Chapter 2, or Chapter 9 of Part 4, of the 1986 Rules, satisfies the underlying contractual debt. The resolution of this alternative contention raises I propose to address this issue by considering first the narrower basis for the the rather fundamental question whether the payment in full of a proved debt, as assessed in accordance with the 1986 Rules, satisfies the underlying contractual debt or whether the underlying contractual debt survives the payment in full of the proved claim based upon it (except where the Rules expressly provide otherwise). David Richards J agreed with CVI on this point essentially on the wider of these two contentions, and that is reflected in paras (ii) and (iii) of the order which he made. The majority of the Court of Appeal (Moore Bick and Briggs LJJ) agreed with this conclusion and held that the foreign currency creditors could claim any contractual shortfall as a non provable liability. Lewison LJ dissented on this point and would have found for the LBHI2 administrators. LBHI2 administrators case, and then the wider basis. The narrower issue: foreign currency claims and rules 2.86 and 4.91 Where sterling has depreciated relative to the relevant currency since the company went into administration or liquidation, a foreign currency creditor who is paid out on his proof will have received less at the time of payment than he would have been contractually entitled to receive. Accordingly, at any rate at first sight, it is hard to quarrel with the argument that, if it turns out that there is a surplus, it would be commercially unjust to distribute it to the members without first making good the shortfall suffered by the foreign currency creditor. CVI relies on Miliangos v George Frank (Textiles) Ltd [1976] AC 443, where it was decided that a court could award damages in foreign currency. In that case, Lord Wilberforce said at p 465 that justice demands that the creditor should not suffer from fluctuations in the value of sterling, as [h]is contract has nothing to do with sterling: he has bargained for his own currency and only his own currency. Nonetheless, CVIs case seems to me to be at odds with the provisions of rule 2.86 read in the context of the 1986 Rules. Before turning to those Rules, it is appropriate to consider some judicial dicta and policy statements which preceded the 1986 legislation. As the courts below recognised, there are relevant judicial observations in two cases relating to foreign currency claims in liquidations under the insolvency code prevailing immediately before the 1986 legislation (namely the 1948 Act and the 1949 Rules). In In re Dynamics Corporation of America [1976] 1 WLR 757, Oliver J in passages at 764H 765A, 767E G and 786D F, quoted by Lewison LJ at [2016] Ch 50, para 66 68, said that he considered that the correct analysis was that the contractual debt was converted into the right to prove, and that the obligation of the company is to pay whatever is the sterling equivalent [of the foreign currency debt] at [the date of liquidation]. Although the issue in that case was not the same as that in this case, it appears to me that the observation just quoted was part of the ratio of the decision, and it accords with the LBHI2 administrators case. On the other hand, in In re Lines Bros Ltd (In Liquidation) [1983] Ch 1, 21F G, Brightman LJ said that he had not heard any convincing objection to the notion that, in a solvent liquidation, the liquidator should make good the shortfall before he pays anything to the shareholders. That was a tentative obiter observation, but it indicates at least a leaning in favour of what is CVIs case. The other members of the Court, Lawton and Oliver LJJ, do not seem to have directly addressed the point, although Lewison LJ may well be right in suggesting that Lawton LJ tended towards the contrary view, ie that adopted by Oliver J in Dynamics Corporation [1976] 1 WLR 757. It is in my opinion dangerous to rely on judicial dicta as to the effect of an earlier insolvency code, given that the 1986 legislation amounts to what Sealy and Milman op cit describe as including extensive and radical changes in the law and practice of bankruptcy and corporate insolvency, amounting virtually to the introduction of a completely new code. Accordingly, while the dicta in Dynamics Corporation [1976] 1 WLR 757 and Lines Brothers [1983] Ch 1 are in point, they are of limited value in themselves both because they are not mutually consistent and because they are based on different legislative provisions under a different code. However, they can be said to suggest that there are principled grounds for supporting either conclusion contended for in this case, and that there is no judicially established practice or understanding on the issue raised by the foreign currency claims. Turning to reports produced shortly before the 1986 legislation, in its 1981 Working Paper No 80 on Private International Law Foreign Money Matters, the Law Commission discussed in some detail the question of the date of conversion of foreign currency debts in insolvencies. The purpose of the Working Paper was to indicate the Law Commissions provisional conclusions on a number of legal issues involving foreign currencies (see para 1.4 of its Final Report mentioned in para 87 below). Paras 3.39 to 3.47 of the Working Paper discussed the specific issue of foreign currency claims in insolvencies. Paras 3.39 to 3.45, which included reference to Miliangos [1976] AC 443, Dynamics Corporation [1976] 1 WLR 757, and Lines Brothers [1983] Ch 1, contained a fairly full analysis of the arguments. In particular, para 3.43 expressed agreement with Oliver Js explanation in Dynamics Corporation [1976] 1 WLR 757 as to why the reasoning in Miliangos [1976] AC 443 should not apply to foreign currency creditors claims in liquidations, namely (i) the form of judgment approved in Miliangos did not relate to a creditor's substantive right, and (ii) the companys obligation in relation to a foreign money debt was an obligation to pay the sterling equivalent of that sum in question at [the date of the winding up order]. Para 3.43 also explained that adjustment of claims by foreign currency creditors as argued for by CVI in this case would extend to the field of liquidation and bankruptcy the difficult problems connected with set off which had been discussed earlier in the Working Paper. In para 3.46 of the Working Paper, the Law Commission went on to consider and reject the suggestion that, where the company is found to be solvent, foreign currency creditors should be compensated from the assets of the company or the bankrupt for adverse exchange rate fluctuations between the date of the relevant order and the date of actual payment. In rejecting that suggestion, the Law Commission made the point that this would produce an unacceptable discrimination between foreign currency debts depending on whether the exchange rates have moved to the advantage or disadvantage of the creditors. The provisional conclusion expressed in para 3.47 was that we support the view of Oliver J. in the Dynamics Corporation case that the date of the winding up order is the appropriate, once for all, date for the conversion of every foreign currency debt on the winding up of both solvent and insolvent companies. In para 1308 of the 1982 Cork Report (referred to in para 10 above), the Committee explained that a primary purpose of the winding up of an insolvent company [is] to ascertain the companys liabilities at a particular date, and accordingly the reasoning in Miliangos [1976] AC 443 had no part to play on the issue of the date as at which foreign currency debts should be converted into sterling in a liquidation. In para 1309, the Cork Report strongly recommend[ed] that any future Insolvency Act should expressly provide that the conversion of debts in foreign currencies should be effected as at the date of the commencement of the relevant insolvency proceedings. Importantly for present purposes, the Report then stated that we take the same view as the Law Commission (Working Paper No 80) that conversion as at that date should continue to apply, even if the debtor is subsequently found to be solvent, and adding that [t]o apply a later conversion date only in the case where the exchange rate has moved to the advantage of the creditor, but (necessarily) not where it had moved against him, would, in our view, be discriminatory and unacceptable. The Law Commission adhered to the provisional view expressed in the Working Paper when it published its Final Report on Private International Law Foreign Money Liabilities, Law Com No 124, in 1983 (Cmnd 9064). At para 3.34 of its 1983 Report, the Law Commission identified the conclusion reached in para 1309 of the Cork Report, and emphasised that that conclusion applied whether [the company] is or is not solvent. At para 3.35, the Law Commission referred to the alternative suggestion that conversion of a foreign currency obligation into sterling be effected at the latest practicable date which would seem to be each occasion on which it is decided to declare and pay a dividend. And at para 3.36, the Law Commission, while accepting that there were arguments both ways, rejected that alternative suggestion and stated that it remain[ed] of the view which [was] expressed in the working paper. Accordingly, it is quite clear that the Cork Committee and the Law Commission each carefully addressed this very issue during the five years leading up to the 1986 insolvency legislation, and reached the clearly expressed and firmly held conclusion that foreign currency claims should be dealt with in solvent, as well as insolvent liquidations, in the manner contended for by the LBHI2 administrators in these proceedings. It is fair to say that the White Paper referred to in para 10 above did not specifically refer to this issue, and that it stated that it did not agree with a number of expressly identified recommendations in the Cork Report, but there is nothing in it to suggest disagreement with the carefully considered and very recently expressed views on the instant topic by the Law Commission and the Cork Committee. Indeed, the very fact that rule 4.91 (which was in the 1986 Rules from their inception, and applies to liquidations) is and was expressed as it is (ie effectively the same as rule 2.86) strongly suggests that the 1986 legislation was intended, on this aspect, to follow the views expressed in the Cork Committee and the Law Commission. In addition, the notion of foreign currency creditors having a possible second bite also appears to be inconsistent with one of the purposes of the 1986 legislation described in the White Paper, namely to simplify the insolvency process. Given the general understanding as expressed in the reports referred to in paras 84 to 87 above was that the view expressed by Oliver J in Dynamics Corporation [1976] 1 WLR 757 represented the law before the changes embodied in the 1986 legislation, it is scarcely consistent with the drive for simplicity that this simple one stage approach to conversion should be replaced by a potential two stage process, particularly when there is no provision in the 1986 legislation which can possibly be said even to hint at such a process. The 1949 Rules were silent so far as the treatment of foreign currency creditors were concerned, and, at least until the decision in Dynamics Corporation [1976] 1 WLR 757, the authorities seemed to suggest that a foreign currency debt should be converted into sterling at the date it fell due. Given that the treatment of foreign currency creditors in corporate insolvencies was expressly dealt with for the first time in the 1986 Rules, it appears to me that there must be a presumption that the new rule 2.86 was intended to spell out the full extent of a foreign currency creditors rights, particularly, when one bears in mind the fact just mentioned that the purpose of the 1986 legislation was to simplify and clarify the law. The LBHI2 administrators argument is also supported by the fact that it is common ground that, if sterling appreciates against the foreign currency in which the debt is denominated after the date of administration, rule 2.86 would work to the benefit of the foreign currency creditor. I consider that it tells quite strongly against CVIs case that, if it is right, rule 2.86 would in effect operate as a one way option on the currency markets in a foreign currency creditors favour: a classic case of heads I win, tails I dont lose. This is a point which weighed heavily with the Law Commission and the Cork Committee as explained in paras 84 to 87 above. Further, it demonstrates that CVIs argument would mean that foreign currency creditors are treated more favourably than partly secured creditors or contingent creditors, in respect of whom the 1986 Rules provide for post proof adjustments either way. The point is, I think, another reason which substantially undermines CVIs reliance on Lord Wilberforces observations in Miliangos [1976] AC 443, 465 cited in para 80 above, whose applicability to foreign currency claims in liquidations was in any event, as explained above, rejected by Oliver J, the Cork Report and the Law Commission. Turning to rules which apply to other types of debts, the revaluation provisions in rule 2.81 (and rule 4.86) appear to me to point against CVIs case. First, they are inconsistent with CVIs argument that the rules in Chapter 10 of Part 2 (like the distribution rules in liquidations under Chapter 9 of Part 4 of the 1986 Rules) proceed on the basis that, as between the creditors, there is a date by reference to which all debts and claims are valued (as explained in para 75 above). On the contrary: I consider that that the clear implication of the second part of rule 2.81 is that a contingent creditor should be able to be paid out on a distributing administration by reference to the contractual value of his claim as at the date of payment. Quite apart from that, and perhaps more centrally for present purposes, given that the 1986 Rules expressly provide that adjustments can be made to a proof for a contingent debt if the contingency varies, it can be said with force that the natural implication of there being no equivalent provision for a foreign currency debt is that it was not intended to be adjustable. CVIs argument thus appears to me to be questionable because it effectively infers a non provable back door for a foreign currency debt when there is no express provable front door to accommodate external changes, in circumstances where there is an express provable front door to accommodate external changes in relation to another type of debt. There are other provisions of the 1986 Rules which are inconsistent with CVIs contention that the scheme of the 1986 legislation is to have a single date by reference to which all debts and claims are valued, and which demonstrate that, where the legislature wishes to revalue a claim by reference to the date of payment, it so provides. Thus, rules 2.83 and 2.90 enable a creditor with security who proves for the unsecured balance of his debt to vary the amount for which he proves in the event of the creditor realising the security, or in the event of a change in the value of the security, on a date subsequent to that on which he proved for his debt. And the set off provisions of rule 2.85(3) which mandate setting off as at the date of the declaration of a dividend are also inconsistent with CVIs argument. While the point has some limited force, I am not much impressed by CVIs argument that, on the LBHI2 administrators case, a company with foreign currency debts could be put into voluntary liquidation for the sole purpose of benefitting from rule 4.91. In the first place, although I accept that it is not a fanciful notion, it would require very unusual facts before a voluntary liquidation, with its inconveniences and costs, would be a sensible course for a company to take simply to crystallise its foreign currency debts. Secondly, such a course would be very much of a gamble. Foreign currency movements, especially in the short and medium term are notoriously very unpredictable. Thirdly, any creditor could protect himself by covering his position, albeit at a cost and with a degree of uncertainty. For these reasons, as well as those expressed by Lord Sumption in para 194 below, I would allow the LBHI2 administrators appeal in relation to the foreign currency claims issue on the basis of the primary, narrower, way in which they put their case, namely the effect of rule 2.86 in its context. I should perhaps add that I am not wholly convinced that there is a good reason for not having a provision (similar to that in the second part of rule 2.81) which enables a proof in respect of a foreign currency debt to be adjusted to take account of currency fluctuations either way between date of proof and date of payment. While my conclusion means that is not necessary to consider the wider, alternative way in which the LBHI2 administrators case is put, it may be helpful to express a preliminary view on the issue, not least because it was the basis on which the Court of Appeal and David Richards J reached a different conclusion from that which I have reached on the foreign currency claims issue. The wider basis: the effect of payment in full of a proof on a debt The wider basis for the LBHI2 administrators case involves challenging the correctness of a proposition which was well expressed by David Richards J at [2015] Ch 1, para 110, namely that creditors contractual rights generally are compromised by the insolvency regime only for the purpose of achieving justice among creditors through a pari passu distribution, and are not affected by payment in full of a proof in respect of the contract under which those rights arise (unless of course the 1986 Rules expressly so provide, as we are agreed that they do in relation to foreign currency debts). While I accept that there is much to be said for the view which the majority of the Court of Appeal and David Richards J reached on this issue (and with which Lord Sumption is inclined to agree), my current inclination is to the opposite effect. It is true that there are statements of high judicial authority which can be cited to support the notion that a contractual claim can survive the payment in full of a proof based on that claim. Thus, in In re Humber Ironworks and Shipbuilding Co (1869) LR 4 Ch App 643, 647, having said that when the estate is insolvent [the Rule then in force] distributes the assets in the fairest way, Giffard LJ explained that where the estate is solvent , as soon as it is ascertained that there is a surplus, the creditor is remitted to his rights under his contract. More recently, Lord Hoffmann discussed the effect of proving for a contractual debt on the underlying debt in the Privy Council case Wight v Eckhardt Marine GmbH [2004] 1 AC 47, paras 26 and 27, as quoted by Lord Sumption in para 198 below. In particular, Lord Hoffmann said that [t]he winding up leaves the debts of the creditors untouched. It only affects the way in which they can be enforced and that [t]he winding up does not either create new substantive rights in the creditors or destroy the old ones. In the later Privy Council case Parmalat Capital Finance Ltd v Food Holdings Ltd (in liquidation) [2008] BCC 371, para 8, Lord Hoffmann said that a winding up order does not affect the legal rights of the creditors or the company. Even ignoring the fact they were based on different insolvency codes, I do not consider that the observations of Giffard LJ in Humber Ironworks LR 4 Ch App 643, 647 or of Lord Hoffmann in Wight [2004] 1 AC 147, paras 23 to 29 and Parmalat Holdings [2008] BCC 371, para 8 can safely be treated as applying to the wider issue raised on the LBHI2 administrators case. Humber Ironworks LR 4 Ch App 643 was concerned with a creditors claim for interest between the date of winding up and payment of the principal, for which the Companies Act 1862 made no provision. Accordingly, the court had to decide what Judge made rule to adopt in relation to such a claim, and it was decided that, in the case of a solvent company, after payment of all principal debts, the liquidator should pay interest at the contractual rate for the period in question. The court was concerned with the effect of the absence of any rule for payment, not with the effect of a rule which stipulated for payment. The dicta in Wight [2004] 1 AC 147 must, as Lewison LJ said at [2016] Ch 1, para 94, on any view be no more than a broad generalisation, as they are self evidently subject to important exceptions, including statutory set off, disclaimer of onerous property, and the treatment of future and contingent debts. Over and above that, the case was concerned with a very different issue from that in this case. Lord Hoffmann was making the point that the fact that a creditor proved for his debt did not mean that the legal incidences of his underlying debt were affected. Thus, as the proof was based on a contract whose benefit was subsequently lawfully transferred by legislation from the proving creditor to a third party, the liquidators were held entitled to reject the creditors proof. The case was therefore concerned with the effect on the right to prove of a subsequent event which affected the creditors rights under the underlying contract, not with the effect on the underlying contract of the payment of a dividend in respect of a proof. In Parmalat Capital [2008] BCC 371, Lord Hoffmann was describing the effect of a winding up order, not the effect of proving for a debt, let alone the effect of payment of a dividend on a proof. It is right to mention Financial Services Compensation Scheme Ltd v Larnell (Insurances) Ltd (in liquidation) [2006] QB 808, where the Court of Appeal was concerned with the current legislation, and the reasoning in Wight [2004] 1 AC 147 was followed. However, no consideration appears to have been given as to the possibility of the law having changed, and in any event, the case was not concerned with the effect on the underlying debt of payment of a proof. (While it is strictly unnecessary to express a view on the point, it is right to add that, at any rate as at present advised, I consider that the actual outcome of those three cases was correct, and, through the medium of rules 2.79 and 2.80 and rules 4.84 and 4.85, the outcome would respectively have been the same in an administration and a liquidation under the 1986 legislation.) I accept that the dicta in Humber Ironworks LR 4 Ch App 643, Wight [2004] 1 AC 147 and, arguably, Parmalat Capital [2008] BCC 371, at least if read out of their context, suggest that paying a 100% dividend in respect of a proof does not necessarily discharge the underlying contractual debt. However, as explained above, in none of those cases was that question being addressed or even considered, and I do not think it is safe to proceed on the basis that the dicta were intended to apply to it. It cannot be doubted that the dividend must at least in part satisfy the underlying contractual debt, and therefore it does affect the creditors rights. In any event, it seems to me that the issue arising from the LBHI2 administrators wider contention must be resolved by considering the relevant provisions of the applicable insolvency code, namely the 1986 legislation, in their context. It appears to me that there is a strong case for saying that it would be inconsistent with the general thrust of Chapter 10 of Part 2 (or indeed Chapter 9 of Part 4) of the 1986 Rules that a debt, which has been the subject of a proof that has been met in full, nonetheless includes a component which is somehow capable of resurrection. There are provable debts and non provable debts, but I consider that it is inherently rather unlikely that the legislature intended that there could be a class of debts which, while wholly provable, may nonetheless transpire to have a non provable element. In other words, the notion of a category of hybrid debt with a presently provable element and a contingently unprovable element seems improbable, particularly bearing in mind that the 1986 legislation was intended to simplify and that its policy was to render as many debts as possible provable (see paras 10 and 33 above). Many of the rules contained in Chapter 10 of Part 2 (and the equivalent rules relating to liquidations in Chapter 9 of Part 4 of the 1986 Rules) appear to me to support the notion that a proving creditor should be treated as having had his contractual rights fully satisfied once he is paid out in full on his proof. I have in mind the provisions for revaluation of underlying contingent claims up to the date of payment of the proof in rule 2.81, the allowance for adjusting partly secured claims up to the date of payment in rules 2.83 and 2.94, the rules regarding set off in rule 2.85 the provisions relating to interest in rule 2.88(9), as well as the 5% discount rate on future debts in rule 2.105 and of course rule 2.86 as discussed above (and the equivalent rules in Chapter 9 of Part 4). There is a powerful case for saying that the fundamental rule 2.72(1) appears to me to be expressed in terms which support the notion that, where a creditor proves for a debt, his contractual rights as a creditor are satisfied if his proof is paid in full. By submitting a proof, a creditor is seeking to recover his debt in whole or in part. The words or in part plainly refer to a case where part of the debt is protected by security, a possibility which is specifically catered for in rules 2.83, 2.93 and 2.94. The suggestion that an unsecured foreign currency creditor who proves for the totality of the sum which he is owed at the time of his proof is seeking to recover only part of his debt appears to me to be self evidently wrong. Accordingly, I would have thought that the natural import of rule 2.72 (and the similarly worded rule 4.73 in the case of liquidations) is that, save where the debt is partially secured, a creditor is treated as seeking to recover his debt in whole when he proves. If that is right, it would seem to me to follow that, if and when a foreign currency debt, which has been converted into a sterling denominated proof in accordance with rule 2.86, is paid in full, the debt has been recovered in whole. On that basis, I consider that it may be said to follow that there is no basis upon which the foreign currency creditors can base their claims for a contractual shortfall. The notion that a creditor who proves in a liquidation is wishing to recover his debt in whole or in part was first introduced in the 1986 legislation. The equivalent provision to rule 4.73 of the 1986 Rules in the 1949 Rules was rule 91, which provided that, subject to certain exceptions, every creditor shall prove his debt. This change in wording makes it unsafe to cite judicial decisions or observations as to the effect of proving under the previous insolvency legislation, or indeed under insolvency legislation in other jurisdictions, as a reliable guide as to the effect of proving under the 1986 Rules. Indeed, the change in wording is consistent with the notion that a change in substantive law was contemplated. I doubt that this analysis can be answered by characterising rule 2.72(1) as a purely administrative provision: it is a provision which should be given its natural meaning, at least in the absence of good reason to the contrary. The way in which rule 2.72 is expressed is significant not just in itself, but also because weight is put by CVI on the opening words of rule 2.86, namely [f]or the purpose of proving (see eg per Briggs LJ in the Court of Appeal at [2016] Ch 50, para 148). Yet, if, as appears to me to be the position, the effect of rule 2.72 is that proving for a debt involves the creditor seeking to recover the debt in whole, and this means that payment in full of the proof satisfies the debt, then the opening words of rule 2.86 take the instant debate no further. In any event, I do not agree with the suggestion that, on the view I incline to favour, the opening words of rule 2.86 are otiose (as Briggs LJ put it at [2016] Ch 50, para 150). The rule would have been oddly expressed if the opening words had been omitted. In support of the contrary view, some reliance has been placed on the contrasting legislative provisions relating to bankruptcy. Bankruptcy is different from liquidation not least because (i) the bankrupt normally survives the bankruptcy through discharge, whereas the liquidation of a company is usually followed by its dissolution, and (ii) the statutory history of the two codes is different, and many of the differences have survived into the 1986 legislation. It is true that rule 6.96, which applies in bankruptcy, is expressed in the same way as rules 2.72 and 4.73, but I do not consider that takes matters any further. If a creditor who proves in a bankruptcy is paid 100p in the pound, I know of no reason why his debt should not be treated as having been satisfied in the same way as a creditor in a liquidation or administration. Sections 279 to 281 do not appear to me to be in point because, as I read them, they are concerned with releasing a bankrupt from liabilities which have not been satisfied. The absence of any provision dealing with joint obligors or sureties where a creditor of a company is paid 100p in the pound seems to me to take matters little further. On any view, the rights of such parties would have to be assessed by the court in a case where a creditor is paid less than 100p in the pound, as has been the position in relation to disclaimers by liquidators under section 181, where the courts have had to work out the consequences for sureties see Hindcastle Ltd v Barbara Attenborough Associates Ltd [1997] AC 70. It is true that section 281(7) deals with joint obligors and sureties of a bankrupt, but that section, which re enacts a statutory provision in the 1914 Act, appears to be intended to apply to cases where the creditor of a bankrupt has not been paid 100p in the pound. Quite apart from this, section 281(7) only applies where the bankrupt is discharged, a situation which has no equivalent in corporate insolvency. Just as in the case of joint obligors or sureties of an insolvent company, there is no provision dealing with joint obligors and sureties of a bankrupt where the bankrupt has not been discharged. The same points apply to section 251I, which in any event cannot be of any assistance as it was only added by the Tribunals, Courts and Enforcement Act in 2007. Conclusion In these circumstances, based on what I have referred to as the narrower or primary contention raised by the LBHI2 administrators, I conclude that it is not open to the foreign currency creditors to seek to claim as a non provable debt, the difference between the sterling value of the debt at the administration date and the sterling value of that debt when paid, where the latter exceeds the former. It therefore follows that I would discharge paras (ii) and (iii) of the order made by David Richards J. The claim for post administration interest in a subsequent liquidation Can rule 2.88(7) interest be claimed from a subsequent liquidator? As explained in para 27 above, rule 2.88(1) provides that, when a company is in administration, creditors can only prove for contractual interest on their debts up to the date of administration, but para (7) provides for payment of interest at the rate specified in para (9) out of any surplus in the hands of the administrator, ie once all proving creditors have been paid in full. The question to be addressed is this: if, after LBIE has been in administration, it is then put into liquidation before such statutory interest has been paid to a creditor (whose principal debt will have been paid in full), can the creditor claim such interest from the LBIE liquidator, or prove for it in the LBIE liquidation? David Richards J held that it could not and so directed in para (iv) of the order which he made. The Court of Appeal disagreed. There are, of course, legislative provisions which deal with interest on debts owed by a company in the winding up context. As explained above, section 189 of the 1986 Act is concerned with interest on debts in a winding up of a company, and section 189(2) (which is set out in para 28 above) is in very similar terms to Rule 2.88(7), which was no doubt based upon it. Rule 4.93 is concerned with the payment of interest on a debt proved for in a liquidation, and para (1), as originally drafted, provided that [w]here a debt proved in a liquidation bears interest, such interest is provable as part of the debt except in so far as it is payable in respect of any period after the company went into liquidation. Following the introduction of distributing administrations, rule 4.93(1) was amended by the 2005 Amendment Rules, by the addition of new final words or, if the liquidation was immediately preceded by an administration, any period after the date that the company entered administration. The LBL administrators contend that, if interest payable under rule 2.88(7) was not paid by the LBIE administrators while LBIE was in administration and LBIE then goes into liquidation, such interest cannot be claimed from the LBIE liquidator or proved for in LBIEs liquidation. They rest this contention on two propositions. First, rule 2.88(7) is a direction to an administrator of a company, and applies so long as the company is in administration and not thereafter. Secondly, section 189(2), which gives a right to claim interest on debts from a company in liquidation, only applies to interest which has accrued since the date of liquidation, and therefore there is no room for a creditor to claim interest which accrued before that date, and in particular during a pre liquidation administration. In addition, even disregarding the amendment made to it in 2005, rule 4.93 only applies to debts which are proved for in the liquidation and a creditor who was entitled to interest under rule 2.88(7) cannot prove for his debt in a subsequent liquidation, because his debt will have been paid out in full by the administrator. With no enthusiasm, David Richards J accepted the LBL administrators contention, but the Court of Appeal disagreed. I agree with David Richards Js conclusion that the interest provided for in rule 2.88(7) cannot be claimed from a subsequent liquidator, and I share his lack of enthusiasm in reaching that conclusion. As to the conclusion, rule 2.88(7) plainly only applies so long as there is an administration in existence. It is, in my view, an accurate characterisation to describe it as a direction to the administrator of a company while he is in office: thus, it seems to me that he would be susceptible to a claim by the proving creditors if he distributed a surplus to members without first paying statutory interest (see the discussion in HIH Casualty [2006] 2 All ER 671 referred to in para 52 above). On no view, can it be read as a direction to a potential or actual subsequent liquidator, acting in a liquidation taking place after an administration has ended. Rule 2.88(7) is in Chapter 10, and, as mentioned above, rule 2.68(1) provides that that Chapter applies to a distributing administration. So, when the administration ends, rule 2.88(7) can no longer apply. And the effect of section 189(2), supported by rule 4.93, is clear: there is no room for rule 2.88(7) interest to be proved for, or to be paid, once a company, which was formerly in administration, is then put into liquidation. As to the lack of enthusiasm, there seems to be no reason why a creditor of a company in administration should lose what would otherwise be his right to statutory interest provided for by rule 2.88, simply because the company goes into liquidation before that interest has been paid. All the more so given that, as mentioned in para 27 above, rule 2.88 itself was amended in 2005 so that, in an administration following a liquidation, the interest which can be claimed under the rule dates back to the liquidation date, rather than the date of administration, but this underscores the force of the point that no similar amendment has been made to section 189(2). And the 2005 amendment to rule 4.93, which dealt with interest which would otherwise accrue after the administration date in the case of a company which subsequently goes into liquidation, further underscores the point. It seems likely that there was an oversight on the part of those responsible for revising the 1986 Act and the 1986 Rules when they were amended to provide for a distributing administration by the 2002 Act and the 2003 Amendment Rules. Two amendments were subsequently made to the 1986 Rules, explained respectively in paras 115 and 27 above: rule 4.93 was amended appropriately by the 2005 Amendment Rules and, even more in point, rule 2.88 was appropriately amended by the same 2005 Amendment Rules. However, section 189(2) was not amended, quite possibly because it is more difficult to amend primary, than secondary, legislation. Under the United Kingdoms constitutional arrangements, it is not normally appropriate for a judge to rewrite or amend a statutory provision in order to correct what may appear to have been an oversight on the part of Parliament. That would involve a court impermissibly usurping the legislative function of Parliament. As Lord Nicholls of Birkenhead said in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586, 592 when discussing the judicial approach to statutes, [t]he courts are ever mindful that their constitutional role in this field is interpretative and [t]hey must abstain from any course which might have the appearance of judicial legislation. For this reason, it would be impermissible to have recourse to an entirely new Judge made rule to fill the gap in the present case. There has been no such rule nor any similar rule in the past (unsurprisingly, as administration is a new concept and a distributing administration is even newer), and the invention of such a rule would be inappropriate for the reasons discussed in paras 117 to 120 above. The Court of Appeal appreciated this problem, but they considered that they could arrive at a commercially sensible conclusion on various grounds. While I sympathise with their wish to avoid the unattractive conclusion arrived at by the Judge, none of those grounds is supportable. The notion that a liquidator in a subsequent liquidation would be obliged to pay the interest which had accrued during the previous administration under rule 2.88(7) would be inconsistent with the fact that rule 2.88 only applies during the administration. Further, it would be inconsistent with the liquidators duties as set out in the 1986 Act and the 1986 Rules if the liquidator was required to pay out money for which there was no warrant in the relevant legislative provisions. He does not stand in the shoes of the former administrator: he is the holder of a different statutory office with its own, different, statutorily imposed duties. And the notion that payment of statutory interest could be said to be a liability of the company concerned (as discussed in paras 49 and 53 above) takes matters no further. It would only be such a liability to the extent that the 1986 Act and the 1986 Rules provide, and that brings one back to the fact that rule 2.88 only applies while the company is in administration, and there is no carry over provision. Further, the principle laid down in Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567, on which Briggs LJ relied, is not in point. It applies where money is transferred by one party to another party for a specific purpose. In this case, there would be no transfer, and there would be no purpose. No transfer because the administrator would simply relinquish office and the liquidator would assume a different office, albeit in relation to the same company and the same assets. No purpose, because, in relation to the companys assets, the administrator would have been responsible for them for his statutorily imposed purposes, and the liquidator for his. Quite apart from this, while the solution adopted by the Court of Appeal deals with the lacuna as it applies on the facts of the present case, it would not provide a complete answer. Thus, the solution would only apply to any surplus which had been in the hands of the administrator, and it could only be invoked by creditors who had lodged proofs in the administration. Accordingly, the Court of Appeals solution would not help in a case where the administration preceding a liquidation had not been a distributing administration, a situation in which the unfairness of a lacuna would be even more marked. Lewison LJ thought, at paras 108 and 109 of his judgment, that a limited solution is better than no solution at all. I would agree with that approach if the court had been simply seeking to arrive at as reasonable and commercial a result as possible: a partially unreasonable and uncommercial outcome would be preferable to a generally unreasonable and uncommercial outcome. However, when it comes to deciding the meaning of a legislative provision, judges are primarily concerned with arriving at a coherent interpretation, which, while taking into account commerciality and reasonableness, pays proper regard to the language of the provision interpreted in its context. David Richards Js conclusion produced a coherent, if unattractive and quite possibly unintended, outcome, which paid proper, if reluctant, regard to the applicable provisions of the 1986 Act and the 1986 Rules. Does the right to contractual interest revive? As just explained, David Richards J rightly concluded that a creditor of LBIE who had been entitled to, but had not been paid, interest under rule 2.88(7), could not claim such interest from a subsequent liquidator or prove for such interest in the subsequent liquidation. However, he went on to hold that such a creditor could nonetheless recover interest at the contractual rate for the period of the administration as a non provable debt from any surplus, and so directed in para (v) of the order which he made. The Court of Appeal allowed the LBHI2 administrators and LBHIs appeal on this point, on the very limited ground that the holding must be wrong in the light of their conclusion that such a creditor could claim the rule 2.88(7) interest from the liquidator. However, given my view that the Court of Appeal was wrong on that issue, it is necessary to consider whether the Judge was right in holding that a creditors contractual right to interest revived. In my judgment, contrary to the conclusion reached by David Richards J, the contractual right to interest for the post administration period does not revive or survive in favour of a creditor who has proved for his debt and been paid out on his proof in a distributing administration. As already mentioned in In re Humber Ironworks LR 4 Ch App 643, 647, Giffard LJ, having held that a creditor could only prove for contractual interest up to the liquidation date, explained that [t]hat rule works with fairness, because where the estate is solvent , as soon as it is ascertained that there is a surplus, the creditor is remitted to his rights under his contract. However, as I have also explained, that observation was made in the context of a decision which was wholly based on what Giffard LJ expressly described as Judge made law, because the contemporary statutory provisions gave no guidance as to how contractual interest was to be dealt with in a winding up. The position is, of course, very different now, especially in relation to interest on proved debts in liquidations and administrations. In that connection, I consider that the legislative provisions discussed above, namely rules 2.88 and 4.93 and section 189 provide a complete statutory code for the recovery of interest on proved debts in administrations and liquidations, and there is now no room for the Judge made law which was invoked by Giffard LJ. It seems to me that this view is consistent with what David Richards J said in In re Lehman Brothers International (Europe) (in administration) [2016] Bus LR 17, para 164, although the point which was there being considered was more limited. This issue has some echoes of the currency conversion claim issue. In each case, I consider that the contractual right (in this case to recover interest and in the case of currency conversion claims, to be paid at a particular rate of exchange) has been replaced by legislative rules. On that basis, there is no room for the contractual right to revive just because those rules contain a casus omissus or because they result in a worse outcome for a creditor than he would have enjoyed under the contract. To put what may ultimately be the same point in somewhat different terms, it strikes me as rather bold to suggest that interest which accrues due between the date of administration and the date of liquidation can be claimed as a non provable debt, when section 189(2) specifically gives the right to make such a claim for interest only when it accrues after the liquidation, and rule 4.93 as amended specifically deals with interest accruing during an administration in the case of a company which subsequently goes into liquidation. Conclusion In these circumstances, without enthusiasm, I would reverse the Court of Appeals decision and restore the direction given by the Judge in para (iv) of his Order, and, albeit for very different reasons, I would uphold the Court of Appeals allowance of the appeal against para (v) of the order made by David Richards J. The issues concerning contributories: general As explained in para 35 above, the remaining issues arise from the provisions of the 1986 Act and the 1986 Rules which are concerned with the liability of contributories. In recent years, these provisions and their legislative predecessors have been relatively rarely invoked. This is because the great majority of modern companies are limited by shares, and the provisions dealing with contributories can only come into play in relation to such companies where there are shares which are not paid up, and that is a relatively infrequent state of affairs. However, in the present case, LBIE is an unlimited company, and so the provisions have a potentially substantial part to play. Section 74(1) provides: When a company is wound up, every present and past member is liable to contribute to its assets to any amount sufficient for payment of its debts and liabilities, and the expenses of the winding up, and for the adjustment of the rights of the contributories among themselves. As Briggs LJ explained in [2016] Ch 50, para 172, subsequent subsections of section 74 contain limitations, and they include a provision that no contribution is required from any member exceeding the amount unpaid on shares, where the company is limited by shares. In this case, because LBIE is an unlimited company, section 74 has, at least potentially, an unusually substantial effect. Section 148 provides that, [a]s soon as may be after making a winding up order, the court shall settle a list of contributories. By section 150(1): The Court may, at any time after making a winding up order make calls on all or any of the contributories for the time being settled on the list of the contributories to the extent of their liability, for payment of any money which the court considers necessary to satisfy the companys debts and liabilities, and the expenses of winding up, and for the adjustment of the rights of the contributories among themselves, and make an order for payment of any calls so made. Section 154 provides that the Court shall adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to it. Pursuant to section 160(1), rules 4.195 to 4.205 delegate the powers and duties of the Court in relation to contributories to the liquidator subject to the courts control. Hence it is the liquidator who settles the list of contributories and makes calls from contributories, but he does so on behalf of the court. Unlike the contents of the 1986 Rules, which, as explained above, are almost all either new provisions or rewritten versions of their legislative predecessors, the provisions of the 1986 Act relating to contributories are largely unchanged from their predecessors. Thus, section 74, section 148, and sections 150 and 154 are respectively expressed in virtually identical terms to section 38, section 98, section 102 and section 109 of the Companies Act 1862 (25 & 26 Vic c 89); and similar provisions are to be found in successive Companies Acts up to the Companies Act 1985. Four issues arise out of LBIEs administration in relation to contributories. The first is self contained, and it is whether contributories can be liable to contribute towards liability for statutory interest and/or non provable liabilities. The other three issues arise from the facts that (i) as explained in para 2 above, LBHI2 and LBL, as shareholders of LBIE, are both potentially liable as contributories, and (ii) as explained in para 6 above, LBHI2 and LBL are also both unsecured creditors of LBIE, and they have each lodged proofs in the administration of LBIE in respect of substantial sums. Liability of contributories for statutory interest and non provable liabilities Introductory The issue to be addressed is whether the phrase debts and liabilities in section 74(1) extends to statutory interest and non provable liabilities, as the LBIE administrators contend. David Richards J held that the phrase does extend to statutory interest and non provable liabilities, and this was recorded in para (vi) of the order which he made. The Court of Appeal agreed. In this connection, it was common ground below, and accepted by the Court of Appeal, that statutory interest and non provable liabilities were not debts because that expression is limited to provable debts (in the light of the terms of rules 12.3 and 13.12). However, the LBIE administrators argued, and the courts below accepted, that statutory interest and non provable liabilities constituted liabilities within section 74(1). That proposition is challenged by the LBHI2 administrators on this appeal. Non provable liabilities It is convenient to take non provable liabilities first. I find it difficult to see why they are not within the expression liabilities in section 74(1). A non provable liability of a company is ex hypothesi, as a matter of ordinary language, a liability of the company, albeit that it would appear to be a contingent liability, at least until it is clear that there is a surplus after all provable debts (and, at least normally, any statutory interest) have been paid in full. Despite the argument of the LBHI2 administrators to that effect, there do not appear to be any convincing grounds to support the argument that the expression liabilities in section 74(1) is limited to liabilities which can be the subject matter of a proof. Neither section 74 nor rules 12.3 or 13.12 appear to contain anything in them to support such a reading. Indeed, in rule 13.12(4), liability is widely defined and in particular in such a way as not to limit it to provable liabilities. The LBHI2 administrators nonetheless argue that, because section 74 only applies after a winding up and the liquidator has no liability to pay non provable liabilities, such claims cannot be liabilities under section 74(1). I cannot accept that argument. In my view, section 74(1) refers to the debts and liabilities of the company, and therefore it can be invoked to ensure that non provable liabilities are paid by the contributories. Further, the liability of contributories under section 74(1) and 150(1) is to the court, and, as explained in para 132 above, the liquidator is acting effectively on behalf of the Court when seeking payments under that section: it is an additional function to his more familiar role, which is concerned with provable debts and liabilities. More importantly in the present context, as discussed in paras 58 to 61 above, although there is no legislative provision requiring a liquidator to pay non provable liabilities, he is, and has always been regarded by the courts as being obliged to pay off any such claims. I cannot in these circumstances see any basis for acceding to the contention that non provable liabilities against a company are not within the scope of section 74 so far as its members are concerned. Statutory interest The position with regard to statutory interest is in my view very different. Statutory interest is due under rule 2.88(7), and that provision states that the liability to pay such interest is only out of any surplus remaining after payment of the debts proved. The contrary view was taken in the courts below, and I accept that their conclusion is more consonant with what one would expect. Nonetheless, it seems to me that there is no answer to the simple proposition advanced by the LBHI2 administrators that, as section 74 only requires payment from contributories of an amount sufficient for payment of [a companys] liabilities, the section cannot be invoked to create a surplus from which statutory interest can then be paid. If there is a deficit, there is no liability for statutory interest, and, if there is a surplus, there is only a liability for statutory interest to the extent of the surplus. Accordingly, in the absence of a sufficient surplus to pay all the statutory interest, there is no obligation to pay all the statutory interest, and therefore there can be no liabilit[y] which a contributory could be called on to meet under section 74(1). In effect, the LBIE administrators argument to the contrary involves them pulling themselves up by their own bootstraps. Moore Bick and Briggs LJJ concluded, in agreement with David Richards J, that they could defeat this analysis by relying on the proposition that the right under section 74 to make calls on contributories is itself an asset of the company. Accordingly, they reasoned, where the aggregation of that right with the other assets of the company disclosed a surplus, then the making of the call, together with payment by contributories in response to it, merely enabled statutory interest to be distributed, rather than created the surplus in the first place (to quote Briggs LJ at [2016] Ch 50, para 197). In my view, that attractively expressed analysis does not answer the simple logic of the argument set out in para 139 above. Section 74(1) can only be invoked in order to pay off liabilities, and, while I accept that that expression extends to contingent liabilities, it involves circuity of reasoning to say that the section can be invoked in relation to a liability which is contingent on the section being invoked. We were referred to observations of Lord Hatherley LC and Lord Chelmsford in Webb v Whiffen (1872) LR 5 HL 711, 718 and 724, which emphasised the broad scope of the power conferred by section 38 of the 1862 Act, but they cannot justify interpreting section 74(1) in a way which is inconsistent with the wording of the rule which is said to found the basis of the particular exercise of the power. The majority of the Court of Appeal also thought that LBHI2 and LBL administrators argument relied too much on the way in which rule 2.88(7) is expressed. To quote Briggs LJ at [2016] Ch 50, para 198, the use in section 189, rule 2.88 and elsewhere in the statutory code of the concept of payment out of a surplus is merely a convenient way of identifying liabilities which fall lower than other liabilities in the priorities encapsulated in the waterfall. It seems to me that this analysis involves re writing the legislative provision to enable it to achieve a more instinctively likely result than if the actual words used in the provision are construed according to the normal principles of interpretation. Briggs LJ could well be right if one was concerned with identifying what the drafters of rule 2.88(7) thought that they were doing, although, because I believe that his re writing of the rule would only make a difference in the rare case where section 74 applies, it may be more a matter of oversight than wrongly expressed intention. However, Briggs LJs analysis does not, with respect, fairly reflect what the drafters of rule 2.88 actually wrote. The result of interpreting the words used in rule 2.88(7), unless one departs in a significant way from their natural meaning, may be counter intuitive, even surprising, in a case where section 74 applies, but it is not absurd or unworkable, and therefore it should be adopted. Unlike Moore Bick and Briggs LJJ, Lewison LJ was not persuaded by the arguments so far discussed. However, he agreed in the outcome, as he considered that, if (as I have concluded) non provable liabilities can be the subject matter of a section 74 claim from contributories, it must follow that statutory interest is in the same position because it ranks above non provable liabilities in the waterfall summarised in para 17 above. Apart from the fact that one could equally well argue for the converse, it seems to me that that argument wrongly treats the statement quoted in para 17 above as some sort of fundamental principle of law. It is not. If money can be sought from contributories to pay non provable liabilities, it does not follow that money can also be sought, or that the money obtained can be used, to pay otherwise irrecoverable statutory interest. It merely means that any statutory interest is, as it were, by passed in favour of non provable liabilities. Statutory interest is payable out of any surplus which arises after payment of provable debts; if there is no surplus, but the liquidator can invoke section 74 to obtain money to pay other non provable liabilities, it seems to me that, given that the money so obtained has been extracted for a specific purpose, it cannot be treated as a surplus which can be used for another purpose. It is true that the cases mentioned at the end of para 60 above underline the importance of a liquidator paying off the companys indebtedness before distributing any surplus to members. However, I do not think that they help the LBIE Administrators case that statutory interest can found a section 74 claim (although they provide support for their case on non provable liabilities). So long as there are assets to distribute to members, there is a surplus, and section 74 does not come into play, and once there is no surplus, there is nothing to distribute to shareholders. For the same reasons, I cannot see how the argument of the LBIE Administrators on this issue is assisted by the fact that section 74(1) can be invoked for the adjustment of the rights of the contributories among themselves. It may be that the LBHI2 administrators are right for another reason, namely that statutory interest is not a liability of the company in question, but of its administrator or its liquidator. That was an argument which concerned Lewison LJ in the light of In re Pyle Works (1890) 44 Ch D 534, where it was held that the power to call on contributories is not part of the capital of the company see at pp 575, 584 and 588, per Cotton, Lindley and Lopes LJJ respectively. The point has some echoes of the argument considered in relation to the subordinated debt in paras 51 and 52 above, but we do not need to decide it and I do not think we should do so. Having said that, I accept that my conclusion does produce the anomalous result that, where section 74 applies, there will be circumstances when one type of creditor who normally has priority over another type will receive nothing when the other type of creditor will be paid in full. It is therefore readily understandable why the courts below tried hard to find a way round this conclusion. However, the conclusion does not lead to any practical or even any conceptual difficulty (see paras 143 and 144 above). Further, if one rejects my conclusion, one is left with the unpalatable choice of holding that a payment for statutory interest is recoverable under section 74 despite the wording of the section and the provisions for statutory interest as discussed in paras 139 to 142 above, or of holding that a payment for other non provable liabilities is irrecoverable under section 74 despite the argument discussed in paras 136 to 138 above. It is perhaps right to add that the conclusion that section 74 can be relied on to meet non provable liabilities but not statutory interest may appear, at any rate at first sight, to conflict with what is said in paras 65 and 66 above in relation to the priority of the subordinated debt. In those paragraphs, I was concerned to explain that, while a party could validly contract to be in a worse position in the waterfall than he would normally be, he could not validly contract to improve his position in the waterfall (unless all those who are thereby disadvantaged have agreed). That is because, unless he agrees otherwise, a person is entitled to insist on his legal rights, which includes priorities in the waterfall. However, it is a different matter where the effect of a statutory provision purports to have the effect of changing or by passing such priorities: the priorities are statutory (with some Judge made additions), and therefore there is no reason why any statutory variation or modification cannot be effective. Conclusion Accordingly, albeit without enthusiasm, I would allow the LBHI2 administrators appeal on the issue whether section 74 can be invoked in order to pay statutory interest, but I would dismiss their appeal on the issue whether that section can be invoked in order to meet other non provable liabilities. I would therefore allow the appeal in part against para (vi) of David Richards Js order. Contributories who are also creditors of LBIE Introductory As explained above, LBHI2 and LBL are each both creditors of, and potential contributories to, LBIE. Three questions arise from this. The first is whether the LBIE administrators are, as they argue, entitled to prove in the potential distributing administrations (or liquidations) of LBHI2 and LBL in respect of each companys respective potential liability to contribute in a future liquidation of LBIE. The second and third questions arise from the argument pursued by LBHI, effectively on behalf of LBHI2 and LBL, that those two companies are entitled to be paid in LBIEs distributing administration in their capacity as creditors of LBIE, even though in due course they may very well be liable as contributories under section 74. The LBIE administrators meet this argument with two contentions. Their first contention is that the potential liability of LBHI2 and LBL as contributories can be set off as a contingent debt in the administration of LBIE pursuant to rule 2.85, which gives rise to the second question. Alternatively, and this gives rise to the third question, the LBIE administrators contend that they are entitled to rely on the so called contributory rule, and so can resist paying LBHI2 and LBL on their proofs until they have met their liabilities as contributories (or it is clear that they will have no such liability). I shall take these three questions in turn. Can the LBIE administrators prove for contributories potential liability? Both the Judge and the Court of Appeal held that the LBIE administrators were entitled to prove in the administrations of LBHI2 and LBL in respect of the potential prospective liabilities of those companies as contributories of LBIE (which I will refer to as a prospective section 150 liability). This is recorded in para (viii) of the order made by the Judge. In order for a prospective section 150 liability to be provable in the administrations of LBHI2 and LBL, it is accepted by the LBIE administrators that it would have to be a contingent obligation under rule 2.85. At any rate on the face of it, such a liability would appear to be contingent, as it could arise in the event of LBIE going into liquidation, and its liquidator being unable to meet all claims and making one or more calls under section 150. The more difficult question would seem to be whether the prospective section 150 liability constitutes an obligation within rule 13.12. In that connection, it was accepted in the courts below and by the parties that the guidance given in In re Nortel GmbH [2014] AC 209, para 77 applies. That guidance is as follows: [T]he mere fact that a company could become under a liability pursuant to a provision in a statute which was in force before the insolvency event, cannot mean that, where the liability arises after the insolvency event, it falls within rule 13.12(1)(b). It would be dangerous to try and suggest a universally applicable formula, given the many different statutory and other liabilities and obligations which could exist. However, I would suggest that, at least normally, in order for a company to have incurred a relevant obligation under rule 13.12(1)(b), it must have taken, or been subjected to, some step or combination of steps which (a) had some legal effect (such as putting it under some legal duty or into some legal relationship), and which (b) resulted in it being vulnerable to the specific liability in question, such that there would be a real prospect of that liability being incurred. If these two requirements are satisfied, it is also, I think, relevant to consider (c) whether it would be consistent with the regime under which the liability is imposed to conclude that the step or combination of steps gave rise to an obligation under rule 13.12(1)(b). In my view, that approach is apt in connection with a prospective section 150 liability. It is true that any claim against a contributory can be said to arise from contract, in that the basis of such a claim is contractual in origin. Thus, Lord Cranworth LC said in Williams v Harding (1866) LR 1 HL 9, 22 that a not dissimilar obligation under section 90 of the Bankruptcy Act 1861 (24 & 25 Vict c 134) be referred back to the year when he became a shareholder and see at pp 27 28 per Lord Kingsdown to the same effect. However, as each of them went on to say, the obligation in question was nonetheless cast on [the contributory] by law or made under the statute. In relation to section 150, such an approach is supported by section 80, which describes the liability of a contributory as a debt accruing due from him at the time when his liability commenced, but payable at the times when calls are made. Accordingly, it is ultimately a statutory obligation, albeit that exposure to such an obligation arises as a result of contract. I can therefore see no reason not to follow the approach suggested in Nortel GmbH [2014] AC 209, para 77. In my opinion, application of that approach to a prospective section 150 liability justifies a different conclusion from that reached by the courts below. This view is based on a combination of two propositions. First, the effect of section 150 and rule 4.195 is that the liquidator is the person entitled to make a call, and he possesses that entitlement for the purpose of performing his statutory duties. Secondly, the nature of the liability to contribute is such that it should not be capable of being the subject matter of a proof unless the company concerned is in liquidation, even bearing in mind the wide provisions of rules 2.85 and 13.12. It is clear from section 150 that the right to make calls on contributories only arises when a company is being wound up by the court. There are many judicial dicta which emphasise that a contributory has no liability until the company concerned is wound up (eg per Sir George Jessel MR in In re Whitehouse & Co (1878) 9 Ch D 595, 599 and per Cotton, Fry and Bowen LJJ in Whittaker v Kershaw (1890) 45 Ch D 320, 326 and 328 329), and it is consistent with section 80. However, those dicta, like section 80 itself, appear to me to take matters no further for present purposes, at least on their own, as they are consistent with the notion that a contributory has a liability for calls under section 150 which is contingent at least until the company concerned goes into liquidation, and probably until the liquidator makes a call. More to the point, however, it appears to me that any money paid pursuant to a call made under section 150 is not paid to or for the company, but to the liquidator, in order to enable him, as subsection (1) provides, to satisfy the companys debts and liabilities, and the expenses of winding up. The point is underscored by comparing this wording with that of section 149(1) which empowers the court, after it has made a winding up order, to require any contributory to pay any money due from him to the company. As was explained in In re Pyle Works 44 Ch D 534, per Cotton LJ at pp 574 575 and Lindley LJ at pp 582 583 (quoted at [2016] Ch 50, paras 113 119), any money paid under section 74 cannot be treated as part of the property of the company concerned: it forms a statutory fund which can only come into existence once the company in question has gone into liquidation. A similar point was more recently made in In re Oasis Merchandising Services Ltd [1998] Ch 170, 182, where Peter Gibson LJ giving the judgment of the Court of Appeal, drew a distinction between the property of the company (and property representing the same) and property which is subsequently acquired by the liquidator through the exercise of rights conferred on him alone by statute and which is to be held on the statutory trust for distribution by the liquidator. The importance of distinguishing some statutory rights of a liquidator from the rights of the company in liquidation is also apparent from the judgments of Millett J in In re MC Bacon Ltd [1991] Ch 127, 136 137, and of Knox J in In re Ayala Holdings Ltd (No 2) [1996] 1 BCLC 467, 470 484. As Lewison LJ said at [2016] Ch 50, para 126, the effect of the reasoning in Pyle Works is: (i) that capital capable of being raised only in a winding up is not part of the capital of the company in the ordinary sense; (ii) that the liquidator is the only person empowered to make the call; (iii) existence only when the company is in liquidation; that the statutory fund created by the call comes into that when paid the call is payable to the liquidator as an (iv) officer of the court, and not to the company; (v) that there can be no anticipation of future calls. Thus, where the company seeking to prove possible future calls is not in liquidation, there is not merely no extant debt: there would appear to be no existing person who could be identified as a potential creditor, merely a person who may (or may not) in due course exist, namely a possible future liquidator. There are therefore obvious problems with the notion that the company or its administrator could prove. In this connection, I do not accept the argument that, because section 80 states that a contributory is a debtor from the time he acquires his shares, there must be a creditor at that time, and therefore the company is the creditor. Section 80 identifies the contractual source of a liability on a call (which is described as a debt, even though it is not actually payable until there is a call) and the person entitled to make the call, namely a liquidator see in this connection the observations in Williams v Harding LR 1 HL 9 cited in para 153 above. If this were the only problem with the LBIE administrators case, it may conceivably have been appropriate to conclude that LBIE or its administrators, as some sort of agent for a future liquidator of LBIE, could prove for the potential section 150 liability of LBHI2 and LBL in their respective administrations. It is unnecessary to consider whether that would have been possible because of the other problems faced by the LBIE administrators case on this issue. Thus, quite apart from the fact that he is not a creditor in respect of the potential section 150 liability, it appears to me that there would be serious difficulties if an administrator of a company could prove for such a liability. If the LBIE administrators could prove for such a liability in the administrations of LBHI2 and LBL, it would seem to follow that LBIE could prove in respect of such a liability even if it was in good financial health. I find it difficult to accept that a company which is not insolvent and is trading should be able to prove for and recover sums representing payments in respect of calls, which are only capable of being made by a liquidator on behalf of the court in order to meet statutory liabilities which arise in the event of that companys winding up. Perhaps on the assumption that a proof based on a contributorys potential liability would only be likely to lead to a substantial sum if the proving creditor was in poor financial health, Briggs LJ said at [2016] Ch 50, para 231, that the directors of the proving creditor may reasonably be expected to use the fruits of that proof to keep the wolf from the door. In the first place, there is no reason, at least as a matter of law, which justifies that assumption. Secondly, even where it did apply, it would mean that the contributorys money was being used for a very different purpose from that for which it is statutorily intended. I am unconvinced by the argument that this point could be met by limiting the right to prove for a prospective section 150 liability to a case where the creditor company is in administration: some administrations result in the company being revived, and carrying on business. Further, the suggestion by Briggs LJ at para 233 that the sum paid by the insolvent contributory pursuant to such a proof could be used by the company to put it back on its feet is, again, inconsistent with the purpose of section 150. In addition, the notion that a company could prove for a prospective section 150 liability leads to this quandary. If a contributory pays out on a proof in respect of such a liability, it is unclear whether that would put an end to his liability as a contributory. If it would do so, then the whole point of section 150 would be thwarted: the contributory would be contributing towards putting the company on its feet (or keeping the wolf from the door) and could not then be called on again if the company became insolvent, which is the reason for being a contributory. Alternatively, if (as has been assumed in argument by all parties, and may be supported by the fact that there is no limit on the number of calls which a liquidator may make) paying on a proof in respect of a prospective section 150 liability would not put an end to the contributorys liability, he could sometimes find himself paying out twice once for the costs of putting a company back on its feet (or keeping the wolf from the door), and if the company then falls over (or the wolf then gets in) for the more normal liabilities of a contributory. Other difficulties would arise if a company, which is solvent and viable, was entitled to prove in respect of a prospective section 150 liability in the insolvency of a contributory. Thus, sections 74(1) and 154 envisage that contributories should be entitled to adjust their rights amongst themselves. It is difficult to see how that could be done, in the absence of any applicable statutory provision, in a case where a contributory is liable to pay out for a potential section 150 liability. Further, in most cases, it would also be very difficult to estimate the value of the right to invoke a call under section 150 if the company in question was a going concern. Apart from the inherently wholly speculative nature of the exercise of assessing the extent of the possible future insolvency, there would be the problem of allowing for settling the notional future list of contributories. Additionally, as Briggs LJ accepted at [2016] Ch 50, para 226, if a contributory could be held liable to a company in administration, he could find himself contributing towards the costs and expenses of the administration (as well as those of any subsequent liquidation), which is plainly not intended by section 74. Taking all these problems together, I conclude that it would not be open to LBIE to prove in the distributing administrations or liquidations of LBHI2 or LBL in respect of their potential respective liabilities to contribute under section 150 in the event of LBIE being wound up. I would accordingly allow the appeal of LBHI2 and LBL on this point and set aside para (viii) of the order made by David Richards J. As both Briggs and Lewison LJJ said, this is not an easy point, not least because of the wide words of rule 13.12, the general principle that all potential liabilities should if possible be provable, and the practical consequences of my conclusion. In relation to this last point, I acknowledge that, at least where the company to which it is liable to contribute is not itself in liquidation, this conclusion would enable a potential contributory to escape liability to contribute, at least in some cases, by going into administration or liquidation. I also acknowledge that, in some cases, this conclusion would operate to induce a company to be wound up rather than to go into administration, or to induce an administrator to move a company into winding up. It may be that this raises a particularly acute problem for an administrator in the light of my conclusion in para 128 above in relation to statutory interest. However, I am unable to accept that these points can undermine the conclusion I have reached. They are ultimately attributable to the fact that distributing administrators have, either for good reason or through oversight, not been given all the powers of liquidators, and in particular have not been given the power to call on contributories. Can the LBIE administrators set off the contributories potential liability? The Judge and the Court of Appeal considered that the LBIE administrators were right to contend that they could set off against the proofs lodged by LBHI2 and LBL in respect of their claims as subordinated creditors, their respective prospective section 150 liabilities. This was declared to be the position in para (ix) of the order made by David Richards J. As Briggs LJ said, this followed from their conclusion that the prospective section 150 liabilities were provable. However, in the preceding section of this judgment, I have concluded that they are not provable, and it is therefore necessary to address the question of set off. I do not accept the first line of argument advanced by LBHI, namely, that, simply because the prospective section 150 liabilities are not provable, that of itself means that they cannot be invoked by way of set off by the LBIE administrators against the proofs lodged by LBHI2 and LBL. I can see no good reason why a debt owing by the creditor to the company which is or would be non provable in the creditors insolvency should thereby be disqualified from being set off under rule 2.85 against a proof lodged by the creditor in the companys administration. It is true that there is direct support for the notion that only a provable debt can be invoked to support a set off, in the judgment of Rose LJ in In re Bank of Credit and Commerce International SA (No 8) [1996] Ch 245, 256, where he said a claim is not capable of set off unless it is admissible to proof To qualify for set off, therefore, the creditors claim must be capable of proof This is true of both sides of the account. In his speech in the appeal to the House of Lords, [1998] AC 214, 228, Lord Hoffmann said that he was not sure that this is right, and mentioned the decision of the High Court of Australia, Gye v McIntyre (1991) 171 CLR 609 as reaching the opposite conclusion. In my view, Lord Hoffmanns doubts were justified, the decision on this point in Gye was correct, and Rose LJs observation should be disapproved. There is nothing in rule 2.85 which, at least expressly, stipulates that the set off liability has to be provable, and it is inappropriate to imply limitations into a legislative provision unless it is strictly necessary. In any event, the general purpose of insolvency set off appears to me to point against implying any such restriction. As Parke B explained in Forster v Wilson (1843) 12 M & W 191, 204, the purpose of insolvency set off is to do substantial justice between the parties, which is reflected in the more recent analysis of Lord Hoffmann in Stein v Blake [1996] AC 243, 252 255. Gye was a clearly reasoned judgment of a powerful court, which included the observations at (1991) 178 CLR 609, 628 629 that there was nothing at all in the relevant legislation which required the set off claim to be provable, that there was no reason in fairness or common sense why such an additional test should be imposed, and considerations of justice and fair dealing which underlie the set off provisions require that a set off be allowed in such circumstances. Further, the only case cited by Rose LJ to support his view, Graham v Russell (1816) 5 M & S 498 does not, with respect, appear to be in point. Accordingly, the mere fact that the prospective section 150 liabilities of LBHI2 and LBL are non provable does not mean that, for that reason alone, they cannot be relied on by the LBIE administrators to set off against the respective proofs of LBHI2 and LBL in their capacities as creditors of LBIE. Nonetheless, I consider that LBHI is right to contend that such a set off would be impermissible. The various reasons set out in paras 152 to 165 above explaining why I consider that the prospective section 150 liabilities are not provable also serve to explain why they cannot be set off. Once one analyses who is entitled to make calls under section 150, what those calls are for, and the problems which would arise if the right to call could be raised as a contingent claim by the company concerned or its administrator, it seems to me that they are outwith the scope of rule 2.85 as well as rule 2.72. Thus, while it may appear somewhat casuistic, although the fact that the LBIE administrators cannot prove for the prospective section 150 liabilities does not of itself mean that they cannot invoke those liabilities by way of set off, the reasons why the LBIE administrators cannot prove for those liabilities also justify the conclusion that they cannot invoke them by way of set off. Does the contributory rule apply in distributing administrations? In view of my conclusion that the LBIE administrators cannot set off the prospective section 150 liabilities of LBHI2 and LBL against their proofs, LBHI contends that those companies are entitled to be paid out on their proofs like any other unsecured creditor. Given that LBHI2 and LBL are probably insolvent, the potential injustice of such an outcome is plain: although LBHI2 and LBL may each turn out to be liable under section 150 for a substantial sum (indeed, a sum which may be greater than their proved claims), they would have to be paid those claims in full, leaving a future liquidator of LBIE to receive nothing or a mere dividend in respect of any calls under section 150. Such an outcome would seem to me to be plainly inconsistent with one of the fundamental principles underlying the statutory corporate insolvency regime, namely the pari passu principle. It would also frustrate the statutory aim of enabling effective calls to be made in a liquidation. It is common ground that this problem would not arise if it was a liquidator, rather than administrators, of LBIE who was effecting a distribution because of the contributory rule, which is an aspect of a wider equitable principle known as the rule in Cherry v Boultbee (1839) 4 My & Cr 442. The contributory rule (the Rule) was first applied in a corporate insolvency case 150 years ago in In re Overend Gurney & Co; Grissels Case (1866) LR 1 Ch App 528, and it was more recently discussed by Lord Walker in Kaupthing (No 2) [2012] 1 AC 804. As he pithily expressed it at para 20, a claimant could recover nothing as a creditor until all his liability as a contributory had been discharged. As he later explained, at para 53, when discussing the wider principle, the Rule may be said to fill the gap left by disapplication of set off, but it does not work in opposition to set off. It produces a similar netting off effect except where some cogent principle of law requires one claim to be given strict priority to another. The Rule applies in liquidations, although it is not provided for in the 1986 Act or the 1986 Rules, and is one of the surviving Judge made rules of the insolvency code, as alluded to in para 17 above. The question is whether it can and should be applied in administrations, and, if so, how it should be so applied. In para (vii) of his Order, David Richards J held that the Rule did not have any application in an administration (including the administration of LBIE). The Court of Appeal agreed. A liquidator is statutorily authorised to make calls on a contributory, whereas an administrator is not, and the Rule has only ever been applied in liquidations. However, it does not necessarily follow from this that the Rule cannot be extended to administrations. Neither David Richards J nor the Court of Appeal thought it right so to extend it, but that was, in each case, after having concluded that the prospective section 150 liability of a contributory could be set off against its proved claim in the administration, a conclusion with which, as explained above, I disagree. As I have already indicated, given the detailed and coherent nature of the 1986 legislation, a judge must think long and hard before laying down a new Judge made rule to liquidations. However, in this case, the course being contemplated does not involve inventing an entirely new rule. It involves extending an existing rule so that it can apply to what is an analogous, albeit not identical, situation to that to which it previously applied, and doing so in order to achieve precisely the same end for which it was conceived. A more difficult question is whether taking such a course would involve extending the contributory rule in a way which is inconsistent with the provisions or principles of the current legislation. There is, at least at first sight, a strong argument that such an extension would be inconsistent with rule 2.69 (which requires debts to be paid in full unless the assets are insufficient to meet them), and rule 2.88(7) (which requires any surplus remaining after payment of the debts proved to be applied in paying statutory interest before being applied for any purpose) see paras 20 and 27 above. The answer to this argument is to be found in the fact that the contributory rule undoubtedly applies in a liquidation see per Lord Walker in Kaupthing (No 2) [2012] 1 AC 804, para 20 and per Briggs LJ in this case, [2016] Ch 50, para 243. Yet if the argument is correct, the contributory rule could not apply in a liquidation, as rule 4.181 and section 189(2) are expressed in effectively identical terms to rules 2.69 and 2.88(7) respectively. The true analysis is that the contributory rule is an aspect of a general equitable principle which operates as a qualification to the 1986 Rules regarding distributions in liquidations, and is needed to ensure compliance with the overall purpose of those rules (as discussed in McPhersons Law of Company Liquidation, 3rd ed (2013), paras 10.036, 13.097 and 13.099). Precisely those reasons justify the extension of a slightly modified version of the contributory rule to administrations. In these circumstances, I have come to the conclusion that it is permissible and appropriate for the LBIE administrators to apply the Rule to the proved claims of LBHI2 and LBL, provided it can be effected in a way which is practical, principled and in harmony with the applicable legislative provisions and principles. David Richards J rejected this conclusion, on the ground that: The fundamental difficulty in applying the contributory rule in an administration is precisely because there is no statutory mechanism for making calls on contributories in an administration. While LBIE remains in administration, there can be no calls and therefore nothing that LBHI2 and LBL as members could do to put themselves in a position where they could prove as creditors in respect of their subordinated and unsubordinated claims. Yet this would be the result of applying the contributory rule to a company in administration [2015] 1 Ch 1, para 188. Briggs LJ expressed much the same view in the Court of Appeal: It would be a serious injustice to a solvent contributory to be disabled from ever proving in a distributing administration because, in the absence of a call, there was nothing which he could pay to free himself from the shackles of the rule. The company might (and usually would) distribute all its assets to its creditors without ever going into liquidation, leaving the contributory high and dry, even though its liability as a contributory might be very small, and its claim as a creditor very large [2016] Ch 50, para 239. I readily accept that, if the Rule was simply applied to a distributing administration in its existing terms, it could easily lead to injustice in the way described in those passages. However, in my view, a potential contributory can be protected if the Rule is applied with minor procedural modifications to distributing administrations. When making a distribution, the administrators should retain any sum which, if the Rule had not applied, would otherwise have been distributed to a contributory, in his capacity of a proving creditor. Thus, assuming a 100% dividend, if the administrator considers that a creditors reasonable maximum potential liability as a contributory, A, is greater than his proved claim, B, then B must be retained. If A is less than B, then he can be paid (B A), and A is retained. If the dividend is not 100% (as presumably almost by definition will be the case), then the position is a little more complex. The administrator would have to assess the likely level of dividend, C, and the same exercise would have to be carried out with (C x B) rather than B. Any such exercise would inevitably be speculative, and the administrator should be cautious but realistic. Any such retention would be kept safe and ready to be paid out appropriately when the final accounts were drawn up, and (save perhaps in these unusual days) the retained money would earn interest. What subsequently happens to that retained sum would depend on the outcome of the distributing administration. If it transpired that there were sufficient funds to meet all claims (other than statutory interest) payable under Chapter 10 of Part 2 (or if the contributories provided security for any potential liability they could have as contributories), then the retained sum could simply be paid to the contributories to meet their proved claims. If there were insufficient funds to meet all Chapter 10 claims (other than statutory interest), then, unless none of the potential contributories was good for any contributions, the administrators would, I think, be bound to have the company wound up, for the very purpose of enabling a liquidator to make calls on the contributories, in which case the retained sum would be paid over to the liquidator. The liquidator would then proceed in accordance with the Rule, and would make calls on the contributories to enable any outstanding liabilities not met by the administrators to be met in so far as that was legally and practically possible, and the liquidator would apply the Rule in the normal way. If all sums payable (other than statutory interest) in the liquidation were duly paid without recourse to the retained sum, then the retained sum could be paid to the contributories. Otherwise, the retained sum would be dealt with in accordance with the duties of the liquidator. Referring back to paras 121 and 122 above, the liquidator would be obliged to deal with the retained sum in that way as it will have been held by, and been passed to him by, the administrator for that purpose. LBHIs objections to this course have force, but I do not consider that any of them represents a fatal objection either in law or in practice. It is perfectly fair to say that there is no legislative mechanism which provides for a reserved fund in an administration, let alone one which is liable to be handed over to a subsequent liquidator. However, it is scarcely surprising that there is no such mechanism, given that there is no legislative mechanism for the application of the Rule in the first place, even in liquidations. If, as I consider, justice requires extension of the Rule to administrations, I see no good reason why it should not be permissible to add a relatively simple procedural step which is needed to give effect to that extension, provided, as I say, that it is not inconsistent with any legislative provision. It is also true that, where it turns out that section 150 does not need to be invoked, a contributory may be kept out of the money which would have been distributed to him. However, in many such cases, the administrator will be able to be certain that section 150 need not be invoked when, or shortly after, the distribution is made; anyway, the reserved sum will attract interest. It is also true that it has been held that the Rule is not, at least normally, applicable to a contingent liability see eg In re Abrahams [1908] 2 Ch 69. However, that was a decision on a will, and I do not consider that the same limitation is appropriate to a liquidation, not least in the light of the treatment of contingent liabilities in the 1986 Rules. Even assuming (which I doubt) that the same limitation would normally apply to section 150 claims, I do not see it as being so fundamental that it stands in the way of my conclusion. I was at one time attracted by Briggs LJs point at [2016] Ch 50, para 243, that the courts did not need to devise an extension to the Rule as there would be nothing to prevent an administrator from moving the company into liquidation simply in order to enable the Rule to be invoked against a contributory. However, if it would otherwise be right to continue the administration, it strikes me as involving a waste of time and money, as well as representing a potential inconvenience, to force an administrator to end the administration prematurely in such a way. Furthermore, given my (reluctant) conclusion in relation to statutory interest in para 128 above, effectively forcing an administrator to move the company into liquidation would potentially wreak real unfairness on all the other creditors of the company. Accordingly, I would allow the appeal of the LBIE administrators on this point, and set aside para (vii) of the Order made by the Judge. I draw support for this conclusion from Lord Walkers description of the Rule quoted in para 173 above. He said that it is intended to fill the gap left by disapplication of set off; it seems to me that if the Rule is not extended to administrations, there would be a gap. Similarly, for the reasons just given, I do not consider that some cogent principle of law requires the Rule not to be extended to administrations. Conclusion For these reasons, I would restore para (i), discharge paras (ii) and (iii), restore para (iv), uphold the discharge of para (v), vary para (vi), and discharge paras (vii), (viii) and (ix), of the order made by David Richards J. No doubt, counsel can agree a form of order which reflects the contents of this judgment. LORD SUMPTION: I agree with the disposition of this appeal proposed by Lord Neuberger. I add a judgment of my own only in order to address some of the particular difficulties raised by the so called currency conversion claims. The obligation of a foreign currency debtor is to pay the debt in the designated foreign currency. As a matter of contract, the only sterling sum which will satisfy that obligation is the sterling equivalent of the debt at the time of payment. This was the essential reason why, in Miliangos v George Frank (Textiles) Ltd [1976] AC 443, the House of Lords discarded the old rule of procedure that an English court could not give judgment in a foreign currency, but only in sterling at the rate of exchange prevailing when the debt fell due. Instead, it was held that unless previously paid in the contractual currency or its equivalent, the debt would be converted to sterling at the date of enforcement. Lord Wilberforce observed that circumstances had changed. In the world, then relatively new, of fluctuating currency values, the old rule had given rise to problems whose resolution was urgent in the interests of justice: see p 463G (Lord Wilberforce). This, he said at p 465G H, was because justice demands that the creditor should not suffer from fluctuations in the value of sterling. His contract has nothing to do with sterling: he has bargained for his own currency and only his own currency. The substance of the debtors obligations depends upon the proper law of the contract (here Swiss law): and though English law (lex fori) prevails as regards procedural matters, it must surely be wrong in principle to allow procedure to affect, detrimentally, the substance of the creditors rights. Courts are bound by their own procedural law and must obey it, if imperative, though to do so may seem unjust. But if means exist for giving effect to the substance of a foreign obligation, conformably with the rules of private international law, procedure should not unnecessarily stand in the way. The application of the Miliangos principle to a liquidation was considered by Oliver J in In re Dynamics Corporation of America [1976] 1 WLR 757, a judgment subsequently approved by the Court of Appeal in In re Lines Brothers Ltd [1983] Ch 1. He held that foreign currency debts should be converted to sterling at the rate prevailing at the commencement of the winding up. The result was to shelter the creditor from the risk of a decline in sterling between the date when the debt fell due and the commencement of the liquidation. But the creditor remained exposed to the risk of a decline of sterling between the commencement of the liquidation and the payment of a dividend. This difference between the position of a judgment creditor and a creditor seeking to prove in a liquidation was, however, a necessary incident of any scheme for the distribution of an insolvent estate, because debts had to be expressed in a common unit of account valued as at a common date if creditors were to rank pari passu in their claims to the deficient pool of assets: see the judgment of Oliver J at pp 761 765. In both In re Dynamics Corporation of America and In re Lines Brothers Ltd, it was argued by analogy with the result in Miliangos, that the correct date of conversion should be the date of payment, the sterling value of the debt being restated at that date. The difficulty about this argument, as Brightman LJ pointed out in In re Lines Brothers (p 16) was that where there was a deficiency it was not consistent with pari passu distribution, because any upward restatement of the value of the foreign currency creditors debts would have been at the expense of the sterling creditors: The policy behind the decision, as was recognised by counsel in argument before us, was that the foreign currency debtor should not be entitled to impose on the foreign currency creditor the risk of a fall in the value of sterling. Justice demands that the risk shall be borne by the debtor, who is the party in default. Hence the justice of the re interpretation of the law, that the debtor in default is not to be excused from his contractual obligation by payment of anything less than the sterling equivalent of the money contractually due at the date of payment. At the time when in In re Dynamics Corporation of America and In re Lines Brothers Ltd were decided, there was no specific provision in the Companies Acts or the Winding up Rules for the conversion of foreign currency debts. The mode of valuing them was determined by Judge made law. Since 1986, it has been statutory. Rule 2.72 of the Insolvency Rules 1986 provides that a person claiming to be a creditor of a company must submit a proof to the administrator. Rule 4.73, which deals with liquidation, is in substantially the same terms. In both cases, a proof must state the value of the debt at the commencement of the administration or liquidation. I shall refer to this as the cut off date. Rules 2.86 and 4.91 provide that for the purpose of proving a debt incurred or payable in a currency other than sterling, the debt must be valued in sterling at the exchange rate prevailing on the cut off date. The combined effect of these provisions is that a creditor with a foreign currency debt can prove only for its sterling equivalent at the cut off date. The currency conversion claims made by the LBIE creditors arise from a fall in the value of sterling between the cut off date and the date of payment of the dividend. The result is that at the date when the dividend comes to be paid, its amount will be based on a sterling valuation of the debt which is less than its actual sterling value on that date. The dividend will not therefore represent his pro rata share of the full amount which he was entitled by contract to be paid. Even if the company proves to be solvent and a dividend of 100 pence in the pound is paid on his proved debt, this will represent less than his contractual entitlement. Although described as currency conversion claims, the claims of the LBIE creditors are in reality simply claims for the unsatisfied balance of the original foreign currency liability. David Richards J and the majority of the Court of Appeal held that although a foreign currency creditors proof was limited to the sterling equivalent of the debt at the cut off date, the unsatisfied balance claimed by the LBIE creditors was recoverable as a non provable debt in a case where there was a surplus available for that purpose after the satisfaction in full of provable debts. Non provable debts are a necessary anomaly in the law of insolvency. Although successive statutory schemes have broadened the range of provable debts, some liabilities are still not provable. These are generally liabilities arising after the commencement of the liquidation or administration, but which are not expenses of the office holder because they arise from matters occurring while the company was a going concern. At the relevant time for the purposes of these proceedings (ie before the Rules were amended in 2006), they included liabilities in tort arising from breaches of duty before the cut off date but giving rise to loss thereafter: In re T & N Ltd [2006] 1 WLR 1728, at paras 106 107. They still include statutory liabilities arising after the cut off date by virtue of events occurring before: In re Nortel GmbH [2014] AC 209. As these examples demonstrate, non provable debts are in principle payable out of any surplus remaining after the satisfaction of provable debts, notwithstanding the absence of express provision for them in the Act or the Rules. This is because the alternative would be to pay the surplus over to shareholders, something which is contrary to the fundamental principle that the assets of a company may not be returned to shareholders while there remains an outstanding unsatisfied liability. As Pearson J observed in Gooch v London Banking Association (1886) 32 Ch D 41, 48, the liquidators would be guilty of a dereliction of duty if they were to distribute the assets without providing for this liability. I have no difficulty with the concept that non provable debts may be recoverable from a surplus, but I do not accept the conclusion of David Richards J and the majority of the Court of Appeal that the unsatisfied balance of a foreign currency debt can be recovered on that basis. The reason can be shortly stated. It is axiomatic that where the Insolvency Rules deal expressly with some matter in one way, it is not open to the courts to deal with it in a different and inconsistent way. The recoverability of non provable debts out of a surplus means that that the statutory rules for recovering a dividend on provable debts cannot be regarded as a complete code of the creditors rights of recovery. But rules 2.86 and 4.91 must be regarded as a complete code for the specific case of foreign currency debts. Non provable debts are normally debts for which no provision is made in the statutory mechanism of proof and distribution. But the Insolvency Rules do provide for foreign currency debts. Rules 2.86 and 4.91 provide that they are to be valued at the cut off date and that distributions are to be made in accordance with that valuation. The limitations of these provisions are as much part of the statutory scheme as their positive enactments. It follows that if a debt is provable but the limited character of these provisions nonetheless leaves part of it unsatisfied, the creditor cannot recover more in respect of the same debt by reference to the Judge made rules governing non provable debts. A foreign currency debt is a provable debt. It is both inherently implausible and inconsistent with the language of the Rules to suppose that the legislator envisaged that the same debt could at one and the same time be recoverable as to part as a provable debt and as to the rest as a non provable, conditionally on there being a surplus. That this limit on the recoverability of such debts was deliberate is strongly suggested by the fact that both the Law Commission and the Cork Committee, whose reports were the basis of the 1986 legislation, concluded that the unsatisfied balance of a foreign currency debt should not be recoverable, even if there was a surplus from which to pay it. For my part, I have some misgivings about their reason for this conclusion, which was that since a creditor could not be required to account for a foreign currency gain arising from an appreciation of sterling, he should not be entitled to recover a loss arising from its fall. But that is beside the point. What matters is that, whether or not their reasons were good, their recommendation was on the face of it adopted by the legislator. This makes it unnecessary to determine the nature of insolvency proceedings as applied to debts in general. There are two possibilities. The first is that the statutory scheme for corporate insolvency works by discharging the creditors legal right and replacing it by a right to receive a distribution from the insolvent estate in accordance with the Rules. In that case, there is no continuing contractual obligation which can be said to remain partially unsatisfied once the creditor has received all that the Insolvency Rules entitle him to. The second possibility is that insolvency proceedings merely operate as an administrative procedure for distributing the debtors assets pari passu among its creditors when there is a deficiency, without abrogating or altering the creditors pre existing legal rights save in so far as the legislative scheme so provides. As David Richards J put it (para 110), the creditors contractual rights are compromised by the insolvency regime only for the purpose of achieving justice among creditors through a pari passu distribution. In that case, the creditors claims survive and remain enforceable against any surplus assets, unless the legislation otherwise provides. On the view which I take, even if this latter analysis is correct, it will not avail the LBIE creditors, since in the case of foreign currency debts the legislation does otherwise provide. These fundamental questions about the nature of insolvency proceedings have arisen in the case law in a wide variety of legal contexts. It may well be necessary to answer them at some point in the future. In the meantime, I merely express the provisional view that there is much to be said for the way in which David Richards J and the majority of the Court of Appeal answered them. In the first place, the view that insolvency proceedings are in principle purely administrative, is consistent with the way that the law has developed historically. The origins of English insolvency law lie in statutory provisions governing personal insolvency which date back to the 16th century. The Companies Act 1862, which provided for the creation of the first modern limited liability companies, also provided for winding them up in accordance with a distinct regime for corporate insolvency. But the principles applied to personal and corporate insolvency were always closely related. Throughout their history, a cardinal feature of both has been that the effect of bankruptcy, winding up or administration on the companys existing liabilities is procedural, not substantive. Subject to any contrary order of the court, the commencement of insolvency proceedings suspends the creditors right to proceed against the debtor or his property for the recovery of his debt, and stays litigation already in progress. In other words, it suspends the creditors remedies, but not his rights. The current statutory provisions are section 130 of the Insolvency Act 1986 (for a winding up by the court), section 285 (for personal bankruptcy), and Schedule B1, paras 43 44 (for administration). They are no different in their general approach from those which applied before 1986. The purpose of the procedural moratorium was to allow the insolvents assets to be realised and distributed to his creditors in proportion to their justified claims. That process was also procedural. In the law of personal insolvency, a bankrupt remained personally liable for his pre bankruptcy debts, for which he could be sued (and under the old law even imprisoned) for an indefinite period after his assets had been distributed to his creditors. The concept of discharge, which was first introduced into English insolvency law by the Bankruptcy Act 1705 (4 & 5 Anne c 17), was designed to mitigate that indefinite liability. By statute, the bankrupt might be discharged by an authority on whom powers were conferred for that purpose, originally the Lord Chancellor but ultimately the Chancery Division. This remains the position. Sections 279 281 of the Insolvency Act 1986 provide for automatic discharge a year after the bankruptcy order, but the time may be extended by the court. It will be apparent that the whole basis of the procedure for discharge was and is that the process of proof of debt and pari passu distribution of assets had not itself discharged the bankrupt. Discharge at the conclusion of the insolvency proceedings or at a specified time after their inception was never a feature of corporate insolvency, even on the limited basis on which it applied in personal insolvency. It was unnecessary, because a corporate insolvency ended with the dissolution of the company, as indeed with limited exceptions it still does. Secondly, English corporate insolvency law has from its inception adopted the principle which had always been fundamental to bankruptcy that liquidation was a mode of collective enforcement of debts, which operated procedurally and administratively rather than substantively and did not itself extinguish the creditors liabilities. The point was first articulated by Lord Cranworth in Oakes v Turquand (1867) LR 2 HL 325, 364, in the context of the Companies Act 1862. For the same reason, Sir George Giffard stated, in In re Humber Ironworks and Shipbuilding Co Ltd (1869) LR 4 Ch App 643, 647, that upon a surplus being ascertained, so that pari passu distribution of a deficient estate is no longer relevant, the creditor whose debt carries interest is remitted to his rights under his contract. A tentative statement to the same effect was made by Brightman LJ in In re Lines Brothers Ltd, at p 20. But the clearest modern statements of the principle are due to Lord Hoffmann. In Wight v Eckhardt Marine GmbH [2004] 1 AC 147, para 21, he rejected an argument that the right to share in a liquidation is a new right which comes into existence in substitution for the previous debt and is governed by the law of the place where the liquidation is taking place, rather in the way that obtaining a judgment merges the cause of action in the judgment and creates a new form of obligation, namely a judgment debt, governed by its own rules of enforceability. His reason was as follows: 26. It is first necessary to remember that a winding up order is not the equivalent of a judgment against the company which converts the creditors claim into something juridically different, like a judgment debt. Winding up is, as Brightman LJ said in In re Lines Bros Ltd [1983] Ch 1, 20, a process of collective enforcement of debts. The creditor who petitions for a winding up is not engaged in proceedings to establish the companys liability or the quantum of the liability (although liability and quantum may be put in issue) but to enforce the liability. 27. The winding up leaves the debts of the creditors untouched. It only affects the way in which they can be enforced. When the order is made, ordinary proceedings against the company are stayed (although the stay can be enforced only against creditors subject to the personal jurisdiction of the court). The creditors are confined to a collective enforcement procedure that results in pari passu distribution of the companys assets. The winding up does not either create new substantive rights in the creditors or destroy the old ones. Their debts, if they are owing, remain debts throughout. They are discharged by the winding up only to the extent that they are paid out of dividends. But when the process of distribution is complete, there are no further assets against which they can be enforced. There is no equivalent of the discharge of a personal bankrupt which extinguishes his debts. When the company is dissolved, there is no longer an entity which the creditor can sue. But even then, discovery of an asset can result in the company being restored for the process to continue. Similar observations were made by Lord Hoffmann with the support of this court or the Judicial Committee of the Privy Council in Parmalat Capital Finance Ltd v Food Holdings Ltd (in liquidation) [2008] BCC 371, and Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings Plc [2007] 1 AC 508, at para 15; and by Lloyd LJ with the support of the rest of the Court of Appeal in Financial Services Compensation Scheme Ltd v Larnell (Insurances) Ltd (in liquidation) [2006] QB 808. Third, there is no reason to believe that the position, well established before 1986, was altered by the insolvency legislation of that year. The 1986 legislation achieved some important changes in United Kingdom insolvency law. The provisions governing proof of debt and the distribution of assets became more elaborate and more comprehensive than the corresponding legislation in force before 1986. But these were incremental changes, many of which in effect codified earlier Judge made law. The purpose and character of the process of proof of debt and distribution did not change. There are, as there always have been, specific circumstances in which the current scheme of corporate insolvency does provide for a discharge. The most significant of them is mutual set off, which occurs automatically under rules 2.85 and 4.90, in circumstances when set off would not necessarily be available at common law. Set off by its very nature brings about a pro tanto discharge of the liability. The disclaimer of onerous obligations under section 178 of the Act is another example. But in neither case is the creditors right affected, except by its pro rata abatement where there is a deficiency of assets. So far as the creditors debt is discharged by set off, he receives full value. So far as it is disclaimed, the debtors obligation is transmuted into a claim for the full amount of the resultant loss, for which the creditor may prove just as he could have proved for the liability disclaimed. All of this was equally true of the pre 1986 legislation in force when most of the cases which I have cited were decided. The critical point, however, is that where the legislation effects a discharge of a liability, as it does in these special cases, it does so expressly. An implied discharge is of course conceptually possible. But there is a strong presumption against the implied legislative abrogation of existing rights, and nothing in the Act or the Rules from which such an implication could be thought necessary. Fourth, in every respect relevant to the present question, the provisions of the Insolvency Act and Rules governing proof of debt and distribution are the same for liquidation or administration on the one hand and bankruptcy on the other. As I have pointed out, it is and always has been the position in personal insolvency that the underlying liabilities of the bankrupt are not discharged by the bankruptcy order or by the subsequent bankruptcy proceedings, save in so far as they are satisfied by the resultant distribution. There is no discharge of the unsatisfied balance until the bankrupt is discharged, either by the court or automatically subject to the discretion of the court. The statutory provisions for the discharge of the bankrupt in personal insolvency are qualified by express provisions preserving the liability of persons jointly or secondarily liable with the bankrupt, who might otherwise be released by the latters discharge: see section 281(7) of the Insolvency Act, which substantially re enacts section 28(4) of the Bankruptcy Act 1914. This is an important safeguard for the rights of and liabilities of third parties. By comparison, with limited exceptions (see above), the law of corporate insolvency has never expressly provided and still does not expressly provide for the discharge of underlying liabilities at any stage, short of payment in full or dissolution. Moreover, there are no corresponding provisions relating to joint obligors and sureties in those parts of the Act which relate to corporate insolvency, as there surely would have been if the legislator had intended that a liquidation or distributing administration should discharge the liabilities of the insolvent company. I am not persuaded that such a radical transformation of the basis of our law of insolvency is achieved by Rule 2.72(1) of the Insolvency Rules, which was the only provision relied upon as expressly having that effect. Rule 2.72(1) provides that a person claiming to be a creditor of the company and wishing to recover his debt in whole or in part must submit a proof. The argument is that once the amount for which the creditor has proved has been satisfied by the payment of a dividend, the creditor is treated as having recovered the debt in whole, or at any rate the whole of the part of the debt for which he proved. In my opinion, this reads too much into the words. Rule 2.72(1) is a purely administrative provision. It appears under the rubric Machinery of Proving a Debt. The accuracy of this description is borne out by the remaining sub rules. The reason why the rule refers to a person wishing to recover his debt in whole or in part is that he may not wish to prove for a debt so far as it is wholly or partly secured. If he did, he would have to surrender his security and allow the property to which it related to be added to the insolvent estate. As a matter of ordinary English, the natural meaning of rule 2.72(1) is simply that a creditor must prove for any claim or part of a claim in respect of which he wishes to receive a dividend. Moreover, rule 2.72(1) is in the same terms as rule 6.96, which is the corresponding provision governing proof of a bankruptcy debt in personal insolvency. Yet it is clear that in personal insolvency the underlying liability is not discharged by proof and survives the payment of a dividend. LORD CLARKE: (dissenting) On every issue but one I agree with Lord Neuberger. The exception relates to the currency conversion claims. So far as claims made in foreign currencies are concerned, the position at common law was radically changed by the decision of the House of Lords in Miliangos v George Frank (Textiles) Ltd [1976] AC 443. Since then it has been recognised that a debt contractually payable in a foreign currency must be discharged in that currency or, if discharged in sterling, at the relevant rate of exchange at the date of payment in order to ensure that it is fully repaid in the contractual currency. It follows that, at any rate in the absence of an administration or liquidation, where the debtor is solvent, the debtor must pay the whole amount so calculated. The obligation to pay is a common law obligation. Where a company goes into administration or liquidation, a creditor must submit a proof to the administrator or liquidator under rules 2.72 and 4.73 of the Insolvency Rules respectively. The combined effect of rules 2.86 and 4.91 is that the proof must state the value of the debt at the cut off date and the debt must be converted into sterling at the exchange rate on that date. If the value of sterling falls between that date and the date on which the debt would be due at common law, and if the debtor is solvent at that time, the creditor will make a currency conversion loss unless he is entitled to recover the difference from the debtor. The question is whether he can recover that difference in order to ensure that he is repaid in aggregate the whole of the value of the debt inclusive of interest to the date of the repayment. In my opinion, he should in principle be entitled to recover that whole amount in order to ensure that he recovers the full amount to which he is entitled at common law under the contract. I am not persuaded that there is any relevant rule or statutory provision that leads to any contrary conclusion and, absent such an intervention, it is sufficient to resolve the issue by an application of the common law. As I see it, the point was clearly and accurately put by Briggs LJ in the Court of Appeal in this very case. In para 136 he expressed disagreement with Lewison LJ that currency conversion claims do not constitute, or therefore rank as, non provable liabilities. In his view they do. He added that the conversion into sterling of foreign currency debts as at the cut off date is, as both rule 2.86 and rule 4.91 make clear, for the purpose of proof and, under rule 4.90(6), for the purpose of set off. Apart from that, he said, there is nothing in the Insolvency Act or in the Rules which prevents the foreign currency creditor from reverting to his contractual rights, once the process of proof (and payment of statutory interest) has run its course, if there is then a surplus. I agree. In my opinion, this is a critical point. I further agree with Briggs LJ when he accepted (at para 137) counsels submission that a currency conversion claim is not a separate or new claim arising from the effect of the two conversion rules. He then in effect harked back to Miliangos in saying that it is simply the balance of the creditors original contractual claim which has not been discharged by the process of early conversion, proof and dividend under the relevant part of the insolvency scheme. The creditor bargained for payment in the specified currency. What he received was payment in sterling, by reference to a conversion date years earlier than payment. Briggs LJ identified the injustice as arising entirely from his exposure to currency risk during the potentially long period between conversion and payment, contrary to the contract, which placed that risk squarely on the company in liquidation or administration. He added that it was not a risk against which the creditor can easily hedge, since (even if while unpaid he has the financial resources) he does not know when, or how much, he will eventually be paid. I agree with Briggs LJ at para 138 that the starting point is to focus on insolvency law as it was immediately prior to 1986, some ten years after Miliangos and before the Insolvency Act 1986. He considered two particular circumstances: a liquidation might affect a company which was solvent; or, it might begin on the basis of insolvency but turn out to be solvent as the realisations of assets exceeded provable liabilities, as in the case of LBIEs administration. He noted in para 139 that in either case non provable liabilities still had to be settled before distributions could be made to members. The basic principle upon which non provable liabilities were dealt with was by reference to the creditors full claim, whether under contract by reference to the concept of reversion to contract used in that case, or in tort, where the liability was not provable. He added, at para 140, that the rules were almost entirely judge made. In para 142 he explained that In re Dynamics Corporation of America [1976] 1 WLR 757 and In re Lines Bros Ltd [1983] Ch 1 need to be understood in that context. Both cases sought to fashion a judge made rule to deal with the establishment in Miliangos of the principle that English law both could and should recognise the injustice of converting a foreign currency obligation into sterling at the date of the commencement of proceedings. They did so as an adjunct to the law of bankruptcy, which was applicable to the winding up of insolvent companies, by requiring that, as an exception to the Miliangos principle, proof of the debt constituted by a foreign currency obligation required conversion into sterling at the cut off date, so that all proving creditors could be treated equally, in a single unit of account. In particular, that adjunct was a Judge made part of the legal process of proof of debts. It had no wider purpose. I agree with Briggs LJ that neither Brightman LJ nor Oliver LJ was deciding anything about how to deal with foreign currency liabilities in a solvent winding up. In so far as Lewison LJ expressed a different view, I respectfully disagree. As Briggs LJ explained in para 144, the 1986 insolvency legislation made significant changes to the insolvency structure, but it was not comprehensive and important judge made principles continued to be applicable. The new legislation did not purport to deal with non provable claims. Having set out a number of classes of non provable claims, Briggs LJ dealt with non provable claims in this way at the end of para 145: While it may be assumed that Parliament specifically intended them not to be provable liabilities in a liquidation, there can be no basis for inferring a legislative intent that they could not be pursued in a liquidation in the event of a surplus after payment of provable debts and statutory interest. In short, the 1986 legislation simply passed them by, leaving them to be pursued, in the rare event of a surplus, by reference to the pre existing judge made law. I agree. In paras 146 and 147 Briggs LJ expressed these conclusions: 146. Thus, although the legislation provided for the first time that, in a solvent liquidation, a pari passu process of distribution against proved claims would be the first stage, distribution of any surplus (after statutory interest) would continue to require the liquidator to treat non provable claimants as having an entitlement ranking prior to that of the members, applying legal principles not to be found set out in detail anywhere in the legislation. 147. Against that background it is of course a question of construction whether or not the Insolvency Rules provide that claims in foreign currency can only be pursued by the process of conversion and proof set out in rules 2.86 and 4.91, so that proof followed by payment leaves them wholly exhausted, or whether, as the judge concluded, those rules merely provide a means of quantifying the amount of the proof, for the purposes of proof, but leave any residue of the original contractual entitlement intact, and capable of being pursued in the event of a surplus. Again, I agree. Briggs LJ then considered the language of the rules, which he thought pointed firmly in the direction identified by the judge. In particular rules 2.86 and 4.91 both used the same formula, namely for the purpose of proving . I agree with him (in para 148) that the effect of each rule is simply to provide an exchange rate for the necessary conversion of the face value of the foreign currency debt into sterling so that the creditor can prove for a specific sterling amount. This was exactly what the judge made rule had done, also (and only) for the purpose of proof. Briggs LJ expressed his conclusion on this part of the case thus in para 153: The potential for injustice caused by the permanent conversion of a foreign currency debt into sterling is entirely the result of the inevitable gap in time between the conversion date and the payment of dividends, during which the risk of depreciation in sterling is thrown, contrary to the contract, on the creditor. But absent set off there is no reason why the conversion for the purpose of proof should be anything more than a means of part payment which is fair as between all proving creditors, leaving the foreign currency creditor with a remedy against a surplus if (but only if) sterling has depreciated in the meantime, and after all proving creditors have been paid in full with statutory interest. I agree. Briggs LJ then noted in para 154 that Lewison LJ had given ten reasons for his preference for a permanent substantive effect as the true construction of the two conversion rules. He then gave his reasons for reaching a different conclusion. He did so in paras 154 to 161 which I find convincing but which it is not necessary to repeat here, save as follows. In para 161 Briggs LJ recognised that the currency conversion rules apply, like all the other rules about proof of debts, both to solvent and insolvent windings up. He added: This was a major change wrought by the 1986 legislation, as I have described. The statutory part of the insolvency scheme is now applied to all companies in liquidation. It is by no means confined to the currency conversion rules, but applies also to the whole body of rules which focus on the cut off date, to the exclusion from proof of post cut off date liabilities, as well as to set off. I agree. Briggs LJ expressed his overall conclusions in paras 162, 163 and 166 in this way: 162. In the context of an undoubtedly solvent company it is not easy to see why any of those rules should be applied, where the undoubted consequence is that there has then to be a two stage process, first of proof and then of the satisfaction of non provable liabilities. But there are equally unsatisfactory aspects of the old regime, in which bankruptcy law was applied only to insolvent companies. Parliament had a choice to make between two alternatives, neither of which can be said to have been ideal. Perhaps the main justification (apart from uniformity) of the choice actually made is that companies may move into and out of insolvency during a liquidation or distributing administration, so that it is better to deal by a single process first with the claims of all those entitled on insolvency, leaving until later the just distribution of any surplus, if there turns out to be one in fact. A second obvious reason is that insolvent liquidation or administration is overwhelmingly the main target of the legislation, as the name of both the Act and the Rules makes clear. 163. However that may be, I do not regard that choice as saying much about the construction of the currency conversion rules, all the more so because they are prefaced by the phrase for the purpose of proving. They are merely one provision which, (like the cut off date itself) is not the end of the story if there is a relevant surplus to be distributed to those entitled to it. 166. The result is that, in respectful disagreement with Lewison LJ, I consider that the judge was correct to regard currency conversion claims as non provable liabilities falling to be dealt with as such in the event of a surplus after payment of provable debts and statutory interest. The language of both relevant rules contains a clear direction to treat conversion as being for the limited purpose of proof of debts, and a separate sub rule applies the conversion rules for the additional purpose of set off. Great injustice will be caused in ultimately solvent liquidations if those rules are given a wider effect than expressly prescribed, and there is in my view no convincing reason why that should be so. I would therefore dismiss the appeal against paragraphs (ii) and (iii) of the judges order. I found that reasoning wholly convincing. Moore Bick LJs reasoning was to much the same effect. I was struck in particular by his quotation of paras 26 and 27 of the judgment of Lord Hoffmann in the Privy Council in Wight v Eckhardt Marine GmbH [2003] UKPC 37; [2004] 1 AC 147, where he stressed that a winding up order is not the equivalent of a judgment against the company. He pointed to the statement of Brightman LJ in In re Lines Bros Ltd [1983] Ch 1, 20 that winding up is a process of collective enforcement of debts. Lord Hoffmann stressed that a winding up does not either create new substantive rights in the creditors or destroy old ones. He added: Their debts, if they are owing, remain debts throughout. They are discharged by the winding up only to the extent that they are paid out of dividends. But when the process of distribution is complete, there are no further assets against which they can be enforced. So, on the facts here the obligation upon the debtor to discharge its obligation to pay interest at the contract rate in dollars remained so long as the company was solvent. There is a good deal of support for this principle: see eg the (albeit obiter) statements of Brightman and Oliver LJJ in In re Lines Bros Ltd [1983] 1 Ch 1, 21 and 26 respectively quoted by Moore Bick LJ in the Court of Appeal at paras 255 and 256. As I see it, any other view would have the effect of allowing shareholders to recover claims against the company ahead of creditors with valid claims at common law. In my opinion that would be wrong in principle. In short, there is no common law principle which supports the view that a creditor is not entitled to recover sums in a foreign currency owed to it by a solvent company. Such a conclusion would be to prefer the interests of a debtor company (and its shareholders) to those of the creditor. Such a conclusion could only be justified by statute or statutory instrument. To my mind clear words would be required to deprive the creditor of its common law rights. As I see it, there is no provision in the 1986 Act which has that effect. Reliance is placed upon rule 2.72(1) of the Insolvency rules quoted by Lord Sumption in para 201. I agree with him that the words relied upon in rule 2.72(1), wishing to recover his debt in whole or in part do not have that effect. I am bound to say that for my part I am not persuaded by the points made by Lord Neuberger in his discussion of the reports leading up to the 1986 legislation. In short, I prefer the reasoning of David Richards J at first instance and of Moore Bick and Briggs LJJ in the Court of Appeal to that of those who have taken a different view. I would dismiss the appeal on this point on the simple ground that there is no statute, statutory rule or common law principle to deprive creditors of a solvent company of a common law right to recover a debt in a foreign currency. As I see it, to conclude otherwise would be to permit shareholders to be preferred to creditors of a solvent company, which would be wrong in principle. I appreciate that the conclusion which I have reached above as to the true construction of rules 2.86 and 4.91 differs from that reached by the majority. I note that in para 194 Lord Sumption has expressed some misgivings about the reasons for the conclusion that the effect of those Rules is that the unsatisfied balance of a foreign currency debt should not be recoverable, even if there is a surplus from which to pay it. I share those misgivings, but I would go further. I do not think that the Rules are clear enough to give the shareholders a windfall at the expense of creditors where there is a surplus which could satisfy the whole or part of the companys liability to the creditors. However, I am pleased to note that the majority have left open the broader questions identified by Lord Sumption at paras 195 et seq. As matters stand at present I agree with his approach, which is essentially the same as I have tried to describe above. It is, as I understand it, agreed that these are questions for final determination on another day.

UK-Abs

This appeal and cross appeal arise from the 2008 collapse of the Lehman Brothers group (the Group). The Groups main trading company in Europe was Lehman Brothers International (Europe) (LBIE), an unlimited company. LB Holdings Intermediate 2 Ltd (LBHI2) holds all LBIEs ordinary and redeemable shares, except one ordinary share which is held by Lehman Brothers Ltd (LBL). LBIE, LBL and LBHI2 have all been in administration since January 2009. LBIE appears to be able to repay its external creditors in full. Under the provisions of the Insolvency Act 1986 as amended (the 1986 Act), an administrator of a company is permitted to make distributions to creditors. Since December 2009, LBIE has been in a distributing administration. The LBIE administrators declared and paid a first interim dividend to its unsecured creditors in November 2012. The LBIE administrators received proofs of debt from unsecured creditors including LBL and LBHI2 and the LBL administrators received proofs from LBHI2 and LBIE. A consolidated set of rules regarding corporate insolvency is set out in the 1986 Act and the Insolvency Rules 1986 as amended (the 1986 Rules) (together, the 1986 legislation). Schedule B1 to the 1986 Act contains provisions dealing with administration. Part 2 of the 1986 Rules is concerned with Administration Procedure and Chapter 10 of that Part, which includes rules 2.68 to 2.105, deals with Distributions to Creditors. The 1986 legislation does not constitute a complete insolvency code and certain established judge made rules may continue to operate. In a distributing administration, as in a liquidation, the duty of the office holder is to gather in and realise the assets of the company and to use them to pay off the companys liabilities. A generalised summary of the distribution priorities in relation to such payments (the waterfall) is set out in In re Nortel GmbH [2014] AC 209 para 39. In February 2013, the administrators of LBIE, LBL and LBHI2 issued proceedings seeking the determination of the court on issues arising in the administrations. In March 2014, Richards J delivered a judgment, and made ten consequential declarations. The Court of Appeal (Moore Bick, Lewison and Briggs LJJ) upheld most, but varied some, of them. The Supreme Court now determines the following issues: Issue 1 concerns the ranking in the waterfall which can be claimed by LBHI2 in its capacity as holder of three subordinated loans made to LBIE, and in particular whether LBHI2s claims rank ahead of statutory interest payable under rule 2.88(7) and/or non provable liabilities. Issue 2 arises from the fact that LBIEs creditors with debts denominated in a foreign currency will be paid under rule 2.86 at the rate of exchange prevailing at the date LBIE went in to administration, and sterling may have depreciated on the foreign exchange markets between that date and the date of payment. The foreign currency creditors claim that they are entitled to receive any contractual shortfall as a non provable claim. Issue 3 concerns whether a creditor of LBIE who had been entitled to, but had not been paid, statutory interest, can claim such interest in a subsequent liquidation. The remaining four issues arise because LBIE is an unlimited company and so its members can be called upon to make contributions under section 74 of the 1986 Act to meet its liabilities if LBIE is in liquidation. Issue 4 is whether such contributions can be sought in respect of liability for statutory interest and for non provable liabilities of LBIE. The other three issues arise because LBHI2 and LBL are creditors of LBIE as well as members of LBIE liable to contribute as such. Issue 5 is whether LBIE can prove in the administrations of LBHI2 and of LBL in respect of their contingent liabilities to make contributions in LBIEs prospective liquidation if they are called on to do so pursuant to section 150 of the 1986 Act. If LBIE cannot do this, issue 6 is whether LBIE can exercise a right of set off. If not, issue 7 is whether LBIE can invoke the so called contributory rule which applies in a liquidation, namely that a person cannot recover as a creditor until his liability as a contributory had been discharged. Lord Neuberger writes the lead judgment, with whom (i) Lord Kerr and Lord Reed agree, (ii) save on an obiter issue on Issue 2, Lord Sumption agrees, and (iii) save on Issue 2 on which he dissents, Lord Clarke agrees. Issue 1: LBHI2s contention, which turns on the interpretation of the Subordinated Loan Agreements, is that its claim as subordinated creditor ranks ahead of statutory interest and non provable liabilities because they are obligations not payable in the insolvency of LBIE or (in the case of statutory interest) it is not payable and owing by [LBIE] within the meaning of the Subordinated Loan Agreements. In agreement with the courts below, the Supreme Court rejects LBHI2s arguments. Statutory interest is plainly an obligation payable in LBIEs insolvency [48 49]. It is also payable and owing by [LBIE], even though LBIE could not be sued for it [51 56]. Secondly, the notion that a liquidator who meets a non provable liability makes a payment in the Insolvency is implied by the provisions of the 1986 Act and by the practical realities [58 61], and the same applies to an administrator [62]. Accordingly, statutory interest and non provable liabilities must be met before any balance can be used for payment of the subordinated loans [64]. In agreement with the judge and disagreeing with the Court of Appeal, LBHI2 cannot prove for the subordinated loans until the non provable liabilities are paid or clearly could be met [70]. Issue 2: Disagreeing with the Judge and the majority of the Court of Appeal, the Supreme Court concludes by a majority of 4 to 1 that rule 2.86, which provides that unsecured debts payable in foreign currencies are to be converted in to sterling at the official rate on the administration date, spells out the full extent of a foreign currency creditors rights [90], and so foreign currency creditors cannot claim as a non provable debt the difference between the sterling value of the debt at the administration date and that at the date the debt was paid [112]. This is consistent with the conclusion reached in reports produced prior to the 1986 legislation [88]. It is also supported by the fact that the contrary conclusion would lead to a one way option in favour of the foreign currency creditors [91] and that, in contrast to proofs for certain other debts, there is no provision in the 1986 Rules for their adjustment [93]. It is dangerous to rely on judicial dicta regarding a previous insolvency code [83]. Lord Clarke dissents on this issue [206 and 211 221]. On the wider issue whether the payment in full of a proved debt satisfies the underlying contractual debt, by a majority of 3 to 2 the Supreme Court inclines to the view that it is inconsistent with Chapter 10 of Part 2 of the 1986 Rules, and the natural meaning of rule 2.72(1), that a debt met in full nonetheless has a component which is capable of resurrection [104 107]. Lord Sumption is inclined to disagree on this issue [195 201] and Lord Clarke agrees with him. Issue 3: Rule 2.88(7) only applies to an existing administration and constitutes a direction to an administrator while in office. Section 189(2) and rule 4.93 exclude rule 2.88(7) interest being proved for or paid once a company previously in administration is put in to liquidation [117]. In agreement with the Judge and disagreeing with the Court of Appeal, the Supreme Court considers that it is impermissible to have recourse to an entirely new judge made rule to fill this gap [120 123]. Disagreeing with the Judge, the Supreme Court concludes that the contractual right to interest for the post administration period does not revive or survive in favour of a creditor who has proved for a debt and been paid on his proof in a distributing administration. Rules 2.88, 4.93 and section 189 provide a complete statutory code for recovery of interest on proved debts [124 5]. Issue 4: Liabilities in section 74 of the 1986 Act is not limited to those capable of being the subject matter of a proof and includes non provable liabilities [136]. However, rule 2.88(7) provides that statutory interest is payable only where there is a surplus after payment of the debts proved, and, in disagreement with the Judge and the Court of Appeal, the Supreme Court holds that section 74 cannot be invoked to create a surplus from which statutory interest can then be paid [139]. Issue 5: section 150 creates a statutory obligation on a member [153] and entitles the liquidator to make the call to fulfil his statutory duties. Contrary to the view of the courts below, the Supreme Court considers that the nature of that obligation is such that it is incapable of being the subject matter of a proof unless the company concerned is in liquidation [154]. Any money paid under section 74 forms a statutory fund which can only come into existence once that company is in liquidation [156]; if that company not in liquidation, there is no existing person to be identified as a potential creditor, merely a possible future liquidator [158]. Further, the alternative would lead to serious difficulties [160 163]. Issue 6: essentially for the same reasons, prospective section 150 liabilities cannot be set off by the LBIE administrators [171]. Issue 7: It is plainly inconsistent with the pari passu principle and with the statutory aim of enabling effective calls to be made in a liquidation to allow LBHI2 and LBL to be paid out on their proofs like any other unsecured creditor, given that they are probably insolvent [172]. The contributory rule which applies in liquidations can properly be, and should be, extended to a distributing administration, with procedural modifications to achieve consistency with the legislative framework [180 182].

I can take the underlying facts from the agreed statement of facts and issues. The appellants are employed as teachers at the respondents sixth form college. They have brought this action and pursued this appeal supported by their union, the NASUWT. Their contracts of employment incorporate terms relating to working time from a collective agreement entitled Conditions of Service Handbook for Teaching Staff in Sixth Form Colleges. It is known as the Red Book. When sixth form teachers whose contracts of employment incorporate the Red Book go on strike their employer can withhold their pay. The issue in these proceedings and in this appeal is how much the employer can deduct for each day of strike action. On 30 November 2011 the appellants participated in a full day of lawful strike action. On or about 31 January 2012, the respondent made deductions from their pay at the rate of 1/260 of their annual pay. The figure of 260 was arrived at by taking 365 days, less weekends, that is by taking the total number of weekdays in the calendar year. The appellants say that the appropriate deduction was 1/365 of their annual pay, pursuant to section 2 of the Apportionment Act 1870 (the Act). The contracts of employment in secondary education, that is at schools rather than sixth form colleges, include an express term contained in the relevant agreement, which is known as the Burgundy Book, that when teachers are on strike their employers are entitled to deduct salary at the rate of 1/365 of their annual pay. The Act The Act is entitled An Act for the better apportionment of rents and other periodical payments. Section 2 is entitled Rents, &c to accrue from day to day and be apportionable in respect of time and provides as follows: All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly. Section 5 is entitled Interpretation of terms and includes the following: In the construction of this Act The word annuities includes salaries and pensions. Section 7 states in the heading that the Act is not to apply where stipulation is made to the contrary and provides: The provisions of this Act shall not extend to any case in which it is or shall be expressly stipulated that no apportionment shall take place. The proceedings On 24 April 2013, the appellants commenced proceedings in the Birmingham County Court alleging that the respondent was in breach of contract and claiming monies owed pursuant to section 2 of the Act to the extent that the deductions from their pay exceeded 1/365 of their annual wage entitlement in respect of each strike day. On 17 June 2013, between the issue of proceedings and the trial of this action Jay J handed down judgment in the High Court in Amey v Peter Symonds College [2013] EWHC 2788 (QB); [2014] IRLR 206, which determined the same issue in favour of the defendant, which was another sixth form college, by reference to the same generic contractual terms and on the basis of very similar, if not identical, facts. Jay J held that while accruing from day to day in section 2 must be construed as referring to calendar days, section 7 applied to disapply section 2 because the claimants contract necessarily implied that his pay was tied to his directed time work. [For the definition of directed time see paras 14 and 16 below.] The claimant, who was not a member of NASUWT, did not appeal to the Court of Appeal. The respondent in the present case applied for summary judgment on the basis that the County Court would be bound by the Amey judgment. The appellants agreed that that was so but resisted summary judgment on the basis that they wanted to seek determination of the point of principle by the Court of Appeal and could only do so if a final determination were entered in favour of the respondent, from which it could apply to the Court of Appeal for permission to appeal pursuant to CPR Part 52 and Practice Direction 52A. As a result, the parties agreed a consent order which was approved by DDJ Viney and referred to in para 2 of the consent order dated 27 February 2014. Pursuant to that order the respondent withdrew its application for summary judgment and, the parties having agreed the material facts, the appellants consented to final judgment being entered in favour of the respondent on the basis that the Amey judgment was binding, but without prejudice to the appellants right to argue on appeal that Amey was wrongly decided and/or that their case should be decided differently on the basis of the agreed facts. On 1 July 2014 HHJ McKenna gave the appellants permission to appeal directly to the Court of Appeal pursuant to CPR Part 52.14, in circumstances in which Aikens LJ had indicated that the Court of Appeal was minded to accept jurisdiction to hear the proposed appeal on that basis because it raised an important point of principle. The appeal was heard by Elias, Tomlinson and Sales LJJ on 19 March 2015. By a judgment handed down on 14 May 2015 given by Elias LJ, with which Tomlinson and Sales LJJ agreed, the Court of Appeal dismissed the appeal [2015] ICR 1143. The Court of Appeal refused permission to appeal to this Court but permission was granted by Lady Hale, Lord Wilson and Lord Reed on 25 February 2016. The issues The central question in this appeal is how much the respondent as the appellants employer can withhold from their pay for each day of strike action. In order to answer that question, a number of further questions potentially arise in order to decide whether the Act applies to the facts of this case. As stated in the statement of facts and issues (albeit in a different order), they are (a) whether the appellants contracts of employment provide expressly or by necessary implication for their salary to be paid to them pro rata in respect of divisible obligations to perform work on each day of directed time so that the Act has no application to this case; (b) what is meant by accruing from day to day in section 2 of the Act; and (c) what is the correct construction of section 7 of the Act. Discussion Question (a) seems to me to reflect a new point which the respondent sought to raise in this appeal which was not taken in the courts below. As formulated (so far as I can see correctly) by the appellants, the argument that the Act does not apply in this case has three steps as follows. (1) The Act was made to address mischiefs which arise in the context of periodic payments which are entire indivisible payments. (2) The contracts in this case provide impliedly for the appellants to be paid periodically in respect only of the work they do in directed time. (3) Therefore the periodic payments were impliedly divisible. The appellant objected to the new point being taken for the first time in this Court. We heard argument on the point without ruling on the objection. Having heard argument and considered the point I would hold that it fails. Although the point was not argued in the Court of Appeal, that point or a very similar one was considered in the judgment of Elias LJ between paras 23 and 32. In particular he considered the decision of the Court of Appeal in Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244; [2005] ICR 450, where an employee who was also a director of a company was paid a salary monthly in arrears. His contract was terminated on 26 June for misconduct. One of the issues was whether he was entitled to his salary for the period during which he worked in June before termination. The Court of Appeal accepted that at common law the employee could not recover anything because his salary did not accrue until the end of the month, but held that the Act applied. It held, as Elias LJ put it in para 31 in this case, that since, by virtue of the Act, salary accrued day by day the employee was entitled to his salary until his dismissal, even where it was for misconduct. Holman J, with whose judgment Arden LJ expressly agreed, said that since the Act is a remedial Act, and since the common law rule works an injustice, the Act should not be restrictively interpreted. Elias LJ concluded that this would suggest that [the Act] will now be readily applied to all employment contracts where the common law principles pertaining to entire contracts and substantial performance would operate. Elias LJ further concluded in para 32 that it followed that the Act does, in principle, apply to the contracts of these teachers. As he put it, their pay is deemed to accrue daily. He added that that was also the view of Scott J in Sim v Rotherham Metropolitan Borough Council [1986] ICR 897, although the point was not directly argued in that case (see further para 22 below). Elias LJ also noted that none of the parties sought to contend otherwise in the Court of Appeal. Thus the first of the three steps in para 9 above was satisfied because the Act was indeed intended to address mischiefs which arise in the context of periodic payments which are entire indivisible payments. However, for the reasons given below, steps (2) and (3), namely that the contracts in this case provide impliedly for the appellants to be paid periodically in respect only of the work they do in directed time and that it follows that the periodic payments were impliedly divisible, were not satisfied. For these reasons I would reject the new point sought to be advanced for the first time in this Court. I would accordingly answer question (a) in the negative. I do not think that the contracts of employment provide expressly or by necessary implication for their salaries to be paid to staff pro rata in respect of divisible obligations to perform work on each day of directed time. To my mind the correct approach to this case depends essentially upon the application of section 2 of the Act to the contracts of employment, all of which are upon more or less the same terms. I return below to the meaning and effect of section 7 of the Act, which in my opinion does not apply to the facts of this case. Clause 1.1 of the contract is entitled DUTIES and provides for the duties to be carried out under the reasonable direction of the Principal. Clause 1.2 provides that the employee may be called upon to perform any of the duties set out in Appendix 4 of the Red Book which might reasonably be assigned to him. Clause 2 provides: 2 WORKING TIME 2.1 Subject to the provisions in the other paragraphs of this section, you may be required to work for 195 days in any year of which 190 will be days on which you may be required to teach in addition to carrying out other duties. Within these 195 days, up to 1,265 hours a year will be allocated reasonably to you by the Principal. Details of this directed time will be provided by the Principal. 2.2 Within the 1,265 hours you may be required to teach for up to six hours over two evenings per week. Any teaching in the evening beyond this level would be undertaken only on a voluntary basis. 2.3 In addition to the requirements in 2.1 above, you will work such additional hours as may be needed to enable you to discharge your duties effectively including, in particular, the marking of students work, the writing of reports on students and the preparation of lessons, teaching material and teaching programmes. 2.4 In this section, year means a period of 12 months commencing on 1st September. 2.5 Details of your holiday periods will be made available to you by the Principal. You will be paid full salary during these holiday periods unless you are receiving less than full salary arising from the application of the sick pay scheme, maternity scheme etc. Clause 4 is entitled SALARY and provides (in Mr Monks case), so far as relevant, that his salary for the relevant year was 38,421 per annum (including PSP) and that it would be paid monthly by credit transfer on the last working day of the month, except in December when payment would reach his bank account on or before 24 December. The other contracts were in the same form, although the figures varied. The Red Book contains a provision almost identical to clause 2.1 above, except that it is para 20 and is entitled Standard Working Time, which is thus the same as directed time. Paragraph 21 provides for Evening Teaching. Paragraph 22 is entitled Undirected Time and reads In addition to the requirements in paragraphs 20 and 21 above, a teacher will work such reasonable additional hours as may be needed to enable them to discharge their duties effectively including, in particular, the marking of students work, the writing of reports on students and the preparation of lessons, teaching material and teaching programmes and such other duties as may reasonably be required. The amount of time required for this work and the times outside the 1,265 specified hours at which duties shall be performed shall not be defined by the college, but shall depend upon the work needed to discharge the teachers duties. In addition, para 18 provides for payment for additional days of directed time, which were remunerated in addition to salary, as for example by an additional payment at a daily rate of 1/195 of the rate for the job. There is also para 26, which provides that no teacher may be required to work on a Sunday, Bank or public holiday. Finally, Appendix 4 in the Red Book describes the teachers Professional Duties. Under that heading it states: The following duties shall be deemed to be included in the professional duties which a teacher employed by a Sixth Form College may be required to perform. Teaching 1(a) planning and preparing courses and lessons; (b) teaching, according to their educational needs, the students assigned to you including the setting and marking of work to be carried out by the student in college and elsewhere; (c) assessing, recording and reporting on the development, progress and attainment of students in each case having regard to the curriculum for the college. Other Activities 2(a) promoting the general progress and well being of individual students and of any class or group of students assigned to you; (b) providing guidance and advice to students on educational and social matters and on their further education and future careers, including information about sources of more expert advice on specific questions; making relevant records and reports; (c) making records of and reports on the personal and social needs of students; (d) students; (e) outside the college; (f) purposes described above. Assessments and Reports 3 Providing or contributing to oral and written assessments, reports and references relating to individual students and groups of students. communicating and co operating with persons or bodies participating in meetings arranged for any of the communicating and consulting with the parents of Appendix 4 includes a number of further activities involved in the work of a teacher, which it is not necessary to particularise in any detail. The topics are educational methods, discipline, health and safety, staff meetings, cover, public examinations, management and administration. The appellants regularly performed their undirected duties outside of the normal term time hours, ie during weekends, evenings and/or days of annual leave, because there was insufficient time to perform all of those duties during such of the normal term time hours as were not allocated to directed time. The statement of facts and issues refers to material relevant to each of the appellants as follows. Mr Hartley says that the volume of work was so great that he was required to work every weekend of the year on both Saturdays and Sundays, typically spending two to three hours carrying out undirected time duties during a weekend. The nature of the job meant that he had no choice but regularly to perform work in undirected time outside of the normal college day, in the evenings, at weekends and during the holidays. Mr Panko had over 11 hours remission time (ie time during directed hours allocated to reflect his additional responsibilities) but was unable to complete all of his work in that time and regularly carried out work during evenings, weekends and holidays. Mr Monk was similarly unable to complete all of his work during his remission and non contact time. If he did not do evening and weekend work he would not be able to deliver lessons because he would not have the material, schedules and tasks prepared. He estimates that he would do work on somewhere between 25 and 52 weekends a year. The amount depends on his priorities and his state of health. The parties agree that the amount of undirected time duties broadly correlates with the amount of directed time duties in that the more directed time, in particular teaching time, the more undirected time is likely to be required. Some assistance in this type of case can I think be found in the judgment of Scott J in Sim at 928G 929C, which is relied upon by the appellants as follows: In considering the scope of a teachers professional obligations as a teacher, it is convenient to start with those matters that are common ground. It is accepted that the teachers have an obligation to teach their classes in accordance with the timetable from time to time in force. It is accepted that they have obligations properly to prepare for their classes and to mark the schoolwork done by their pupils either in class or as homework. It is accepted that these latter obligations may require work to be done outside normal school hours. To put the point another way, a teacher could not excuse a failure to be properly prepared for a class or a failure to mark schoolwork within a reasonable time after it had been done by pointing out, correct though the observation might be, that he or she had not had time within school hours to do the work. It is, perhaps, one of the hallmarks of professional employment, as opposed to employment in non professional capacities, that professionals are employed to provide a particular service and have a contractual obligation to do so properly. A worker in a car factory or shop may clock off at 5.30 pm or, perhaps, work late on an overtime basis. An employed professional does not usually have an overtime option. He is employed to provide a particular service to proper professional standards. His contract may require his attendance in an office or other place of work for particular hours but his contractual obligations are not necessarily limited to work done within those hours. So, too, teachers duties are not necessarily confined to their obligation to be on school premises during school hours and to take their classes during those hours. The professional obligations of a teacher cannot, in my opinion, be confined to the imparting of academic knowledge to the pupils. That passage gives a picture of the wide scope of responsibilities of teachers such as the appellants, all of which must be reflected in their overall salaries. So too does the speech of Lord Templeman in Miles v Wakefield Metropolitan District Council [1987] AC 539 at 556F H, which was relied upon by the appellants. Lord Templeman did not refer to the Act, although section 2 had been relied upon by the successful employers. He said this: It is unusual for the holder of an office to take industrial action and the consequences will depend on the rights and obligations conferred and imposed on the office holder by the terms of his appointment. But if an ambassador and the embassy porter were both on strike then I would expect both to be liable to lose or both to be entitled to claim their apportioned remuneration attributable to the period of the strike. A judge and an usher on strike should arguably be treated in the same manner. The ambassador might be required to decode a declaration of war on Sunday, and a judge might devote his Christmas holidays to the elucidation of legal problems arising from industrial action, so that it would be necessary to divide their annual salaries by 365 to define a daily rate applicable to the period of strike, whereas the weekly, daily or hourly wages of the porter and the usher provide a different basis for apportionment, Section 2 of the Act must be read so that it provides in effect that all salaries shall, like interest on monies lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly. In Sim Scott J considered section 2 at pp 935G 936A, where he rejected a submission that teachers salaries accrued minute by minute and added: Under the contracts, the salaries are based on a yearly scale but are paid by monthly payments. Each month a contractual right to a salary payment vests in the teacher. By reason of section 2 of the Apportionment Act 1870, the salaries are deemed to accrue day by day. If a teachers contract were, in the middle of a month, to come to an end, by death, dismissal or some other event, section 2 would entitle the teacher, or his estate, to an apportioned part of the months salary payment. So the salaries may be regarded as accruing day by day. But they do not accrue minute by minute. And for as long as the contract is continuing, the only payment that can be claimed by a teacher is a monthly payment and the only obligation to make a payment of salary that rests on the education authority is an obligation to make a monthly payment. This approach to section 2 appears to me to be correct, although on the facts Scott J held that the employer was entitled to reduce the amount paid by way of equitable set off. The approach is not however that set out in the judgment of Elias LJ in the Court of Appeal, to which I return below. The use of the word considered in section 2 seems to me to show that the section is a deeming provision. The appellants case was summarised in para 32 of their written case in this way. In the case of unvarying, annualised periodic payments (whether made once a month, or otherwise), such as the salaries of the appellants, section 2 of the Act has the effect of deeming accrual at the rate of 1/365 each day; but only because they are unvarying annualised periodic payments. The appellants do not and did not suggest that a periodic payment made over a period different from (and in particular a period of less than) a calendar year should accrue at the rate of 1/365, or should be aggregated with other periodic payments so that the total of such payments over a calendar year should be added up and divided so as to accrue at the rate of 1/365. Thus the application of section 2 depends upon the terms of the particular contract. In this case we are concerned only with an annual contract. It is I think helpful to consider the arguments advanced by the parties and the reasoning of the Court of Appeal in order to understand both the position in the Court of Appeal and the present position. It is striking that the argument in the Court of Appeal proceeded on the express basis (which was not challenged by the Court of Appeal at the hearing) that, if section 2 applied and section 7 did not, the effect was that Mr Monks salary had to be apportioned at the rate of 1/365 per calendar day. By contrast the respondent put forward 1/260. It was common ground in the Court of Appeal that section 2, if applicable, would require pay to accrue by equal amounts daily: see per Elias LJ at para 53. It was submitted on behalf of the respondent that, if the Act applied, the terms of the contract could not be reconciled with the principle of equal daily accrual and amounted to an express stipulation within the meaning of section 7 that the principle in section 2 should not apply. The respondent adopted the reasoning of Jay J in Amey and its submissions were recorded by Elias LJ in para 57 as follows: The undirected duties are subsidiary and directed towards the directed duties. As a matter of common sense it is obvious that pay is, as Jay J expressed it at para 42, tied to the measurable part of a teachers work. This is further supported by the fact that part time workers are paid as a proportion of the full time teaching hours that they work; that a teacher who agrees to teach an additional day is paid 1/195 of the annual salary; and that sick pay is calculated on the basis of working days. So in the Court of Appeal the appellants argued for 1/365 per calendar day in reliance upon section 2 and, if section 2 did not apply, upon section 7, whereas the respondent argued for 1/260 in reliance upon section 7. In this Court the case for the appellants was the same, whereas the respondent relied upon section 2 on the basis of the conclusion of the Court of Appeal that section 2 does not imply the principle of equal daily accrual but at a rate which is appropriate in the context of that contract to the particular day in question: per Elias LJ at para 59. It appears that he would have chosen 1/195 by analogy with the pay of part time workers, but adopted the respondents figure of 1/260 on the basis that it related to the total number of annual working days. Both these approaches assume that the working days are limited to days on which directed duties were carried out. I have reached the conclusion that the appellants case is to be preferred to that of the respondent. As I see it, the difficulty with 1/260 is that, given that the work done by the teachers described above was not limited to work during week days, it makes no sense to choose a calculation of 1/260 of the annual salary, which assumes only week day working. I would therefore reject the 1/260 figure. What then should the figure be? Although, as stated above, a case might perhaps be made for some other figure, the only alternative figure put forward during the argument was 1/365. It might be said that the difficulty with the figure of 365 is that it cannot be justified arithmetically. However, this is where, as it seems to me, the statutory formula in the Act comes in. On the basis of the statutory formula, namely that salary shall be considered as accruing from day to day, and shall be apportionable in respect of time accordingly, the most sensible approach in order to apportion the annual salary on a day to day basis is by treating each day as 1/365 of the annual salary. As I see it, this achieves an overall approach which is broadly fair. The reason why it is broadly fair is that the monthly payments are made every month, including periods when the teacher is on holiday, and the work carried out is spread throughout the year as explained both by Scott J and by the appellants evidence in this case. In particular, it is not limited to periods when the teacher is carrying out directed work, but includes preparatory work and the like which involves working in the evenings and weekends. I recognise that it can be said that this can give rise to surprising results but that is almost always true of deeming provisions. They are chosen in order to have a simple rule which can be applied in every case. Moreover, this approach seems to me largely to adopt the approach in the cases in which the court construed the expression day by day to mean daily or each calendar day: see eg Taylor v East Midlands Offender Employment [2000] IRLR 760, EAT, per Maurice Kay J at para 5 and Thames Water Utilities v Reynolds [1996] IRLR 186, para 22, EAT. In the latter case HH Judge Clark said this by reference to the expression from day to day in section 2: Accordingly the real question is what is meant by the expression from day to day in section 2 of the Act. In our view it can only be calendar days and not working days. In that case the EAT expressly agreed with the view of Evans Lombe J in In re BCCI SA [1994] IRLR 282. See also, to similar effect Smith v Kent County Council [2004] EWHC 412 (QB), where Mackay J concluded that 1/365 was appropriate, distinguishing Sim v Rotherham and Miles v Wakefield Metropolitan District Council [1987] AC 539 on the facts. In Amey Jay J said at para 17 that that line of authority had fallen into disfavour, although he recognised that it had not been overruled by the Court of Appeal. He expressed that view on the basis that in Leisure Leagues UK Ltd v Maconnachie [2002] IRLR 600 the EAT had held that the concept of day to day accrual in the 1870 Act must be, as he put it, envisaged by reference to the number of working days in the year and not the number of calendar days because the EAT based itself on the Working Time Regulations 1998 (SI 1998/1833). He also noted, at para 19, that that decision had been followed by the EAT in Yarrow v Edwards Chartered Accountants [2007] All ER (D) 118 (Aug). However, Jay J said at para 20 that those cases were only persuasive in the High Court and that he was not convinced that the Act can be overridden simply because it achieves a poor fit with modern employment law. I agree, although those Regulations set a maximum average number of hours to be worked weekly (subject to contrary agreement), entitlement to rest periods and paid annual leave, none of which is incompatible with the terms and conditions of the employment in question here. It is noteworthy that Jay J then set out the provisions of sections 2 and 7 of the Act and held in para 23 that the reference to accruing from day to day in section 2 must be to each calendar day. As I read the decision of Jay J, it was based upon section 7 of the Act and, as explained below, I reach a different conclusion from him in respect of section 7. We were also referred to the decision of Blake J in Cooper v Isle of Wight College [2008] IRLR 124; [2007] EWHC 2831 (QB). However, that decision seems to me to be of little assistance in deciding how section 2 works in a case like this. Blake J referred to the part of Lord Templemans speech in Miles v Wakefield Metropolitan District Council quoted in para 23 above, including the passage at the end of the quote where he gave the examples of the ambassador and the judge who might be required to devote their Sundays or holidays to work, so that it would be necessary to divide their annual salaries by 365 to define a daily rate applicable to the period of strike, whereas the weekly, daily or hourly wages of the porter and the usher provided a different basis for apportionment. Cooper was concerned with pay for a defined 37 hour week. In all these circumstances the cases seem to me to show that the correct approach under section 2 to a case like this, where the contract is an annual contract, is to hold that the salary must be apportioned on a calendar day basis over 365 days, which yields a daily figure of 1/365. reached a different conclusion from the Court of Appeal. Before considering the effect of section 7, it is convenient to consider the approach of the Court of Appeal to sections 2 and 7 together because Elias LJ does so in paras 33 to 38 as follows: In reaching these conclusions I am conscious that I have in this respect 33. It is a critical element in the claimants case that the effect of section 2 is that pay does not merely accrue daily but does so at an even rate. This is the justification for treating the pay referable to the strike day at 1/365. 34. No doubt for most periodic payments that will typically be the case. There will be no reason to assume that the payment should accrue other than by regular and equal increments. But I do not think that section 2 dictates this result. In my view there are strong arguments which suggest that this is neither the purpose nor the effect of the Act. It is concerned with providing a remedy for the unfairness which results from the fact that the common law would recognise no rights in a party who had provided service to the employer but not for the whole of the relevant pay period. The Act ensured an entitlement to such portion of the payment as was referable to the period of service. To achieve that objective it is not necessary to provide that payment accrues at an equal daily rate. Moreover, to construe section 2 as having that effect would create a new source of unfairness, where the rigid application of a daily rate of 1/365 would create an injustice in the context of the particular arrangement between the relevant parties, which it is difficult to suppose Parliament intended. The present case illustrates the sort of problem which could arise, if the Colleges argument about the unfairness and inappropriateness of deductions being made at a rigid daily rate of 1/365 are accepted (see below). 35. There are two further features of the Act which support this analysis. The first is that in section 5 there is a definition of dividend by reference to various forms of payments, including payments out of the revenue of trading or other public companies, divisible between all or any of the members of such respective companies shall be usually made or declared at any fixed times or otherwise; and the provision then goes on to provide expressly: all such divisible revenue shall, for the purposes of this Act, be deemed to have accrued by equal daily increment during and within the period for, or in respect of which the payment of the same revenue shall be declared or expressed to be made . If section 2 automatically envisaged that payments caught by the Act would be deemed to accrue by equal daily increments, these words would not have been required. 36. The second lies in the way in which the exclusion principle in section 7 is drafted. That section envisages that the parties might displace the Act by providing in sufficiently clear terms that no apportionment shall take place. But if there is no such exclusion and section 2 establishes a principle of equal daily accrual, that principle will apply. Section 7 does not provide that the parties might agree to exclude that principle, or might otherwise draft the contract in a manner which is at odds with that principle. Yet Parliament would surely have allowed this had it understood that the principle was imported by section 2. The parties have assumed that it is possible to read section 7 as allowing for that exclusion, but as I indicate below I am very doubtful whether it can. If that is right, the failure to allow departure from the principle of equal daily accrual can be explained either on the basis that the principle is not part of the Act and therefore does not need excluding; or it is part of the Act which Parliament intends to be mandatory in all circumstances where the Act applies. However, if there is a principle of equal daily accrual, and especially if the parties cannot contract out of it, that would lead to curious and potentially unjust consequences. Take a case outside the area of employment law. Assume that a party takes a lease and agrees to pay the landlord at the end of 12 months at a rent which increases after six months. Suppose that the landlord sells the freehold after six months. He would be entitled under the Act to the rent for that period. Under the terms of the lease, that would be a smaller sum than could be claimed by his successor because the rent has increased. But if section 2 imposes a principle of regular and equal daily accrual, the successor would have to account for half the full rent paid over the 12 months to the original landlord, even though the rent for the first half of the year was smaller. If, contrary to my view, the principle of equal daily accrual is implicit in section 2, Parliament must surely have intended to allow contracting out from that principle. However, I confess that I can find no satisfactory way of construing section 7 so as to achieve that result. 37. As I understand Elias LJs reference to equal daily apportionment, he is describing a process which leads to 1/365. For the reasons I have given I would hold that in a case like this the express provision in section 2 that the salaries shall be considered as accruing from day to day and shall be apportionable in respect of time accordingly does indeed mean equal daily apportionment. However, I agree with him that Parliament must surely have intended to allow contracting out from the principle. In my opinion it did so in section 7. 38. The question then arises what is meant in section 7 by an express stipulation. On the face of it, it means that there must be an express provision in the contract which has the effect of disapplying the statutory formula so that no apportionment shall take place. As Elias LJ says in para 40, read literally, section 7 seems to suggest that the apportionment principle will apply unless the contract in clear terms addresses it and says that it should not. In my opinion the parties correctly so understood the Act. In paras 40 and 41 Elias LJ refers to two cases on the meaning of section 7 and its predecessor. In In re Lysaght [1898] 1 Ch 115 Lord Lindley MR held that but for a clause in a will that certain shares shall carry the dividend accruing thereon at my death the Act would have allowed residual legatees to take the benefit of dividends on the shares up to the date of death. As Lord Lindley put it, the clause amounted to a stipulation, within the meaning of section 7 , that no apportionment shall take place. In reaching that conclusion (as Elias LJ put it in para 41) Lord Lindley referred to the interpretation put on a predecessor clause in similar terms considered in Tyrell v Clark (1854) 2 Drew 86; 61 ER 651. In that case the Vice Chancellor (Sir R T Kindersley) considered the meaning of an express stipulation and how those words should be construed. Elias LJ said this: In my judgment these authorities show that, where the language of the contract is plainly inconsistent with an apportionment of income, no apportionment is permissible. But there is a presumption that the Act will apply, and if the contract is ambiguous or lacks clarity on that question, it cannot displace the operation of the Act. Elias LJ concluded in para 42 that, assuming that section 2 requires pay to accrue at an equal rate daily, and that section 7 permits contracting out of that principle, it seemed to him that the concept of an express stipulation would have to be similarly construed. There would have to be a clear intention derived from the contract that the principle should not apply. I would accept that only if it can fairly be said that in a particular case, there is, in the words of section 7, an express stipulation in the contract that no apportionment should take place. As I see it, the amount of the daily rate provided for in section 2 which is to be apportionable in respect of time accordingly will depend upon the terms of the particular contract. I agree with Elias LJ (in para 44) that, absent a provision (I would say an express provision) to the contrary the principle of equal daily accrual will be the obvious principle to adopt. For the reasons given above, I am of the opinion that 1/365 is the appropriate rate here. In any case the precise figure will depend upon the true construction of the particular contract. I do not accept the view expressed on behalf of the Court of Appeal that the arguments have been advanced on a false basis. In this case there is no express (or indeed implied) stipulation excluding the statutory apportionment so that section 7 has no application. A critical feature of the instant case which leads to a figure of 1/365 is that the contracts are annual contracts. If the contracts were not annual contracts the position would be very different and would depend upon the terms of the particular contract. Elias LJ put the position in paras 59, 60 and 61 as follows: 59. It will be clear from my discussion of the effect of the 1870 Act that I believe that the arguments have been advanced on a false premise. It is a fundamental feature of the claimants case that section 2 implies the principle of equal daily accrual unless excluded by a clear inconsistent clause. If that is the wrong analysis of section 2, and there is no such principle which needs to be excluded, the question of what pay would have been earned on the strike day has to be gleaned purely from the construction of the contract, modified by the assumption that pay accrues daily at a rate which is appropriate in the context of that contract to the particular day in question. 60. Applying that modified principle of construction, I do not think that the claimants can be right. The natural interpretation of the contract (as modified by that assumption) would not in my view be that pay accrues at an equal rate day by day, and I do not accept that the fact that work may be carried out on any day of the year would justify that conclusion. There is plainly a close link between the directed hours and pay, and in my judgment Jay J was right [in Amey] to say the undirected work is essentially ancillary to the directed work. There is little point, and no value to the employer, in a teacher preparing for lessons which are not given. The judge also held that pay is tied to the measurable part of the teachers work. Although Mr Segal did not accept that analysis, it seems to me justified by the way in which part time teachers are paid. They receive that proportion of the full time directed hours which they perform. It is also supported by the fact that if a teacher voluntarily agrees to work an extra day, the amount paid is 1/195 of the annual salary. No doubt that extra day will generate undirected working time, but this is taken into account by treating it as a contributory part of the value provided by the teaching day. 61. Taken to its logical conclusion that would tend to justify the principle that the pay referable to a strike day is 1/195 of the annual salary. But the College does not seek to follow the logic that far, perhaps with good reason. Some of the undirected work, such as writing references, preparing materials and so forth will not necessarily be directly and inextricably linked to the directed time, in the sense that a failure to work for a day will lead to a proportionate reduction in the work done in the undirected hours. So relating the work to the total number of annual working days, including days which are paid holidays, provides a sensible and acceptable principle which possibly errs in the employees favour. Finally I should refer to para 64 in these terms: 64. Mr Segal puts forward a forceful argument that it is far from clear precisely how the contract envisages that the pay will accrue. I accept that is so, but for reasons I have given I think that the principle of equal daily accrual will be excluded if it is clear that the contract is inconsistent with that principle, even if it is not obvious precisely how the pay is deemed to accrue. For reasons I have given, in my view the contract plainly does not envisage that pay will accrue by equal amounts per day. I respectfully disagree with the approach in those paragraphs, essentially for these reasons. The directed work is plainly important but it is only part of the teachers responsibilities. While there is a relationship between the directed work and undirected work, much of the undirected work is very important in its own right and is carried out outside the hours of directed work: see in particular paras 18, 19 and, especially 20, above. Moreover the role of a teacher as described by Scott J is a multi faceted one. The appellants case may be summarised as follows. Mr Monks case is typical of that of all the appellants. He was employed on an annual salary of 38,421 payable to him monthly at the end of each month. He was paid that salary to perform the duties referred to in his contract, as set out above, notably in clause 1 and in Appendix 4 set out in the Red Book. There is no suggestion in any of the documents referred to above that some of his duties were paid and some unpaid. Section 2 of the Act provides that his salary must be considered as accruing from day to day and be apportionable in respect of time accordingly. There is nothing in the contract which stipulates for any apportionment other than a day to day apportionment, which (as appears above) the cases show means calendar day. In the context of an annual contract in which payment is monthly and, given the wide variety of work carried out, whether directed or undirected work, where there is no distinction between days upon which work is carried out and days upon which work is not carried out, the natural effect of the Act is that, as submitted on behalf of the appellants, the apportioned part of his salary on the day he was on strike was the same as any other day, namely 1/365 of his annual salary. In short, it was deemed or considered by section 2 to be part of his annual salary. As to para 59 of Elias LJs judgment, quoted above, I would accept the submission made on behalf of the appellants that section 2 of the Act implies the principle of equal daily accrual unless excluded by a clear inconsistent clause. I would accept the appellants arguments set out in para 45 above that they were paid a salary to perform the duties referred to in their contracts and there is no suggestion that some of those were paid and some unpaid. On that basis, as para 59 puts it, I agree that the question of what pay would have been earned on the strike day has to be gleaned purely from the construction of the contract, modified by the assumption that pay accrues daily at a rate which is appropriate in the context of that contract to the particular day in question. However, I do not agree with the Court of Appeal that, as stated in paras 60 and 61 of the judgment of Elias LJ, the natural construction of the contract on that assumption would not be that pay accrues at an equal rate day by day. It appears to me that it is wrong to say that, as Jay J put it in Amey, there is a close relationship between the directed hours and pay. Indeed, as Elias LJ says in para 61, some of the undirected work, such as writing references, preparing materials and so forth will not necessarily be directly and inextricably linked to the directed time, in the sense that a failure to work for a day will lead to a proportionate reduction in the work done in the undirected hours. This is clear, for example, from the many different Professional Duties identified in Appendix 4 of the Red Book and quoted in para 18 above under the heading of Other Activities and not Teaching. In short they are not limited to the week days but cover many other days including evenings and weekdays. Hence the conclusion that, in the context of an annual salary, the provision in section 2 that the salary shall be considered as accruing from [calendar] day to [calendar] day and shall be apportionable in respect of time accordingly points to an apportionment of 1/365. CONCLUSION For these reasons I would hold that section 2 of the Act applied in this case and was not excluded by section 7. As to the questions posed in para 8 above, I would hold that (a) section 2 of the Act applied to this case, (b) that accruing from day to day means accruing calendar day by calendar day and (c) that section 7 of the Act has the meaning discussed in paras 38 to 41 above and does not apply on the facts of this case. The contract involved many different obligations and was not restricted to direct work five days a week. Under section 2, the salary shall be considered as accruing from day to day, and shall be apportionable in respect of time accordingly and the cases show that an apportionment must be carried out on a calendar day by calendar day basis. To my mind those cases are correctly decided and are to be preferred to those which doubt that approach. Once a calculation based on five days a week has been rejected, it follows that the solution cannot be a deduction of 1/260 of the annual salary for one days strike. Once the 1/260 approach is rejected, it seems to me that the natural solution is to take 1/365. Indeed, it is hard to see what other approach could fairly be adopted. It does seem to me that to take 1/365 is to respect (and reflect) the statutory approach in the cases of calculating the value of one calendar day in cases where the contracts provide for an annual salary paid monthly. The rate would no doubt be different if the contracts were not annual contracts. For these reasons I would allow the appeal and invite the parties to agree an order. Failing agreement, written submissions on the form of order and on costs must be filed within 21 days of the handing down of the judgment.

UK-Abs

The appellants are employed as teachers at the respondent sixth form college [1]. They are paid an annual salary on a monthly basis [15]. Their contracts of employment incorporate terms relating to working time from a collective agreement known as the Red Book [2]. The Red Book provides that teachers will be required to work up to 195 days a year of directed time which includes teaching and other duties as directed by the Principal. In addition to directed time, a teacher is required to work for an unspecified amount of undirected time, defined as such reasonable hours as may be needed to enable [the teachers] to discharge their duties effectively, including, in particular, the marking of students work, the writing of reports on students, the preparation of lessons, teaching material and teaching programmes and such other duties as may reasonably be required [14 16]. The appellants regularly performed undirected duties outside of the normal term time hours, i.e. during evenings, weekends and/or days of annual leave [20 21]. On 30 November 2011, the appellants participated in a full day of lawful strike action. The Red Book provides that when sixth form teachers go on strike their employer can withhold their pay [2]. The respondent made deductions from the appellants pay at a rate of 1/260 of their annual pay, 260 being the number of weekdays in a calendar year [2]. The appellants brought proceedings in the County Court alleging the respondent was in breach of contract. They argued that the respondent was only entitled to deduct 1/365 of their annual pay, pursuant to section 2 of the Apportionment Act 1870 (the Act), which provides that all. annuities. shallbe considered as accruing from day to day, and shall be apportionable in respect of time accordingly. The Act defines annuities to include salaries [2 5]. Before the trial commenced, another case involving the same issue and very similar facts was decided in favour of the sixth form college in the High Court. The parties therefore agreed for final judgment to be entered in favour of the respondent. The appellants were granted permission to appeal directly to the Court of Appeal, which dismissed the appeal [6 7]. It found that section 2 did not imply a principle of equal daily accrual but a daily accrual at a rate gleaned from the construction of the contract. Elias LJ thought in this case the rate should be 1/195; 195 being the number of days of directed time. However, as some work done in undirected time was not necessarily linked to directed time, he accepted that the respondents approach of relating the work to the total number of annual working days was a sensible and acceptable principle [42]. The Supreme Court allows the teachers appeal. Lord Clarke, with whom the other justices agree, gives the lead judgment. The Act is intended to address the problems which arise in the context of periodic payments which are entire indivisible payments. The appellants salaries are such payments; the contracts do not provide expressly or by necessary implication for their salaries to paid to staff pro rata in respect of divisible obligations to perform work on each day of directed time. The Act is therefore applicable to their contracts [9 11]. The use of the word considered in section 2 of the Act shows that the section is a deeming provision, which deems that payments are to accrue day by day at an equal rate. Where an employment contract is an annual contract, it must therefore be apportioned on a daily basis over 365 days, yielding a daily figure of 1/365 [24, 30, 34, 37]. If the employment contract was other than an annual contract, then the rate would no doubt be different [48]. Section 7 of the Act provides that the Act will not apply where it is expressly stipulated that no apportionment shall take place [4]. This means that the principle of equal daily apportionment will apply unless the contract in clear terms addresses it and says it should not. Where the language of the contract is clearly inconsistent with this principle this will also amount to an express stipulation for the purposes of section 7 [38 40]. There is nothing in the appellants contracts which stipulates for any apportionment other than apportionment on a calendar day basis. The Court of Appeals approach assumes that working days are limited to days on which directed duties are carried out [28 29]. However, the appellants are paid a salary to perform the duties referred to in their contracts and there is no suggestion that some of those are paid and some unpaid. Given the wide scope of the responsibilities of teachers, none of the appellants are able to carry out all of their work during directed time, therefore the appellants carry out much of their work in undirected time outside of the normal college day on evenings, weekends and days of annual leave. While there is a relationship between directed work and undirected work, much undirected work is important in its own right and will not necessarily be directly linked to the directed time in the sense that a failure to work for the day will lead to a proportionate reduction in the undirected work done. This is clear from the vast variety of Professional Duties identified in the Red Book under the heading of Other Activities and not Teaching [18 20, 44 46]. Therefore, in the appellants case, section 2 of the Act deems that their salaries accrue at an equal daily rate and this is not excluded by section 7. The respondent was therefore only entitled to make deductions from the appellants pay at a rate of 1/365 of their annual salary [47 49].

Mr Achilles Macriss complaint is that without giving him a chance to make representations in his own defence, the Financial Conduct Authority has published a notice imposing a penalty on his former employer for various irregularities in the conduct of its business, in terms which identify him as the person responsible. The question at issue on this appeal is whether the notices in question did in fact identify him. This may look like a small point but, for reasons which I shall explain, it has significant implications for the conduct of the Authoritys investigatory and disciplinary functions. The Financial Conduct Authority is responsible for the statutory regulation of the United Kingdoms financial markets. This includes protecting and enhancing the integrity of the United Kingdom financial system and ensuring the stability and orderly functioning of financial markets. The Authoritys powers are derived from the Financial Services and Markets Act 2000 (the Act), as amended by the Financial Services Act 2012. JP Morgan Chase Bank NA is authorised under the Act to carry on regulated investment activities. In 2012 Mr Macris was the Banks International Chief Investment Officer. In that capacity, he was the head of a unit of the Bank in London called the Chief Investment Office (or CIO International). The function of CIO International was to manage the firms excess deposits, including a portfolio of traded credit instruments called the Synthetic Credit Portfolio. Mr Macriss own functions were controlled functions for the purpose of section 59 of the Act, which meant that he had to be approved by the Authority as a suitable person to carry on those functions. In July 2012, the Bank announced that the Synthetic Credit Portfolio had lost $5.8 billion in the first half of the year, a figure which rose to $6.2 billion by the end of the year. Following an investigation, the Authority concluded that the loss was caused by a high risk trading strategy, weak management of that trading and an inadequate response to important information which should have alerted the Bank to the problems. It also concluded that the Bank had withheld significant information from the Authority while the losses were being incurred. Together, these failings were found to have undermined trust and confidence in UK financial markets. A regulatory settlement was agreed with the Bank, under which it paid a penalty of 137,610,000. The provisions of the Act governing the imposition of penalties provide for three successive notices to be given to a person or firm under investigation: a warning notice describing the action which the Authority is provisionally minded to take and inviting representations (section 207); a decision notice describing the action that it has decided to take after considering any representations and informing the recipient of his right to refer the matter to the Upper Tribunal (Tax and Chancery) (section 208); and a final notice describing the action that it is taking once the decision notice has become final, ie after it has been reviewed by the Upper Tribunal or the time for applying for such a review has expired (section 390). The normal form of these notices is a brief statement of the action proposed, followed by a fairly extensive narrative entitled Reasons. Where a regulatory settlement is agreed before the service of any of these notices, they must still be given, but the practice is to draft them in identical terms and serve them simultaneously. In this case the three notices were all served on the Bank on 18 September 2013. The Authority is not required to publish a warning notice to the world, but it is required to publish a decision notice and a final notice. It did so in this case on the following day, 19 September 2013. Notices recording disciplinary action proposed to be taken against an authorised firm will almost inevitably contain implicit or explicit criticisms of those responsible for the irregularities in question and possibly of other persons involved. These are referred to in the Act as third parties. Section 393 contains provisions for protecting them against unfair prejudice. Subsection (1) provides: If any of the reasons contained in a warning notice to which this section applies relates to a matter which identifies a person (the third party) other than (a) the person to whom the notice is given, and (b) is prejudicial to the third party, in the opinion of the regulator giving the notice, a copy of the notice must be given to the third party. The object of this procedure is to enable the third party to make representations to the regulator. Subsection (3) requires a copy notice served on a third party to specify a reasonable period of time within which he may do so. Subsection (4) contains a corresponding provision relating to decision notices. The object here is to enable the third party to take the matter before the Upper Tribunal, as subsection (9) entitles him to do. These procedures need not be followed if a corresponding notice in relation to the same matter has been given to the third party in his own right: see subsections (2) and (6). Mr Macris was not supplied with a copy of the notice served on the Bank or given an opportunity to make representations. As an approved person he was personally under investigation along with his employer. But he was not party to the settlement with the Bank, and the investigation of his conduct was still in progress at the time. Ultimately, in February 2016, Mr Macris reached his own regulatory settlement. A final notice in relation to him was published on 9 February 2016, in which he was found to have been party to the withholding of information from the Authority and on one occasion to have misled it. A penalty of 762,900 was imposed on him. The Authority does not deny that if Mr Macris was identified in the warning and decision notices served on the Bank, there were statements in those notices which were prejudicial to him. Their case is that he was not identified. It is common ground that he was not identified by name or job title. But there were many references to conduct by CIO London management or similar expressions. Mr Macris was not the only manager in CIO International in London. On the basis of the notice alone, therefore, CIO London management could have referred to a number of people other than him. His case is that those who were active in the relevant markets would have known that it referred to him. In support of this case, he produced two witness statements in the Upper Tribunal, neither of which was challenged. One was from a senior manager formerly employed in CIO International in London, who said that it was clear to him that CIO London management referred to Mr Macris. This was because of the knowledge that he had acquired as a manager in the same unit. In particular, he knew that Mr Macris was the head of that unit and was not in the habit of sharing his responsibilities with others. The other witness was a senior sales representative dealing in credit instruments for another bank in London. He said that he drew the same conclusion because he knew about Mr Macriss position and working methods from his dealings with CIO International. In addition, Mr Macris relied on the fact that some five months before the service of the notices on the Bank, a US Senate Committee had published a report on the losses in the Banks Synthetic Credit Portfolio, which described his role in the incurring and treatment of those losses, identifying him by name. This report was available on the internet. It was said that if read side by side with the Authoritys notices the Senate Committee report would enable anyone to deduce who was being referred to as CIO London management. The Upper Tribunal directed the hearing as a preliminary issue of the question whether Mr Macris was entitled to be treated as a third party for the purposes of section 393 of the Act. Judge Herrington upheld Mr Macriss complaint and held that he was. He referred at para 13 of his judgment to para 4.3 of the final notice, which described the position of CIO International in the Banks hierarchy in the following terms: 4.3 The Firm is a wholly owned subsidiary of the Group. CIO operates within the Firm in both New York and London. The traders on the SCP were managed by SCP management, which in turn were managed by CIO London management. CIO London management represented the most senior level of management for the SCP in London, reporting directly to CIO Senior Management in New York, which in turn reported to Firm Senior Management. CIO also had its own Risk, Finance and VCG functions, which were control functions relevant to the SCP and other portfolios within CIO. The wider control functions within the Group included Internal Audit, Compliance and the Groups Audit Committee. The judge then referred at para 16 to a number of places where the notices referred to acts as having been performed by an individual (eg CIO London management sent an e mail). The essence of his reasoning appears at paras 45 and 46 of his judgment: 45. In my view the drafting of para 4.3 is inconsistent with how a corporation would describe the hierarchy of its governing bodies. Collective bodies are responsible for the management of particular business units rather than managing them themselves and the bodies concerned would appoint named individuals to carry out the actual management in clearly defined reporting lines. What therefore comes across clearly from para 4.3 of the Final Notice is a description of the reporting lines of particular individuals to their line managers. The paragraph also discloses the fact that SCP management would manage rather than be purely responsible for the management of the individual traders who would therefore each say that their line manager was whoever was identified as SCP management. It is not the practice that an individual trader would report to a collection of individuals; it is the hallmark of good management that there can be no confusion over which individual a person reports to he needs to know who his boss is and so he does not get conflicting messages. The reference to CIO London management being the most senior level of management for the SCP in London is also significant; again a reader with experience of how large corporations operate would take such a reference as being to the most senior individual concerned. 46. This initial impression that the reader would take from para 4.3 is reinforced by the fact that CIO London management is stated in the notice to have performed actions such as having conversations, attending meetings and sending e mails which can only be taken in the context in which these events are described, as being the actions of an individual rather than a body of persons. This is clearly apparent from the references Mr Herberg referred me to as set out in para 16 above. In the Court of Appeal Gloster LJ delivered the leading judgment, Patten LJ agreeing with her generally and Longmore LJ agreeing to the extent that it is a question of law. Gloster LJ declined (paras 52, 60) to adopt Judge Herringtons reasoning but agreed with him in the result, namely that the references to CIO London management were references to an individual, ascertained by reference solely to the terms of the notice itself (para 52). She also considered (para 53) that the evidence adduced by Mr Macris and publicly available material such as the US Senate Committee report entitled the judge to conclude, on an objective basis, that persons acquainted with Mr Macris, or who operated in his area of the financial services industry, would reasonably have been able to identify Mr Macris from the statements made in the notice. Gloster LJs view that the relevant audience was persons acquainted with Mr Macris, or who operated in his area of the financial services industry was based on an analogy, which she regarded as persuasive, between disclosure under section 393 of the Act and publication in the law of defamation. In the latter context, she drew attention after the hearing to the statement in the current edition of Gatley on Libel and Slander, 12th ed (2013), paras 7.1, 7.2: The question in all cases is whether the words might be understood by reasonable people to refer to the claimant, subject to the qualification that where the words are published to persons who have special knowledge the issue will be decided by reference to what reasonable persons possessing that knowledge would understand by them. The test of whether words that do not specifically name the claimant refer to him or not is this: Are they such as reasonably in the circumstances would lead persons acquainted with the claimant to believe that he was the person referred to? This appeal turns on the meaning of identifies and on the meaning of the notice to which that word is being applied. Both are questions of law, although the answers may be informed by background facts. The essential question before us is what background facts may be relevant for this purpose. In my opinion, a person is identified in a notice under section 393 if he is identified by name or by a synonym for him, such as his office or job title. In the case of a synonym, it must be apparent from the notice itself that it could apply to only one person and that person must be identifiable from information which is either in the notice or publicly available elsewhere. However, resort to information publicly available elsewhere is permissible only where it enables one to interpret (as opposed to supplementing) the language of the notice. Thus a reference to the chief executive of the X Company may be elucidated by discovering from the companys website who that is. And a reference to CIO London Management would be a relevant synonym if it could be shown to refer to one person and that person so described was identifiable from publicly available information. What is not permissible is to resort to additional facts about the person so described so that if those facts and the notice are placed side by side it becomes apparent that they refer to the same person. I reach this conclusion for the following reasons. The starting point is that section 393 covers the same ground as the general obligation imposed by public law to give those affected sufficient notice to enable them to make representations to protect their legitimate interests. But it does so in a more limited way. So far as it concerns notice of potential criticisms, the section defines what fairness requires in the context of warning and decision notices issued by the Authority. Secondly, although the word identifies is not elaborated, it is clear from the language that it is the reasons contained in the notice which must identify the third party and not some extrinsic source. Reference to extrinsic sources of information is legitimate only so far as it is necessary in order to understand what the notice means. Third, it is necessary to read section 393 in the light of the practicalities of performing the Authoritys investigatory and disciplinary functions. It is common for notices to be served on different parties to the same investigation at different times. The possibility is expressly envisaged in section 393 itself. The role of the firm or of the various individuals involved may take more or less long to investigate. Or, as happened in this case, one of them may settle before the others. Once the facts relating to one person or firm under investigation are ascertained or admitted and are found to justify criticism or sanctions, there will often be no proper reasons for withholding that information from the market. Yet there will almost always be people in the know, who will realise when they read the notices which individuals are encompassed by apparently anodyne collective expressions such as management or who is likely to have been responsible for particular failings of the firm. The facts, or enough of them, may be well known within the firm. They may be deduced by those who know enough about the firms procedures or organisational structure or the business methods of the third party in question. Even for those who are further from the scene, the internet is a fertile source of information and gossip for those who are willing to go to some trouble to discover his identity. The Authority will not necessarily know what if any further information about the business, the facts or the individuals involved may be available to knowledgeable outsiders or discoverable from publicly available sources. In those circumstances it must be able to ensure, by the way in which it frames its own notices, that a third party is not identified in the notice, even if he or she is identifiable from information elsewhere. The present case is a good illustration of the problem. The Court of Appeal considered that the information relevant for the purpose of identifying Mr Macris included the US Senate Report, which identified him by name. On that footing, once the Senate Committee had published his report, it would have been impossible for the Authority to serve the notice on JP Morgan as part of the settlement process, without serving a copy on Mr Macris at a comparatively early stage of the investigation of his role, when it would not necessarily know the relevant facts or have formulated any criticisms. Fourth, the combination of information in the notice with other information can prejudice a third party only if the notice is published. Publication is not automatic. Where the Authority decides to publish, it does so in order to serve the public interest in the proper performance of its functions and the protection of those who use the financial services industry. This is reflected in the Authoritys Enforcement Guide (2016), section 6.2.16 of which states: Publishing notices is important to ensure the transparency of FCA decision making; it informs the public and helps to maximise the deterrent effect of enforcement action. The relevant audience for this purpose is accordingly the public at large. The fact that some specific sector of the public at large may, like Mr Macriss witnesses, have special additional information enabling them to identify a third party is not relevant. Finally, I do not regard the suggested analogy with the law of defamation as helpful. The law imposes strict liability for the publication of a defamatory statement which reflects on the claimant, even if the defendant did not intend it to refer to the claimant and had no reason to believe that others would connect it with him. The test is whether those to whom the statement was published would reasonably suppose him to be the person referred to. That will commonly depend on who it was published to and what knowledge they had of him. In that context, extrinsic evidence is naturally available to connect the perception of the claimant among those to whom the defamatory statement was published with the person referred to in it. Section 393 of the Act has an entirely different purpose. It applies where the Authority knows of the third party and intends to refer to his actions, but only where it actually identifies him in the notice. I do not accept, any more than the Court of Appeal did, the judges view that because reporting lines lead to individuals, any reference to management must be to an individual. Nor do I accept Mr Macriss argument that because the notices referred to actions such as making statements, attending meetings or sending e mails, which must have been done by individuals, a single individual is meant, as opposed to any of a number of individuals comprised within the term the firm, CIO or CIO management. The real question is whether the terms of the notice itself would have conveyed to a reasonable member of the public without extrinsic information that any of these terms was a synonym for Mr Macris. Plainly it would not. I would therefore allow the appeal and declare that Mr Macris was not a third party for the purposes of section 393 of the Financial Services and Markets Act 2000. LORD NEUBERGER: I agree with the judgment of Lord Sumption, and I add a few observations of my own because there is no doubt that the case for giving a wider meaning to section 393(1)(a) of the Financial Services and Markets Act 2000, as explained by Lord Mance and Lord Wilson, has considerable force. The point raised on this appeal centres around the effect of the word identifies in section 393(1)(a), and it is, at least in my view, difficult to resolve. Section 393(1)(a) is a good example of Parliament enacting a provision whose general purpose is clear, but, because there can be more than one reasonable view as to the provisions scope, the resolution of that issue has effectively been assigned to the courts. I do not say this by way of complaint. In some cases, Parliament may consider that it is better for the legislature to lay down a rule in fairly unspecific terms in a statute, and then leave it to the courts to determine the precise extent and reach of the rule by reference to specific sets of facts. This appears to be such a case. As is clear from reading the judgments of Lord Sumption and Lord Wilson, resolution of the point at issue has significant implications both for the conduct of the Financial Conduct Authoritys functions and for individuals who, while they are not named in a warning notice (under section 387) or a decision notice (under section 388), may have their reputations harmed as a result of the publication of such a notice. Section 393 is plainly intended to enable at least some such individuals to be served with a copy of the notice concerned, to refer it to the Upper Tribunal and to challenge some or all of the contents of the notice, rather than leaving any challenge to the notice in the sole hands of the party against whom it is primarily issued, presumably normally the employer of the individual concerned, as in this case. The purpose of including such a provision in the 2000 Act is clear. The interests of the addressee of a notice who is accused of failings, and those of a third party such as an employee of the addressee, who may be identifiable as responsible for, or implicated in, the alleged failings, are by no means necessarily aligned. Thus, it may well be that an employer would want to try and curtail any publicity about the alleged failings by quickly negotiating and paying a penalty, even if there may be grounds for challenging the allegation in whole or in part. But this may often not suit the employee, who might well feel that, in the absence of the Tribunal exonerating him, his reputation, and therefore his future employment prospects, could be severely harmed or even ruined. In this case, the addressee of the Notice, JP Morgan Chase Bank NA, was Mr Macriss employer, and it did indeed pay a substantial penalty to the Authority, no doubt with a view to putting an end to any proceedings on the Notice. Mr Macris received a separate notice and contested before the Tribunal the allegations in the notice served on him (which were substantially identical to those in the Notice served on the Bank, which is the Notice to which he claims section 393 applies). While some of the allegations against Mr Macris were upheld, the more serious ones, including one which at least implied that he had not been honest in certain respects, were rejected. Had he not been served with his own notice, Mr Macris would not have been able to challenge the Notice served on the Bank, unless he had been identifie[d] in that Notice. That brings me to the question of the scope of the section. The wider the scope of section 393(1)(a), the more constraining it will be on the Authoritys activities, as Lord Sumption explains in para 14 above. But the narrower the scope of the provision, the greater the number of individuals who will be at risk of being harmed by notices without any recourse, as Lord Wilson describes in paras 60 and 61 below. On this appeal, it is not suggested on behalf of Mr Macris that an individual should be within the scope of section 393 simply because he could show that one person could identify him from the terms of the notice. On the other hand, the Authority accepts that section 393 cannot be limited to cases where the individual concerned is mentioned by name in the notice. There is no entirely satisfactory logical basis for justifying any particular conclusion as to the precise point at which one draws the line between these two extremes. Because there are powerful policy arguments pointing in opposite directions, it seems to me that it is justified, indeed requisite, to have particular regard to the wording of the relevant statutory provision. Section 393(1)(a) states that section 393 applies where any of the reasons contained in a notice relates to a matter which identifies a person. In other words, the question to be asked is: does the notice identify the individual in question? The language used appears to stipulate that the person must be identified in the notice, not that he must be identifiable as a result of the notice. A literal reading could therefore be said to suggest that the notice must expressly mention the individual by name, as opposed to rendering that individual capable of being identified as a result of information to which one reader, all readers or a specific group of readers of the notice may be able to get access. In my view, that would be too narrow a meaning to give the section. An equally natural, but more realistic interpretation is that, in order for the section to apply to an individual, either he must be named in the notice, or the description in the notice must be equivalent to naming him. On this basis, a reference to the Chairman of the Board of a United Kingdom registered company would identif[y] the individual concerned, as it would be easy for anyone to find out his name. (And, depending on the facts, the same might be the case with a reference to the Chairman of the Board of a foreign registered company). It is true that even that form of identification would require the reader to have some outside knowledge, but as a matter of ordinary language, I would accept that an individual is identified in a document if (i) his position or office is mentioned, (ii) he is the sole holder of that position or office, and (iii) reference by members of the public to freely and publicly available sources of information would easily reveal the name of that individual by reference to his position or office. Apart from the notice having to mention the position or office, that test has two essential features. The first is that it involves assessing the identifiability of an individual by reference to what members of the public generally know or could discover. A test that was satisfied by reference to a specific and smaller group would give rise to difficulties as to where one should draw the line as a matter of principle, and also as to how in practice the Authority could know whether or not an individual satisfies the statutory test. The second essential feature is that, in order to satisfy the test, any research or investigation should be straightforward and simple, as would be the case in relation to identifying who chairs the board of a UK registered company. In order to qualify, any investigation process should not require any detective work; and so jigsaw identification, ie correctly identifying someone as a result of relating separate snippets of information (Donald v Ntuli [2011] 1 WLR 294, para 55), would not do. Similarly, the fact that Mr Macris could be identified by reference to a publicly available US Senate Committee report would not do because a member of the public would not know of that report, and anyway would not think of referring to it for the purpose of identifying Mr Macris as the individual referred to in the Notice in this case. Lord Wilson makes out a strong case as to the potential for unfairness if this conclusion is right, and his powerfully expressed views have caused me considerable doubts as to whether indeed it is. However, his solution appears to me to give rise to problems which support adhering to the conclusion I have expressed. First, if a wider meaning than that which I have suggested is given to section 393(1)(a), it would be a matter of subjective assessment as to how wide a scope to give it. Secondly, any wider definition, unless it is very much wider than anyone has so far suggested, could self evidently lead to disputes. Thirdly, a wider meaning could lead to some rather odd consequences. Fourthly, a wider definition would put the Authority in a difficulty from the start. Fifthly, a wider definition could still lead to arbitrary outcomes. Lord Wilsons suggested formulation in para 63 is plainly reasonable and indeed it is attractive. However, like the formulation suggested by the Court of Appeal, it seems to me to manifest the first and second problems I have just identified, and it also serves to demonstrate the third, fourth and fifth problems. First, if section 393(1)(a) has a wider application than I have suggested, there is no logical or principled reason for excluding from, or indeed including in, its scope an individual who could be identified by a person who is personally acquainted with [him], to quote from Lord Wilsons test. Secondly, there could also easily be disagreements, which would have to be resolved, as to whether, on disputed or agreed facts, a particular person falls within that expression. Thirdly, as the facts of this case show, it may well be that Mr Macris could only have satisfied Lord Wilsons test because of the happenstance that he had been identified in a published US Senate Committee report on various problems encountered by the Bank. Fourthly, these very facts highlight the difficulties which the Authority could face if one gives section 393(1)(a) a wide meaning. Fifthly, even on Lord Wilsons test, where a group of two people is identifiable from a Notice, it could be damaging to both of them if they could not clear their names, yet unless one of them could be identified, neither of them would be within the section. LORD MANCE: This is a difficult case. But, ultimately, I am in broadly the same position as Lord Wilson on the issue of law. However I find myself, not without hesitation, arriving at the same conclusion about the outcome of this appeal as Lord Sumption and Lord Neuberger when I apply this test to the facts of this case. On the question of law, it is tempting to take the very broad view that it is unfair if a person like Mr Macris is not given the opportunity to address criticisms in a final decision notice directed, as this was, to Mr Macriss current employers, JP Morgan Chase Bank NA, in terms which future employers might be able to ascertain by due diligence or investigation were in reality critical of Mr Macris. But that would make the task of the Authority very difficult indeed, and is not in my opinion the intention or effect of the language of section 393 of the Financial Services and Markets Act 2000. On the other hand, I consider that Lord Sumption and Lord Neuberger take too narrow a view of the third party protection which the Act intended. They take a narrower approach than even the Authority advances as its primary case, a narrower approach than any previous court addressing the issue has ever considered appropriate. They do not go to the absolute extremity of a requirement that the third party should be named. But they require either naming or what is described as a synonym. In Lord Sumptions words (para 11), a person is identified in a notice under section 393 if he is identified by name or by a synonym for him, such as his office or job title. In the case of a synonym, it must be apparent from the notice itself that it could apply to only one person and that person must be identifiable from information which is either in the notice or publicly available elsewhere. However, resort to information publicly available elsewhere is permissible only where it enables one to interpret (as opposed to supplementing) the language of the notice. This is what one may call a dictionary approach. But a notice is not issued into a vacuum, of which the only occupant is a dictionary. The dictionary is one aspect of publicly available information, and, once it is permissible to look at that aspect of publicly available information to supply the identity of a person who is being criticised in a notice, I am unclear why this should not, for example, also be permissible to show that a generic description such as CIO London management in a notice in fact describes only one person. In my view, the correct analysis is, rather, along the lines of the Authoritys primary case, viz that a matter (only) identifies a person if the identity of the person is apparent from the terms in which the matter is described or explained, read in the light of information generally or publicly available in the financial world (as distinct from information available only to persons acquainted with the person or his company). Judge Timothy Herrington in the Upper Tribunal treated section 393 of the 2000 Act as involving a two stage test. First, the decision notice must direct criticism at a particular individual or the members of a particular group of individuals. Second, that satisfied, such individual or individuals could be identified for the purposes of section 393 by external material, regardless of whether the ordinary reader of the notice would be able to establish that the criticisms relate to the individual in question (para 37). It was not a question of whether any particular type of reader could identify the individual concerned but simply whether there is information in the public domain that incontrovertibly links the description in the Final Notice to, in this case, Mr Macris (para 50). Judge Herrington considered (in my view, probably incorrectly) that this analysis was consistent with that adopted by an earlier Financial Services and Markets Tribunal decision in Watts v Financial Services Authority FIN/2004/0024 (unreported) 7 September 2005. Judge Herrington attached no significance to the fact that the British press had not in fact worked out the identity of Mr Macris until by his present claim he prompted them. The Court of Appeal considered that Whether the relevant matters identify a person for the purposes of section 393 is in one sense a unitary question, a proposition with which I agree, but went on to adopt Judge Herringtons two stage approach as logical. It disagreed with the breadth of Judge Herringtons approach at the second stage of his two stage approach. It said that there cannot be ex post facto unlimited reference to external material to identify the third party, and that identification could only be made by reference to information which objectively would be known by persons acquainted with the third party, or persons operating in the relevant area of the financial services market (para 50). It is notable, however, that, in the next paragraph of its judgment, the Court of Appeal referred to what such persons might reasonably have known. Further, in para 51, after noting, correctly in my view, that the failure of the press to identify Mr Macris before his present claim was of some evidential relevance, the Court of Appeal only upheld the judges conclusion on the basis that had he applied the objective test [which the Court of Appeal] formulated, [he] would have been entitled to conclude on the evidence before him, that despite the fact that the press had not previously latched on to the matter, the relevant sector of the financial market would nonetheless have appreciated that it was Mr Macris who was identified in the Notice as CIO London management. Once it had concluded that Judge Herrington had applied the wrong test, it was for the Court of Appeal itself to apply the right test, not to consider whether a judge applying the correct text might reasonably have arrived at the same result or would have been entitled to do so. Section 393 gives rights which go beyond any which would arise at common law under principles discussed in In re Pergamon Press Ltd [1971] Ch 388. It is not therefore surprising that these are carefully delimited. The use of the words which identifies a person contrasts with the use elsewhere in the statute of the word identifiable (Schedule 2, paragraph 14(2) and Schedule 11B, paragraph 8(3)). Some assistance in understanding section 393 may also be obtained from section 230A, albeit only added with effect from 24 January 2013. This, in the context of the Ombudsman Scheme introduced by Part XVI of the Act, provides that: (3) Unless the complainant agrees, a report of a determination published by the scheme operator may not include the name of the complainant, or particulars which, in the opinion of the scheme operator, are likely to identify the complainant. The ambit of this provision may be regarded as confirming the limited scope of the third party protection intended under section 393. On the question whether a notice is directed at a particular person, the Tribunal said in Watts, at para 50, in the context of a decision notice directed simply at Shell, that: There is no reason in our view why a market abuse allegation directed at a company must necessarily be taken to impute criticism to particular individuals. We doubt whether undertaking the threefold steps which are said to be required, and looking at publicly available sources to see whether any and if so which individuals were identified, would be a workable process. In the present case, I consider (contrary to the conclusion reached by Judge Herrington) that the criticism directed in the report to CIO [ie Chief Investment Office] London Management cannot by itself necessarily be taken to relate to any particular individual or individuals. However, it must relate to one or more of a group of individuals making up CIO London management. I also consider (contrary to the view taken in both courts below) that a notice cannot be said to identify an individual merely because persons acquainted with him or his company could do so. Otherwise, it would be necessary in almost every case for a third party notice to be given. The test of identification should have regard to information generally available publicly, without inquiry of those with direct knowledge of the company involved or detailed investigation, to those in the relevant financial world in which the matter occurred. A notice will, in my view, only identify an individual if it does so to persons operating in that world, unacquainted with the particular individual or his company, though familiar with information generally available publicly to operators in that world. In the present case, the matter to which the Notice related consisted of the circumstances in which the Bank incurred losses as the result of what became known as the London Whale trades (para 2.1), and the Notice assigned responsibility for this matter in certain respects to CIO London management. If there was publicly available information making clear that CIO London management equated with Mr Macris or that he was the person who within CIO London management had managed the London Whale trades, I would regard that as sufficient identification of him to trigger section 393(1) and (4). The courts below relied both on evidence from two witnesses closely acquainted with Mr Macris and on the US Senate Report into the London Whale matter. The two witnesses in question had worked with Mr Macris in, or done business with, the CIO and had detailed knowledge of the CIOs organisation and structure. They were speaking on the basis of specialist knowledge which was, in my view, irrelevant to identification. As to the Report, Judge Herrington said that it is accessible on the internet and contains many references to [Mr Macris] (para 53), and noted that it showed that some of the communications referred to in the Notice as involving CIO London management were in fact with Mr Macris. In disagreement with Lord Wilson on this point, I do not consider that it follows that CIO London management equated with Mr Macris, or that he was the only relevant individual in CIO London management or that the criticisms directed generically at CIO London management were being directed at him. Although it was accessible on the internet, I am also left uncertain whether it and its contents have been shown to constitute publicly available information in a United Kingdom context. For these reasons, I agree that this appeal should be allowed. LORD WILSON: (dissenting) I find myself in respectful disagreement both with the majority of the court and, on a more limited yet important aspect referable to the disposal of this particular appeal, also with Lord Mance. In its Notice of Appeal the Authority suggested that, when providing for third party rights in section 393 of the Act, Parliament probably intended an approach which could strike a fair balance between individual reputation and regulatory efficiency. The courts decision today does not strike a fair balance. In para 1 of his judgment Lord Sumption observes that the point raised by the appeal has significant implications for the conduct of the Authoritys investigatory and disciplinary functions. I agree with Lord Sumptions observation. But does it not betray a lack of balance? Does the point not also have significant implications for individuals wrongly criticised in warning and decision notices given by the Authority to others? In its Notice of Appeal the Authority stated as follows: I indorse the Authoritys suggestion. The issue in the appeal is whether the test formulated by the Court of Appeal is correct. The Authority does not seek to argue (as it did in the Court of Appeal) that identification for these purposes is limited to names or designations that function as proper nouns. But the Authority submits, as it did in the Court of Appeal, that a person is identified in a notice only if the terms of the notice would reasonably lead the ordinary reader (that is, the reader with a general understanding of financial affairs and aware of publicly and widely available background material, but without specific or special knowledge of the underlying facts of the matter to which the notice and its reasons relate) to conclude that the notice unambiguously identifies the applicant as a person mentioned in the notice. I will refer to the Authoritys suggested test as the ordinary reader test. In its written case, echoed in the oral submissions of Mr Crow QC on its behalf, the Authority suggested that, while the court might wish to consider whether an individual was identified only if named in the notice, or perhaps also if referred to by his formal job title, the correct test was its ordinary reader test. In order to ensure that the Authoritys functions are workable, Lord Sumption favours a construction of section 393 which appears to narrow the field of those upon whom it confers third party rights even more than the Authority itself suggests to be correct. But I say that his construction appears to narrow the field because I confess that I find it indeed it follows that I find the whole basis of the courts decision today slightly hard to understand. My perplexity, which I trust that readers of our judgments will not share, arises in the following way: (a) Both in para 11 and in the final paragraph of his judgment (para 17) Lord Sumption stresses the need for a synonym before an unnamed person will be identified within the meaning of the section. (b) In explaining his agreement with Lord Sumption, Lord Neuberger therefore undertakes, at para 26, a conventional analysis of what, in this context, a synonym means. He suggests that the persons position or office must be mentioned, that he must be the sole holder of it and that, by reference to freely available sources of information, the public must be able easily to discover his name as being the holder of it. In para 11, however, Lord Sumption proceeds to explain his use of the (c) As Lord Mance suggests at para 33, the above may be called a dictionary approach. (d) word synonym. (e) So he says that a reference to CIO London management would be a synonym if it referred to one person who was identifiable from publicly available information. But can CIO London management be described as a position or office? (f) Lord Sumption also says that resort to publicly available information is permissible in order only to interpret, and not to supplement, the language of the notice. How obvious is this distinction? (g) He also says that it is impermissible to resort to additional facts about the person so that, if they are placed alongside the notice, it becomes apparent that they refer to the same person. How clear is the meaning of this prohibition? The question raised by section 393(1) and (4) of the Act is whether any of the reasons contained in a notice relates to a matter which (a) identifies a person The cumbersome terminology was borrowed from the predecessor of the section, namely section 70(4) of the Financial Services Act 1986 (the 1986 Act). But the surplus words are swiftly and conveniently banished in section 393(2)(b) and (6)(b) of the Act, where it is made clear that it is simply the notice which has to identify the person. In the Upper Tribunal Judge Herrington, who prior to his appointment had been Chair of the Authoritys Regulatory Decisions Committee and so brought to the issue an arresting level of expertise, suggested that the question whether a notice identified an applicant for third party status should be answered in two stages: (i) By reference only to the terms of the notice, do the matters of which the applicant complains refer to an individual? If so, (ii) demonstrates that the individual is the applicant? Is there information in the public domain which incontrovertibly The Court of Appeal agreed that the question should be answered in two stages and that the judges formulation of the question at the first stage was correct. The Authority says that it now agrees that a two stage approach may be helpful and it broadly agrees with the formulation of the first question. The Court of Appeal held that the judges formulation of the question at the second stage was too broad; and no one now contends otherwise. The Court of Appeal proceeded to reformulate that question as follows, at para 45: Are the words used in the matters such as would reasonably in the circumstances lead persons acquainted with the [applicant], or who operate in his area of the financial services industry, and therefore would have the requisite specialist knowledge of the relevant circumstances, to believe as at the date of the promulgation of the Notice that he is a person prejudicially affected by matters stated in the reasons contained in the notice? Unfortunately the Court of Appeals mistaken reliance on the law of defamation led it to make two errors in its reformulation of the question at the second stage and to include in it one infelicity. The first error was to include persons acquainted with the [applicant] in the notional constituency of those who would decide whether he was the individual to whom the notice referred. Persons acquainted with him would include persons well acquainted with him, such as members of his family and close colleagues at work; and they would be likely to know that he was indeed that individual in circumstances in which it would be absurd to describe him as having been identified in the notice. Thus, in the recent case in the tribunal of Bittar v Financial Conduct Authority [2015] UKUT 602 (TCC), Judge Herrington felt the need, at paras 33 and 34, to apply a heavy gloss to the Court of Appeals reference to acquaintances so as to exclude those with close knowledge of the circumstances. The second error was to define the decision for that constituency as being whether the applicant was a person prejudicially affected by matters in the notice. The decision for the constituency is, instead, whether the individual to whom the notice refers is the applicant. Whether, if so, matters in the notice are prejudicial to him is, instead, a matter for the Authority pursuant to section 393(1)(b) and (4)(b) of the Act. The infelicity was to suggest that it was enough for that constituency to believe. The verb is too weak. Although the composition of the constituency may not have been correctly identified in its ordinary reader test, the Authority is correct to suggest that, at the second stage, the constituency needs to conclude that the individual to whom the notice refers is the applicant. But the kernel of the Court of Appeals reformulation of the question at the second stage remains. It is that the relevant conclusion should be reached by persons who operate in his area of the financial services industry, and therefore would have the requisite specialist knowledge of the relevant circumstances. It is at this point that the court should have addressed what is in my view the central issue of construction raised by the appeal. Does a notice identify a person for the purpose of section 393(1)(a) and (4)(a) of the Act if ordinary readers, as defined by the Authority in its suggested test, would conclude that the individual to whom the notice refers is the applicant? Or does it identify a person for that purpose if ordinary operators in the same sector of the market would reach that conclusion? Which, in other words, is the appropriate constituency ordinary readers or ordinary market operators? I answer the question by reference to the particular sort of damage which a wrong criticism of an individual in a notice given by the Authority is likely to cause to him. It is the reaction to the criticism of those who operate in the same sector of the market which is likely to cause him most damage; for it may prejudice his ability to remain in his employment, or to find other employment in that sector, or otherwise to continue to earn his livelihood in the industry. The predecessor to section 393 of the Act, namely section 70(4) of the 1986 Act, identified, at (b), the prejudice which the Secretary of State needed to perceive: it was prejudice to that person in any office or employment. Although under section 393(1)(b) and (4)(b) of the 2000 Act the type of prejudice which the Authority needs to perceive is left open, there is nothing to indicate that in 2000 Parliament was any less concerned about prejudice in relation to employment than it had been in 1986. Take the case of Mr Macris himself. In the warning and decision notices given to the bank on 18 September 2013, the Authority referred in detail to a telephone call on 10 April 2012 which it had conducted with CIO London management. In fact it had conducted the call with (or primarily with) Mr Macris; and in these proceedings it has always accepted that, when referring in the notices to CIO London management, it was referring to Mr Macris but in a way which (so it hoped) would avoid identifying him. In the notices the Authority concluded in relation to the telephone call that (by virtue of the conduct of CIO London management) the Authority was deliberately misled by the Firm. The allegation that during the telephone call Mr Macris deliberately misled the Authority is, if untrue, gravely damaging to him. But, in its later notices given to Mr Macris himself following its direct inquiry into his conduct, there is no such allegation. There is extensive reference to the same telephone call; and his conduct in the course of it is said to contribute to the conclusion that, as an approved person, he had failed to deal with the Authority in an open and cooperative way in breach of Statement of Principle 4 of the Authoritys Statements of Principle for Approved Persons. But the more gravely damaging allegation against Mr Macris is not repeated. Yet, by contrast, there, in the published decision notice given to the bank, the allegation remains. Apparently Mr Macris, whose employment by the bank has long since been terminated, cannot challenge it in any way. He cannot sue the Authority for damages, whether in tort or otherwise, because it has not acted in bad faith: paragraph 25 of Schedule 1ZA to the Act. And, by the decision of the court today, he is not entitled to third party status under section 393 of the Act. Nor would Mr Macris have been entitled to third party status by application of the Authoritys ordinary reader test. I see no merit in the Authoritys submission that, even if ordinary market operators were to conclude that he was the individual to whom the decision notice referred, Mr Macris should fail to secure third party status because ordinary readers would not reach a similar conclusion. In my view the proper construction of the word identifies in section 393(1)(a) and (4)(a) of the Act requires that the question at the second stage of the inquiry should be answered by reference to the ordinary market operator test. But the test requires expansion in order to identify, and in particular to limit, the information to which the operator should refer. In essential agreement with Lord Mance at para 37, I would expand it as follows: Are the words in the notice such as would reasonably lead an operator in the same sector of the market who is not personally acquainted with the applicant, by reference only to information in the public domain to which he would have ready access, to conclude that the individual referred to in the notice is the applicant? It is easy to pick holes in my formulation of the above question. In their application to particular facts, its references to the same sector, to personal acquaintanceship and to ready access to information might all give rise to debate. But, for my part, I am unpersuaded that it would be impossible for the Authority satisfactorily to address that question; for it will not have reached the stage of giving a notice before having conducted a profound examination of the relevant circumstances. Above all, however, my formulation would, if I may say so, have better struck, as between individual reputation and regulatory efficiency, the fair balance which the Authority has correctly identified to have been Parliaments intention. Were I correctly to have formulated the question at the second stage of the inquiry, the answer to it would be yes, the individual referred to in the notices is Mr Macris. There is no doubt that the two deponents in support of Mr Macris, each of whom knew him and had worked with him, could not have contributed to an affirmative answer. But there was also the report of the US Senate Permanent Subcommittee on Investigations dated 15 March 2013 and entitled JP Morgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses. As Judge Herrington said, the report was the subject of an in depth investigation; was readily accessible on the subcommittees website; and contained many (in fact more than 80) references to Mr Macris. It had generated significant press attention. By cross reference to the report, the ordinary market operator would readily conclude that the references in the notices to CIO London management were references to Mr Macris. When, for example, the notices referred to the despatch by CIO London management of an e mail on 30 March 2012, the subcommittee report referred to its despatch by Achilles Macris. I do not share the concern of Lord Mance, expressed at para 39, that the report might not have been readily available to market operators in the UK; and I agree with the qualified acknowledgement by Lord Neuberger, at para 30, that it would provide an affirmative answer to my formulation of the question. Nor do I join my colleagues in concluding that Mr Macris fails even to pass the first stage of the inquiry, which requires him to establish that, by reference only to the terms of the notices, the Authoritys criticisms of CIO London management refer to an individual. The Authority secured permission from the Court of Appeal to challenge the tribunals conclusion that Mr Macris had passed the first stage; but its challenge failed. In its Grounds of Appeal to this court there was no suggestion of any aspiration to mount a further challenge in this respect. Indeed in my view, had permission to do so been sought, it would have been refused; it does not raise a point of general public importance. I consider that, although good arguments relevant to the inquiry at the first stage have run both ways, it is no longer open to the Authority to dispute the passage of Mr Macris through it. So I would have dismissed the appeal.

UK-Abs

In 2012 Mr Macris was the International Chief Investment Officer of JP Morgan Chase Bank NA and, in that capacity, head of the banks Chief Investment Office (CIO International). Part of CIO Internationals function was to manage a portfolio of traded credit instruments called the Synthetic Credit Portfolio. The Financial Conduct Authority (FCA) is responsible for the statutory regulation of the United Kingdoms financial markets, deriving its powers from the Financial Services and Markets Act 2000 (the Act), as amended by the Financial Services and Markets Act 2012. Over the course of 2012 the Synthetic Credit Portfolio made losses of $6.2 billion and, following an investigation, the FCA concluded that the loss was caused by, amongst other things, a high risk trading strategy, weak management of that trading and an inadequate response to information which should have alerted the bank to the problems. The FCA agreed a regulatory settlement with the bank, under which it paid a penalty of 137,610,000. The provisions of the Act governing the imposition of penalties provide for three successive notices to be given to a person or firm under investigation, all of which include extensive reasons for the FCAs actions. Where a regulatory settlement is agreed before service of these notices, the usual procedure is to draft them in identical terms and serve them simultaneously. That practice occurred in this case on 18 September 2013. Where such notices contain material discreditable to particular individuals not party to the settlement, the Act makes provision under section 393 to protect these persons from unfair prejudice. When the notice identifies such a person, they must be given a copy of the notice, to enable them to make representations to the regulator and take the matter before the Upper Tribunal. These notices did not identify Mr Macris by name or job title, but there were multiple references to CIO London management, a category to which he belonged He was not supplied with a copy of the notice served on the bank or given an opportunity to make representations. He brought a claim before the Upper Tribunal, which heard as a preliminary issue the question of whether he was entitled to be notified under section 393. The Upper Tribunal upheld the complaint on the basis that the references to CIO London management would be taken by a reader with relevant experience to refer to the most senior individual involved. The Court of Appeal agreed in the result, but based their reasoning in part on an analogy with the law of defamation. This led them to conclude that persons who operated in Mr Macris field would reasonably have been able to identify Mr Macris from statements made in the notice in conjunction with publicly available material. The FCA appealed to the Supreme Court. By a majority of 4 to 1, the Supreme Court allows the FCAs appeal. Lord Sumption gives the lead judgment, with which Lord Neuberger and Lord Hodge agree. Lord Neuberger adds a concurring judgment and Lord Wilson gives a dissenting judgment. Lord Mance writes a judgment concurring with the majority in the outcome of the appeal, but agreeing with Lord Wilson on the issue of law. Lord Sumption holds that a person is identified in a notice under section 393 if he is identified by name or by a synonym for him, such as his office or job title. In the case of a synonym it must be apparent from the notice itself that it could only apply to one person and that person must be identifiable from information which is either in the notice or publicly available elsewhere. However, resort to information publicly available elsewhere is permissible only where it enables one to interpret (as opposed to supplement) the language of the notice. It is not permissible to resort to additional facts about the person so that if those facts and the notice are placed side by side it becomes apparent that they refer to the same person [11]. Lord Sumption gives five reasons: (i) section 393 defines what fairness requires in the context of notices issued by the FCA [12]; (ii) it is clear from the provision that it must be the reasons contained in the notice which identify the third party and not an extrinsic source [13]; (iii) the Act must be read in a manner which enables the FCA to ensure that a third party is not identified in the notice, when it does not know precisely what information is available elsewhere [14]; (iv) the relevant audience for publication is the public at large, not a specific industry sector specially familiar with the third party or his business [15]; and (v) the suggested analogy with the law of defamation is not helpful given its different purpose to that of section 393 of the Act [16]. Lord Neuberger points out that the wider the scope of section 393(1)(a), the more constraining it will be on the FCAs activities; but the narrower it is the greater the number of individuals who will be at risk of being harmed by notices without any recourse [23]. The question to be asked is: does the notice identify the individual in question? The statutory language appears to stipulate that the person must be identified in the notice, not that he must be identifiable as a result of the notice [25]. Lord Neuberger describes the test as whether the individual is named in the notice, or the description in the notice must be equivalent to naming him. An individual is identified in a document if: (i) his position or office is mentioned, (ii) he is the sole holder of that position or office, and (iii) reference by members of the public to freely and publicly available sources of information would easily reveal the name of that individual by reference to his position or office [26]. Lord Neuberger also points to a number of problems if a wider meaning is adopted: (i) it would be a matter of subjective assessment as to how wide a scope to give it; (ii) it could self evidently lead to disputes; (iii) it could lead to some odd consequences; (iv) it would place the FCA in difficulty from the outset; and (v) it could still lead to arbitrary outcomes [28]. Lord Wilson dissents on the ground that the majoritys approach does not strike a fair balance between individual reputation and regulatory efficiency [44]. The central issue of construction in the appeal relates to the appropriate constituency whether it is ordinary readers or ordinary market operators who would conclude that the individual to whom the notice refers is the applicant [59]. The answer is by reference to the particular sort of damage which a wrong criticism of an individual by a notice is likely to cause him: that from within the sector of the market in which he operates [60]. Lord Wilson agrees in essence with the formulation of Lord Mance: the key question being are the words in the notice such as would reasonably lead an operator in the same sector of the market who is not personally acquainted with the applicant, by reference only to information in the public domain to which he would have ready access, to conclude that the individual referred to in the notice is the applicant [63]? However, in his application of that test, Lord Mance concludes that CIO London management did not equate with or identify Mr Macris, and that no information had been shown to exist in the public domain which, when read with the notice, identified him with CIO London Management. [39]. On this basis, Lord Mance agrees with the majority in the outcome of the appeal.

The question raised by this appeal is whether there exists a power under the Immigration Act 1971 (the 1971 Act) to grant immigration bail to a person who can no longer be lawfully detained. Factual Background B has a long and complex immigration history which it is necessary to refer to in some detail. He has been in the United Kingdom since 1993. Between 5 February 2002 and 11 March 2005, he was detained under section 21 of the Anti terrorism, Crime and Security Act 2001. He appealed to the Special Immigration Appeals Commission (SIAC) against that decision using a false identity. The relevant provisions of the 2001 Act were repealed by the Prevention of Terrorism Act 2005 (the 2005 Act) following the decision of the House of Lords in A and others v Secretary of State for the Home Department [2004] UKHL 56; [2005] 2 AC 68. B was then released from detention on 11 March 2005, and made subject to a control order under the 2005 Act. He was admitted to the Royal Free Hospital on the 12 March 2005 as a voluntary psychiatric patient where he remained, save for one night, until 11 August 2005. On 11 August 2005 B was notified, in accordance with regulations under section 105 of the Nationality Immigration and Asylum Act 2002, of the Secretary of States decision to make a deportation order against him on national security grounds, under sections 3(5) and 5(1) of the 1971 Act. B was arrested and detained under immigration powers contained in paragraph 2(2) of Schedule 3 to the 1971 Act pending the making of the deportation order. He was detained at HMP Woodhill and, the following day, transferred to HMP Long Lartin. On 17 August 2005, B appealed to SIAC against that decision, once again using the same false identity. Bs grounds of appeal contended, inter alia, that his removal to Algeria would be in breach of the United Kingdoms obligations under the UN Refugee Convention and unlawful as incompatible with his rights under article 3 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). The Secretary of State has never disputed that, if deported to Algeria, B would be at real risk of treatment incompatible with article 3 ECHR and that only with specific individual assurances from the Algerian government could he be lawfully and safely removed to Algeria. On 11 May 2006, Her Majestys Government informed the Algerian Government that it proposed to deport B and requested certain information about him. On 16 May 2006, specific assurances as to the treatment of B were sought from Algeria. On 10 July 2006, the Algerian authorities confirmed that the details of his identity given by B were those of an individual present in Algeria. On 17 July 2006, SIAC heard the national security case in Bs appeal against the Secretary of States decision to make a deportation order. On 12 January 2007, pursuant to rule 39(1) of the Special Immigration Appeals Commission (Procedure) Rules 2003, SIAC directed B to provide specified particulars of his true identity and to consent to provide a non invasive sample for the purposes of DNA testing. B consented to provide a DNA sample but refused to provide the particulars of his true identity. On 19 July 2007, SIAC ordered B to provide details of his true identity. A penal notice was attached to the order. On 30 July 2008, SIAC gave judgment in the national security case against B, holding that the Secretary of States case on the risk to national security had been made out. SIAC concluded that, notwithstanding his mental health difficulties, B had played a leading role in facilitating communications for Algerian terrorists, as well as being responsible for the procurement of false documentation and high technology equipment. The hearing of the case on safety on return did not take place at that time because of the unresolved question of Bs true identity. On 18 August 2009, the Secretary of State applied to SIAC for an order that B be committed to prison for contempt for disobeying the order of 19 July 2007. Following an adjournment in the hope of resolving the issue of Bs identity, the committal application was eventually heard on 11 October 2010. In its judgment delivered on 26 November 2010 SIAC held that B had deliberately and contumeliously disobeyed its order and, taking into account all the circumstances including that Bs mental illness may have reinforced his decision not to comply with SIACs order, imposed a prison sentence of four months. The operation of the order was suspended until the final determination of any appeal. On 21 July 2011, the Court of Appeal by a majority dismissed his appeal (B (Algeria) v Secretary of State for the Home Department [2011] EWCA Civ 828). B appealed to the Supreme Court which on 30 January 2013 dismissed the appeal (B (Algeria) v Secretary of State for the Home Department [2013] UKSC 4; [2013] 1 WLR 435). B then served his sentence of 4 months imprisonment in HMP Belmarsh and was released on 5 April 2013. On 11 April 2006, SIAC had decided in principle that B could be granted bail. However, save for one night, throughout the period from 11 March 2005 B remained in either prison or hospital until his discharge from hospital to bail accommodation on 18 January 2011. B was voluntarily readmitted to hospital in February 2011 and on further occasions thereafter. Following his release from prison after serving his sentence for contempt, two sets of bail conditions were set by SIAC to run in parallel depending on whether B was an in patient at a psychiatric hospital or residing at his bail accommodation. On 23 January 2014, B applied to vary his bail conditions which, he maintained, constituted an unlawful deprivation of liberty. At a hearing on 28 and 29 January 2014 SIAC considered the application of the Hardial Singh principles (R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704) to the circumstances of Bs case, including the prospect of Bs removal to Algeria. In its judgment of 13 February 2014, SIAC found that in the absence of a change of mind by B there is no reasonable prospect of removing [B] to Algeria and thus the ordinary legal basis for justified detention of B under the Immigration Acts has fallen away. Following this ruling, the Secretary of State did not authorise the further detention of B, although Bs advisers only became aware of this on or about 6 June 2014. In its judgment of 13 February 2014 SIAC also held that the conditions of bail did not constitute a deprivation of liberty. However, it subsequently directed a review of Bs bail conditions, which were relaxed by an order dated 16 May 2014. On 14 May 2014 the Secretary of State applied under rules 11B and 40 of the Special Immigration Appeals Commission (Procedure) Rules 2003 to strike out Bs appeal against the notice of decision to deport him, on the grounds of his continuing refusal to comply with the order of 19 July 2007. On 1 July 2014, in the light of Bs continuing contempt of court, SIAC struck out Bs appeal. B maintained that, following SIACs findings on 13 February 2014, his detention could no longer lawfully be authorised as it would be incompatible with Hardial Singh principles. He contended that if that were so, and he could not lawfully be detained, SIAC no longer had jurisdiction to grant bail to B or to impose bail conditions. In its judgment of 1 July 2014, SIAC rejected these submissions, concluding that it continued to have jurisdiction to impose bail conditions on B. B then applied for permission to apply for judicial review of SIACs decision of 1 July 2014 on its bail jurisdiction, there being no right of appeal against that decision. Irwin J, sitting as a High Court Judge, heard that application by agreement between B and the Secretary of State, and on 14 August 2014 he granted B permission to apply for judicial review of that decision, dismissed the application for judicial review, and granted permission to appeal to the Court of Appeal. B appealed to the Court of Appeal which on 6 May 2015 gave judgment allowing both appeals (B (Algeria) v Secretary of State for the Home Department (No 2) [2015] EWCA Civ 445; [2016] QB 789). (1) The Court of Appeal allowed Bs appeal in relation to SIACs bail jurisdiction on the ground that SIAC had no jurisdiction to impose bail conditions on B if his detention would be unlawful. (2) The Court of Appeal also allowed Bs appeal against the strike out of Bs SIAC appeal and remitted the matter to SIAC. On 15 September 2016 SIAC refused the application to strike out Bs appeal against the decision to make a deportation order against him. The Secretary of State then indicated that she no longer opposed Bs appeal. Accordingly, in a judgment dated 12 December 2016 SIAC confirmed its decision to allow Bs appeal against the notice of intention to deport him. The Secretary of State did not seek permission to appeal. As a result of this ruling allowing the substantive deportation appeal, Bs bail fell away and it is common ground that the immigration bail power is now unavailable. On 9 November 2015, the Supreme Court granted the Secretary of State permission to appeal against the decision of the Court of Appeal on the issue of SIACs bail jurisdiction. Statutory provisions The Secretary of States power to detain or control a person pending deportation is set out in paragraph 2 of Schedule 3 to the 1971 Act which provides in material part, as amended: (2) Where notice has been given to a person in accordance with Regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 (notice of decision) of a decision to make a deportation order against him, and he is not detained in pursuance of the sentence or order of a court, he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise). (4A) Paragraphs 22 to 25 of Schedule 2 to this Act apply in relation to a person detained under sub paragraph (1), (2) or (3) as they apply in relation to a person detained under paragraph 16 of that Schedule. (5) A person to whom this sub paragraph applies shall be subject to such restrictions as to residence, as to his employment or occupation and as to reporting to the police or an immigration officer as may from time to time be notified to him in writing by the Secretary of State. (6) The persons to whom sub paragraph (5) above applies are (b) a person liable to be detained under sub paragraph (2) or (3) above, while he is not so detained. The power to grant immigration bail and impose bail conditions derives from paragraphs 22 and 29 of Schedule 2 to the 1971 Act so far as relevant, as amended. Paragraph 22 governs bail in general and paragraph 29 governs bail pending appeal. Section 3 of the Special Immigration Appeals Commission Act 1997 (the 1997 Act) extends to SIAC the power to grant bail and impose bail conditions that is conferred on an immigration officer not below the rank of chief immigration officer or the First tier Tribunal (the FTT) by paragraphs 22 and 29 of Schedule 2 to the 1971 Act. Section 3 of the 1997 Act provides in material part: (1) In the case of a person to whom section (2) below applies, the provisions of Schedule 2 to the Immigration Act 1971 specified in Schedule 3 to this Act shall have effect with the modifications set out there. (2) This subsection applies to a person who is detained under the Immigration Act 1971 if the Secretary of State certifies that his detention (a) is necessary in the interests of national security, (b) or (c) he is detained following a decision to make a deportation order against him on the ground that his deportation is in the interests of national security. Paragraphs 1 and 4 of Schedule 3 to the 1997 Act modify paragraphs 22 and 29 of Schedule 2 to the 1971 Act respectively so that, in deportation cases heard in SIAC, they provide as follows: 22. (1) The following, namely a person detained under paragraph 16(1) (a) above pending examination; (aa) a person detained under paragraph 16 (1A) above pending completion of his examination or a decision on whether to cancel his leave to enter; and a person detained under paragraph 16(2) (b) above pending the giving of directions, may be released on bail in accordance with this paragraph. (1A) The Special Immigration Appeals Commission may release a person so detained on his entering into a recognizance or, in Scotland, bail bond conditioned for his appearance before an immigration officer at a time and place named in the recognizance or bail bond or at such other time and place as may in the meantime be notified to him in writing by an immigration officer. (2) The conditions of a recognizance or bail bond taken under this paragraph may include conditions appearing to the Special Immigration Appeals Commission to be likely to result in the appearance of the person bailed at the required time and place; and any recognizance shall be with or without sureties as the Commission may determine. (3) In any case in which the Special Immigration Appeals Commission has power under this paragraph to release a person on bail, the Commission may, instead of taking the bail, fix the amount and conditions of the bail (including the amount in which any sureties are to be bound) with a view to its being taken subsequently by any such person as may be specified by the Commission; and on the recognizance or bail bond being so taken the person to be bailed shall be released. 29(1) Where a person (in the following provisions of this Schedule referred to as an appellant) has an appeal pending under Part 5 of the Nationality, Immigration and Asylum Act 2002 or section 2 of the Special Immigration Appeals Commission Act 1997 or a review pending under section 2E of that Act and is for the time being detained under Part I of this Schedule, he may be released on bail in accordance with this paragraph and paragraph 22 does not apply. (2) The Special Immigration Appeals Commission may release an appellant on his entering into a recognizance or, in Scotland, bail bond conditioned for his appearance before the Commission at a time and place named in the recognizance or bail bond. (5) The conditions of a recognizance or bail bond taken under this paragraph may include conditions appearing to the person fixing the bail to be likely to result in the appearance of the appellant at the time and place named; and any recognizance shall be with or without sureties as that person may determine. The power of arrest and re detention of persons on bail under paragraphs 22 and 29 of Schedule 2 is provided for under paragraph 24 of Schedule 2 to the 1971 Act which provides: 24. (1) An immigration officer or constable may arrest without warrant a person who has been released by virtue of paragraph 22 above (a) if he has reasonable grounds for believing that that person is likely to break the condition of his recognizance or bail bond that he will appear at the time and place required or to break any other condition of it, or has reasonable ground to suspect that that person is breaking or has broken any such other condition; or (b) if, a recognizance with sureties having been taken, he is notified in writing by any surety of the suretys belief that that person is likely to break the first mentioned condition, and of the suretys wish for that reason to be relieved of his obligations as a surety; and paragraph 17(2) above shall apply for the arrest of a person under this paragraph as it applies for the arrest of a person under paragraph 17. (2) A person arrested under this paragraph (a) if not required by a condition on which he was released to appear before an immigration officer within twenty four hours after the time of his arrest, shall as soon as practicable be brought before the First tier Tribunal or, if that is not practicable within those 24 hours, before in England and Wales, a justice of the peace, in Northern Ireland, a justice of the peace acting for the petty sessions area in which he is arrested or, in Scotland, the sheriff; and (b) if required by such a condition to appear within those 24 hours before an immigration officer, shall be brought before that officer. (3) Where a person is brought before the First tier Tribunal, a justice of the peace or the sheriff by virtue of sub paragraph (2)(a), the Tribunal, justice of the peace or sheriff (a) if of the opinion that that person has broken or is likely to break any condition on which he was released, may either (i) direct that he be detained under the authority of the person by whom he was arrested; or (ii) release him, on his original recognizance or on a new recognizance, with or without sureties, or, in Scotland, on his original bail or on new bail; and if not of that opinion, shall release him on (b) his original recognizance or bail. On 12 May 2016 the Immigration Bill 2016 received royal assent. Section 61 of the Immigration Act 2016 provides in material part: (3) A person may be released and remain on bail under paragraph 22 or 29 of Schedule 2 to the Immigration Act 1971 even if the person can no longer be detained under a provision of the Immigration Acts to which that paragraph applies, if the person is liable to detention under such a provision. (4) The reference in subsection (3) to paragraph 22 or 29 of Schedule 2 to the Immigration Act 1971 includes that paragraph as applied by any other provision of the Immigration Acts. (5) Subsections (3) and (4) are to be treated as always having had effect. On 9 November 2015, the Supreme Court granted the Secretary of State permission to appeal on the issue of SIACs bail jurisdiction. The Secretary of State indicated that she did not propose to rely on section 61 of the Immigration Act 2016 on this appeal. The appeal has been heard on the basis of the statutory provisions as they were at the time of the Court of Appeals decision. Hardial Singh principles The Hardial Singh principles form an important part of the background to these proceedings. In Hardial Singh itself Woolf J. laid down the following propositions (at p 706D G): Since 20 July 1983, the applicant has been detained under the power contained in paragraph 2(3) of Schedule 3 to the Immigration Act 1971. Although the power which is given to the Secretary of State in paragraph 2 to detain individuals is not subject to any express limitation of time, I am quite satisfied that it is subject to limitations. First of all, it can only authorise detention if the individual is being detained in one case pending the making of a deportation order and, in the other case, pending his removal. It cannot be used for any other purpose. Secondly, as the power is given in order to enable the machinery of deportation to be carried out, I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose. The period which is reasonable will depend upon the circumstances of the particular case. What is more, if there is a situation where it is apparent to the Secretary of State that he is not going to be able to operate the machinery provided in the Act for removing persons who are intended to be deported within a reasonable period, it seems to me that it would be wrong for the Secretary of State to seek to exercise his power of detention. In addition, I would regard it as implicit that the Secretary of State should exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time. Over time these principles have been elaborated and refined. In R (WL (Congo)) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245, Lord Dyson JSC summarised them as follows (at para 22): With regard to determining what is a reasonable period Lord Dyson (at para 104) repeated his earlier conclusion in Is case (at para 48): It is common ground that my statement in R (I) v Secretary of State for the Home Department [2003] INLR 196, para 46 correctly encapsulates the principles as follows: (i) the Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) the deportee may only be detained for a period that is reasonable in all the circumstances; (iii) if, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period, he should not seek to exercise the power of detention; (iv) the Secretary of State should act with reasonable diligence and expedition to effect removal. It is not possible or desirable to produce an exhaustive list of all the circumstances that are or may be relevant to the question of how long it is reasonable for the Secretary of State to detain a person pending deportation pursuant to paragraph 2(3) of Schedule 3 to the Immigration Act 1971. But in my view they include at least: the length of the period of detention; the nature of the obstacles which stand in the path of the Secretary of State preventing a deportation; the diligence, speed and effectiveness of the steps taken by the Secretary of State to surmount such obstacles; the conditions in which the detained person is being kept; the effect of detention on him and his family; the risk that if he is released from detention he will abscond; and the danger that, if released, he will commit criminal offences. Discussion I take as my starting point that adopted by the Court of Appeal at paragraph 23 of the judgment of Lord Dyson MR. It is uncontroversial. On 13 February 2014 SIAC ruled that there was no reasonable prospect of removing [B] to Algeria and thus the ordinary legal basis for justified detention of B under the Immigration Acts has fallen away. The Secretary of State accepts that there was thereafter no further authority for the detention of B under paragraph 2(2) of Schedule 3 to the 1971 Act. It is, therefore, common ground that B could not lawfully be detained following the ruling of 13 February 2014 because to do so would exceed the implied limits on the exercise of administrative power to detain for immigration purposes as determined in Hardial Singh. At the heart of this case lies a dispute between the parties as to the correct approach in principle to the availability of immigration bail when the Hardial Singh limit on actual detention is reached. The Secretary of State submits that at that point the individual can be moved onto or kept on bail as an alternative to detention, as a means of getting or keeping him out of detention that is, or is about to become, or would be unlawful. Moreover, at that point the ability to exercise control over him in the form of bail conditions is retained. Bs position, by contrast, is that bail is predicated on lawful detention with the result that when the Hardial Singh limit on actual detention is reached the ability to grant or maintain bail also simultaneously falls away. On behalf of the Secretary of State, Mr Tam urges the court to adopt a purposive interpretation of the relevant legislation. He submits that it is consistent with the purpose of the bail power for it to be construed so that bail is available regardless of whether the individual is lawfully detained or would hypothetically be lawfully detained. The bail power has been provided in order to remove an individual from detention. That purpose would be served whether the detention is lawful or unlawful at the time that bail is granted and the detention is terminated. The bail power, he submits, constitutes a practical solution which permits the termination of unwanted or unwarranted detention, regardless of the separate question of whether that detention is lawful or unlawful. He then draws attention to the fact that at one end of the spectrum of cases dealt with by the immigration system are those of dangerous criminals and those who pose a risk to national security. It is, he submits, particularly important that bail should be available in such cases. Here he refers to the fact that bail conditions can be of greater stringency than conditions which can be attached to temporary admission or temporary release. The availability of bail, he argues, therefore helps to protect the public from such risks if detention is no longer appropriate. While accepting that practical difficulties may arise in the categories of case referred to by Mr Tam in circumstances where continuing detention becomes unlawful on Hardial Singh grounds, I can see no basis for adopting the purposive approach for which the Secretary of State contends, resting as it does on a disregard of the issue of the lawfulness of any continuing detention. It is a fundamental principle of the common law that in enacting legislation Parliament is presumed not to intend to interfere with the liberty of the subject without making such an intention clear (Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, 111E; R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74, 122E F per Lord Bridge). Thus, in In re Wasfi Suleman Mahmod [1995] Imm AR 311, 314 Laws J, observed: While, of course, Parliament is entitled to confer powers of administrative detention without trial, the courts will see to it that where such a power is conferred the statute that confers it will be strictly and narrowly construed and its operation and effect will be supervised by the court according to high standards. In the present case our particular focus is not on a power of executive detention, but on a power to grant bail. Nevertheless, and despite the fact that the purpose may be to effect a release from detention, I consider that this similarly attracts the presumption of statutory interpretation because the conditions which may be attached to a grant of bail are capable of severely curtailing the liberty of the person concerned. It was common ground before us that bail under the 1971 Act may be subject to conditions which constitute a deprivation of liberty within article 5(1)(f) ECHR. As Mr Tam frankly accepts, the ability to exercise control through the use of what may be stringent conditions of bail in part underlies the purposive interpretation for which he contends. Moreover, this is, to my mind, a situation where the principle of legality is in play. As Lord Hoffmann observed in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131D G: Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In these circumstances, we are required to interpret the statutory provisions strictly and restrictively. It is common ground that being detained is a condition precedent to the exercise of the power to grant bail conferred by paragraphs 22 and 29 of Schedule 2 to the 1971 Act. The power of SIAC to grant bail under section 3, Special Immigration Appeals Commission Act 1997 is similarly based on the person being detained. The Court of Appeal (at para 30) described the bail power as predicated on the individual being detained. Paragraph 22 of Schedule 2 confers a power to release on bail in the case of three categories of person, namely a person detained under paragraph 16(1) pending examination, a person detained under paragraph 16(1A) pending completion of his examination or a decision on whether to cancel his leave to enter, and a person detained under paragraph 16(2) pending the giving of directions. Each category is defined by reference to the person being detained under paragraph 16 of Schedule 2. Similarly, paragraph 29 applies to a person who is for the time being detained under Part I of this Schedule. Applying the strict approach to interpretation which I consider is required here, these provisions must be taken to refer to detention which is lawful. This conclusion is reinforced by the fact that in respect of each category to which it applies paragraph 16 refers to detention under the authority of an immigration officer. This makes clear that the provision is not addressing the mere fact of detention; this must refer to a lawful authorisation for detention. As the Court of Appeal concluded in the present case, it would be extraordinary if Parliament had intended to confer the power to grant bail where a person had been unlawfully detained or could not lawfully be detained. The words employed are certainly not appropriate to refer to a state of purported detention or to embrace both lawful and unlawful detention. I consider that detained in paragraphs 22 and 29 refers to lawfully authorised detention. On behalf of the Secretary of State, Mr Tam submits that detained is used only to define the state of affairs which must exist at the time when the power is first exercised. Clearly the power to grant bail can continue to be exercised after the person has ceased to be detained. However, this fails to address whether there needs to be a continuing power to detain as a pre condition to the grant of bail. Here it seems to me that unless there is a continuing power to detain, the system of bail within Part 1 of Schedule 2 would encounter substantial difficulties in its operation. In this regard, Ms Harrison on behalf of B, draws attention to certain features attending the grant of bail. First, paragraph 22(1A) and paragraph 29(2) require the detained person to enter into a recognizance to appear before an immigration officer at a named time and place. When he does so it is then for the immigration officer to re fix bail if he or she considers it appropriate to do so and to determine any appropriate conditions. (R (AR (Pakistan)) v Secretary of State for the Home Department [2016] EWCA Civ 807, para 26). It is difficult to see how this would operate if there were no continuing power of detention. As Ms Harrison points out, bail could be re fixed but until it is the individual cannot simply be at liberty, neither detained nor granted temporary admission. Secondly, and more fundamentally, Ms Harrison points to a situation in which it becomes necessary to re detain the person on bail, for example because he or she is in breach of the conditions of bail. This would not be possible in the absence of a subsisting lawful power to detain. In the absence of such a power, conditions of bail and recognizances entered into would be unenforceable. In response Mr Tam first places reliance on the breach of bail conditions. However, in such circumstances the legal authority for detention cannot be found in the grant of bail or in the breach of conditions of bail but must be found in an ongoing lawful power to detain, as appears from Stellato v Ministry of Justice [2010] EWCA Civ 1435; [2011] QB 856 and R (Konan) v Secretary of State for the Home Department [2004] EWHC 22 (Admin), authorities to which I shall return later in this judgment. Secondly, he makes the point that under the Hardial Singh principles a power of detention may sometimes revive, for example because of a change of circumstances in the foreign state concerned or because of a change in the risk which the individual presents. While that may well occur from time to time in individual cases, it is no answer to Ms Harrisons objection which is directed at the operation of the system of immigration bail. I note, moreover, that there is no possibility of that occurring in the present case where not only did SIAC conclude on 1 July 2014 that Bs detention could no longer be authorised as it would be incompatible with Hardial Singh principles, but the Secretary of State has not authorised Bs continuing detention since that finding of SIAC. The present case, it appears, falls within the category contemplated by Lord Dyson JSC in WL (Congo) at para 144 where, however grave the risk of absconding or the risk of serious offending, it ceases to be lawful to detain a person pending deportation. Once that position is reached there is, in my view, no longer a power of detention under paragraph 16 and there is therefore no longer a power to grant bail under paragraphs 22 or 29. The Secretary of State next draws attention to paragraph 21 of Schedule 2 which concerns temporary admission or release of persons liable to detention or detained in non deportation cases (ie the equivalent provisions to paragraphs 2(5) and (6) of Schedule 3 of the 1971 Act). Paragraph 21 as amended provides for the release or temporary admission of persons liable to detention or detained: 21. Temporary admission or release of persons liable to detention (1) A person liable to detention or detained under paragraph 16(1), (1A) or (2) above may, under the written authority of an immigration officer, be temporarily admitted to the United Kingdom without being detained or be released from detention; but this shall not prejudice a later exercise of the power to detain him. (2) So long as a person is at large in the United Kingdom by virtue of this paragraph, he shall be subject to such restrictions as to residence, as to his employment or occupation and as to reporting to the police or an immigration officer as may from time to time be notified to him in writing by an immigration officer. Mr Tam submits that the respective structures of the powers to grant temporary admission or release under paragraph 21 and the power to grant bail under paragraph 22 are similar; paragraph 21 refers to a person liable to detention or detained whereas paragraph 22 refers to a person detained. He submits that this difference of wording serves only to identify that bail is available only if the individual is actually detained, while temporary admission is also available if the individual has not been actually detained. Thereafter, he submits, the approach adopted by the House of Lords in R (Khadir) v Secretary of State for the Home Department [2005] UKHL 39; [2006] 1 AC 207 ought to apply equally to both of these ameliorating possibilities. The power to admit temporarily and the power to grant bail should be held to continue so long as the power to detain exists, even if it cannot be lawfully exercised. The approach to which he refers is to be found in the speech of Lord Brown in Khadir at paras 31 33. 31. For my part I have no doubt that Mance LJ was right to recognise a distinction between the circumstances in which a person is potentially liable to detention (and can properly be temporarily admitted) and the circumstances in which the power to detain can in any particular case properly be exercised. It surely goes without saying that the longer the delay in effecting someones removal the more difficult will it be to justify his continued detention meanwhile. But that is by no means to say that he does not remain liable to detention. What I cannot see is how the fact that someone has been temporarily admitted rather than detained can be said to lengthen the period properly to be regarded as pending . his removal. 32. The true position in my judgment is this. Pending in paragraph 16 means no more than until. The word is being used as a preposition, not as an adjective. Paragraph 16 does not say that the removal must be pending, still less that it must be impending. So long as the Secretary of State remains intent upon removing the person and there is some prospect of achieving this, paragraph 16 authorises detention meanwhile. Plainly it may become unreasonable actually to detain the person pending a long delayed removal (ie throughout the whole period until removal is finally achieved). But that does not mean that the power has lapsed. He remains liable to detention and the ameliorating possibility of his temporary admission in lieu of detention arises under paragraph 21. 33. To my mind the Hardial Singh line of cases says everything about the exercise of the power to detain (when properly it can be exercised and when it cannot); nothing about its existence. In its judgment in the present proceedings SIAC drew attention to the distinction drawn by Lord Brown between the existence of a power to detain, which can subsist even where actual detention would be unlawful, and the unlawful exercise of that power. The power to detain continues to exist even if actual detention would be unlawful provided that there is some prospect of removal being effected. It noted that Khadir had not been disapproved by the Supreme Court in WL (Congo). In the present case SIAC considered that there remained some prospect of removal so that the power to detain persisted under paragraph 2 of Schedule 3. The fact that detention today would be unlawful did not necessarily prevent lawful detention in the future. As a result it concluded that the power to grant bail also subsisted and could be exercised. That reasoning was decisively rejected by the Court of Appeal. On this further appeal Mr Tam submits that the value of the decision in Khadir is that its acceptance of the continuing existence of the power to detain and thus the continuing availability of temporary admission or temporary release allows a purposive construction of the three layered mechanism provided by Schedule 2 ie detention, bail, temporary admission or temporary release. In particular, he submits that as both bail and temporary admission or temporary release are ameliorating possibilities of alternatives to detention, it is sensible for both powers to persist for some duration beyond the point at which actual detention can no longer continue. In my view, Khadir provides no assistance to the Secretary of State in the present case, for the reasons given by Lord Dyson MR (at paras 29 31). They may be summarised as follows: (1) Khadir is a decision not on detention or on the power to grant bail under paragraphs 22 or 29, but on the power to grant temporary admission under paragraph 21. (2) There is a material difference between the wording of paragraph 21, on the one hand, and paragraphs 22 and 29 on the other. The distinction between a person detained and a person liable to be detained is clear and must have been deliberate. (3) The House of Lords in Khadir held that the distinction between the existence and the exercise of the power to detain was material to the power to grant temporary admission to a person liable to detention. There is no warrant for applying that distinction to the different question of whether there is a power to grant bail to a person who may not lawfully be detained at the time when it is proposed to grant bail. On behalf of the Secretary of State it is then submitted that the interpretation of paragraphs 22 and 29 favoured by the Court of Appeal would lead to impracticability in their application and that this casts doubt on its reading. First, it is submitted that, if there is no power to grant bail unless there is a power to detain, on an application for bail the FTT or an immigration officer would have to determine Hardial Singh issues as a jurisdictional matter. It is submitted that Parliament could not have intended the FTT or immigration officers to engage in such an exercise which is difficult enough in a case of actual detention but which would be much more difficult or even logically impossible in the hypothetical context required by this reading of paragraphs 22 and 29. As a result bail applications could require two or three days of Hardial Singh enquiry simply to decide whether there is jurisdiction to grant bail. Here Mr Tam further submits that the FTT does not have jurisdiction to decide whether detention is lawful. (See Konan at para 30 and WL (Congo) at para 118.) I consider that there is little or no substance in these contentions for the following reasons: (1) It is unlikely that an applicant for bail will seek to challenge the jurisdiction of the FTT to grant bail. Similarly, the Secretary of State is unlikely to maintain that an applicants detention is unlawful. I accept, however, that, as it is a matter of jurisdiction, there may be cases in which the FTT should properly take the point of its own motion. (2) The power to grant bail is expressly conferred on the FTT or a Chief Immigration Officer by paragraphs 22 and 29 of Schedule 2. If an issue as to the legality of detention were to arise on a bail application, it would fall to be addressed in that context. If the judge concluded that detention was unlawful, the Secretary of State could be expected to direct release of the applicant on temporary admission. If she maintained the view that detention was lawful, the matter could be raised urgently in the Administrative Court. I note that, in the context of SIAC, where an applicant puts the legality of his detention in issue, concurrent judicial review proceedings can be lodged and the Chair of SIAC is able to exercise the jurisdiction of the Administrative Court. That is, in fact, what occurred in the present case. (3) The FTT is clearly entitled to address the Hardial Singh principles. Consideration on a bail application of whether detention was lawful would not, in any event, require the FTT to depart significantly from what is currently required of it. The current guidance (Bail Guidance for Immigration Judges Presiding over Immigration and Asylum Hearing, Presidential Note 1 of 2012, Judge Michael Clements, 11 June 2012 at paras 5,17 and 18) recognises that the lawfulness of detention may be a relevant factor in bail proceedings, as has the High Court in the SIAC jurisdiction (R (Othman) v SIAC [2012] EWHC 2349 (Admin)). Secondly, the Secretary of State submits that it appears from the statutory scheme that the grant of bail was intended to be an exercise conducted by relatively junior immigration officers or even by police officers with less specialist immigration experience and that, accordingly, it is very unlikely that Parliament intended that the lawfulness of detention should be investigated before the grant of bail. This is equally unconvincing. So far as the capabilities of immigration officers are concerned, I agree with the observations of Lord Dyson MR (at para 35). Immigration officers are charged by Parliament with taking many difficult decisions, which require care, individual consideration and the exercise of judgement and which may involve fact finding. These decisions are of enormous consequence to the lives of the persons concerned. In particular, in considering whether to grant temporary admission an immigration officer may have to consider whether a person is liable to detention under paragraph 21. Contrary to the submission of Mr Tam, I cannot see that application of the Khadir test of some prospect of the individuals removal is a significantly less complex exercise than the application of the Hardial Singh principles. Thirdly, the Secretary of State submits that an arrest by a police officer for an actual or apprehended breach of bail would require the officer to consider the Hardial Singh principles and assess whether the prescribed limit of a power to detain had been reached. However, the power of arrest conferred by paragraph 24(1)(a) is exercisable by a police officer if he has reasonable grounds for believing that that person is likely to break the condition of his recognizance or bail bond. Unlike the power to order re detention in paragraph 24(3), it does not depend on a continuing power to exercise immigration detention. Fourthly, the Secretary of State points to the consequences which might follow if detention were unlawful on other grounds. Here, particular reliance is placed on WL (Congo), where detention was unlawful because it was based on an unpublished policy which conflicted with a published policy, and on R (SK (Zimbabwe)) v Secretary of State for the Home Department [2011] UKSC 23; [2011] 1 WLR 1299, where detention was unlawful because of missed detention reviews required by a published policy. It is said that it would be absurd if there were no power to grant bail in such circumstances. In my view, there is no absurdity here. Once detention had been authorised on a lawful basis there would be power to grant bail. Accordingly, I consider that the spectre of impracticability conjured up by Mr Tam is illusory and does not cast any doubt on my reading of paragraphs 22 and 29. There is no reason to conclude that Parliament must have intended to confer a power to grant bail where a person is detained unlawfully. On the contrary, I have no doubt that the statutory provisions with which we are concerned require a lawful power to detain as a pre condition to a grant of bail. In any event, if administrative inconvenience is a consequence the remedy lies with Parliament. For these reasons I agree with the conclusion of Lord Dyson MR that bail may not be granted under paragraphs 22 and 29 of Schedule 2 where a person is unlawfully detained purportedly under paragraph 2(2) of Schedule 3 to the 1971 Act or where a person not currently in detention could not lawfully be detained under that provision. In his judgment in the Court of Appeal in the present case, Lord Dyson MR, having arrived at the conclusion that the word detained in paragraphs 22 and 29 of Schedule 2 should be construed as meaning lawfully detained, advanced a further, independent basis for his conclusion, namely that the power to grant bail presupposes the existence of and the ability to exercise the power to detain lawfully. In support of this conclusion he drew attention to Mitchell v Mitchinham (1823) 2 D & R 722 and In re Amand [1941] 2 KB 239 which, he observed, demonstrate that the writ of habeas corpus can still issue where a person is on bail. As a matter of legal instinct, the proposition that the ability to exercise a lawful power to detain is a precondition to a power to grant bail seems entirely sound. Not only does it seem correct as a matter of principle, but also the lack of a lawful power to detain is likely, without more, to give rise to practical difficulties. As I have explained earlier in this judgment, that would, in my view, be the position in relation to immigration bail if the Secretary of States submissions were accepted in the present case. Although we have been referred on this appeal to a number of authorities relating to the scope and availability of habeas corpus, including those referred to by Lord Dyson MR, I have not found these decisions of any great assistance. Nevertheless, there is a considerable body of modern authority which supports Lord Dysons statement of principle. The decision of the Court of Appeal in Stellato v Ministry of Justice [2011] QB 856 is strongly supportive of this approach. The claimant having been released on licence from a prison sentence refused to comply with the conditions of his licence on the ground that he was entitled to be released unconditionally. He was returned to prison. A Divisional Court of the Queens Bench Division dismissed his claim for judicial review. His appeal was allowed by the Court of Appeal which granted a declaration that he was entitled to immediate release but stayed the declaration to permit a petition to the House of Lords and granted him conditional bail. He refused to comply with the bail conditions and, as a result, was arrested and returned to prison pursuant to an order of a Lord Justice who, the next day, ordered that his bail be revoked and that he remain in custody until the end of the stay granted by the Court of Appeal. Following the dismissal by the House of Lords of the Home Offices appeal, he was released unconditionally and he then brought an action for false imprisonment and breach of his rights under article 5 ECHR against the Ministry of Justice as successor to the Home Office. In those proceedings the question arose whether the stay or the breach of bail conditions provided legal authority for his detention. The Court of Appeal (Maurice Kay, Stanley Burnton and Patten LJJ) held that they did not. Stanley Burnton LJ explained (at para 21) that the only authority for the continued detention was the original sentence of imprisonment and the legislation which was the subject of the courts judgment. He continued: 23. Turning to the effect of the orders of Hughes LJ, I consider that the answer is to be found in the nature of a grant of bail. In principle, a grant of bail is not an order for the detention of the person to whom it is granted. To the contrary, it is a grant of liberty to someone who would otherwise be detained. The legal justification for his detention is to be found elsewhere: in the case of a person suspected of crime, in the powers of arrest of a constable under a warrant issued by a magistrates court (see section 1 of the Magistrates Courts Act 1980), or without a warrant (see section 24 of the Police and Criminal Evidence Act 1984), and powers to remand pending trial or further hearing. Similarly, there is statutory authority for detention in immigration cases: see, for example, paragraph 16 of Schedule 2 to, and paragraph 2 of Schedule 3 to, the Immigration Act 1971. 24. A grant of bail may be conditional or unconditional. A condition of bail does not impose an obligation on the person granted bail. It is a true condition. It qualifies the grant of liberty made by the grant of bail. If the person granted bail does not comply with the conditions of his bail, he is liable to be returned to custody. If so, the legal authority for his detention is not the grant of bail, or his breach of the conditions of his bail, but the authority for his detention apart from the order for bail. All that his breach of the conditions of his bail does is to disentitle him to bail. Similarly, in R (Konan) v Secretary of State for the Home Department [2004] EWHC 22 Admin, where the claimants alleged that their immigration detention had been unlawful, Collins J, in rejecting a submission on behalf of the Secretary of State that bail was an alternative remedy, stated (at para 30): An adjudicator in considering a bail application is not determining (indeed, he has no power to determine) the lawfulness of the detention. The grant of bail presupposes the power to detain since a breach of a bail condition can lead to a reintroduction of the detention. That the grant of bail is not a determination of the legality of detention was emphasised by Lord Dyson JSC in R (WL (Congo)) v Secretary of State for the Home Department [2012] 1 AC 245, para 118, and Hughes LJ in R (Omar Othman) v Special Immigration Appeals Commission [2012] EWHC 2349 (Admin), para 18. I also note that in Ismail v United Kingdom (2014) 58 EHRR SE6, para 16, the United Kingdom expressly submitted, on the authority of Konan and Lumba, that article 5(4) ECHR was not applicable since a bail application was not a procedure under domestic law to challenge the lawfulness of immigration detention and emphasised that, under domestic law as interpreted by the courts, a decision to release a person on bail, subject to conditions designed to ensure his future attendance, presupposed the legality of the power to detain. On behalf of the Secretary of State Mr Tam relies before us on a line of cases concerning foreign national offenders in which bail had been granted to an individual, whose detention had become or was about to become unlawful, as a means of ending the detention and continuing the individuals management whilst he was on bail. These decisions include R (Bashir) v Secretary of State for the Home Department [2007] EWHC 3017 (Admin); R (A, MA, B and E) v Secretary of State for the Home Department [2008] EWHC 142 (Admin); R (O) v Secretary of State for the Home Department [2008] EWHC 2596 (Admin); R (Adewale) v Secretary of State for the Home Department [2009] EWHC 1289 (Admin); R (Wang) v Secretary of State for the Home Department [2009] EWHC 1578 (Admin); R (D) v Secretary of State for the Home Department [2009] EWHC 1655 (Admin); R (Ahmed) v Secretary of State for the Home Department [2010] EWHC 625 (Admin); R (Hussein) v Secretary of State for the Home Department [2010] EWHC 2651 (Admin) and R (HY) v Secretary of State for the Home Department [2010] EWHC 1678 (Admin). On this basis, he submits that the Secretary of States contention in the present proceedings is the conventionally accepted approach to the question of bail and that this includes the imposition of bail conditions as an alternative to detention after actual detention has become unlawful for Hardial Singh reasons. The difficulty with this submission, however, is that in these first instance decisions, which include one of my own, the power to grant bail appears to have been assumed without the present issue having been directly addressed. Nevertheless, the notion that the power to grant bail presupposes the existence and the ability to exercise a power to detain lawfully is not necessarily a principle of universal application. While the clearest possible words would be required to achieve a contrary result, Parliament could do so. It would be a question of construction in each case whether that result had been achieved. Thus in Stellato Stanley Burnton LJ observed (at para 25) that the general principles which he had set out in paragraphs 23 and 24 (quoted above) are subject to any statutory provision. Moreover, following a suggestion by Lord Hughes during the course of argument on this appeal, it became apparent that the provisions governing police bail in sections 34, 37 and 41, Police and Criminal Evidence Act 1984 may be exceptions to the general principle stated by the Court of Appeal. In this regard, I also draw attention to section 61, Immigration Act 2016. In view of such possible statutory inroads into the principle stated by the Court of Appeal, I prefer to found my conclusions in the present case on the interpretation of the provisions of Schedule 2. In the present case it is common ground that B could not lawfully be detained following the ruling of SIAC on 13 February 2014 that there was no reasonable prospect of removing [B] to Algeria and thus the ordinary legal basis for justified detention of B under the Immigration Acts has fallen away. Furthermore, it has not been suggested that this is a case in which, on the application of Hardial Singh principles, a lawful power of detention subsequently revived as a result of a change of circumstances. In these circumstances I conclude, for the reasons set out above, that in the absence of a power of lawful detention there was no power to grant bail to B pursuant to paragraph 22 of Schedule 2 to the 1971 Act. In these circumstances I do not consider it necessary to address the arguments which we have heard on article 5 ECHR which, in my view, adds nothing to the resolution of the issues before the court on this appeal.

UK-Abs

The Respondent (B) has been in the UK since 1993. He was originally detained under section 21 of the Anti Terrorism, Crime and Security Act 2001 and was subsequently subject to a control order under the Prevention of Terrorism Act 2005. On 11 August 2005, he was notified of the Secretary of States intention to make a deportation order against him on national security grounds. He was detained under Schedule 3 of the Immigration Act 1971 (the 1971 Act) pending deportation. He appealed, using a false identity, to the Special Immigration Appeals Commission (SIAC) against his deportation. The UK Government sought assurances from the Algerian authorities that, if returned to Algeria, B would not be subject to treatment incompatible with Article 3 of the European Convention on Human Rights (ECHR). On 10 July 2006, the Algerian authorities confirmed that the details of his identity given by B were those of an individual present in Algeria. On 19 July 2007, SIAC ordered B to provide details of his true identity. On 30 July 2008, SIAC held that the Secretary of States case against B on the risk to national security had been made out. On 26 November 2010, SIAC held that B had disobeyed its earlier order of 19 July 2007 and imposed a prison sentence on B of four months. Following his eventual release from prison, bail conditions were imposed on B. On 13 February 2014, SIAC held that there was no reasonable prospect of removing B to Algeria and the ordinary legal basis for justified detention under the Immigration Acts therefore fell away. Thereafter, the Secretary of State did not authorise Bs further detention and his bail conditions were relaxed. Bs appeal against the notice of decision to deport him was struck out by SIAC in light of his continuing contempt of court. SIAC also rejected Bs submission that, following SIACs findings of 13 February 2014, it no longer had jurisdiction to grant bail to B or to impose bail conditions. This decision was upheld by the High Court. B appealed to the Court of Appeal, which allowed his appeal on the ground that SIAC had no jurisdiction to impose bail conditions on B if his detention would be unlawful. On 12 December 2016, SIAC allowed Bs substantive deportation appeal. As a result, Bs bail fell away and it is common ground that the immigration power is now unavailable. The Supreme Court granted the Secretary of State permission to appeal against the decision of the Court of Appeal on the issue of SIACs bail jurisdiction. The Supreme Court unanimously dismisses the appeal. Lord Lloyd Jones gives the lead judgment with which the other Justices agree. The so called Hardial Singh principles concerning the operation of the detention power contained in paragraph 2 of Schedule 3 to the 1971 Act form an important part of the background to this appeal. These principles are that (i) the Secretary of State must intend to deport the person and can only use the detention power for that purpose; (ii) the deportee may only be detained for a reasonable period; (iii) if it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period then he should not seek to exercise the power of detention; and (iv) the Secretary of State should act with reasonable diligence and expedition to effect removal [24 25]. At the heart of the case is a dispute about what the correct approach to the availability of immigration bail is when the Hardial Singh limit on actual detention is reached. The Secretary of State suggested that a purposive interpretation of the legislation should apply so that bail is available regardless of whether the individual is lawfully detained or would hypothetically be lawfully detained [28]. The Court saw no basis for such an approach. It is a fundamental principle of the common law that Parliament is presumed not to intend to interfere with the liberty of the subject without making such an intention clear. This was a situation where the principle of legality was in play. Accordingly, the Court was required to interpret the statutory provisions strictly and restrictively [29]. It was common ground that being detained was a condition precedent to the exercise of the power to grant bail conferred by paragraphs 22 and 29 of Schedule 2 to the 1971 Act. Applying the strict approach to interpretation, the Court found that the reference to detained means lawful detention [30 31]. Furthermore, detained does not only refer to the state of affairs which must exist at the time when the power is first exercised. Unless there is a continuing power to detain, the system of bail would encounter substantial difficulties in operation [32]. Where it ceases to be lawful to detain a person pending deportation there is no longer a power of detention under paragraph 16 of Schedule 2, and there is therefore no longer a power to grant bail under paragraphs 22 or 29 [33]. The Secretary of State submitted that as both bail and temporary admission or temporary release are ameliorating possibilities of alternatives to detention, it is sensible for both powers to persist for some duration beyond the point at which actual detention can no longer continue. Temporary admission or release is covered by paragraph 21 of Schedule 2. However, unlike paragraphs 22 and 29, it refers to a person liable to be detained and not detention which is a material difference. Accordingly, the comparison does not assist the Secretary of State [34 39]. The Court did not agree with the Secretary of States submission that the interpretation of paragraphs 22 and 29 favoured by the Court of Appeal would lead to impracticability in their application. In any event, if administrative inconvenience is a consequence the remedy lies with Parliament [40 45]. The Court found considerable modern authority which supported the Court of Appeals statement of principle that the power to grant bail presupposes the existence of and the ability to exercise the power to detain lawfully. [47 51]. However, this is not necessarily a principle of universal application. While the clearest possible words would be required to achieve a contrary result, Parliament could do so [53]. In the circumstances it was not necessary to address the arguments under Article 5 ECHR which added nothing to the resolution of the issues on appeal [56].

Approved premises (APs) used to be known as probation hostels and bail hostels. Living there may be made a condition of release on licence for certain medium, high or very high risk prisoners. They are now all single sex establishments. There are 94 APs for men, scattered about England and Wales, with several in London. There are only six APs for women, in Bedford, Birmingham, Leeds, Liverpool, Preston and Reading, and none in London or in Wales. This means that women are far more likely than men to be placed in an AP which is some distance from their homes and communities. The issue in this appeal is whether the current distribution of APs constitutes unlawful sex discrimination against women. This issue arises in the context of a long standing concern that the prison system is largely designed by men for men and that women have been marginalised within it (The Corston Report, A Report by Baroness Jean Corston of a Review of Women with Particular Vulnerabilities in the Criminal Justice System, Home Office, 2007, para 4). This is scarcely surprising, as women constitute only 5% of the prison population and the system is struggling to cope with the ever increasing demands made upon it. Many voices have been raised in support of Baroness Corstons call for a radical change in the way we treat women throughout the criminal justice system, among them the Howard League for Penal Reform, who have intervened in this appeal to emphasise the particular difficulties which women face in the criminal justice system, including the problems of re settlement with which we are concerned. Those concerns are well understood. But the issue for this court is not whether the criminal justice system should be making better provision for women. The issue is whether the provision that it does make is, in one particular respect, unlawfully discriminatory. It is quite possible that the answer to be given to the first question is yes, while the answer to be given to the second question is no. The facts The appellant is now in her fifties. She has lived in London for almost the whole of her adult life and has no significant ties with Sunderland, where she spent her childhood, or anywhere else. She has two children in their twenties and two young grandchildren. In August 2004 she was sentenced to life imprisonment for murder, with a tariff of 11 years and three months. She was imprisoned first in HMP Holloway, where her family were able to visit; then in HMP Send near Woking, where they did not visit; and then in Askham Grange open prison near York in 2013. She has been assessed as presenting a medium risk of harm. Her tariff expired in November 2015, nearly two years after these proceedings were begun. She has since been released on licence. As a condition of that release, she was required permanently to live in Approved Premises in Bedford, not to leave to live elsewhere even for one night, without the prior approval of her supervising officer, and thereafter to reside as directed by that officer. These judicial review proceedings were launched in January 2013, because the appellant wanted to be released to the London area, albeit not to Haringey where she had lived before her sentence, so that she could be near her family, and she feared that she would be required to live in an AP far from there. She sought declarations that (a) the lack of provision for a womens AP in London is discriminatory contrary to the Equality Act 2010 and/or articles 8 and 14 of the European Convention on Human Rights; and that (b) the Secretary of State had acted in breach of the public sector equality duty in section 149 of the Equality Act by failing to have due regard, in relation to the provision of APs in London, to the need to eliminate discrimination against women, and advance equality of opportunity for them. Cranston J dismissed her discrimination claim, principally because comparing men prisoners with women prisoners was not comparing like with like. But he did declare that the Secretary of State had failed to discharge the public sector equality duty: [2013] EWHC 4077 (Admin). As he explained, at para 65: What is required is that the Secretary of State address possible impacts, assessing whether there is a disadvantage, how significant it is, and what steps might be taken to mitigate it. In the context of advancing equality of opportunity one aspect of the duty that means taking the opportunity to see whether more might be done for women, having regard to their particular circumstances. Nothing even approaching this has been done. The Secretary of State has not challenged that finding, although we have no evidence of what has since been done to give effect to it. The appellant did challenge the finding that there was no discrimination, either direct or indirect, but failed in the Court of Appeal: [2015] EWCA Civ 328. At that stage, she had still not been released and it was regarded as unlikely that, if released, she would be required to live in an AP. On any view, therefore, she had not then personally suffered from the discrimination of which complaint was made, which was that the configuration of APs meant that it was inevitably harder to place women close to home than men. Since then, of course, she has been released and required to live in an AP in Bedford. So if there is discrimination, she has been the victim of it. We are told by her counsel that she was required to live there for over nine months, was unable to get travel warrants to look for accommodation in London, and is now living in rented accommodation near Bedford. Thus the placement in the Bedford AP has had further consequences for her and perpetuated the separation from her family. She has now brought a discrimination claim in the county court, but this has been stayed until the outcome of these proceedings is known. Approved premises Approved premises are premises which have been approved by the Secretary of State under the Offender Management Act 2007, among other things for, or in connection with, the supervision or rehabilitation of persons convicted of offences (section 13(1)(b)). Under section 2 of that Act, the Secretary of State is responsible for ensuring that sufficient provision is made throughout England and Wales for probation purposes. These are defined in section 1(1)(c) to include the supervision and rehabilitation of persons charged with or convicted of offences. Under section 1(2)(b) to (d), this includes, in particular, assisting in the rehabilitation of offenders being held in prison, supervising persons released from prison on licence and providing accommodation in APs. Under the current Offender Management Act 2007 (Approved Premises) Regulations 2014 (SI 2014/1198), regulation 6(1)(a)(iii), among the general duties of providers of APs is a requirement that at least two members of staff are present on the premises at all times (the same was required by the predecessor Regulations (SI 2008/1263), regulation 7(1)(a)(iii)). Assuming three eight hour shifts in a day, this means that each AP must have a minimum of six staff no matter how many people are housed there. According to Probation Circular 37/2005, The Role and Purposes of Approved Premises, APs are a criminal justice facility where offenders reside for the purposes of assessment, supervision and management, in the interests of protecting the public, reducing re offending and promoting rehabilitation. Their core purpose is the provision of enhanced supervision as a contribution to the management of offenders who pose a significant risk to the public. They cater for male and female prisoners who are assessed as very high or high risk, but in order to increase take up APs also cater for female medium risk offenders such as the appellant. Although APs also cater for people on bail or serving a community sentence, the majority of residents are there because of the conditions of their release on licence from prison. They have to abide by a curfew and a code of conduct and any breach of the conditions of their licence can result in recall to prison. The six APs for women have a total capacity of 112 places. This is sufficient to meet demand. They have an annual occupancy rate of 81% compared with 94% in the 94 APs for men. There is a presumption that offenders should be placed in their home probation area, although this can be displaced if there are good reasons for placing them in a different area. However, the limited number and geographical distribution of the womens APs mean that women are far more likely than men to be placed in an AP outside their home area and, indeed, many miles away from their homes and families. In March 2008 there was published the report of a joint inspection of APs by the chief inspectors of probation, prisons and constabulary, Probation hostels: Control, Help and Change? Because of local opposition to new hostels, places had been taken from the womens hostels estate to provide more places for men. This was an understandable, but not acceptable, strategy, nor, in the inspectors view was it compatible with equalities legislation (para 8.1.1). As they explained: The number and location of hostels for women perpetuated the discrimination experienced by women in prison in that a higher proportion than men were forced to stay a long way from home. For women, in particular, enforced separation from their families and support networks compounded the problems associated with their offending, eg relationships and mental health. (para 8.1.3) The research [Sheehan, McIvor and Trotter, What Works with Women Offenders, 2007] found that women in prison tended to be the primary carers of children and were often single parents. It estimated that over two thirds of women prisoners were mothers. Only a small proportion of male prisoners had primary care of children. The main element of discrimination against female prisoners and by extension against female hostel residents was the distance between their family and community and where they were located during the custodial and licensed supervision elements of their sentences. (para 8.1.6) Given the location of the [then] seven hostels, it followed that many potential residents would face several hours of travel to visit their children. Travel was expensive, unlikely to be direct, given the geography, and slow. In addition, as most hostel residents had lost their own accommodation, regaining suitable accommodation for themselves and their children in a different part of the country could seem or actually be insurmountable. (para 8.1.7) The report quoted part of the argument from The Corston Report: Equality does not mean treating everyone the same. The new gender equality duty means that men and women should be treated with equivalent respect, according to need. Equality must embrace not just fairness but also inclusivity. This will result in different services and policies for men and women. Our findings supported this approach. (para 8.3.4.) Apart from the closure of the few remaining mixed gender hostels, which soon happened, the report recommended: Adequate and appropriate provision for female offenders meeting the national target profile for hostel accommodation is established within each probation region in the short term and plans drawn up by NOMS [The National Offender Management Service] to ensure reasonable access from all major centres of population by 2011. (p 46) The only immediate response to this report, and to the Corston Report, was Probation Circular 16/2008, Expanded use of female approved premises. This promised a survey of the need for AP places, which would pay particular attention to the need for APs for female offenders. In the meantime, greater use of the current female estate was encouraged, for a wider range of women offenders, including those who presented only a medium risk of harm. Apart from this, nothing else changed between then and the bringing of these proceedings. In 2013, the House of Commons Justice Committee published its report, Women offenders: after the Corston Report Session 2012 13, HC 92. This began with the comment that: Now, six years after her report, we found that it is well recognised that women face very different hurdles from men in their journey towards a law abiding life, and that responding appropriately and effectively to the problems that women bring into the criminal justice system requires a distinct approach. (p 3) Discussing APs, they observed: Sometimes being required to live away from a home area can provide the break with a set of circumstances which, if a woman were to return to them, would be likely to perpetuate the problems that caused her to offend in the first place. Having only six approved premises for women limits the number of women who can benefit from their constructive regimes and support. More women could benefit from safe, secure and supervised accommodation. Approved premises have the expertise and experience of working with female offenders across the full risk of harm continuum and we consider that the approved premises estate could usefully be expanded to manage more women safely and cost effectively in the community. We would like to see the review consider how existing approved premises regimes could safely be adapted for a broader range of women, and how more creative use of a greater number of approved premises could be funded. (para 196) This was all part of their preference for a gradual reconfiguration of the female custodial estate, with a significant increase in the use of residential alternatives to custody and the reduction of the numbers of women sentenced to short periods in custody (para 197). In their summary, they commented: There is little evidence that the equality duty, and its forerunner the gender equality duty, have had the desired impact on systematically encouraging local mainstream commissioners to provide services tackling the underlying causes of womens offending, or on consistently informing broader policy initiatives with the Ministry of Justice and the National Offender Management Service. Both struggle to reflect fully the distinct needs of female offenders. We urge NOMS to consider gender as a matter of course, rather than seeking to reduce any detrimental impact on women of their general approach after the event. Cranston J did, of course, find that the Secretary of State was in breach of the equality duty. The issue for us is whether the provision of APs for women is unlawful sex discrimination. Direct and indirect discrimination Section 13(1) of the Equality Act 2010 defines direct discrimination as follows: A person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others. By section 4, sex is a protected characteristic. Section 19(1) and (2) defines indirect discrimination as follows: (1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of Bs. (2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of Bs if (a) A applies, or would apply, it to persons with whom B does not share the characteristic, (b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it, (c) (d) A cannot show it to be a proportionate means of achieving a legitimate aim. it puts, or would put, B at that disadvantage, and By subsection (3), sex is among the relevant protected characteristics for this purpose. By section 23(1), on a comparison of cases for the purposes of sections 13 and 19, there must be no material difference between the circumstances relating to each case. Public function Not all conduct which falls within those definitions of discrimination is unlawful. Relevant here is section 29 of the Equality Act 2010. By section 29(1) and (2), a person concerned with the provision of services to the public, or a section of the public, whether or not for payment, must not discriminate by not providing the service, or as to the terms on which it is provided, or by terminating it, or by subjecting a person to whom the service is provided to any detriment. By section 31(3), this applies to the provision of a service in the exercise of a public function; by section 31(4), a public function is a function of a public nature for the purpose of the Human Rights Act 1998. The provision of APs under the Offender Management Act is clearly a function of this nature. However, APs are commissioned rather than directly provided by the Secretary of State. But section 29(6) provides that: (6) A person must not, in the exercise of a public function that is not the provision of a service to the public, do anything that constitutes discrimination, harassment or victimisation. While what would otherwise amount to indirect discrimination may be justified if the discriminator can show that the provision, criterion or practice [the PCP] is a proportionate means of achieving a legitimate aim, direct discrimination is only justifiable in certain limited and defined circumstances. One of these is set out in paragraph 26 of Schedule 3 (which is given effect by section 31(10)). This relates to the provision of separate services for men and women: (1) A person does not contravene section 29, so far as relating to sex discrimination, by providing separate services for persons of each sex if a joint service for persons of both sexes would be (a) less effective, and (b) achieving a legitimate aim. the limited provision is a proportionate means of (2) A person does not contravene section 29, so far as relating to sex discrimination, by providing separate services differently for persons of each sex if a joint service for persons of both sexes would be (a) less effective, (b) the extent to which the service is required by one sex makes it not reasonably practicable to provide the service otherwise than as a separate service provided differently for each sex, and (c) achieving a legitimate aim. the limited provision is a proportionate means of (3) This paragraph applies to a person exercising a public function in relation to the provision of a service as it applies to the person providing the service. It was not necessary for the courts below to make a finding on this exception, because they both found that there was no discrimination, direct or indirect, which might require justification. On its face it is capable of applying to both direct and indirect discrimination, although, as we shall see, it is difficult to see how it could arise in a case of indirect discrimination. Is there direct discrimination here? The appellants case on direct discrimination is a simple one. Being required to live in an AP a long way away from home is a detriment. A woman is much more likely to suffer this detriment than is a man, because of the geographical distribution of the small number of APs available for women. This is treating her less favourably than a man because of her sex. Ms Rose QC, on behalf of the appellant, argues that this case is on all fours with the well known case of R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] 1 AC 1155. Birmingham City Council maintained a system of selection for secondary school places but, for historical reasons, it had fewer places at selective schools for girls than for boys. This meant that the pass mark for girls in the entrance examinations was higher than for boys. This was treating the girls less favourably than the boys because of their sex. The Council had not deliberately set out to discriminate against girls; it was a historical accident. But whatever may have been the intention or motive of the council, nevertheless it is because of their sex that the girls in question receive less favourable treatment than the boys and so are subject to discrimination under the [Sex Discrimination Act 1975] (per Lord Goff at p 1194). The House of Lords also rejected an argument that the failure to provide enough selective school places for girls was not an act or deliberate omission which constituted sex discrimination under section 23 of the 1975 Act: It is unlawful for a local education authority, in carrying out [certain] of its functions under the Education Acts 1944 to 1981 . , to do any act which constitutes sex discrimination. Ms Rose points to the similarity of wording in that section and in section 29(6) of the 2010 Act (para 23 above). The provision, or lack of provision, of places in APs is therefore treatment for the purposes of the 2010 Act (as indeed both courts below held). She also points out that the Birmingham case, like this, was a challenge to the system brought by way of judicial review, rather than a complaint of discrimination against an individual. The outcome was a declaration that the arrangements made by Birmingham City Council for the provision of selective secondary education were unlawful pursuant to section 23 of the 1975 Act. A similar declaration is sought here. Mr Chamberlain QC, for the Secretary of State, raises a new argument before this Court. Not all women suffer the detriment complained of. Some are placed reasonably close to home. Therefore, there cannot be direct discrimination, because that requires exact correspondence between the disadvantaged class and the protected characteristic, as held by this Court in Patmalniece v Secretary of State for Work and Pensions (AIRE Centre intervening) [2011] UKSC 11, [2011] 1 WLR 783, and discussed at some length in Preddy v Bull (Liberty intervening) [2013] UKSC 73, [2013] 1 WLR 3741. However, as Ms Rose correctly points out, the exact correspondence test is only relevant where the actual criterion used by the alleged discriminator is not a protected characteristic but something else. In Patmalniece it was not having the right to reside in the United Kingdom; in Preddy v Bull, it was not being married. The question is whether some other criterion is in reality a proxy for the protected characteristic. The best known example is James v Eastleigh Borough Council [1990] 2 AC 751, where people who had reached the state retirement age were allowed free entry to the councils swimming pool. The differential state retirement ages for men and women meant that a 61 year old woman got in free whereas her 61 year old husband did not. This was held to be direct discrimination on grounds of sex. In this case, there is no doubt what the criterion is. It is sex, which is itself a protected characteristic. Furthermore, it cannot be a requirement of direct discrimination that all the people who share a particular protected characteristic must suffer the less favourable treatment complained of. It is not necessary to show, for example, that an employer always discriminates against women: it is enough to show that he did so in this case. In the Birmingham case, some of the girls achieved a high enough pass mark to gain a place at a selective school. What all the girls suffered from was the risk that if they did not get a high enough mark, they would not get a place just as, in the recent case of Essop v Home Office (Border Agency) [2017] UKSC 27; [2017] 1 WLR 1343, all the BME candidates suffered from the greater risk of failing the core skills assessment required for promotion, but of course some of them passed it. In the Birmingham case, some of the girls did of course achieve a high enough mark to get a place. But there were some who achieved a mark which would have been high enough had they been boys but was not high enough because they were girls. That is direct discrimination on grounds of sex. I can see no valid distinction between the Birmingham case and this one. In this case, all the women who would be required to live in an AP when released on licence suffered the much greater risk than the men that they would be sent to an AP far from their homes and families. The fact that some of them would not suffer this detriment does not mean that those who do suffer it have not been discriminated against. It was argued in the courts below that there was a material difference between the circumstances of the male and female offenders so that their cases were not comparable for the purpose of section 23 (para 22 above). Cranston J accepted that comparing the women prisoners with the men prisoners was not comparing like with like (para 54). The women had different characteristics from the men, fewer being of high or very high risk, and the criteria for admitting them to APs were different. However, in the Court of Appeal, Elias LJ rejected this argument. Those differences were not material to the present issue, which was accommodating them close to home (para 44). I agree. The question of comparing like with like must always be treated with great care men and women are different from one another in many ways, but that does not mean that the relevant circumstances cannot be the same for the purpose of deciding whether one has been treated less favourably than the other. Usually, those circumstances will be something other than the personal characteristics of the men and women concerned, something extrinsic rather than intrinsic to them. In this case, the material circumstances are that they are offenders being released on licence on condition that they live in an AP. Those circumstances are the same for men and women. But the risk of being placed far from home is much greater for the women than for the men. Of course, the reasons for this are not any deliberate desire to treat the women less favourably than the men. They are a combination of two things. The first is the much smaller number of women offenders for whom the system has to cater. That by itself would not lead to the problem were it not for the second. This is the policy decision that all APs should be single sex. If they were all mixed sex, then men and women would have exactly the same chance of being placed close to home. If there were some mixed sex APs, the geographical spread would be much better and the corresponding risk for the women would be much lower. There used to be some mixed sex APs, but the Joint Inspection Report (above para 12) recommended that all APs should be single sex. This was because of the particular vulnerability of the women required to live in an AP on release. Their chances of successful reintegration into the community were thought much higher if they were protected from the risks associated with mixed sex premises. Paragraph 26 of Schedule 3 This brings us, therefore, to paragraph 26 of Schedule 3 to the 2010 Act (para 24 above). The history of the United States of America and of the Republic of South Africa, to take the two most obvious examples, has taught us to treat with great suspicion the claim that, if the races are segregated, separate but equal facilities can be provided for both, quite apart from the affront to dignity in the assumption that the races have to be kept separate. There have been periods in our own history where segregation of the sexes has led to separate facilities which were very far from equal. Paragraph 26 recognises that there may be good reasons for providing separate facilities for men and women. As Ms Rose points out, paragraph 26 proceeds on the assumption that, without it, the provision of single sex services would be unlawful discrimination. The question, therefore, is whether in this case the discriminatory effect of providing only single sex establishments can be justified. Ms Rose characterises paragraph 26(1) as providing for separate but equal facilities for men and women. This permits the provision of separate services for persons of each sex, provided that a joint service for both sexes would be less effective and the limited provision is a proportionate means of achieving a legitimate aim. She characterises paragraph 26(2) as referring to separate and different services. It permits providing separate services differently for persons of each sex, provided that a joint service for both services would be less effective, that the extent to which the service is required by one sex makes it not reasonably practicable to provide the service otherwise than as a separate service provided differently for each sex, and that the limited provision is a proportionate means of achieving a legitimate aim. She argues that limited must here mean limited by sex. I agree, because there is nothing else that the limited can be referring back to, other than providing separate services for each sex, whether equally or differently. Although the wording of paragraph 26(1) and (2) is aimed at the people actually providing the service in question, paragraph 26(3) applies the paragraph to a person exercising a public function in relation to the provision of a service as it applies to the person providing the service. It is difficult to see how the commissioning (and regulation) of APs under the Offender Management Act is not the exercise of a public function in relation to the provision of those APs. As Elias LJ observed the words relate to are broad and would in principle cover all administrative decisions which are inextricably linked with the policy of creating sufficient APs to meet the needs of both sexes separately (para 48). As he had already concluded that there was no discrimination and therefore no need for justification, Elias LJ considered paragraph 26 only briefly. He considered that paragraph 26(1) applied and so it was unnecessary to decide whether paragraph 26(2) applied (para 49). Ms Rose argues that the provision of APs is not separate but equal because of the limited number and distribution of APs for women compared with those for men. The applicable exception is in paragraph 26(2), dealing with separate but different services. Once again, I agree with her, because the services are different in this important respect. They may very well be different in other respects too, because the needs of women offenders are recognised to be different from the needs of male offenders, but that is by the way. In any event, it does not matter which sub paragraph is applicable here, because the issue is the same whichever it is. Ms Rose accepts that a joint service for persons of both sexes would be less effective. Expecting women offenders, with their many vulnerabilities, to share premises with male offenders who by definition present a high or very high risk of harm is not likely to be an effective way of helping them with the transition to an independent and law abiding life in the outside world. Ms Rose also accepts that paragraph 26(2)(b) is fulfilled the much lesser extent to which women require the service makes it not reasonably practicable to provide it otherwise than as a separate service provided differently. It would not be reasonably practicable to provide 94 APs for the 112 places for women required. This must be correct. The minimum staffing costs, for example, are the same no matter how many residents there are. The crucial question, therefore, is whether the limited provision is a proportionate means of achieving a legitimate aim. In discussing justification, Cranston J focussed principally on the problem of cost. The cost of building or converting a building into an AP was between 1.5 and 2.2m. No matter how small, the annual running cost of an AP was said to be in the region of 500,000 to 750,000 per annum. There was also likely to be community opposition to establishing new APs. Female APs were under used, so that women who needed them would readily find a place. The average stay was only 80 days on average. So the current provision was proportionate (para 60). Elias LJ did not think that the only objective was saving cost in a time of austerity. It was also to ensure that men and women were in similarly appointed establishments, because there was a real risk of discrimination claims if they were not. Given the limited disadvantage, because of the short average stay, the finding of justification was in principle sustainable (para 64). Saving cost is, of course, a legitimate objective of public policy. But, as the Court of Justice of the European Union emphasised in OBrien v Ministry of Justice [2012] ICR 955, budgetary considerations cannot justify discrimination (para 66). In other words, if a benefit is to be limited in order to save costs, it must be limited in a non discriminatory way. There was no evidence and no finding that the aim was to ensure that men and women were accommodated in similarly appointed premises. Given that the Act permits different provision to be made if their needs are different, this would not by itself be a sound basis for the discrimination. Despite her criticisms of the aims identified by the respondent and the courts below, Ms Rose accepts that in principle the different provision made for men and women might be justified. Her complaint is that the Ministry of Justice has never properly addressed its collective mind to the problem of providing sufficient and suitable places in APs for women which achieve, so far as practicable, the policy of placing them as close to home as possible. There are other options which could have been considered, including: replacing one or more of the current, relatively large womens APs with a larger number of smaller units, more widely spread; closing one or more of the existing womens APs and replacing them with APs closer to the areas where large numbers of serious women offenders have their homes and families; redesignating one of the mens APs in London for women and one of the womens APs for men to make up the loss of male places; or considering alternative forms of accommodation for women released on licence. Cranston Js finding that the Secretary of State was in breach of the public sector equality duty also means that the Ministry is not in a position to show that the discrimination involved in the different provision made for men and for women is a proportionate means of fulfilling a legitimate aim. It may or may not be. But it is for the respondent to show that the discrimination is justified. Given that the Ministry has not addressed the possible impacts upon women, assessed whether there is a disadvantage, how significant it is and what might be done to mitigate it or to meet the particular circumstances of women offenders, it cannot show that the present distribution of APs for women is a proportionate means of achieving a legitimate aim. Indirect discrimination Ms Rose accepts that it is difficult to analyse this case in terms of indirect discrimination. The whole point of indirect discrimination is that a PCP is applied equally to, in this case, men and women, whereas the complaint here is of unequal provision. Shoe horning the complaint into indirect discrimination by identifying the PCP as the requirement to live in an AP on release on licence does not really work, because what has to be justified is the PCP, and such a PCP is readily justifiable by the aims of protecting the public, reducing reoffending and assisting the offenders rehabilitation. In my view, no such shoe horning is required. Conduct cannot at one and the same time be both direct and indirect discrimination. The finding that this is direct discrimination, albeit potentially justifiable, rules out a finding of indirect discrimination. Relief There is still the issue of relief. Even if he had found that this was a case of discrimination, Elias LJ would not have made a declaration (para 65). This is a discretionary remedy and in this case would do no more than tell the Secretary of State that he (now she) had to comply with the public sector equality duty, which Cranston J had already done. If it were clear that the current state of affairs could not be justified, then there would be merit in declaring it to be unlawful. But it was rightly conceded that it was capable of justification, and so this could not be done. Ms Rose now seeks a different declaration from that sought in the claim form, to the effect that the provision of approved premises discriminates unlawfully and has not been justified. That is a simple statement which reflects the findings I have made. I would be prepared to grant a declaration that: The provision of Approved Premises in England and Wales by the Secretary of State pursuant to section 2 of the Offender Management Act 2007 constitutes direct discrimination against women contrary to section 13(1) of the Equality Act 2010 which is unlawful unless justified under paragraph 26 of Schedule 3 to the 2010 Act. No such justification has yet been shown by the Secretary of State. This makes it clear that an individual woman who is less favourably treated as a result of the provision of APs may bring a sex discrimination claim in the county court, but that it will be open to the Secretary of State to resist the claim (assuming it to be made out on the facts) on the ground that the provision is justified under paragraph 26. To that extent, I would allow this appeal.

UK-Abs

It can be a condition of release from prison of certain medium or high risk prisoners that they must live at Approved Premises (APs). APs are single sex establishments. There are 94 APs for men, distributed around England and Wales including several in London. There are only 6 APs for women, who constitute 5% of the prison population, and none of them is in London or in Wales. This means that women are much more likely than men to be placed in an AP which is far from their homes and communities. In 2004 the appellant was sentenced to life imprisonment with a tariff of 11 years and 3 months, which was due to expire in November 2015. She anticipated that on her release she would be required to live at an AP, which would necessarily be at a considerable distance from her family in London. In 2013 the appellant brought proceedings seeking a declaration that the current provision of APs amounted to unlawful sex discrimination, contrary to the Equality Act 2010 (the EA) and her rights protected by articles 8 and 14 of the European Convention on Human Rights, and that the Secretary of State had acted in breach of the public sector equality duty (PSED) under section 49 EA by failing to have due regard for the need to eliminate discrimination against women in the provision of APs. In the High Court, Cranston J dismissed the discrimination claim but granted a declaration that the Secretary of State had failed to discharge the PSED. The Secretary of State has not appealed that declaration. The appellants appeal against the finding of no discrimination was dismissed by the Court of Appeal. Since that time, she has been released from prison and required to live in an AP in Bedford. The appellant has brought a discrimination claim in the county court which has been stayed pending the outcome of these proceedings. The Supreme Court unanimously allows the appellants appeal to the extent of granting a declaration that provision of APs constitutes direct discrimination against women which is unlawful unless justified, and that the Secretary of State has yet to show such justification. Lady Hale, with whom all the other Justices agree, gives the only judgment. APs are commissioned rather than directly provided by the Secretary of State. However, under s 29(6) EA, a person exercising a public function such as this must not do anything that constitutes discrimination, harassment or victimisation. It is not necessary for the appellant to show that every female prisoner required to live at an AP has suffered the detriment of being placed at an AP far from her home in order to establish a case of direct discrimination on grounds of sex [29 31]. Nor are there differences between the circumstances of male and female prisoners required to live in APs, which are material to the issue of accommodating them close to home. In this respect their circumstances are comparable, and the risk of being placed far from home is much greater for women than for men [32]. The reason for this is not any deliberate desire to treat the women less favourably than the men but a function of the much smaller numbers of female offenders and the policy decision that the particular vulnerability of women required to live in an AP means that all APs should be single sex [33]. The appellants case is one of direct rather than indirect discrimination [43]. Direct discrimination can only be justified in certain limited and defined circumstances, including those set out in paragraph 26 of Schedule 3 to the EA. Paragraph 26(2) relates to the provision of separate and different services for men and women, and provides that these will not contravene s 29 if (a) a joint service for persons of both sexes would be less effective, (b) it is not reasonably practicable to provide a service which is not different, and (c) the limited provision is a proportionate means of achieving a legitimate aim [24, 34]. There is no dispute that in relation to APs, providing a joint service would be less effective. The appellant also accepts that the much lesser extent to which women require APs makes it not reasonably practicable to provide the same number of APs for each sex [38]. The crucial question is whether the limited provision for women is a proportionate means of achieving a legitimate aim [39]. Saving cost is a legitimate objective of public policy but if a benefit is to be limited to save costs it must be limited in a non discriminatory way [40]. The appellant accepts that in principle the different provision for men and women might be justified but the Ministry of Justice has never properly addressed its mind to the problem of providing sufficient and suitable places in APs for women which achieve, so far as is practicable, the policy of placing them as close to home as possible. There are other options which could have been considered, such as replacing large womens APs with smaller units more widely spread, or replacing one or more of the existing womens APs with APs closer to the areas where many women offenders have their homes, or considering alternative forms of accommodation for women released on licence [41]. It is for the Secretary of State to show that the discrimination is justified and, in the light of the breach of the PSED, she has so far failed to do this [42]. The Supreme Court therefore allows the appeal to the extent that it makes a declaration that the provision of APs in England and Wales constitutes direct discrimination against women contrary to s 13(1) EA, which is unlawful unless justified under paragraph 26 of Schedule 3 to the EA. No such justification has yet been shown by the Secretary of State. Individual women who are less favourably treated as a result of the provision of APs may bring sex discrimination claims in the county court but it will be open to the Secretary of State to resist such claims on the ground that the provision is justified under paragraph 26 [45].

In R v Soneji [2005] UKHL 49; [2006] AC 340, para 3 Lord Steyn feared that it might be innocent to predict that the then new Proceeds of Crime Act 2002 (POCA) had solved the problems involved in the criminal process of confiscation. He was considering in particular the question whether and when a breach of statutory procedural terms for the process of post conviction confiscation deprives the Court of jurisdiction to make such an order. The present appeal raises the same question again. More particularly, the present question is whether a procedural breach deprives the court of jurisdiction if it is combined with a breach of the rules contained in section 15(2) for the order in which sentence and confiscation order are to be approached. The principal statutory provisions in question are sections 15(2), and 14(8), (11) and (12) of POCA. The respondent, Lodvik Guraj, pleaded guilty on 11 June 2012 to offences involving the supply of heroin and money laundering. He had been caught in possession at his home of about 1.5Kg of heroin, some amphetamine and some cocaine. Hidden in the house and garage was equipment for processing the drugs, such as an hydraulic press and cutting agents, and also various substantial quantities of cash. He appeared to have been supplying drugs for some time. The offences were lifestyle offences for the purposes of POCA. On 16 July 2012 the respondent was sentenced to terms of imprisonment totalling five years and four months. At the same time, the judge made, apparently without any question arising as to the propriety of doing so, orders (a) forfeiting the drugs under section 27 of the Misuse of Drugs Act 1971, and (b) depriving the respondent of a car, a laptop, five mobile telephones, some scales, the press and a money counting machine, pursuant to section 143 of the Powers of Criminal Courts (Sentencing) Act 2000, on the basis that they had been used for the purposes of crime. Also at the same time, the judge gave directions for the progression of the confiscation aspect of the case. She set three dates in August, October and November 2012 for the respondent to provide some information he was required to give, and then for the service by first the Crown and then the respondent of the statements of case required by sections 16 and 17 of POCA. The last of the dates thus fixed was 9 November 2012. The judges order then directed that a half day hearing should follow, two weeks thereafter, with a date to be fixed. Thereafter, the timetable set by the judge for confiscation slipped badly. The respondent did give the information required, albeit in September rather than in August as directed. The CPS then lost sight of the case for a whole year and did not serve its section 16 statement. In October 2013, it woke up to what had happened, and contacted the respondent to admit the fact, and to invite agreement to a new timetable. The case was listed for 7 January 2014, but although a Crown statement was prepared in advance of this, it was not served until 15 January, and the CPS failed to get the officer in the case to court so that the hearing was abortive, save that a direction for a further Crown statement was given. The case was next listed on 31 March 2014, but this hearing was also abortive owing to the failure of the CPS to register the date and get the advocate instructed to be there to conduct it. Wasted costs orders were made against the Crown in relation to both these abortive hearings. In due course there was a properly attended hearing on 2 May 2014, but by now the respondents counsel had formulated the submission that the events which had occurred had the consequence that there was no longer any jurisdiction to proceed. The judge directed a special hearing to deal with that contention and in due course, on 7 May 2014, that took place. Whilst lamenting the repeated errors of the prosecution, the judge rejected the defence argument and on 9 June 2014 made a confiscation order in a sum which had been by then agreed, subject to the jurisdiction point, at 57,458. The Court of Appeal took the opposite view to the judge on the jurisdiction point and quashed the confiscation order. orders made at the time of sentencing, and to the matter of timetabling. Forfeiture etc POCA contains provisions which relate both to the forfeiture and deprivation Section 13 POCA provides (as amended), so far as material, as follows: 13. Effect of order on courts other powers If the court makes a confiscation order it must proceed (1) as mentioned in subsections (2) and (4) in respect of the offence or offences concerned. (2) The court must take account of the confiscation order before (a) (b) it imposes a fine on the defendant, or it makes an order falling within subsection (3). (3) These orders fall within this subsection an order involving payment by the defendant, an order under section 27 of the Misuse of Drugs an order under section 143 of the Sentencing Act (a) other than [defined exceptions] (b) Act 1971 (c 38) (forfeiture orders); (c) (deprivation orders); (d) Act 2000 (c 11) (forfeiture orders) an order under section 23 or 23A of the Terrorism (3A) (4) Subject to subsection (2), the court must leave the confiscation order out of account in deciding the appropriate sentence for the defendant. These provisions are directed at the inter relation between confiscation and sentence. They say, in effect, that confiscation has no effect on sentence except for some (but not all) aspects of the latter which are either financial or property depriving. By exceptions defined in section 13(3)(a) and 13(3A), various orders in the nature of compensation or restitution are excluded, as are mandatory orders for the payment of the surcharge; these are plainly given priority. Those apart, the reasoning plainly is that financial/property orders might be affected by removal under a confiscation order of some of the defendants assets, and so the confiscation order is to be taken into account before making them. There is obvious potential for a confiscation order to affect the ability of a defendant to meet a fine, and there might be some scope for it to affect the question whether it is right to make a deprivation order, since the financial impact of such an order on the defendant is, by section 143(5)(b) of the Powers of Criminal Courts (Sentencing) Act 2000, a consideration to which a court is required to have regard when deciding whether to make it. The same might sometimes be true of a forfeiture order under section 27 of the Misuse of Drugs Act 1971, at least when it relates to money, or to property used in the offending, rather than to any drugs recovered. These provisions have existed, essentially in similar form, ever since confiscation was introduced to English criminal law by the Drug Trafficking Offences Act 1986 and, for non drugs crime, by the Criminal Justice Act 1988. In order to understand them it is necessary to remember that, as initially conceived, the scheme was for confiscation to be dealt with before sentence. That is why the provisions are couched in terms of taking account of the confiscation order when determining the sentence. However, it was rapidly discovered that it was wholly unrealistic to expect the complex questions which frequently arise in relation to confiscation, not infrequently involving third party interests, to be ready to be determined immediately on conviction, especially after a contested trial. The result was that the sentencing of offenders was held up, often for a substantial time, when it is a cardinal principle of the criminal law that sentence ought to follow conviction either immediately or very shortly after, not least in the interests of defendants. So, with effect from the Criminal Justice Act 1993, courts were given express power to adopt what is much the more natural sequence, and to sentence first. That was done, however, by creating a power in the court to postpone the confiscation hearing until after sentence, initially as an exception to a general practice of dealing with confiscation first. Although the general practice has rapidly, and inevitably, become to sentence promptly and to deal with confiscation subsequently, the terms of some of the statutory provisions have not, in this respect, altered. The power to postpone has been continued into POCA, and indeed extended. It is no longer predicated, as initially it was, on a decision that the court needs additional information before confiscation can be dealt with, and the initial provision that confiscation must ordinarily be completed within six months has been replaced by a period of two years. But section 13, because it has substantially been modelled on the previous statutes, is still couched in terms which assume that confiscation will ordinarily come first. Timetabling: Postponement The power to postpone confiscation until after sentence is now in section 14 (as amended) which provides (omitting immaterial parts): 14. Postponement (1) The court may (a) proceed under section 6 before it sentences the defendant for the offence (or any of the offences) concerned, or (b) postpone proceedings under section 6 for a specified period. [extension of permitted period if defendant appeals his (2) A period of postponement may be extended. (3) A period of postponement (including one as extended) must not end after the permitted period ends. (4) But subsection (3) does not apply if there are exceptional circumstances. (5) The permitted period is the period of two years starting with the date of conviction. (6) conviction] (7) A postponement or extension may be made (a) on application by the defendant; (b) on application by the prosecutor; (c) by the court of its own motion. If (a) proceedings are postponed for a period, and (b) an application to extend the period is made before it ends, the application may be granted even after the period ends. (9) [definition of date of conviction] (10) [extended definition of appeals] (11) A confiscation order must not be quashed only on the ground that there was a defect or omission in the procedure (8) connected with the application for or the granting of a postponement. (12) But subsection (11) does not apply if before it made the confiscation order the court imposed a fine on the defendant; (a) (b) made an order falling within section 13(3); (c) made an order under section 130 of the Sentencing Act (compensation orders) (ca) made an order under section 161A of the Criminal Justice Act 2003 (orders requiring payment of surcharge); (d) made an order under section 4 of the Prevention of Social Housing Fraud Act 2013 (unlawful profit orders). 15. Effect of postponement (1) If the court postpones proceedings under section 6 it may proceed to sentence the defendant for the offence (or any of the offences) concerned. (2) In sentencing the defendant for the offence (or any of the offences) concerned in the postponement period the court must not (a) impose a fine on him, Section 15 (as also amended) then contains what are, in effect, consequential provisions which combine section 13 with the power to postpone in section 14. So far as material, it provides: (b) make an order falling within section 13(3), (c) make an order for the payment of compensation under section 130 of the Sentencing Act (ca) make an order for the payment of a surcharge under section 161A of the Criminal Justice Act 2003, or (d) make an unlawful profit order under section 4 of the Prevention of Social Housing Fraud Act 2013. (3) If the court sentences the defendant for the offence (or any of the offences) concerned in the postponement period, after that period ends it may vary the sentence by imposing a fine on him, (a) (b) making an order falling within section13(3), (c) making an order for the payment of compensation under section 130 of the Sentencing Act; (ca) making an order for the payment of a surcharge under section 161A of the Criminal Justice Act 2003, or (d) making an unlawful profit order under section 4 of the Prevention of Social Housing Fraud Act 2013. (4) But the court may proceed under subsection (3) only within the period of 28 days which starts with the last day of the postponement period. It will be seen that section 15(2) feeds on the underlying thinking of section 13(2) and (3), but extends it. Sections 13(2) and (3) direct the court to take account of any confiscation order before making the various financial or property orders there specified. But section 15(2) goes on to prohibit the court from dealing with these financial/property aspects of sentence until after the confiscation proceedings have been concluded, and by subparagraphs (b) to (d) it includes a prohibition also on making various financial orders (such as compensation) which are exempted from section 13(3). Curiously, a restitution order under section 148 of the Powers of Criminal Courts (Sentencing) Act 2000, although it may involve payment of money, is not included in the prohibition. As recorded above, section 13 derives from the days before there could be any question of sentence before confiscation. Section 15(2) derives from the creation of what was in 1993 a new power to deal with sentence first, and from a time when it may well have been anticipated, however unrealistically, that postponement would be relatively unusual. Section 15(2) is, however, in many cases counter intuitive, and creates a trap into which even the most experienced and skilled trial judges may fall. That is because many forfeiture orders will not be in the least controversial and are inevitable whatever the outcome of confiscation proceedings may be. A good example is the order in the present case forfeiting the fairly substantial quantity of drugs found on Guraj. But for section 15(2), it would make sense to make inevitable forfeiture orders immediately after conviction in order to avoid the risk of their being overlooked, and, equally importantly, to allow the drugs to be destroyed without delay. It is not obviously sensible to insist on sometimes industrial quantities of volatile substances being kept by the police for months. There may easily be similar practical difficulties in preserving other property which is inevitably going to be forfeited. Section 14(12) essentially follows section 15(2). Its effect is that section 14(11) does not apply if orders have been made prior to the confiscation process of the kind which section 15(2) says should not precede it. Because, when the natural order of process (sentence first) was restored from 1993, it was accomplished hedged about by detailed procedural provisions for postponement of confiscation, there ensued many instances of technical failures to observe the procedures being relied upon for the contention that the ensuing confiscation proceedings were invalid and no order could be made. Similar complaints of procedural errors unconnected with postponement were likewise frequently relied upon as invalidating confiscation orders. On a number of occasions the courts felt obliged to accept these arguments and several confiscation orders were quashed as a result, although it could not be suggested that the defendant had suffered any unfairness or that the confiscation order was other than correct if there was power to make it. Examples included R v Ross [2001] 2 Cr App R (S) 109 and the striking case of R v Palmer [2002] EWCA Crim 2202; [2003] 1 Cr App R (S) 112 at 572, where the order quashed exceeded 32m. Other courts took a different view of the legal consequences of failure to get the procedure right. In due course the resulting uncertainty was addressed both by Parliament in renewing the confiscation legislation in POCA and by the House of Lords in R v Soneji [2005] UKHL 49; [2006] 1 AC 340 and R v Knights [2005] UKHL 50; [2006] 1 AC 368. It is relevant to note that the first preceded the second in time. The legislative response was the insertion into POCA of subsections 14(11) and (12). The manifest purpose of section 14(11) is to remove any supposed rule that a procedural failure connected with postponement invalidates the confiscation procedure and prevents an order being made. Such a failure cannot thereafter be the sole ground for quashing a confiscation order. The subsection is addressed to the Court of Appeal, rather than to the court of trial and sentence, but it is a plain consequence of its provisions that a Crown Court is not disabled from making a confiscation order only on the ground that there was a defect or omission in the procedure connected with the application for or the granting of a postponement. Subsection (11) comes, however, with the qualification of subsection (12). The present case is agreed to be one to which subsection (12) applies, because the judge had inadvertently infringed section 15(2) by making the forfeiture and deprivation orders before confiscation had been considered. The issue in the present case is therefore this: what is the legal position when subsection (12) takes subsection (11) out of the picture? In Soneji and Knights the House of Lords considered the legal consequences of procedural error in the absence of both subsections 14(11) and (12) because neither was present in the (amended) Criminal Justice Act 1988 which governed the cases then before the House. In Soneji confiscation orders had been made more than 18 months after the defendants had been sentenced to imprisonment for money laundering. The statute then in force provided that postponement could not be for more than six months in total unless there were exceptional circumstances; although the postponement had been made in good faith, the question whether there were exceptional circumstances had not been addressed. In Knights, the confiscation hearing had been postponed initially without setting a precise date and in terms which would place it more than six months after the conviction of one of the defendants. The House held that statutory provisions ought no longer to be classified as either mandatory or directory, but rather that attention should focus on what Parliament intended to be the consequences of failure to comply with them. It drew attention to the fact that the court comes under a duty under the confiscation legislation to make the order if the Crown seeks it, and indeed even if it does not, if the court determines that there should be such an order. It followed that the question was whether that duty was removed by the failure to observe the procedural requirements. The House held that the plain purpose of the postponement provisions was to ensure the overall effectiveness of the sentencing process, and to enable sentence to take place promptly, at least where no financial sentence was in prospect. Accordingly it held that it was not the consequence of failure to comply with the statutory procedural provisions that a confiscation order could not be made, at least where there was no injustice to the defendant in making it. Thus both Parliament and the House of Lords as a court recognised that it would defeat the purpose of the confiscation legislation if orders were treated as bad simply because there had been a failure to comply with the procedural provisions laid down for postponement. Parliament accordingly altered the law, prospectively, by inserting section 14(11) into POCA. For its part, the House of Lords construed the existing earlier statute which had no such provision, and which provided stricter procedural requirements than POCA now does, and held that it cannot have been intended that invalidity should be the consequence of procedural breach. It follows from the decisions in Soneji and Knights that irrespective of section 14(11) the correct approach to the legal consequences of failure to observe procedural provisions is to ask whether Parliament must have intended invalidity of any confiscation order to follow, bearing in mind the underlying duty on the court to make such an order. There can be no question of sections 14(11) and (12) being designed to be a Parliamentary response to Soneji and Knights and to curtail the breadth of those decisions; these sections had been enacted before the House came to consider those two cases. Whether those sections do nevertheless curtail the breadth of the decisions in Soneji and Knights is central to the question in the present case. The two responses, by Parliament and the court, both address the problem of procedural error and its effect on the validity of a post conviction confiscation order. But it should be noted that the two responses are not identical. Sections 14(11) and (12) are confined to the case of procedural error connected with the application for or the granting of a postponement. They have no application to any other kind of procedural error. Thus confined, section 14(11), where it applies, is peremptory: an order must not be quashed only on grounds of such error. The decisions in Soneji and Knights are, first of all, not peremptory. They leave to the court the determination of when a procedural defect must have been intended to affect validity. But the decisions are also of broader ambit than sections 14(11) and (12). Although the facts of both cases did concern postponements, the reasoning is not confined to that kind of procedural defect. It proceeds on analysis of the effect of statutory conditions for the exercise of a power generally. The procedural provisions of POCA are legion and certainly not confined to postponements of the hearing. Others which might be invoked in aid of an argument that a post conviction confiscation order was invalid might, for example, include the detailed rules for affording time for payment (section 11 passim), the rules for making compliance orders (section 13A as inserted by section 7 of the Serious Crime Act 2015), a failure to make a section 13(6) order for payment out of the confiscation order of a priority order (which includes the mandatory surcharge order) or the provisions of sections 16 for the furnishing of statements of information by the Crown; those are by no means exhaustive instances. Sections 14(11) and (12) would have no application to this sort of argument, but there is no reason to suppose that the reasoning of Soneji and Knights would not apply. This case The contention of the respondent is that there have been in this case two respects in which the statutory provisions have not been complied with. The first was the making of the forfeiture and deprivation orders, in contravention of section 15(2). The second was the failure on the part of the Crown to make an application for an extension of the postponement before it expired, as is required by section 14(8); the original postponement ordered by the judge in July 2012 had expired by the end of November 2012, and nothing then happened for a year. Says the respondent, the effect of the first error is that section 14(12) takes section 14(11) out of the picture, and the result is that the second error is fatal to the courts jurisdiction. It is expressly accepted that the respondent can point to no injury, unfairness or injustice to which he has been exposed by the making of the order after the timetable recorded above. If, however, the jurisdiction to make the order has gone, that does not matter. The judge applied the Soneji approach. He directed himself that the failure of the Crown to apply before December 2012 for a further postponement was a procedural error, and a serious one, but one which was capable of remedy within the two year period, and had indeed been remedied. He approached the respondents submission as in effect an application to stay the confiscation proceedings and thus asked himself whether any injustice had been sustained by the defendant. He held that Parliament could not have intended that any failure to apply for an extension of postponement, even by, for example, making the application two days late, would lead inevitably to the confiscation proceedings becoming invalid. Delay and incompetence could, he held, be met fairly by a stay if the consequence of them was unfairness. There being no suggested prejudice or unfairness, he proceeded to make the order. The Court of Appeal reached the opposite conclusion. It accepted that there was a clear Parliamentary intention that confiscation proceedings should not be invalidated by technical errors, but held that there was also a clear intention that those proceedings should move on expeditiously, hence the timetabling provisions of section 14. It held that section 14(8) was infringed by the failure to apply for an extension before the initial period of postponement expired. At that point, at para 54, it held, the prosecution needs the balm of section 14(11) in order to retrieve its position. But that balm was unavailable, because of section 14(12). It expressed the result of the interlocking statutory provisions, and particularly of sections 15(2) and 14(12) as follows: 55. It is of course right that we must strive to give effect to the objects of POCA and the intention of Parliament, as the House of Lords stated in both Knights [2006] 1 AC 368 and R v Soneji [2006] 1 AC 340. The difficulty for the prosecution, however, is that part of Parliaments intention is now expressed in section 14(12) of POCA. That is a mandatory prohibition which, as the Lord Judge CJ stated in R v Neish [2010] 1 WLR 2395, cannot be ignored. Forfeiture orders should not be made when confiscation proceedings are under way. If forfeiture orders are made in such circumstances, then the prosecution will be held more strictly to the time limits contained in section 14. The outcome of the appeal was stated thus: we conclude that the combination of delays and breaches by the prosecution was such as to deprive the court of the power to make a confiscation order. (para 57) This approach, centred on a crucial role for section 14(12) as disapplying section 14(11), must be seen against the background that section 14(12) is triggered by any forfeiture or other order specified in section 15(2), whether or not such order could conceivably be affected by a confiscation order. So, for example, section 14(12) is triggered by an order for the forfeiture of drugs recovered, as in the present case, and would also be triggered by a deprivation order relating to a trivial item of property in the hands of a defendant who had ample assets with which to meet a confiscation order. Is this approach compelled by the statute? The Court of Appeals reasoning involves reading section 14(12) as not simply disapplying section 14(11), which plainly it does, but also as restoring those of the pre Soneji cases which regarded procedural errors as going to jurisdiction to make a confiscation order. It involves understanding section 14(12) as not simply removing the balm of section 14(11), so as to remove the peremptory bar on quashing only for postponement procedural error, but as prescribing that an order will, in its absence, be invalidated for such an error. That, however, is not a necessary reading of section 14(12) and it is to give insufficient weight to the quite separate analysis contained in Soneji and Knights. That latter analysis holds as good now as it did at the time of the House of Lords decisions. The court remains under a duty to make a confiscation order, and the question remains whether that duty is removed by procedural error which causes no injustice or unfairness to the defendant. The purpose of the postponement provisions of POCA is, just as the purpose of their predecessors in the Criminal Justice Act 1988 was, to make the sentencing process effective. If anything, the recognition that confiscation will frequently, and in reality generally, follow sentence, is clearer in POCA than it was in the predecessor legislation. The need to found postponement on the absence of necessary information has gone, and the permitted period for postponement has been increased fourfold. It should be noted that the judge and the Court of Appeal both dealt with the case on the agreed basis that the original postponement order had expired by December 2012 and that there was a breach of section 14(8) in the failure of the Crown to seek a further extension before that time. In this court, Mr Hall QC for the Crown offered an alternative analysis, namely that the original (valid) postponement order ran until two weeks after the service of both parties statements of information, and therefore survived until the Crowns was served in late 2013. On the correct view of the law, it is not necessary to resolve this issue. Subject, however, to any further argument and evidence of accepted practice, the better view would appear to be that the original postponement was valid, being for a specified period until December, but would not have been valid (because not for a specified period) if it had been open ended and dependent on the uncertain event of service of a partys statement of information. Whatever the correct technical view, it may be sensible for a court which needs to give directions such as those given initially in the present case to postpone confiscation to a fixed date somewhat beyond the hoped for date, or earlier by liaison with the parties. In any event it is clear that the listing officer needs to keep the situation under review see para 37 below. The Court of Appeals reasoning treated the breach of section 14(8) as the critical matter which, once section 14(11) was removed from consideration by the inadvertent making of the forfeiture orders, led in its view to the loss of jurisdiction to make a confiscation order. But although section 14(8) certainly contemplates that an application by a party for a further postponement will be made before the expiry of a previous postponement, it is difficult to see a failure to meet this requirement as going to so fundamental a matter as jurisdiction. If it did, it would indeed mean, as the judge held, that an extension application which is a day late would be fatal, and even if there were an acceptable excuse for it, and maybe even if it were made by the defendant or had been consented to by him. There is simply no reason at all why this should be so. It is also to be observed that a postponement or extension may, under section 14(7), be made not only on an application by a party, but also by the court of its own motion. Given the courts statutory duty under section 6 to make a confiscation order, it would plainly not be improper for the court to order an extension without any application from a party, if satisfied that no injustice or unfairness would thereby be occasioned. If it did so, section 14(8) would appear to have no application. In arriving at its conclusion the Court of Appeal described section 14(12) as containing a mandatory prohibition. That was understandably based on an obiter passage in the judgment of Lord Judge CJ in R v Neish [2010] EWCA Crim 1011; [2010] 1 WLR 2395. The initial postponements of confiscation in that case had been to a fixed date about five months after sentence. There was plainly nothing wrong with that. Before that date arrived, the judge learned that, unexpectedly, he was double booked in court that day. He immediately instructed the listing officer to vacate that date and to re list on a date convenient to both parties. The listing officer did so and, before the originally fixed date was reached, had re listed the case about three weeks later. The point taken on behalf of the defendant was that this process involved no judicial decision to postpone for a specific period, because the judge had left it to the listing officer to find a convenient date. The judge had felt obliged to accept this point, but the Court of Appeal rightly held that there was nothing at all in it. The revised date was still only six months after sentence. It had been fixed on judicial direction. The judge acted via the listing officer, exercising the judicial function of listing, and through him adjourned the hearing to the revised fixed date. There had been a perfectly legitimate postponement. The court added an analysis based upon Soneji and Knights, correctly pointing out that those cases, and in particular the latter, decided that an adjournment may be a valid postponement for a specific period without fixing a date, so long as it was not simply an adjournment generally. The court then offered this summary: 18. In short, the conclusion to which the reasoning in the House of Lords in R v Soneji [2006] 1 AC 340 and R v Knights [2006] 1 AC 368 drives us is the comforting one that unless the continuation of confiscation proceedings would contravene an unequivocal statutory provision, there is no reason why technical errors which cause no prejudice to the defendant should prevent their continuation. The position is exemplified by section 14(11) and section 14(12) of the 2002 Act. Section 14(11) states in express language that a confiscation order must not be quashed only on the ground that there was a defect or omission in the procedure connected with the application for or the granting of a postponement. That language is clear, but by section 14(12) it is not to apply if, before the confiscation order was made, the court had already, for example, imposed a fine on the defendant. That is an express statutory prohibition which it is not open to the court to ignore. However what happened here did not contravene any statutory provision. Since the court had found, correctly, that there had been a valid postponement to a fixed date, Neish was a case in which there was no procedural error at all. Neither Soneji nor section 14(11) were engaged. The observations set out above were obiter, albeit an entirely understandable reinforcement of the inevitability of the decision that the court could and should continue in that case to deal with confiscation. The court was plainly not attempting to provide a comprehensive statement of the law. The expressions unequivocal statutory provision and express statutory prohibition do not derive directly from the speeches in Soneji; indeed in that case the complaint had been that the postponement did contravene an express statutory provision which prevented adjournment beyond six months unless in exceptional circumstances. It is possible that in the penultimate sentence of the passage quoted above the expression used in the first was repeated, and that prohibition is a transcription error for provision. However that may be, section 14(11) does contain a prohibition: it says that the court must not quash a confiscation order only on the grounds of procedural defect or omission connected with postponement. Section 14(12) is less obviously to be described as a prohibition. It is certainly an express provision, and it disapplies section 14(11). It certainly cannot be ignored. But to say that it disapplies section 14(11) is the beginning of the exercise, not the end. The judgment of the Court of Appeal in the present case also considered the earlier case of R v Donohoe [2006] EWCA Crim 2200; [2007] 1 Cr App R (S) 88 at 548. There, the postponements were not criticised, but they had followed sentencing in which the judge had fallen into precisely the same trap as did the judge in the present case: he had made a forfeiture order. It was only of the drugs seized. It could not conceivably have been resisted, and it is difficult to see how its making could have been affected by the confiscation process. But to make it was, there as here, a breach of section 15(2). The decision of the Court of Appeal (Criminal Division) (Sir Igor Judge P, Gray and McCombe JJ) was that that breach did not render the confiscation order invalid. The court said this, of sections 14(11) and (12): 15. There is nothing in the remaining provisions of the Act which say that if the court makes an order in contravention of section 15(2), it may no longer proceed to hear the application for a confiscation order under section 6. What the Act does say in sections 14(11) and (12) is that a confiscation order must not be quashed on the grounds that the procedural defect or error, except if that error was the imposition of a fine, compensation order, forfeiture order or the like within section 13(3). When the Act speaks of quashing of an order it seems to propose an order has been made and an application is made to quash it, presumably on an appeal. On their face, therefore, these two subsections appear to provide that an appellate court may quash a confiscation order even on procedural grounds if, for example, an order for forfeiture has been made under section 27 of the 1971 Act, before the making of the confiscation order. The subsections do not say directly that the court at first instance cannot make a confiscation order in such circumstances. Are they however saying so indirectly? 16. It seems to us that these two subsections are allowing the appellate court, if it sees fit, to quash a compensation [sic: but McCombe J must have said confiscation] order on procedural grounds where, for example, there is a danger of double counting or double penalty because the court had made an earlier order of an expropriating nature against a defendant and it should not have done so. The subsections are not imposing a prohibition on the trial court from proceeding with the confiscation proceedings which it has validly postponed 17. We do not consider therefore that either section 15(2), or sections 14(11) and (12) had the effect of depriving the court of jurisdiction to make a confiscation order when there had been a failure to observe the prohibition in section 13(2). None of these provisions state this to be the consequence. It would, in our view, be frustrating the object of the 2002 Act to hold that the erroneous imposition of a trivial fine or, for example, the forfeiture of drug dealing paraphernalia rendered the court powerless to proceed with the substantive confiscation proceedings. A technically erroneous order for forfeiture of illegal drugs is, in our view, an a fortiori case. Such an approach is, we consider, consistent with that of the House of Lords in the recent case of Soneji [2005] UKHL 49; [2006] 1 Cr App R (S) 79 (p 430) The reasoning there set out, which was ex tempore, appears, with respect, to have overlooked the fact that in a case where the postponements were not criticised, sections 14(11) and (12) had no application. But on the direct question whether section 15(2) mandated invalidity, the application of the principle of Soneji to a non postponement procedural error was plainly correct. The court went on to consider ways in which any injustice or unfairness to a defendant arising from making a confiscation order after a premature forfeiture order might be corrected. That was the right approach. A similar result ensued in R v Paivarinta Taylor [2010] EWCA Crim 28; [2010] 2 Cr App R (S) 64, para 42, where a confiscation order was held not automatically to be invalidated by the fact that the court had imposed a fine in advance of the confiscation proceedings, contrary to section 72A(9) of the then applicable Criminal Justice Act 1988. Whatever the position might have been if the confiscation order could conceivably have impacted on the fine, in that case it could not have done so. True it is, as the Court of Appeal said in the present case, that Donohoe (and Pairvarinta Taylor) differ from this case because there was no postponement error suggested. But Donohoe was cited to the court in Neish and the latter judgment did not question it in any way. That is a further reason why it is not possible to read into the obiter passage cited above from Neish any implied suggestion that once an express statutory provision outside section 14(11) is contravened, invalidity must follow. The decision in the Court of Appeal in the present case raises the question when a postponement or other procedural error will have the effect of invalidating confiscation proceedings in the absence of the availability of section 14(11). As already demonstrated, for non postponement errors, section 14(11) is irrelevant. In the case of a postponement error, such as the infringement of section 14(8) in the present case, the Court of Appeal decision is that invalidity necessarily follows from any breach, however venial, if section 14(11) is unavailable, because jurisdiction to make an order is lost. For the respondent in this court, Mr Farrell QC realistically shrank from so absolutist a proposition. He concentrated his fire upon the fact that the Act has among its plain objectives the prompt despatch of confiscation proceedings, and on the tendency for them to drift unless firmly controlled. He submitted that if the Crowns argument were to succeed, there would be nothing to prevent confiscation proceedings being resurrected after a much longer period of inactivity than the year which disfigured the present case, and that section 14(12) would then have no effect at all. He submitted that the purpose of section 14(12) was to permit the invalidation of an order where there has been both a breach of section 15(2) by making the forfeiture order and a flagrant procedural error (the emphasis is ours). In such a case, he contended, the court has no jurisdiction to make the order. He submitted that it is necessarily a matter of degree when the breach is sufficiently flagrant for this conclusion to follow, and that there ought to be a factual enquiry in each case into what has occurred. But once that is the argument, it must follow that a procedural error does not go to jurisdiction. What, then, is the answer to the question: If section 14(11) is unavailable, when does a procedural error prevent the making of a confiscation order, or invalidate such an order if it is made? Consistently with Soneji and with the dominant purpose of POCA that confiscation is the duty of the court, to which a significant priority is to be given, the answer is not that every procedural defect does so. The correct analysis is not that a procedural defect deprives the court of jurisdiction, which would indeed mean that every defect had the same consequence. Rather, it is that a failure to honour the procedure set down by the statute raises the very real possibility that it will be unfair to make an order, although the jurisdiction to do so remains, and that unless the court is satisfied that no substantial unfairness will ensue, an order ought not to be made. This is not to deprive section 14(12) of effect; it remains effective to remove the peremptory bar of section 14(11) upon quashing confiscation orders on grounds only of procedural defect connected with postponement. Where section 14(11) applies, no such defect can alone justify quashing. Resulting unfairness, on the other hand, may, but such unfairness cannot be inferred merely from the procedural breach. Where section 14(11) does not apply, a procedural defect, not limited to postponement, will have the effect of making it wrong to make a confiscation order if unfairness to the defendant would thereby ensue. If, however, the defect gives rise to no unfairness, or to none that cannot be cured, there can be no obstacle to the making of the order, and this is what the duty of the court under POCA requires. The present case is one where no unfairness can be or is suggested; cure does not arise. If it were to arise, in another case, it is possible that there might be ways in which a potential unfairness could be cured. They might include, for example, determining in accordance with R v Waya [2012] UKSC 51; [2013] 1 AC 294, that the confiscation order must be adjusted to achieve proportionality. In a few instances, it might be possible to vary an inadvertently imposed sentence within the 56 days permitted by section 155 of the Powers of Criminal Courts (Sentencing) Act 2000. In others, the correct outcome may be that it is the forfeiture order which ought to be quashed, by way of appeal, rather than the confiscation order; priority for the latter is after all built into POCA. Each case, however, must depend on its own facts. In the event of a very long period of inactivity, the correct inference may well be that unfairness to the accused has ensued; his own affairs and, importantly, those of others may have been on hold, or may even have been conducted on the basis that the threat of confiscation had gone away, to the extent that to resume the process is unfair. The statutes intention is clearly that although confiscation may follow sentence, it is to be dealt with promptly. The duty to remove assets falling within the proceeds of crime legislation is clearly a legislative priority. The present case does not involve any exceeding of the statutory permitted period of two years, for which see sections 14(3) (5). The order was eventually made well within that time. There are inconsistent expressions of view in decisions of the Court of Appeal on the effect of exceeding the permitted period. In R v Iqbal [2010] EWCA Crim 376; [2010] 1 WLR 1985 the court held that the effect of section 14(8), read with section 14(3), is that unless an application for an extension is made before the expiry of the two year period, no further postponement is possible and no order can be made. But that decision, whilst it referred to Soneji, did not explain why the rule should be different when the permitted period (six months previously and now two years) is exceeded after an application has been made but there has been no consideration (as is required) of the existence of exceptional circumstances, as happened in Soneji. It is moreover inconsistent with R v T [2010] EWCA Crim 2703, where there were undoubtedly exceptional circumstances (the defendant several times failed to appear, at one stage having absconded abroad) but no application had been made within the two years for extension of time; the court there held that there was no obstacle to the confiscation process continuing. A similar decision was reached in R v Johal [2013] EWCA Crim 647; [2014] 1 WLR 146. There, the court had, of its own motion, adjourned anticipated confiscation proceedings on the day before the two year period expired, but had neither considered exceptional circumstances nor set any kind of period, whether by way of fixed date or otherwise. The court made the assumption in favour of the defendant that section 14(11) did not apply where the order of adjournment was not a proper postponement because of failure to specify any period, but nevertheless held that the Crown Court Recorder had been entitled subsequently to decide that there were exceptional circumstances, and that in consequence the confiscation order was valid. Since the two year period is not in question in this case, it is unnecessary to say more than that it must be especially likely that unfairness will ensue if it is exceeded without there being exceptional circumstances. Conclusion It follows that the judge applied the correct test. In this case it is not suggested that any unfairness at all has befallen the defendant in consequence of the irregularities which occurred. There was no obstacle to the making of the confiscation order, and it ought to have been made. The Crowns appeal must be allowed and the order restored. Two further matters Enough has been said to show that Lord Steyns prediction in Soneji (see para 1 above) was sadly entirely accurate. The Law Commission has expressed interest in reviewing the confiscation legislation. It may be that amongst the topics which would merit review are (1) the best way of providing realistically for the sequencing of sentencing and confiscation and (2) the status of procedural requirements in the Act. We re emphasise the message given at para 13 by this court in R v T [2010] EWCA Crim 2703. The fact that the courts will not wish to see the intention of Parliament defeated by technical points taken to stave off meritorious confiscation orders, does not mean that the obligations under the Act can be taken lightly. It is essential that listing officers, acting as they do on behalf of judges and discharging a judicial function delegated to them for day to day administration, pay close regard to the procedural steps laid down in section 14. Listing officers should be aware of the necessity to adhere to the two year limit. They should be alive to the risk that the parties may not alert them to such a problem. They should be aware of the requirement to consider whether there are exceptional circumstances before a postponement beyond two years is granted. They should be aware of the obligation not to postpone generally but to specify a date when there is to be a postponement. It would be wise for listing officers to consult the resident judge when any such problem is likely to arise. It would also be wise to keep a record of what was taken into consideration at the time, and in particular whether any exceptional circumstances arose which justified postponement. The Act must, however, be obeyed as it stands. Confiscation proceedings are particularly susceptible to drift. They must not be allowed to suffer it. They need not always be complicated, and efforts should be made by the Crown, as well as the courts, to simplify them. It will often be in the interests of defendants to delay. In overstretched police and CPS offices it may often be tempting to give priority to something other than confiscation. Courts have got to be alive to these realities. It may help to echo the useful practical guidance offered by Irwin J, giving the judgment of the Court of Appeal (Criminal Division) in Johal:

UK-Abs

The Respondent, Lodvik Guraj, pleaded guilty to offences involving the supply of heroin and money laundering and was sentenced in July 2012 to a custodial sentence and forfeiture and deprivation orders. The judge did not make a confiscation order, but postponed the determination of that issue to take place after sentence, as he was entitled to do under s.14 Proceeds of Crime Act (POCA). The judge gave directions setting a procedural timetable for a hearing to be listed in November 2015, for the Respondent to provide certain information, and for the Crown first and then the Respondent to serve statements of case. The timetable slipped badly. The Respondent provided the required information late, the Crown did not serve its statement of case until over a year later, and two hearings were aborted due to the Crowns failure to be ready. There was eventually a properly attended hearing in May 2014, at which the Respondents counsel argued that the procedural requirements under POCA had been breached with the effect that the court no longer had jurisdiction to make a confiscation order. The Respondent argued there had been two procedural breaches. The first was that the judge had made forfeiture and deprivation orders before the confiscation proceedings, in breach of s.15(2) POCA which prohibits the court from dealing with the financial or property aspects of sentence (including deprivation and forfeiture orders) until after any confiscation proceedings have been concluded. The second breach was the Crowns failure to make an application for an extension of the postponement of the confiscation hearing, before the postponement expired by November 2012 (as required by s.14(8)). The judge accepted that there had been serious procedural error, but found that no unfairness had occurred as a result. It could not be Parliaments intention that any procedural error removed the courts jurisdiction to make an order. A confiscation order was made in a sum which had by then been agreed (subject to the jurisdiction point). The Court of Appeal took the opposite view on the jurisdiction point and quashed the confiscation order. The Crown now appeals and seeks the quashed order to be restored. The Supreme Court unanimously allows the Crowns appeal. Lord Hughes gives judgment, with which the rest of the Court agrees. The judges approach was correct. No unfairness had arisen in consequence of the irregularities which occurred, and there was no obstacle to the making of the confiscation order. S.14 allows confiscation proceedings to be postponed until after sentence, for up to two years from conviction. Postponement may be applied for by the parties or may be granted by the court of its own motion. If there is a defect in procedure relating to postponement, as there was here, s.14(11) states that this alone is not sufficient to require a confiscation order made in the defective proceedings to be quashed. However, s.14(12) dis applies s.14(11) where, before the making of a confiscation order, an order has been made which s.15(2) says should not precede a confiscation order. Therefore, where forfeiture and deprivation orders have been made prior to confiscation proceedings, the rule under s.14(11) that the court is not prevented from making confiscation orders solely because there was a defect in the procedure relating to postponement does not apply [9 14]. The issue in this case was whether the dis application of the s.14(11) bar had the consequence that a confiscation order made with a defect in postponement procedure must always be quashed [18]. Preceding the insertion of ss.14(11) and (12), there was some uncertainty as to the legal consequences of procedural errors. This was clarified in R v Soneji [2005] UKHL 49 and R v Knights [2005] UKHL 50, where the House of Lords held that the dominant purpose of POCA was to make confiscation the duty of the court. It would defeat the purpose of the confiscation legislation if orders were treated as bad simply because there had been a failure to comply with procedural provisions laid down for postponement. The correct approach was to question whether the duty to make a confiscation order was removed by procedural errors which caused injustice or unfairness to the defendant. S.14(11) was subsequently introduced with the effect of clarifying on a statutory footing that a procedural error in postponement does not on its own invalidate the confiscation procedure [15 17]. The trial judges interpretation of the operation of ss.14(11) and (12) was correct. The fact that the bar to quashing a confiscation order in certain circumstances is dis applied does not give rise to a requirement to quash in those circumstances. Where s.14(11) applies, no procedural defect relating to postponement can on its own justify quashing. Where s.14(11) does not apply, and there has been a procedural defect relating to postponement, an order may be quashed, or it may not be. Applying the principles in Soneji and Knights, the position is that a procedural defect (not limited to postponement) will have the effect of making it wrong to make a confiscation order if unfairness to the defendant would ensue. If the order would give rise to no unfairness, or to none that cannot be cured, there can be no obstacle to making the order [19 30]. The Court of Appeals interpretation of s.14(12) as prescribing that an order will be invalidated for a procedural error was wrong. This was to approach s.14(11) as if it restored the position to the pre Soneji case law which regarded procedural errors as going to the courts jurisdiction to make a confiscation order. The trial judge was correct to continue to follow the Soneji and Knights approach, whose analysis still holds good [22]. That unfairness has resulted from a procedural error may be inferred in the event of a very long period of inactivity. If the statutory permitted two year postponement period is exceeded without there being exceptional circumstances, it is likely that unfairness will ensue. The present case is one where it has been accepted that the Respondent cannot point to unfairness, injury or injustice resulting from the making of the order after the prescribed timetable. The order was eventually made within the permitted period of two years. As there is no unfairness in this case, the question of curable unfairness does not arise. If it were to arise, a potential unfairness might be cured for example by adjusting a confiscation order, or by quashing a forfeiture order. Each case must depend on its own facts [31 4].

This appeal concerns the assessment of compensation for compulsory acquisition of two parcels of grazing land, amounting in all to 26.85 acres (10.86 ha) (the reference land), formerly owned by the present appellant (the claimants). They were part of a much larger area of some 420 acres (170ha) acquired under the North West Development Agency (Kingsway Business Park, Rochdale) Compulsory Purchase Order 2002 (the CPO), for the development of the so called Kingsway Business Park (KBP). Responsibility for payment of compensation now rests with the Homes and Communities Agency, the respondent to this appeal (the authority). An initial claim was made for 2,593,000 compensation, on the basis that the land had significant hope value for residential development, independently of the scheme of acquisition. The authority contended that the claim should be limited to the existing use value, giving a figure (rounded) of 50,000. The Upper Tribunal agreed with the claimants in part, awarding compensation of 746,000. On the authoritys appeal, the Court of Appeal declined to accept the argument of either party, and remitted the matter to the tribunal to re determine compensation on what it considered to be the correct basis. The valuation date was 4 January 2006, being the date when the reference land vested in the acquiring authority under a general vesting declaration. The facts The facts are set out in detail in the Upper Tribunals decision. A summary will suffice. The order lands lie about one mile east of Rochdale town centre, on the north west side of the M62 motorway, close to Junction 21. The reference land, shown as Plots 13 & 14 on the CPO plan, comprises two adjoining parcels of land towards the north east part of the order lands, close to, but not immediately adjoining, a road to the south east known as Buckley Hill Lane. The claimants relied on the prospect, in the absence of the scheme, of planning permission for residential development being permitted with access from Buckley Hill Lane through an intervening plot known as the Nib (also in their ownership but not subject to the CPO). The area has a long planning history. Its potential for development of some form had been recognised since the 1960s. In 1999 developers published a KBP Development Framework, in support of an application for planning permission. The framework included a master plan within which the reference land was shown for development of various kinds (including some residential) within phase 5. Planning consents linked to the master plan were granted on 19 December 1999. As the tribunal found (para 13) they had been commenced and were extant at the valuation date. At the time the CPO was made (in 2002) the reference land was owned by members of the Nall family. A planning application had been submitted on their behalf for residential development on part of the reference land and the Nib, but it was refused on 18 January 2002 as piecemeal development. The land, together with the Nib, was acquired by the claimants in May 2003 for a total price of 1.3m (para 18). Their objection to the CPO was rejected, principally on the grounds that the land was needed for the comprehensive development of the KBP scheme (para 19). The Statutory Development Plan at the valuation date comprised the regional guidance (RPG13) approved in March 2003 and the Rochdale Unitary Development Plan (the 1999 UDP) adopted in March 1999. The KBP was listed in RPG 13 as one of 11 Strategic Regional Sites. The KBP site was allocated under policy EC/6 of the UDP, subject to certain criteria including provision for vehicular access to be obtained from the A664 Kingsway and from Junction 21 of the M62 Motorway only; for any individual development to be compatible with the overall objective of a strategic business park development; and for limited residential development provided it is part of a comprehensive development scheme for predominantly business uses (para 23). Similar policies were reproduced in policy EC/7 of the draft replacement UDP which was well under way by the valuation date, and was agreed to be material to a hypothetical planning application made at that time (paras 24 30). It was common ground that a limited residential development on the reference land with access from Buckley Hill Lane would not have been recommended for refusal on highway grounds (para 31). In August 2006 the claimants made an application to Rochdale MBC for a Certificate of Appropriate Alternative Development (see para 15 below) in respect of the reference land, for various classes of development including residential development of 74 dwellings. The officers report recommended refusal on the grounds (inter alia) of non compliance with policy EC/6 of the UDP. Following sight of the report, the application was withdrawn before formal determination. The law The no scheme rule The appeal raises questions concerning the so called Pointe Gourde rule (Pointe Gourde Quarrying & Transport Co Ltd v Sub Intendent of Crown Lands [1947] AC 565), or no scheme rule: that is, the rule that compensation for compulsory acquisition is to be assessed disregarding any increase or decrease in value solely attributable to the underlying scheme of the acquiring authority. The law is to be found in the Land Compensation Act 1961 as explained and expanded by judicial interpretation. The particular issue concerns the relationship between the general provisions for the disregard of the scheme, and the more specific provisions relating to planning assumptions. The rule has given rise to substantial controversy and difficulty in practice. In Waters v Welsh Development Agency [2004] 1 WLR 1304; [2004] UKHL 19, para 2 (Waters), Lord Nicholls of Birkenhead spoke of the law as fraught with complexity and obscurity. In a report in 2003 the Law Commission conducted a detailed review of the history of the rule and the relevant jurisprudence, and made recommendations for the replacement of the existing rules by a comprehensive statutory code (Towards a Compulsory Purchase Code (1) Compensation Law Com No 286 (Cm 6071)). Since that report aspects of the rule have been subject to authoritative exposition by the House of Lords in Waters itself, and more recently in Transport for London v Spirerose Ltd [2009] 1 WLR 1797; [2009] UKHL 44 (Spirerose). Although the Law Commissions recommendations for a complete new code were not adopted by government, limited amendments to the 1961 Act in line with their recommendations were made by the Localism Act 2011 section 232 (relating to planning assumptions) Further proposed amendments, dealing with the no scheme principle more generally, are currently before Parliament in the Neighbourhood Planning Bill 2016 17. The purpose of the latter is said to be that of clarify[ing] the principles and assumptions for the noscheme world, taking into account the case law and judicial comment (Explanatory Notes para 70). The present appeal falls to be decided by reference to the 1961 Act as it stood before the 2011 amendments. Section 5 rule 2 established the general principle that the value of land is taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise. In applying this general principle, it is necessary for present purposes to take account of two other groups of provisions, relating first to disregards of actual or prospective development (section 6 and Schedule 1), and secondly to planning assumptions (sections 14 16). Disregards Section 6 (headed disregard of actual or prospective development in certain cases) has been treated by the courts as a statutory but not exhaustive embodiment of the Pointe Gourde principle (see Waters paras 49 54). So far as relevant to this appeal it provides: 1 no account shall be taken of any increase or diminution in the value of the relevant interest which, in the circumstances described in any of the paragraphs in the first column of Part I of the First Schedule to this Act, is attributable to the carrying out or the prospect of so much of the development mentioned in relation thereto in the second column of that Part as would not have been likely to be carried out if (a) (where the acquisition is for purposes involving development of any of the land authorised to be acquired) the acquiring authority had not acquired and did not propose to acquire any of the land; Part I of the First Schedule sets out in tabular form a number of cases with the corresponding development, the prospect of which is to be left out of account. The first case is: Where the acquisition is for purposes involving development of any of the land authorised to be acquired. The corresponding development is: Development of any of the land authorised to be acquired, other than the relevant land, being development for any of the purposes for which any part of the first mentioned land (including any part of the relevant land) is to be acquired. (emphasis added) Although this paragraph in terms applies the statutory disregard to land other than the relevant land, that is the land subject to acquisition, the Pointe Gourde rule has been treated by the court as requiring the same approach to be applied also to the subject land itself (see Camrose v Basingstoke Corpn [1966] 1 WLR 1100, Waters para 52. Note that relevant land is defined by reference to the notice to treat, actual or, in the case of a vesting declaration, constructive: section 39(2); Compulsory Purchase (Vesting Declarations) Act 1981, section 7). Planning assumptions Section 14 is the first of a group of sections headed assumptions as to planning permission. In valuing the relevant interest the valuer must make such one or more of the assumptions mentioned in sections 15 or 16 as are applicable to all or part of the relevant land (section 14(1)). Such assumptions are to be in addition to any planning permission in force at the date of service of the notice to treat (section 14(2)). Although the tribunal noted the existence of extant permissions for the KBP scheme, they do not appear to have been relied on by the parties for valuation purposes. Section 14(3) makes clear that these provisions are not to be construed as requiring it to be assumed that planning permission would necessarily be refused for development not covered by the statutory assumptions. Section 16(3) applies to land forming part of an area shown in the current development plan as an area allocated primarily for a range of two or more uses specified in the plan. It was common ground that the reference land was within such an area. It is to be assumed that planning permission would be granted for development for purposes falling within that range of uses, which is development for which planning permission might reasonably have been expected to be granted in respect of the reference, if no part of that land were proposed to be acquired by any authority possessing compulsory purchase powers (section 16(3)(b), (7)). For the purpose of this exercise it has to be assumed that the scheme of acquisition in respect of the reference land was cancelled on the date of the notice to treat (the cancellation assumption: see (Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307). Section 17 (certification of appropriate alternative development) provides a means by which an application can be made to the local planning authority to determine the forms of development if any which would have been permitted if the land had not been proposed for compulsory acquisition. As already noted, such an application was made in the present case, but withdrawn before determination. The scope of the no scheme rule One of the difficulties presented by these two groups of provisions in their unamended form arises from the distinction drawn between the application of the rule, on the one hand to the relevant land alone, that is in this case the reference land itself; and on the other to land comprised in the compulsory purchase order as a whole; or, more broadly still, to land comprised in the same scheme of development, which may for example include land already in the ownership of the authority, or land acquired by agreement. Thus, the rules relating to assumed permissions (sections 14 16) are based on cancellation of the scheme solely in respect of the reference land. In the Court of Appeal, Patten LJ summarised the effect of the cancellation assumption in the present case: It operates to limit the scope of any assumed planning permission to a counter factual scenario in which the KBP scheme has been cancelled in respect of, but only in respect of, the reference land: ie as if the landowner had succeeded at the public inquiry in persuading the Inspector to omit Plots 13 and 14 from the CPO. There is no requirement to assume that the CPO would not have gone ahead in respect of the remainder of the order land or that the development of the KBP would not have proceeded (para 26) By contrast, as noted above, section 6 taken with the Pointe Gourde rule itself requires disregard of the scheme of acquisition in relation to the whole of the order land. The Upper Tribunal spoke of the consequent need for them to consider life in at least two parallel universes: the cancellation assumption universe and the disregard the scheme universe (called no KBP for short) (para 52). As will be seen below, the distinction drawn by the tribunal between these two universes is critical to the understanding of their later reasoning. The proceedings below The Upper Tribunal The tribunal (HH Judge Mole QC and Paul Francis FRICS) began by summarising the law in respect first of planning assumptions and secondly of disregards, in terms which have not been materially challenged. They mentioned the importance of not eliding the two stages (para 46). They noted (following the Upper Tribunal decision in Thomas Newall Ltd v Lancaster City Council [2010] UKUT 2 (LC)) that for the purposes of sections 14 16 the cancellation assumption was to be applied, not to the whole scheme, but to only so much of it as affected the reference land (paras 42 43). Under the heading disregards they set out the statutory provisions, noting that (in the light of Waters) the no scheme principle was to be treated as extending to the subject land as well as to other land within the same acquisition (paras 47 48). Under the heading the nature of the exercise, having identified the two universes which required to be considered, they summarised the respective positions of the parties: 53. Both parties focused in their evidence and submissions upon the prospects of a purchaser obtaining a residential permission on the reference land in those two different situations. The cancellation universe assumed that the compulsory purchase orders on the reference land had been cancelled but that access could be obtained through the KBP. In that situation it was broadly agreed that the reference land might indeed have some potential hope value for residential development. 54. The claimant said it would be substantial. The acquiring authority maintained that any such hope value would be much reduced, probably to nil, because the planning authority would not be prepared to grant a permission that did not conform with the master plan requirements for phasing, which would delay residential development, or make a very substantial financial contribution to the infrastructure of the KBP. Finally, the acquiring authority submitted, any such value that remained should be disregarded as a matter of law. 55. The second situation was postulated in order to consider what value the reference land might have if the law required that the whole of the KBP proposals had to be left out of consideration. That situation was chiefly one where permission was being sought for a development with access from Buckley Hill Lane, although we do not think the claimant completely abandoned the possibility that in the no KBP universe a purchaser would still contemplate the development of a business park by another scheme. There followed a lengthy review and discussion by the tribunal of the evidence and submissions relating to both planning assumptions and the disregards (paras 56 100). For present purposes it is sufficient to refer to the critical findings, first relating to the application of the cancellation assumption under section 16, and secondly to the wider considerations under section 6. As to the former the assumed position on the ground was described as follows: The cancellation assumption requires the Tribunal to imagine all the facts on the ground and all the planning permissions, plans and potentialities as they were at the valuation date but to assume that the compulsory purchase order on the reference land, and only on the reference land, had been cancelled. That, of course, can have a significant effect upon some of the planning assumptions. In the present case it is to be assumed that the KBP had been begun in accordance with the Master Plan. The junction with the motorway, the central spine road and part of the southern loop road were built or in the course of construction, and some development had already begun. Part of the northern loop road at the western end had also been started. It was too late for the developer to pull out of its commitments to build out the KBP according to the master plan. (para 80) 89. We think that simply on the cancellation assumption there would have been a reasonable prospect of some residential development on the reference land with access from a northern loop. However, it would seem that such an increase in the value of the relevant interest would have to be Having reviewed a number of suggested alternatives the tribunal concluded: disregarded. It would be unequivocally attributable to the development of part of the land authorised to be acquired other than the relevant land, and it would not have been likely to be carried out in the absence of the acquiring authoritys proposals to acquire the land for such a road. Turning to section 6 and the Pointe Gourde rule, the tribunal noted that that this was not a case where the latter rule had anything much to add to the statutory code, given that the other land included in the compulsory purchase order encompass(ed) all the land that could be described as the scheme (para 91). They accepted that, even if the KBP scheme itself had failed, the planning policies would have continued to support it, and the authorities would have done their best to bring forward another scheme, but a prospective purchaser of the reference land would have regarded it as a long shot. It would not in itself have added much if anything to the existing use value of the reference land (para 92). They continued: The only development that would produce an increased value on the reference land which would not have to be disregarded under the statute would be a likely development that took no part of the other land. In other words that would have to be a development which took its access from the existing Buckley Hill Lane. (para 93) The statute required to be left out of account any increase or diminution (their emphasis) attributable to the acquisition of the other land for the purposes of the order. For this purpose it was necessary to visualise a no KBP universe (para 94). In such a universe it was necessary to leave out of account both the benefits of the KBP scheme, such as improved access due to its infrastructure, and also any disadvantages, such as potential traffic objections based on over use of existing highway capacity. Broader policy objections based on possible prejudice to a future KBP scheme would also be very different in weight to the situation where the planning authority was relating such objections to a specific scheme which is just starting to get off the ground (para 95). For similar reasons, the tribunal attached little weight to the refusals of the Nall application in 2002 or to the fate of the section 17 application, the reasons for both of which relied on policy EC/6 and the need for a comprehensive KBP scheme. In a no scheme universe those reasons for refusal would have to be very carefully reconsidered and might carry much less weight. Other possible objections would have to balanced against the extensive policy support for residential development on part of the reference land, leading in their view to a reasonable argument in favour of permission (para 96). They concluded on this aspect: 97. It was evident from our site visit that there has been development off Buckley Hill Lane in the comparatively recent past on its eastern side. The long history of the identification of the land of which the reference land forms part for substantial development would weaken a PPG 3 greenfield objection to a residential development on the west side of the lane, incorporating the Nib. It was agreed between the highway witnesses that a substantial number of houses could take an access on to Buckley Hill Lane although the witnesses differed as to whether the maximum would be 60 or 74. For the reasons we have just given we think we should give less weight, in considering the prospects of this hypothetical permission, to an objection based upon policy EC/6 or emerging policy EC/7 and no weight to a highway objection based upon traffic flows from the KBP development. On the other hand the motorway junction itself was a fact on the ground at the valuation date. It was not part of the compulsory purchase order and it does not seem to us that it would be right to extend the definition of the scheme to include it. 98. Taking all those matters into consideration and doing the best we can to make sense of a number of assumptions of varying solidity, in our judgement the hypothetical purchaser would have considered that the reference land would have had some extra hope value of a permission for residential development. However we would not put a percentage better than 50/50 on the chances of success. In summary they considered that there would have been a 50/50 chance of planning permission being obtained on the reference land in a no KBP world, and they thought it realistic to assess the period of deferral at five years (para 117). Having considered the valuation evidence, and taking account of other factors, they arrived at a figure of 746,000, as the amount which a hypothetical purchaser would pay for the reference land, and accordingly determined compensation in that amount (para 123). There is no challenge to the valuation aspects of their decision. The Court of Appeal The authority appealed to the Court of Appeal. They did so principally on the grounds that the tribunal had misapplied the statutory disregards under section 6 and Schedule 1. In the leading judgment Patten LJ summarised their primary submission: 32. HCAs primary submission is that the UT has done the very thing which they had said was to be avoided: namely eliding the identification of the planning status of the reference land with its valuation. They submit that once the planning status is determined by the application of sections 14 16 of the 1961 Act the valuation exercise has to proceed on that basis and that the application of the section 6 disregards does not involve any further alteration in the assumed planning permissions or policies which have previously been determined to apply Having reviewed the tribunals reasoning and the relevant case law, he identified the real issue as whether the Upper Tribunal had struck the balance between the no KBP universe and the planning actualit in the right place. He continued: Mr Kingston QC (for the claimants) submits that the [Upper Tribunal] was right not to assume the total abandonment of policy EC/6 or emerging policy EC/7 but to regard them as modified to the point at which a planning application for an independent development via the Nib would be assessed on its own planning merits relative to location and housing need. Mr Humphries primary position remained that the application of the disregards did not entitle the [Upper Tribunal] to assume any modification of the planning status determined in accordance with sections 14 16. (para 37) Neither argument appeared correct to him (para 38). Having further discussed the respective submissions, he concluded: 40. In my view, the [Upper Tribunal] was right to hold that the planning status of the reference land did have to be modified for the purposes of valuation in accordance with the no KBP universe methodology. But it was wrong to do so by simply downgrading the strict application of the existing and emerging development plan but otherwise leaving the allocation of the land for development in place. What it should have done was to consider the planning potential of the reference land without regard to the development scheme and its underlying policies and therefore its effect on value. In that no scheme world it should have examined what wider no scheme specific policies (including but not necessarily limited to PPG3) would have applied to a planning application at the valuation date had there been no KBP and so struck a fair balance between the public interest and those of the claimant in relation to the valuation of the reference land. The assumption relied on in both parties submissions that policy EC/6 and developing policy EC/7 continued to apply was based on a wrong application of section 6(1) and the valuation calculated on that basis must be set aside. He accordingly held that the assessment of compensation should be remitted to the Upper Tribunal to be decided without regard to the scheme of development as defined in this judgment (para 44). Humphries principal submission that In a concurring judgment, Sales LJ similarly rejected what he took to be Mr once one has gone through the section 14 exercise the question of the planning status of the reference land must be taken to be immutably fixed when calculating the valuation of the land for the purposes of compensation. (para 47) However, he was unable to support the tribunals reasoning: 52. In the present case the [Upper Tribunal] erred by still giving weight to the planning policies in relation to the KBP site, including in particular the part of the historic, current and emerging policies to promote the development of a business park which contemplated that there should be residential development on the site as part of that development (what the [Upper Tribunal] called the extensive policy support for residential development on part of the reference land: para 96). In this respect, the [Upper Tribunal] failed to apply the section 6(1) disregard correctly and appears to have overvalued the reference land for the purposes of compensation. Jackson LJ agreed with both judgments. Issues in the appeal In this court, Mr Kingston for the claimants submits in short that the Court of Appeal was wrong to adopt a line of reasoning which had been supported by neither party; and in doing so to interfere with a matter pre eminently for the judgment of the expert tribunal, that is the assessment of the weight to be given in the no scheme world to the policies in the development plan. Contrary to the understanding of the court, the tribunal had ample evidence of the prospect of development in the absence of the KBP scheme, and properly took it into account. For the authority Mr Humphries renews his primary submission, rejected by the Court of Appeal. That relies on a strict division between two stages of the process: first, the assessment of planning status by reference to the statutory assumptions in sections 14 16 of the Act; and secondly the valuation of the land with the planning status so determined, at which stage the disregards under section 6 come into play. On this approach it is not permissible for the decision maker at the second stage to use the valuation disregards to revisit and revise the planning status of the reference land as determined pursuant to the planning provisions at the first stage. As an alternative submission he supports the reasoning of the Court of Appeal. In particular the tribunal was wrong in effect to allow the claimant to have the benefit of the allocation of the land for development in policy EC/6, while treating the policy as modified so as to allow independent access. Discussion With respect to the Court of Appeal, Mr Kingstons criticisms of their reasoning appear to me well founded. As already noted, it had not been supported by either party in argument before them. As I read Patten LJs judgment (para 31 above) he seems to have treated the required disregard of the KBP scheme as extending also to all the policies, past and present, which supported development on this land. The planning potential of the reference land was to be assessed without regard to the development scheme and its underlying policies. Similarly Sales LJ (para 32 above) thought that the tribunal had erred by taking account of the historic, current and emerging policies promoting a business park, or the extensive policy support for residential development on the reference land. In my view the tribunal were clearly entitled to regard the underlying policies, including the allocation in the development plan, as potentially relevant also to the prospect of development apart from the KBP scheme. The assessment of their significance in the no KBP universe was pre eminently a matter for them. Mr Humphries does not argue otherwise. As the very experienced members of a specialist tribunal, who had also visited the area, they were well equipped for that task. Their approach appears most clearly in their concluding passage at para 96 (see above). There they properly took account of the pattern of development as seen by them on the ground, and the long history of identification of this land for substantial development. They did not ignore potential policy objections, such as under PPG3 or policy EC/6, but took the view that they would not have sufficient weight to rule out the possibility of development in the absence of the KBP scheme. That reasoning discloses no error of law. I turn to Mr Humphries principal submission, that the tribunal erred in not treating the planning status of the land as conclusively fixed by reference to their applications of sections 14 to 16 of the 1961 Act. In my view the Court of Appeal were right to reject this submission, which is supported neither by the statutory provisions nor by authority. Indeed, the principle that the statutory assumptions are not exclusive is confirmed by the 1961 Act itself in section 14(3). That provides in terms that the statutory planning assumptions do not imply any presumption against development which might otherwise fall to be taken into account. The statutory assumptions work only in favour of the claimant, not against him. They do not deprive him of the right to argue for prospective value under other provisions or the general law. The right to claim for potential development value is long established. As Lord Collins of Mapesbury said at the beginning of his leading judgment in Spirerose (para 65), it has been accepted from the earliest days of the law of compensation that the value of the land taken should include not only the present purpose to which the land is applied, but also any other more beneficial purpose to which in the course of events at no remote period it may be applied. (para 65, citing R v Brown (1867) LR 2 QB 630, 631) Since the introduction of general planning control in 1947, and the restoration of market value compensation in the 1950s development value has been an important element in the assessment of compensation, because the value of land in the open market may depend on what planning permission exists or could be obtained for development on the land. In Spirerose itself there was no suggestion that the specific statutory provisions relating to planning assumptions precluded account being taken under the general law of the prospect of permission for valuable development. The only issue was whether such a prospective permission should be valued as a certainty (as the tribunal had held) or merely as a hope, as the House ruled. It is in any event well established that the application of the Pointe Gourde rule itself may result in changes to the assumed planning status of the subject land. Thus in Melwood Units Pty Ltd v Main Roads Comr [1979] AC 426, where land was acquired for an expressway, the Privy Council accepted that compensation should reflect the fact that but for the expressway project permission would have been obtained to develop the whole area for a drive in shopping centre (p 433). That case, although decided under a different statutory code, has long been accepted as authoritative in this jurisdiction. It was cited without criticism in Spirerose (see paras 110ff per Lord Collins). Nor is there anything in section 6 to indicate that a more restrictive approach should be applied under the statutory disregards. In saying that the two stages should not be elided (para 19 above), the tribunal as I understand them were doing no more than emphasising the difference between the statutory tests. It has also long been accepted that application of the general law may produce a more favourable result for the claimant than the statutory planning assumptions. A striking illustration noted by the Law Commission (loc cit p 206 7) is provided by the two Jelson cases, relating to the same strip of land acquired for a road: Jelson Ltd v Minister of Housing and Local Government [1970] 1 QB 243, Jelson Ltd v Blaby District Council [1977] 1 WLR 1020. The refusal in the first case of a section 17 certificate for residential development, was held in the second not to prevent the tribunal taking account of the prospect of residential development under the Pointe Gourde rule (or section 9 of the 1961 Act). The difference lay in the criteria to be applied. Under section 17 attention was directed at the position as at the date of the deemed notice to treat, by which time development on either side of the strip had made further development impossible. Under the Pointe Gourde rule it was possible to look at the matter more broadly. Again this decision was cited without criticism in Spirerose (paras 105ff per Lord Collins). Mr Humphries relies on a passage in the concurring speech of Lord Neuberger of Abbotsbury in Spirerose (para 55), in which he referred to the distinction drawn in some authorities between the effect of the scheme on the value of the owners interest, as opposed to the characterisation of that interest (see Rugby Joint Water Board v Shaw Fox [1973] AC 202, 253, approving a dictum of Russell LJ in Minister of Transport v Pettitt (1968) 67 LGR 449, 462). However, those comments must be read in context. As already noted, Spirerose proceeded on the premise that the prospect of permission for development could be taken into account under the Pointe Gourde rule. The use of the rule for that purpose was not in issue. The question was how it should be valued. The dicta mentioned by Lord Neuberger were directed to the ascertainment of the nature of the relevant interest in land, not its planning status. It is true that in Myers v Milton Keynes Development Corpn [1974] 1 WLR 696, 702 Lord Denning MR (apparently with the agreement of counsel) seems to have equated the two, relying on the same dicta. However, the legal basis for that approach was not discussed in detail, and it was not followed in later cases. As it happens, at an earlier stage of the proceedings in Spirerose, a similar argument had been advanced for the claimant by Mr Barnes QC (who appeared also in the House of Lords), but it was not pursued in the higher courts. The Court of Appeal commented ([2008] EWCA Civ 1230); [2009] 1 P & CR 20): 24. We mention in passing Mr Barnes argument before the tribunal (see para 61), not pressed in this court, that the no scheme rule had nothing to do with planning assumptions, being a principle of valuation and not planning status. This argument was based on some comments of Lord Denning MR in Myers v Milton Keynes Development Corpn [1974] 1 WLR 696, and of Carnwath LJ in Roberts v South Gloucestershire Council [2003] RVR 43. He was right in our view not to pursue the point. The observations in Roberts were certainly not intended to support such an argument. It is also inconsistent with the reasoning of Lord Denning himself in the second Jelson case, and with one of the leading cases in the Privy Council, Melwood Units Pty Ltd v Main Roads Comr [1979] AC 426 (assumed permission for a shopping centre). Conclusion The Upper Tribunals decision in the present case is a powerful illustration of the potential complexities generated by the 1961 Act in its unamended form. It is to be hoped that the amendments currently before Parliament will be approved, and that taken with the 2011 amendments they will have their desired effect of simplifying the exercise for the future. It is no criticism of the tribunal if parts of their reasoning may appear obscure at first sight and require some unpicking. However, once that is done, I am satisfied that the criticisms made by the Court of Appeal and in this court by the respondents are misplaced. Overall, the tribunals application of these difficult provisions to the complex facts of this case is in my view exemplary. I find no error of law. For these reasons I would allow the appeal and set aside the order of the Court of Appeal. In the result, if my colleagues agree, the award of the tribunal will be restored.

UK-Abs

This appeal concerns two parcels of grazing land one mile east of Rochdale, totalling 26.85 acres, formerly owned by the appellant and which were subject to compulsory acquisition under the North West Development Agency (Kingsway Business Park, Rochdale) Compulsory Purchase Order 2002 (the CPO). Responsibility for paying compensation to the appellant rests with the respondent (the authority), and for which the valuation date was 4 January 2006. In 1999 developers published a KBP Development Framework in support of an application for planning permission, which included a master plan. Planning consents linked to the master plan were granted on 19 December 1999, and remained in force at the date when the parcels fell to be valued. The CPO was then made in 2002. The appellant acquired the land (and an additional adjacent parcel) for a total of 1.3m in May 2003 and its objection to the CPO was rejected, chiefly on the grounds that the land was required for the comprehensive development of the KBP scheme. At the time the land came to be valued, the Statutory Development Plan in force comprised the regional guidance (RPG13) which included the Kingsway Business Park as a strategic regional site and the Rochdale Unitary Development Plan (the 1999 UDP). The law on compensation for compulsory acquisition is found in the Land Compensation Act 1961 (the 1961 Act), with the general compensatory principle found in section 5, rule 2. Also relevant to calculating compensation in this appeal are the provisions on disregards of actual or prospective development (section 6 and Schedule 1), and those on planning assumptions (sections 14 16). These provisions operate alongside the Pointe Gourde rule or no scheme rule that compensation is to be assessed disregarding any increase or decrease in value solely attributable to the underlying scheme of the acquiring authority. The appellant made a claim for 2,593,000 compensation on the basis that the land had significant potential value for residential development, independent of the scheme of acquisition. The respondent, meanwhile, argued that the claim should be limited to the existing use value of approximately 50,000. The Upper Tribunal agreed with the appellant in part, awarding compensation of 746,000 on the basis that there would have been a 50/50 chance of planning permission being obtained in the no KBP world. On the authoritys appeal, however, the Court of Appeal did not accept either partys argument, and remitted the issue for determination on an alternative basis that applied the s.6(1) disregard more widely. The Supreme Court unanimously allows the appeal. Lord Carnwath gives the judgment, with which the other Justices agree. The Court of Appeals approach would seem to require disregarding not just the KBP scheme, but also all the policies past and present which supported development on this land [35]. The Upper Tribunal were clearly entitled to regard the underlying policies as potentially relevant to the prospect of development, apart from the KBP scheme. The assessment of their significance in the no KBP world was pre eminently a matter for the tribunal, which properly took account of the pattern of development on the ground and the long history of identification of this land for development. Their approach did not ignore potential policy objections, and disclosed no error of law [36]. The Court of Appeal was, however, correct to reject the submission that the tribunal should have treated the planning status of the land as conclusively fixed by reference to sections 14 16 of the 1961 Act. That the statutory assumptions are not exclusive is confirmed in section 14(3) of the 1961 Act, itself. They work only in favour of a claimant, and do not deprive him of the right to argue for prospective value under other provisions or the general law [37]. It is well established that the application of the Pointe Gourde rule may result in changes to the assumed planning status of the subject land. Further, there is nothing in section 6 to indicate that a more restrictive approach should be applied under the statutory disregards: the tribunal did no more than emphasise the difference between the statutory tests when it stated that the two stages of the analysis should not be elided [39]. It has also long been accepted that application of the general law may produce a result more favourable to a claimant than the statutory assumptions: the Law Commission has pointed to the two Jelson cases as an example of this, where the Pointe Gourde rule permitted a broader view of the matter [40]. It is hoped that the amendments currently before Parliament in the Neighbourhood Planning Bill will achieve their stated aim of clarifying the principles and assumptions for the no scheme world. Overall, the tribunals application of these complex provisions was exemplary; the appeal should be allowed and the award of the tribunal restored [43 44].

This appeal raises the question whether the tort of malicious prosecution includes the prosecution of civil proceedings. It also raises a question about whether and in what circumstances a lower court may follow a decision of the Privy Council which has reached a different conclusion from that of the House of Lords (or the Supreme Court or Court of Appeal) on an earlier occasion. The second question is the subject of a separate judgment: [2016] UKSC 44. The appeal is from a decision of Ms Amanda Tipples QC, sitting as a deputy judge of the Chancery Division, striking out a claim brought by Mr Peter Willers against Mr Albert Gubay as disclosing no cause of action known to English law. The judge was faced with conflicting views of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419 and the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366. She held that she was bound by the decision of the House of Lords but granted a leapfrog certificate under section 12 of the Administration of Justice Act 1969, and permission to appeal was given by this court. In excellent arguments on both sides the court was referred to a large number of authorities. In examining the case law it will be convenient to begin with the Gregory case and the Crawford case, before going back to the earlier authorities, and then to consider the policy arguments. First, it is necessary to explain in brief outline the nature of the claim. Mr Willers claim Mr Gubay was a successful businessman. He died while this appeal was pending and his executors now act on behalf of his estate. Mr Willers was Mr Gubays right hand man for over 20 years until he was dismissed by Mr Gubay in the summer of 2009. Among the group of companies controlled by Mr Gubay was a leisure company, Langstone Leisure Ltd (Langstone). Mr Willers was a director of it. Prior to Mr Willers dismissal, Langstone pursued an action for wrongful trading against the directors of another company, Aqua Design and Play Ltd (Aqua), which had gone into liquidation. That action was abandoned shortly before trial in late 2009 on Mr Gubays instructions. In 2010 Langstone sued Mr Willers for alleged breach of contractual and fiduciary duties in causing it to incur costs in pursuing the Aqua directors. Mr Willers defended the action, and issued a third party claim for an indemnity against Mr Gubay, on the grounds that he had acted under Mr Gubays directions in the prosecution of the Aqua claim. On 28 March 2013, two weeks before the date fixed for a five week trial of the action, Langstone gave notice of discontinuance. On 16 April 2013 Newey J ordered Langstone to pay Mr Willers costs on the standard basis. It is Mr Willers case that the claim brought against him by Langstone was part of a campaign by Mr Gubay to do him harm. It is unnecessary to set out the details pleaded by him in the present action. It is not disputed that they include all the necessary ingredients for a claim of malicious prosecution of civil proceedings, if such an action is sustainable in English law. In particular, it is sufficiently alleged that Mr Gubay was responsible for having caused the claim to be brought; that the claim was determined in Mr Willers favour; that it was brought without reasonable cause, since Mr Gubay knew that it was he who was responsible for causing Langstone to bring the earlier wrongful trading claim; that Mr Gubay was actuated by malice in causing Langstone to sue Mr Willers; and that Mr Willers suffered damage. The heads of damage claimed are damage to his reputation, damage to health, loss of earnings and the difference between the full amount of the costs incurred by him in defending Langstones claim (3.9m) and the amount recovered under the costs order of Newey J (1.7m). Gregory v Portsmouth City Council Mr Gregory was a member of Portsmouth City Council. Allegations were made that he had misused, for his personal advantage, confidential information gained by him as a councillor about matters affecting local properties. Internal disciplinary proceedings resulted in findings of misconduct and his removal from various committees. The details were widely reported in the local press. Mr Gregory successfully challenged the decision by means of judicial review. He then brought an action against the council for malicious prosecution of the disciplinary proceedings. The House of Lords upheld a decision striking out his claim. The main speech was given by Lord Steyn. It was argued by Mr Gregory that disciplinary proceedings were penal in nature and should therefore be covered by the tort of malicious prosecution in the same way as criminal proceedings. This argument was rejected. Lord Steyn observed that there was a great diversity of statutory and non statutory disciplinary proceedings with different purposes. To leave it to the courts to decide on a case by case basis which disciplinary proceedings might ground the tort would be liable to plunge the law into uncertainty. In arguing that the disciplinary proceedings should be regarded as penal, counsel for Mr Gregory conceded that the tort did not extend to civil proceedings generally. Lord Steyn observed (pp 427 428) that it had never been held to be available beyond the limits of criminal proceedings and a few special cases of abuse of civil legal process, such as malicious presentation of a winding up or bankruptcy petition (Johnson v Emerson (1871) LR 6 Ex 329; Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674), malicious obtaining of a search warrant (Gibbs v Rea [1998] AC 786) or bench warrant (Roy v Prior [1971] AC 470), or malicious process to obtain execution against property (Clissold v Cratchley [1910] 2 KB 244). He said that although such cases appeared to be disparate, there was in a broad sense a common feature in that they potentially involved immediate and irreversible damage to the reputation of the victim. Another recognised head of actionable abuse of process was the malicious arrest of a vessel (The Walter D Wallet [1893] P 202) and in such cases the loss was merely financial, but Lord Steyn described them as rare. He said that the traditional explanation for not extending the tort to civil proceedings generally was that in a civil case there was no damage, since the fair name of the victim was protected by the trial and judgment. Lord Steyn acknowledged (p 432) that this theory was no longer plausible in an age when reputational harm can be caused by pre trial publicity, but he said that it was a matter for consideration whether there might be other reasons for restricting the availability of the tort in respect of civil proceedings. Lord Steyn concluded (p 432) that it was not necessary for the disposal of the case to express a view on the argument in favour of extending the tort to civil proceedings generally, but that it would be unsatisfactory to leave the matter in the air, and he therefore stated his opinion briefly. He accepted that there was a stronger case for extending the tort to civil proceedings generally than to disciplinary proceedings, but he said that for essentially practical reasons he was not persuaded that such an extension had been shown to be necessary, taking into account the protection afforded by the torts of defamation, malicious falsehood, conspiracy and misfeasance in public office. Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd Mr Alastair Paterson was a chartered surveyor in the Cayman Islands. He provided services as a loss adjuster and as a project manager, acting through two companies of which he was a director. In those capacities he was instructed by the insurers and owners of residential development in the Cayman Islands that had suffered hurricane damage. Mr Paterson instructed building contractors to carry out the remedial work. Acting on his advice the insurers made substantial payments to the contractors. He was close to finalising his adjustment of the insurers liability, when the insurers internal claim handling was taken over by a newly appointed senior officer, Mr Frank Delessio. From their past acquaintanceship Mr Delessio had a strong dislike of Mr Paterson and a low opinion of his competence. On studying the paperwork, Mr Delessio became concerned that there was a serious lack of documentation to support the payments which the insurers had already made on Mr Patersons advice. He announced that he intended to drive Mr Paterson out of business and to destroy him professionally. He instructed another surveyor and loss adjuster to value the work done, but on Mr Delessios instructions the second surveyor did not speak to Mr Paterson or the contractors. Nor did he make inquiries of the subcontractors or suppliers about costs or consult the structural engineers who had prepared the drawings. On the strength of the figures put forward by the second surveyor, Mr Delessio caused the insurers to sue Mr Paterson, his companies and the contractors, claiming damages on various bases including deceit and conspiracy to defraud. He was also instrumental in alerting the local press to the allegations against Mr Paterson of fraudulent or reckless misrepresentations, and the allegations were published. As intended, the publicity caused great harm to Mr Patersons business and reputation. After the contractors gave disclosure of invoices showing the amounts paid by them to the subcontractors and suppliers, the insurers attorneys were advised by counsel that it would be professionally improper for him, or them, to represent the insurers in the claims of fraud and conspiracy. Days before the trial the insurers and owners discontinued their claims. The judge ordered them to pay the defendants costs on an indemnity basis and gave Mr Paterson permission to amend his counterclaim to claim damages against the insurers for abuse of process. At the trial of the counterclaim the judge considered the torts of abuse of process and malicious prosecution. He rejected abuse of process because the insurers were genuinely seeking the relief claimed in the writ, rather than using the action as a device to secure an entirely extraneous objective. As to malicious prosecution, he found that all the ingredients were established if the tort was capable in law of applying to the relevant proceedings, but, citing Gregory, he held that it was not. He therefore dismissed the claim but said that, if it had been available, he would have awarded Mr Paterson CI$1.3m for his professional losses and CI$35,000 for distress and humiliation. In particular, the judge found that although Mr Delessio believed that Mr Paterson had defrauded the insurers, his belief was without reasonable cause; that Mr Delessio knew that the second surveyors report was not a proper basis for making such allegations; and that the dominant factor which led him to make them was his strong dislike of Mr Paterson and obsessive determination to destroy him professionally. The Privy Council decided by a majority of three to two that on those facts the judge was wrong to dismiss the claim for malicious prosecution. All five members of the panel gave reasons for their opinions. On the majority side the leading opinion was given by Lord Wilson. On the dissenting side the leading opinion was given by Lord Sumption. They each carried out a detailed historical survey of the tort from the middle ages to the present day but with different conclusions. At the risk of over simplification, Lord Wilson concluded that the case law prior to Quartz Hill did not distinguish between civil and criminal proceedings as such, but limited the types of damage recoverable in a way which had the practical effect of restricting the claims that were brought as a result of malicious civil process. Lord Wilson was critical of dicta in Quartz Hill to the effect that by the late 19th century, when that case was decided, no mere bringing of an action, albeit maliciously and without reasonable cause, could give rise to the tort. As to later authority, Lord Wilson noted that Lord Steyns remarks on the subject in Gregory were obiter, and he observed that the practical rationale behind Lord Steyns reluctance about the tort applying to civil proceedings lost its force in circumstances where no other tort was capable of application. As a matter of principle and policy, Lord Wilson concluded that it would be unjust for Mr Paterson to be left without a legal remedy for the damage which Mr Delessio had intentionally caused him to suffer by the malicious prosecution of civil process without any reasonable cause. Lord Sumptions conclusion was that the tort had never applied to civil proceedings as such. Over the course of history there had come to be recognised a small and anomalous class of cases in which the action had been held to be available for maliciously obtaining an ex parte order of the court which caused, or was liable to cause, immediate injury to the claimant through the misuse of the courts coercive powers. Such cases were rare and in Quartz Hill the Court of Appeal had taken a firm stand against their extension. So too had the House of Lords in Gregory. Mr Paterson had suffered an undoubted injustice, but this did not make it right to sweep away restrictions on the application of the tort to civil process which had existed for very many years. Lord Sumption was unpersuaded that there was a general need to extend the tort. To do so would in his view create uncertainty, further anomalies and the likelihood of undesirable practical consequences. Analysis: the case law Lord Wilsons and Lord Sumptions historical analyses were the subject of very detailed critical analysis by counsel in the present case. While respecting the thoroughness of their arguments, I do not intend to rehearse them. It is apparent to my mind that the early case law is capable of more than one respectable interpretation, and it may be that there was never a time when there was a general understanding precisely where the boundaries of the tort lay. The same could be said about other aspects of the common law. In any case, the decision now to be made by this court should not depend on which side has the better argument on a controversial question about the scope of the law some centuries ago. Having said that, it is right that I should indicate the more significant points which I glean from my reading of the case law. But I do so with caution, because the identification of such points involves an element of selection in which I cannot lay any special claim to being necessarily right. Before the judgment of Holt CJ in Savile v Roberts in 1698 (discussed below), I have not detected any authority which excluded the application of the tort to a civil action, and there are some indications that it was capable of applying to civil proceedings. A number were referred to in the reported argument for the plaintiff in Cotterell v Jones (1851) 11 CB 713, 719 724. Counsel cited, among other sources, Waterer v Freeman (1618) Hobart 266, Atwood v Monger (1653) Style 378, and a note by Hargrave to Coke on Littleton. Waterer v Freeman involved double execution on goods, but counsel in Cotterell v Jones relied on what he argued was a statement of general principle by Hobart CJ (who had succeeded Sir Edward Coke as Chief Justice of the Court of Common Pleas): Now to the principal case, if a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him for the undue vexation and damage that he putteth me unto by his ill practice, though the suit itself be legal and I cannot complain of it. This statement was described by Blackburn J as an authority entitled to weight in Wren v Weild (1869) LR 4 QB 730, 736 (to which I refer below). Atwood v Monger arose from proceedings brought against the plaintiff before the conservators of the River Thames, who had a statutory responsibility for the management of the river, for allegedly allowing earth to fall into the river. Counsel for the plaintiff in Cotterell v Jones relied on what they submitted was a statement of general principle by Rolle CJ in the Atwood case: An action upon the case lies for bringing an appeal against one in the Common Pleas, though it be coram non judice, by reason of the vexation of the party, and so it is all one whether here were any jurisdiction or no, for the plaintiff is prejudiced by the vexation and the conservators took upon them to have authority to take the presentment. And I hold that an action upon the case will lye, (sic) for maliciously bringing an action against him where he had no probable cause, and if such actions were used to be brought, it would deter men from such malitious (sic) courses as are to (sic) often put in practice. The passage from Hargraves note to Coke on Littleton read: Where two or more conspire to harass any person by a false and malicious suit, whether criminally or civilly, it is a crime punishable by indictment, or the parties injured may sue for damages by writ of conspiracy; and both of these remedies lie at common law, that part of the statute or ordinance of Articuli super chartas which gives remedies against conspirators by writ out on Chancery, being, according to both Staunford and Lord Coke, only an affirmation of the common law. Staunf CP 172 [Staunfords Common Pleas], 2 Inst 561, 562 [Cokes Institutes]. There is also a remedy for false and malicious prosecution, though the aggravation of a conspiracy or confederacy is wanting, and the injury comes from one only; for, in such a case, the party prosecuted may have an action upon the case for damages. I apprehend, too, that such an action lies, as well where the vexation is practised by a civil suit, as where it is carried on through the medium of a criminal process. FNB 114, D [Fitzherberts Natura Brevium]. (Sir William Staunford was a judge of the Court of Common Pleas from 1554 to 1558. Sir Anthony Fitzherbert was appointed a judge of the Court of Common Pleas in 1522. His new Natura Brevium was published in 1534.) Savile v Roberts was an important case. The defendant on two occasions caused the plaintiff to be prosecuted at quarter sessions on an indictment charging him with riot. After being acquitted both times the plaintiff sued the defendant in the Court of Common Pleas for prosecuting him maliciously. His claim succeeded and he was awarded damages for the expenses which he had incurred in defending himself. The defendant brought a writ of error to have the judgment set aside but the judgment was upheld. There are nine reports of the decision, varying in length and content. Among them, I have found the reports at 5 Mod 405, 12 Mod 208 and 1 Ld Raymond 374 the most helpful. Since the action was on the case, damage had to be proved. Holt CJ identified three types of damage which could support such a claim. The first was damage to the plaintiffs fame or reputation. The second was damage to his person either by assault or by deprivation of his liberty. The third was damage to his property, which included being put to expense. The damages awarded to the plaintiff fell within this category, as to which Holt CJ said (12 Mod 209) that if this injury be occasioned by a malicious prosecution, it is reason and justice that he should have an action to repair him the injury: though of late days it has been questioned, yet it has always been allowed formerly; as Atwood v Monger (to which I have referred). The defendant objected that to allow such an action will be of mischievous consequence, by stopping all prosecutions of this kind; and there is no more reason in this case of a malicious indictment, than a malicious action: and no man shall be responsible for any damages whatsoever for suing a writ or prosecuting in the Kings Courts (12 Mod 210). Holt CJ said that there was a great difference between bringing an action maliciously and prosecuting an indictment maliciously (5 Mod 408, 12 Mod 210, 1 Ld Raymond 379 380). He explained that in former times the common law provided that every claimant should provide pledges, who were amerced (that is, they forfeited the amount pledged) if the claim was false. That method was replaced by statutes which provided for defendants to recover their costs. By contrast Holt CJ said that there was no amercement upon indictments, and the party had not any remedy to reimburse himself but by action (1 Ld Raymond 380). Holt CJ added that if an action were brought merely through malice and vexation, an action on the case would lie in some cases, where the plaintiff could show particular damage (1 Ld Raymond 380) or special matter (5 Mod 408, 12 Mod 211). The ability to sue for malicious prosecution seems therefore to have depended, according to Holt CJ, essentially on the nature of the damage suffered rather than the form which the proceedings took, although the two were likely to be interrelated. It is also possible that when Holt CJ spoke of special matter he was not referring to the damage suffered but to special matter showing the malicious nature of the defendants conduct. I take this interpretation from the judgment of Parker CJ in Jones v Givin (1713) Gilb Cas 185, 196 197 (also reported as Jones v Gwynn 10 Mod 147, 214). After commenting that the demand of right (a civil claim) was more favoured than bringing to punishment, and that if an action was false, the plaintiff was by law amerced, and the defendant to have costs, Parker CJ said: And therefore my Lord Chief Justice Holt, in his excellent argument in Savill and Roberts, where he fully states the difference between the two cases, said that in case for a malicious action the plaintiff must shew special matter which shows malice, for else an action, being the plaintiff seeking and demanding advantage to himself, carries in it [a] fair and honourable cause, unless the recovery be utterly hopeless, and the suit without some other design, which therefore must be specially shewn. It is not necessary, even if it were possible, to decide whether the special matter referred to in these authorities was an evidential requirement, ie a reference to what was needed to prove malice, or related to the type of damage which could give rise to the action. Either way the premise appears to have been that an action would lie if the defendant maliciously invoked civil process against the plaintiff which resulted in the plaintiff suffering a recognised head of damage. In Grainger v Hill (1838) 4 Bing (NC) 212 the plaintiff owned a vessel which he mortgaged to the defendants as security for a loan repayable after 12 months. The plaintiff was to retain the vessels register, which he needed in order to make voyages. Two months later the defendants became concerned about the adequacy of the security and determined to obtain the register. To that end they swore an affidavit of debt and issued a writ of capias for the arrest of the plaintiff in support of a claim of assumpsit. The sheriffs officers told the plaintiff that they had come for the register, and that if he failed to hand it over or provide bail he would be arrested. Under that threat he handed over the register. The defendants claim in debt was settled by the repayment of the loan and release of the mortgage deed. The plaintiff then sued the defendants for malicious issue of the civil proceedings. At the trial the plaintiff obtained a verdict in his favour, but the defendants argued that the plaintiff should be nonsuited among other reasons because he had failed to aver that the action had been commenced without reasonable or probable cause. The plaintiff responded that he had proved that the defendants suit was without reasonable or probable cause, but that in any event this was unnecessary in a case where the action had been brought for an improper purpose, ie as a means of coercing the plaintiff into giving up the register to which the defendants had no right. The court accepted the plaintiffs argument. Tindal CJ said at 221: If the course pursued by the defendants is such that there is no precedent of a similar transaction, the plaintiffs remedy is by an action on the case, applicable to such new and special circumstances; and his complaint being that the process of the law has been abused, to effect an object not within the scope of the process, it is immaterial whether the suit which that process commenced had been determined or not, or whether or not it was founded on reasonable and probable cause. Similarly Park J said at 222: this is a case primae impressionis, in which the defendants are charged with having abused the process of the law, in order to obtain property to which they had no colour of title; and, if an action on the case be the remedy applicable to a new species of injury, the declaration and proof must be according to the particular circumstances. Grainger v Hill has been treated as creating a separate tort from malicious prosecution, but it has been difficult to pin down the precise limits of an improper purpose as contrasted with the absence of reasonable and probable cause within the meaning of the tort of malicious prosecution. This is not entirely surprising because in Grainger v Hill itself there plainly was no reasonable or probable cause to issue the assumpsit proceedings, since the debt was not due to be paid for another ten months as the lenders well knew. It might be better to see it for what it really was, an instance of malicious prosecution, in which the pursuit of an unjustifiable collateral objective was evidence of malice, rather than as a separate tort. This would be consistent with the reference in Parker CJs judgment in Jones v Givin (or Jones v Gwynn), cited above, to some other design as a potential special matter showing malice. It is unnecessary to express a firm view on this point, but Grainger v Hill does at any rate illustrate the willingness of the court to grant a remedy, in what it regarded as novel circumstances, where the plaintiff had suffered provable loss as a result of civil proceedings brought against him maliciously and without any proper justification. In other mid 19th century cases the courts recognised a broad principle underlying the cause of action for malicious prosecution; De Medina v Grove (1847) 10 QB 172 and Churchill v Siggers (1854) 3 E & B 929. In both cases the plaintiff suffered a period of imprisonment and incurred expenditure through the execution of a writ of capias, which the plaintiff claimed that the defendant had issued for an excessive sum. In De Medina v Grove the plaintiffs claim was dismissed on the ground that the facts pleaded by him were consistent with the existence of probable cause. The claim in Churchill v Siggers was allowed to go to trial. The judges in each case adopted a common starting point. Cresswell J, Williams J, Parke B and Rolfe B agreed) began: In De Medina v Grove the judgment of Wilde CJ (with whom Maule J, The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause. In Churchill v Siggers the judgment of the court (Lord Campbell CJ, Erle J and Crompton J) began: To put into force the process of the law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case. It is argued by those in favour of limiting the cause of action to the various circumstances in which it has been applied that these statements were not intended to be definitive and should be read in their particular factual context. But the statements contained the rationale by reference to which the cases were decided and cannot be regarded as obiter dicta. The reference, for example, to the law allowing every person to apply its process for the purpose of trying his rights, unless he acted maliciously and without probable cause, does not fit with a narrow concept peculiar to the process of execution. The subject was considered indirectly in Wren v Weild (1869) LR 4 QB 730. The claim was in substance a patent dispute. The plaintiffs were manufacturers of machinery. They sued the defendant for falsely and maliciously telling their customers that their machines infringed the defendants patents and threatening legal action if the customers used the machines without paying royalties to the defendant. There was no allegation on the pleading that the defendant acted without reasonable and probable cause. Lush J nonsuited the plaintiffs, who applied to set aside the nonsuit. The judgment of the court (consisting of Blackburn, Lush and Hayes JJ) was given by Blackburn J. He considered whether the circumstances were such as to make the bringing of an action [against the customers] altogether wrongful. In that context Blackburn J considered (p 736) the statement of principle by Hobart CJ in Waterer v Freeman, set out in para 17 above, and the effect of Savile v Roberts: In Waterer v Freeman (1618) Hobart 266, 267, which was an action for maliciously and vexatiously issuing a second fi. fa. whilst the first was unreturned, the Chief Justice says: If a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him for the undue vexation and damage that he putteth me unto by his ill practice. This was not necessary for the decision of the case before the court, but it was by no means irrelevant, and it is therefore an authority entitled to weight. On the other hand, in Savile v Roberts 1 Ld Raym 374, Lord Holt, in delivering the judgment of the Exchequer Chamber, expresses an opinion that no such action would lie without alleging and proving some collateral wrong, such as that he was maliciously held to bail, or the like. For this he gives two reasons, first that a man is entitled to bring an action if he fancies he has a right, which is in accordance with Lord Ellenboroughs reasoning in Pitt v Donovan (1813) 1 M & S 639. But this reason is quite consistent with Lord Hobarts position, that the action will lie where it was certainly known to him that the action was utterly without ground. His second reason is, that the law considers that the party grieved has an adequate remedy in his judgment for costs; and on this the Court of Common Pleas acted in Purton v Honnor (1798) 1 B & P 205. But this artificial reason does not apply in the present Applying the same line of reasoning, the court held in the case before it that the action could not lie, unless the plaintiffs affirmatively proved that the defendants claim was not a bona fide claim in support of a right which, with or without cause, he fancied he had; but a mala fide and malicious attempt to injure the plaintiffs by asserting a claim of right against his own knowledge that it was without any foundation (p 737). The courts reasoning was consistent with the statements of principle in De Medina v Grove and Churchill v Siggers and it confirms that this was a mainstream view. It is noteworthy that by 1869 the court regarded the notion that a party who was sued maliciously and without any ground had an adequate remedy in a judgment for costs as artificial. Blackburn Js statement that Holt CJ in his judgment in Savile v Roberts expresses an opinion that no such action would lie without alleging and proving some collateral wrong, as that he was maliciously held to bail, or the like must have been his interpretation of the sentence in the report in 1 Ld Raymond (the version cited by Blackburn J) at 380: If A sues an action against B for mere vexation, in some cases upon particular damage B may have an action; but it is not enough to say that A sued him falso et malitiose, but he must show the matter of the grievance specially, so that it may appear to the court to be manifestly vexatious. 1 Sid 424, Daw v Swain, where the special cause was the holding to excessive bail. I have discussed the interpretation of Holt CJs reference to particular damage (or special matter as it appears in other reports of the judgment) at paras 20 to 21 above. In Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, [1882] WN 27, the defendant presented a petition to wind up the plaintiff company and advertised it in several papers. The petition alleged that the companys capital had been raised by a fraudulent prospectus and that there was no possibility of its trading profitably. The defendant believed at that time that he was a shareholder of the company, but immediately after the presentation he learned that his broker had sold his shares and he promptly gave notice that his petition would be withdrawn. The petition was never served on the company and was dismissed by Hall V C. Both parties were represented at the hearing, and each applied for their costs of appearance, but the judge made no order for costs. The reason that the company was not given its costs appears to have been that its appearance was considered unnecessary: see Berry v British Transport Commission [1962] 1 QB 306, 319, per Devlin LJ. The company then sued the defendant for maliciously presenting the petition without reasonable or probable cause. At the trial before Stephen J the company adduced no evidence of special damage other than its costs in respect of the petition. At the close of its case, the judge nonsuited it. His decision was upheld by the Divisional Court (Pollock, B and Manisty, J) but reversed by the Court of Appeal, comprising Brett MR and Bowen LJ, and a new trial was ordered. Counsel for the defendant advanced three arguments why the companys claim must fail. The first was that there was no evidence of special damage necessary to maintain the action: Savile v Roberts. The second was that there was no evidence of malice or absence of reasonable or probable cause. The third was that no action of this kind would lie under the circumstances, because the action taken by the defendant was not of an ex parte character, but an application to the court on which the company had the opportunity of appearing in opposition, and the judge hearing the petition could make an award of costs. Brett MR rejected the first argument on the ground that the publication of the petition in the newspapers would have been destructive of the companys reputation and that this amounted to damage within Holt CJs first category. He accepted that the company was not entitled to recover its costs, because the courts operated on the theory that the jurisdiction to award litigation costs to the successful party covered all costs reasonably and necessarily incurred, and therefore any excess was not to be regarded in law as caused by the conduct of the losing party. The second argument was a purely evidential matter. The third argument has significance in the present case because Mr Bernard Livesey QC argued on behalf of Mr Gubays estate that the cases in which claims for malicious prosecution of civil proceedings have succeeded should be explained as cases in which the defendant took it on himself to make malicious and unjustifiable use of the coercive powers of the state, such as the power of arrest of a person or their property, and that it is only in such a case that the action can be maintained. This submission has a strong echo of the third argument advanced by the defendant in the Quartz Hill case. It was rejected by Brett MR in these terms, at (1883) 11 KB 684: The proposition is that an action cannot be maintained because the petitioning creditor merely asks the court to act judicially, and because it was to be assumed that the court would decide rightly. If that proposition were well founded, it would be an answer to malicious prosecution on a criminal charge, because even in that case the prosecutor merely asks the tribunal to decide upon the guilt of the person whom he charges. If a man is summoned before a justice of the peace falsely and maliciously and without reasonable or probable cause, he will be put to expense in defending himself, and his fame may suffer from the accusation; nevertheless the prosecutor only asks the justice to adjudicate upon the charge. Therefore it is not a good answer to an action for maliciously procuring an adjudication in bankruptcy to say, that the alleged creditor has only asked for a judicial decision. It seems to me that an action can be maintained for maliciously procuring an adjudication under the Bankruptcy Act, 1869, because by the petition, which is the first process, the credit of the person against whom it is presented is injured before he can shew that the accusation made against him is false; he is injured in his fair fame, even although he does not suffer a pecuniary loss. Bowen LJ began his judgment by saying that he was of the same opinion as Brett MR and that he would not have added anything if they had not been overruling the opinion of more than one judge of great experience and ability. He ended by saying that there must be a new trial for the reasons given by the Master of the Rolls and that he hoped that he had not weakened the force of those reasons by stating his own. It is clear therefore that Brett MRs judgment had the full authority of the court. In his judgment Bowen LJ expressed the view, obiter, that under our present rules of procedure, and with the consequences attaching under our present law, the bringing of an action could not give rise to an action for malicious prosecution, even if the first action were brought maliciously and without reasonable and probable cause (pp 690 691). The reason, he explained, was that he could not conceive that under the courts present mode of procedure the bringing of an action could result in any of the three heads of damage recognised in Savile v Roberts. As to damage to reputation, he acknowledged that the publication of the proceedings might incidentally cause damage to a persons reputation, but he said that the bringing of an action itself was not the cause of injury, and that when the action was tried in public his fair fame will be cleared, if it deserves to be cleared: if the action is not tried, his fair fame cannot be in any way assailed by the bringing of the action. In this respect Bowen LJ contrasted the bringing of a civil action with the bringing of a criminal allegation involving scandal to reputation, or the issue of a bankruptcy petition, which he said in its nature caused reputational damage that could not necessarily be repaired afterwards. Where reputational damage is concerned, to draw a distinction between the effect of the bringing of proceedings as such and the effect of attendant publicity seems highly artificial in circumstances where the action is brought as part of a determined campaign to destroy a persons reputation. It seems surprising also that Bowen LJ considered it inconceivable that the making of allegations in a civil suit might result in reputational damage with immediate and irreparable consequences, in the same way as might result from the institution of criminal or insolvency proceedings. But, if it was inconceivable in 1883, it is certainly not inconceivable in todays world. Bowen LJ did not suggest that if he were wrong, and if such damage were to result from the malicious institution of civil proceedings without reasonable or probable cause, there would be any principled reason to leave the injured party without a remedy. That would have been inconsistent with the reasoning which led the court to hold that Quartz Hills claim should go to trial. In Berry v British Transport Commission the plaintiff was prosecuted for the summary offence of pulling the communication cord on a train without reasonable cause. After conviction by the magistrates she appealed to quarter sessions, her conviction was quashed and she was awarded costs against the complainant in a sum which amounted to about a quarter of her actual costs. She sued the defendant for malicious prosecution, claiming that she had suffered damage to reputation; had been held up to ridicule; had suffered mental anxiety; and had incurred special damage by way of the shortfall between the full amount of her expenses and the amount awarded to her at quarter sessions. On the trial of a preliminary question of law, Diplock J struck out her claim as disclosing no cause of action: [1961] 1 QB 149. Diplock J said at p 159 that the action on the case for malicious prosecution could be founded upon any form of legal proceedings, civil or criminal, brought maliciously and without any reasonable or proper cause by the plaintiff against the defendant, but, as the action was in case, damage was an essential ingredient. He held that the criminal allegation was not an imputation affecting her fair fame, and that the rule in Quartz Hill that the difference between actual costs incurred and party and party costs awarded in civil proceedings could not be recovered as special damage should be applied also to costs incurred in defending criminal proceedings, since the criminal court had a discretion to order the prosecutor to pay such costs as were just and reasonable. The Court of Appeal (Ormerod, Devlin and Danckwerts LJJ) upheld Diplock Js judgment on the issue of damage to reputation, but reversed his judgment on the issue of special damages: [1962] 1 QB 306. The court accepted that it was bound by the decision in Quartz Hill that the excess of costs incurred in defending civil proceedings over the taxed costs awarded could not be recovered as special damage in a subsequent action for malicious prosecution, but it declined to extend the rule to costs incurred in defending criminal proceedings. In his judgment, at p 334, Danckwerts LJ repeated Diplock Js obiter dictum that the action for malicious prosecution lies for wrongful and malicious civil proceedings as well as criminal proceedings. The common law is prized for its combination of principle and pragmatism. The doctrine of precedent in the words of Dean Roscoe Pound is one of reason applied to experience: The Spirit of the Common Law, 1963 ed, pp 182 183. Growth he said is insured in that the limits of the principle are not fixed authoritatively once and for all but are discovered gradually by a process of inclusion and exclusion as cases arise which bring out its practical workings and prove how far it may be made to do justice in its actual operation. The case law on the tort of malicious prosecution is in point. It shows how the courts have fashioned the tort to do justice in various situations in which a person has suffered injury in consequence of the malicious use of legal process without any reasonable basis. Drawing on that experience, the court has to decide whether the tort should now apply to the malicious and groundless prosecution of a civil claim causing damage of the kinds alleged in the present case. This requires consideration of the justice and practical consequences whichever way the question is decided. In considering those consequences, it is appropriate to have in mind the essential ingredients of the tort, although they were not the subject of argument (see paras 52 to 56 below). Analysis: policy Mr Willers claim to recover the excess of his legal expenses over the amount awarded under the costs order made in the action brought against him by Langstone raises a question to which I will return. Otherwise I see no difficulty in principle about the heads of damage claimed by him (damage to reputation, health and earnings), subject to the fundamental question whether his action is maintainable in law. The case put on his behalf can be simply stated. In the words of Holt CJ in Savile v Roberts, if this injury be occasioned by a malicious prosecution, it is reason and justice that he should have an action to repair him the injury. This appeal to justice is both obvious and compelling. It seems instinctively unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there is no reasonable ground, and yet not be entitled to compensation for the injury intentionally caused by the person responsible for instigating it. It was that consideration which led the judges to create the tort of malicious prosecution, as can be seen in the case law. The question is whether there are countervailing factors such that its applicability to civil proceedings should be limited to an assortment of instances where it has previously been applied. A considerable number of countervailing factors have been suggested, and I turn to what appear to me to be the principal ones. Underlying the individual counter arguments, it is a common theme of the opinions of the minority that malicious prosecution of criminal proceedings is now obsolescent, if not obsolete, as a form of tort, and so this is no time to countenance it in the area of civil proceedings. I disagree with the premise of that argument. Maliciously causing a person to be prosecuted on the basis of an allegation known by the complainant to be false is far from being a thing of the past, and in recent times it has led in some cases to the conviction of the complainant for the offence of perverting or attempting to pervert the course of justice. Although in such cases the complainant has typically not been worth suing, if the situation were otherwise there would be no reason to regard an action for malicious prosecution as inappropriate. Floodgates. It is suggested that although Mr Willers claim may be meritorious, there is an unacceptable risk of its being followed by other claims which are unmeritorious. The argument that a good claim should not be allowed because it may lead to someone else pursuing a bad one is not generally attractive, but in this case it is bolstered by two other arguments, the deterrence factor and the finality factor. Deterrence. It is suggested that if the tort is available it may deter those who have valid civil claims from pursuing them for fear that if the claim fails they may face a vindictive action for malicious prosecution. This was the argument advanced 300 years ago in Savile v Roberts for not allowing the tort in criminal proceedings. I am not persuaded that it has greater merit in relation to civil proceedings. There are many deterrents to litigation (uncertainty, time, expense, etc), some of which may be stronger than others. A claimant who brings civil proceedings on an improper basis exposes himself to the risk of having to pay indemnity costs, but I am not aware of evidence that this has deterred those with honest claims from pursuing them. One can always hypothesise that an honest litigant who has not been put off from bringing a claim by the risk of the judge (wrongly) deciding that he had acted improperly and making an indemnity costs order might nevertheless be put off by the extra risk of an opposing party bringing a vindictive action for malicious prosecution, but there is no way of testing the hypothesis and it seems to me intrinsically unlikely. Finality. There is unquestionably a public interest in avoiding unnecessary satellite litigation, whether in criminal or civil matters, but that has not been considered a sufficient reason for disallowing a claim for malicious prosecution of criminal proceedings. Unlike certain other forms of satellite litigation, an action for malicious prosecution does not amount to a collateral attack on the outcome of the first proceedings (subject to the discrete point about a claim for costs in excess of those allowed in the underlying proceedings). Duplication of remedies. In Gregory Lord Steyn expressed himself to be tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings were either adequately protected under other torts or capable of being addressed by any necessary and desirable extensions of other torts: [2000] 1 AC 419, 432. Crawford and the present case show that this is not so. Inconsistency with witness immunity from civil liability. It is suggested that to allow Mr Willers claim would introduce an inconsistency with the rule that evidence given to a court is protected by immunity from civil action, even if the evidence is perjured. If this were a valid objection it would apply to all forms of the tort of malicious prosecution, including prosecution of criminal proceedings, as well as to the instances of malicious institution of civil process which are acknowledged on all sides to be within the scope of the tort. Roy v Prior [1971] AC 470, 477 478, is authority that the rule which bars an action against a witness for making a false statement does not prevent an action in respect of abuse of the process of the court. Lord Morris of Borth y Gest explained the difference: It is well settled that no action will lie against a witness for words spoken in giving evidence in a court even if the evidence is falsely and maliciously given (see Dawkins v Lord Rokeby (1873) LR 8 QB 255, Watson v MEwan [1905] AC 480) This, however, does not involve that an action which is not brought in respect of evidence given in court but is brought in respect of an alleged abuse of process of the court must be defeated if one step in the course of the abuse of the process of the court involved or necessitated the giving of evidence. It must often happen that a defendant who is sued for damages for malicious prosecution will have given evidence in the criminal prosecution of which the plaintiff complains. The essence of the complaint in such a case is that criminal proceedings have been instituted not only without reasonable and probable cause but also maliciously. So also in actions based upon alleged abuses of the process of the court it will often have happened that the court will have been induced to act by reason of some false evidence given by someone. In such cases the actions are not brought on or in respect of any evidence given but in respect of malicious abuse of process (see Elsee v Smith (1822) 2 Chit 304). Inconsistency with the absence of a duty of care by a litigant towards the opposing party. There is a great difference between imposing a duty of care and imposing a liability for maliciously instituting proceedings without reasonable or probable cause. The same distinction is established in relation to criminal cases. The police owe no duty of care towards a suspect (Calveley v Chief Constable of Merseyside Police [1989] AC 1228), but that does not mean that a police officer is immune from the tort of malicious prosecution. The distinction between careless and intentional conduct is a familiar feature of parts of the common law, reflected in Oliver Wendell Holmes, Jrs often quoted saying, Even a dog distinguishes between being stumbled over and being kicked (The Common Law, 1909, lecture 1). The tort should be confined to persons exercising the coercive power of the state. This was the third argument advanced by the defendant in Quartz Hill and was rejected by the Court of Appeal for reasons which I regard as sound: see para 35 above. Implicit in the suggested restriction is the idea that malicious prosecution is a public law tort, available against public officers and others who take it on themselves to exercise the coercive powers of the state; but in Gibbs v Rea [1998] AC 786, 804 Lord Goff and Lord Hope were emphatic that it would be incorrect to see the tort as having any of the characteristics of a public law remedy. They were in a minority in their opinion about the proper decision in that case, but I do not detect any difference on that point. Reciprocity. It is suggested that the logical corollary of allowing a claim for malicious prosecution of civil proceedings should be a right to sue for the malicious defence of a civil claim without reasonable or probable cause. The same argument might logically be advanced in relation to the malicious prosecution of criminal proceedings. It is not uncommon for a criminal suspect, when questioned about an offence, to advance a defence involving false accusations of one kind or another against the complainant, which may be injurious to the complainants reputation. It is easy to think of some high profile examples. That aside, the question whether there should be civil liability for bad faith denial of claims raises other and wider considerations. For an English court to adopt the approach of Supreme Court of New Hampshire in Aranson v Schroeder (1995) 671 A 2d 1023 and recognise the existence of a cause of action of that description would be bold, to say the least, but I do not see that recognition of civil liability for malicious prosecution of civil proceedings carries with it as a necessary counterpart that there should be liability for bad faith denial of a claim. There is an obvious distinction between the initiation of the legal process itself and later steps which may involve bad faith (for which the court is able to impose sanctions) but do not go to the root of the institution of legal process. Uncertainty as to malice. It is suggested that a decision in Mr Willers favour would take the courts into new and uncertain waters about the meaning of malice. The requirement of malice has been considered in the past at the highest level, for example in Glinski v McIvor [1962] AC 726, 766, and Gibbs v Rea [1998] AC 786, 797. No argument was addressed to the court in the present case on this issue for understandable reasons. If the facts alleged by Mr Willers are substantiated, there was undoubtedly malice on the part of Mr Gubay. Lord Mance expresses concern about the concept of malice in the context of a claim for malicious prosecution of civil proceedings (paras 137 to 140). I make two preliminary observations. First, this subject was not raised in either partys written or oral arguments, for understandable reasons. Mr Willers case is that Mr Gubay well knew that Mr Willers had done Mr Gubays bidding in the matter of Langstones claim against the Aqua directors, and the prosecution of Langstones claim against Mr Willers was part of Mr Gubays vendetta against him. Secondly, over the last 400 years there has been a volume of case law about malice, and the related requirement of absence of reasonable and probable cause, for the purposes of the tort of malicious prosecution. Most of it has not been cited, and the court has not had the benefit of the parties analysis of it. I recognise that Lord Mance is registering a concern, rather than seeking to seeking to lay down doctrine. It would be wrong for me to ignore that concern, but anything that I say on this aspect is necessarily obiter. In the early case law Hobart CJ stated the requirements succinctly in the passage from his judgment in Waterer v Freeman cited at para 17 above: if a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him. This formula was adopted by Blackburn J in 1869 in Wren v Weild. It accords with Lord Mances suggestion (para 139) that he would be readier to accept a concept of malicious prosecution which depended on actual appreciation that the original claim was unfounded. Hobart CJs statement remains a helpful starting point and, speaking in general terms, it has in my view much to commend it. It is well established that the requirements of absence of reasonable and probable cause and malice are separate requirements although they may be entwined: see, for example, Glinski v McIver [1962] AC 726, 765, (it is a commonplace that in order to succeed in an action for malicious prosecution the plaintiff must prove both that the defendant was actuated by malice and that he had no reasonable and probable cause for prosecuting, per Lord Devlin). In order to have reasonable and probable cause, the defendant does not have to believe that the proceedings will succeed. It is enough that, on the material on which he acted, there was a proper case to lay before the court: Glinski v McIver, per Lord Denning at 758 759. (Compare and contrast a suit which is utterly without ground of truth, per Hobart CJ.) Malice is an additional requirement. In the early cases, such as Savile v Roberts, the courts used the expression falso et malitiose. In the 19th century malitiose was replaced by the word malicious, which came to be used frequently both in statutes and in common law cases. In Bromage v Prosser (1825) 4 B & C 247, 255, Bayley J said that Malice, in common acceptation, means ill will against a person, but in its legal sense it means a wrongful act, done intentionally, without just cause or excuse. His statement was cited with approval by Lord Davey in Allen v Flood [1898] AC 1, 171. (For a recent discussion of the nineteenth century understanding of the meaning of malicious in the law of tort, see O (A Child) v Rhodes [2016] AC 219, paras 37 to 41.) As applied to malicious prosecution, it requires the claimant to prove that the defendant deliberately misused the process of the court. The most obvious case is where the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation (as in Hobart CJs formulation.) But the authorities show that there may be other instances of abuse. A person, for example, may be indifferent whether the allegation is supportable and may bring the proceedings, not for the bona fide purpose of trying that issue, but to secure some extraneous benefit to which he has no colour of a right. The critical feature which has to be proved is that the proceedings instituted by the defendant were not a bona fide use of the courts process. In the Crawford case Mr Delessio knew that there was no proper basis for making allegations of fraud against Mr Paterson, but he did so in order to destroy Mr Patersons business and reputation. The combination of requirements that the claimant must prove not only the absence of reasonable and probable cause, but also that the defendant did not have a bona fide reason to bring the proceedings, means that the claimant has a heavy burden to discharge. All things considered, I do not regard the suggested countervailing considerations as sufficient to outweigh the argument that simple justice dictates that Mr Willers claim for malicious prosecution should be sustainable in English law. Excess costs. Newey Js decision to award costs to Mr Willers on a standard basis is readily understandable. The action had been discontinued and the judge would not have been able to determine whether Mr Willers should recover indemnity costs without conducting what would have amounted to a trial of the present action. On the other hand, the notion that the costs order made has necessarily made good the injury caused by Mr Gubays prosecution of the claim is almost certainly a fiction, and the court should try if possible to avoid fictions, especially where they result in substantial injustice. A trial of Mr Willers claim will of course take up further court time, but that is not a good reason for him to have to accept a loss which he puts at over 2m in legal expenses. Expenditure of court time is sometimes the public price of justice. If Langstones action against Mr Willers had gone to a full trial, and if at the end the judge had refused an application for indemnity costs because he judged that the claim had not been conducted improperly, then to attempt to secure a more favourable costs outcome by bringing an action for malicious prosecution would itself have been objectionable as an abuse of the process of the court, because it would have amounted to a collateral attack on the judges decision. But those are not the circumstances and I do not regard Mr Willers claim to recover his excess costs as an abuse of process. Conclusion For these reasons, which largely replicate the judgments of the majority in Crawford, I would allow the appeal and hold that the entirety of Mr Willers claim should be permitted to go to trial. LORD CLARKE: (agrees with Lord Toulson) Introduction The principal issue in this appeal is whether the tort of malicious prosecution includes the prosecution of civil proceedings. I would firmly answer that question in the affirmative. Lord Toulson and others have set out the facts and the issues in the light of the conflicting approaches of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419 and the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366. I am content to adopt the facts as stated by Lord Toulson at paras 3 to 5 and his analyses of Gregory at paras 6 to 8 and of Sagicor at paras 9 to 15 respectively. Lord Toulsons historical analysis Lord Toulsons analysis of the cases he refers to at paras 16 to 41 is by no means conclusive but I agree with him when he says at the end of para 25 that Grainger v Hill (1838) 4 Bing (NC) 212 does at any rate illustrate the willingness of the court to grant a remedy in what it regarded as novel circumstances, where the plaintiff had suffered provable loss as a result of civil proceedings brought against him maliciously and without any proper justification. Moreover it seems to me to be of some note that, as Lord Toulson says at paras 26 and 27, having briefly set out the facts of De Medina v Grove (1847) 10 QB 172 and Churchill v Siggers (1854) 3 E & B 929, the judges in each case adopted a common starting point. See in particular the quotations in Lord Toulsons para 27, where he sets out a quote from De Medina v Grove in which Wilde CJ (with whom Maule J, Cresswell J, Williams J, Parke B and Rolfe B agreed) began his judgment by stating: The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause. Similarly in Churchill v Siggers (1854) 3 E & B 929 Lord Campbell CJ, delivering the judgment of the court, including Erle J and Crompton J, began thus: To put into force the process of the law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case. I agree with Lord Toulson (in his para 29) that there is no good reason for limiting the breadth of that proposition: see his paras 30 to 32. I also agree with his analysis of the Quartz Hill case at his paras 33 to 38 and with his analysis of the Berry v British Transport Commission case at his paras 39 to 42. That analysis appears to me to provide at least some support for the proposition stated by Danckwerts LJ in the Court of Appeal [1962] 1 QB 306 in which at p 334 he repeated Diplock Js obiter dictum at first instance that the action for malicious prosecution lies for wrongful and malicious civil as well as criminal proceedings. In all the circumstances I agree with Lord Toulsons conclusion at his para 42 that the courts have fashioned the tort of malicious prosecution to do justice in various situations in which a person has suffered injury in consequence of the malicious use of legal process without any reasonable basis. As he puts it, the court has to decide whether the tort should now apply to the malicious and groundless prosecution of a civil claim causing damage of the kinds alleged in the instant case. Discussion I have reached the clear conclusion, in agreement with the majority in Crawford, and in particular with the leading judgment given by Lord Wilson, that this court should conclude that there is a tort of malicious prosecution of civil claims. I recognise that there is scope for argument but, in my opinion, Lord Toulsons analysis shows that there is a good deal of support for such a tort. In this regard I am not persuaded that the cases show that, in so far as such a tort has been recognised, it has been limited to ex parte applications to secure a claim. In particular it does not seem to me that the jurisprudence on the arrest of ships is limited in that way. Claims for damages for wrongful arrest of a ship are not limited to claims for security obtained on an ex parte basis. They are claims in tort for wrongful arrest in which, if the claimant is successful he or it will obtain damages calculated in accordance with the principles of the common law. A person who arrests a ship does not have to provide security to the defendant in respect of any loss which he might incur. It is thus not helpful (as I see it) to note that it is now commonplace for claimants to be required to give undertakings as a condition of obtaining a freezing order. I recognise that there are those who favour the introduction of such an approach in the case of the arrest of ships; see for example Sir Bernard Eder in a lecture given on 12 December 1996 under the auspices of the London Shipping Law Centre entitled Wrongful Arrest of Ships and see further the articles referred to in paras 82 84 below. However, so far as I am aware, no such approach has been adopted in any decided case. Much of the learning in this area derives from the decision of the Privy Council in The Evangelismos (1858) Swa 378, 12 Moore PC 352, where the judgment of the Board was given by the Rt Hon T Pemberton Leigh, where he said at pp 359 360: Their Lordships think that there is no reason for distinguishing this case, or giving damages. Undoubtedly there may be cases in which there is either mala fides or that crassa negligentia, which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at Common law damages may be obtained. In the Court of Admiralty the proceedings are, however, more convenient, because in the action in which the main action is disposed of, damages may be awarded. The real question in this case, following the principles laid down with regard to actions of this description, comes to this: is there or is there not, reason to say, that the action was so unwarrantably brought, or brought with so little colour, or so little foundation, that it rather implies malice on the part of the plaintiff, or that gross negligence which is equivalent to it? The test was thus malice or crassa negligentia, defined as that crassa negligentia which implies malice. That decision was preceded by a number of earlier cases to much the same effect including The Orion (1852) 12 Moo 356, The Glasgow (1855) Swa 145, The Nautilus (1856) Swa 105, and The Gloria de Maria (1856) Swab 106. Moreover the principle in The Evangelismos was applied consistently through the late 1800s, usually by Dr Lushington: see The Active (1862) 5 LT (NS) 773, The Eleonore (1863) Br & L 185, The Volant (1864) Br & L 321; 167 ER 385 and The Cathcart (1867) LR 1 A&E 314, The Collingrove, The Numida (1885) 10 PD 158 and The Keroula (1886) 11 PD 92. common law actions for malicious prosecution. He said: In The Kate (1864) Br & L 218, Dr Lushington drew an express analogy with The defendants are not in my opinion entitled to damages, because the circumstances of the case do not shew on the part of the plaintiffs any mala fides or crassa negligentia, without which, according to The Evangelismos unsuccessful plaintiffs are not to be mulcted in damages. The principles in The Evangelismos were further expressly followed by the Privy Council in The Strathnaver (1875) 1 App Cas 58. The position was summarised in the well known case of The Walter D Wallet, [1893] P 202, where Sir Francis Jeune P put the principles thus at pp 205 206: No precedent, as far as I know, can be found in the books of an action at common law for the malicious arrest of a ship by means of Admiralty process. But it appears to me that the onus lies on those who dispute the right to bring such an action of producing authority against it. As Lord Campbell said in Churchill v Siggers , To put into force the process of law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case. Why is the process of law in Admiralty proceedings to be excepted from this principle? It was long ago held that that an action on the case would lie for malicious prosecution, ending in imprisonment under the writ de excommunicato capiendo in the spiritual court: Hocking v Matthews (1670) 1 Ventris 86. It can, therefore, hardly be denied that it would have lain for malicious arrest of a person by Admiralty process in the days when Admiralty suits so commenced, just as for malicious arrest on mesne process at common law. But if for arrest of a person by Admiralty process, why not for arrest of a person's property? I can imagine no answer, and the language of the reasons of the Privy Council in the case of The Evangelismos , quoted with approval in the later case of The Strathnaver appears to me to treat the existence of such an action at common law as indisputable. The words to which I refer were employed by their lordships in speaking of the arrest of a ship in a salvage suit. Their lordships say (at p 67), Undoubtedly there may be cases in which there is either mala fides, or that crassa negligentia which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at common law, damages may be obtained. In the Court of Admiralty the proceedings are, however, more convenient, because, in the action in which the main question is disposed of, damages may be awarded. It is perhaps noteworthy that, at any rate as I read it, The Walter D Wallet was an action brought at common law, although the President held that the relevant principles were the same as had been applicable in the Court of Admiralty. He said at p 208: Still, the action of the defendants was, I think, clearly in common law phrase, without reasonable or probable cause; or, in equivalent Admiralty language, the result of crassa negligentia, and in a sufficient sense mala fides, and the plaintiffs ship was in fact seized. A little earlier, at p 207 the President said: No doubt in an action on the case for commencing or prosecuting an action, civil or criminal, maliciously and without reasonable or probable cause, damage must be shown: Cotterell v Jones. Cotterell v Jones is reported at (1851) 11 CB 713. It was not necessary to decide whether an action would lie at all because it was held that, if it did, damage must be proved. Although a majority of the judges left the point open, Williams J plainly thought that, if damage was proved, such an action would lie: see p 730. The President was of the same view in The Walter D Wallet. See also Mitchell v Jenkins (1833) 5 B & Ad 588. There has been little analysis in England and Wales of the principles governing wrongful arrest since The Walter D Wallet. The courts have essentially applied the principles in The Evangelismos since then. See, comparatively recently, The Kommunar (No 3) [1997] 1 Lloyds Rep 22, per Colman J at p 30 and the decision of the Court of Appeal in Gulf Azov Shipping Co Ltd v Idisi [2001] 1 Lloyds Rep 727. I note in passing that in The Maule [1995] 2 LRC 192 the Court of Appeal in Hong Kong applied the same principles by reference to the same cases. Moreover it is interesting in the present context to see that Bokhary JA said at p 195, under the heading The analogy with malicious prosecution that [t]he analogy between the tort of malicious prosecution and claims such as the present is well established. I should add that the court does not have a discretion as to whether to permit the arrest of a vessel. It was held by the Court of Appeal in The Varna [1993] 2 Lloyds Rep 253 that, provided the property was within the scope of an action in rem, and provided that there had been procedural compliance with the rules, the plaintiff was entitled to arrest the vessel. The specific issue related to the question whether there was a duty of full and frank disclosure. The court held that after a change in the RSC in 1986, there was no such duty. Before 1986 there was such a duty but, as I see it, there was a right to arrest subject to that duty. Thus in the context of the arrest of ships the courts have recognised a claim for what is in essence malicious prosecution of a civil action by arresting a ship in circumstances where the ingredients of the tort are either mala fides, or that crassa negligentia which implies malice. Moreover the above passage shows that damages were recoverable both in the Admiralty Court and in the courts of common law, where the principles were the same and where the action was on the case. To my mind these principles cannot be disregarded on the basis that they were applied only in some form of interlocutory process. They appear to me to support the historical analysis identified by Lord Toulson. Moreover they show that there are some torts which require proof of malice or something akin to it. There are two other examples which seem to me to support this approach. They are misfeasance in public office and malicious prosecution of a criminal process. I first came across misfeasance in public office in 1995 when I was asked, at first instance, to identify the ingredients of the tort in Three Rivers District Council v Governor and Company of the Bank of England [1996] 3 All ER 558. However the case subsequently went twice to the House of Lords, reported at [2003] 2 AC 1. On the first occasion the House considered the ingredients of the tort. They were identified by Lord Steyn at pp 191 196. His third ingredient focused on two alternative states of mind on the part of the defendant. The first was targeted malice. The second (at p 191E) was where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. It involves bad faith inasmuch as the public officer does not have an honest belief that his act is lawful. That test seems to me to be close to the test of malice referred to in the wrongful arrest cases referred to above. It shows that the torts which require malice or something like it are not uncommon. There is in my opinion a close affinity between the tort of malicious prosecution of a crime and the tort of malicious prosecution of a civil action. The ingredients are essentially the same, namely malice or, in the old language, crassa negligentia which implies malice. I agree with Lord Toulsons approach to malice in his paras 52 to 56. In addition, as Lord Toulson explains in para 54, by reference to Lord Devlins opinion in Glinski v McIver [1962] AC 726 at 765, it is commonplace that in order to succeed in an action for malicious prosecution the plaintiff must prove both that the defendant was activated by malice and that he had no reasonable and probable cause for prosecuting. There is some scope for argument as to whether that is the same test as crassa negligentia in a claim based on wrongful arrest. However, this was not discussed in the course of the argument in this appeal and is not relevant to the issue for decision. Equally I should note in passing that there has been some discussion, both in academic articles here and elsewhere and in judgments in common law jurisdictions, on the question whether a less stringent test should be introduced in a claim for damages for wrongful arrest. The articles include, in addition to the article referred to in para 68 above, the following. First there are three articles in volume 38 of the Tulane Maritime Law Journal Winter 2013, No 1, at pp 115 145: the first by Sir Bernard Eder entitled Time for a Change, the second by Martin Davies by way of reply to Sir Bernard and the third a rejoinder by Sir Bernard. The second is by Dr Aleka Sheppard in the third edition of her Modern Maritime Law, 2013 at section 2.4 under the heading Wrongful Arrest of Ships. The third article is by Michael Woodford in (2005) 19 MLAANZ 115 which sets out the position in Australia and discusses many of the cases including those referred to above. As to decided cases, there have been some Singapore cases in recent years which discuss the same cases and, for the most part follow the English cases. They include the decision of Selvam JC in The Ohm Mariana, Ex p Peony [1992] 1 SLR(R) 556 and The Kiku Pacific [1999] SGCA 96, in which the Court of Appeal, endorsed the test of mala fides and crassa negligentia implying malice rather than the test of absence of reasonable and probable cause. That decision was followed by the Singaporean High Court in The Inai Selasih (Ex p Geopotes X) [2005] 4 SLR 1. Subsequently the same point was considered in some detail by the Court of Appeal in The Vasily Golovnin [2008] 4 SLR (R) 994, especially at paras 118 134, where it noted that the test was widespread in the Commonwealth, including Canada and New Zealand: see paras 132 133. Rajah JA, delivering the judgment of the court, concluded as follows: 134. We would agree with the views of both Iacobucci J [in the Canadian Supreme Court] and Giles J [in the High Court in New Zealand] to the extent that the Evangelismos test is long standing, and should not be departed from lightly, without good reasons and due consideration. However, it is always open to this court to depart from this judicially created test if the day comes when it no longer serves any relevant purpose. Having examined the genesis of the Evangelismos test and its current application in Singapore, we shall for now leave this issue to be addressed more fully at a more appropriate juncture. We are prepared to reconsider the continuing relevance and applicability of the Evangelismos test when we have had the benefit of full argument from counsel as well as the submissions of other interested stakeholders in the maritime community in the form of Brandeis briefs. For the present appeal, as will be demonstrated shortly, the outcome reached by this court would nonetheless be the same whether the Evangelismos test or a less onerous test is applied. The court had earlier noted that relaxation of the test had in many cases been achieved by statute. It is not necessary to consider this further here because the issue does not arise. However, it is important to note that nobody has suggested that there should be no claim for damages for wrongful arrest, only that the test should be lower than the test of either mala fides, or that crassa negligentia which implies malice. In so far as the test for malicious prosecution identified in Glinski v McIver includes the requirement that the defendant had no reasonable and probable cause for prosecuting, there may be scope for argument as to precisely what is meant by that expression, but that is not the subject of this appeal. The question here is whether there is a tort of malicious prosecution of a civil claim. For my part I can see no sensible basis for accepting that the tort of malicious prosecution of a crime exists in English law, whereas the tort of malicious prosecution of a civil action does not. Not only are the ingredients the same, but it seems to me that, if a claimant is entitled to recover damages against a person who maliciously prosecutes him for an alleged crime, a claimant should also be entitled to recover damages against a person who maliciously brings civil proceedings against him. The latter class of case can easily cause a claimant very considerable losses. They will often be considerably greater than in a case of malicious prosecution of criminal proceedings. Some members of the court rely upon a number of factors which are said to point to a different conclusion. Lord Toulson has discussed those factors in his paras 44 to 51 under the headings of floodgates, deterrence, finality, duplication of remedies, inconsistency with the absence of a duty of care, witness immunity, limitation to the coercive power of the state and reciprocity. Largely for the reasons given by Lord Toulson I agree that those factors do not have sufficient weight to counter the conclusion that, like malicious prosecution of criminal proceedings, malicious prosecution of civil proceedings is a tort. The only point I would make by way of postscript in relation to the factors discussed by Lord Toulson is that it is to my mind irrelevant that no duty of care is owed because the sole question is whether the tort of malicious prosecution exists. In my opinion it does. Finally, I note that in Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M) [2008] EWHC 1615 (Comm); [2009] 1 All ER (Comm) 479 Flaux J, albeit obiter, considered the question whether English law recognises a tort of wrongful attachment of property. It was argued that it does not based on a passage in the speech of Lord Steyn in Gregory at p 427, which was relied upon as support for the proposition that the tort of malicious prosecution is not generally available in respect of civil proceedings. Flaux J concluded that Lord Steyn was not laying down that proposition as of general application. He referred in particular to Lord Steyns speech at pp 432 433, where he said this: My Lords, it is not necessary for the disposal of the present appeal to express a view on the argument in favour of the extension of the tort to civil proceedings generally. It would, however, be unsatisfactory to leave this important issue in the air. I will, therefore, briefly state my conclusions on this aspect. There is a stronger case for an extension of the tort to civil legal proceeding than to disciplinary proceedings. Both criminal and civil legal proceedings are covered by the same immunity. And as I have explained with reference to the potential damage of publicity about a civil action alleging fraud, the traditional explanation namely that in the case of civil proceedings the poison and the antidote are presented simultaneously, is no longer plausible. Nevertheless, for essentially practical reasons I am not persuaded that the general extension of the tort to civil proceedings has been shown to be necessary if one takes into account the protection afforded by other related torts. I am tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extensions of other torts. Instead of embarking on a radical extension of the tort of malicious prosecution I would rely on the capacity of our tort law for pragmatic growth in response to true necessities demonstrated by experience. It is important to note that Lord Steyns conclusion was not based upon principle but upon what he called practical reasons. Flaux J concluded (at para 22), that Lord Steyn expressly recognised that there may be scope for incremental growth and extension of existing torts, including wrongful arrest. I agree. Indeed, I would go further and hold that the logical conclusion from the cases is that a person who suffers damage as a result of the malicious prosecution of a civil suit against him is entitled to recover that damage in just the same way as a person who suffers damage as a result of the malicious prosecution of criminal proceedings against him. Conclusion For these reasons and those given by Lord Toulson I would allow the appeal. LORD MANCE: (dissenting) Introduction This appeal revisits before nine Justices in the Supreme Court the question how far the tort of malicious prosecution does or should apply in relation to civil proceedings. The question received intense and helpful consideration in no less than five judgments given by the five members of the court sitting as Privy Counsellors in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17, [2014] AC 366 (Crawford v Sagicor). I would also pay tribute to the meticulous analysis of the issues in the first instance judgment of Miss Amanda Tipples QC in the present case. Much of the discussion in those judgments can be taken as read. The difficulty is that the Judicial Committee was split three to two in Crawford v Sagicor, taking different views both of the case law and of policy. That the Supreme Court must also engage closely with legal policy is I think clear. Viewed in isolation, the assumed facts of this case make it attractive to think that the appellant should have a legal remedy. But the wider implications require close consideration. We must beware of the risk that hard cases make bad law, and we are entitled to ask why, until the Privy Councils majority decision in Crawford v Sagicor, there has been an apparent dearth of authority in this jurisdiction for a claim such as the appellant wishes to pursue. Both sides attached significance to this last question. Mr John McDonnell QC for the appellant said at the outset that he accepted a fundamental difference between creating a remedy for the first time and recognising a remedy that had become over looked with time. He relied on a series of authorities in the 16th, 17th and 18th centuries for an underlying principle, encapsulated he submitted most clearly by Holt CJ in the late 17th century in Savile v Roberts 1 Ld Raym 374, 3 Salk 17, 3 Ld Raym 264, 1 Salk 13, 12 Mod 208, Carthew 416, 5 Mod 405. The principle was, he submitted, that malicious prosecution of an unfounded civil suit can give rise to liability for damage inflicted in respect of reputation, health, earnings and charges. This principle had, he submitted, been misunderstood and wrongly constrained during the 19th century, in particular by the Court of Appeal in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674. Analysis of the case law McDonnell advocates is not justified: I have come to the conclusion that the reading of the authorities which Mr i) The 16th to 18th century authorities must be seen in the light of contemporary procedures governing civil proceedings. Plaintiffs at the relevant times could on an ex parte basis institute or cause an officer of the state to institute drastic measures affecting the intended defendants person, property or ability to trade. In that context, it was recognised that, once it had been established that the measures had been instituted or caused without any reasonable cause and maliciously, the defendant should have a remedy for what was effectively wrongful imprisonment, wrongful deprivation of goods or wrongful deprivation of the opportunity to trade. He could then recover any concomitant damage to person, reputation, business or pocket. ii) However, it was established that damage to a plaintiffs pocket did not in this connection include extra costs, over and above those recoverable inter partes in the original action. iii) The principle of the prior authorities was in the 1880s extended by analogy to enable the recovery of general damages to reputation arising from malicious pursuit of a winding up petition in respect of a company. But this extension was carefully limited, so as to exclude any general right to bring an action for malicious pursuit of a prior action. iv) good these propositions. I will in the following paragraphs examine the authorities to make Taking the cases prior to Savile v Roberts, in Bulwer v Smith (1583) 4 Leon 52, the defendant, by impersonating a deceased judgment creditor, took out against the judgment debtor successive writs, first a capias ad satisfaciendum whereby the debtor was outlawed and forfeited all his goods and then a capias utlagatum whereby he was arrested and imprisoned for two months. The error having been revealed, it was held that the judgment debtor was entitled to damages. In Waterer v Freeman (1617) Hobart 205, (1618) Hobart 266, the claim was that the defendant had wilfully and vexatiously taken out a second writ of fieri facias, thereby causing the sheriff to levy double execution on the plaintiffs goods. The court held the claim to be maintainable, once the double execution was established and provided that the suit (here the second execution) was utterly without ground of truth, and that certainly known to the person taking it. In Skinner v Gunton (1667) 2 Keb 473, (1668) 1 Saund 228(d), 2 Keb 475 and T Raym 176, (1671) 3 Keb 118, Gunton, maliciously and knowing that Skinner would not be able to find bail, issued an unfounded plaint for trespass allegedly causing loss of 300 against Skinner, causing the sheriff to arrest Skinner and imprison him for 20 days. Gunton was held liable for damages of 10. Finally, Daw v Swaine (or Swayne) (1668) 1 Sid 424, (1668) 2 Keble 546, (1669) 1 Mod 4, was another case of malicious issue of a plaint in a sum (variously put at 5,000 or 600), in the knowledge that it was not due and the defendant would not be able to afford bail and would suffer incarceration. In fact a much lesser sum was due. Skinner v Gunton was followed. All these cases involved imprisonment or at least seizure of goods. A case outside that ambit was Gray v Dight (1677) 2 Show KB 144 where the plaintiff, having given an account as churchwarden before the Ecclesiastical Court, was prosecuted a second time by the defendant, who went and told the Judge that he would not account, on which he [was] excommunicated. It was resolved the action though nothing ensued by an excommunication, and no capias, nor any express damage laid; for this court will consider of the consequences of an excommunication; and an action lies for a malicious prosecution, though the judges proceedings are erroneous, for that is not material in this case. lies, It may be inferred from this reasoning that the court was conscious that it was outside the normal area of malicious prosecution, where a capias led to arrest, but justified this because of the seriousness attaching to excommunication. In holding that judicial error in giving effect to the second action was no bar to the claim, the court was also anticipating much later decisions in Johnson v Emerson (1871) LR 6 Ex 329 and Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674: see below. Against this background I turn to Savile v Roberts. It was in fact a case of alleged malicious indictment (for taking part in a riot, by stopping a road by which the defendant used to carry his tithes). But both counsels submissions and the judgment also addressed malicious pursuit of civil proceedings. The Privy Council in Crawford Adjusters Ltd v Sagicor Insurance Ltd considered that the best encapsulation of the central decision in Savill v Roberts, which makes no distinction between criminal and civil proceedings, is to be collected from the report at 5 Mod 394, as follows: It is the malice that is the foundation of all actions of this nature, which incites men to make use of law for other purposes than those for which it was ordained. It is now clear that the report at 5 Mod 394 is of counsels submissions. The judgment of Holt CJ is covered by other reports, notably 1 Ld Raym 374, 1 Salkeld 13 and 12 Mod 208. From those reports, it is clear that Holt CJ, speaking for all three members of the court, drew distinctions between maliciously pursued criminal proceedings and maliciously pursued civil proceedings. Thus, addressing an objection that there was no more reason that an action should be maintainable in this case (ie for a malicious indictment) than where a civil action is sued without cause, for which no action will lie Holt CJ said (taking the report at 1 Ld Raym 374): There is a great difference between the suing of an action maliciously, and the indicting of a man maliciously. When a man sues an action, he claims a right to himself, or complains of an injury done to him; and if a man fancies he has a right, he may sue an action. He went on: 2. The common law has made provision, to hinder malicious and frivolous and vexatious suits, that every plaintiff should find pledges, who were amerced, if the claim was false; which judgment the court heretofore always gave, and then a writ issued to the coroners, and they affeered them according to the proportion of the vexation. See 8 Co 39 b FNB 76a. But that method became disused, and then to supply it, the statutes gave costs to the defendants. And though this practice of levying of amercements be disused, yet the court must judge according to the reason of the law, and not vary their judgments by accidents. But there was no amercement upon indictments, and the party had not any remedy to reimburse himself but by action. 2. If A. sues an action against B. for mere vexation, in some cases upon particular damage B. may have an action; but it is not enough to say that A. sued him falso et malitiose, but he must shew the matter of the grievance specially, so that it may appear to the court to be manifestly vexatious. 1 Sid 424, Daw v Swain, where the special cause was the holding to excessive bail. But if a stranger who is not concerned, excites A. to sue an action against B. B. may have an action against the stranger. FNB 98 n and 2 Inst 444. The report at 1 Salkeld 13 adds a further reference at the end to 3 Cro 378. That is the case of Robodham v Venleck, recognising a malicious assertion that a person had lied on his oath in court as involving an actionable slander. The citation of 2 Inst 444 in the context of a stranger exciting the pursuit of an action indicates that Holt CJ was referring to a statute of 13 Ed I Stat 1 (Westminster second) chapter 36 entitled A Distress taken upon a Suit commenced by others. This was enacted to deal with abuses of position by feudal courts. Its opening words were: Forasmuch as lords of courts, and others that keep courts, and stewards, intending to grieve their inferiors, where they have no lawful means so to do, procure others to move matters against them, and to put in surety and other pledges . (Holt CJ also referred to the statute expressly in a passage cited in para 103 below.) The remedy for such abuses was prescribed to be triple damages. This cause of action no longer exists, and no distinction was drawn in counsels submissions on the present appeal between the liability of a party maliciously suing and the liability of a third party knowingly procuring or assisting a party to sue maliciously. It seems right that the two should be assimilated, certainly in a case like the present where Mr Gubay is said to have been the alter ego of the company alleged to have pursued civil proceedings maliciously at his instance. In the report at 12 Mod 208, Holt CJ is reported as referring to both Daw v Swain and Skinner v Gunton, and as adding that: There is another case where an action of this nature will lie, and that is, where a stranger, who is not at all concerned, will excite another to bring an action, whereby he is grieved, an action lies against the exciter. There are other cases where this action is allowed; as Carlion v Mills 1 Cro 291, Norris v Palmer 2 Mod 51 and Ruddock v Sherman 1 Danv Abr 209: but though this action does lie, yet it is an action not to be favoured, and ought not to be maintained without rank and express malice and iniquity. Therefore, if there be no scandal or imprisonment, and ignoramus found [ie lack of basis for the original claim], no action lies, though the matter be false. Carlion v Mills and Ruddock v Sherman concerned malicious citations before ecclesiastical courts for respectively inconsistency and adultery, and Norris v Palmer extended the action on the case for malicious prosecution to an indictment for a common trespass in taking away one hundred bricks in respect of which the defendant was only acquitted by the jury at trial after he was compelled to spend great sums of money presumably on lawyers, not the jury. The judgment in Savile v Roberts focused on the nature of the injury which could found an action for malicious indictment. The report at 1 Ld Raym 374 records Holt CJ saying (at p 378) that the nature of the injury for which damages might be recoverable has been much unsettled in Westminster Hall, and therefore to set it at rest is at this time very necessary. And, 1. He said, that there are three sorts of damages, any of which would be sufficient ground to support this action. 1. The damage to a mans fame, as if the matter whereof he is accused be scandalous. But there is no scandal in the crime for which the plaintiff in the original action was indicted. 2. The second sort of damages, which would support such an action, are such as are done to the person; as where a man is put in danger to lose his life, or limb, or liberty, which has been always allowed a good foundation of such an action, as appears by the Statute de Conspiratoribus where the Parliament describes a conspirator, and the Statute of Westm 2, 13 Ed 1, st 1, c 12, which gives damages to the party falsely appealed, respectu habito ad imprisonamentum et arrestationem corporis, and also ad infamiam; but these kinds of damages are not ingredients in the present case 3. The third sort of damages, which will support such an action, is damage to a mans property, as where he is forced to expend his money in necessary charges, to acquit himself of the crime of which he is accused, which is the present charge. That a man in such case is put to expences is without doubt, which is an injury to his property; and if that injury is done to him maliciously, it is reasonable that he shall have an action to repair himself. It cannot be assumed that Holt CJ meant that the same approach applied in respect of an action for malicious pursuit of civil proceedings. In speaking of the third sort of damages, he expressly referred only to crime. In the same judgment he went on to make clear (at p 379) that one of the great differences between criminal and civil proceedings, which explained why a claim could lie for maliciously instituting the former when it did not lie for maliciously pursuing the latter, was that the law did not provide for costs in relation to the former, when it did in relation to the latter: see para 99 above. Further, and as will appear, later authority is almost unanimously to the effect that the costs position in relation to the malicious pursuit of civil proceedings is quite different from that in relation to criminal proceedings (see paras 107, 110, 111, 124 125 and 141 below). The report at 12 Mod 208 also refers to the three sorts of damage which Holt CJ identified: it is necessary to consider what are the true grounds and reasons of such actions as these; and it does appear, that there are three sorts of damages, any one of which is sufficient to support this action. First, damage to his fame, if the matter whereof he be accused be scandalous. Secondly, to his person, whereby he is imprisoned. Thirdly, to his property, whereby he is put to charges and expenses. A scandalous matter in the context of the first sort of damage meant a charge, an oral accusation of which would amount to slander per se (not the case at the time with a charge of riot). Later authority appears to have understood scandal as including any defamatory accusation a point that may require consideration in the context of the present case: see Berry v British Transport Commission [1961] 1 QB 149, pp 163 165, per Diplock J, discussing the effect of Rayson v South London Tramways Co [1893] 2 QB 304 and Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600. As to the second sort of damage, the report at 12 Mod 208 makes clear that the second sort of damage involved showing actual imprisonment, rather than a mere risk of loss of liberty: Berry v British Transport Commission [1961] 1 QB 149, 161. Two years after Savile v Roberts, Neal v Spencer (1700) 12 Mod 257 held that an action on the case for arresting without cause of action lies not, if it be not that he [the current plaintiff] was held to excessive bail. The nature of the damage recoverable in an action upon the case for malicious indictment was further considered in Jones v Givin (or Gwynn) (1713) Gilb Cas 185, (1712) 10 Mod 147 and 214 (a case where the plaintiff had been wrongly accused of exercising the trade of a badger of corn and grain). Holt CJ having died in 1710, his successor Parker CJ delivered a formidably erudite judgment paying tribute to the excellent argument of that great man in Savile v Roberts. Dismissing a submission that a claim for malicious indictment was no more actionable than certain (unspecified) claims for malicious prosecution of a civil action, Parker CJ said: But I choose to say there is a great difference between the two cases. (1) Because the demand of right or satisfaction is more favoured than the bringing to punishment. An action is to recover his right, or satisfaction for it, perhaps his subsistence. An indictment does himself no good, only punishes another, and there is a case which goes so far as to say, that to indict for a common trespass for which a civil action will lie, is malice apparent. Pas 30 Car 2, C B 2 Mod 306. Lord Chief Justice North not named. And it is observable, that in actions of conspiracy, in cases of appeals, the plaintiffs in appeals never were made defendants, but in case of judgments the prosecutors for the most part were. (2) Because if the action is false, the plaintiff is by law amerced, and the defendant to have costs. And therefore my Lord Chief Justice Holt, in his excellent argument in Savill and Roberts, Mich 10 W 3, where he fully states the difference between the two cases, said that in case for a malicious action the plaintiff must shew special matter which shews malice, for else an action, being the plaintiffs seeking and demanding advantage to himself, carrys in it, 1. A fair and honest cause, unless the recovery be utterly hopeless, and the suit without some other design, which therefore must be specially shewn. Parker CJ concluded that, applying the guidance given in Savile v Roberts regarding the sorts of recoverable damage, a man was just as much intitled to satisfaction as well for damages in his property through expence, as for damage in his fame through scandal, the species of the damage, whether the one or the other is the same, for they can make no difference now, whatsoever it might have done formerly. Again, that was said in the context of the claim for malicious indictment. Then in Chapman v Pickersgill (1762) 2 Wils KB 145, Lord Mansfield CJ considered whether an action would lie for falsely and maliciously petitioning the Lord Chancellor that the plaintiff owed the petitioner a debt of 200 and had committed an act of bankruptcy, whereupon the commission had been issued (the petitioner giving to the Lord Chancellor a bond for 200 to cover loss which the plaintiff might sustain if no such debt was proved) and the plaintiff had been declared bankrupt. The bankruptcy having been set aside, the petitioner, now defendant, objected, first, that a proceeding on a commission of bankruptcy was a proceeding in nature of a civil suit; and that no action of this sort was ever brought and, second, that the statutory remedy excluded any common law claim. Lord Mansfield, giving the judgment of the whole court, gave both objections short shrift. Of the first, he said: The general grounds of this action are, that the commission was falsely and maliciously sued out; that the plaintiff has been greatly damaged thereby, scandalized upon record, and put to great charges in obtaining a supersedeas to the commission. Here is falsehood and malice in the defendant, and great wrong and damage done to the plaintiff thereby. Now wherever there is an injury done to a man's property by a false and malicious prosecution, it is most reasonable he should have an action to As to the second objection, Lord Mansfield said: repair himself. See 5 Mod 407, 8 10 Mod 218 [ie Jones v Givin or Gwynn], 12 Mod 210. I take these to be two leading cases, and it is dangerous to alter the law. See also 12 Mod 273, 7 Rep Bulwers case [ie Bulwer v Smith], 1. 2 Leon 1 Roll Abr 101, 1 Ven 86, 1 Sid 464. But it is said, this action was never brought; and so it was said in Ashby and White. I wish never to hear this objection again. This action is for a tort: torts are infinitely various, not limited or confined, for there is nothing in nature but may be an instrument of mischief, and this of suing out a commission of bankruptcy falsely and maliciously, is of the most injurious consequence in a trading country. we are all of opinion, that in this case the plaintiff would have been entitled to this remedy by action at common law, if this Act had never been made, and that the statute being in the affirmative, hath not taken away the remedy at law. but the most decisive answer is, that this statute remedy is a most inadequate and uncertain remedy; for though there be the most outrageous malice and perjury, and the party injured suffer to the amount of ten or twenty thousand pounds, yet the Chancellor has no power to give him more than the penalty of 200. Besides, the method of applying to the Chancellor is more tedious, expensive, and inconvenient than this common law remedy; and this case, in its nature, is more properly the province of a jury than of any judge whatever. As the first passage shows, the damages awarded had been put in broad terms covering, according to Lord Mansfield, both great damage due to being scandalised upon record and great charges in obtaining a supersedeas to the commission. Lord Mansfield in the second passage was clearly focusing on the former head of damages and on the evident inadequacy of a bond limited to 200 to cover all loss which the victim of a malicious civil suit might suffer up to five figure amounts. He was not addressing the recoverability of extra costs in circumstances where the original court had or has a discretion to award appropriate compensatory costs. In Goslin v Wilcox (1766) 2 Wils K B 303, the plaintiff, a market trader, owed some 5, but the creditor maliciously issued a writ of capias ad respondendum in the Bridgwater Borough court which he knew to have no jurisdiction. On that basis, he caused the plaintiff while trading at his stall in Bridgwater Fair to be arrested by the bailiffs on pain of providing 5 bail, so that the plaintiff was not only put to great charges in freeing himself, but was also during his imprisonment hindered from trading and lost his whole profit at Bridgwater put at some 50. The Common Pleas held that, although Courts will be cautious how they discourage men from suing, the action lay (p 307). Lord Camden CJ, after initial hesitation, was evidently satisfied that the case was sufficiently analogous to those where nothing was due, or where the arrest was for much more than was due, where it had been held that the costs in the cause are not a sufficient satisfaction for imprisoning a man unjustly (p 305). In Purton v Honnor (1798) 1 Bos & Pul 205, the claim was for damages for vexatious ejectment. On the court expressing themselves clearly of opinion on the authority of Savile v Roberts 1 Salk 13, that such an action was not maintainable, counsel for the plaintiff declined to argue the point. The report at 1 Salk 13 is very brief and confined to the proposition that it is not sufficient that the plaintiff prove he was innocent, but he must prove express malice in the defendant. It therefore appears probable that the defect in the claim in Purton v Honnor was simply that there was no plea of malice. On that basis, the case is presently irrelevant. Sinclair v Eldred (1811) 4 Taunt 7 concerned the arrest of the plaintiff by a bill of Middlesex, the device whereby civil proceedings could be commenced in the Court of Kings Bench (rather than the Common Pleas) under the fiction that a trespass had been committed in the County of Middlesex. The bill was indorsed for bail for 10, which the plaintiffs attorney undertook whereupon the plaintiff was released. The defendant allowed the claim to lapse. The plaintiff had by then incurred costs of 13 guineas, but was only allowed 4 4s 6d, leaving him out of pocket for 9, which he claimed to recover. The claim failed, for want of evidence of malice, but Mansfield CJ said during submissions (p 9): The plaintiff has recovered already in the shape of taxed costs all the costs which the law allows, and it cannot be that an action may be sustained for the surplus. And in his judgment (pp 9 10) he added: This is certainly a new species of action, I mean considering it as an action to recover the extra costs, for there was no proof of any inconvenience of any sort arising to the plaintiff, except in the payment of more costs than the law allows him, and which therefore he ought not to recover. Cotterell v Jones (1851) 11 CB 713 involved a claim against two third parties for maliciously commencing an unfounded action against the plaintiff using the name of Osborne and knowing him to be a pauper. The action was non suited without, so far as appeared, any order for costs being made against Osborne who was insolvent. During the elaborate argument, the court evinced scepticism about the proposition that injury to property in putting a person to needless expense could ground a claim for malicious pursuit of a civil claim. After counsel had made extensive reference to Savile v Roberts and other authority, Jervis CJ said (p 718): You will find that doctrine very much qualified, as you approach more modern times, and Williams J said (p 723): I doubt whether we can take notice of the alleged insolvency of the nominal plaintiff in the former action: the costs must be assumed to be a full compensation for the vexation. Ultimately, the claim failed because no judgment for costs had, for whatever reason, been obtained against Osborne, so that his insolvency was not shown to have been causative of any inability to recover costs. But the court endorsed the proposition, which was evidently common ground, that in the ordinary case costs not recoverable in the action cannot be recovered in an action for malicious pursuit of the action. As Jervis CJ said: It is conceded also, that, if the party so wrongfully put forward as plaintiff in the former action had been a person in solvent circumstances, this action could not have been maintained, inasmuch as the award of costs to the defendant (the now plaintiff) upon the failure of that action, would, in contemplation of law, have been a full compensation to him for the unjust vexation, and consequently he would have sustained no damage. To like effect, Maule J said: It is conceded that this action could not be maintained in respect of extra costs, that is, costs ultra the costs given by the statute (23 H 8, chapter 15, section 1) to a successful defendant. Williams and Talfourd JJ started their judgments by saying that they were of the same opinion. Talfourd J also said: It appears from the whole current of authorities, that an action of this description, if maintainable at all, is only maintainable in respect of legal damage actually sustained; and that the mere expenditure of money by the plaintiff in the defence of the action brought against him does not constitute such legal damage; but that the only measure of damage is, the costs ascertained by the usual course of law. There being no averment in this declaration that any such costs were incurred or awarded, no legal ground is disclosed for the maintenance of the action. Churchill v Siggers (1854) 3 E & B 929 and Gilding v Eyre (1861) 10 CB NS 592 were both successful claims for maliciously issuing writs of capias for sums larger than any remaining due, with the result that the plaintiff had been wrongly imprisoned for periods and had also incurred expenses. Sophia de Medina v Grove and Weymouth (1846) 1 QB 152, 166 170 and (1847) 1 QB 172 was a claim for wrongfully issuing a writ of fi fa to enforce a judgment allegedly obtained for more than remained due, leading to the plaintiffs imprisonment until he provided securities for the full judgment sum. The claim failed in the absence of any plea that the claim was brought without probable cause, as well as maliciously. The plaintiffs remedy in such circumstances was to apply to set aside the judgment. The case adds nothing to the wisdom of other case law. In Johnson v Emerson (1871) LR 6 Ex 329 an order that the plaintiff put up a bond within seven days was stayed, but the allegation was that the petitioner, being aware of this, nonetheless maliciously petitioned ex parte for the plaintiffs bankruptcy for failure to put up such a bond and also ex parte obtained the appointment of a receiver, leading to the plaintiff being adjudicated bankrupt, an adjudication later set aside as having been erroneous. The court split equally on the factual question of awareness and maliciousness, with the result that the verdict below in favour of the plaintiff stood. Cleasby B, who with Kelly CB upheld the claim, distinguished a petition for adjudication [from] an ordinary commencement of an action, which leaves both parties in the same position, describing it as a most important ex parte proceeding against a man, which may be likened to an application for a capias to hold to bail The one makes a mans property liable to be taken, and the other makes his person liable to be taken (p 340). On the other side, Martin B, who would have set aside the verdict in favour of the plaintiff, questioned whether an action for malicious pursuit of civil proceedings could ever lie where a petition would, procedurally, lead in due course to an inter partes adjudication. Martin Bs view was not however followed by the Court of Appeal in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674. Quartz Hill Quartz Hill concerned a claim for malicious presentation and advertisement of a winding up petition, which was subsequently dismissed. The Court of Appeal consisted of the powerful combination of Brett MR and Bowen LJ. They addressed two main points, which they saw as related. The first was whether an action would lie for falsely and maliciously presenting a petition to wind up a company, while the second related to the nature of any damage which might be recoverable in such an action: see p 688, per Bowen LJ. As to the first, both members of the court treated it as axiomatic that no action lay for maliciously pursuing ordinary civil proceedings. The question was whether a winding up petition could be brought by analogy within the group of ex parte procedural measures involving damage to person, property or reputation which, on past authority, could give rise to such an action. As to the second, both members of the court also treated it as axiomatic that extra costs, over and above those recoverable in the original civil proceedings, could not be recovered in a later action for maliciously pursuing those proceedings. In my opinion, the Court of Appeal was on all these points correct in its analysis of past authority. Taking the first point, a petition to wind up a company could have no immediate effect of any person or property as such. The authorities on arrest of the person and seizure or dispossession of goods were not therefore in point. But the petition to wind up was nonetheless an ex parte procedure which directly affected the companys trading reputation. It was in Brett MRs words (p 685) more like a bankruptcy petition than an action charging fraud, and the very touchstone of this point is that the petition to wind up is by force of law made public before the company can defend itself against the imputations made against it; for the petitioner is bound to publicly advertise the petition seven days before it is to be heard and adjudicated upon Both members of the court gave consideration to the distinction between what they saw as a general inability to found an action upon the malicious pursuit of a prior civil action and the case before them. In a much commented passage, Brett MR suggested (pp 684 685) that the case before them was not like an action charging a merchant with fraud, where the evil done by bringing the action is remedied at the same time that the mischief is published, namely at the trial. That idea was picked up by Buckley LJ in Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600, 607, who said that the exception of civil proceedings so far as they are excepted, depends not upon any essential difference between civil and criminal proceedings, but upon the fact that in civil proceedings the poison and the antidote are presented simultaneously. Brett MRs and Buckley LJs aphorisms have been well criticised, on the basis that, if they were ever justified, the transparency and publicity surrounding modern day civil actions, at least in common law countries, make them quite unrealistic. This criticism was accepted by the Supreme Court of Victoria in Little v Law Institute of Victoria (No 3) [1990] VR 257, where Kaye and Beach JJ held (in the context of allegedly malicious pursuit of civil proceedings alleging that the plaintiff had been practising as a solicitor without being qualified to do so) that there was no longer justification for confining to a bankruptcy petition and an application to wind up a company the remedy for malicious abuse of civil proceedings where the damages claimed is to the plaintiffs reputation. The criticism was also accepted as valid by the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419, 428A. But the House of Lords went on, rightly, to indicate (p 428B) that acceptance of the criticism leaves open for consideration whether the restriction upon the availability of the tort in respect of civil proceedings may be justified for other reasons. In this regard, Bowen LJs judgment is in my opinion of interest for its fuller treatment of the point. He said (p 688): I start with this, that at the present day the bringing of an action under our present rules of procedure, and with the consequences attaching under our present law, although the action is brought falsely and maliciously and without reasonable or probable cause, and whatever may be the allegations contained in the pleadings, will not furnish a ground for a subsequent complaint by the person who has been sued, nor support an action on his part for maliciously bringing the first action. To speak broadly, and without travelling into every corner of the law, whenever a man complains before a court of justice of the false and malicious legal proceedings of another, his complaint, in order to give a good and substantial cause of action, must shew that the false and malicious legal proceedings have been accompanied by damage express or implied. After examining the three sorts of damage contemplated in Savile v Roberts, Bowen LJ went on (pp 690 691): To apply this test to any action that can be conceived under our present mode of procedure and under our present law, it seems to me that no mere bringing of an action, although it is brought maliciously and without reasonable or probable cause, will give rise to an action for malicious prosecution. In no action, at all events in none of the ordinary kind, not even in those based upon fraud where there are scandalous allegations in the pleadings, is damage to a mans fair fame the necessary and natural consequence of bringing the action. Incidentally matters connected with the action, such as the publication of the proceedings in the action, may do a man an injury; but the bringing of the action is of itself no injury to him. When the action is tried in public, his fair fame will be cleared, if it deserves to be cleared: if the action is not tried, his fair fame cannot be assailed in any way by the bringing of the action. In contrast, certain indictments, those involving scandal to reputation or possible loss of liberty, were by their nature considered to affect a persons fair fame and to be actionable, if malicious, and the presentation of a bankruptcy petition fell into the same class: In the past, when a traders property was touched by making him a bankrupt in the first instance, and he was left to get rid of the misfortune as best he could, of course he suffered a direct injury as to his property. But a traders credit seems to me to be as valuable as his property, and the present proceedings in bankruptcy, although they are dissimilar to proceedings in bankruptcy under former Acts, resemble them in this, that they strike home at a man's credit, and therefore I think the view of those judges correct who held, in Johnson v Emerson, that the false and malicious presentation, without reasonable and probable cause, of a bankruptcy petition against a trader, under the Bankruptcy. Act, 1869, gave rise to an action for malicious prosecution. On the general inability to found an action upon the malicious pursuit of a previous civil action, Bowen LJ also said this, vividly and in my view wisely (at pp 690 691): I do not say that if one travels into the past and looks through the cases cited to us, one will not find scattered observations and even scattered cases which seem to shew that in other days, under other systems of procedure and law, in which the consequences of actions were different from those of the present day, it was supposed that there might be some kind of action which, if it were brought maliciously and unreasonably, might subsequently give rise to an action for malicious prosecution. It is unnecessary to say that there could not be an action of that kind in the past, and it is unnecessary to say that there may not be such an action in the future, although it cannot be found at the present day. The counsel for the plaintiff company have argued this case with great ability; but they cannot point to a single instance since Westminster Hall began to be the seat of justice in which an ordinary action similar to the actions of the present day, has been considered to justify a subsequent action on the ground that it was brought maliciously and without reasonable and probable cause. And although every judge of the present day will be swift to do justice and slow to allow himself as to matters of justice to be encumbered with either precedents or technicalities, still every wise judge who sits to administer justice must feel the greatest respect for the wisdom of the past, and the wisdom of the past presents us with no decisive authority for the broad proposition in its entirety which the counsel for the plaintiff company have put forward. But although an action does not give rise to an action for malicious prosecution, inasmuch as it does not necessarily or naturally involve damage, there are legal proceedings which do necessarily and naturally involve that damage These passages highlight the point that civil actions cannot be said to have the same inevitable or necessary effect on trading or any other reputation as a winding up petition. They may be the occasion for serious allegations, which may be reported, but that is a feature of much civil litigation, not merely as a result of the way in which it is initiated and pursued, but as a result of evidence which may be given by independent factual and expert witnesses as well as parties. Civil actions are complex and developing phenomena, not infrequently exciting the interest of the press and public and leading ultimately to a resolution, by judgment, earlier settlement or sometimes withdrawal. This is so with whatever motive or prospect they may be pursued. The basic point which the Court of Appeal in Quartz Hill was concerned to underline was that an action to investigate the maliciousness or otherwise of a full blown prior civil action, which had been fought and resolved inter partes, was and is a quite different proposition to an action for malicious pursuit of an ex parte step taken maliciously with immediate effect on the other partys person, property or business. That distinction is still in my view a valid one. A judge of today would also be as sensible as a judge of Bowen LJs time to heed the fact that the wisdom of the past presents no decisive authority for the broad contrary proposition which counsel for Mr Willers puts forward. The second proposition for which Quartz Hill stands is that extra costs over and above those awarded in a prior civil action cannot on any view ground or be recovered in an action for malicious pursuit of that prior action. That proposition is supported by Sinclair v Eldred (1811), as well as by Johnson v Emerson (1871) to which the Court of Appeal referred. Although such extra costs might be quite reasonable as between solicitor and client, they were as between the parties to be regarded as the only costs which were necessary or were caused by or properly recoverable in respect of the prior litigation: per Brett MR and Bowen LJ at pp 682 and 690. There is an obvious policy imperative behind this rule. A court awarding costs in a civil action is entitled to have regard to all relevant matters, including the absence of any prospects of success and the state of mind in which it was pursued, when deciding what costs, and whether on an indemnity or standard basis; should be recoverable. To permit litigation about these issues after the close of an unsuccessful action would be to invite or risk re litigation of issues which were or could have been decided in the first action. And in so far as the costs assessed by a costs judge are not likely to or may not enable full recovery of all costs incurred, the reason is likely to be that the costs incurred were not in the eyes of the law necessary, reasonable or proportionate in the context of the issues. To allow a claim for their recovery in a separate action for malicious pursuit of the original action would in each of these cases run contrary to the general policy of the law regarding costs. Authority since Quartz Hill Pursuing the line of relevant authority, in Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600 the Court of Appeal held (albeit applying a view of scandal not necessarily coincident with that which Holt CJ intended in Savile v Roberts: see para 103 above) that non compliance with a Public Health Act 1875 notice did not necessarily and naturally involve damage to the defendants fair fame. Buckley LJ noted Bowen LJ as indicating in Quartz Hill that it is in very few cases that an action for malicious prosecution will lie where the matter is one of civil proceedings (p 606). It was accepted by counsel, and endorsed by Buckley and Phillimore LJJ (pp 607 and 610), that extra costs over and above the five guineas allowable by the Justices were not legal damages within the third head of damage recognised in Savile v Roberts. Over the years since Quartz Hill, there has been a miscellany of further instances in which a remedy has been recognised in respect of procedural measures taken against the person or property. The malicious arrest of a vessel was recognised as actionable in The Walter D Wallet [1893] P 202 and Varawa v Howard Smith Co Ltd (1911) 13 CLR 35, where Quartz Hill was cited with approval (by OConnor J at p 72); the case actually concerned the issue of a writ of capias for breach of an alleged contract for sale of a ship, pursuant to which writ the plaintiff had been arrested, imprisoned and held to bail. There is nothing in The Walter D Wallet or the other Admiralty arrest cases which Lord Clarke cites in his judgment contrary to the general principles and distinctions identified in Quartz Hill. The cases he cites do no more than illustrate that the malicious initiation of civil proceedings by wrongful arrest of a vessel can give rise to liability in similar fashion to the malicious institution of civil proceedings by wrongful arrest of a person. The malicious obtaining of a bench warrant, although supported by false testimony from the witness box, was likewise held actionable in Roy v Prior [1971] AC 470, where the analogy with malicious arrest on a criminal charge was drawn. Maliciously setting in train execution against property was accepted as actionable in Clissold v Cratchley [1910] 2 KB 244. Maliciously procuring the issue of a search warrant by a judge was held actionable in Gibbs v Rea [1998] AC 786, where it was held that such a claim had long been recognised though seldom successfully prosecuted (p 797B), and that it was akin to malicious prosecution which is a well established tort and to the less common tort of maliciously procuring an arrest: Roy v Prior. In Gregory v Portsmouth City Council [2000] 1 AC 419, 427G Lord Steyn said that: These instances may at first glance appear disparate but in a broad sense there is a common feature, namely the initial ex parte abuse of legal process with arguably immediate and perhaps irreversible damage to the reputation of the victim. In Gregory v Portsmouth City Council the House of Lords refused to extend the tort of malicious prosecution to the malicious commencement of disciplinary proceedings (involving in that case the removal of a local counsellor from various committees). But Lord Steyn, giving the only full speech, accepted at p 432F G that there was a stronger case for an extension of the tort to civil legal proceeding than to disciplinary proceedings. Both criminal and civil legal proceedings are covered by the same immunity. And as I have explained with reference to the potential damage of publicity about a civil action alleging fraud, the traditional explanation namely that in the case of civil proceedings the poison and the antidote are presented simultaneously, is no longer plausible. Nevertheless, for essentially practical reasons I am not persuaded that the general extension of the tort to civil proceedings has been shown to be necessary if one takes into account the protection afforded by other related torts. I am tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extensions of other torts. While the last comment could well be true in relation to disciplinary proceedings not enjoying absolute privilege of the sort actually before the House, it would not necessarily be so in relation to civil proceedings before a court which enjoy absolute privilege. Summary of the effect of the case law As I have indicated in para 95 above, the authorities on malicious prosecution prior to Crawford v Sagicor appear to me to fall into only a limited number of categories, in essence: prosecution of criminal (and, at least anciently, some ecclesiastical) i) proceedings, but not of disciplinary proceedings; ii) institution of coercive measures instituted ex parte (though with the assistance of, or subject to some form of adjudication by, legal authorities) under civil procedures available leading to the arrest, seizure or search of the plaintiffs person or property or scandalisation of his fair fame; iii) petitions for bankruptcy or insolvency, even though the grant of the petition is subject to some form of adjudication. In claims for malicious prosecution within point (i), ie relating to a criminal prosecution, damages could include costs which the plaintiff incurred in successfully defending the malicious prosecution. But in the case of claims within points (ii) and (iii), ie in relation to the pursuit of prior civil proceedings, a plaintiff could, under the rules recognised in and expounded after Savile v Roberts recover damages for injury to person or reputation (in cases of scandal), but could not recover any extra costs over and above those recoverable inter partes in the original action. In Crawford v Sagicor, the debate between Lord Wilson in the majority and Lord Sumption in the minority appeared at times to focus on whether the tort of malicious prosecution had or had not applied to civil proceedings: compare eg paras 42 and 140. But, in reality, the position is more nuanced as appears both by their detailed discussion and by the analysis above of the case law. There is a range of cases in which the ex parte misuse of civil procedures, with immediate effects on the other partys person, property or business, has grounded a tortious claim for malicious prosecution. But it has never been accepted that there is a general right to claim damages for the malicious pursuit of a prior civil action, which has been decided in the original defendants favour by judgment, settlement or abandonment. Policy The question is whether that position should as a matter of policy be maintained. I have already indicated some factors which suggest that it should be. But ultimately it is necessary to review the issues of policy more generally. At this point, I can return gratefully to the discussion in Crawford v Sagicor, in particular in the judgments of Lord Wilson and Lord Sumption, as well as to Lord Neubergers judgment on the present appeal which I have had the benefit of seeing before writing this part of my own judgment. As will appear, I myself see the position in similar terms to Lord Neuberger and Lord Sumption. But I add this. To my mind, one thing is missing from the judgments so far. That is a discussion of the nature of the heads, or sorts, of damage which might be recoverable, if such an action were to be admissible. As Quartz Hill made clear, there can be a close relationship between this issue and the question whether any such action is admissible. According to the Statement of Facts and Issues, it is to be assumed that Mr Willers has suffered damage (1) to his reputation, (2) to his health, (3) in the form of lost earnings, (4) in the form of expenses incurred but not fully recovered, ie his costs of defending the Langstone action net of the costs awarded in it by Newey J on the standard basis. But there is no further information or assumption about the nature or causation of these heads of damage. And we have heard no submissions on them. It is impossible to form any view as to whether all or any of them might be said to have followed necessarily or naturally from the allegations made in the allegedly malicious action brought by Langstone Leisure Ltd against Mr Willers. Nevertheless, I regret that it has not been possible, on the facts being assumed and on the way in which the case has been presented, to give any close examination to the sorts of damage that might be recoverable under any tort of malicious prosecution that might otherwise exist. I shall nevertheless say some words on this. Taking first however the general question of policy, I do not consider that the law should recognise the suggested general tort. The first point I would make is that it is to my mind unconvincing to suggest that, because there is a tort of malicious prosecution of criminal proceedings, therefore it is logical or sensible that there should be a tort of malicious prosecution of civil proceedings. Not only does that ignore the teaching of history, showing courts studiously avoiding any such parallel. It also ignores the fact that, in an era when private prosecutions have largely disappeared, the tort of malicious prosecution of criminal proceedings is virtually extinct. To create a tort of malicious prosecution of civil proceedings might in these circumstances be thought to come close to necromancy. Second, the recognition of a general tort in respect of civil proceedings would be carrying the law into uncharted waters, inviting fresh litigation about prior litigation, the soundness of its basis, its motivation and its consequences. The basis, motivation and consequences of individual ex parte steps, having immediate effects at the outset of litigation, are likely to be relatively easy to identify. The exact opposite is likely to be the position in the context of prior litigation which has extended quite probably over years. Further, there is (and could logically be) nothing in the proposed extension of the tort of malicious prosecution, to limit it to circumstances where the claim was at the outset unfounded or malicious. It would be open to a defendant throughout the course of civil proceedings to tax the claimant with the emergence of new evidence, or the suggested failure of a witness to come up to proof, and to suggest that from then on the claim must be regarded as unfounded and could only be being pursued for malicious reasons. Logically, as Lord Kerr recognised in Crawford v Sagicor, paras 111 113, it must also be open to a claimant to tax a defendant with pursuing a malicious defence. Logically again, any such general tort should extend to any individual application or step in the course of a civil action, which could be said to be unfounded and maliciously motivated, eg to gain time or avoid execution, rather than for genuine litigational purposes. Indeed, logically in my view, once the parties are exposed to claims for maliciously pursuing their respective cases, there is no real reason why witnesses should not likewise be exposed, whether as co conspirators or even as persons having their own individual malicious axe to grind by giving unfounded evidence. Equally, as Lord Neuberger notes (para 162), there seems to be no reason why the extended tort should not extend to family court, domestic tribunal or arbitral proceedings. I do not see how we can avoid considering these implications of the suggested extension, when we decide the present appeal. It is no answer to say that they do not arise for immediate decision. If on the face of it they follow logically from the suggested extension, we must recognise them. Lord Wilson was unperturbed by any idea that claimants might feel exposed to off putting risks or that litigants might misuse the tort of malicious prosecution to their advantage. He suggested in paras 72(a)(i) and (e)(ii) of his judgment in Crawford v Sagicor that the court should have before it empirical evidence before giving weight to any suggestion that litigants might be put off bringing civil actions by threats of malicious prosecution or that actions for malicious prosecution might become pervasive and contaminate the system. In my opinion, such evidence could hardly be expected, when such actions have for long been seen as impossible. In any event, the formation of legal policy does not normally depend on statistics, but rather on judges collective experience of litigation and litigants and, more particularly here, their appreciation of the risks involved in litigation and the risks of its misuse. Judges have enough experience of disingenuous behaviour and procedural shenanigans on the part of litigants to form a view of sound policy in this area. Further, there already exists a clear recognition of the need that civil actions should in general be litigated without any risk of one or another party, or a third party, subsequently being able to go over and claim in respect of anything said or done in such actions. That is the absence of any duty of care owed by one litigant to another, and the general immunity which attaches to what is said or done in court by litigants or witnesses: see Lord Neubergers first and second points in paras 157 and 158 of his judgment on this appeal. A similar recognition informs the House of Lords conclusion in Manifest Shipping Co Ltd v Uni Polaris Insurance Co Ltd [2001] UKHL 1; [2003] 1 AC 469, paras 73 78 that, once parties are in litigation, their conduct is subject to the rules governing litigation, which supersede the application of (in that case) any prior duty of good faith. I need not go further into the reasons why I consider the proposed extension to be unjustified and unwise. I am content simply to say that they have been fully and to my mind powerfully set out in Crawford v Sagicor by Lord Sumption in the four points he made at paras 145 148, supplemented by those made by Lord Neuberger on the basis of United States law and experience in paras 192 196, and on the present appeal by Lord Neuberger in his first ten and final points in paras 157 to 167 and 169. However, I would add that I am also troubled by the role assigned to the concept of malice in the expanded tort for which Mr Willers contends, and reluctant on that ground also to undertake the proposed expansion. The concept is key. The pursuit of an unfounded claim, defence or other step during civil proceedings has never been actionable in itself. Rather, the remedies available for such behaviour include striking out, judgment or costs or, where an undertaking is given or required as a condition of for example an injunction, enforcement of the undertaking. The additional feature of malice is, as Lord Sumption observes in Crawford v Sagicor (para 133 et seq), not as a general rule relevant to tortious (or one may add contractual) liability. One should hesitate before extending its role, for reasons which I will indicate. The starting point is to ask what malice is said to mean in the context of malicious prosecution. This is illustrated by Crawford v Sagicor itself. The facts were that (a) it was unreasonable for Mr Delessio, acting for Sagicor, to believe that Mr Paterson had defrauded Sagicor, but (b) he did nonetheless believe this and (c) his dominant motive in alleging fraud against Mr Paterson was his strong dislike and resentment of Mr Paterson, his wish to gain revenge on him and his obsessive determination to destroy him professionally. These factors were sufficient to make Sagicor liable: see paras 32 and 80, per Lord Wilson. Two points arise from this. First, liability for malicious pursuit of civil proceedings can arise from an unfounded claim, if the claimants dominant motive is to injure, even if he believes the claim to be well founded and intends to injure the defendant by pursuing it to judgment. I would for my part better understand and be readier to accept a concept of malicious prosecution which depended on actual appreciation by the original claimant that the original claim was unfounded. The concept as advanced, and as the case law suggests, opens the door to wider claims, to wider exposure and to wider risks of misuse. Second, the concept as advanced also opens the door to future litigation about the meaning of dominant motive. This was discussed and left unanswered in the very different context of directors duties to act for a proper purpose: see Eclairs Group Ltd v JKX Oil & Gas plc [2015] UKSC 71; [2015] Bus LR 1345. Lord Sumption there considered that but for causation was the answer, whereas I thought that the principal or primary purpose in mind would be likely to be easier to identify, as well as more consistent with such guidance as authority afforded. The sorts of damage recoverable I turn to the sorts of damages that might be contemplated when considering the possibility of an action for malicious pursuit of a prior civil action. As indicated above, although much weight is put by those representing Mr Willers on Savile v Roberts, the submissions before the Supreme Court have not addressed this aspect, which was a significant element in Holt CJs judgment. It was also central to the discussion in Quartz Hill. It seems to me potentially to represent a whole further area for litigation, very likely at the appellate level, though one which it is impossible for us to resolve in any detail without having heard further submissions about it. It seems clear, however, that what is contended is that, once proceedings are found to have been maliciously pursued, all adverse consequences of their pursuit, in terms of damage to reputation, earnings, health and extra costs, are recoverable without further enquiry into their precise nature or causation. I will comment briefly on each of these sorts of damage. As regards injury to reputation, all that can be said is that it will be necessary to revisit the area on which Diplock J touched in Berry v British Transport Commission [1961] 1 QB 149, pp 163 165 (see para 104 above) and then perhaps, having decided what is the correct or the appropriate modern understanding of a scandalous allegation, to consider whether the allegations of breach of common law and statutory duties made against Mr Willers by Langstone Leisure Ltd in action HC10C01760 fell necessarily and naturally within this concept. It seems at least clear from Bowen LJs judgment in Quartz Hill that he would not have contemplated that breaches of this nature could constitute recoverable damage or ground an action for malicious pursuit of a prior civil action: see para 120 above. The damage alleged to health (or by way of distress) lies some way from the damage to the person by way of arrest or imprisonment in issue in the case law discussed above. Both the nature of the damage and its causation are presently unparticularised. Once these are known, consideration will need to be given to whether the claim to recover damages in respect of them is subject to any special rule or simply to ordinary tortious rules. The claim for damage to earnings is put on the basis that it was impossible for Mr Willers to find alternative employment while Langstone Leisure Ltds claims of breach of duty against him were unresolved. He claims 500,000 in respect of the period 27 August 2009 to 28 March 2013. Sinclair v Eldred (1811) 4 Taunt 7 stands as a precedent for the recovery of loss of earnings during a period of unfounded and maliciously caused imprisonment. Mr Willers claim for loss of earnings is not related to imprisonment, but rather, it seems likely, to the alleged damage to his reputation which Langstone Leisure Ltds proceedings allegedly caused. Consideration will need to be given to whether damage of this nature is recoverable at all, whether as general damages on account of the scandalous or other nature of the original malicious action under Savile v Roberts or as special damages on any other principle. Finally, there is Mr Willers claim to recover extra costs amounting to 2,199,966.32, over and above the 1,700,582.20 which he recovered in the proceedings brought by Langstone Leisure Ltd. There is a strong line of case law over the last 200 years holding as a rule that extra costs of this nature are as a matter of principle irrecoverable as between the parties to the original proceedings: Sinclair v Eldred, Cotterell v Jones, Quartz Hill and Wiffen v Bailey (paras 110, 111, 124 and 125 above). This line can also be traced back to Holt CJs reasoning in Savile v Roberts and to Parker CJs in Jones v Givin (paras 99 and 105 above). This line extends back before and continues after Chapman v Pickersgill and, for the reasons I have given in para 107 above, Lord Mansfield CJs approach to the bond for 200 covering all loss in that case does not in my view impinge on it or on the rule it establishes. The rule must in my opinion also apply in a case like the present where Mr Gubay is said to have been the effective instigator of the proceedings brought by Langstone Leisure Ltd (and indeed to have owned as well as controlled that company). Extra costs may in some circumstances be payable to or recoverable from a true third party, eg payable by a party to its solicitor or recoverable under an insurance or other contract. But a claim for malicious pursuit of prior proceedings against those responsible for their instigation is in effect a claim between the parties to the prior proceedings. For the reasons given in the line of authority to which I have referred, and in my discussion of it (in particular in para 124 above), the rule applies and I agree with it. Conclusion It follows from all the above that I would dismiss this appeal. LORD NEUBERGER: (dissenting) The tort of malicious prosecution in the civil context The question whether there should be a cause of action in malicious prosecution in respect of civil proceedings has recently been considered by the Judicial Committee of the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366, and it is now being addressed by the Supreme Court. In each case, the answer is in the affirmative, albeit by a bare majority. As in Crawford v Sagicor, I am in the minority. Although I agree with the judgment of Lord Mance, I propose to summarise my reasons for concluding that the answer should be in the negative, because, no doubt partly thanks to the judgments in Crawford v Sagicor, we have been given a fuller analysis of the history and implications of this tort than we had in the Judicial Committee. So far as the history of the tort of malicious prosecution in civil proceedings is concerned, there was considerable debate as to the effect of the judgments in various cases, starting with the judgment of Wray CJ in Bulwer v Smith (1583) 4 Leon 52, including the much reported judgment of Holt CJ in Savile v Roberts (1698) reported variously in 1 Ld Raym 374, 3 Salk 17, 3 Ld Raym 264, 1 Salk 13, 12 Mod 208, Carthew 416, 5 Mod 405, and ending with the judgment of Campbell CJ in Churchill v Siggers (1854) 3 E & B 929. The appellants argument is that those judgments demonstrate that the tort of malicious prosecution extended to all civil proceedings which had been maliciously and baselessly brought against the potential claimant. The respondents argument is that those cases support the view that, although the tort did not generally apply to civil proceedings, there were exceptions which were limited to cases where the potential claimant loses his liberty or his property as a result of a malicious and baseless ex parte application or the like, and, as legal procedures have developed, those exceptions have largely fallen away. The decision of Sir Francis Jeune P in The Walter D Wallet [1893] P 202 is a relatively late example of a successful malicious prosecution claim in such circumstances (in that case, the malicious arrest of a ship). These old judgments, at least in the form in which they are reported, (i) are sometimes hard to interpret, (ii) often refer to, and may depend on, procedures and rules which have long since ceased to exist, (iii) at least in some cases, are not entirely reliable, as is apparent from differing reports of the same case, and (iv) do not, on any view, speak with one voice. Accordingly, it is perhaps understandable that there is disagreement as to their precise effect in terms of the overall legal position. Nonetheless, having read Lord Mances full and informative analysis in paras 96 110 above, which is supported by that of Lord Sumption in Crawford v Sagicor, I am satisfied that the respondents analysis is correct. Apparently general remarks, such as one finds in the judgment of Lord Campbell CJ in Churchill at p 937 are not, on close analysis, as clear as they might at first appear to a modern reader. He said [t]o put in force the process of law maliciously and without any reasonable or probable cause is wrongful, and the reference to the process of the law seems to me to be to be at least capable of referring to the execution of ex parte legal process, such as detention the claimants person or his assets, attachment and the like. In any event, broad general statements about the law, even by highly respected judges, are by no means always a reliable guide to the precise boundaries of a cause of action, when the extent of those boundaries is not in issue in the case concerned. In any case, any judicial decision is authority for what it decides, not for dicta which plainly go beyond the decision. In addition to the actual contents of those judgments, two factors persuade me that the respondents contention as to the effect of these old judgments is correct. First, there is not a single reported case of a successful claim in malicious prosecution which is inconsistent with the respondents much more limited version of the tort. If the much wider tort, as contended for by the appellant, existed, one would have expected there to have been a reported case of a claim based on such a tort succeeding, or at least having been brought, especially bearing in mind the many law reporters in Westminster Hall between the 17th and 19th centuries. Secondly, in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, both Sir Baliol Brett MR at pp 682 685 and Bowen LJ at pp 688 691 (where, as Lord Mance points out at para 122 above, he discusses, rather more fully, the point made in para 153 above) clearly took the view that the tort of malicious prosecution in civil proceedings had the more limited character contended for by the respondents. In addition, I note from p 677 that the first instance judge was Stephen J, who held that there was no cause of action, and that his decision had been upheld by Pollock B and Manisty J. It is perfectly true that in that case it was not argued that the tort was as wide as the appellant now suggests, and that the issue was whether the malicious and unfounded presentation of a winding up petition (whose immediate effect was then more drastic than under the current state of the law) was to be treated as within the class of ex parte exceptions to the normal rule that there was no general tort of malicious prosecution in civil cases. Not only is that of itself worthy of note, but it appears to me to be little short of fanciful to imagine that all those five distinguished Judges would have misunderstood the scope of the tort of malicious prosecution. All of them had been in practice in the 1860s, well before the fundamental procedural changes effect in the 1870s, and Sir Baliol Brett, Pollock B and Manisty J had all been in practice since the 1840s. Further (at least in the Court of Appeal), they referred to a number of the previous authorities in their judgments. Of course, the fact that the boundaries of the tort were heavily circumscribed in the past does not mean that this court is bound to hold that they should remain circumscribed. However, the fact that the boundaries of the tort have (in my view) always been heavily circumscribed and have (on any view) been treated by the courts as heavily circumscribed since 1883, places a tolerably heavy burden on the appellants argument that those boundaries should, in effect, be removed, or at least substantially widened. A defendant to a malicious groundless civil claim will suffer stress and often will suffer financially in general terms, and many peoples immediate reaction on hearing of what happened in this case (at least as pleaded by the appellant) would be that the malicious claimant should compensate him for any mental distress and other damage which he has suffered as a consequence. However, to my mind, there are powerful reasons, some of which were identified by Lord Sumption in Crawford v Sagicor, against confirming (to use a neutral verb) the existence of a tort such as that contended for by the appellant. Some of those reasons are based on principle and some are based on practical considerations. The first reason, referred to in Crawford v Sagicor, para 124, is that the existence of the tort would be inconsistent with the well established general rule that a litigant owes no duty to his opponent in the conduct of civil litigation, a proposition which is supported by two recent House of Lords decisions, Customs and Excise Comrs v Barclays Bank plc [2007] 1 AC 181, and Jain v Trent Strategic Health Authority [2009] AC 853. In the latter case, at para 35, Lord Scott, who gave the only reasoned judgment, said that, where the defendants slipshod conduct of an investigation and prosecution led to a wholly unjust order which caused the claimant substantial damage, a remedy for the damage cannot be obtained via the imposition on the opposing party of a common law duty of care, but that the solution must depend on the control of the litigation by the court or tribunal in charge of it. The second reason, discussed in Crawford v Sagicor, para 125, is that the existence of the tort would be inconsistent with the equally well established rule that even a perjuring witness in court proceedings is absolutely immune from civil liability for a recent example see Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435, 445 446, 460 461 and 464. As was confirmed in Taylor v Director of the Serious Fraud Office [1999] 2 AC 177, this principle also applies to a potential witness giving a statement. While the decision in Jones v Kaney [2011] 2 AC 398 can be said to have made a slight inroad into this principle, the Supreme Court actually affirmed the general rule (see paras 16 17 and 105). More importantly, the effect of Jones was not to create a new tort or even a new duty of care; it was simply to remove an existing limitation on an existing duty of care: the result of the decision was that an expert witnesss duty to her client did not stop when she came to give evidence in court. The third reason, identified in Crawford v Sagicor, para 145, is that the original justification for the tort in the criminal context does not apply in the ordinary civil context. As Lord Sumption put it, the tort of malicious prosecution was developed as a tool for constraining the arbitrary exercise of the powers of public prosecuting authorities or private persons exercising corresponding functions against the claimant in subsequent potential malicious prosecution proceedings. In the non criminal context this was limited to cases where the court was invited by the potential defendant to exercise ex parte or interlocutory powers which resulted in the claimant losing his liberty or property without the prior opportunity properly to defend himself. That is no basis for extending it to civil proceedings generally. It is perhaps worth adding that the courts have developed a different and more wide ranging power in this context, by requiring, almost as a matter of course in most cases, a cross undertaking in damages to be given by a party who obtains an interlocutory order. In other words, rather than limiting damages claims by victims of wrongly granted ex parte or interlocutory orders to maliciously brought applications leading to loss of liberty or of property, the law grants an almost automatic right to such victims, irrespective of the nature of the loss or of the presence of malice. That seems to me to render it all the more peculiar to resurrect today the tort of malicious prosecution in relation to civil claims generally. The fourth reason, mentioned in Crawford v Sagicor para 146, is that within the past twenty years, in a judgment given by Lord Steyn, the House of Lords in Gregory v Portsmouth City Council [2000] AC 419 made it clear in obiter but very carefully considered remarks that the tort should not be extended beyond criminal proceedings. The contrary view had been very fully expressed by Schiemann LJ in the Court of Appeal, and Lord Steyns detailed discussion and clear conclusion should, in the absence of very telling reasons to the contrary, settle the matter. The fifth reason, as described in Crawford v Sagicor, para 147, is that the precise ambit of the tort, if it extends to civil proceedings of a private nature will be both uncertain and potentially very wide. It appears that it would extend to a malicious defence (see per Lord Kerr in Crawford v Sagicor, paras 111 113), and it may be hard to justify why it should not extend to malicious applications or allegations in proceedings which would otherwise not be malicious. And, as Lord Mance says in para 132 above, the tort could apply at different stages of proceedings, so that a claim which was not malicious initially could arguably become malicious as things change. In particular, as he points out at para 133 above, there are likely to be arguments whether proceedings, which were initially unexceptionable, have become malicious because they are being continued for tactical or costs reasons. Similarly, there could easily be arguments as to whether it could apply to family court proceedings, domestic tribunal proceedings, and arbitrations. As I observed in Crawford v Sagicor, para 194, the present position is clear and simple, and in the field of law clarity and simplicity are at a premium. The sixth reason, adumbrated in Crawford v Sagicor, para 148, arises from the practical consequences in terms of the risk of satellite litigation. There are several recent examples where the House of Lords has had cause to express concern as to how well intentioned changes in the law have spawned such undesirable results eg an industry of satellite litigation in Grovit v Doctor [1997] 1 WLR 640, a new and costly form of satellite litigation in Medcalf v Mardell [2003] 1 AC 120, para 24, and a mass of satellite litigation in Three Rivers District Council v Bank of England [2005] 1 AC 610, para 65. Seventhly, it seems to me that confirmation of the existence of the tort could well have unanticipated knock on effects in other areas of law. For instance, in relation to the law of privilege. Lord Reed pointed out that in Scotland, where such a tort is recognised, the law of privilege in relation to defamation claims is different, and it may need to be amended in this jurisdiction to accommodate the tort, with unpredictable consequences. The unforeseen problems which follow when a court seeks to change the law of tort to do what it sees as justice in particular cases are, as Lord Reed says in para 184 below, well illustrated by the problems thrown up in Zurich Insurance plc UK Branch v International Energy Group Ltd v Zurich Insurance plc UK Branch (Association of British Insurers intervening) [2015] UKSC 33; [2015] 2 AC 509 and the cases cited therein. Eighthly, problems could arise for a defendant to a malicious prosecution claim, who wished to invoke his right to privilege in relation to any document in connection with the allegedly malicious proceedings. This problem would not arise in relation to a claim based on the ruling in Jones v Kaney, as the privilege would be that of the claimant, who would presumably be waiving the privilege in order to bring his claim in the first place. Ninthly, the existence of the tort could have a chilling effect on the bringing, prosecuting or defending of civil proceedings. The notion that a person should not have to face malicious proceedings brought by a ruthless party is said to justify the existence of this tort; but the existence of the tort severely risks creating what would be at least an equally undesirable new weapon in the hands of a ruthless party, namely intimidation through the unjustified, but worrying, threat of a malicious prosecution claim to deter bona fide proceedings. In other words, the creation of a remedy for one wrong is likely to lead to another wrong. Tenthly, it is almost inevitable that the cost and time of some proceedings will be increased as a party manoeuvres in one way or another with a view to setting up a malicious prosecution claim if the other partys case fails. Eleventhly, there is a particular irony that we are creating or affirming the existence of this tort at a time when the courts of England and Wales have more powers than ever before to control litigation and make peremptory orders for costs. Twelfthly, as I discussed in Crawford v Sagicor, paras 170 175 and 181 190, unlike courts in England and Wales, courts in the United States of America have considerable experience of claims for malicious prosecution in the civil field. The state courts are pretty evenly divided as to the existence of the wide tort contended for by the appellant. Many state courts which accept the existence of the wide tort justify departing from what they understand to be the law in England on the basis that [t]he English rule is that generally the loser must pay the winners attorneys fees and so an English plaintiff who brings a frivolous suit does so as the peril of paying his adversarys litigation expenses (to quote Ciparick J in Engel v CBS Inc (1999) 711 NE 2d 626, 629). Thus, even though the costs sanction which applies to litigation in this jurisdiction is largely absent in the United States, a substantial proportion of the courts in that jurisdiction have set their face against the existence of this tort, and many of those that accept it justify their view by reference to the absence of the costs sanction which is routinely available in our courts. In addition to these reasons for not approving the existence of the tort as proposed by the appellant, there are the two rather fundamental points made by Lord Mance in paras 136 139 and 140 144 above, which appear to me to be well founded. Thus, I consider that there could be real problems involved both in identifying what constitutes malice and in deciding what types of loss and damage should be recoverable in connection with claims based on the proposed tort. Finally, in this connection, it seems to me that the risks of according a right of action to those who suffer as a result of wrong doing in the context of litigation are very well illustrated by the unfortunate experience of the litigation prompted by Parliaments decision to extend the right of litigants to seek wasted costs orders against barristers in England and Wales through section 4 of the Courts and Legal Services Act 1990. In Ridehalgh v Horsefield [1994] Ch 205, 239, Lord Bingham MR in the Court of Appeal, after referring to the fact that the number and value of wasted costs orders applied for, and the costs of litigating them, have risen sharply tried to stem the flow of such claims. Subsequently, in the House of Lords case of Medcalf v Mardell, para 13, Lord Bingham referred to the fact that the clear warnings given in [Ridehalgh] have not proved sufficient to deter parties from incurring large and disproportionate sums of costs in pursuing protracted claims for wasted costs, many of which have proved unsuccessful. In Ridehalgh, the Court of Appeal also tried to curtail the expense involved in wasted costs hearings by saying that such hearings should be measured in hours not days (a view repeated in Medcalf). That led to courts refusing to hear wasted costs applications when they became disproportionate see eg Regent Leisuretime Ltd v Skerrett [2006] EWCA Civ 1032. Because wasted costs applications are procedural and ultimately discretionary, it is far easier for the court to control the proceedings than it would be in relation to a malicious prosecution proceedings, where the claim would be based on a substantive legal right (although, as mentioned in para 168 above, the courts generally have greater powers of case management than they did in the past). The judgments in Ridehalgh v Horsefield at pp 233 234 and in Medcalf v Mardell at paras 23 24, 40 and 61 also demonstrate the problems thrown up by the law of privilege in relation to claims founded on the conduct of litigation. In addition, Ridehalgh v Horsefield at pp 233 234 support the concerns I have expressed about the risk of the tort giving rise to intimidation to discourage the bringing of valid claims. For these reasons, I would have held that a tort such as that argued for by the appellants should not be recognised in the courts of England and Wales, and I would have dismissed the appeal. LORD SUMPTION: (dissenting) This appeal has been argued with conspicuous learning and skill on both sides, but the result has been to confirm me in the view which I expressed in Crawford Adjusters (Cayman) Ltd v Sagicor [2014] AC 366, that the recognition of a tort of maliciously prosecuting civil proceedings is unwarranted by authority, unjustified in principle and undesirable in practice. The only exception is the limited category of cases in which the coercive powers of the courts are invoked ex parte at the suit of the former claimant, without any process of adjudication. This exception is less significant today than it was historically, because modern forensic procedure offers less scope for the exercise of this kind of power. The only notable survivor of the panoply of procedures that once existed for the exercise of coercive powers over person or property without judicial intervention is the power to procure a warrant for the arrest of a ship, a context in which the exception is still germane and valuable. But whatever its limits, the exception is at least certain and rationally founded upon the special features of such cases. It has no application in this case any more than it did in Crawford v Sagicor. Since I expressed my reasons at length in that case, and I entirely agree with the judgments of Lord Neuberger and Lord Mance in this one, I shall limit myself to some brief general observations. The appellants are contending for a tort of general application, which was thought to have received its quietus from the Court of Appeal more than a century ago in Quartz Hill Consolidated Gold Mining Co v Eyre 11 QBD 674 and has never once been successfully invoked in the period of some five centuries during which the question has arisen. The alleged tort can therefore fairly be described as novel, whatever ones interpretation of the language of Holt CJ in Savile v Roberts (1698) 1 Ld Raym 374. Novelty as such is of course no bar to the recognition of a rule of law. But in a system of judge made customary law, judges have always accepted limitations on their ability to recognise new bases of non consensual liability. Two limitations are particularly germane in this case, neither of which is consistent with recognising the wider tort for which the appellant are arguing. The first is that where the courts develop the law, they must do so coherently. This means, among other things, that the development must be consistent with other, cognate principles of law, whether statutory or judge made. The recognition of a general liability for maliciously prosecuting civil proceedings fails that test. It circumvents the careful and principled limits that the courts have imposed on the tort of abuse of civil process. It cuts across the immunities which the law has always recognised for things said and done in the course of legal proceedings. It introduces malice as an element of tortious liability contrary to the long standing principle of the law of tort that malice is irrelevant. Logically, it would entitle litigants to recover as of right costs which by statute are a matter of discretion. And unless we are to overrule not just the reasoning but the decision of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419, it would introduce an unjustifiable distinction between civil proceedings sounding in private law and those sounding in public law such as the disciplinary proceedings in issue in that case. The recognition of the wider basis of liability urged by the appellant would make the law relating to the conduct of legal proceedings incoherent in ways that cannot simply be brushed aside or left to other cases to sort out. The second limitation is that the proposed development of the law should be warranted by current values and current social conditions. Unless the law is to be reinvented on a case by case basis, something must generally have changed to make appropriate that which was previously rejected. The appellants arguments fail that test also. The courts have far more extensive powers today than they did a century and a half ago to prevent abuse of their procedures, and the closer judicial supervision of the interlocutory stages of litigation makes it easier to exercise them. Of course, these powers will not be enough to identify in time the more determined and skilful abuses, but that is part of the price to be paid for access to justice. The reluctance of the courts to accept rules of law justifying secondary or satellite litigation is born of long standing judicial experience of the incidents of litigation and the ways of litigants. That experience is as relevant today as it has ever been. The volume of litigation has increased exponentially in the last 70 years. Its tendency to generate persistence, obsession and rancour is as great as ever. The hazards of losing, already considerable in terms of costs, must inevitably be greater if one adds the threat of secondary litigation for prosecuting the earlier action in the first place. Doubtless the great majority of secondary actions will fail, but that makes it even less satisfactory to enlarge the opportunities for bringing them. On the status as authority of the judgments of the Privy Council, I have nothing to add to the judgment of Lord Neuberger, with which I entirely agree. I would dismiss this appeal. LORD REED: (dissenting) I agree with the judgments of Lord Neuberger and Lord Mance, and wish to add only three observations. The first concerns the extent to which the discussion in the present appeal has focused on the interpretation of law reports from the 16th to the 18th centuries. It is often valuable to understand how the modern law has come to be shaped as it is, especially where, as in the present case, the court is faced with an argument that it contains an anomaly. The judgment of Lord Sumption in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17; [2014] AC 366, and that of Lord Mance in the present case, are therefore valuable in explaining how the modern law came about, and why criminal prosecutions and certain ex parte civil proceedings have been treated differently from other civil proceedings. But the significance of the historical inquiry to the courts decision should not be exaggerated. My own conclusion in the present case would have been the same even if a judgment had been discovered which unequivocally demonstrated that a right of action had been held to lie 300 years ago for the malicious prosecution of a civil suit inter partes. That is because, in the first place, the question raised by the appeal has to be answered in the context of the modern law of tort and modern civil procedure, rather than the corresponding law of 300 years ago. More generally, the court must not lose sight of the fact that it is deciding the law for the 21st century. We have to develop a body of law which is well suited to the conditions of the present day, looking back to the achievements of our predecessors, and also, often more pertinently, to those of our contemporaries in other jurisdictions (as Lord Neuberger did in Crawford, in his consideration of the US authorities). As Maitland observed, every age should be the mistress of its own law (The making of the German Civil Code, in Fisher (ed), The Collected Papers of Frederic William Maitland, Vol III, p 487 (1911)). The great judges of the past, such as Holt and Mansfield, would have been the first to recognise that. The second point also concerns the use made of the reports of judgments given several centuries ago. As any modern judge knows, the citation of something he has said in a judgment, taken out of its context, is liable to be misleading. The same is surely true of the judgments of our predecessors. The court must therefore have a secure understanding of the factual and legal context of those judgments in order to be able to determine the intended scope of any judicial pronouncements. It is often difficult, however, to attain such an understanding of the judgments of the distant past. Difficulties arising from an unfamiliar procedural context, and an equally unfamiliar remedy centred approach to legal thinking, are liable to be exacerbated by the variable quality of the reports themselves, and the variations between reports of the same case. It is unsurprising that, in the present case, notwithstanding the careful research carried out by counsel and members of the court, the authorities are nevertheless interpreted differently. Thirdly, major steps in the development of the common law should not be taken without careful consideration of the implications, however much sympathy one may feel for the particular claimant. The confusion resulting from the development of the law in order to afford justice to the victims of mesothelioma, in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32, should have taught us that lesson. In the present case, the basic problem facing the appellant, so far as his claim is based on damage to his reputation caused by allegations made against him in earlier civil proceedings, is the absolute privilege accorded by the modern law of defamation. The solution favoured by the majority results in the circumvention of that problem by the creation or extension of another tort. The question where that leaves the law of defamation, and the other issues identified by Lord Mance, appear to me to require fuller consideration than they have received. Sooner or later, this court will have to address them.

UK-Abs

For the purposes of the appeal, the Court was invited to assume that Mr Gubay controlled a leisure company, Langstone, of which Mr Willers was a director. Mr Willers was later dismissed as director of Langstone and in 2010 Langstone sued Mr Willers for alleged breach of contractual and fiduciary duties in pursuing litigation. On 28 March 2013, Langstone discontinued its claim against Mr Willers. Mr Willers claimed that the claim brought against him by Langstone was part of a campaign by Mr Gubay to do him harm. Consequently he sued Mr Gubay for malicious prosecution. It was not disputed that the alleged actions of Mr Gubay constituted the necessary ingredients for a claim in malicious prosecution (on the assumption Mr Willers could substantiate such claims at trial); the question was whether a claim in malicious prosecution could be brought in relation to civil proceedings by an individual against another individual. Malicious prosecution already exists in relation to criminal proceedings. If a malicious prosecution did exist in relation to civil proceedings as between private individuals, then Mr Willers claim would be permitted to go to trial. The Supreme Court allows Mr Willers appeal by a majority of 5 to 4 ruling that the entirety of Mr Willers claim should be permitted to go to trial. Lord Toulson (with whom Lady Hale, Lord Kerr and Lord Wilson agree) gives the lead judgment. Lord Clarke delivers a concurring judgment. Lords Neuberger, Mance, Sumption and Reed give dissenting judgments. It seems instinctively unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there is no reasonable ground, and yet not be entitled to compensation for the injury intentionally caused by the person responsible for instigating it [43]. The tort will not deter those who have valid claims. This was the argument advanced for not allowing the tort in criminal proceedings. It has no greater merit in civil proceedings [44]. There is a public interest in finality and in avoiding unnecessary satellite litigation, but an action for malicious prosecution does not amount to a collateral attack on the outcome of the first proceedings [46]. The tort does not create a duty of care. There is a great difference between imposing a duty of care and imposing a liability for maliciously instituting proceedings without reasonable or probable cause [49]. Over the last 400 years there has been a volume of case law about malice, and the related requirement of absence of reasonable and probable cause, for the purposes of the tort of malicious prosecution [53]. To make out malicious prosecution it is well established that the requirements of absence of reasonable and probable cause and malice are separate requirements although they may be entwined. In order to have reasonable and probable cause, the defendant does not have to believe that the proceedings will succeed. It is enough that, on the material on which he acted, there was a proper case to lay before the court. Malice is an additional requirement. As applied to malicious prosecution, it requires the claimant to prove that the defendant deliberately misused the process of the court. The most obvious case is where the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation. But the authorities show that there may be other instances of abuse. A person, for example, may be indifferent whether the allegation is supportable and may bring the proceedings, not for the bona fide purpose of trying that issue, but to secure some extraneous benefit to which he has no colour of a right. The critical feature which has to be proved is that the proceedings instituted by the defendant were not a bona fide use of the courts process [54 55]. The combination of requirements that the claimant must prove not only the absence of reasonable and probable cause, but also that the defendant did not have a bona fide reason to bring the proceedings, means that the claimant has a heavy burden to discharge [56]. Lord Clarke delivers a concurring judgment by reference to the arrest of ships, the ingredients of the tort of misfeasance in public office and the close affinity between malicious prosecution of criminal proceedings and malicious prosecution of civil proceedings [60 91]. Lord Neuberger delivers a dissenting judgment with twelve reasons for why the tort of malicious prosecution should not available in respect of civil proceedings between one private litigant and another as well as in criminal proceedings. The key reasons are that the tort would be inconsistent with the general rule that a litigant owes no duty to his opponent in the conduct of civil litigation [157], inconsistent with witness immunity from civil liability [158], create a danger of satellite litigation [163] and may have a chilling effect on the bringing civil proceedings [166]. Lord Mance delivers a dissenting judgment. The extension of malicious prosecution is not supported by the authorities [95 129] or by policy because, for example, there is no duty of care owed between litigants [130 140, see 135]. Lord Sumption adds a dissenting judgment. When recognising new species of non consensual liability, the common law must develop coherently. The recognition of a general liability for maliciously prosecuting civil proceedings circumvents the principled limits that the courts have imposed on the tort of abuse [178]. Its developments must also be warranted by current values and social conditions. The courts have far more extensive powers today than they did a century and a half ago to prevent abuse of their procedures [179]. Lord Reed adds a dissenting judgment in agreement with Lords Neuberger and Mance adding observations including a caution against relying on 16th to 18th century cases in a judgments reasoning, especially when constructing their historical context may be difficult [182 3].

Trump International Golf Club Scotland Limited (TIGC) has developed a golf club and resort at Menie Estate and Menie Links, Balmedie, Aberdeenshire. In 2011 Aberdeen Offshore Wind Farm Limited (AOWFL) applied for consent under section 36 of the Electricity Act 1989 (the 1989 Act) to construct and operate the European Offshore Wind Deployment Centre in Aberdeen Bay, off the coast of Blackdog, Aberdeenshire. The application concerned the construction of up to 11 wind turbines, which might be of different sizes, with a maximum power generation of 100MW. The proposed windfarm, if constructed, would be located about 3.5 kilometres from the golf resort and would be seen by people using the resort. TIGC, concerned that the proposed windfarm development would materially diminish the amenity of the golf resort, opposed the application. On 26 March 2013 the Scottish Ministers granted consent for the development and operation of the windfarm subject to conditions. TIGC has challenged that decision on various grounds in the courts in Scotland without success. Two grounds of challenge remain in this appeal. The two grounds on which TIGC now seeks to have the consent quashed are: (i) because the Scottish Ministers had no power under the 1989 Act to grant consent to the windfarm application as only a licence holder or an exempt person may apply for and be granted a construction consent under section 36 of that Act; and (ii) because condition 14 of the consent (which requires the submission and approval of a design statement) is void for uncertainty. I shall refer to the first ground as the section 36 challenge and the second ground as the condition 14 challenge. The section 36 challenge The section 36 challenge raises a question of statutory construction. In essence, TIGC relies on the wording of paragraph 3 of Schedule 9 to the 1989 Act in support of its contention that only the holder of a licence to generate, transmit, or supply electricity, which is granted under section 6 of the 1989 Act, or a person exempted under section 5 of that Act from holding such a licence, may apply for a construction consent under section 36. Paragraph 3 of Schedule 9 (so far as relevant) provides: (1) In formulating any relevant proposals, a licence holder or a person authorised by an exemption to generate, distribute, supply or participate in the transmission of electricity (a) shall have regard to the desirability of preserving natural beauty, of conserving flora, fauna and geological or physiographical features of special interest and of protecting sites, buildings and objects of architectural, historic or archaeological interest; and (b) shall do what he reasonably can to mitigate any effect which the proposals would have on the natural beauty of the countryside or on such flora, fauna, features, sites, buildings or objects. (2) In considering any relevant proposals for which his consent is required under section 36 or 37 of this Act, the Secretary of State shall have regard to (a) paragraph (a) of sub paragraph (1) above; and (b) the extent to which the person by whom the proposals were formulated has complied with his duty under paragraph (b) of that sub paragraph. the desirability of the matters mentioned in (3) Without prejudice to sub paragraphs (1) and (2) above, in exercising any relevant functions each of the following, namely, a licence holder, a person authorised by an exemption to generate or supply electricity and the Secretary of State shall avoid, so far as possible, causing injury to fisheries or to the stock of fish in any waters. The references to the Secretary of State in relation to section 36 applications in Scotland should be treated as references to the Scottish Ministers: Scotland Act 1998, section 117. Section 36 of the 1989 Act provides inter alia that a generating station shall not be constructed, extended or operated except in accordance with a consent which in England and Wales is granted by the Secretary of State and in Scotland by the Scottish Ministers. Mr John Campbell QC for TIGC submits that paragraph 3 of Schedule 9 to the 1989 Act gives rise to a necessary implication that only licence holders or exempt persons may be granted a section 36 consent. Were it otherwise, there would be two classes of section 36 applicant, namely those with duties under paragraph 3(1) of Schedule 9 and those without such duties. There is, he submits, no reason for two such classes. Secondly, under paragraph 3(2) of Schedule 9, the Scottish Ministers when considering any relevant proposals which require a section 36 consent, are to have regard to the extent to which the applicant has complied with his duty under paragraph 3(1)(b) of Schedule 9. That presupposes that the applicant is under such a duty. Only licence holders and exempt persons are under those duties. If an applicant were able to obtain a section 36 consent and construct a generating station or other relevant proposal before he obtained a licence to generate, he could complete a significant development before he became subject to the environmental duties of paragraph 3 of Schedule 9. Looking more generally at statutory policy, Mr Campbell submits that the statutory policy is to secure that only operators who are suitably qualified in the electricity generating industry will apply for consent to construct a generating station or other development which is a relevant proposal. There is, he submits, a logical progression by which, first, an applicant establishes his competence to generate electricity by obtaining a section 6 licence or a section 5 exemption, secondly, he formulates his proposals for the development in a section 36 application, thirdly, he prepares and publishes a statement (under Schedule 9, paragraph 4) setting out the manner in which he will perform the Schedule 9 paragraph 3(1) duties, before, finally, he implements the section 36 consent by constructing the relevant proposal. Like Lord Doherty and the First Division of the Inner House of the Court of Session, I am satisfied that this challenge fails. I examine first the structure of and the language used in the 1989 Act and then discuss the wider policy background to the Act. (i) The structure and language of the 1989 Act The relevant starting point is section 4 of the 1989 Act, which makes it a criminal offence to generate electricity or to carry out other specified activities without authorisation by a licence. Section 5 empowers the Secretary of State to grant an exemption from the requirement of a licence. Section 6 empowers the Gas and Electricity Markets Authority to grant, among others, a licence to generate electricity. There is no express prohibition in section 4 from constructing a generating station without a licence, as one might have expected if only licence holders or exempt persons alone were to be given a section 36 consent. Section 36 places no restriction on who may apply for a consent to construct a generating station. Neither does Schedule 8, which section 36(8) relates to consents under section 36 and also consents to the installation of overhead lines under section 37. Schedule 8 sets out the procedures to be followed when seeking or objecting to applications for consent or challenging a decision whether to hold a public inquiry. Again, one might have expected an express restriction on the applicants for a section 36 consent in these provisions if one were intended. Section 38 provides: The provisions of Schedule 9 to this Act (which relate to the preservation of amenity and fisheries) shall have effect. Paragraphs 1 and 2 of Schedule 9 relate to the preservation of amenity in England and Wales and paragraphs 3 and 4 contain similar provisions for the preservation of amenity in Scotland. Two considerations point away from Mr Campbells interpretation. First, neither paragraph 1(1) or 3(1) contains any express restriction on who may apply for a section 36 consent for the construction of a generating station which is large enough to be a relevant proposal. If there were to be such a restriction, I would have expected an express provision. Secondly, not all section 36 applications are affected by Schedule 9, but only relevant proposals, which are defined in Schedule 9, paragraph 1(3) as the construction or extension of a generating station with a capacity of not less than 10MW. Offshore generating stations with a capacity of 1MW or more require a section 36 consent (the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 ((SSI 2002/407), article 3). But they are not relevant proposals to which Schedule 9 applies if their capacity is below 10MW. As offshore installations with a capacity of under 10MW can have a significant impact on the environment and amenity, this limitation suggests that Schedule 9 was not intended to be a regime for controlling the environmental effects of constructing generating stations but, as I suggest in para 20 below, is a survivor from prior legislation when the electricity generating market was organised differently. In my view, Mr Campbells strongest point is that sub paragraph 3(2)(b) requires the Scottish Ministers, when considering any relevant proposals in a section 36 application, to have regard to the extent to which the licence holder or person authorised to generate by an exemption has complied with his sub paragraph 3(1)(b) duties to mitigate adverse effects. But, in the absence of any indication in sub paragraph 3(1), either express or arising by necessary implication, that only a licence holder or person authorised by exemption could apply under section 36 to construct a generating station which was a relevant proposal, I do not attach significance to this point. In my view sub paragraph 3(2) requires the Scottish Ministers to have regard to the environmental matters in sub paragraph 3(1)(a), whoever is the section 36 applicant. This is supported by the opening words of sub paragraph 3(2): In considering any relevant proposals for which [their] consent is required. Sub paragraph 3(2)(b) makes sense in this context if one construes it as applying only to those applicants who are under a duty under sub paragraph 3(1)(b) by reading in the words (if any) after duty so that the provision reads the Scottish Ministers shall have regard to the extent to which the person by whom the proposals were formulated has complied with his duty (if any) under paragraph (b) of sub paragraph 3(1) (emphasis added). Unless there were anything in the wider policy background to the 1989 Act which suggested an intention to restrict the persons who may apply under section 36, I think that the reading in of those words, which does no violence to the statutory language, makes sense of the provisions of Schedule 9. Finally, in this part of the challenge, Mr Campbell points out that the section 36 permission allows the applicant to operate as well as construct the generating station. Because only a licensed person or a person authorised by exemption can lawfully generate electricity, he suggests that the permission to operate can only be given to a licensed or exempted person. I am not persuaded that that is so. A section 36 permission to operate is a necessary but not a sufficient precondition for generating electricity in a generating station. As the Scottish Ministers submit in their written case, section 4 makes it clear that no generating station may be operated without a licence or exemption, and it is customary in statutory development consents to include conditions governing the operations of the new building. By requiring a section 36 consent for operations, the 1989 Act enables the Scottish Ministers to impose conditions relating to the use of the generating station as well as its construction. I am therefore of the view that the structure and language of the 1989 Act does not support TIGCs case, which depends upon the courts acceptance that Parliament sought to limit who may apply for a section 36 consent by using circumlocution and implication. (ii) The policy background to the 1989 Act I am also satisfied that there is nothing in the background to the 1989 Act which requires the court to take a different view of the relevant statutory provisions. I have five reasons for that conclusion. First, the aim of the 1989 Act was to liberalise the market for the generation, transmission and supply of electricity in Great Britain by privatisation. The White Paper, Privatisation of the Scottish Electricity Industry (1988) (Cm 327) proposed the replacement of the two Scottish public sector electricity boards by two vertically integrated private companies and envisaged that, because Scotland then had surplus generating capacity and England and Wales were projected to need substantial new capacity by 2000, the electricity industry in Scotland could compete in the British market for electricity. It and the White Paper for England and Wales, Privatising Electricity (1988) (Cm 322), proposed a Britain wide regulatory system in order to promote fair competition. In England and Wales the White Paper proposed competition in electricity generation by removing the effective monopoly on generation of the Central Electricity Generating Board and by transferring control and ownership of the National Grid to the distribution companies, with whom the generating companies would enter into contracts. The policy did not address who would construct generating stations. But it was not a necessary part of this model that the persons who sought to build the needed new generating stations were the same persons as those who later generated electricity at those stations. Secondly, the 1989 Act contains two separate regulatory regimes, for the construction of electricity generation stations and overhead electric lines (sections 36 and 37) on the one hand, and for the licensing and other regulation of electricity supply, including generation and transmission (inter alia sections 4, 6 and 7) on the other. Since the devolution of power to Scotland there have been separate regulators for those activities: the former, involving a land use permission, is in Scotland the responsibility of the Scottish Ministers; the latter, involving the regulation of electricity generation, transmission, distribution and supply in the interests of consumers (viz the 1989 Act section 3A(1) and (5)) is a reserved matter (Scotland Act 1998, section 30 and Schedule 5, Part II, section D1) and is the responsibility of the Secretary of State and the Gas and Electricity Markets Authority. Thirdly, I am satisfied that Parliament did not create a regulatory gap by allowing persons, who are not subject to environmental duties under sub paragraph 3(1) of Schedule 9, to apply for construction consents under section 36 of the 1989 Act. There is a theme in TIGCs written case which suggests that if an applicant for a section 36 consent is not under statutory environmental obligations in Schedule 9, paragraph 3(1), it is not subject to environmental constraints when constructing a generating station. But this is not so. The Scottish Ministers have a duty under sub paragraph 3(2)(a) of Schedule 9, when considering any application for consent under section 36 or 37 for a development which is a relevant proposal, to have regard to the desirability of the matters mentioned in sub paragraph 3(1) of that Schedule. In addition, the Scottish Ministers have a wide power under section 36(5) to impose conditions in a section 36 consent and they are informed of the environmental impact of a proposed development by an environmental assessment which has been required since the commencement of the Environmental Assessment (Scotland) Regulations 1988 (SI 1988/1221) and their amendment in 1990 to take into account the 1989 Act. Now the Scottish Ministers are subject to the Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000 (SSI 2000/320), all as Lord Doherty narrated in paras 42 to 44 of his impressive opinion. As with an applicant for planning permission under the Town and Country Planning legislation, it is not necessary in order to protect the environment for an applicant for a section 36 consent to be subject to environmental duties in relation to the construction of a generating station because the authority granting the consent protects the environment by imposing conditions. Fourthly, there was and is no need to require an applicant under section 36 to possess in advance a generating licence or an exemption in order to secure that only competent persons construct generating stations. Section 36(5) of the 1989 Act, which provides that the Scottish Ministers may include in a consent such conditions as appear to them to be appropriate, expressly refers to conditions as to the ownership or operation of the station. Further, the skills required to construct a generating station, whether onshore or offshore, are not the same as those required for generating and supplying electricity, although the two skill sets may overlap. Fifthly, as Mr James Mure QC explained, it has been the established practice in both of the British jurisdictions for commercial organisations to apply for and obtain section 36 consents before they seek a licence to generate electricity under section 6 of the 1989 Act or an exemption under section 5. No evidence was presented that this practice has resulted in unsuitable persons applying for and obtaining section 36 consents or in any failure to protect the environment. A question remains as to why Parliament, when creating the new regulatory regime in the 1989 Act, should have imposed duties in Schedule 9 on licence holders and exempt persons in relation to the formulation of relevant proposals but not on other applicants for a section 36 consent for relevant proposals. The answer seems to be in the prior legislative history, in which earlier statutes imposed similar duties on publicly owned electricity boards which generated electricity. The 1989 Act preserved those duties by imposing them on persons authorised to generate electricity. Lord Malcolm in the First Division discussed this in paras 52 to 57 of his opinion, which I need not repeat in this judgment. Accordingly, neither the language of the 1989 Act nor its policy background supports the interpretation which TIGC advances. I therefore turn to the challenge to the validity of condition 14 of the section 36 consent. The condition 14 challenge Condition 14 of the section 36 consent, which the Scottish Ministers included after consulting Scottish Natural Heritage (SNH), states: Prior to the Commencement of the Development, a detailed Design Statement must be submitted by the Company to the Scottish Ministers for their written approval, after consultation by the Scottish Ministers with SNH, Marine and Coastguard Agency, Northern Lighthouse Board, National Air Traffic Services and any such other advisors as may be required at the discretion of the Scottish Ministers. The Design Statement must provide guiding principles for the deployment of the wind turbines. This plan must detail: (a) Layout location for each phase and each turbine; and (b) Turbine height, finishes, blade diameter and rotation speed across each phase, rows and individual turbine locations; and (c) Lighting requirements (navigation and aviation) for each turbine/row or, as the case may be, phase including any anemometer mast; and (d) Further detailed assessment of visual impacts to inform the detailed layout and design of each location and phase of the deployment centre from selected viewpoints to be agreed with the Scottish Ministers and any such other advisors as may be required at their discretion. Reason: to set out design principles to mitigate, as far as possible, the visual impact of the turbines. Mr Campbell submits that the section 36 consent is invalid because condition 14 is both unenforceable and also so uncertain that it is irrational. He advances three arguments in support of that contention. First, he submits that the condition is invalid because there is no mechanism by which the Scottish Ministers can force the developer to construct the windfarm in accordance with the design statement. He argues that, in contrast with conditions 18, 24 and 25, there is no express statement that the developer must construct and operate the development in accordance with its terms. Secondly, he submits that the condition is void for uncertainty because there is no indication of what compliance with it entails. Thirdly, even if (which he does not accept) the design statement could be enforced through the construction method statement in condition 13, which I set out in para 29 below, the power of the Scottish Ministers to agree a departure from the construction method statement means that the scope of the development is uncertain. The short answer to this challenge is that if, contrary to my view, condition 14 were unenforceable, the section 36 consent would not be invalidated. Annex 1 of the consent confines the development to 11 turbines each with a maximum blade tip height of 198.5 metres and Figure 1 attached to the consent shows the approved location of the 11 turbines. TIGC does not dispute that (subject to an argument about the final words of the condition, which I discuss below) condition 7 requires that the development be constructed and operated in accordance with, among others, the environmental statement and the supplementary environmental information statement. The latter document contains design principles on the location and height of the turbines, on which the Scottish Ministers can insist by invoking condition 7. Chapter 19 of the environmental statement contained a seascape, landscape and visual impact assessment which had been prepared after consultation with SNH, Aberdeen City Council and Aberdeenshire Council. It assumed that the wind turbines would have a tip height of up to 195 metres and a rotor radius of up to 75 metres. In order to take account of developing windfarm technology, in the supplementary environmental information statement AOWFL re assessed the visual impact of the development on the assumption that the maximum tip height was 198.5 metres and the maximum rotor radius was 86 metres. AOWFL also took account of SNHs consultation response, in which it requested a condition requiring a design statement. AOWFL set out objectives or design principles which it formulated after having regard to, and adapting to the offshore environment, SNHs publication, Siting and Designing Windfarms in the Landscape (2009). AOWFL listed its objectives such as (a) that the closest shoreward row of turbines should be relatively consistent in tip height to maintain design integrity in views from the immediate coastline and should be populated with the smallest tip heights and rotor diameter, and (b) that the largest turbines should be located further out to sea at specified locations to achieve a gradation to the lowest turbines located closest to the coastline. It used those objectives to formulate three zoning scenarios and appraised their visual impact from various locations. The Scottish Ministers accepted the visual impact of those scenarios. Thus, even if condition 14 were invalid, important elements of the benefits which it promoted are contained within the supplementary environmental information statement. The Scottish Ministers can insist on compliance with that document and those principles in the construction of the development. The scope of the development is defined by Annex 1 of the consent and the supplementary environmental information statement sets out the principles governing the size and location of the turbines. Condition 14 therefore cannot be seen as a fundamental condition which determines the scope and nature of a development and which, if invalid, would in turn invalidate the consent. For completeness, I observe that even if condition 14 could not be enforced so as to require AOWFL to construct the windfarm in accordance with the design statement, the condition would not be void for uncertainty. It would have effect to the extent that the developer would have to produce a design statement and obtain its approval by the Scottish Ministers before it could start the development. In Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, a case concerning a condition in a planning permission, Lord Denning stated (p 678): a planning condition is only void for uncertainty if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results. It is the daily task of the courts to resolve ambiguities of language and to choose between them; and to construe words so as to avoid absurdities or to put up with them. And this applies to conditions in planning permissions as well as to other documents. It cannot be said that condition 14 has no ascertainable meaning. Indeed, TIGC accepts that it provides that the Scottish Ministers must approve the design statement before the development can commence. Further, I do not accept the submission that the condition is invalid because of any uncertainty as to what amounts to compliance with its terms. What will amount to compliance with the design statement will depend on (a) its terms and (b) the way in which the Scottish Ministers incorporate its requirements into the construction method statement, which is the subject of condition 13, to which I now turn. When one construes the conditions as a whole, it is clear that the consent contains a mechanism that can enable the Scottish Ministers to enforce compliance with the condition 14 design statement in the construction of the development. First, condition 13 provides (so far as relevant): Prior to the Commencement of Development a Construction Method Statement (CMS) must be submitted by the Company to the Scottish Ministers and approved, in writing by the Scottish Ministers, following consultation [with specified advisors including SNH]. Unless otherwise agreed in writing by the Scottish Ministers, construction of the Development must proceed in accordance with the approved CMS. The CMS must include, but not be limited to, information on the following matters: (a) Commencement dates; (b) Working methods ; and (g) Design Statement. The CMS must be cross referenced with the Project Environmental Management Plan, the Vessel Management Plan and the Navigational Safety Plan. Reason: To ensure the appropriate construction management of the Development, taking into account mitigation measures to protect the environment and other users of the marine area. It is thus open to the Scottish Ministers to require AOWFL to include in the CMS a statement as to how it would implement the design statement. The condition refers to information on the design statement. That can include information on how the method of construction will comply with it, which, once the CMS is approved, becomes obligatory. Further, the listed matters are not exclusive as the condition says that the CMS must include, but not be limited to the listed topics. The Scottish Ministers, after consulting SNH amongst others, can require other relevant matters which mitigate environmental impact to be included within the CMS before they approve it. Thus condition 14 can be enforced by the use of the powers which the Scottish Ministers possess in condition 13. Secondly, further support for the view that the conditions envisaged that the developer would be required to comply with the design statement can be found in condition 24, which requires AOWFL to submit for approval a vessel management plan to minimise disturbance to marine mammals and birds. As mentioned above, the condition requires that the development must be constructed and operated in accordance with the vessel management plan. It also provides that the vessel management plan must be cross referenced with, amongst others, the CMS and the design statement. Thus, when one reads condition 14 in the context of conditions 13 and 24 it is clear that the conditions envisaged that the Scottish Ministers could use both the CMS and the design statement to regulate the detailed design of the windfarm in the interests of environmental protection and require those constructing the generating station to comply with those statements. It is not therefore necessary to consider whether one can imply into condition 14 an obligation that the construction of the development must be in accordance with the design statement. But as it is an important point which Mr Campbell raises in his submissions, and as Lord Carnwath has discussed the matter more fully in his judgment, I will deal with it briefly. Mr Campbell submits that the court should follow the approach which Sullivan J adopted to planning conditions in Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 13 and hold that there is no room for implying into condition 14 a further obligation that the developer must construct the development in accordance with the design statement. In agreement with Lord Carnwath, I am not persuaded that there is a complete bar on implying terms into the conditions in planning permissions, and I do not see the case law on planning conditions under planning legislation as directly applicable to conditions under the 1989 Act because of the different wording of the 1989 Act. Whether words are to be implied into a document depends on the interpretation of the words which the author or authors have used. The first question therefore is how to interpret the express words, in this case the section 36 consent. There is a modern tendency in the law to break down divisions in the rules on the interpretation of different kinds of document, both private and public, and to look for more general rules on how to ascertain the meaning of words. In particular, there has been a harmonisation of the interpretation of contracts, unilateral notices, patents and also testamentary documents. This can be seen, for example, in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 per Lord Clarke at paras 14 to 23 (contracts), Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 per Lord Steyn at pp 770C 771D and Lord Hoffmann at pp 779H 780F (unilateral notices), Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, per Lord Hoffmann at paras 27 to 35 (patents), and Marley v Rawlings [2015] AC 129, per Lord Neuberger at paras 18 23 (testamentary documents). Differences in the nature of documents will influence the extent to which the court may look at the factual background to assist interpretation. Thus third parties may have an interest in a public document, such as a planning permission or a consent under section 36 of the 1989 Act, in contrast with many contracts. As a result, the shared knowledge of the applicant for permission and the drafter of the condition does not have the relevance to the process of interpretation that the shared knowledge of parties to a contract, in which there may be no third party interest, has. There is only limited scope for the use of extrinsic material in the interpretation of a public document, such as a planning permission or a section 36 consent: R v Ashford Borough Council, Ex p Shepway District Council [1999] PLCR 12, per Keene J at pp 19C 20B; Carter Commercial Developments Ltd v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 1994, [2003] JPL 1048, per Buxton LJ at para 13, at para 27 per Arden LJ. It is also relevant to the process of interpretation that a failure to comply with a condition in a public law consent may give rise to criminal liability. In section 36(6) of the 1989 Act the construction of a generating station otherwise than in accordance with the consent is a criminal offence. This calls for clarity and precision in the drafting of conditions. When the court is concerned with the interpretation of words in a condition in a public document such as a section 36 consent, it asks itself what a reasonable reader would understand the words to mean when reading the condition in the context of the other conditions and of the consent as a whole. This is an objective exercise in which the court will have regard to the natural and ordinary meaning of the relevant words, the overall purpose of the consent, any other conditions which cast light on the purpose of the relevant words, and common sense. Whether the court may also look at other documents that are connected with the application for the consent or are referred to in the consent will depend on the circumstances of the case, in particular the wording of the document that it is interpreting. Other documents may be relevant if they are incorporated into the consent by reference (as in condition 7 set out in para 38 below) or there is an ambiguity in the consent, which can be resolved, for example, by considering the application for consent. Interpretation is not the same as the implication of terms. Interpretation of the words of a document is the precursor of implication. It forms the context in which the law may have to imply terms into a document, where the court concludes from its interpretation of the words used in the document that it must have been intended that the document would have a certain effect, although the words to give it that effect are absent. See the decision of the Privy Council in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 per Lord Hoffmann at paras 16 to 24 as explained by this court in Marks & Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd [2015] UKSC 71, per Lord Neuberger at paras 22 to 30. While the court will, understandably, exercise great restraint in implying terms into public documents which have criminal sanctions, I see no principled reason for excluding implication altogether. In my view assertions, such as are found in Trustees of the Walton on Thames Charities v Walton and Weybridge Urban District Council (1970) 21 P & CR 411, Salmon LJ at p 418 and Widgery LJ at p 420, and in the Sevenoaks District Council case (above), Sullivan J at para 45, that there can never be an implied condition in a planning permission are too absolute. To say that is not to undervalue the importance of the advice of the Secretary of State and now the Scottish Ministers in Planning Circular 4/98 that planning conditions should be precise and clear. In paragraph 29 of Annex A to the circular it is stated: The framing of conditions requires great care, not least to ensure that a condition is enforceable. A condition, for example, requiring only that a landscaping scheme shall be submitted for the approval of the planning authority is incomplete since, if the applicant were to submit the scheme and even obtain approval for it, but neglect to carry it out, it is unlikely that the planning authority could actually require the scheme to be implemented. In such a case, a requirement should be imposed that landscaping shall be carried out in accordance with a scheme to be approved in writing by the planning authority; and the wording of the condition must clearly require this. Subject to the observation that, in view of the decision in this case, the second sentence of the advice may overstate the difficulty which the planning authority might face in requiring the implementation of an approved scheme, this and the almost identical advice in the earlier Circular 11/95, paragraph 30 in respect of England and Wales remain good advice as a planning authority which follows the advice can avoid unnecessary and possibly difficult disputes about whether terms can be implied into a condition. If condition 13 had not provided that the CMS was to contain information about the design statement but, like condition 24, had required only cross references to it, I, on applying the approach to interpretation set out above, would have readily drawn the inference that the conditions of the consent read as a whole required the developer to conform to the design statement in the construction of the windfarm. The combination of the obligation in condition 14 to have the design statement approved by the Scottish Ministers and what would have been the obligation to cross refer to the design statement in statements or plans under conditions 13 and 24, with which the Scottish Ministers could enforce compliance, would point inexorably towards that conclusion. But, as I have said, it is not necessary to imply words into the consent as condition 13 gives the Scottish Ministers the vehicle to make the requirement explicit. Finally, Mr Campbell argues that the power conferred on the Scottish Ministers to alter the terms of the CMS in condition 13 (ie Unless otherwise agreed in writing by the Scottish Ministers ) invalidated the condition as it rendered the design and layout of the development uncertain. He argues also that condition 7 suffers from a similar defect. Condition 7 provides: The Development must be constructed and operated in accordance with the terms of the Application and the the accompanying Environmental Statement Supplementary Environmental Information Statement, except in so far as amended by the terms of the section 36 consent and any direction made by the Scottish Ministers. (Emphasis added) Reason: To ensure that the Development is carried out in accordance with the application documentation. and In support of that contention he refers to two cases, Midcounties Co operative Ltd v Wyre Forest District Council [2009] EWHC 964 (Admin) and Hubert v Carmarthenshire County Council [2015] EWHC 2327 (Admin). I consider that his contention is unsound. The flexibility conferred on the Scottish Ministers in each of those conditions to modify the way in which the windfarm is constructed and operated does not enable them to alter the nature of the approved development. As I have said, the maximum size and the maximum number of the turbines and their locations are set out in Annex 1 and Figure 1 of the consent, which define the development. The two cases to which Mr Campbell refers can be distinguished on that basis. The parties agreed that the reference in condition 7 to a direction made by the Scottish Ministers was a reference to a lawful direction made under a statutory power, for example under section 96 of the 1989 Act. Such a direction likewise may affect the manner in which the windfarm is constructed or operated, but it cannot alter the definition of the development itself. Conclusion For these reasons, I would dismiss the appeal. LORD MANCE: I agree with the judgment prepared by Lord Hodge and agree therefore that the appeal should be dismissed. But I add some words with regard to the process of implication on which Lord Hodge touches in para 35 of his judgment by reference to the Privy Councils advice in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 per Lord Hoffmann at paras 16 to 24 as explained by this court in Marks & Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd [2015] UKSC 72 per Lord Neuberger at paras 22 to 30. As Lord Neuberger indicates in para 23 in Marks & Spencer, whether an implication is necessary to give business efficacy must be judged objectively, in the light of the provisions of the contract as a whole and the surrounding circumstances at the time when the contract is made. But I would not encourage advocates or courts to adopt too rigid or sequential an approach to the processes of consideration of the express terms and of consideration of the possibility of an implication. Without derogating from the requirement to construe any contract as a whole, particular provisions of a contract may I think give rise to a necessary implication, which, once recognised, will itself throw light on the scope and meaning of other express provisions of the contract. This applies whether one is concerned, as in this case, with a public document in the interpretation of which there is, as Lord Hodge notes in para 33, limited scope for the use of extrinsic material or with, for example, a commercial contract, where the overall aim is to give effect to the parties assumed intentions, objectively assessed by reference to the contractual language they used understood against the background of their wider relationship and the circumstances of which both must be taken to have been aware when contracting. In the light of the above at least, it appears to me helpful to recognise that, in a broad sense as Lord Neuberger and Lord Clarke recognise in Marks & Spencer at paras 26 and 76, the processes of consideration of express terms and of the possibility that an implication exists are all part of an overall, and potentially iterative, process of objective construction of the contract as a whole. LORD CARNWATH: I agree that the appeal should be dismissed for the reasons given by Lord Hodge. I add a comment on the planning cases which have been relied on in support of the appellants strict interpretation of condition 14. These cases, in particular the first Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 13), are said by Mr Campbell QC for the appellants to support the submission that it is not possible by implication to add to the condition a requirement that the development be completed in accordance with the approved design statement. For reasons I will explain at the end of this judgment, I do not regard the planning cases as of much assistance in relation to the issue before us, which is in a different statutory context. However, since they have been said to disclose a degree of tension between competing principles of interpretation, some guidance from this court may be of value. The planning cases The three cases are: Sevenoaks District Council v First Secretary of State [2005] 1 P & (i) CR 13; (ii) Hulme v Secretary of State for Communities and Local Government [2011] EWCA Civ 638; (iii) Telford and Wrekin Council v Secretary of State for Communities and Local Government [2013] EWHC 79 (Admin). All three were concerned with what might be termed incomplete conditions, in that they required approval of certain matters in relation to the development in question, without fully stating the consequences. A similar defect is said to affect condition 14 in the present case. It is convenient to start with a brief summary of each case, to explain how the incompleteness arose and how it was resolved, before discussing the principles of law which they are said to establish or illustrate. the construction of a 27 hole golf course. It was subject to a condition 12: In Sevenoaks the claimant had been granted outline planning permission for Prior to the commencement of the development hereby permitted details of all proposed engineering works associated with the laying out of golf courses including the creation of greens, bunkers, tees, ponds or lakes shall be submitted to and approved in writing by the district planning authority. There was nothing in terms to require completion of those engineering works in accordance with the approved details. By contrast condition 8, dealing with details of means of access, expressly required completion in accordance with the approved details. Parts of the engineering works as constructed did not comply with the approved details under condition 12. The authority served an enforcement notice alleging breach of the condition. Sullivan J upheld the planning inspectors decision to allow an appeal against the notice, on the basis that the condition was unambiguously directed to submission of the details only, and not to their implementation. This authority is relied on by the appellants as providing a direct parallel with the present case, which has not been displaced by the later authorities. In Hulme permission had been granted for a windfarm, subject to a complex group of conditions, designed to mitigate noise, including (as it was described) blade swish. Condition 20 required the operator, in the event of a complaint from a local resident, to employ a consultant to assess whether the noise emissions at that dwelling exceeded the expected levels, by reference to levels specified in the condition. The condition was obscurely drafted, and failed to indicate clearly what was to happen next. However, having regard to its obvious purpose and to the scheme of the conditions as a whole, Elias LJ was able to interpret it as imposing an obligation, running for the duration of the permission, to comply with the specified levels, subject to enforcement by the planning authority in the normal way (para 38). He distinguished but did not overrule the decision in Sevenoaks. In Telford permission had been granted for use of a building as a garden centre subject to a condition in these terms: prior to the garden centre hereby approved opening, details of the proposed types of products to be sold should be submitted to and agreed in writing by the local planning authority. It was accepted that use as a garden centre was a retail use within Use Class A1, and that apart from the condition it could have been used without permission for any other use within that class. On an application for a certificate of lawful use to that effect, it was held by the planning inspector that the condition was insufficiently clear to exclude the rights otherwise available under the Use Classes Order. Beatson LJ, sitting in the Administrative Court, refused leave to appeal against that decision. He detected what he described, at para 32, as a degree of tension between the approaches in the two previous cases: The Sevenoaks case involved a condition that was considered clear and without ambiguity. Sullivan J emphasised the need for clarity and certainty on the face of the condition, in particular because a planning permission is a public document which is likely to affect third party rights and the wider public and on which they are entitled to rely, and because breach of a condition may ultimately have criminal consequences. Hulmes case appears to take a less strict approach in the context of words in a condition Elias LJ (at para 31) described as particularly opaque. The Hulme principles In both Hulme and Telford the court attempted to enunciate lists of principles said to be derived from the relevant authorities. In the first, Elias LJ set out four principles, by reference to three decided cases, one at first instance, one in the Court of Appeal and one in the House of Lords. In Telford, Beatson LJ managed with the assistance of the very experienced counsel before him to extract no fewer than nine principles, derived from a dozen or so authorities at different levels of the judicial hierarchy. With respect to them both I see dangers in an approach which may lead to the impression that there is a special set of rules applying to planning conditions, as compared to other legal documents, or that the process is one of great complexity. Beatson LJ was faced with an apparent conflict between the approaches in Sevenoaks and Hulme which needed to be resolved, and I have no difficulty with his conclusion on the facts of the case before him. However, most of the judgments cited in support of his nine principles, many at first instance, turned on their own facts, and cannot be relied on as establishing any more general rules. It may be useful to comment in more detail on Elias LJs summary of the relevant legal principles, and their relationship to the decision in Sevenoaks which is most directly relevant to the present case. They were said by him to be not in dispute (para 13), from which I infer that he may have been reproducing a summary provided by counsel without further discussion or examination of the authorities referred to. The principles were stated by him, at para 13, as follows: a) The conditions must be construed in the context of the decision letter as a whole. b) The conditions should be interpreted benevolently and not narrowly or strictly: see Carter Commercial Development Ltd v Secretary of State for the Environment [2002] EWHC 1200 (Admin), para 49 per Sullivan J, as he was. c) A condition will be void for uncertainty only if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results per Lord Denning in Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, 678. This seems to me to be an application of the benevolent construction principle. d) There is no room for an implied condition (although for reasons I discuss more fully below, the scope of this principle needs careful analysis). This principle was enunciated by Widgery LJ, as he then was, in Trustees of Walton on Thames Charities v Walton and Weighbridge District Council (1970) 21 P & CR 411, 420 in the following terms: I have never heard of an implied condition in a planning permission, and I believe that no such creature exists. Planning permission enures for the benefit of the land. It is not simply a matter of contract between the parties. There is no place, in my judgment, within the law relating to planning permission for an implied condition. Conditions should be express; they should be clear; they should be in the document containing the permission. Principle (a) is of course uncontroversial but not peculiar to planning permissions. Principle (b) requires a little more comment, as does the citation. Benevolence is not a very helpful concept, since benevolence to one party may have the opposite effect on his opponent. But it is equally uncontroversial, if it means no more than that, as with any other legal document, incompetent drafting should not prevent the court from giving the condition a sensible meaning if at all possible. On the other hand, I suspect Sullivan J himself might have been surprised to find that principle supported by reference to his own judgment at first instance from 2002. The case went to the Court of Appeal ([2002] EWCA Civ 1994), which upheld his decision but did not refer to this aspect of the judgment (see further below). In fact that same principle is supported by one of the earliest Court of Appeal decisions under the Town and Country Planning Act 1947: Crisp from the Fens Ltd v Rutland County Council (1950) 1 P & CR 48, 59. In that case a permission granted for a change of use of a building to use for making potato crisps was subject to a condition confining its use to that of the manufacture of potato crisps or any use within class III of [the Use Classes Order]. The stated reason was to ensure that the building shall not be used for general industrial purposes which would be detrimental to the amenity of the locality. The relevant Use Classes Order distinguished between use as a light industrial building (class III) and as a general industrial building (class IV); the former being defined by reference to whether the processes could be carried on in any residential area without detriment to its amenity by reason of noise, smell, fumes or smoke. It was held that, notwithstanding the unqualified reference in the condition to use for manufacture of potato crisps, the word other should be read into the second part of the condition (or any other use ), with the effect that class III constraints should be read as applying to both parts of the condition. The court relied in particular on the clear intention, expressed in the reason, to protect the local amenities by excluding general industrial use: see p 54, per Bucknill LJ. As he put it, the court should have regard to the common sense of the transaction, and to the real intention and meaning of the parties rather than criticise minutely the precise words used (p 55). Denning LJ added: It is a case where strict adherence to the letter would involve an error of substance (p 59). The same approach was reflected in the words, again of Lord Denning, from Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, 678, cited in support of Elias LJs third principle, again in itself uncontroversial. However, it is also clear from the context that Lord Denning was not enunciating some principle special to planning conditions, as compared to other forms of legal document rather the contrary. In the previous paragraph he had been considering suggested comparisons with documents such as contracts or wills. Following the passage quoted by Elias LJ, he commented: It is the daily task of the courts to resolve ambiguities of language and to choose between them; and to construe words so as to avoid absurdities or to put up with them. And this applies to conditions in planning permissions as well as to other documents. (p 678 emphasis added) I have more difficulty with Elias LJs fourth principle, not least because it reflects a strictness of approach apparently at odds with his two previous principles. The case cited in support (Walton) arose in a very esoteric and now obsolete legal context: that of so called third schedule development (under Schedule 3 to the Town and Country Planning Act 1962, as applied by section 15(3) of the Land Compensation Act 1961). Elias LJ explained the issue later in his judgment in Hulme (paras 36 37): That case concerned the assessment of compensation for the compulsory purchase of land under the Land Compensation Act 1961. The value of the compensation depended upon the value of the deemed planning permission for the rebuilding of 50 prefabs on the land. The compensating authority contended that the value with the assumed planning permission would be nil since there was to be implied a condition that any prefabs would have to be removed within ten years. This was said to arise by virtue of a power under section 2 of the Housing (Temporary Accommodation) Act 1944 which enabled the Secretary of State to require the removal of prefabs after ten years unless housing conditions required that they should remain. The Court of Appeal unanimously held that there could be no implied condition to that effect, and Widgery LJ made the observations to which I have referred above, and on which the appellant relies. Elias LJ contrasted the proposed implied term in that case, which depended on reading into the planning permission an obligation which was said to arise from extrinsic circumstances, with that in the instant case which arises as a necessary implication from the language of the express conditions when read in the context of the decision letter (para 37). I agree with that analysis, but I would go further. Widgery LJ had been a leading proponent of planning law in the early decades of the new system. However, with great respect to him, I regret the elevation of these obiter comments, made in a very unusual legal and factual context, to statements of general principle. He was not giving the leading judgment, and his comments went further than was necessary to decide the case. His general approach is apparent from the passage immediately preceding the words quoted: The courts have said on many occasions that it is only fair to a landowner that conditions attaching to planning permissions should be clear and explicit. Their effect is to work a forfeiture, and they have to be judged by the courts strict rules, like any other forfeiture. (p 420) That reflects a view, not uncommon at the time, of planning control as an interference with property rights requiring to be kept within narrow limits. It is not consistent with the modern approach, nor indeed with that of earlier cases such as Crisp from the Fens and Fawcett. There is no reason in my view to exclude implication as a technique of interpretation, where justified in accordance with the familiar, albeit restrictive, principles applied to other legal documents. In this respect planning permissions are not in a special category. Sevenoaks There are indications that such an exclusionary rule was the basis of Sullivan Js reasoning in Sevenoaks. To that extent, he was in my respectful view mistaken. The inspector had recorded the appellants case as resting on the proposition that they did what the condition required of them and could not by implication be required to do more: Words cannot be introduced later to give a condition efficacy. That is a contractual not a public law concept (judgment, para 10). The substance of that submission seems to have been accepted by Sullivan J. Having cited the statement by Widgery LJ in Walton he noted the authoritys attempt to distinguish the case, on the basis that it involved the implication of an additional condition, rather than the implication of an additional obligation to a condition already in the permission. That he said, was a distinction without a difference, adding: If conditions are to be included in a public document such as a planning permission, they should be clearly and expressly imposed, so that they are plain for all to read. There is no room for implication. (para 45) For the reasons I have given, I consider that was too widely stated, and he was wrong to find support in Walton. His approach to the issue of implication was in my view also inconsistent with the reasoning of the Court of Appeal in Crisp from the Fens, which he had cited earlier in the judgment (para 19). That decision had been relied on by counsel to support the proposition that it was possible to imply words into a condition if it was necessary to do so in order to enable the condition to achieve its purpose (para 23). Sullivan J distinguished it on the basis that the condition in that case had been found to be ambiguous, unlike his view of the condition before him. He also noted the Court of Appeals references to the intention of the parties, made, he said, at a time when the 1947 Act was a novel Act. He added: We no longer consider it appropriate to examine the intentions of the applicant and the local planning authority. The question is: what was permitted by the local planning authority? The answer to that question is to be found by construing in a common sense way the planning permission together with such other documentary evidence as may be admissible: see per Arden LJ in Carter paras 27 and 28. (para 38). I have no difficulty with the approach stated in the second part of that passage, which is entirely consistent with that of the Court of Appeal in 1950. It is true that at the end of his judgment, Bucknill LJ noted that it was a novel Act (p 55), but, as I read it, rather by way of explanation of the authoritys failure, than as a necessary part of his reasoning. Denning LJ himself emphasised the importance in general of such a condition being expressed in plain language so that any layman can understand it , but here the terms of the condition and, particularly, the reasons for it left no doubt as to its meaning (p 59). The intention of the authority was apparent, not from extrinsic evidence, but from the terms of the document itself. It was that which enabled words to be added by implication to the terms of the condition. Before leaving this subject I should add one comment on the judgment of Arden LJ in Carter Commercial (cited by Sullivan J in the passage quoted above). At the outset of her concurring judgment she said: 27. I start from the position that this planning permission is not to be construed like a commercial document, but is to be given the meaning that a reasonable reader would give to it, having available to him only the permission, the variation, the application form and the Lewin Fryer report referred to in condition 4 in the planning permission itself. 28. The reasonable reader for this purpose is to be contrasted with, for instance, the testator into whose armchair the court is enjoined to place itself in order to construe a will, or the position of parties to a commercial contract from whose standpoint the court will construe a commercial contract having regard to all the background information reasonably available to them. This is a public document, to which very different principles apply. She cited the judgment of Keene J (as he then was) in R v Ashford Borough Council, Ex p Shepway District Council [1999] PLCR 12, as indicating the very strict limitations on the extrinsic material that can be used in construing an application, including a permission I do not question the decision of the court in that case, or the reasoning on which it was based. As will have become apparent, however, and in agreement also with Lord Hodge, I do not think it is right to regard the process of interpreting a planning permission as differing materially from that appropriate to other legal documents. As has been seen, that was not how it was regarded by Lord Denning in Fawcett. Any such document of course must be interpreted in its particular legal and factual context. One aspect of that context is that a planning permission is a public document which may be relied on by parties unrelated to those originally involved. (Similar considerations may apply to other forms of legal document, for example leases which may need to be interpreted many years, or decades, after the original parties have disappeared or ceased to have any interest.) It must also be borne in mind that planning conditions may be used to support criminal proceedings. Those are good reasons for a relatively cautious approach, for example in the well established rules limiting the categories of documents which may be used in interpreting a planning permission (helpfully summarised in the judgment of Keene J in the Shepway case at pp 19 20). But such considerations arise from the legal framework within which planning permissions are granted. They do not require the adoption of a completely different approach to their interpretation. The statutory contexts compared As I have indicated I do not in any event regard the English planning cases as providing much assistance to the resolution of the issue before us. There are important differences between the two statutory schemes in respect of non compliance and its consequences. The scheme of the Town and Country Planning Act 1990 (as of the Town and Country Planning (Scotland) Act 1997, which in this respect follows the English statute), as respects enforcement, is relatively complex. Section 57 provides that planning permission is required for the carrying out of any development of land. It says nothing of the consequences of non compliance, nor is it made an offence. Enforcement is covered by a different group of sections (Part VII). [B]reach of planning control is defined as either (a) carrying out development without the required planning permission; or (b) failing to comply with any condition or limitation subject to which planning permission has been granted (section 171A(1)). Enforcement may be by means of an enforcement notice, which is required to state the paragraph of section 171A(1) within which, in the opinion of the authority, the breach falls: section 173(1)(b) (a requirement relied on by the inspector, and noted by Sullivan J, in the Sevenoaks case: para 18). An alternative, in the case of contravention of a condition, is a breach of condition notice (section 187A). An offence is committed by non compliance with a confirmed enforcement notice (section 179), or a breach of condition notice (section 187A(9)). There is also specific provision for the planning authority to apply to the court for an injunction (or, in the Scottish Act, section 146, interdict) to restrain an apprehended breach of planning control as so defined (section 187B). The scheme of the Electricity Act 1989 is much simpler. Section 36(1) provides that a generating station shall not be constructed, extended or operated except in accordance with a consent granted by the Secretary of State. Such a consent may include such conditions as appear to the Secretary of State to be appropriate (section 36(5)). Contravention of the provisions of the section is an offence, for which proceedings can only be commenced by the Secretary of State (section 36(6)(7)). I do not read this as excluding the possibility of a civil remedy if necessary to restrain an apprehended breach, at least at the suit of the Secretary of State. It seems clear that that construction will not be in accordance with the consent if it does not comply with the conditions under which it was granted. By contrast with the planning scheme, no distinction is drawn for this purpose between the two forms of non compliance. The same approach would extend in my view to any matters requiring subsequent approval under the conditions, in so far as they are properly regarded as part of the consent. Thus, even disregarding condition 13 (on which I agree with Lord Hodge), I see no reason why the requirement to construct in accordance with the consent should not include compliance with the terms of the condition 14 design statement. By condition 14 the design statement must be submitted to the Scottish Ministers for their written approval, and it must provide guiding principles for the deployment of the wind turbines, including such matters as layout location and detailed assessment of visual impacts. Although it does not in terms provide that development must be constructed in accordance with the design statement, such a requirement must as a matter of common sense be implicit, since otherwise the statement would have no practical purpose. For these reasons, in addition to those given by Lord Hodge, I would dismiss the appeal.

UK-Abs

Trump International Golf Club Scotland Ltd (TIGC) has developed a golf resort at Menie Estate and Menie Links, Balmedie, Aberdeenshire. In 2011, Aberdeen Offshore Wind Farm Ltd applied for consent under s.36 of the Electricity Act 1989 (the 1989 Act) to construct and operate the European Offshore Wind Deployment Centre in Aberdeen Bay. The application concerned the construction of up to 11 wind turbines, which might be of different sizes, with a maximum power generation of 100 MW. The proposed windfarm would be located about 3.5km from the golf resort and would be seen by people at the resort. TIGC opposed the application. In March 2013, the Scottish Ministers granted consent (the Consent) for the development and operation of the windfarm subject to conditions. TIGC challenged the Consent on various grounds in the Scottish courts without success [1]. TIGC appealed to the Supreme Court on two remaining grounds, arguing that the Consent should be quashed: (a) because the Scottish Ministers had no power under the 1989 Act to grant consent to the windfarm application as only the holder of a licence to generate, transmit, or supply electricity granted under s.6, or a person exempted under s.5 from holding such a licence may apply under s.36 (the Section 36 Challenge); and (b) because condition 14 of the Consent, which requires the submission and approval of a design statement, is void for uncertainty (the Condition 14 Challenge) [2]. The Supreme Court unanimously dismisses the appeal by TIGC. The leading judgment is given by Lord Hodge, with whom Lord Neuberger, Lord Mance, Lord Reed and Lord Carnwath agree. Lord Mance and Lord Carnwath each give concurring judgments. Section 36 Challenge TIGCs Section 36 Challenge is rejected. It is not supported by the structure and language of the 1989 Act [8 13]. Further, there is nothing in the policy background to the 1989 Act which requires the Court to take a different view of the statutory provisions. There are five reasons for this [14]: (1) The 1989 Act aimed to liberalise the British electricity market by privatisation. The policy did not address who would construct generating stations, and it was not a necessary part of the policy that the persons who built generating stations would also be the persons generating the electricity [15]. (2) The 1989 Act contains two separate regulatory regimes: (a) one for the construction of generation stations and overhead lines, and (b) one for the licensing of electricity supply, including generation. Since devolution, there have been separate regulators for those activities in Scotland [16]. (3) Parliament did not create a regulatory gap by allowing persons who are not subject to environmental duties under para 3(1) of Schedule 9 to apply for construction consents under s.36. The Scottish Ministers have a duty when considering a s.36 application to have regard to environmental matters, and wide powers to impose conditions to protect the environment [17]. (4) There is no need to require a s.36 applicant to hold in advance a generating licence or exemption, as the Scottish Ministers may (pursuant to s.36(5)) include appropriate conditions in a consent [18]. (5) It is established practice in both British jurisdictions for commercial organisations to apply for and obtain s.36 consents before they seek a licence to generate electricity, or an exemption [19]. Condition 14 Challenge The short answer to this challenge is that, even if condition 14 were unenforceable, the Consent would not be invalidated. Condition 7 requires that the development be constructed in accordance with the supplemental environmental information statement (SEIS) which covers important elements of the benefits promoted by condition 14, and the Scottish Ministers can insist on compliance with the SEIS. Further, the scope of the development is defined by Annex 1 of the Consent and the SEIS specifies the maximum size and location of the turbines. Condition 14 is not therefore a fundamental condition determining the scope and nature of the development which, if invalid, would invalidate the Consent [24 26]. Even if condition 14 could not be enforced, a planning condition is only void for uncertainty if it can be given no sensible or ascertainable meaning. This cannot be said for condition 14, which provides that the Scottish Ministers must approve the design statement before the development can begin [27]. Further, condition 14 is not invalid owing to any uncertainty as to what amounts to compliance with its terms. Construing the conditions as a whole (in particular conditions 13 and 24), it is clear that the Consent contains a mechanism enabling the Scottish Ministers to use both the construction method statement and the design statement to regulate the design of the windfarm in the interests of environmental protection, and to require compliance with those statements [28 30]. Given those conclusions, it is unnecessary to consider whether terms could be implied into the Consent [31]. Had it been necessary, however, an inference would have been drawn that the Consent read as a whole required the developer to conform to the design statement [37]. There is not a complete bar on implying terms into planning permissions, and the planning legislation cases relied on by TIGC which suggest otherwise are not directly applicable to conditions under the 1989 Act given the different statutory language [32]. Whether words are implied into a document depends on the interpretation of the express words and, while restraint is required when implying terms into public documents with criminal sanctions, there is no reason for excluding implication altogether [33 36]. Finally, the flexibility conferred on the Scottish Ministers in conditions 7 and 13 to modify the way in which the windfarm is constructed and operated does not invalidate those conditions, as the Scottish Ministers are not able to alter the nature of the approved development [38 39]. Lord Mance provides some comments on the process of implication of terms [41 44]. Lord Carnwath agrees that the planning cases do not assist in this appeal, given the differences between the statutory schemes [67 70], but he provides some guidance on the principles of interpretation derived from them [45]. He considers that the process of interpreting a planning permission does not differ materially from that appropriate to other legal documents and that there is no reason to exclude implication as a technique of interpretation where it is justified [46 66].

Ideally, discrimination ought to be an easy concept, although proving it may be harder. But we do not live in an ideal world and the concepts are not easy, as these two cases illustrate all too well. The law prohibits two main kinds of discrimination direct and indirect. Direct discrimination is comparatively simple: it is treating one person less favourably than you would treat another person, because of a particular protected characteristic that the former has. Indirect discrimination, however, is not so simple. It is meant to avoid rules and practices which are not directed at or against people with a particular protected characteristic but have the effect of putting them at a disadvantage. It is one form of trying to level the playing field. The two cases before us are about indirect discrimination on grounds of race and/or age and/or religion. Indirect discrimination is defined in section 19 of the Equality Act 2010 in this way: (1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of Bs. (2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of Bs if (a) A applies, or would apply, it to persons with whom B does not share the characteristic, (b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it, (c) it puts, or would put, B at that disadvantage, and (d) A cannot show it to be a proportionate means of achieving a legitimate aim. Subsection (3) lists the relevant protected characteristics, which include age, race and religion or belief. Mr Essops case relies upon both age and race; Mr Naeems case relies on both race and religion but primarily religion. Section 9 explains what is meant by race: (1) Race includes (a) colour; (b) nationality; (c) ethnic or national origins. (2) In relation to the protected characteristic of race a reference to a person who has a particular (a) protected characteristic is a reference to a person of a particular racial group; (b) a reference to persons who share a protected characteristic is a reference to persons of the same racial group. (3) A racial group is a group of persons defined by reference to race; and a reference to a persons racial group is a reference to a racial group into which the person falls. (4) The fact that a racial group comprises two or more distinct racial groups does not prevent it from constituting a particular racial group. Section 5(1) and (2) makes provision equivalent to section 9(2) for people who belong to or share a particular age group, which may be defined either by reference to a particular age or an age range. Section 10(3) makes equivalent provision for people of, or who share, a particular religion or belief. The concept of discrimination obviously involves comparisons between groups or individuals. Section 23(1) provides that: On a comparison of cases for the purpose of section 13, 14 or 19 there must be no material difference between the circumstances relating to each case. Having defined what is meant by discrimination, the Act goes on to define the circumstances in which it is unlawful. Relevant to these appeals is section 39(2): An employer (A) must not discriminate against an employee of As (B) (a) as to Bs terms of employment; (b) in the way A affords B access, or by not affording B access, to opportunities for promotion, transfer or training or for receiving any other benefit, facility or service. Finally, the Act deals with the burden of proof in civil proceedings before a court or a list of tribunals which includes an employment tribunal. Relevant to these appeals are section 136(2) and (3): (2) If there are facts from which the court could decide, in the absence of any other explanation, that a person (A) contravened the provisions concerned, the court must hold that the contravention occurred. (3) But subsection (2) does not apply if A shows that A did not contravene the provision. The Essop case Mr Essop is the lead appellant in a group of 49 people, six of whom have been chosen as test cases. They are, or were, all employed by the Home Office. Mr Essop is an immigration officer who has been employed by the Home Office since 1995. It is common ground that the relevant provision, criterion or practice (PCP) in this case is the requirement to pass a Core Skills Assessment (CSA) as a pre requisite to promotion to certain civil service grades. At the relevant times, the Home Office required all employees to take and pass a CSA in order to become eligible for promotion to the grades of Higher Executive Officer (HEO) original, HEO interim or Grade 7. The CSA was a generic test required for each of these grades, irrespective of the particular role. Its stated purpose was to test the core skills required to operate as a civil servant at those grades, rather than the knowledge and skills required for the particular post sought. Candidates who passed the CSA would then be required to sit and pass a Specific Skills Assessment relevant to the particular post. All the appellants have, at some time, failed the CSA and were thus not, at that time, eligible for promotion. In 2010, a report commissioned by the Home Office from a firm of occupational psychologists, Pearn Kandola, revealed that Black and Minority Ethnic (BME) candidates and older candidates had lower pass rates than white and younger candidates. All non white candidates were pooled into a single BME grouping, although a more detailed breakdown of ethnicity was available, in order to maximise the size of the group and thus the reliability of the analysis. (Whether this is an appropriate approach is not in issue before this Court but was left open by the Employment Tribunal.) The BME pass rate was 40.3% of that of the white candidates. The pass rate of candidates aged 35 or older was 37.4% of that of those below that age. In each case, there was a 0.1% likelihood that this could happen by chance. Of course, they did not all fail. No one knows why the proportion of BME or older candidates failing is significantly higher than the proportion of white or younger candidates failing. Proceedings were launched in the London South Employment Tribunal. It was agreed between the parties that a pre hearing review was required to determine whether the claimants were required for the purposes of section 19(2)(b) and/or (c) to prove what the reason for the lower pass rate was. The Home Office argued that they did need to do so. The claimants argued that they did not. The Employment Judge held that they did have to prove the reason. The claimants appealed to the then President of the Employment Appeal Tribunal, Langstaff J, who sat alone on this occasion. He held that they did not have to prove the reason. It was enough to show that the group had suffered, or would suffer, the particular disadvantage of a greater risk of failure and that each individual had in fact suffered the disadvantage of failure: [2014] UKEAT/0480/13; [2014] ICR 871. The Home Office appealed to the Court of Appeal, which held that the claimants had to show why the requirement to pass the CSA put the group at a disadvantage and that he or she had failed the test for that same reason and gave general guidance for the Employment Tribunal handling the claims: [2015] EWCA Civ 609; [2015] ICR 1063. The principal issue of law on appeal to this Court, therefore, is whether section 19(2)(b) and (c) of the 2010 Act requires that the reason for the disadvantage suffered by the group be established and that the reason why the individual has suffered from that disadvantage be the same. Also in issue are how the disadvantage is to be defined in this case and how and by whom the burden of proving the reason for it is to be discharged. The Naeem case Mr Naeem is an imam who works as a chaplain in the Prison Service. Some prison chaplains are employed on a salaried basis under contracts of employment. Some are engaged on a sessional basis as and when required and paid at an hourly rate. Both groups are required to undergo training. Before 2002, Muslim chaplains were engaged on a sessional basis only, because the Prison Service believed that there were not enough Muslim prisoners to justify employing them on a salaried basis. Mr Naeem began working as a prison chaplain at HMP Bullingdon in June 2001, at first on a sessional basis, but in October 2004 he became a salaried employee. It is common ground that the PCP in question is the Prison Service pay scheme for chaplains, which incorporates pay progression over time and thus pay is related to length of service. Like many public sector employers, the Prison Service operates an incremental pay scale, with (usually) annual increments in pay in addition to any cost of living increases until the top of the scale is reached. When Mr Naeem became an employee it would take 17 years to progress from the bottom of the pay scale (where employees normally began) to the top. The Prison Service has since reduced the time taken to climb from the bottom to the top, with the eventual aim of reducing the ladder to six years. This was done gradually, so that a new joiner in 2009 would take only nine years to do so. Existing chaplains were granted accelerated progress up the scale so that they could keep pace. But the whole process was interrupted by government constraints and a pay freeze from 2010/11 onwards. These proceedings were launched in April 2011. On 1 April 2011, the average basic pay for Muslim chaplains was 31,847, whereas the average basic pay for Christian chaplains was 33,811. This was because Muslims had only been employed on a salaried basis since 2002, whereas a substantial number of Christian chaplains had started their employment before that date. Hence their average length of service was longer and they had had more time to climb the ladder. Of course, a Christian chaplain who started in salaried employment on the same date as a Muslim chaplain, and who had the same appraisal record, would be paid the same. Mr Naeem brought proceedings in the Reading Employment Tribunal complaining that the incremental pay scheme was indirectly discriminatory against Muslim or Asian chaplains. It resulted in his being paid less than Christian chaplains in a post where length of service served no useful purpose as a reflection of ability or experience. The Tribunal held that the pay scheme was indirectly discriminatory in relation to both race and religion, but that it was objectively justified as a proportionate means of achieving a legitimate aim. Each side appealed to the Employment Appeal Tribunal, which held that the pay scheme was not indirectly discriminatory at all, because chaplains employed before 2002 should be excluded from the comparison between the two groups. However, if the EAT were wrong about that, the pay scheme had not been shown to be a proportionate means of achieving a legitimate aim. There were various possible ways of modifying the scheme so as to avoid the disadvantage suffered by people such as the claimant, which the tribunal ought to have considered: UKEAT/0215/13/RN; [2014] ICR 472. Mr Naeems appeal to the Court of Appeal was dismissed. It was not enough to show that the length of service criterion had a disparate impact upon Muslim chaplains. It was also necessary to show that the reason for that disparate impact was something peculiar to the protected characteristic in question: [2015] EWCA Civ 1264; [2016] ICR 289. Thus, although the reason for the differential impact of the length of service criterion is known, one issue in Mr Naeems case is whether the reason for the disadvantage which he suffers has also to be related to the protected characteristic of his religion or race. It is also in issue whether the pool for comparison should be all prison chaplains or only those employed since 2002 and whether the EAT was entitled to interfere with the decision of the Employment Tribunal. Direct and indirect discrimination Under the Sex Discrimination Act 1975 and the Race Relations Act 1976, direct discrimination was defined as treating a person less favourably than another on the ground of her sex or on racial grounds. Under section 13(1) of the Equality Act 2010, this has become treating someone less favourably because of a protected characteristic. The characteristic has to be the reason for the treatment. Sometimes this will be obvious, as when the characteristic is the criterion employed for the less favourable treatment: an example is Preddy v Bull [2013] UKSC 73; [2013] I WLR 3741, where reserving double bedded rooms to hetero sexual married couples only was directly discriminatory on grounds of sexual orientation. At other times, it will not be obvious, and the reasons for the less favourable treatment will have to be explored: an example is Nagarajan v London Regional Transport [2000] 1 AC 501, where the tribunals factual finding of conscious or subconscious bias was upheld in the House of Lords, confirming the principle, established in R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155 and James v Eastleigh Borough Council [1990] 2 AC 751, that no hostile or malicious motive is required. James v Eastleigh Borough Council also shows that, even if the protected characteristic is not the overt criterion, there will still be direct discrimination if the criterion used (in that case retirement age) exactly corresponds with a protected characteristic (in that case sex) and is thus a proxy for it. The concept of indirect discrimination has proved more difficult to define in statutory terms. The original version in section 1(1)(b) of the Sex Discrimination Act 1975 provided that a person discriminates against a woman if he applies to her a requirement or condition which he applies or would apply equally to a man but (i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and (ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and (iii) which is to her detriment because she cannot comply with it. Essentially the same definition was contained in section 1(1)(b) of the Race Relations Act 1976, as originally enacted. Much, but by no means all, of the Equality Act 2010 is derived from our obligations under European Union law. Those parts which are so derived must be interpreted consistently with EU law (as it is now called) and it is inconceivable that Parliament intended the same concepts to be interpreted differently in different contexts. Although EU law has always recognised both direct and indirect discrimination, the first legislative definition of indirect discrimination was contained in Council Directive 97/80/EC on the burden of proof in cases of discrimination based on sex, article 2(2) of which provided that, for the purposes of the principle of equal treatment, indirect discrimination shall exist where an apparently neutral provision, criterion or practice disadvantages a substantially higher proportion of the members of one sex unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex. This introduced the term an apparently neutral provision, criterion or practice (or PCP as it is generally known) and the concept of disproportionate group disadvantage. There was no reference to individual disadvantage, but article 4 required that, where persons who considered themselves wronged by the non application to them of the principle of equal treatment established facts from which it might be presumed that there had been direct or indirect discrimination, it was for the respondent to prove that there had been no breach of the principle of equal treatment. In 2001, a new section 63A was added to the Sex Discrimination Act to cater for this in relation to particular fields of activity covered by European Union law. A new section 54A was added to make equivalent provision in the Race Relations Act, although not yet required by European law (although it soon would be, by article 8 of Council Directive 2000/43/EC, referred to below). Section 136 of the Equality Act 2010 (above, para 6) has extended the shifting burden of proof to all activities covered by the Act (although not to criminal proceedings). The next European definition of indirect discrimination came in Council Directive 2000/43/EC implementing the principle of equal treatment between persons irrespective of racial or ethnic origins (the Race Directive). Article 2(2)(b) provided that: indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons of a racial or ethnic origin at a particular disadvantage compared with other persons, unless that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary. Thus it was sufficient that the PCP would put such persons at a particular disadvantage when compared to others. Article 8 made the same provision for shifting the burden of proof as had the earlier Directive in relation to sex. The same definition of indirect discrimination was adopted in article 2(2)(b) of Council Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation on grounds other than sex or race, in article 2(b) of Council Directive 2004/113/EC implementing the principle of equal treatment between men and women in the access to and supply of goods and services and article 2(1)(b) of Council Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast). In 2003, both the Sex Discrimination Act and the Race Relations Act were amended to apply this new concept of indirect discrimination to specified fields of activity covered by European Union law. Thus a new section 1(2)(b) in the 1975 Act provided that, for those purposes, a person discriminated against a woman if he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but (i) which puts or would put women at a particular disadvantage when compared with men, (ii) which puts her at that disadvantage, and (iii) which he cannot show to be a proportionate means of achieving a legitimate aim. Equivalent provision was made in a new section 1(1A) of the 1976 Act. That is the same concept of indirect discrimination as has now been applied to all the areas of activity covered by the Equality Act 2010. It is instructive to go through the various iterations of the indirect discrimination concept because it is inconceivable that the later versions were seeking to cut it down or to restrict it in ways which the earlier ones did not. The whole trend of equality legislation since it began in the 1970s has been to reinforce the protection given to the principle of equal treatment. All the iterations share certain salient features relevant to the issues before us. The first salient feature is that, in none of the various definitions of indirect discrimination, is there any express requirement for an explanation of the reasons why a particular PCP puts one group at a disadvantage when compared with others. Thus there was no requirement in the 1975 Act that the claimant had to show why the proportion of women who could comply with the requirement was smaller than the proportion of men. It was enough that it was. There is no requirement in the Equality Act 2010 that the claimant show why the PCP puts one group sharing a particular protected characteristic at a particular disadvantage when compared with others. It is enough that it does. Sometimes, perhaps usually, the reason will be obvious: women are on average shorter than men, so a tall minimum height requirement will disadvantage women whereas a short maximum will disadvantage men. But sometimes it will not be obvious: there is no generally accepted explanation for why women have on average achieved lower grades as chess players than men, but a requirement to hold a high chess grade will put them at a disadvantage. A second salient feature is the contrast between the definitions of direct and indirect discrimination. Direct discrimination expressly requires a causal link between the less favourable treatment and the protected characteristic. Indirect discrimination does not. Instead it requires a causal link between the PCP and the particular disadvantage suffered by the group and the individual. The reason for this is that the prohibition of direct discrimination aims to achieve equality of treatment. Indirect discrimination assumes equality of treatment the PCP is applied indiscriminately to all but aims to achieve a level playing field, where people sharing a particular protected characteristic are not subjected to requirements which many of them cannot meet but which cannot be shown to be justified. The prohibition of indirect discrimination thus aims to achieve equality of results in the absence of such justification. It is dealing with hidden barriers which are not easy to anticipate or to spot. A third salient feature is that the reasons why one group may find it harder to comply with the PCP than others are many and various (Mr Sean Jones QC for Mr Naeem called them context factors). They could be genetic, such as strength or height. They could be social, such as the expectation that women will bear the greater responsibility for caring for the home and family than will men. They could be traditional employment practices, such as the division between womens jobs and mens jobs or the practice of starting at the bottom of an incremental pay scale. They could be another PCP, working in combination with the one at issue, as in Homer v Chief Constable of West Yorkshire [2012] UKSC 15; [2012] ICR 704, where the requirement of a law degree operated in combination with normal retirement age to produce the disadvantage suffered by Mr Homer and others in his age group. These various examples show that the reason for the disadvantage need not be unlawful in itself or be under the control of the employer or provider (although sometimes it will be). They also show that both the PCP and the reason for the disadvantage are but for causes of the disadvantage: removing one or the other would solve the problem. A fourth salient feature is that there is no requirement that the PCP in question put every member of the group sharing the particular protected characteristic at a disadvantage. The later definitions cannot have restricted the original definitions, which referred to the proportion who could, or could not, meet the requirement. Obviously, some women are taller or stronger than some men and can meet a height or strength requirement that many women could not. Some women can work full time without difficulty whereas others cannot. Yet these are paradigm examples of a PCP which may be indirectly discriminatory. The fact that some BME or older candidates could pass the test is neither here nor there. The group was at a disadvantage because the proportion of those who could pass it was smaller than the proportion of white or younger candidates. If they had all failed, it would be closer to a case of direct discrimination (because the test requirement would be a proxy for race or age). A fifth salient feature is that it is commonplace for the disparate impact, or particular disadvantage, to be established on the basis of statistical evidence. That was obvious from the way in which the concept was expressed in the 1975 and 1976 Acts: indeed it might be difficult to establish that the proportion of women who could comply with the requirement was smaller than the proportion of men unless there was statistical evidence to that effect. Recital (15) to the Race Directive recognised that indirect discrimination might be proved on the basis of statistical evidence, while at the same time introducing the new definition. It cannot have been contemplated that the particular disadvantage might not be capable of being proved by statistical evidence. Statistical evidence is designed to show correlations between particular variables and particular outcomes and to assess the significance of those correlations. But a correlation is not the same as a causal link. A final salient feature is that it is always open to the respondent to show that his PCP is justified in other words, that there is a good reason for the particular height requirement, or the particular chess grade, or the particular CSA test. Some reluctance to reach this point can be detected in the cases, yet there should not be. There is no finding of unlawful discrimination until all four elements of the definition are met. The requirement to justify a PCP should not be seen as placing an unreasonable burden upon respondents. Nor should it be seen as casting some sort of shadow or stigma upon them. There is no shame in it. There may well be very good reasons for the PCP in question fitness levels in fire fighters or policemen spring to mind. But, as Langstaff J pointed out in the EAT in Essop, a wise employer will monitor how his policies and practices impact upon various groups and, if he finds that they do have a disparate impact, will try and see what can be modified to remove that impact while achieving the desired result. The arguments in Essop All the above salient features of the definition of indirect discrimination support the appellants case that there is no need to prove the reason why the PCP in question puts or would put the affected group at a particular disadvantage. The respondent relies upon two main arguments to counter this. The first is that the individual claimant has to show that he has been put at that disadvantage, that is, the same disadvantage that the group to which he belongs is, or would be, put. How, it is said, can one know what that disadvantage is unless one knows the reason for it? But what is required by the language is correspondence between the disadvantage suffered by the group and the disadvantage suffered by the individual. This will largely depend upon how one defines the particular disadvantage in question. If the disadvantage is that more BME or older candidates fail the test than do white or younger candidates, then failure is the disadvantage and a claimant who fails has suffered that disadvantage. If the disadvantage is that BME and older candidates are more likely to fail than white or younger candidates, then the likelihood of failure is the disadvantage and any BME or older candidate suffers that disadvantage. That leads to the second argument that undeserving claimants, who have failed for reasons that have nothing to do with the disparate impact, may coat tail upon the claims of the deserving ones. This is easier to answer if the disadvantage is defined in terms of actual failure than if it is defined in terms of likelihood of failure (because only some suffer the first whereas all suffer the second). But in any event, it must be open to the respondent to show that the particular claimant was not put at a disadvantage by the requirement. There was no causal link between the PCP and the disadvantage suffered by the individual: he failed because he did not prepare, or did not show up at the right time or in the right place to take the test, or did not finish the task. A second answer is that a candidate who fails for reasons such as that is not in the same position as a candidate who diligently prepares for the test, turns up in the right place at the right time, and finishes the tasks he was set. In such a situation there would be a material difference between the circumstances relating to each case, contrary to section 23(1) (para 4 above). A third answer is that the test may in any event be justified despite its disparate impact. Although justification is aimed at the impact of the PCP on the group as a whole rather than at the impact upon the individual, as Langstaff J pointed out, the less the disadvantage suffered by the group as a whole, the easier it is likely to be to justify the PCP. If, however, the disadvantage is defined in terms of likelihood of rather than actual failure, then it could be said that all do suffer it, whether or not they fail and whatever the reason for their failure. But there still has to be a causal link between the PCP and the individual disadvantage and it is fanciful to suppose that people who do not fail or who fail because of their own conduct have suffered any harm as a result of the PCP. It must be permissible for an employer to show that an employee has not suffered harm as a result of the PCP in question. The appeal has come before us as a matter of principle. In principle, the arguments put forward by the respondent do not justify importing words into the statute (and the Directives which lay behind it) which are simply not there and which, as the Court of Appeal recognised, could lead to the continuation of unlawful discrimination, which would be contrary to the public interest (para 34). In order to succeed in an indirect discrimination claim, it is not necessary to establish the reason for the particular disadvantage to which the group is put. The essential element is a causal connection between the PCP and the disadvantage suffered, not only by the group, but also by the individual. This may be easier to prove if the reason for the group disadvantage is known but that is a matter of fact, not law. Secondly, the parties are not agreed on how the disadvantage should be defined. The case came before the Employment Tribunal on the basis that the disadvantage was the greater likelihood of failure. In the Employment Appeal Tribunal, Langstaff J treated the mere fact of failure of the test as the disadvantage (para 25). The Court of Appeal favoured the approach in the Employment Tribunal. Before this Court the appellants identify the disadvantage in essentially the same terms as did Langstaff J: the disadvantage was that members of the group failed the test disproportionately and the appellants suffered that same disadvantage. In my view, the appellants (and the EAT) are in principle correct. As already noted, it is a typical feature of indirect discrimination that some members of the disadvantaged group will not in fact suffer the disadvantage. At the level of the group the disadvantage may be no more than likely but that does not make it a different disadvantage from the actual disadvantage suffered by those who are affected. The difference is between potential and actual disadvantage but the disadvantage is the same. Thus, in the typical example of a height requirement, women are statistically more likely to fail to meet it, but only some will fail and others will pass. The disadvantage in each case is the same the failure to meet the height requirement. Any other approach would deprive indirect discrimination of much of its content. I would therefore allow the appeal in the Essop case and remit the claims to be determined by the Employment Tribunal in accordance with this judgment. The arguments in Naeem Disadvantage In Mr Naeems case, the reason why the pay scale puts Muslim chaplains at a disadvantage is known: essentially it depends upon length of service and they have, on average, shorter lengths of service than Christian chaplains. But the respondent raises two main arguments. The first argument is that the reason why the PCP puts the group at a disadvantage the context factor has itself to be related to the protected characteristic. This was the view taken by Underhill LJ in the Court of Appeal in this case (and in the EAT in the earlier case of Haq v Audit Commission [2011] UKEAT/0123/10/LA but not upheld by the Court of Appeal at [2012] EWCA Civ 1621; [2013] Eq LR 130). Thus, at para 22, he held that it cannot properly be said that it is the use of the length of service criterion which puts Muslim chaplains at a disadvantage, within the meaning of section 19(2)(b). The concept of putting persons at a disadvantage is causal, and, as in any legal analysis of causation, it is necessary to distinguish the legally relevant cause or causes from other factors in the situation. In my view the only material cause of the disparity in remuneration is the (on average) more recent start dates of the Muslim chaplains. But that does not reflect any characteristic peculiar to them as Muslims: rather, it reflects the fact that there was no need for their services (as employees) at any earlier date. But this cannot be right. The same could be said of almost any reason why a PCP puts one group at a disadvantage. There is nothing peculiar to womanhood in taking the larger share of caring responsibilities in a family. Some do and some do not. But (in the context of equal pay) it has been acknowledged that a length of service criterion can have a disparate impact on women because they tend to have shorter service periods as a result of career breaks or later career starts flowing from their child care responsibilities: see Wilson v Health and Safety Executive [2009] EWCA Civ 1074; [2010] ICR 302, following Cadman v Health and Safety Executive (Case C 17/05) [2006] ICR 1623. Indeed, it could be said that the lack of need for the Muslim chaplains is more peculiar to them as Muslims than are many of the reasons why women may suffer a particular disadvantage. All that this means is that the employer may have to justify the PCP. In principle, a length of service criterion may be justified as a reward for greater experience and skill, but this gets harder to do the longer the time taken to achieve parity with others. The second argument relates to the group or pool with which the comparison is made. Should it be all chaplains, as the Employment Tribunal held, or only those who were employed since 2002? In the equal pay case of Grundy v British Airways plc [2007] EWCA Civ 1020; [2008] IRLR 74, at para 27, Sedley LJ said that the pool chosen should be that which suitably tests the particular discrimination complained of. In relation to the indirect discrimination claim in Allonby v Accrington and Rossendale College [2001] EWCA Civ 529; [2001] ICR 1189, at para 18, he observed that identifying the pool was not a matter of discretion or of fact finding but of logic. Giving permission to appeal to the Court of Appeal in this case, he observed that There is no formula for identifying indirect discrimination pools, but there are some guiding principles. Amongst these is the principle that the pool should not be so drawn as to incorporate the disputed condition. Consistently with these observations, the Statutory Code of Practice (2011), prepared by the Equality and Human Rights Commission under section 14 of the Equality Act 2006, at para 4.18, advises that: In general, the pool should consist of the group which the provision, criterion or practice affects (or would affect) either positively and negatively, while excluding workers who are not affected by it, either positively or negatively. In other words, all the workers affected by the PCP in question should be considered. Then the comparison can be made between the impact of the PCP on the group with the relevant protected characteristic and its impact upon the group without it. This makes sense. It also matches the language of section 19(2)(b) which requires that it ie the PCP in question puts or would put persons with whom B shares the characteristic at a particular disadvantage compared with persons with whom B does not share it. There is no warrant for including only some of the persons affected by the PCP for comparison purposes. In general, therefore, identifying the PCP will also identify the pool for comparison. In this case, the PCP identified was the incremental pay structure which affected all the chaplains employed by the Prison Service. This did put the Muslim chaplains at a particular disadvantage compared with the Christians. The appellant suffered this disadvantage and so section 19(2)(b) and (c) were satisfied. The question, therefore, is whether the respondent can justify it as a proportionate means of achieving a legitimate aim. Justification The Employment Tribunal held that it could. The original pay scale had been intended to reward loyalty and experience. The Prison Service had been trying to move away, as quickly as possible, from the long incremental pay scale to a much shorter one, where increments would depend to a limited extent on experience and a greater extent on assessed performance. The Employment Tribunal identified the objective as the single one of rewarding length of service and increasing experience, while at the same time managing an orderly and structured transition, over a period of time, to the shorter, single pay scale That is clearly a serious objective, which represents a real organisational need (para 27). The EAT agreed that the Employment Tribunal had properly identified a legitimate aim. Mr Naeem does not now challenge that conclusion. The EAT however disagreed that the means adopted to meet that organisational need had been shown to be proportionate. The Employment Tribunal had found as a fact that six years service was the most required for newly appointed chaplains to have attained the professional standards which should entitle them to be rewarded at the top of the scale, as fully trained and experienced in their role (para 10.7). The Prison Service was trying to achieve that in an orderly manner, by agreement with the Trade Union, but the process had been halted by government pay restraint. The Tribunal simply concluded that We accept that the need for orderly management of the process renders the element of particular disadvantage in this case necessary, but having regard to the totality of the circumstances, we find that such disadvantage to the claimant is no more than is necessary to achieve the objective (para 27). They had not considered alternative ways in which the Prison Service could have eliminated the discrimination against Mr Naeem and the other Muslim chaplains affected within the constraints to which they were subject. Not surprisingly, Mr Naeem agrees with the EAT and asks this Court, should we accept his arguments on the earlier issues, as I would do, to remit the claim to the Employment Tribunal for reconsideration of the justification issue. The EAT records that the Employment Tribunal had been offered the example of a larger group of Prison Service employees, psychotherapists, for whom a suitable adjustment had been made to eliminate discriminatory treatment (para 41). The EAT did not place much, if any, weight on this, as it had been done in the context of an equal pay rather than a discrimination claim. But the EAT made other suggestions for alternative ways of continuing to apply the PCP in question without disadvantage to the claimant backdating his length of service, adding an additional increment at the start of his service, or refusing further pay increases for those higher up the scale while improving the position of those lower down the scale. The Tribunal should have thought of these, especially as they had been given an example of a successful search for solutions. Neither the EAT nor any higher court is entitled to disturb the factual findings of an Employment Tribunal. It must detect an error of law. The Tribunal had adopted the no more than necessary test of proportionality from the Homer case and can scarcely be criticised by this Court for doing so. But we are here concerned with a system which is in transition. The question was not whether the original pay scheme could be justified but whether the steps being taken to move towards the new system were proportionate. Where part of the aim is to move towards a system which will reduce or even eliminate the disadvantage suffered by a group sharing a protected characteristic, it is necessary to consider whether there were other ways of proceeding which would eliminate or reduce the disadvantage more quickly. Otherwise it cannot be said that the means used are no more than necessary to meet the employers need for an orderly transition. This is a particular and perhaps unusual category of case. The burden of proof is on the respondent, although it is clearly incumbent upon the claimant to challenge the assertion that there was nothing else the employer could do. Where alternative means are suggested or are obvious, it is incumbent upon the Tribunal to consider them. But this is a question of fact, not of law, and if it was not fully explored before the Employment Tribunal it is not for the EAT or this Court to do so. I would therefore dismiss the appeal in Mr Naeems case.

UK-Abs

These two appeals were heard together because both raise issues arising from claims of indirect discrimination on grounds of race and/or age and/or religion. Indirect discrimination occurs when an employer applies a provision, criterion or practice (PCP) both to people who have and people who do not have the protected characteristic in question but which puts people with that characteristic at a particular disadvantage when compared with others and puts, or would put, the individual at that disadvantage, unless the employer can show that the PCP is a proportionate means of achieving a legitimate aim. Mr Essop is the lead appellant in a group of 49 people, six of whom have been chosen as test cases. They are, or were, all employed by the Home Office. They were required to pass a Core Skills Assessment (CSA) as a pre requisite to promotion to certain civil service grades. A report in 2010 established that Black and Minority Ethnic (BME) candidates, and older candidates, had lower pass rates than white and younger candidates. No one has been able to identify why this is. The appellants issued claims alleging that the requirement to pass the CSA constituted indirect discrimination on the grounds of race or age. The Home Office argued that section 19(2)(b) of the Equality Act 2010 required the appellants to prove the reason for the lower pass rate. The Court of Appeal agreed, upholding the decision of the Employment Judge. Mr Naeem is an imam who works as a chaplain in the Prison Service. Before 2002, Muslim chaplains were engaged on a sessional basis only, because it was believed that there were too few Muslim prisoners to justify employing them on a salaried basis as some Christian chaplains were. Mr Naeem worked on a sessional basis from 2001 but in 2004 became a salaried employee. At this date the pay scheme for chaplains incorporated pay progression over time. The average length of service of Christian chaplains was longer which led to a higher average basic pay. Mr Naeem argued that the incremental pay scheme was indirectly discriminatory against Muslim or Asian chaplains, resulting in lower pay in a post where length of service served no useful purpose as a reflection of ability or experience. Mr Naeems claim was rejected by the Employment Tribunal which found that the indirect discrimination was justified. The Employment Appeal Tribunal held that the scheme was not indirectly discriminatory at all because chaplains employed before 2002 should be excluded from the comparison between the two groups. The Court of Appeal held that it was not enough to show that the length of service criterion had a disparate impact upon Muslim chaplains: it was also necessary to show that the reason for that disparate impact was something peculiar to the protected characteristic of race or religion. The Supreme Court unanimously allows the Essop appeal. It remits the claims to be determined by the Employment Tribunal in accordance with the judgment. It unanimously dismisses Mr Naeems appeal. Lady Hale, with whom all the other Justices agree, gives the only judgment. The concept of indirect discrimination has following salient features: There has never been any express requirement for an explanation of the reasons why a particular PCP puts one group at a disadvantage when compared with others. It is enough that it does [24]. Indirect discrimination, unlike direct discrimination, does not require a causal link between the characteristic and the treatment but does require a causal link between the PCP and the particular disadvantage suffered [25]. The reason for the disadvantage may not be in itself unlawful, or within the control of the employer, but both the PCP and the reason for the disadvantage must be but for causes of the disadvantage [26]. The PCP need not put every member of the group sharing the protected characteristic at a disadvantage. In the Essop case, it was irrelevant that some BME or older candidates could pass the CSA: the group was at a disadvantage because the proportion who could pass was smaller than the proportion of white or younger candidates [27]. It is commonplace for the disparate impact, or particular disadvantage, to be established on the basis of statistical evidence [28]. It is always open to a respondent to show that the PCP is justified. There may well be a good reason for it. A wise employer will, however, try to see if PCPs which do have a disparate impact can be modified to remove that impact while achieving the desired result [29]. The disadvantage suffered by the individual must correspond with the disadvantage suffered by the group. The disadvantage in Essop was that members of the group failed the CSA disproportionately and the appellants suffered this disadvantage. However, a candidate who fails the CSA because he did not prepare or did not turn up for or finish the CSA has not suffered harm as a result of the PCP in question and in such a case it is open to the respondent to show that the causal link between the PCP and the individual disadvantage is absent. The Essop appeal is therefore allowed and the claims are remitted to the Employment Tribunal [30 36]. In Mr Naeems case the reason why the pay scale puts Muslim chaplains at a disadvantage is known. It is because they have on average shorter lengths of service than Christian chaplains [37]. The Court of Appeal was wrong to require the reason to relate to the protected characteristic [39]. The pool of comparators comprises all workers affected by the PCP in question. In this case the incremental pay structure affected all chaplains in the Prison Service and this did put the Muslim chaplains at a disadvantage compared with the Christians [42]. As regards justification, it was not in dispute that the pay scheme had a legitimate aim but the means adopted needed to be proportionate. The Employment Tribunal found as a fact that six years was the most required for newly appointed chaplains to have the skills and experience for reward at the top of the scale, but that in the circumstances the disadvantage suffered by Mr Naeem was no more than was necessary as the transition to a new shorter pay scale took its course. This was the correct test. It is not open to the courts on an appeal to disturb that finding, even if there were alternative means to reduce the disadvantage more quickly which could have been considered [43 47]. Mr Naeems appeal is therefore dismissed.

Between 2003 and 2008, John Worboys, the driver of a black cab in London, committed a legion of sexual offences on women. The first respondent in these proceedings (who has been referred to throughout as DSD) was among his first victims. She was attacked in 2003. The second respondent (NBV) became Worboys victim in July 2007. Many others were attacked by him between 2003 and 2007 and, sadly, yet more after NBV was assaulted. DSD and NBV brought proceedings against the Commissioner of the Metropolitan Police Service (MPS) for the alleged failure of the police to conduct effective investigations into Worboys crimes. The claims were brought under sections 7 and 8 of the Human Rights Act 1998 (HRA). The combined effect of these provisions (so far as this case is concerned) is to allow a person who claims that a public authority has acted in a way which is incompatible with their rights under the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) to bring proceedings against the public authority and to be awarded damages. The kernel of DSD and NBVs claims is that the police failures in the investigation of the crimes committed by Worboys constituted a violation of their rights under article 3 of ECHR. This provides that [n]o one shall be subjected to torture or to inhuman or degrading treatment or punishment. They succeeded in that claim before Green J, who delivered judgment on the liability issues on 28 February 2014, (Neutral Citation [2014] EWHC 436 (QB)). In a second judgment handed down on 23 July 2014, (Neutral Citation [2014] EWHC 2493 (QB)), Green J awarded compensation to DSD and NBV against MPS. An appeal by MPS was dismissed by the Court of Appeal (Lord Dyson MR, Laws and Kitchin LJJ) on 30 June 2015, (Neutral Citation [2015] EWCA Civ 646): [2016] QB 161). MPS has appealed to this court. The Secretary of State for the Home Department (SSHD) intervened, making written and oral submissions. A number of other parties intervened. Liberty intervened, as did jointly the organisations Rape Crisis, England and Wales, the End Violence Against Women Coalition, Southall Black Sisters and the Nia Project. They made helpful written submissions and valuable oral submissions. In this appeal MPS accepts that both respondents were subjected to serious sexual assault by Worboys. It further accepts that there were significant errors by the police in each of the investigations into the crimes committed against them. MPS has said that, whatever the outcome of this appeal, MPS will not seek to recoup any of the compensation and consequential costs which have been paid. DSD and NBV have recovered compensation from Worboys and each of them has received an award from the Criminal Injuries Compensation Authority (CICA). The principal issue It is accepted that HRA imposes a general duty to investigate ill treatment amounting to a violation of article 3 of ECHR. The main area of dispute is the nature of that duty. That issue has a number of themes. They can be summarised as follows: Is it a public duty or one owed to individual victims of the breach of Is it a systems or an operational duty? (i) article 3? (ii) (iii) Does the duty to investigate breaches of article 3 in relation to a particular individual arise only when it is alleged that state authorities are complicit in the breach? (iv) If the duty comprehends an obligation to investigate breaches of article 3, even if there is no involvement of state agents, is there a right to claim compensation against the state? (v) Should the fact that a victim can obtain redress against an offender or make a claim under the CICA scheme affect consideration of the availability of a right to compensation under HRA? (vi) In this context, is it relevant that UK courts have, so far, refused to recognise a common law duty of care on the police in relation to the manner in which officers prevent and investigate crime? (vii) Finally, it is suggested that it would require the clearest statement in consistent decisions of the European Court of Human Rights (ECtHR) Grand Chamber to the effect that a positive duty was owed by the state to individuals who suffered treatment contrary to article 3 at the hands of another individual before holding that the investigative duty of the state was animated. If ECtHR jurisprudence is found to be less than clear, the appropriate course was to allow the government to deploy its arguments in Strasbourg R (Ullah) v Special Adjudicator [2004] 2 AC 323. Many of these themes overlap and blend into one another and it is impossible to consider them other than compendiously, not least because that is how they are treated in many of the relevant authorities, both domestic and European. It is necessary at the outset, however, to recognise that examination of the nature of the duty is a multi faceted exercise. The nature of the duty owed under HRA the arguments The appellant argues that the duty of the police to investigate, detect and prosecute crime is of a communal nature; one which is owed to the public at large, not to individual citizens. It is submitted that the general rule is that no private law duty is owed to victims of crime. This is because it has been deemed that it would not be fair, just and reasonable to impose such a duty. The consistent theme of judicial decisions on the liability of the police at common law has been, the appellant suggests, that there are overwhelming public policy reasons that no such liability should be recognised. The Court of Appeal in the present case had emphasised the importance of consistency between the common law and HRA. It would be anomalous, the appellant contends, for there to be different bases of duty owed by the police at common law and under HRA. Many of the public policy considerations which militated against the recognition of such a duty at common law apply with equal force to the duty to investigate that arises under article 3 of HRA. It is accepted that there is a duty to investigate allegations of ill treatment which amount to a violation of article 3 but it is suggested that this duty can be enforced through the disciplinary regime, under the independent oversight of the Independent Police Complaints Commission. The existence of this regime, the appellant says, reflects the public nature of that duty. Insofar as article 3 of ECHR imposes a positive obligation to respond to ill treatment by a member of the public who is not a state agent, that obligation, the appellant submits, is to put in place the legal structures required to ensure that a proper inquiry can be conducted. It does not extend to the operational content of an individual inquiry. The investigative obligation in relation to individual cases arises only where state agents are complicit in the alleged ill treatment. The SSHD submits that the origin of the investigative duty is Assenov v Bulgaria (1998) 28 EHRR 652 where ECtHR stated that an effective official investigation was required where there was an arguable claim of serious ill treatment by the police or other such agents of the state unlawfully and in breach of article 3 para 102. It is therefore argued that the principled foundation for the implication of an investigative duty is to underpin the effectiveness of the express prohibition set out in article 3. That prohibition could only apply, the SSHD argues, to agents of the state, not to private individuals. The respondents riposte to these arguments is that the state has a duty under article 3 to conduct an effective investigation into crimes which involve serious violence to an individual. This is a positive, protective obligation to take measures designed to ensure that individuals within its jurisdiction are not subject to the treatment which article 3 prohibits. The duty is not an abstract one owed to the public at large but can be invoked by an individual who demonstrates that the states failure to fulfil its obligation has led to her or his suffering treatment prohibited by the article. The respondents submit that the appellants argument about the need for consistency between the common law position and the availability of a claim under HRA is, properly analysed, one of justiciability. They point out that the appellant accepts that there is a domestic law duty to investigate effectively serious criminal offences. It is accepted that there were several deficiencies in the investigation of these offences. The decision by Parliament to enact HRA effectively disposes of the issue of justiciability. The incorporation of ECHR into domestic law made available to an individual a remedy for a breach by the state of the article 3 protective obligation. This was entirely in line with the jurisprudence of ECtHR. In any event, the respondents argue, the public policy considerations which have been held to underlie the exemption from liability at common law do not translate to the position under HRA. As Lord Brown of Eaton under Heywood held in Van Colle v Chief Constable of Herts Police; Smith v Chief Constable of Sussex Police [2009] AC 225, para 138, Convention claims have quite different aims from civil actions. On the appellants argument that the duty of the state under article 3 is confined to putting in place legal structures to prohibit such ill treatment as is forbidden by the article, the respondents claim that this is unsustainable, again in light of the decision in Van Colle. That decision was premised on the existence of an operational duty to protect against a real and immediate risk of serious violence. The relevant case law on the nature of the duty In MC v Bulgaria (2005) 40 EHRR 20 the applicant complained that she had been raped by two men when she was 14 years old. The men in question were interviewed but it was concluded that they had not used threats or violence and there was no evidence of resistance on the part of the complainant. The district prosecutor therefore issued a decree terminating the proceedings. The complainants application to ECtHR rested on the twin assertions that Bulgarian law did not provide effective protection against rape and sexual abuse as only cases where the victim had actively resisted were prosecuted, and that the authorities had not properly investigated her allegations. It is important to recognise that the court found that the failure properly to investigate her allegations constituted violation of her rights under articles 3 and 8 of ECHR. As I shall discuss below, the appellant has concentrated on the first of the assertions made by the applicant in MC. The second aspect of her complaint that there was not a proper investigation of her allegations is a distinct and unconnected ground on which the court decided that article 3 had been breached. In para 151 of MC ECtHR observed that, in a number of cases, article 3 of ECHR gives rise to a positive obligation to conduct an official investigation. The court expressly said that such positive obligations cannot be considered in principle to be limited solely to cases of ill treatment by state agents. It concluded that the authorities had failed to explore the surrounding circumstances para 177. On that account, there was a violation of the states positive obligation under article 3 para 187. This was a duty owed to the applicant personally and she was awarded compensation para 194. A significant passage from the courts judgment is to be found in para 153: the court considers that states have a positive obligation inherent in articles 3 and 8 of the Convention to enact criminal law provisions, effectively punishing rape and to apply them in practice through effective investigation and prosecution. (Emphasis supplied) The binary nature of the positive obligation arising under these articles was noted by Green J in para 163 of his judgment: effective systems and operational duties: There were two relevant aspects. First, whether the state of Bulgarian law on rape was so flawed as to amount to a breach of the states positive obligation under articles 3 and 8 (the systemic failings). Secondly, to consider whether the alleged shortcomings in the investigation were, also, so flawed as also to amount to a breach of the states obligations under the same articles (the operational failings). Under the heading general approach the court explained that the duty to create a corpus of law and the duty to apply them in practice through investigation and punishment were separate Lord Hughes has suggested (in para 117 of his judgment) that the statement in para 153 of ECtHRs judgment, that article 3 carries an obligation in some circumstances to investigate third party offending leaves only uncertainties about its source and thus its extent. What is not in the least uncertain, however, is that, if the relevant circumstances are present, there is a duty on the part of state authorities to investigate where non state agents are responsible for the infliction of the harm. That cannot be characterised as other than an operational duty. The debate must focus, therefore, not on the existence of such a duty but on the circumstances in which it is animated. It is suggested (para 119 of Lord Hughes judgment) that Calvelli and Ciglio v Italy (2002) (Application No 32967/96) does not provide authority for the second proposition in para 151 of MC, namely, that positive obligations to investigate cannot be considered in principle to be limited solely to cases of ill treatment by state agents. It should be observed, however, that part of the applicants complaint in that case related to the unexplained delay in the proper investigation of their representations that the doctor who was ultimately charged with manslaughter was responsible for the death of their child see para 43 of the judgment. In other words, an operational failure. At para 54, the court said this: In the instant case, the court notes that the criminal proceedings instituted against the doctor concerned became time barred because of procedural shortcomings that led to delays, particularly during the police inquiry and judicial investigation. The rejection of the applicants case in Calvelli and Ciglio was not because ECtHR considered that the duty to investigate was confined to an obligation to provide a sufficient investigative structure, as Lord Hughes puts it in the final sentence of para 119 of his judgment. To the contrary, the Strasbourg court held that, because of the applicants entitlement to issue proceedings in the civil courts and the fact that they entered into a settlement agreement with the doctors insurers, they had waived their rights to pursue criminal proceedings (para 54). Nothing in the courts judgment supports the suggestion that it was founded on a view that the extent of the ancillary duty under article 2 was to provide a sufficient investigative structure rather than a duty not to be negligent in the way in which the inquiry was conducted. The court made that unequivocally clear in para 56 of its judgment where it said that because the applicants had denied themselves the best means of elucidating the extent of the doctors responsibility for the death of their child, it was unnecessary to examine whether the time bar on bringing proceedings prevented the doctor from being prosecuted. The coming into force of the time bar had, of course, been contributed to by the operational failure of the state authorities to conduct investigations more expeditiously. Lord Hughes has described the statement in para 152 of MC as tentative see para 121 of his judgment. It seems to me clear, however, that the court was there recording that, hitherto, ECtHR had not excluded the prospect that it would be held that actions by non state agents would give rise to positive obligations on the part of the state under articles 2 and 3 of ECHR. MC provided the occasion to proclaim that such a positive obligation existed. In order to be an effective deterrent, laws which prohibit conduct constituting a breach of article 3 must be rigorously enforced and complaints of such conduct must be properly investigated. There is a clear line of Strasbourg authority for the duty to properly investigate reported offences and allegations of ill treatment, which is summarised with approval at para 172 of OKeeffe v Ireland (35810/09): The Court recalls the principles outlined in CAS v Romania (cited above, paras 68 70) to the effect that article 3 requires the authorities to conduct an effective official investigation into alleged ill treatment inflicted by private individuals which investigation should, in principle, be capable of leading to the establishment of the facts of the case and to the identification and punishment of those responsible. That investigation should be conducted independently, promptly and with reasonable expedition. The victim should be able to participate effectively. It has been suggested (Lord Hughes at para 123) that ECtHR in MC made it clear that it regarded the deficiencies in the investigation as the consequence of, and part and parcel with, the flawed approach of the Bulgarian system generally to the issue of lack of consent. At para 179 the court said this: It is highly significant that the reason for that failure [to conduct a proper investigation] was, apparently, the investigators and the prosecutors opinion that since what was alleged to have occurred was a date rape, in the absence of direct proof of rape, such as traces of violence and resistance or calls for help, they could not infer proof of lack of consent and, therefore, of rape from an assessment of all the surrounding circumstances. That approach transpires clearly from the position of the investigator and, in particular, from the Regional Prosecutors decision of May 13, 1997 and the Chief Public Prosecutors decision of June 24, 1997. In my view, the court was not suggesting in this passage that the deficiencies in the investigation were somehow subsumed into the shortcomings of the Bulgarian law. Nor was it suggested that deficiencies in investigation had to be accompanied in all circumstances by systemic defects. In MC, the lack of assiduity in the investigation could be explained because of the inadequacy of that law but it does not follow that deficiencies in investigation, if they are sufficiently egregious, cannot of themselves constitute a violation of article 3. Cases decided after MC make that unambiguously clear. I will discuss those cases presently. Concentrating for the moment on MC, however, Lord Hughes suggests that his thesis, that deficiencies in investigation were part and parcel of the flawed approach of the Bulgarian system generally, was supported by the words of para 168 which he quotes at para 122 of his judgment. In para 168, ECtHR said that it was not concerned with allegations of errors or isolated omissions in the investigation. The court accepted that it could not replace the domestic authorities assessment of the facts of the case nor could it decide on the alleged perpetrators criminal responsibility. These statements must be seen in context. The Strasbourg court is a supra national body. There are obvious limitations on its opportunity to examine deficiencies in investigation. National courts are not so constrained. This case provides the perfect example. Green J heard detailed evidence of the errors that had been made by police in the investigation of Worboys crimes. He was in a position to form a judgment as to the impact of those errors on the respondents cases. And it was open to him to find, as he correctly did, that the errors were so serious that a violation of article 3 was established. I cannot accept a suggestion that, to give rise to a breach of article 3, deficiencies in investigation had to be part and parcel of a flawed approach of the system generally. I accept, however, that simple errors or isolated omissions will not give rise to a violation of article 3 at the supra national and the national levels. That is why, as I point out below, only conspicuous or substantial errors in investigation would qualify. The Strasbourg court disavowed any close examination of the errors in investigation because it was a supra national court. It left that to national courts. But, my reference to ECtHRs disinclination to conduct such a close examination is not intended to suggest that minor errors in investigation will give rise to a breach of the Convention right on the national plane. To the contrary, as I make clear in paras 53 and 72 below, errors in investigation, to give rise to a breach of article 3, must be egregious and significant. As I hope is now clear, not every error in investigation will give rise to a breach of article 3. But the difficulty in defining those errors which qualify should not prompt capitulation to the notion that there has to be some form of structural deficiency before egregious errors in the investigation of the offences, such as occurred in this case, can amount to a breach of article 3. That proposition is strongly supported by consideration of cases decided after MC and I turn now to those cases. The case of Szula v United Kingdom (2007) 44 EHRR SE19 involved a complaint of sexual and physical abuse brought by a minor during the time that he was in a residential approved school. The applicants claim was deemed inadmissible but this was because it was concluded that there was no indication that the authorities showed any lack of diligence or expedition in the investigation of his allegations. Implicit in that finding was that, had there been such an indication, the applicants case would have been admissible. It has been suggested that this case is an example of the court having looked for evidence of a structural defect or culpable disregard or an absence of good faith in the administration of the domestic system (para 26). I do not agree. In that case the court expressly recognised that the criminal law prohibited the physical and sexual abuse alleged by the applicant. True it is that the court, after reviewing steps taken by police and prosecuting authorities, also said (in para 1 of its judgment): While that sequence of events was somewhat unfortunate, the court does not consider that it discloses any culpable disregard, discernible bad faith or lack of will on the part of the police or prosecuting authorities as regards properly holding perpetrators of serious criminal offences accountable pursuant to domestic law. It is unquestionably clear that these observations were made in relation to the discharge by the police and the prosecuting authorities of their operational duties. There is no hint in the judgment that this was in any way related to a structural defect. As I have said, the court had examined the criminal law system and not found it wanting. I cannot accept, therefore, that the quoted passage had anything whatever to do with a systemic or structural failure. It was plainly pertinent and only pertinent to a review of the operational actions and decisions of the police and prosecuting authorities. The fact that the court considered it necessary to conduct such a review, when no systemic defect was present, is important, however. It can only have been necessary if the court considered that a purely operational failing, entirely unrelated to any structural defect, could have given rise to a violation of article 3. In Secic v Croatia (2009) 49 EHRR 18 (31 May 2007), ECtHR considered a complaint of ineffective criminal investigation of a racially motivated physical assault. The court again repeated the statement from MC that article 3 may give rise to a positive obligation to conduct an official investigation para 53. The court stated that the obligation on the state to conduct an official investigation is one of means, not result, referring to the article 2 cases of Menson v United Kingdom (2003) 37 EHRR CD 220 and Yasa v Turkey (1999) 28 EHRR 408. At para 54, however, it observed that the authorities had to take all reasonable steps available to them to secure the evidence concerning the incident and that the authorities must act with promptness and reasonable expedition. Having considered the investigations conducted by the police, ECtHR concluded, at para 59, that the failure of the state authorities to further the case or obtain any tangible evidence with a view to identifying and arresting the attackers over a prolonged period of time indicates that the investigation did not meet the requirements of article 3 of the Convention. It therefore found that article 3 had been breached and that the applicant was entitled to be compensated. Lord Hughes has cited this case as an example where there were plain overtones of structural State deficiencies in relation to the investigation of allegations of racially motivated or discriminatory violence (para 126). The applicants submissions are set out in paras 38 42 of the courts judgment. None of these submissions touched on any structural or systemic deficiency in Croatian law or procedure. To the contrary, the applicant complained that Croatian law provided for many processes and police methods which the police had failed to follow. He also complained that they had failed to apply to a Croatian court for an order compelling a journalist to reveal the name of an interviewee who might have been able to shed light on the attack on him. Such an application could have been made under section 30 of the Media Act. No complaint was made about any inadequacy in that provision. All of the applicants complaints were in relation to the operational failings of the police. The Croatian governments submissions are set out in paras 43 48 of the Strasbourg courts judgment. Apart from claiming that the applicants ill treatment did not reach the threshold required for a breach of article 3 and that the positive obligation under that article arose only where the state had been made aware of acts which it was reasonable to expect them to prevent, all the governments submissions were focused on a defence of the operational decisions and actions of the police. The question of systemic deficiencies was simply not in play in this case. That is obvious also from the courts decision. At para 53 the court said that article 3 may give rise to a positive obligation to conduct an official investigation. This was not, in principle, limited to cases of ill treatment by state agents. And at para 54 the court said this: the court reiterates that the scope of the obligation by the state is one of means, not of result; the authorities must have taken all reasonable steps available to them to secure the evidence concerning the incident. A requirement of promptness and reasonable expedition of the investigation is implicit in this context. The complaint of lack of promptness related solely to police inaction. Nothing about any structural or systemic deficiency was instanced. And the remainder of the courts judgment focused entirely on the operational failings of the police. For my part, therefore, I have not been able to find any overtones of structural state deficiencies in the report of this case. Beganovi v Croatia (Application No 46423/06) 25 June 2009 was a case in which the applicant had been assaulted by three individuals. Although ECtHR acknowledged (in para 69 of its judgment) that no direct responsibility can attach to a member state under ECHR for the acts of private individuals, it stated (in paras 70 and 71): 70. even in the absence of any direct responsibility for the acts of a private individual under article 3 of the Convention, State responsibility may nevertheless be engaged through the obligation imposed by article 1 of the Convention. In this connection the Court reiterates that the obligation on the High Contracting Parties under article 1 of the Convention to secure to everyone within their jurisdiction the rights and freedoms defined in the Convention, taken together with article 3, requires States to take measures designed to ensure that individuals within their jurisdiction are not subjected to torture or inhuman or degrading treatment or punishment, including such ill treatment administered by private individuals (see A v United Kingdom, cited above, para 22). 71. In order that a state may be held responsible it must be shown that the domestic legal system, and in particular the criminal law applicable in the circumstances of the case, fails to provide practical and effective protection of the rights guaranteed by article 3 (see X and Y cited above cited above, para 30, and A v United Kingdom, cited above, opinion of the Commission, para 48). (Emphasis supplied) The court made clear that, as well as examining the impugned regulations and practices, and in particular the domestic authorities compliance with the relevant procedural rules, it would also consider the manner in which the criminal mechanisms were implemented in the instant case para 74. At para 75, ECtHR set out the minimum standards applicable in respect of the duty to investigate. They included that the investigation be independent, impartial and subject to public scrutiny, and that the authorities act with diligence and promptness. It also reiterated that for an investigation to be considered effective, the authorities must take whatever reasonable steps they can to secure the evidence concerning the incident, including, inter alia, a detailed statement concerning the allegations from the alleged victim, eyewitness testimony, forensic evidence and, where appropriate, additional medical reports. The failings in fact identified in this case arose at the post investigative stage and ECtHR confirmed the principle that the requirement for effective criminal law provisions extends to the trial phase of proceedings para 77. The ECtHR decided that the state authorities did not fulfil their positive obligations under article 3. Violation of that article was found. Compensation was awarded to the applicant. The various elements of an effective investigation identified by the court should be noted. It must be independent. It requires to be prompt. Evidence must be secured. Failure to adhere to these standards renders the state liable to the individual affected by that failure. In the case of Vasilyev v Russia (Application No 32704/04) 17 December 2009 the applicant and his friend were seriously assaulted and robbed. Although police officers attended the scene, no investigation into the circumstances of the assault were conducted. The police officers claimed to have considered that the applicant and his friend were intoxicated, so they moved them from the position where they had been found and left them. A number of criminal investigations were subsequently instituted, largely on the initiative of the applicants mother. It was decided to suspend the proceedings because the perpetrators could not be identified. This decision was reversed and restored on a number of occasions. The two police officers who had attended the scene were prosecuted for failing to fulfil their legal duty to protect victims of offences. They were acquitted. The applicant did not lay blame on the state authorities for the attack; nor was it suggested that they knew or ought to have known that the applicant was at risk of physical violence at the hands of third parties. The court explicitly found, however, that this did not absolve the state from obligations under article 3. At para 99, it said that what the article required was that the authorities conduct an effective investigation into the alleged ill treatment even if such treatment has been inflicted by private individuals. It elaborated on this statement at para 100: For the investigation to be regarded as effective, it should in principle be capable of leading to the establishment of the facts of the case and to the identification and punishment of those responsible. This is not an obligation of result, but one of means. The authorities must have taken the reasonable steps available to them to secure the evidence concerning the incident, including, inter alia, eyewitness testimony, forensic evidence, and so on. Any deficiency in the investigation which undermines its ability to establish the cause of injuries or the identity of the persons responsible will risk falling foul of this standard, and a requirement of promptness and reasonable expedition is implicit in this context (see, among many authorities, Mikheyev v Russia, no 77617/01, para 107 et seq, 26 January 2006, and Assenov and Others v Bulgaria, judgment of 28 October 1998, Reports 1998 VIII, paras 102 et seq). It was held that there had been a violation of article 3 under its procedural limb in that the investigation into the assault on the applicant was ineffective. He was awarded compensation. A similar approach to that in the cases already discussed is found in later decisions of ECtHR such as Milanovic v Serbia (Application No 44614/07) 14 December 2010, CAS v Romania (2015) 61 EHRR 18 and BV v Croatia (Application No 38435/13) 21 January 2016. The statement of the applicable principles concerning the procedural obligations in CAS v Romania (which reflected the exposition of those in the cases considered in detail above) was expressly endorsed by the Grand Chamber in OKeefe v Ireland (2014) 59 EHRR 15. These propositions have been reiterated by the second section of ECtHR most recently in BV v Belgium (Application No 61030/08) 2 May 2017. At para 56 the court stated that the obligation to carry out an effective investigation cannot be limited to cases of ill treatment by agents of the state. A clear and constant line of authority? In R (Ullah) v Special Adjudicator [2004] 2 AC 323, Lord Bingham of Cornhill, at para 20, quoted with approval the statement of Lord Slynn of Hadley in R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, para 26, where he said: Your Lordships have been referred to many decisions of the European Court of Human Rights on article 6 of the Convention. Although the Human Rights Act 1998 does not provide that a national court is bound by these decisions it is obliged to take account of them so far as they are relevant. In the absence of some special circumstances it seems to me that the court should follow any clear and constant jurisprudence of the European Court of Human Rights. The respondents argue that the authorities which I have reviewed above constitute clear and constant jurisprudence to the effect that the state has a duty under article 3 to conduct an effective investigation into crimes which involve serious violence to an individual. In order that the protective right under the article be practical and effective, the respondents also assert that failure to conduct such an investigation gives rise to a right to hold the state to account by, among other things, a claim for compensation on the part of a person who was a victim of the article 3 violation and the states failure to discharge its obligations under the article. The appellant counters this argument, claiming that the Strasbourg courts extensive case law (including decisions of the Grand Chamber) refers back to Assenov as the authoritative source of the obligation, derived from article 3, to investigate allegations of ill treatment by state agents. It is suggested that Assenov explicitly limits the investigative duty to cases where the ill treatment has been perpetrated by the police or other such agents of the state unlawfully and in breach of article 3 (para 102). This approach, it is claimed, has been followed by decisions of the Grand Chamber in such cases as Gfgen v Germany (2011) 52 EHRR 1 and El Masri v The Former Yugoslav Republic of Macedonia (2012) 57 EHRR 25. It is to be noted, of course, that Assenov was a case where the claim was based on allegations against state agents, namely, the Bulgarian police. When, therefore, the court expressed the view, which it did in para 102 of its judgment, that, where an individual raises an arguable claim that he has been seriously ill treated by the police or other such agents of the State unlawfully and in breach of article 3, that provision requires by implication that there should be an effective official investigation, it did not address the question whether such a duty arose where the perpetrators of the ill treatment were not state agents. It did not need to do so. The issue simply did not arise in that case. Likewise, in Gfgen the complaint was made concerning the applicants ill treatment by police. So also in El Masri the applicant claimed that he had suffered ill treatment at the hands of state agents and that they had been actively involved in his subsequent rendition by CIA agents. Statements in the judgments in both cases which echo that in Assenov quoted in the preceding paragraph do not sound on the question whether ill treatment by individuals other than state agents can give rise to the duty to investigate under article 3. Those decisions do not impinge upon, much less derogate from, the authority of the cases decided by ECtHR between 2005 and 2017 discussed in paras 16 to 28 above. I consider that those cases amount to clear and constant case law of the Strasbourg court. And I have concluded that they establish that the state is obliged under article 3 to conduct an effective investigation into crimes which involve serious violence to persons, whether that has been carried out by state agents or individual criminals. Further, in order that the protective right should be practical and effective, an individual who has suffered ill treatment contrary to article 3 has a right to claim compensation against the state where there has been a failure by state authorities to conduct a sufficient investigation into the crime. At para 127 of Lord Hughes judgment, he suggests that the proper test for the positive obligation to investigate reports of past violence under article 3 is whether the state has a proper structure of legal provision designed to punish it when it occurs and has administered [it] in good faith and with proper regard for the gravity of the behaviour under consideration. It is not clear whether this formulation excludes any investigation of operational failings on the part of state authorities such as the police. Conceivably, I suppose, a failure to administer the proper structure of criminal legal provisions might entail an examination of the way in which police conducted their inquiries into a particular case. But, importantly, the duty to administer is qualified in Lord Hughes exposition by the stipulation that the administration of the structure of legal provision, if it is to fall foul of the test, must be shown to have been conducted in bad faith or without proper regard for the gravity of the behaviour involved. This places an obvious limitation on the scope of any review of the operational actions and decisions of the police. There is no suggestion in this case, for instance, that the police acted in bad faith. It might possibly be said that there were instances of the police failing to have regard for the gravity of the crimes which the respondents complained of but I am unsure whether this would fulfil Lord Hughes test because the failure to have due regard to the gravity of the crime must take place in the context of the administration of the proper structure of legal provisions. It is true, as Lord Hughes says in para 140, that there were structural errors. But I cannot agree with his statement that the various detailed failings in the conduct of the inquiry were largely attributable to this flawed structural approach. Green J dealt with the operational failures in these two cases in a long passage of his judgment between paras 285 and 313. Some of these were related by him to lack of training but many were not. Significantly, the judge found that if the operational failings had not occurred, the police officers involved in the investigation would have taken steps which would have been capable of identifying and arresting Worboys. It is unnecessary to list all the operational failings. These are set out in admirable and clear detail by the trial judge in his judgment. It is sufficient to refer to a sample of these to explain why I do not accept that these were largely attributable to a flawed structural approach. (i) Reception staff failed to record relevant names, addresses and vehicle registration details. If these had been recorded, it was perfectly feasible to believe, the judge found, that Worboys might have been apprehended earlier or might even have been deterred from further offending; (ii) Failure to interview promptly a witness known as Kevin. He could have identified Worboys and could have given evidence that might have led to his arrest; (iii) Failure to collect CCTV evidence. Worboys had driven his taxi to a police station. The timing of his arrival at and departure from the police station was known. If police officers had checked the CCTV footage, they could have identified the registration number and this would have led them to Worboys; (iv) Between 2003 and 2008 many complaints were made to police which should have been sufficient to trigger the arrest of Worboys. The failure to make the link between these complaints was due not only to a lack of training but also to a failure to adhere to procedures; (v) Failure to conduct searches. None of these failures can be described as a failure in training or in the structures that were in place for the investigation of serious crime at the material time. Many other operational failures, none of which can be ascribed to a flawed structural approach were found by Green J to have occurred. These were considered by him to have contributed in a significant way to his finding that a breach of article 3 had been established. If I have understood Lord Hughes formulation of the relevant test correctly, none of them was relevant to that conclusion. The prospect of every complaint of burglary, car theft or fraud becoming the subject of an action under the Human Rights Act has been raised. I do not believe that this is a serious possibility. All of the cases in this area involve conspicuous and substantial shortcomings in the conduct of the police and prosecutorial investigation. And, as this case illustrates, frequently, operational failures will be accompanied by systemic defects. The recognition that really serious operational failures by police in the investigation of offences can give rise to a breach of article 3 cannot realistically be said to herald an avalanche of claims for every retrospectively detected error in police investigations of minor crime. A systems or an operational duty? The appellant argued that MC v Bulgaria should not be taken as authority for the proposition that how the state carried out its investigative duty at an operational level required to be examined in order to determine whether article 3 had been breached. That case, it was said, involved a systemic problem with Bulgarian law in relation to sexual offences. Under that law, it was not sufficient, in a rape prosecution, to show that a complainant had not consented to sexual intercourse. It was necessary to show that she was incapable of defending herself, or that she had been compelled by force or threats or that she had been brought to a state of defencelessness. The case was therefore primarily concerned with the system of laws in Bulgaria, the appellant claimed, and the court did not find a breach of article 3 because of any particular failing in the investigation in isolation, but because the legal system itself was deficient. The appellant claims that nothing in the judgment says in positive terms that article 3 gives rise to an obligation to investigate in cases where the state is not complicit in ill treatment. I do not accept these arguments. As pointed out in para 18 above, the Strasbourg court in MC clearly specified that the states duty had two aspects. The first was to enact criminal law provisions which would effectively punish rape. The second, distinct but definite obligation was to carry out proper investigation and prosecution so that the laws could be applied effectively. It should be noted that the applicants complaint in that case had two separate aspects, described in para 109 of the judgment as follows: The applicant complained that Bulgarian law and practice did not provide effective protection against rape and sexual abuse as only cases where the victim had resisted actively were prosecuted and that the authorities had not investigated the events of July 31 and August 1, 1995 effectively. (Emphasis supplied) The second aspect of her complaint was elaborated on in para 117 of the judgment where it is recorded that she alleged that the investigation had not been thorough and complete. The crucial issue of the timing of all the movements of the men and the applicant during the night in question had not been investigated. The courts conclusions on the second aspect of the applicants complaint were unmistakable. At paras 176 178 it said: 176. The court recognises that the Bulgarian authorities faced a difficult task, as they were confronted with two conflicting versions of the events and little direct evidence. The court does not underestimate the efforts invested by the investigator and the prosecutors in their work on the case. 177. It notes, nonetheless, that the presence of two irreconcilable versions of the facts obviously called for a context sensitive assessment of the credibility of the statements made and for verification of all the surrounding circumstances. Little was done, however, to test the credibility of the version of the events proposed by P and A [the alleged rapists] and the witnesses called by them. In particular, the witnesses whose statements contradicted each other, such as Ms T and Mr M, were not confronted. No attempt was made to establish with more precision the timing of the events. The applicant and her representative were not given the opportunity to put questions to the witnesses whom she accused of perjury. In their decisions, the prosecutors did not devote any attention to the question whether the story proposed by P and A was credible when some of their statements called for caution, such as the assertion that the applicant, 14 years old at the time, had started caressing A minutes after having had sex for the first time in her life with another man. 178. The court thus considers that the authorities failed to explore the available possibilities for establishing all the surrounding circumstances and did not assess sufficiently the credibility of the conflicting statements made. Plainly, therefore, the court made a separate finding in relation to the inadequacy of the police investigation. This finding was entirely freestanding of its conclusions in relation to the systemic deficiencies in the Bulgarian law in relation to rape. That approach has been consistently followed in the cases examined above. It is incontestably clear, therefore, that the positive obligation to conduct a proper inquiry into behaviour amounting to breach of article 3 may constitute a violation of the states duty under the article. Is state complicity a prerequisite? The answer to the argument that the positive obligation to investigate is animated only where there is state involvement in the acts said to breach article 3 can be simply supplied by reference to the passage from para 151 of MC quoted at para 17 above. The statement that positive obligations are not solely confined to cases of ill treatment by state agents could not be clearer. In fact, of course, statements to like effect appear repeatedly in ECtHR jurisprudence see, for instance, para 70 of Beganovi quoted at para 37 above; Vasilyev where the applicant expressly disavowed any accusation of blame on the state authorities for the attack on him; and para 83 of Milanovic (mentioned at para 43 above) where the court said: In general, actions incompatible with article 3 of the Convention primarily incur the liability of a Contracting State if they were inflicted by persons holding an official position. However, the obligation on the High Contracting Parties under article 1 of the Convention to secure to everyone within their jurisdiction the rights and freedoms defined in the Convention, taken in conjunction with article 3, also requires states to take measures designed to ensure that individuals within their jurisdiction are not subjected to ill treatment administered by other private persons (see A v United Kingdom, judgment of 23 September 1998, para 22, Reports of Judgments and Decisions 1998 VI; Z and Others v United Kingdom [GC], no 29392/95, para 73 75, ECHR 2001 V; E and Others v United Kingdom, no 33218/96, 26 November 2002). Likewise, in CAS v Romania where there was no question of state involvement in the sexual abuse of the first applicant, the court was unambiguous in its finding that this was not a prerequisite to a breach of article 3. At para 69, it said: the absence of any direct state responsibility for acts of violence that meet the condition of severity such as to engage article 3 of the Convention does not absolve the state from all obligations under this provision. In such cases, article 3 requires that the authorities conduct an effective official investigation into the alleged ill treatment even if such treatment has been inflicted by private individuals. I am satisfied, therefore, that ECtHR has consistently held that it is not required that there be state involvement in the acts alleged to amount to breach of article 3. The appellants argument based on that proposition must be rejected. Compensation The themes outlined in para 6 (iv) and (v) above may be taken together. They can be dealt with briefly. Compensation is by no means automatically payable for breaches of the article 3 duty to investigate and prosecute crime. As Lord Bingham pointed out in R (Greenfield) v Secretary of State for the Home Department [2005] 1 WLR 673, para 8, in many cases the Strasbourg court has treated the finding of the violation as, in itself, just satisfaction under article 41 (although that was said in the context of article 6 breaches). It is well settled, however, that the award of compensation for breach of a Convention right serves a purpose which is distinctly different from that of an order for the payment of damages in a civil action. As Lord Brown said in Van Colle at para 138: Convention claims have very different objectives from civil actions. Where civil actions are designed essentially to compensate claimants for their losses, Convention claims are intended rather to uphold minimum human rights standards and to vindicate those rights. That is why time limits are markedly shorter. It is also why section 8(3) of the [HRA] provides that no damages are to be awarded unless necessary for just satisfaction Laws LJ said in para 68 of his judgment in the Court of Appeal, that the inquiry into compliance with the article 3 duty is first and foremost concerned, not with the effect on the claimant, but with the overall nature of the investigative steps to be taken by the State. I agree with that. The award of compensation is geared principally to the upholding of standards concerning the discharge of the states duty to conduct proper investigations into criminal conduct which falls foul of article 3. In paras 72 78 of his judgment, Laws LJ set out the systemic and operational failures of the appellant, quoting extensively from the judgment of Green J as to the first of these. That catalogue of failures was considered to warrant the award of compensation to the respondents, irrespective of the fact that they had received damages from both Worboys and CICA. I cannot find any flaw in the judges decision to award that compensation nor in the Court of Appeals decision to uphold that decision. The relevance of the circumstance that there is no common law duty of care In Van Colle and Smith, two associated cases heard together, the complaint was that police had failed to follow up reports of threats to kill. In Van Colle, the alleged failure had resulted, it was claimed, in the killing of the individual who was the subject of the threats. In Smith, the victim was seriously injured. The first case was brought solely under HRA, alleging violation of article 2. It failed on its facts. In Smith, no HRA claim was made. The appellant relied solely on the common law, alleging negligence by the police. The House of Lords rejected the argument that the common law should now be developed to reflect the Strasbourg jurisprudence about the positive obligation arising under articles 2 and 3 of the Convention (para 136). A similar approach was taken by the majority in this court in Michael v Chief Constable of South Wales Police [2015] AC 1732. As Laws LJ, in the Court of Appeal in this case, pointed out, the essence of the argument on behalf of the appellants in those cases was that the common law rule (that police owe no general duty of care. to identify or apprehend an unknown criminal, nor. a duty of care to individual members of the public who might suffer injury through the criminals activities Hill v Chief Constable of West Yorkshire Police [1989] AC 53) should be moderated so as to accommodate the ECHR para 30. As he observed, the converse is contended for in this appeal. The appellant and the Secretary of State argue that the exemption from liability of the police at common law should be extended to claims advanced under HRA so that the two systems should be in harmony. There are two reasons for rejecting the argument. In the first place, the bases of liability are different, as mentioned at para 44 above. In as much as it was considered that the common law duty should not be adapted to harmonise with the perceived duty arising under ECHR, so should the latter duty remain free from the influence of the pre HRA domestic law. Alternatively, it requires, at least, to be considered on its own merits, without the encumbrance of the corpus of jurisprudence under common law. Secondly and more importantly, no assumption should be made that the policy reasons which underlay the conclusion that an exemption of police from liability at common law apply mutatis mutandi to liability for breach of Convention rights. In Michael much of the debate as to whether police owed a duty to an individual member of the public centred on the question whether there was a sufficient proximity of relationship between the claimant and the police force against whom action was taken. No such considerations arise in the present context. The issue here is simple. Did the state through the police force fail to comply with its protective obligation under article 3? The other principal argument advanced on behalf of the police in Michael was that it would not be fair, just and reasonable to impose liability on them for failings in individual cases. This is a concept with which the common law, with its innate flexibility, can cope but it is not one which can easily be accommodated in Convention jurisprudence. The police either have a protective duty under article 3 or they do not. The presence of the duty cannot depend on ones conception of whether it is fair, just or reasonable for it to exist. Lord Hughes has said (in para 130 of his judgment) that law enforcement and the investigation of crime involve a complex series of judgments and discretionary decisions; that they concern the choice of lines of inquiry, the weighing of evidence and the allocation of finite resources. All of that is unexceptionable. But the claim that to re visit such matters step by step by way of litigation would inhibit the robust operation of police work divert resources from current inquiries [and act as a deterrent] not a spur to law enforcement is unsupported by any evidence. In the first place, none of the cases cited above required a painstaking, minute examination of decisions taken by police. Nothing in the Strasbourg jurisprudence suggests that this would be appropriate, much less that it would be even admissible, as the basis for advancing a claim under article 3. Carrying out police investigations efficiently should not give rise to a diversion of resources. On the contrary, it should lead to more effective investigation of crime, the enhancement of standards and the saving of resources. There is no reason to suppose that the existence of a right under article 3 to call to account egregious errors on the part of the police in the investigation of serious crime would do other than act as an incentive to avoid those errors and to deter, indeed eliminate, the making of such grievous mistakes. The statement made by Lord Hughes (in para 130) about the undesirability of the investigation of terrorist activity and the delicate and difficult decisions it involves being subject to review would be a powerful factor, if it were a possible consequence of following the jurisprudence of ECtHR in this area. But, in my view, it is not. Nothing in that case law supports the notion that a charter has been created for the examination of every judgment or choice of strategy made. As I have said, only obvious and significant shortcomings in the conduct of the police and prosecutorial investigation will give rise to the possibility of a claim. There is no reason to suppose that courts will not be able to forestall challenges to police inquiries based on spurious or speculative claims. Should the question be left to Strasbourg? It was strongly argued, particularly on behalf of the Secretary of State, that the question whether a liability such as that contended for by the respondents arises was one on which ECtHR should be invited to pronounce. The sub text to this argument appeared to be that, where Strasbourg has not yet spoken, national courts should not venture forth. This argument carries echoes of those which found favour in such cases as R (Al Skeini) v Secretary of State for Defence (The Redress Trust intervening) [2007] UKHL 26; [2008] AC 153, and Ambrose v Harris Procurator Fiscal [2011] UKSC 43; [2011] 1 WLR 2435. In Al Skeini Lord Brown suggested that where ECtHR had not spoken, our courts should hold back, explaining that, if it proved that Convention rights have been denied by too narrow a construction, the aggrieved individual can have the decision corrected in Strasbourg. And in R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29; [2011] 1 AC 1 Lord Phillips followed a similar line. The difficulty with the argument is that it fails to address the circumstance that the courts of this country, constituted as they are as public authorities, must give effect to (or refuse to give effect to) Convention rights as a matter of domestic law. The HRA introduced to the law of the United Kingdom the European Convention on Human Rights and Fundamental Freedoms by making the Convention part of national law so that the rights became domestic rights. Because the rights are domestic, they must be given effect according to the correct interpretation of the domestic statute. As Lord Hoffmann said In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] AC 173, para 34 [the courts] first duty is to give effect to the domestic statute according to what they consider to be its proper meaning, even if its provisions are in the same language as the international instrument which is interpreted in Strasbourg. The so called mirror principle (whereby pronouncements by national courts on Convention rights should precisely match those of Strasbourg) is often attributed to Lord Binghams statement in Ullah at para 20 where he said The duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time: no more but certainly no less. As explained in para 232 of R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2015] UKSC 69; [2016] AC 1355, Lord Bingham was careful to refer to the interpretation of the Convention (as opposed to the interpretation of HRA). Despite this, his opinion in that case has been used in a number of subsequent judgments to support the proposition that the content of domestic rights under HRA should not, as a matter of principle, differ from that pronounced by Strasbourg. Indeed, his judgment has been construed as indicating that, unless ECtHR has given clear guidance on the nature and content of a particular Convention right, the national courts of the United Kingdom should refrain from recognising the substance of a claimed entitlement under ECHR see, for instance, Al Skeini, Smith and Ambrose, referred to in para 74 above. In more recent cases, a departure from the mirror principle can be detected. Thus, in Rabone v Pennine Care NHS Foundation Trust (INQUEST intervening) [2012] UKSC 2; [2012] 2 AC 72 it was held that there was a positive obligation to protect the life of a mentally ill young woman who had been admitted to hospital informally because of serious attempts to take her own life. This decision was reached notwithstanding the fact that there was no authority from ECtHR to that effect. In Surrey County Council v P (Equality and Human Rights Commission intervening) [2014] UKSC 19; [2014] AC 896, para 62 Lord Neuberger said that where there was no Strasbourg authority which dealt precisely with the issues before this court, this court could rely on principles expressed by ECtHR, even if only indirectly relevant, and apply them to the cases which it had to decide. And in Moohan v Lord Advocate (Advocate General for Scotland intervening) [2014] UKSC 67; [2015] AC 901 Lord Wilson suggested that there had been a retreat from the Ullah principle which had led the court to substantially modify it. At para 105 he said: where there is no directly relevant decision of the ECtHR with which it would be possible (even if appropriate) to keep pace, we can and must do more. We must determine for ourselves the existence or otherwise of an alleged Convention This seems to me to be inescapably correct. Reticence by the courts of the UK to decide whether a Convention right has been violated would be an abnegation of our statutory obligation under section 6 of HRA. This section makes it unlawful for a public authority, including a court, to act in a way which is incompatible with a Convention right. As it happens, of course, I consider that the jurisprudence of the Strasbourg court is clear and constant on the issues which this court has to decide. Even if it were not, however, I would firmly reject the suggestion that the decision of this court on whether the respondents enjoy a right under the HRA to claim compensation against the appellant should be influenced, much less inhibited, by any perceived absence of authoritative guidance from ECtHR. Conclusion For these reasons and for those given in the judgment of Lord Neuberger, with which I agree, I would dismiss the appeal. LORD NEUBERGER: (with whom Lady Hale agrees) The claimants, DSD and NBV, succeeded before Green J in establishing that they were entitled to damages from the defendant, the Commissioner of the Police of the Metropolis, as a result of failures by the police properly to investigate serious sexual assaults which had been perpetrated against them. The claims were founded on the propositions that (i) article 3 of the European Convention on Human Rights carries with it an obligation on the state to carry out an effective investigation when it receives a credible allegation that serious harm has been caused to an individual, and (ii) there were serious defects in the police investigation of the assaults on the claimants. The Court of Appeal upheld the decision, and this court takes the same view. However, we disagree on one issue. That issue is whether a person in the claimants position needs to establish that the serious defects in the investigation in question were attributable to failures of a structural nature (also referred to as systems, or systemic, failures), and not to purely operational failures (ie failings on the part of the individual police officers responsible for conducting the specific investigation). We do not need to decide this issue in order to resolve the appeal, but I agree that we should do so. It has been fully and helpfully argued by the parties and the interveners, the competing arguments have been admirably expounded by Lord Kerr and Lord Hughes, and it seems to me to be an important issue which should be decided if possible. The competing arguments have been fully set out in the judgments of Lord Kerr and Lord Hughes. Lord Kerr favours the wider approach, namely that a claimant need only establish serious defects in the investigation into her particular case, irrespective of whether they are systemic or operational failures. Lord Hughes prefers the narrower approach, the effect of which is that a claimant has to establish serious failings of a systemic nature, and that failings of a purely operational nature will not suffice, at least where the perpetrator of the alleged assault was not a state agent. In agreement with Lord Kerr, I am of the view, that serious failures which are purely operational will suffice to establish a claim that an investigation carried out pursuant to an article 3 (or indeed an article 2) duty infringed that duty. So far as the Strasbourg jurisprudence is concerned, I consider that the judgments to which we have been referred support the wider approach. The investigatory duty was identified in Assenov v Bulgaria (1998) 28 EHRR 652, para 102, where the court said that article 3, read with article 1, requires by implication that there should be an effective official investigation into cases where an individual raises an arguable claim that he has been seriously ill treated by the police or other such agents of the state unlawfully and in breach of article 3. I also note that the wider approach appears to have been adopted by the Grand Chamber in the article 2 case of Mustafa Tun and Fecire Tun v Turkey [2015] ECHR 383 see at paras 183 209. I accept of course that those decisions were concerned with cases of ill treatment by state agents, and that the approval of the principle in other decisions of the Grand Chamber (eg Gfgen v Germany (2010) 52 EHRR 1 and El Masri v The Former Yugoslav Republic of Macedonia (2012) 57 EHRR 25) were also concerned with such cases. I also accept that the standard which a court should apply when considering whether the investigatory duty has been satisfied may well be more stringent in cases where the alleged ill treatment was caused by state agents than in cases where it was caused by others. However, I see no basis for holding that the duty is different in kind in the two types of case. While in a number of Strasbourg court decisions, it is stated that the duty extends to cases where the alleged ill treatment was caused by third parties, there is no suggestion that the nature of the duty to investigate is different in kind in the two types of case. Thus, in the recent case of BV v Belgium (Application No 61030/08) 2 May 2017, para 56 the court stated that the obligation to carry out an effective investigation cannot be limited to cases of ill treatment by agents of the state, without suggesting that there was any difference in the basic nature of the duty. It is true that in Beganovi v Croatia [2009] ECHR 992, para 69, the court said that the scope of the States positive obligations might differ between cases where treatment contrary to article 3 of the Convention has been inflicted through the involvement of state agents and cases where violence is inflicted by private individuals. However, even without considering other decisions of the Strasbourg court, that seems to me to be a very small peg on which to hang a contention that the two cases require approaches which differ in nature. In any event, when that observation was repeated in Vasilyev v Russia [2009] ECHR 2078, para 100, the court immediately went on to make the point that the requirements as to an official investigation are similar, and that was a point repeated in a number of subsequent decisions see eg Koky v Slovakia [2012] ECHR 994, para 215, Amadayev v Russia [2014] ECHR 704, para 70, and MC and AC v Romania [2016] ECHR 359, para 111. Indeed, I note that in Beganovi itself, when considering whether the investigatory duty had been complied with in a case where the alleged perpetrator had been a non state agent, the court said in para 74 that it should consider whether or not the impugned regulations and practices, and in particular the domestic authorities compliance with the relevant procedural rules, as well as the manner in which the criminal law mechanisms were implemented in the instant case, were defective to the point of constituting a violation of the respondent states positive obligations under article 3. And the subsequent analysis of the facts in paras 80 86, which led the court to conclude that there had been a violation in that case, focussed very much on the operational failures. That approach appears to be supported by other Strasbourg court decisions involving the investigatory duty in relation to acts of serious ill treatment by non state agents. There is no suggestion in MC v Bulgaria (2005) 40 EHRR 20 that that duty is restricted to having effective systems in place: at para 153, the court referred to the duty of a state to enact criminal law provisions effectively punishing rape and to apply them in practice through effective investigation and prosecution. In para 167, the court seems to me to have been referring to both systemic and operational failures when it mentioned significant flaws in the impugned legislation and practice and its application in the case at hand, combined with the alleged shortcomings in the investigation (and see para 179). The finding of inadmissibility in Szula v United Kingdom (2007) 44 EHRR SE19 appears to me to have been based on the assumption that operational failures would, in principle, suffice to found a claim see para 1. To the same effect, in ei v Croatia (2007) 49 EHRR 18, the court said in para 54 that the police should have taken all reasonable steps available to them to obtain relevant evidence, which, as a matter of ordinary language, naturally refers to operational steps. In para 59 the court concluded that what appear to me to have been operational, rather than structural, failures (summarised in paras 56 58) enabled the article 3 claim to succeed. In Beganovi, para 75, the court made the point that the duty to investigate involved the authorities [having to] take whatever reasonable steps they can to secure the evidence concerning the incident which covers operational matters at least as much as systems. Vasilyev is another case where the court described the duty in terms which are, at least in my view, significantly more consistent with the wider approach, namely that the authorities [should] conduct an effective investigation involving the reasonable steps available to them (paras 99 and 100). In the 2016 case of Chernaya v Ukraine [2016] ECHR 1117, which involved an injury inflicted by a non state agent, the court reiterated in para 25 that [t]he minimum standards of effectiveness laid down by the Courts case law include the requirements that the investigation be independent, impartial and subject to public scrutiny, and that the competent authorities must act with exemplary diligence and promptness again focusing on the operational aspects of the particular investigation. Of course, this Court is not required to follow Strasbourg jurisprudence, even in a case such as this where there is a clear and consistent approach adopted in a significant number of chamber decisions. Dialogue between the United Kingdom Supreme Court (and indeed other courts in the United Kingdom) and the Strasbourg court has proved to be beneficial to the development of human rights law in this jurisdiction and, I hope, in Strasbourg. Accordingly, if it appears to us that the narrower approach is even only probably correct, the fact that the Strasbourg court has consistently taken a different view should not necessarily stand in the way of our coming to a contrary conclusion. In this case, the notion that we can take such a course can fairly be said to be supported by the fact that, although it is inconsistent with the views expressed in a number of decisions of the Strasbourg court, the notion that the narrower approach is correct has not, so far as I can see, been specifically raised in that court. But there must be a good reason for our taking such a course, and in this case, at least in my view, there is not. Indeed, in my view, there are good reasons for favouring the wider approach. First, one starts with the proposition that, given that it is rightly accepted on all sides that the authorities have an investigatory duty, it would be of little value unless it was a duty to investigate effectively. Provided that courts bear clearly in mind the difficulties involved in policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources and the need to interpret the duty in a way which does not impose an impossible or disproportionate burden on the authorities (Osman v United Kingdom (1998) 29 EHRR 245, para 116), I find it hard to understand why an investigation which is seriously defective in purely operational terms should, in effect, be held to satisfy the investigatory duty. Secondly, I cannot see any basis in its jurisprudence to suggest that it is likely that the Strasbourg court would think it right to limit the extent of the investigatory duty to systemic, as opposed to operational, failures. It is true that in A v United Kingdom (1998) 27 EHRR 611, having held that article 3, together with article 1, requires States to take measures designed to ensure that individuals within their jurisdiction are not subjected to torture or inhuman or degrading treatment or punishment, the court concluded that then current statutory provisions did not provide adequate protection to the applicant against treatment or punishment contrary to article 3 and that the failure to provide adequate protection constitutes a violation of article 3 (paras 21 and 24). However, that conclusion merely reflected the factual basis and arguments in the case. If the statute did not provide adequate protection, there was a systemic failure, and it was both unnecessary and pointless to consider the operational aspects of the legal system. However, clearly to my mind, it does not follow that, if the statutory provisions had complied with article 3, but the legal processes had been defective, the United Kingdom would have been acquitted of infringing article 3. Indeed, the courts summary of the law in A v United Kingdom, para 22 contains nothing to suggest that the states obligation there being discussed should be limited to systemic matters. Similarly, while the court in Osman, para 116, was concerned to ensure that the investigatory duty was not interpreted or applied unrealistically, there is no indication in that paragraph that it was intending to limit the duty to the provision of a satisfactory framework, irrespective of how ineptly it operated in a particular case. Indeed, such an approach would seem to me to be inconsistent with how the Strasbourg court approaches cases generally, namely by reference to the specific facts of the particular case. Thirdly, there are forensic considerations. In that connection, I would start by rejecting the notion that it could be right for a court to dismiss a claim that an investigation was seriously defective simply because the relevant police procedures as set out in official documents were satisfactory. It would not merely be formalistic, but both unjust and unrealistic, to hold that an investigation, which was seriously systematically defective in practice, nonetheless complied with the article 3 investigatory duty simply on the grounds that, while the systemic defects occurred in practice, they did not reflect the systems as laid down officially. Whether the wider or the narrower approach is correct, the court must surely consider the real, not the hypothetical. Once that is accepted, I consider that the narrower approach could present a court with difficult practical, categorisation, and apportionment issues. Whichever approach applies, a court must inevitably start by considering the failures in the particular case. On the wider approach, the court would simply ask whether those failures were sufficiently serious to represent an infringement of the investigatory duty. On the other hand, on the narrower approach, the court would have to consider which of the failures were operational and which were systemic, and that, as I see it, is where problems would often start. Serious operational failures by individual officers would frequently throw up arguable systemic issues, such as systems of supervision or even of appointment of those officers. And, in order to decide whether the operational failures were systemic in origin, the court might often have to embark on an inquiry whether, for instance, the failures were redolent of what happened in other investigations. That could involve a potentially time consuming and expensive inquiry into other investigations, as well as arguments as to the number and types of investigation, if any, to which the inquiry should be restricted. The question whether the defective investigation was attributable to systemic, rather than purely operational, failures could also involve difficult issues of categorisation and inference. For instance, in many cases it may be hard to decide whether a particular failure is operational or systemic, or whether the operational failures in an investigation or a set of investigations entitle the court to infer a systemic failure. And what happens if, as may very often be the case, there are some operational failures which are purely operational and some which are attributable to structural failures? I do not consider that my view is undermined by the reasoning expressed or conclusions reached in Hill v Chief Constable of West Yorkshire Police [1989] 1 AC 53, Brooks v Comr for the Police for the Metropolis [2005] 1 WLR 1495, Van Colle v Chief Constable of Hertfordshire Police; Smith v Chief Constable of Sussex Police [2009] AC 225 and Michael v Chief Constable of South Wales Police [2015] AC 1732. Those cases establish that, absent special factors, our domestic law adopts the view that, when investigating crime, the police owe no duty of care in tort to individual citizens. That is because courts in this country consider that the imposition of such a duty would, as Lord Hughes puts it, inhibit the robust operation of police work, and divert resources from current inquiries; it would be detrimental, not a spur, to law enforcement. That view is entirely defensible, but, at least in the absence of concrete evidence to the contrary, so is the opposite view that the imposition of such a duty, provided that it is realistically interpreted and applied, would serve to enhance the effectiveness of police operations. It is therefore understandable that human rights law, with its investigatory duty under article 2 and 3, differs from domestic tort law in holding that it is right to impose an investigatory duty on the police. Just as the majority of this Court accepted in Michael, at paras 123 128, that the domestic tortious test for liability should not be widened to achieve consistency with the human rights test, so should the human rights test for liability not be narrowed to achieve consistency with the domestic, tortious test. Finally, I turn to an argument which I have already touched on, namely that the wider interpretation involves placing too great a burden on public authorities, in particular on the police. This concern was recognised in relation to the similar article 2 obligation on the police in Osman v United Kingdom (1998) 29 EHRR 245, para 116, where, as I have mentioned, the Strasbourg court said that the obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities (and see to the same effect CN v United Kingdom (2012) 56 EHRR 24, para 68). The point was developed in MC v Bulgaria, where at para 168, the Strasbourg court made it clear that, when considering whether an investigation had satisfied article 2, a court should not be concerned with allegations of errors or isolated omissions in the investigation. As the Grand Chamber said in Tun v Turkey, para 176, the nature and degree of scrutiny which satisfy the minimum threshold of the investigations effectiveness depend on the circumstances of the particular case. The court in that case went on to find shortcomings in the investigation, but held that there had been no infringement of article 2, because they were not serious or decisive (paras 189 and 195), and it concluded in para 209 that there were no such shortcomings as might call into question the overall adequacy and promptness of the investigation. And in Beganovi v Croatia, para 78, the Strasbourg court emphasised that it should only conclude that the investigatory duty had been infringed in cases of manifest disproportion between the gravity of the act and the results obtained at domestic level (citing the earlier decisions of Nikolova and Velichkova v Bulgaria, (2009) 48 EHRR 40, para 62, and Atalay v Turkey [2008] ECHR 850, para 40, which are to the like effect). It is because of the concern expressed in Osman, para 116, that it is important to emphasise that only serious defects in any investigation can lead to the conclusion that there has been an infringement of article 2 or article 3. Accordingly, I conclude that a claim based on serious defects in the performance of the investigatory duty under article 3 (and equally under article 2) can succeed even if defects are all of a purely operational, as opposed to a systemic, nature. For these reasons, which are little more than a summary of those given by Lord Kerr, with whose judgment I agree, I would therefore dismiss this appeal. LORD HUGHES: I agree that the appeal of the Metropolitan Police in this case should be dismissed. It seems to me, however, important that the ambit of the positive duties which arise under article 3 ECHR should be subject to examination, if not that an exhaustive definition should be attempted. The context in which this case comes to this court needs to be remarked. It is unusual. The treatment under consideration is the very serious offence of rape of victims who were exploited after putting themselves in apparently trustworthy hands (a black cab driver) and who had then been rendered helpless by stupefaction. There has been no dispute from the beginning that there were notable general failings in the police approach to investigation into the kind of complaint which both claimants made. They affected both the initial complaint by DSD in 2003, at least from the time of the morning after the event, at which stage she first realised that she had been sexually attacked, and the later complaint by NBV in 2007. The findings recorded by the judge in a meticulous judgment were almost entirely to the same effect as, and were grounded upon, the polices own conclusions, following detailed internal reports, about the deficiencies of their approach to the possibility of drug induced rape. The consequences were extremely serious. Because the first incident reported was not approached properly, the attacker remained undetected and became a serial rapist. Although only a small proportion (ten) of his many attacks were reported to the police at the time, it is now known that he raped more than 100 women, employing a similar method. His modus operandi was highly specific. Once anyone put two or more of the reported incidents side by side, the inference that there was a single serial offender was irresistible. Once that was done, early in 2008, the rapist was arrested, and compelling evidence against him found, within eight days. That could and should have been done years earlier. Recognising the substantial justice of the complaints, the police have made it clear that in the event that their appeal should be successful, they do not seek repayment of the compensation ordered by the judge. But the elementary justice of the complainants cases makes it all the more important that the ambit of the duty should be considered. Otherwise indignation at their experiences may lead to an over wide formulation passing unnoticed, with detrimental results for the criminal justice system. The origin of the positive duties Article 3 ECHR says this: No one shall be subjected to torture or to inhuman or degrading treatment or punishment. It is elementary that, as Laws LJ pointed out in the Court of Appeal in the present case, the obligations created by the Convention lie upon the party States and upon no one else. The Convention governs the relationship between the State and the citizen. It creates no duties for individuals. Article 1 is explicit. It is on the states that it imposes the obligation to secure to those within their jurisdiction the rights and freedoms defined in the Convention. It is perfectly clear that the primary case of behaviour which is a breach of article 3 is where torture or inhuman or degrading treatment is meted out by the state against a person within its jurisdiction. Even without the origins of the Convention in the aftermath of the Second World War, the very use of the expressions torture and inhuman or degrading treatment is sufficient demonstration of that; these are typically descriptions of State misbehaviour. And the same is demonstrated by the words subjected to. If the State inflicts such treatment, it has subjected the citizen to it. Anything beyond that is a judicial gloss on the Convention, well established as that gloss may now be. In fact, there have been developed two glosses. Similar glosses have been applied to the primary obligation in article 2, concerning the right to life, and it may be to other rights. The first gloss was explained by the Strasbourg court in Assenov v Bulgaria (1998) 28 EHRR 652, in which there was an allegation of police violence towards a suspect in custody. It builds on the primary obligation of the state not itself to inflict prohibited treatment on the individual. If that primary obligation stood alone, it might well be ineffective because the State organ which inflicts such treatment may deny it or cover it up. It will be effective only if, when there is a reason to think that such ill treatment may have been inflicted by a state organ, there is an ancillary positive obligation to take steps to investigate the allegation and to bring to book those who are found to be responsible. At para 102 the court set out the reason for this obligation: The court considers that where an individual raises an arguable claim that he has been seriously ill treated by the police or other such agents of the State unlawfully and in breach of article 3, that provision, read in conjunction with the States general duty under article 1 of the Convention to secure to everyone within their jurisdiction the rights and freedoms in [the] Convention, requires by implication that there should be an effective official investigation. This obligation, as with that under article 2, should be capable of leading to the identification and punishment of those responsible. If this were not the case, the general legal prohibition of torture and inhuman and degrading treatment and punishment, despite its fundamental importance, would be ineffective in practice and it would be possible in some cases for agents of the State to abuse the rights of those within their control with virtual impunity. (Emphasis supplied) The same rationale was explained (in the context of the ancillary article 2 positive obligation to investigate State responsibility for death in custody) by Lord Bingham in R (Amin) v Secretary of State for the Home Department [2004] 1 AC 653, para 31. The purpose of the duty is, he said: to ensure so far as possible that the full facts are brought to light; that culpable and discreditable conduct is exposed and brought to public notice; that suspicion of deliberate wrongdoing (if unjustified) is allayed; that dangerous practices and procedures are rectified; and that those who have lost their relative may at least have the satisfaction of knowing that lessons learnt from his death may save the lives of others. The reference to culpable and discreditable conduct was plainly to such conduct on the part of State organs. The nature of the obligation was neatly summed up by Jackson J in R (Wright)v Secretary of State for the Home Department [2001] EWHC Admin 520, [2001] UKHRR 1399, in terms repeated by Sedley LJ in R (AM) v Secretary of State for the Home Department [2009] EWCA Civ 219: that an article 2 or article 3 investigation is required in order to maximise future compliance with those articles. The second gloss is different and is the one in question in the present case. It concerns ill treatment not by the state but by an individual or other third party actor. Plainly a citizen may be subjected to inhuman or degrading treatment (or torture) by a fellow citizen. It has become commonplace to speak of this as a breach of article 3, but it is not. An individual cannot be in breach of the Convention. In the ordinary way, if treatment falling within article 3 is applied by A to B, then A may have subjected B to it, but the state has not. The States responsibility is simply not engaged. But it may be if, and only if, the State fails to take steps to afford its protection to B against As misbehaviour. In that event, it is still not a case of the state subjecting the individual to inhuman or degrading treatment, but by judicial gloss the article is read as carrying with it an unspoken but implicit positive obligation upon the State to afford its protection. This second gloss has the potential to extend considerably wider than the first. Whilst the first is concerned to give effect to the primary obligation of the state not itself to subject people to inhuman or degrading treatment, the second reaches into the question of what the state is bound to do in relation to the acts of people for whose behaviour it is not responsible. When one comes to this question, there are considerations which do not apply to the first gloss. Even in the most law abiding of states, that sometimes serious harm will be inflicted by one individual upon another, in the context of all manner of disputes and in pursuit of many different objectives, is a regrettably unavoidable feature of life. No one suggests that the state is bound to guarantee that this will not happen. Indeed, some steps which an authoritarian state might be inclined to take with a view to preventing it (such as preventive detention without conviction or other court order, house arrest, intensive surveillance and the like) might themselves be infringements of other fundamental rights afforded to the citizen. That consideration apart, the systems which states adopt for the protection of those within their boundaries do not have to be the same. It has never been suggested that it is the function of the Convention to monitor every act of enforcement or policing of the varied domestic legal requirements, nor the content of those requirements, so long as they provide sufficiently for the protection of the individual against third party behaviour which meets the high threshold of severity contemplated by article 3. Otherwise, what would be involved would not be a gloss on the primary obligation imposed by article 3, nor would the positive obligation be in any sense ancillary to that primary obligation. Rather, the duty would be of a completely different character to the primary obligation, and would entail wholesale assimilation of, and judicial control of, the legal systems of independent states. The positive obligation constituted by this second gloss relating to the protection of citizens from third party ill treatment requires first that the state have a legal framework for the prohibition of conduct passing the article 3 threshold, and thus afford the protection of its legal system against such behaviour. A v United Kingdom (1998) 27 EHRR 611 was an example of a legal system which failed to provide sufficient protection to children against the infliction of serious harm via corporal punishment, until the former English defence of reasonable chastisement was altered. Such cases concern the structure of a states system. The more difficult question is whether the implied positive obligation recognised by the second gloss extends beyond the structure of the states system to its operation in an individual case. The Strasbourg court confronted this in Osman v United Kingdom (1998) 29 EHRR 245, where the complaint was that the police force had failed sufficiently to heed reports suggesting that an obsessive might be a danger to an individual, who had then been attacked and almost killed (and his father killed). The context was the equivalent gloss on article 2, but the principles are the same as for article 3. The court concluded that the implied positive obligation to protect could apply but in narrow circumstances of a real and immediate risk to the life of an identified individual by a third party, of which risk the State either knew or ought to have known. If such an immediate threat exists, then the States obligation is to do what can reasonably be expected of it which might reasonably have avoided the risk; it is not limited to a duty to avoid gross negligence. As Lord Bingham observed in Van Colle v Chief Constable of Hertfordshire Police; Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225 at para 29, it is quite apparent that every ingredient of this carefully drafted test is of importance. It defines the restricted circumstances in which a duty arises under the Convention to take reasonable operational steps to forestall known specific threats to the safety of an individual from eventuating. The court in Osman made clear the reason why this test is restrictive. It lies in the realities of law enforcement and policing. At para 116 it said this: For the Court, and bearing in mind the difficulties of policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources, such an obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities. Accordingly, not every claimed risk to life can entail for the authorities a Convention requirement to take operational measures to prevent that risk from materialising. Another relevant consideration is the need to ensure that the police exercise their powers to control and prevent crime in a manner which fully respects the due process and other guarantees which legitimately place restraints on the scope of their action to investigate crime and bring offenders to justice, including the guarantees contained in articles 5 and 8 of the Convention. This duty recognised in Osman is a duty to take reasonable steps not to enforce the law or to punish a perpetrator, but to prevent serious violence from occurring to an individual when the threat of it is sufficiently specific. It is an expansion of the second gloss beyond the requirement for structures and systems to render serious violence unlawful, but it is carefully narrow in extent. The House of Lords faithfully applied Osman in Van Colle v Chief Constable of Hertfordshire Police. What has happened since is that the second gloss has been further extended beyond prevention of anticipated violent crime to a duty to investigate reported past violence. The usually identified origin of this further extension is MC v Bulgaria (2005) 40 EHRR 20. There is no doubt that the formulation adopted in that case has been often repeated, usually word for word, in later cases. In that sense there is, no doubt, a consistent line of authority. The difficulty is that much remains unclear, indeed unexplained. Unclear remain the rationale for the extension, the issue whether it can be derived from Osman and/or Assenov or if not why departure from the principles of those cases is justified, and the extent of the duty as extended. MC v Bulgaria concerned a complaint of rape made by a 14 year old against two young men of her acquaintance with whom she had spent an evening and night travelling around in their car. They had been arrested on the day that she made her complaint to the police, a few days after the alleged event. Their case was that she had consented. There were multiple clashes of evidence between the complainant on the one hand and those she accused, plus other witnesses, on the other. But the prosecutors investigation had been closed on the grounds that neither force (physical or psychological) nor threats of the same, nor physical resistance by the complainant, had been established. The point of the case was the courts rejection of that criterion for rape, which was at the time consistently adopted by the Bulgarian authorities, and was asserted by the Government to be the rule: see paras 122 and 166. Thus there was a breach of article 3 (and indeed of article 8) because the Bulgarian structures or system for the criminalisation of rape did not sufficiently protect an individuals sexual autonomy; absence of consent must be the criterion, rather than the use of force. That sufficiently demonstrated a breach of article 3 in the same way as in A v United Kingdom. The court, however, went on to draw attention to deficiencies in the prosecutors investigation of the complaint. At the outset of its judgment it made the following statement of principle, which has subsequently been adopted, often word for word, in later cases. 151. In a number of cases article 3 of the Convention gives rise to a positive obligation to conduct an official investigation. Such positive obligations cannot be considered in principle to be limited solely to cases of ill treatment by state agents. 152. Further, the Court has not excluded the possibilities that the states positive obligation under article 8 to safeguard the individuals physical integrity may extend to questions relating to the effectiveness of a criminal investigation. 153. On that basis the Court considers that states have a positive obligation inherent in articles 3 and 8 of the Convention to enact criminal law provisions effectively punishing rape and to apply them in practice through effective investigation and prosecution. (Emphasis supplied) The emphasised passage in para 153 is expressed as a summary of the three propositions in paras 151 and 152. As to those, authority is cited for each of them. The authority cited for the first sentence of 151 is Assenov (at para 102). For the second sentence of 151 it is Calvelli and Ciglio v Italy. For the third proposition, in 152, it is Osman at para 128. Whilst these paragraphs show that the court asserts that article 3 carries an obligation in some circumstances to investigate third party offending, they leave only uncertainties about its source and thus its extent. As has been seen, Assenov does indeed show that article 3 gives rise to a positive obligation in a number of cases to conduct an official investigation. But those cases are ones where the investigation is into suspected state involvement in ill treatment and is necessary if the primary obligation on the State is not to be ineffective. That rationale does not apply to cases of third party offending and MC v Bulgaria does not say anything about the difference between the two situations. Given the explanation in Assenov of the reasons why an ancillary positive obligation has been devised by judicial gloss, the difference is fundamental. Calvelli and Ciglio was a case of alleged medical negligence in the course of the delivery of a baby who died shortly afterwards. It had been treated by the Italian authorities as a case of possible criminal manslaughter. The doctor had been convicted but his conviction was eventually set aside by the Court of Cassation on the grounds that he had wrongly been convicted in his absence. A re trial was ordered but by then the limitation period had expired. The claimants asserted that there had been no effective system of investigation and trial because owing to delays the limitation period had expired and the doctor had not been convicted. The Court held that there had been no violation of article 2. The obligation discussed was the duty to run a system which provided sufficient remedies: see paras 49 54. That is the A v United Kingdom duty. There had been no breach of it because in the field of medical negligence a civil rather than a criminal process can suffice and here there had been sufficient remedies in (1) a right to damages (which had been pursued and then settled by the claimants without a finding of liability against the doctor, thus waiving an entitlement to pursue the case to such a finding) and (2) disciplinary regulation of doctors. True, there was complaint of delay made, but there was no examination in this case of the question what duty existed to investigate the doctors actions. The nearest that the court got to that question was the observation that remedies must be effective and not exist in theory only. It is not easy to see how this case generated the second sentence of para 151 in MC v Bulgaria, but if it did it is more consistent with an obligation to provide a sufficient investigative structure than with a duty not to be negligent in the detailed inquiry. As to para 152 of MC v Bulgaria, para 128 of Osman (a) is concerned with whether there had been a breach of article 8 and (b) simply re states the finding that the police did not know, nor ought to have known, of a real and immediate threat to the safety of the complainant. Of course it is true that in order to establish whether a sufficiently real and immediate threat to the safety of the complainant exists, it will in some cases be necessary for the police to investigate the complaint. But that does not alter the fact that the carefully limited duty recognised in Osman is concerned not with an obligation to investigate a past event, but with an obligation to prevent a future one. The tentative tone of para 152 is also to be noted. No more is said than that the possibility of the positive obligation extending to a duty to mount an effective investigation is not excluded. No further reasoning is shown for the progression from that to the much more positive statement in para 153. It is not clear why that more positive statement follows from the previous two paragraphs, even if those two had been themselves firmly grounded on the authority cited. The court in MC v Bulgaria was moreover at pains to set some limit to the permissible review of the investigation. At paras 167 168 it said this: 167. In the light of the above, the courts task is to examine whether or not the impugned legislation and practice and its application in the case at hand, combined with the alleged shortcomings in the investigation, had such significant flaws as to amount to a breach of the respondent states positive obligations under articles 3 and 8 of the Convention. 168. The issue before the court is limited to the above. The court is not concerned with allegations of errors or isolated omissions in the investigation; it cannot replace the domestic authorities in the assessment of the facts of the case; nor can it decide on the alleged perpetrators criminal responsibility. The court identified, at para 177, deficiencies in the investigation. It concluded that the conflicting assertions were not sufficiently sensitively assessed, and that inquiries which could have been made into timings, which might have shown which version was correct, were not made. It also criticised the fact that the complainant had not had the opportunity to confront and question the witnesses relied upon by the accused. Lastly, the investigators had not, it was said, sufficiently taken into account the unlikelihood that a 14 year old would make advances to the second man only minutes after losing her virginity to the first. But at para 179, set out by Lord Kerr at para 25 above, the court made it clear that it regarded the deficiencies in the investigation as the consequence of, and part and parcel with, the flawed approach of the Bulgarian system generally to the issue of lack of consent. It was because of the criterion of force/resistance that the investigation did not go into matters which otherwise it should have done. This must be the explanation for the observations about investigation, for otherwise it is very difficult to see that the criticisms made could found a breach of article 3 given the words of paras 167 and 168. Those paragraphs make it clear that the gloss on article 3 is not a vehicle for the second guessing via the Convention of the ordinary domestic process of assessment of conflicting evidence. Of course it is true that the Strasbourg court is a supra national one, but there is no sign that the limit on concern with errors or isolated omissions is restricted to that court as distinct from a national court when the latter is applying the Convention; on the contrary, the limit is expressed to be one which determines when there is a breach of article 3 and this plainly is the same for all courts examining that question. Nor can it be the case that a system which does not involve pre trial confrontation of witnesses, as some Code Napoleon systems do, but other systems, including all the United Kingdom ones, do not, is ipso facto in breach of article 3. What has happened since MC v Bulgaria is that the formulation cited above has been repeated, or in some cases summarised. It is plain that in several of them the summary has been to the effect that whenever there is an allegation of ill treatment passing the article 3 threshold, by whomever committed, there is an obligation on the state to conduct an effective investigation. But in none of these cases has the basis for, and thus the ambit of, any obligation to investigate third party violence ever been addressed. Reference back to MC v Bulgaria, and to its reliance on Assenov, Calvelli and Osman is frequently made, but never examined and the uncertainties mentioned above have not been confronted. In some cases, there is additional reliance on a series of Turkish cases: Ay [2005] ECHR 167, Ali & Aysu Duran [2008] ECHR 289, Mehmet [2008] ECHR 269, Celik [2004] ECHR 548 and Bati [2008] ECHR 246. But all of these were cases of allegations of serious police torture or ill treatment of suspects; the citation of such cases illustrates the manner in which the difference between the first gloss and the second has not received attention. In most cases the injunction that the court is not concerned with errors or isolated omissions is similarly repeated. In some, the court appears to have looked accordingly for evidence of a structural defect, alternatively culpable disregard or an absence of good faith, in the administration of the domestic system: see for example Szula v United Kingdom (2007) 44 EHRR SE19 and BV v Croatia (Application No 38435/13) 21 January 2016. But this is not always the case. The injunction notwithstanding, in some of the cases the criticisms of the investigation have been very particular. In some, there are plain overtones of structural State deficiencies in relation to the investigation of allegations of racially motivated or discriminatory violence: examples include Secic v Croatia (2009) 49 EHRR 18, Beganovi v Croatia [2009] ECHR 992, and Milanovic v Serbia [2010] ECHR 2029, but this was not given as a reason for the decisions. In others, such as Vasilyev v Russia [2009] ECHR 2078, the nub of the allegation was serious misbehaviour by the police, in that case by dumping the injured men in the street in the aftermath of a third party assault. But in some, the court has found itself simply pronouncing on whether the investigation was sufficiently careful. An example appears to be CAS v Romania (2015) 61 EHRR 18, where the complaint was of sexual abuse of a boy in his home by a visitor or neighbour. It is possible that the basis of the decision was a conclusion that, as in some other cases, the state did not take allegations of sexual abuse seriously enough, but that is not said. The court found a breach of article 3 not only in delay, which did not prevent the prosecution of the specific individual identified, but also in what it described as a failure sufficiently to evaluate conflicting testimony, supported by the fact that when that individual accused was acquitted, the police did not look for anyone else. That is very close to, if not indistinguishable from, a view that the outcome of the trial was wrong, and moreover that if it was wrong that could itself amount to a breach of article 3. Beganovi is another case in which (at para 77) the court appears to have held that the positive obligation under article 3 may extend into examination of the conduct of the trial. Such instances, which may be atypical, leave unanswered the question what is meant by the principle that a breach of article 3 is not constituted by a bona fide decision in the course of investigation or law enforcement which is afterwards held to have been an error. Occasionally in the Strasbourg cases, the general statement of principles includes the seminal passage from Osman v United Kingdom (para 116) which is set out at para 112 above. In most of them it does not. But it is surely clear that these considerations relating to the practical business of policing, to the operational choices which have to be made as to priorities and to the allocation of finite resources, must apply with equal if not greater force to the investigation of allegations of past third party violence as they do to reports of threats of future violence. These considerations point firmly to the proper test for the ancillary positive obligation under article 3 to investigate reports of past violence being whether the state has a proper structure of legal and policing provision designed to punish it when it occurs and has administered that structure in good faith and with proper regard for the gravity of the behaviour under consideration. They do not point towards a test of ex post facto assessment of whether the investigation was careless or made mistakes which ought not to have been made, nor to a finding that there has been a breach of the right not to suffer torture, or inhuman or degrading treatment, when the complaint is that an investigation could and should have been done better. The threshold of behaviour This is the more so when one considers the range of behaviour which is treated as triggering the ancillary positive obligation under article 3. It is clear, and regularly emphasised, that treatment must pass a minimum of severity before it falls within article 3. It is also clear, and routinely stated, that what that minimum amounts to is relative and varies according to the circumstances of the case, such as the nature and context of the punishment, the manner and method of its execution, its duration, its physical and mental effects, and in some instances the sex age and state of health of the victim. That statement derives from an early corporal punishment case, Costello Roberts v United Kingdom (1995) 19 EHRR 112, para 30. It was repeated in A v United Kingdom at para 20 and in many subsequent judgments. It is no doubt plain that in the case involving breach of the states primary obligation not to inflict inhuman or degrading treatment on its citizens, almost any physical injury perpetrated upon a citizen by a State official, typically the police, will cross the article 3 threshold. Save where necessary in the course of resisted arrest or the prevention of crime, there is simply no place in policing for causing injury of any kind to a suspect. The practice of the Strasbourg court in relation to third party violence might have built upon the relative nature of the threshold in order to limit the ancillary positive obligation to very serious violence but it has not done so. In Milanovic v Serbia numerous cuts combined with feelings of fear and helplessness were regarded (at para 87) as triggering the ancillary positive obligation. In BV v Croatia (at paras 153 and 121) injuries to the head and contusions to the body were treated likewise. It is plain from the cases that the threshold is regarded as falling, in English terms, somewhere on the scale of actual bodily harm. To that must be added rape and child sexual abuse; whether indecent assault passes the threshold remains unclear but it is perhaps likely that it may. So also one would think must be added false imprisonment (for example by relatives), violent disorder, most terrorist offences and many other crimes. It follows that the great majority of violent and sexual offences will trigger the ancillary positive obligation, and that potentially the investigation of all such offences might lead to an action under section 6 of the Human Rights Act, querying the adequacy of the police treatment of the case. It might also be noted that the application of the judicial glosses to the other rights protected by the Convention has not, as yet, received detailed consideration. But it is difficult to see why, if they are sound, they may not in principle be applied equally to other rights. In Siliadin v France [2005] ECHR 545 the Court held that the second gloss applied to article 4 at least as far as the obligation to put in place legal prohibition of forced labour was concerned, but an obligation in relation to investigation was not in issue. Some third party behaviour in relation to modern slavery might indeed be considerably more serious than actual bodily harm in a fight outside a club. Some of the cases clearly contemplate that third party infringement of article 8 rights may trigger the ancillary positive obligation: see in CAS v Romania at para 72, and Szula v United Kingdom at para 1. The possible application of that ancillary positive obligation to third party interference with the right to enjoyment of ones possessions under Article 1 Protocol 1 has yet, it seems, to be considered. But in principle, the state has a duty to protect this right in its citizens, as it has in relation to all the other rights under the Convention. If so, the prospect may exist of the response to every complaint of burglary, car theft or fraud becoming the subject of an action under the Human Rights Act. English domestic law and its relevance English law recognises a public legal duty owed by the police to enforce the law. The police enjoy a wide measure of discretion as to how to go about it, what inquiries to make, and when and whom to prosecute, but a structural failure to enforce a particular part of the law is amenable to direction by the court via judicial review on the application of any interested party: R v Comr of Police of the Metropolis, Ex p Blackburn [1968] 2 QB 118. Such a public duty is real, not abstract. That is consistent with the implied positive obligation recognised by the Strasbourg court in cases such as A v United Kingdom. English law also recognises the liability of the police to individuals where a tortious duty of care is broken, as it may be where they have directly or indirectly occasioned physical harm: Knightley v Johns [1982] 1 WLR 349 is a simple example. Further, it has a statutory scheme for the independent investigation of complaints about the police, and a different statutory scheme for the compensation of citizens who are injured through the criminal acts of others. What English law does not recognise is a duty of care in tort owed by the police to individual citizens and sounding in damages in relation to the detection of crime and the enforcement of the law. The reasons for this absence of private law duty of care were fully explained by the House of Lords in Hill v Chief Constable of West Yorkshire Police [1989] AC 53, and confirmed by that court in Brooks v Comr for the Police of the Metropolis [2005] 1 WLR 1495, [2005] UKHL 24 and in Van Colle v Chief Constable of Hertfordshire Police [2008] UKHL 50, [2009] AC 225; Smith v Chief Constable of Sussex Police [2008] UKHL 50, [2009] AC 225; and by this court in Michael v Chief Constable of South Wales Police [2015] AC 1732, [2015] UKSC 2. They find convincing expression in the first three cases in the separate speeches of Lords Keith, Steyn, Hope, Phillips, Carswell and Brown and were supported also by Lord Bingham despite his solitary dissent on the extent of the particular duty (of prevention) under consideration in Smith. A convenient summary is perhaps afforded by the judgment of Lord Phillips in Smith at para 97: I do not find it possible to approach Hill and Brooks as cases that turned on their own facts. The fact that Lord Steyn applied the decision in Hill to the facts of Brooks, which were so very different, underlines the fact that Lord Steyn was indeed applying a core principle that had been unchallenged for many years. That principle is, so it seems to me, that in the absence of special circumstances the police owe no common law duty of care to protect individuals against harm caused by criminals. The two relevant justifications advanced for the principle are (i) that a private law duty of care in relation to individuals would be calculated to distort, by encouraging defensive action, the manner in which the police would otherwise deploy their limited resources; (ii) resources would be diverted from the performance of the public duties of the police in order to deal with claims advanced for alleged breaches of private law duties owed to individuals. The point that he [Lord Steyn] was making in Brooks, in support of the core principle in Hill, was that the principle had been enunciated in the interests of the whole community. Replacing it with a legal principle which focuses on the facts of each case would amount, in Lord Steyns words, to a retreat from the core principle. We must be careful not to allow ourselves to be persuaded by the shortcomings of the police in individual cases to undermine that principle. That was the very thing that he was warning against, because of the risks that this would give rise to. As Ward LJ said in Swinney v Chief Constable of Northumbria Police Force [1997] QB 464, 487, the greater public good outweighs any individual hardship. As Lord Hope explained in the same case at para 75: These reasons are powerful, repeated and carefully considered. They are grounded in public policy and have something in common with the considerations explained by the Strasbourg court in Osman v United Kingdom at para 116 (see above at para 112). In the briefest of terms, law enforcement and the investigation of alleged crime involve a complex series of judgments and discretionary decisions. They concern, amongst many other things, the choice of lines of inquiry, the weighing of evidence thus far assembled and the allocation of limited resources as between competing claims. To re visit such matters step by step by way of litigation with a view to private compensation would inhibit the robust operation of police work, and divert resources from current inquiries; it would be detrimental to, not a spur to, law enforcement. It is not carrying out the impugned investigation efficiently which is likely to lead to diversion of resources; on the contrary. It is the re investigation of past investigations in response to litigation which is likely to do so. Moreover, whilst there may exist a mechanism by way of summary judgment for stopping short such a re investigation if the litigation be spurious in the sense of demonstrably bad on the papers, other claims, and particularly those which turn out to be speculative, cannot thus be halted. In short, the public duty would be inhibited by a private duty of such a kind. A contemporary example can be seen in terrorist activity. It is well known that large numbers of possible activists are, to some extent or other, known to the police or security services. The most delicate and difficult decisions have to be made about whom to concentrate upon, whose movements to watch, who to make the subject of potentially intrusive surveillance and so on. It is in no sense in the public interest that, if a terrorist attack should unfortunately occur, litigation should become the forum for a review of the information held about different suspects and of the decisions made as to how they were to be dealt with. Nor is it difficult to see that it is by no means necessarily in the public interest that there should be pressure on the authorities, via the prospect of litigation, to ratchet up the surveillance of additional persons. The long standing controversy over police use of powers of stop and search, for instance in relation to the carrying of knives by youths, affords another example. It may be noted that in his separate opinion on Osman in the commission, Sir Nicholas Bratza recognised the force of these considerations: (1998) 29 EHRR at 298. As he pointed out, the difficulties highlighted by the House of Lords in Hill were well illustrated by the facts of Osman. The allegations there made by the claimant would, he said, involve an investigation not only into issues of fact but into acutely difficult questions of policy and discretion. The relevance of the position at which English law has arrived, after long consideration at the highest level, is not that English law can control the operation of the ECHR. But it is to highlight the delicate balance between the duty of the State to the public generally and its relationship to individuals in particular cases of reported or anticipated crime. That delicate balance is as applicable to the ambit of the implied ancillary positive obligation under articles 2, 3 and maybe others as it is to an action in tort in the domestic courts. When taken together with the uncertainties as to the nature and extent of the implied positive obligation as found by the second gloss on those articles, it points clearly to the undesirability of any assertion of a detailed review of the course of a particular criminal investigation by way of the Convention. It is one thing to say that a state must take seriously its protective obligation, must put in place structures which enforce the law and must not then ignore them. It is quite another to say that by way of the Convention every police investigation should be examined in detail to see whether it should have been done better, and that compensation should be paid out of the limited police resources, at the expense of other necessary expenditure on current cases, if the decision is that it should have been. These important public considerations have nowhere been examined or put into the balance in any of the Strasbourg cases on the second gloss, from MC v Bulgaria onwards. It can properly be said that the distinction between structural and operational defects may at times be difficult to make. It is, however, no more difficult than the distinction which it is suggested must be made, if operational negligence suffices, between errors which amount to breaches of article 3 and those which do not. To say that the errors must be serious and significant in order to amount to a breach of article 3 is surely more to present than to solve the difficulty. Nor is such a restriction clearly to be found anywhere in the line of Strasbourg cases relied upon. If the test is not to be simply a falling below the standard to be expected of the police, and thus the same as negligence, it is not easy to see what it is. The English cases make a clear distinction between the objectives served by a tortious duty to compensate and a Convention based duty to uphold the prohibition on inhuman or degrading treatment: see for example Lord Brown in Van Colle at para 138. In substance, the Convention based duty is not aimed at compensation but at upholding and vindicating minimum human rights standards. It is, substantially, to insist on performance of a public duty. It is now said that this distinction justifies the acceptance of a general duty under article 3 to investigate any report of past behaviour passing the threshold of that article, because such will not impinge on the common law position as firmly established in the cases beginning with Hill. The error in this argument is to seek to have it both ways. One cannot both uphold the distinction and effectively eliminate it by employing a Convention claim to serve substantially the same purpose as an action in tort. That it will do if the wide ambit of the ancillary article 3 duty is accepted, and if compensation routinely follows a finding that a criminal investigation should have been better conducted. True it is that the limitation period differs, but this will not remove the disadvantages to policing which were identified in the English cases. It may be that there is a more relaxed approach to causation in a Convention based claim, but that if anything only increases the prospect of such a claim becoming a substitute for a claim in tort. There is no doubt some difference of approach to the calculation of compensation, but the present case is a good illustration of the marginal, if not imperceptible, nature of the distinction in outcome see the judges scrupulous quantum judgment at paras 33, 130 and 143. If, on the other hand, the positive duty under article 3 is recognised to conform to the public duty, to put in place structures to outlaw the prohibited behaviour and to operate them in good faith, the Convention based claim will afford the possibility of some compensation where the English common law rules do not, but will not result in wholesale substitution of the Convention for a duty in tort. The claimants argument For the claimants Ms Kaufmann QC mounts an elegant argument. It is that the positive obligation to investigate past third party crime for which she contends is simply analogous to the Osman duty to protect from threatened violent crime. Just as the latter arises when there is a real and immediate risk of prescribed behaviour, so she contends the former arises when there is a credible report that the prescribed behaviour has already occurred. Elegant as the argument is, the two situations are not analogous. There is a clear distinction between protection from an immediately anticipated danger and inquiry into a past event. The carefully limited Osman duty arises because there is an immediate risk of death or serious injury to an identified individual, communicated to the State. By contrast, a crime of violence committed by A against B will only occasionally carry a risk of repetition, whether against B or against others; there is generally no immediate danger to an identified person. It is no doubt possible to categorise the duty to investigate reports of third party crime as deriving from the states duty to protect its citizens, in the same way as does its duty to have in place structures which make such behaviour unlawful. So viewed, the duty to investigate each reported crime can be said to be an application of cases such as A v United Kingdom. But the reality is that there is a marked and vital distinction, even if it is sometimes of degree, between structural failure to outlaw the behaviour and operational failings in the investigation of particular reports. The present case The judges findings as to what went wrong are not disputed, and were in any event largely based on the very critical internal police reports, as well as on that of the Independent Police Complaints Commission. What went wrong involved plain structural errors. The Metropolitan Police had a written policy for recognising and dealing with cases of drug induced rape but it was institutionally treated as mere form and there was no proper training in its application. The complaints made by the claimants were simply not accorded the kind of weight which they demanded because of generic failures to treat them with sufficient care and gravity. Moreover there was pressure internally to write off cases of the kind here encountered. The various detailed failings in the conduct of the inquiry were largely attributable to this flawed structural approach. They included those set out by Lord Kerr at para 51. There is, as explained at the outset, no appeal as to quantum. In those circumstances, this is a case which falls within the ancillary positive duty under article 3, as it ought to be interpreted. It is for that reason that I agree that the appeal in the present case ought to be dismissed. LORD MANCE: I have read with benefit the three judgments prepared in this case by Lord Kerr, Lord Neuberger and Lord Hughes. The result is not in doubt, but there is a significant difference between Lord Kerr and Lord Neuberger on the one hand and Lord Hughes on the other regarding the extent to which the Convention rights, as domesticated by the Human Rights Act 1998, should be seen as imposing on the State an operational duty to investigate serious offences the commission of which there is no reason to attribute to state agents. If there is such a duty, then I do not see that it can or should be confined to the victim of the offence in question. Part of its purpose must be not only to punish, but also to deter and to prevent the occurrence of further such offences, and, if a third person suffers foreseeably as a result of a failure properly to investigate, that third person appears to me, potentially at least, to be a victim. There is much force in Lord Hughes analysis and critique in relation to the question whether any such general duty exists. What has happened in the Strasbourg jurisprudence is, unfortunately, not unprecedented. The European Court of Human Rights starts from a solidly rationalised principle, but then extends it to situations to which the rationale does not apply, without overt recognition of the extension, without formulating any fresh rationale and relying on supposed authority which does not actually support the extension. Further, the European Court of Human Rights has not in the present context really focused at any stage on the implications for policing of the general duty which it has suggested. These have been discussed domestically in a number of common law cases, and include the risks of defensive policing and of police priorities being affected by the perceived risk of being sued, as well as the significant financial implications of exposing the police to all those potentially affected by any failure in police investigative work: see eg Michael v Chief Constable of South Wales Police [2015] UKSC 2; [2015] AC 1732, paras 121 122. In these circumstances, while appreciating the pressures under which the European Court of Human Rights operates, and the difficulties of maintaining coherence and discipline in a court consisting in the first instance of multiple chambers, an approach, careful to identify, rationalise and justify any significant development of principle, would save domestic litigants and courts time, effort and expense. The starting point is the positive duty on the State under article 3 not to subject anyone to torture or to inhuman or degrading treatment or punishment. One (solidly rationalised) principle which the Court has derived from that duty, by way of gloss, is an ancillary positive duty to conduct an effective official investigation where an individual raises an arguable case that he has been seriously ill treated by the police or other such agents of the State unlawfully and in breach of article 3: Assenov v Bulgaria (1998) 28 EHRR 652, para 102; the basis for this being that: If this were not the case, the general legal prohibition of torture and inhuman and degrading treatment and punishment, despite its fundamental importance, would be ineffective in practice and it would be possible in some cases for agents of the state to abuse the rights of those within their control with virtual impunity. This is a coherent gloss, derived from the rationale of article 3. It was repeated in Sevtap Veznedaroglou v Turkey (Application No 32357/96), para 32, cited in Jacobs, While and Overys The European Convention on Human Rights (OUP, 2014) where this rationalisation is cited as the basis of any positive investigative duty. The Supreme Court in R (Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29; [2011] 1 AC 1, expressed a similar understanding of the parallel ancillary investigative duty capable of arising under article 2 (providing that Everyones right to life shall be protected by law): the investigative obligation under article 2 arose only in circumstances where there was ground for suspicion that the state might have breached a substantive obligation under article 2, and the death of a soldier on active service did not of itself raise a presumption of such a breach: see headnote, holding (2). At paras 200 212, I examined both the Strasbourg and the domestic jurisprudence on this point, including the analysis of the point by the House of Lords in the prior authority of R (Middleton) v West Somerset Coroner [2004] 2 AC 182, para 3 per Lord Bingham, and R (Gentle) v Prime Minister [2008] AC 1356, para 6, per Lord Bingham. The investigative duty was in short parasitic. At para 210, I examined the various specific situations in which the European Court of Human Rights had held that there was sufficient State involvement to give rise to a substantive obligation to protect, combined with a parasitic duty to investigate after the event: killings by State agents and deaths of persons in custody or mental health detainees, deaths of conscripts, as well as situations where under the principle in Osman v United Kingdom (1998) 29 EHRR 245, the State was on notice of a specific and immediate threat to someones life and bound accordingly to take protective steps. In para 211, I pointed out the distinction between the procedural investigative obligation arising in such circumstances and the general substantive obligation under article 2 to establish an appropriate regulatory, investigatory and judicial system. To my mind, Lord Hughes analysis fits perfectly with what the House and the Supreme Court then understood to be the law under article 2, and I believe would also have thought the law to be under article 3, since there is no reason to differentiate in this respect between them. The case of MC v Bulgaria (2005) 40 EHRR 20 was not even cited in R (Smith) and there is reason to believe that its potential significance under these articles was not appreciated until much more recently: see paras 149 and 150 below. It is at this point that the European Court of Human Rights extended a solidly rationalised principle to situations to which the rationale did not apply. What it did in MC v Bulgaria (2005) 40 EHRR 20, para 151, was to cite Assenov, para 102, in support of propositions that: In a number of cases article 3 of the Convention gives rise to a positive obligation to conduct an official investigation. Such positive obligations cannot be considered in principle to be limited solely to cases of ill treatment by state agents. The other case cited in support of the second sentence was Calvelli and Ciglio v Italy (Application No 32967/96), where the Court remarked that procedural shortcomings had led to a time bar in relation to any criminal proceedings against the (private) doctor involved, but that the complainants had been able to commence civil proceedings, which, but for the fact that they chose to settle them, would in the special circumstances of the instant case, have satisfied the positive obligations arising under article 2: para 55. This reasoning and decision do not directly address the subject matter of either sentence cited above, and offer negligible support for any departure from the rationale of any investigative obligation stated in Assenov. It is also consistent with a requirement that there should be a sufficient system for redress. On this authority has however been piled a weight of subsequent Strasbourg caselaw, including some recent Grand Chamber authority, to the effect that the investigative duty is not, or not necessarily, confined to cases of suspected misdoing or default by State agents. Lord Kerr and Lord Neuberger have examined this caselaw. While its foundations or rationale may be shaky, I cannot ignore at any rate the clear terms in which the conclusion has now so often been expressed, to the effect that the States positive investigative obligation can arise even where the relevant offence is not arguably attributable to any State agent. There are however some caveats that I would make, based on such explanations as the Court has given as to the working of this extended duty: i) The Court has reiterated that the scope of the States positive obligations might differ between cases where treatment contrary to article 3 of the Convention has been inflicted through the involvement of State agents and cases where violence in inflicted by private individuals: see eg Beganovi v Croatia [2009] ECHR 992, para 62, Vasilyev v Russia [2009] ECHR 2078, para 100 and other cases cited by Lord Neuberger in para 88. This must mean something in practice, even though the Court went on to say that the requirements as to an official investigation are similar. ii) The Court has also repeatedly emphasised that it is not concerned with allegations of errors or isolated omissions in the investigation. A statement to that effect appears in the seminal authority of MC v Bulgaria, para 168, and is repeated in CAS v Romania (2015) 61 EHRR 18, para 69, BV v Croatia (Application No 38435/13) and BV v Belgium (Application No 61030/08), paras 55 61. In place of what was once understood to be a distinction between casual errors of judgments or acts of negligence, consisting of operational as opposed to systematic failures by state servants or agents, there is now a distinction to be drawn between simple errors or isolated omissions in the investigation and more serious failings. In this connection, I agree with Lord Hughes, para 123, that there is no basis for treating this qualification on the scope of the positive investigative duty under article 3 as confined to Strasbourg as a supra national court, and as irrelevant to the English domestic courts interpretation of article 3. I had understood Lord Kerr to suggest the contrary, but he has clarified in paras 27 to 30 that this is not the case. iii) In paras 27 to 30, Lord Kerr expresses a conclusion that the only shortcomings relevant when it comes to the operational duty to conduct an investigation are those which are conspicuous or substantial, or really serious, or egregious or obvious and significant. Lord Hughes considers that this is more to present than to solve the difficulty, and that no such restriction is clearly to be found anywhere in the line of Strasbourg cases relied on: para 136. But a distinction between mere shortcomings and more serious failures is at least consistent with the Courts statements of principle set out in the previous subparagraph, and appears in the reasoning in Mustafa Tun v Turkey (Application No 24104/05), paras 189, 192 and 195. It is also consistent with the Courts more general jurisprudence, to the effect that: ill treatment must attain a minimum level of severity if it is to fall within the scope of article 3. The assessment of this minimum is, in the nature of things, relative; it depends on all the circumstances of the case, such as the nature and context of the treatment, the manner and method of its execution, its duration, its physical or mental effects and, in some instances, the sex, age and state of health of the victim See Kudla v Poland [2000] 35 EHRR 198, para 91; and also A, B and C v Ireland (2011) 53 EHRR 13, paras 164 165. It is evident from the way the Court explains the assessment of the minimum level of severity that it is not going to be easy to predict where it falls in any individual case. iv) The investigative duty currently under consideration should not be confused with, and cannot be treated as part of, an Osman type duty on the state to act in the face of a real and immediate threat imperilling the life or bodily well being of a potential victim. That would involve mining and extending a separate strand of Strasbourg caselaw. In some cases, it would mean there was no investigative duty at all, if no real and immediate threat was apparent to anyone, or anyone other than the original victim, following the original offence. The investigative duty which the Strasbourg case law, in my opinion, now recognises is not tied down by any such restriction. It arises from the fact of the offence. I endorse what Lord Hughes says on this aspect in his paras 137 138. Finally, I do not accept that Lord Binghams well known cautionary remarks in R (Ullah) v Special Investigator [2004] UKHL 26; [2004] 2 AC 323 were confined to the international level (whatever relevance that would mean they had domestically). They were, and have correctly been understood in later authority, such as R (Al Skeini) v Secretary of State for Defence [2007] UKHL 26; [2008] AC 153, as guidance relating to the general approach which domestic courts should take. The general aim of the Human Rights Act was to align domestic law with Strasbourg law. Domestic courts should not normally refuse to follow Strasbourg authority, although circumstances can arise where this is appropriate and a healthy dialogue may then ensue: see eg R v Horncastle [2009] UKSC 14; [2010] 2 AC 373; Manchester City Council v Pinnock [2010] UKSC 45; [2011] 2 AC 104, para 48 and Chester v Secretary of State for Justice [2031] UKSC 63, [2014] 1 AC 271, paras 27 28. Conversely, domestic courts should not, at least by way of interpretation of the Convention rights as they apply domestically, forge ahead, without good reason. That follows, not merely from Ullah, but, as Lord Hoffmann said in In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] 1 AC 173, para 36, from the ordinary respect attaching to the European Court of Human Rights and the general desirability of a uniform interpretation of the Convention in all member states. There are however cases where the English courts can and should, as a matter of domestic law, go with confidence beyond existing Strasbourg authority: see eg Rabone v Pennine Care NHS Foundation Trust [2012] UKSC 2; [2012] 2 AC 72. If the existence or otherwise of a Convention right is unclear, then it may be appropriate for domestic courts to make up their minds whether the Convention rights should or should not be understood to embrace it. Further, where the European Court of Human Rights has left a matter to States margin of appreciation, then domestic courts have to decide what the domestic position is, what degree of involvement or intervention by a domestic court is appropriate, and what degree of institutional respect to attach to any relevant legislative choice in the particular area: see In re G, paras 30 38, per Lord Hoffmann, para 56, per Lord Hope and paras 128 130, per Lord Mance.

UK-Abs

Between 2003 and 2008, John Worboys, the driver of a black cab in London, committed sexual offences against many women. The respondents were two of his victims and both reported their assault to the police. DSD was one of Worboys first victims. She was attacked in 2003. After her assault Worboys was not identified as her assailant. In NBVs case, following an attack in 2007, Worboys was quickly arrested as a suspect but released without charge. Following a review of sexual assault cases by police in February 2008, cases were identified which involved a particular modus operandi by the perpetrator. This resulted in a police media appeal. This led to DSD and NBV being identified as his victims. Many other women were also identified as being victims of his attack. Worboys was eventually convicted of 19 counts of sexual assault, including the assault on NBV. Both women brought proceedings against the police, alleging failure to conduct effective investigations into Worboys crimes. They claimed that these failures constituted a violation of their rights under article 3 of the European Convention on Human Rights (ECHR), which provides that no one shall be subjected to torture or inhuman or degrading treatment or punishment. The main issue was to what extent article 3 imposes a positive obligation on states effectively to investigate reported crimes perpetrated by private individuals. The High Court and the Court of Appeal held that a positive obligation to investigate did exist and that, in this case, this obligation had been breached. Compensation was awarded to the respondents. The Commissioner of Police of the Metropolis appealed to the UK Supreme Court, although it was accepted that, whatever the outcome of the appeal, recoupment of any of the compensation paid would not be sought. The Supreme Court unanimously dismisses the appeal. Lord Kerr gives the main judgment, with which Lady Hale agrees. Lord Neuberger agrees with Lord Kerr but also gives a judgment with which Lady Hale agrees. Lord Hughes and Lord Mance give separate judgments with differing reasons but agreeing with the outcome. The main area of dispute is the nature of the positive obligation imposed by article 3 of the ECHR, particularly the issue of whether the obligation relates only to systemic failures or whether it also includes operational failures [6]. Lord Kerr examines the ECHR case law supporting the existence of the positive obligation under article 3 and concludes that there is an operational duty to conduct a proper inquiry into behaviour amounting to a breach of article 3 [20, 54 58]. In order to be an effective deterrent, laws which prohibit conduct constituting a breach of article 3 must be rigorously enforced and complaints of such conduct must be properly investigated [24]. Deficiencies in investigations do not have to be part of a flawed approach of the system generally for a breach of article 3 to arise. It is clear, however, that errors must be serious in order to give rise to such a breach [29 30]. The ECtHR case law demonstrates a clear and constant line of authority to the effect that the state has a duty to conduct an effective investigation into crimes involving serious violence to the individual [44 48]. It has consistently been held that the positive obligation to investigate effectively is not solely confined to cases of ill treatment by state agents [59 62]. Lord Neuberger agrees with Lord Kerr that serious failures which are purely operational will suffice to establish a claim. ECtHR case law supports this approach. There is no basis in that case law for the suggestion that the investigatory duty should be limited to systemic, as opposed to operational, failures [85, 93]. Lord Hughes differs from this view in that he considers there is a positive obligation to ensure that there are appropriate legal structures in place but that there is no operational obligation. ECtHR case law leaves uncertainty as to the source and extent of the investigative duty [117]. The proper test for the positive obligation under article 3 to investigate reports of past violence is whether the state has a proper structure of legal and policing provision designed to punish it when it occurs and has administered that structure in good faith and with proper regard for the gravity of the behaviour under consideration. The test is not whether the investigation was careless or involved mistakes which ought not to have been made [127]. There is a breach of the positive obligation in this case as there were plain structural errors [140]. Lord Kerr considers that the fact that the police do not have a common law duty of care in tort does not extend to claims advanced under the Human Rights Act 1998 (HRA). The bases of liability are different and no assumption should be made that the policy reasons which underlie the exemption of police from common law liability apply in the same way to liability for breach of HRA obligations. The existence of a duty to investigate effectively does not depend on whether it is fair, just or reasonable to impose one [67 70]. Lord Hughes takes a different view and examines the public policy reasons why English law does not recognise a duty of care owed in tort by the police to individual citizens. Law enforcement and the investigation of alleged crime involve a complex series of judgments and discretionary decisions to re visit such matters step by step by way of litigation with a view to private compensation would inhibit the robust operation of police work. English law cannot control the operation of the ECHR, but there is a delicate balance to be struck and it is undesirable to permit detailed review of a particular criminal investigation by way of the ECHR, which is why the positive obligation should be confined to structural failings [131 132, 134]. Lord Mance considers that the distinction between operational and systemic failures has been replaced by a distinction between simple errors/isolated omissions and more serious failings, and emphasises that the positive obligation under article only relates to more serious failings [151].

The distinct legal personality of companies has been a fundamental feature of English commercial law for a century and a half, but that has never stopped businessmen from treating their companies as indistinguishable from themselves. Mr Michael Hunt is not the first businessman to make that mistake, and doubtless he will not be the last. Mr Hunt is a wealthy investor. The judge found that at the relevant time one of his preferred methods of investment was to lend money to companies whose business was too risky for them to be able to borrow on normal terms from banks. For this he would charge a substantial arrangement fee and interest at a relatively high rate. Swynson Ltd was a company controlled and beneficially owned by Mr Hunt which was used as a vehicle for such transactions, including the one which has given rise to these proceedings. On 31 October 2006, Mr Hunt caused Swynson to lend 15m to Evo Medical Solutions Ltd (or EMSL) for a period of a year. The purpose of the loan was to enable EMSL to finance the management buy out of an American company called Medical Industries America Inc, trading as Evo, which distributed medical equipment in the United States. Shorn of peripheral detail, the result of the buy out was that the 15m was spent on buying out the existing owners of Evo. Evo then became a wholly owned subsidiary of EMSL, whose shares were owned 71.4% by Evos management, 25% by Mr Hunt and 3.6% by an associate of Mr Hunt who joined its board. Swynsons loan to EMSL was secured by charges over Evos assets and limited personal guarantees by the management. Before entering into this transaction, Swynson and EMSL jointly instructed a firm of accountants, Hurst, Morrison Thomson, to carry out due diligence on Evo. They subsequently changed their name to Lowick Rose LLP, but I shall refer to them throughout as HMT. They are now in liquidation. Their report failed to draw attention to some fundamental problems about the companys finances, in particular the insufficiency of its working capital. It is now common ground that that failure was negligent, and that if HMT had carried out their task properly they would have reported the problem and the transaction would not have gone ahead. In the course of 2007, Evo began to experience severe cash flow problems and EMSL began to default on its interest payments. In July 2007, Mr Hunt was told that Evo was at risk of collapse without a substantial cash injection. He decided that the only way of recovering his money would be to provide further funding until Evo was restored to financial health, when it could either be floated or sold. To that end he caused Swynson to lend a further 1.75m to EMSL in 2007. A yet further loan of 3m was made in July 2008, as part of a larger transaction, under which Mr Hunt became the controlling shareholder of EMSL with 85% of the equity, leaving 15% in the hands of the management. Evos financial position did not improve, however, and neither the original nor the further loans were repaid. On 31 December 2008, rather more than two years after the original transaction, the 2006 and 2007 loans were refinanced. Mr Hunt and EMSL entered into a loan agreement under which Mr Hunt personally made a short term loan of 18.663m to EMSL, secured by fixed and floating charges over its assets and undertaking. The loan was interest free, although there was a provision for default interest. It was a term of the agreement that EMSL would apply the loan moneys in satisfaction of the outstanding balance of the 2006 and 2007 loans. EMSL duly did this. There were two reasons for these transactions. The first was that under UK tax legislation governing close companies, once Mr Hunt, who already controlled Swynson, acquired control of EMSL in July 2008, Swynson became assessable to tax on the interest payments due from EMSL notwithstanding that those payments were not being made. The second was that Mr Hunt took the view that it was disadvantageous for Swynson to have a large non performing loan on its books. The result was that the 2006 and 2007 loans were discharged, as Mr Hunt intended. Only the 2008 loan of 3m remained outstanding on Swynsons books. In October 2012 Swynson and Mr Hunt brought the present proceedings in support of a claim against HMT for damages of 16.157m, being the principal amount of all the loans of 19.75m, less sums received under the managements personal guarantees and the value of recoveries from cash and assets in the hands of Evo. The matter came on for trial before Rose J. Liability was conceded in the course of the trial, and by the time that the judge came to give judgment the only outstanding issues related to damages. She found that only the 2006 loan had been made on the strength of HMTs report, but that losses arising from the 2007 and 2008 loans were in principle recoverable as the cost of reasonable steps taken in mitigation, subject to an overall cap of 15m agreed in the letter of engagement. That left for decision the main point taken on damages, and the only one which is presently before this court, which concerned the effect of the discharge of the 2006 and 2007 loans as a result of the refinancing of December 2008. HMT submitted that EMSL having repaid these loans to Swynson, albeit with money borrowed from Mr Hunt personally, Swynson had suffered no loss in respect of them which could be recovered by way of damages. In response, Swynson and Mr Hunt argued four points: (i) that the December 2008 refinancing was res inter alios acta and did not affect the amount of Swynsons recoverable loss; (ii) that if the loss was not recoverable by Swynson it was recoverable by Mr Hunt, on the footing that HMT owed him a duty of care; (iii) that Swynson was entitled to recover on the principle of transferred loss; and (iv) that HMT having been unjustly enriched by Mr Hunts provision of funds to EMSL to repay Swynson, Mr Hunt was subrogated to Swynsons claims against them. The judge accepted point (i) and awarded damages of 15m on that basis. On point (ii) she held that no duty of care was owed to Mr Hunt personally. Points (iii) and (iv) did not arise having regard to her conclusion on point (i) and she did not deal with them. In the Court of Appeal, Mr Hunt abandoned the argument that a duty of care was owed to him personally. But the other three points remained in issue. The Court of Appeal held by a majority (Longmore and Sales LJJ) that the judge had been right about point (i) (res inter alios acta) and dismissed the appeal on that basis. The majority disagreed about point (iv) (unjust enrichment and equitable subrogation). Longmore LJ would have rejected it, while Sales LJ would have accepted it. Davis LJ rejected all three points and would have allowed the appeal. The issues before this court stand as they did in the Court of Appeal. There is, as will be apparent, a measure of overlap between them. Res inter alios acta The general rule is that loss which has been avoided is not recoverable as damages, although expense reasonably incurred in avoiding it may be recoverable as costs of mitigation. To this there is an exception for collateral payments (res inter alios acta), which the law treats as not making good the claimants loss. It is difficult to identify a single principle underlying every case. In spite of what the latin tag might lead one to expect, the critical factor is not the source of the benefit in a third party but its character. Broadly speaking, collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Thus a gift received by the claimant, even if occasioned by his loss, is regarded as independent of the loss because its gratuitous character means that there is no causal relationship between them. The same is true of a benefit received by right from a third party in respect of the loss, but for which the claimant has given a consideration independent of the legal relationship with the defendant from which the loss arose. Classic cases include loss payments under an indemnity insurance: Bradburn v Great Western Railway Co (1874 5) LR 10 Ex 1. Or disability pensions under a contributory scheme: Parry v Cleaver [1970] AC 1. In cases such as these, as between the claimant and the wrongdoer, the law treats the receipt of the benefit as tantamount to the claimant making good the loss from his own resources, because they are attributable to his premiums, his contributions or his work. The position may be different if the benefits are not collateral because they are derived from a contract (say, an insurance policy) made for the benefit of the wrongdoer: Arab Bank Plc v John D Wood Commercial Ltd [2000] 1 WLR 857 (CA), at paras 92 93 (Mance LJ). Or because the benefit is derived from steps taken by the Claimant in consequence of the breach, which mitigated his loss: British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Ltd [1912] AC 673, 689, 691 (Viscount Haldane LC). These principles represent a coherent approach to avoided loss. In Parry v Cleaver, at p 13, Lord Reid derived them from considerations of justice, reasonableness and public policy. Justice, reasonableness and public policy are, however, the basis on which the law has arrived at the relevant principles. They are not a licence for discarding those principles and deciding each case on what may be regarded as its broader commercial merits. On the judges findings, the loss recoverable by Swynson from HMT was that which arose from its inability to recover (i) the 2006 loan which it had made to EMSL on the strength of HMTs reports about Evos financial strength, and (ii) the 2007 and 2008 loans which it made in a reasonable but unsuccessful attempt to mitigate the loss arising from the 2006 loan. So far as the 2006 and 2007 loans were concerned, that loss was made good when EMSL repaid them. The fact that the money with which it did so was borrowed from Mr Hunt was no more relevant than it would have been if it had been borrowed from a bank or obtained from some other unconnected third party. There was nothing special about the fact that Mr Hunt provided the funds, once one discards the idea that HMT owed any relevant duty to him. The short point is that the repayment of the 2006 and 2007 loans cannot be treated as discharging them as between Swynson and EMSL, but not as between Swynson and HMT. If, in December 2008, Mr Hunt had lent the money to Swynson to strengthen its financial position in the light of EMSLs default, the payment would indeed have had no effect on the damages recoverable from HMT. The payment would not have discharged EMSLs debt. It would also have been collateral. But the payments made by Mr Hunt to EMSL and by EMSL to Swynson to pay off the 2006 and 2007 loans could not possibly be regarded as collateral. In the first place, the transaction discharged the very liability whose existence represented Swynsons loss. Secondly, the money which Mr Hunt lent to EMSL in December 2008 was not an indirect payment to Swynson, even though it ultimately reached them, as the terms of the loan required. Mr Hunts agreement to make that loan and the earlier agreements of Swynson to lend money to EMSL were distinct transactions between different parties, each of which was made for valuable consideration in the form of the respective covenants to repay. Thirdly, as the Court of Appeal correctly held, the consequences of the refinancing could not be recoverable as the cost of mitigation, because the loan to EMSL was not an act of Swynson and was not attributable to HMTs breach of duty. Transferred loss The principle of transferred loss is a limited exception to the general rule that a claimant can recover only loss which he has himself suffered. It applies where the known object of a transaction is to benefit a third party or a class of persons to which a third party belongs, and the anticipated effect of a breach of duty will be to cause loss to that third party. It has hitherto been recognised only in cases where the third party suffers loss as the intended transferee of the property affected by the breach. The paradigm case is the rule which has applied in the law of carriage of goods by sea ever since the decision of the House of Lords in Dunlop v Lambert (1839) 2 Cl & F 626, that the shipper may sue the shipowner for loss of or damage to the cargo notwithstanding that the loss has been suffered by the consignee to whom property and risk (but not the rights under the contract of carriage) have passed. In Albacruz (Cargo Owners) v Albazero (Owners) [1977] AC 774, 847 Lord Diplock, with whom the rest of the Appellate Committee agreed, expressed the rationale of the carriage of goods rule as being that: in a commercial contract concerning goods where it is in the contemplation of the parties that the proprietary interests in the goods may be transferred from one owner to another after the contract has been entered into and before the breach which causes loss or damage to the goods, an original party to the contract, if such be the intention of them both, is to be treated in law as having entered into the contract for the benefit of all persons who have or may acquire an interest in the goods before they are lost or damaged, and is entitled to recover by way of damages for breach of contract the actual loss sustained by those for whose benefit the contract is entered into. The party recovering is accountable to the third party for any damages recovered: ibid, p 844. In Linden Gardens Trust v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, this rationale was extended to contracts generally. A contractor had done defective work in breach of a building contract with the developer but the loss was suffered by a third party who had by then purchased the development. The developer recovered the loss suffered by the purchaser. Lord Griffiths, however, suggested (at p 97) that the result could be justified on what has become known as the broader ground. This is that the developer had himself suffered the loss because he had his own interest in being able to give the third party the benefit that the third party was intended to have. He could recover the cost of rectifying the defects because it represented what the developer would have to spend to give the third party that benefit, even though he had no legal liability to spend it. On the broader ground, the principle would not be limited to cases where the loss related to transferred property. It is, however, important to remember that the principle of transferred loss, whether in its broader or narrower form, is an exception to a fundamental principle of the law of obligations and not an alternative to that principle. All of the modern case law on the subject emphasises that it is driven by legal necessity. It is therefore an essential feature of the principle that the recognition of a right in the contracting party to recover the third partys loss should be necessary to give effect to the object of the transaction and to avoid a legal black hole, in which in the anticipated course of events the only party entitled to recover would be different from the only party which could be treated as suffering loss: see Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518, 547 548 (Lord Goff), 568 (Lord Jauncey), 577 578 (Lord Browne Wilkinson), 582 583 (Lord Millett). That is why, as the House of Lords held in this last case, it is not available if the third party has a direct right of action for the same loss, on whatever basis. In the present case the relevant duty was owed to Swynson but the loss has in the event been suffered by Mr Hunt. Since Mr Hunt did not suffer his loss in his capacity as the owner of property, only the broader principle of transferred loss could be relevant to his case. Like others before me, I consider that there is much to be said for the broader principle. But it is not necessary to decide the point on this appeal because it is plain that the principle cannot apply in either form to the present facts. The reason is that it was no part of the object of the engagement of HMT or indeed of any other aspect of the 2006 transaction to benefit Mr Hunt. That is the main reason why no duty of care was owed to him. It is also one reason why the engagement letter was unassignable without consent. Mr Hunts loss arises out of the refinancing of December 2008, which had nothing to do with HMT and did not arise out of their breach of duty. Equitable subrogation as a remedy for unjust enrichment Equitable subrogation is a remedy available to give effect to a proprietary right or in some cases to a cause of action. This is not a case where subrogation is invoked to give effect to a proprietary right. It belongs to an established category of cases in which the claimant discharges the defendants debt on the basis of some agreement or expectation of benefit which fails. The rule was stated by Walton J stated in Burston Finance Ltd v Speirway Ltd (in liquidation) [1974] 1 WLR 1648, 1652 as follows: [W]here As money is used to pay off the claim of B, who is a secured creditor, A is entitled to be regarded in equity as having had an assignment to him of Bs rights as a secured creditor It finds one of its chief uses in the situation where one person advances money on the understanding that he is to have certain security for the money he has advanced, and for one reason or another, he does not receive the promised security. In such a case he is nevertheless to be subrogated to the rights of any other person who at the relevant time had any security over the same property and whose debts have been discharged in whole or in part by the money so provided by him. Most of the cases are indeed about subrogation to securities, but the principle applies equally to allow subrogation to personal rights: Cheltenham & Gloucester Plc v Appleyard [2004] EWCA Civ 291, at para 36; Commissioners for HM Revenue and Customs v Investment Trust Companies (In Liquidation) [2017] UKSC 29. In Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221 the House of Lords reinterpreted the existing authorities so as to recognise that, subject to special defences, equitable subrogation served to prevent or reverse the unjust enrichment of the defendant at the plaintiffs expense. The argument for Mr Hunt is that HMT has been unjustly enriched at his expense by virtue of the discharge of the 2006 and 2007 loans, the loss on which would otherwise have been recoverable from them by way of damages. Equitable subrogation is invoked as the appropriate remedy to reverse that enrichment. I am prepared to assume for the sake of argument that HMT was enriched, although I regard it as rather contrived to treat someone as enriched simply because a contractual counterparty has suffered no loss by his breaches of duty. I am also prepared to assume that if they have been unjustly enriched it was at Mr Hunts expense, although that is also an odd assumption to make on the facts of this case. Although Mr Hunt lent EMSL the money which was used to pay off the debt, his loss was not attributable to the benefit thereby conferred on HMT. It was purely incidental, for Mr Hunt had no claim against HMT and was not affected by the reduction of their liability. He was affected only by the eventual insolvency of the borrower. Nonetheless, I make both of these assumptions in order to focus attention on what seems to me to be the critical questions, namely whether the enrichment was unjust and if so whether subrogation is an appropriate way of addressing the fact. As I shall show, these two questions are closely related. Mr Hunt says that it was unjust because he entered into the December 2008 refinancing under a mistake. The mistake in question has been identified on this appeal by reference to a passage from his witness statement which the Judge accepted: It should be obvious from what I have said that there was no intention on my part or Swynsons part to relieve HMT from any liability due to the refinancing exercise. As far as I was concerned the claim against HMT remained unaffected by this refinancing and was of no concern of theirs. As between me and Swynson the consideration of who technically would be entitled to recover the money from HMT did not matter as I was the owner of Swynson, but it was implicitly understood that the recovery would be held pro rata according to the unpaid lending advanced. In fact, no case of mistake was ever pleaded or advanced at trial. This evidence appears to have been given by Mr Hunt and accepted by the judge in support of the argument that she accepted, namely that the repayment of the loan by EMSL to Swynson was collateral (no concern of theirs). It is therefore not entirely fair to deploy it in a very different legal context. But I will put aside my reservations on that score and approach the matter as if mistake had been an issue at the trial and this finding had been addressed to it. As with any novel application of the relevant principles, it is necessary to remind oneself at the outset that the law of unjust enrichment is part of the law of obligations. It is not a matter of judicial discretion. As Lord Reed points out in Investment Trust Companies (para 39) it does not create a judicial licence to meet the perceived requirements of fairness on a case by case basis: legal rights arising from unjust enrichment should be determined by rules of law which are ascertainable and consistently applied. English law does not have a universal theory to explain all the cases in which restitution is available. It recognises a number of discrete factual situations in which enrichment is treated as vitiated by some unjust factor. These factual situations are not, however, random illustrations of the Courts indulgence to litigants. They have the common feature that some legal norm or some legally recognised expectation of the claimant falling short of a legal right has been disrupted or disappointed. Leaving aside cases of illegality, legal compulsion or necessity, which give rise to special considerations irrelevant to the present case, the defendants enrichment at the claimants expense is unjust because, in the words of Professor Burrows Restatement (2012) at Section 3(2)(a), the claimants consent to the defendants enrichment was impaired, qualified or absent. As Lord Reed puts it in Investment Trust Companies (para 42), the purpose of the law of unjust enrichment is to correct normatively defective transfers of value by restoring the parties to their pre transfer positions. It reflects an Aristotelian conception of justice as the restoration of a balance or equilibrium which has been disrupted. In Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221, Parc had borrowed money from R on the security of a first legal charge over property, and from an associated company, OOL, on the security of a second legal charge. The plaintiff bank partially refinanced the borrowing from R. For regulatory reasons the refinancing was structured as a loan to the general manager of the group holding company, who in turn lent it to Parc who used it to pay off part of the loan from R. The plaintiffs loan was made on the strength of an undertaking by the general manager that intra group loans to Parc would be postponed to the plaintiffs loan. The undertaking was intended to bind all the companies of the group, but in fact bound only the holding company because it was given without the subsidiaries knowledge or authority. OOL accordingly sought to enforce its second charge ahead of the plaintiff. The plaintiff sought to defeat this attempt by claiming to be subrogated to Rs first charge. This depended on the contention that OOL would otherwise be unjustly enriched by the indirect use of the plaintiffs money to discharge indebtedness which ranked ahead of theirs. The House of Lords accepted that contention, holding that the plaintiffs were subrogated to Rs first charge, but only as against intra group creditors who would have been postponed had the general managers undertaking been binding on them. Lord Hoffmann, with whom the rest of the Appellate Committee agreed, distinguished, at p 231H G, between contractual subrogation (as in the case of indemnity insurance or guarantee) and equitable subrogation, which was an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived. He identified as the unjust factor in OOLs enrichment the defeat of the plaintiffs expectation of priority over intra group loans which was the basis on which it had advanced the money. This was so, notwithstanding that that expectation was not shared by OOL who had nothing to do with the transaction and was unaware of it. Lord Hoffmann cited in support of this proposition a number of earlier cases in which a right of subrogation had been held to arise when the expectations of the person paying the money (whether or not shared by the party enriched) were defeated because something went wrong with the transaction. Thus in Chetwynd v Allen [1899] 1 Ch 353 and Butler v Rice [1910] 2 Ch 277, the plaintiff lent money to pay off a prior loan secured by a mortgage on property. The plaintiffs expectation that he would obtain a charge to secure his own loan was based on an agreement with the debtor, but was defeated because unbeknown to him the property in question belonged to the debtors wife. The plaintiff was subrogated to the prior mortgage because otherwise the wife would have been unjustly enriched by the discharge of the debt which it secured. In Ghana Commercial Bank v Chandiram [1960] AC 732, the plaintiff bank lent money to the debtor to pay off an existing loan from another bank secured by an equitable mortgage on property. It did this on the footing that it would obtain a legal mortgage over the property. That expectation was defeated because although the legal mortgage was executed it was invalidated by a prior attachment of the property in favour of a judgment creditor. The plaintiff bank was subrogated to the judgment creditors attachment because otherwise the judgment creditor would have been unjustly enriched by the discharge of the debt which the equitable mortgage secured. In Boscawen v Bajwa [1996] 1 WLR 328, the plaintiff Building Society agreed to lend money on mortgage for the purchase of a property. It paid the loan moneys to the solicitors acting for them and the purchaser, to be held on its behalf until paid over against a first legal charge on the property. The solicitors paid it over to the vendors solicitors to be held to their order pending completion. The plaintiffs expectations were defeated because the vendors solicitors used it without authority to pay off the vendors mortgage before completion and the purchase subsequently fell through so that completion never occurred. The plaintiff was subrogated to the vendors mortgage because otherwise the vendor would have been unjustly enriched by the discharge of the debt which it secured. Likewise, in Banque Financire itself, the plaintiffs expectation of priority over intra group loans was defeated by the general managers absence of authority to bind the subsidiaries. In the absence of subrogation, OOL would have been unjustly enriched because Parcs debt to R, which would otherwise have ranked ahead of its debt to OOL, was discharged at the plaintiffs expense without the plaintiffs effective consent. As Lord Hoffman observed, at p 235A B, the plaintiff failed to obtain that priority over intra group indebtedness which was an essential part of the transaction under which it paid the money. Where the basic conditions for equitable subrogation apply, the fact that the legal right to which the Claimant is subrogated has been discharged is irrelevant. This is because, as Lord Hoffmann explained at p 236, subrogation operates on a fictionalised basis: In a case in which the whole of the secured debt is repaid, the charge is not kept alive at all. It is discharged and ceases to exist It is important to remember that subrogation is not a right or a cause of action but an equitable remedy against a party who would otherwise be unjustly enriched. It is a means by which the court regulates the legal relationships between a plaintiff and a defendant or defendants in order to prevent unjust enrichment. When judges say that the charge is kept alive for the benefit of the plaintiff, what they mean is that his legal relations with a defendant who would otherwise be unjustly enriched are regulated as if the benefit of the charge had been assigned to him. It does not by any means follow that the plaintiff must for all purposes be treated as an actual assignee of the benefit of the charge and, in particular, that he would be so treated in relation to someone who would not be unjustly enriched. In Cheltenham & Gloucester Plc v Appleyard [2004] EWCA Civ 291, the Plaintiff Building Society lent money to Mr and Mrs Appleyard to refinance debts owed to the Bradford & Bingley Building Society secured by a first charge on their home, and to BCCI secured by a second charge. The plaintiff put its solicitors in funds and the solicitors paid the outstanding balance of both debts to the respective creditors. The Appleyards executed a legal charge over the property in favour of the plaintiff. But the charge could not be registered as a legal charge at HM Land Registry because BCCI (which was in liquidation) refused to recognise that it had received the money or to consent to the discharge of its own security, and the terms of that security prohibited any charge subsequent to its own. The plaintiffs were held entitled to be subrogated to the legal charge of Bradford & Bingley to the extent of the value of the Bradford & Bingley mortgage at the time it was paid off. This was because otherwise the Appleyards would be unjustly enriched to the extent that their property was burdened with a lesser security. In Banque Financire and the earlier cases cited by Lord Hoffmann the defendants did not share the expectation of the claimant, whereas in Cheltenham & Gloucester they did. But in either case the intentions of the defendants were beside the point. The reason was that the claimant had bargained for the benefit which failed, whereas from the defendants point of view the discharge of the prior indebtedness was a windfall for which they had not bargained. If they had given consideration for it the result would have been different. This point may be illustrated by the other leading modern case, Bank of Cyprus UK Ltd v Menelaou [2016] AC 176. The decision is authority for the proposition that a third party who pays the purchase price of property may be subrogated to the vendors lien for the purchase price, if the purchaser would otherwise have been unjustly enriched. The Menelaou parents proposed to sell the family home to release capital to be spent on (among other things) buying a house for their daughter. To enable this to happen, the claimant bank, to whom the family home was mortgaged, agreed to release its charges on condition that it would receive a charge over the house to be acquired for the daughter. This expectation was defeated because she was unaware of the arrangement and the signature on the charge was not hers. The daughter was enriched, not by the mere fact of acquiring a house, which she owed to the benevolence of her parents, but by the fact that she acquired it free of the charge which the bank expected to have and without which the transaction should not have proceeded. The main issue on the appeal was whether that enrichment occurred at the banks expense, given that the money to pay the purchase price had come from her parents out of the proceeds of sale of the family home, and not directly from the bank. Once that question was answered in the banks favour, it was held that the enrichment was unjust. This was because the banks consent to the use of the proceeds of the family home to buy the daughter a house had been conditional on it obtaining a charge. That condition had failed and the daughter had consequently been enriched. To reverse the enrichment, the bank was subrogated to the vendors lien, on the footing that the purchase price secured by that lien had in substance been paid with the banks money. The daughters intentions were irrelevant because the absence of a valid charge had been a windfall for her. As Lord Neuberger pointed out (para 70), this was because she did not pay for it. If she had been a bona fide purchaser for full value it might well have been impossible to characterise any enrichment arising from the absence of the intended charge as unjust. The cases on the use of equitable subrogation to prevent or reverse unjust enrichment are all cases of defective transactions. They were defective in the sense that the claimant paid money on the basis of an expectation which failed. Many of them may broadly be said to arise from a mistake on the part of the claimant. For example, he may wrongly have assumed that the benefit in question was available or enforceable or that his stipulation was valid, when it was not. However, it would be unwise to draw too close an analogy with the role of mistake in other legal contexts or to try to fit the subrogation cases into any broader category of unjust enrichment. It is in many ways sui generis. In the first place, except in the case of voluntary dispositions, the law does not normally attach legal consequences to a unilateral mistake unless it is known to or was induced by the other party. But it does so in the subrogation cases. This is, as I have explained, because the windfall character of the benefit conferred on the defendant means that it is not unjust to give effect to the unilateral expectation of the claimant. Secondly, where money is paid under a contract, restitution is normally available only if the contract can be and is rescinded or is otherwise at an end without performance (eg by frustration). This is because the law of unjust enrichment is generally concerned to restore the parties to a normatively defective transfer to their pre transfer position. Subrogation, however, does not restore the parties to their pre transfer position. It effectively operates to specifically enforce a defeated expectation. Thirdly, as Lord Clarke suggested in Menelaou (para 21), the rule may be equally capable of analysis in terms of failure of basis for the transfer. Restitution on that ground ordinarily requires that the expectation should be mutual, whereas this is not a requirement for equitable subrogation. But some cases, such as Boscawen v Bajwa and Cheltenham & Gloucester v Appleyard, cannot without artifice be analysed in any other way, since the payer does not seem to have been mistaken about anything. His expectation was simply defeated by some subsequent external event. What this suggests is that the real basis of the rule is the defeat of an expectation of benefit which was the basis of the payers consent to the payment of the money for the relevant purpose. Mistake is not the critical element. It is only one, admittedly common, explanation of how that expectation came to be disappointed. Two things, however, are clear. The first is that the role of the law of unjust enrichment in such cases is to characterise the resultant enrichment of the defendant as unjust, because the absence of the stipulated benefit disrupted a relevant expectation about the transaction under which the money was paid. The second is that the role of equitable subrogation is to replicate as far as possible that element of the transaction whose absence made it defective. This is why subrogation cannot be allowed to confer a greater benefit on the claimants than he has bargained for: see Paul v Speirway Ltd [1976] Ch 220, 232 (Oliver J), Banque Financire, at pp 236 237 (Lord Hoffmann), and Cheltenham & Gloucester v Appleyard, at paras 38, 41 42 (Neuberger LJ). It can be seen that the fact that all the cases relate to defective transactions is not just an adventitious feature of the disputes that happen to have come before the courts. It is fundamental to the principle on which they were decided. The present case is entirely different from the kind of case with which equitable subrogation is properly concerned. The December 2008 refinancing was not a defective transaction. Mr Hunt intended to discharge EMSLs debt to Swynson. Otherwise he would not have achieved his objective of cleaning up Swynsons balance sheet and reducing its liability to tax. He received the whole of the benefit from the transaction for which he had stipulated: the covenant to repay, the security over EMSLs assets, the tax advantage and the presentational advantage of removing a large non performing debt from Swynsons books. It is of course true that he did not receive repayment of his loan, because EMSL was (or became) insolvent and its assets were worth much less than the debt. But that was a commercial risk that he took with his eyes open, and it was not what enriched HMT. In these circumstances, subrogation is not being invoked for its proper purpose, namely to replicate some element of the transaction which was expected but failed. It is being invoked so as to enable Mr Hunt to exercise for his own benefit the claims of Swynson in respect of an unconnected breach of duty under a different transaction between different parties more than two years earlier. Mr Hunts alleged mistake contributes nothing to this analysis. I need not enter into the long standing controversy about whether a transaction may be set aside on account of a mistake relating to the consequences or advantages of a transaction as opposed to its terms or character, or whether any causative mistake of sufficient importance will do. That issue is discussed by Lord Walker in Pitt v Holt [2013] 2 AC 108 at paras 114 123 and by the editors of Goff & Jones, The Law of Unjust Enrichment, 9th ed (2016), paras 9 135 9 142. But it does not arise here. Mr Hunt is not seeking to set aside the December 2008 refinancing and would not be entitled to do so. He is trying to invoke a remedy which the law provides for a specific purpose, and to deploy it for a different one. When Mr Hunt entered into the December 2008 refinancing, he did not in any sense bargain for a right to recover substantial damages from HMT. Nor was he mistaken about what he was going to get out of the refinancing. At best, he was mistaken about the effect that the discharge of EMSLs debt to Swynson would have on the latters claims under the very different transaction which it had entered into in 2006 when it engaged HMT to carry out the due diligence. In fact, however, his evidence does not even go that far. What it shows is that he wrongly believed that he had already bargained for a right to substantial damages from HMT back in 2006. This was because he considered that as the owner of Swynson he was as much entitled under Swynsons contract with HMT as Swynson was. As between me and Swynson, he wrote in the passage from his witness statement cited by the judge, the consideration of who technically would be entitled to recover the money from HMT did not matter as I was the owner of Swynson. As a result, he did not think that by discharging EMSLs debt to Swynson two years later he would diminish his own entitlement. As between Swynson and himself, it was implicitly understood that whichever of them made the recovery it would be shared between them pro rata according to the unpaid lending advanced. This was an error, but it does not follow that its consequences constitute an injustice which falls to be corrected by the law of equitable subrogation. Unless the claimant has been defeated in his expectation of some feature of the transaction for which he may be said to have bargained, he does not suffer an injustice recognised by law simply because in law he has no right. Failure to recognise these limitations would transform the law of equitable subrogation into a general escape route from any principle of law which the claimant overlooked or misunderstood when he arranged his affairs as he did. The consequence of a rule as broad as that can be seen by supposing that after Mr Hunt has recovered damages from HMT by way of subrogation, the fortunes of Evo turn and EMSL is in a position to repay the December 2008 loan. It does not matter for present purposes whether or not this was a realistic prospect in December 2008, although the judges findings on mitigation suggest that it was not unrealistic. If Mr Hunts argument is correct, the transfer which enriched HMT at his expense was the payment of the loan moneys to EMSL and which EMSL then paid to Swynson. His right of subrogation is said to have arisen from the discharge of the debt which EMSL owed to Swynson. It did not depend on whether or not he was able to recover the money he lent to EMSL. If EMSL were restored to financial health, there would be nothing to stop him from obtaining repayment of EMSLs debt under the December 2008 loan agreement. Subrogation on these facts would then have served to give Mr Hunt an additional right on top of everything the he bargained for in December 2008. This result would hardly do credit to the law. But it is the natural consequence of allowing subrogation to rights arising under a different transaction from the one which gave rise to the enrichment, instead of confining it to cases where it serves to replicate a missing element of the same transaction. Conclusion appropriate order. In the result I would allow the appeal. The parties are invited to agree an LORD MANCE: Introduction This appeal arises from an unsuccessful management buyout of Medical Industries America Inc, trading as Evo Medical Solutions (Evo), made through Evo Medical Solutions Ltd (EMSL) in 2006. EMSL was set up for the purpose and was owned as to 25% by Mr Michael Hunt through nominees, as to 3.6% by a colleague of his and as to the remaining 71.4% by the management team proposing the buyout. Mr Hunt has at all material times owned and controlled the respondent to this appeal, Swynson Ltd (Swynson). The management buyout was enabled by an interest bearing loan of 15m made on 31 October 2006 by Swynson to EMSL, secured by charges over EMSLs and Evos assets and repayable on 31 October 2007. As from 28 February 2007, this loan was financed by Swynson by borrowing from Credit Suisse guaranteed by Mr Hunt and secured on his assets. By July 2007 it appeared that Evo was at risk of financial collapse, and on 13 August 2007 Swynson granted a further facility of 1.75m to EMSL, which was fully drawn down by 1 October 2007 and repayable on 31 October 2007. Evos finances failed to improve and on 4 June 2008 Swynson made a third loan of 3m to EMSL. At or about the same date, Mr Hunt acquired the majority beneficial ownership of EMSL. The appellants, Hurst Morrison Thomson LLP (now known as Lowick Rose LLP) (HMT) through their partner, Mr Morrison, introduced the management buyout to Mr Hunt in mid 2006, by a proposal letter dated 12 July 2006 followed by a meeting the next day. They undertook by formal engagement letter dated 30 September 2006 to act as Swynsons reporting accountants in the same context and provided a final due diligence report on 31 October 2006. The engagement letter provided that HMTs maximum liability for advice given in respect of this matter was limited to 15m in aggregate in respect of any claim or claims that Swynson might have against HMT arising out of this engagement. It is conceded that HMTs advice was negligent and that their negligence caused Swynsons decision to enter into the 2006 loan. During the first half of 2008 Mr Morrison asked Mr Hunt if he was contemplating legal action against HMT. Mr Hunt replied that he would find that most unpalatable and said that they should wait and see how things developed following the additional funding provided in October 2007. By 1 July 2008 it was clear that matters had further deteriorated, and Mr Hunt drafted a letter of claim, and disclosed that he had done so to Mr Morrison and had, as an alternative to forcing Evo into liquidation, made the third investment in June 2008. Mr Morrison asked him not to send the letter as it would cause great concern with HMTs insurers, and Mr Hunt refrained from taking any such step until 24 August 2010, when he wrote referring to the earlier letter and conversation, stated that Evo had from the outset been a pig in a poke, and and made a formal claim. That claim led in due course to the commencement on 30 October 2012 of the present proceedings, in which Swynson and Mr Hunt were both claimants and sought to recover damages for losses resulting from the management buyout and the making of all three loans in 2006, 2007 and 2008. The losses claimed at trial consisted of the total of the funding provided (19.75m) less moneys and assets recovered, making a net claim of $16.157m (over HMTs limit of liability under the engagement letter), plus interest. In the meantime, however, the consequence of Mr Hunts acquiring of majority ownership of EMSL in addition to his ownership of Swynson had been that Her Majestys Revenue and Customs began to treat Swynson as receiving the interest which EMSL should have paid, but was not in fact paying, to Swynson. At the Revenues official interest rate of 6.25% pa and the corporation tax rate of 28% applicable at the time, the resulting tax charge on the 2006 and 2007 loans was some 293,125 per annum. Swynson also remained exposed on its borrowings from Credit Suisse. In these circumstances, on the advice, it appears, of his accountant, Mr Hunt determined to lend EMSL the money to pay off Swynson. He did so under a loan agreement dated 31 December 2008, which recited that, due to the financial circumstances of the borrower the loan was to be non interest bearing, and clause 3.2 of which provided that: The Borrower shall use all money borrowed under this agreement (i) To pay certain of the Borrowers existing loans to Swynson Limited (but for the avoidance of doubt not the Second Additional Loan made available on 4 June 2008); (ii) To pay for costs incurred in connection with the repayment of this agreement and (iii) for general working capital purposes and not for any other purpose. On this basis, EMSL was able to and did pay Swynson the sums due in respect of the 2006 and 2007 loans. In the courts below, Mr Hunts claim against HMT failed, on the ground that HMT undertook and owed no duty to him personally. There is no appeal against that conclusion. In relation to Swynson, HMT unquestionably owed and breached duties in both contract and tort. But HMT submit that the effect of the transaction of 31 December 2008 was and is to repay the loans given by Swynson to fund and support the management buyout. So no loss has, in the event, been suffered by Swynson, and Swynson can have no claim against HMT with regard to them. That is the submission. (a) Mitigation and res inter alios acta? HMTs submission failed at first instance before Rose J and in the Court of Appeal before Longmore and Sales LJJ, with Davis LJ dissenting. Rose J and the majority in the Court of Appeal held that the transaction effected on 31 December 2008 fell to be regarded as res inter alios acta, as between Swynson and HMT. They considered, clearly correctly, that the transaction did not constitute mitigation by Swynson of its damage, since Swynson was in no position to, and did not effect, the transaction itself. But they regarded the transaction as in fact avoiding loss in a way which should only be brought into account, if it arose out of HMTs breach of duty and in the ordinary course of business. They cited in this connection from Viscount Haldane LCs speech in British Westinghouse Co Ltd v Underground Electric Railways Co Ltd [1912] AC 673, 690. It can readily be accepted that there was a causal link between Mr Hunts action in funding EMSL to repay Swynson and HMTs negligence, and also that Mr Hunt was not acting in the ordinary course of business, but in the grip of a continuing and somewhat disastrous course of events brought about by that negligence. But, as has been held, Mr Hunt himself has no claim against HMT for negligence, and his action brought about the repayment of the loan granted to Swynson independently of any action by Swynson itself. In the passages cited, Viscount Haldane LC was speaking of loss mitigated by the claimant him or itself in circumstances where there was no obligation to mitigate loss. Here, the payment off of the indebtedness was not undertaken by or at the request of Swynson. It was initiated by Mr Hunt in his personal capacity deciding that it would suit Swynsons and his own interests to procure repayment by EMSL of its indebtedness to Swynson. Swynson and Mr Hunt are distinct legal personalities, and Mr Hunts conduct cannot be attributed to Swynson. The majority in the Court of Appeal also sought to support its reasoning by reference to the principle recognised in cases such as Parry v Cleaver [1970] AC 1 as governing collateral receipts, such as the proceeds of insurance, benevolent payments, disablement and pension payments. Whether such receipts should be brought into account was there said by Lord Reid, at p 13H, to depend on justice, reasonableness and public policy, and to involve a distinction which in his view at p 15E depended not on their source but on their intrinsic nature. In some cases, such payments can be seen to have been effectively purchased or paid for by the claimant, so that it would be unfair to deprive him of their benefit. In other cases, such as insurance, whosoever has paid the premium, it is clear that insurers liability is intended to be secondary, and subrogation will ensure that any recovery flows back to compensate the insurer. None of such cases resembles the present, where it is suggested that the court can ignore what is, in its intrinsic nature, a repayment of the loan under and by virtue of which the loss has been incurred. Longmore LJ noted that, if Mr Hunt had simply given Swynson the amounts of the outstanding 2006 and 2007 loans, no one could have suggested that HMT would have benefitted by this. That is clear. But the reason is that the gift would not have discharged the outstanding loans, and would have been a purely gratuitous or benevolent addition to Swynsons assets which was clearly not intended or apt to discharge HMT. Longmore LJ said it would be a triumph of form over substance if a different result occurred merely because the payment is made through EMSL. But the difference is in the nature of the payment, to which Lord Reid referred in Parry v Cleaver. Mr Hunts loan to EMSL was intended to and did lead to actual payment off of the first two loans which Swynson had made to EMSL. Sales LJ, agreeing on this point with Davis LJ, also accepted (para 55) that, if EMSL had suddenly become able to repay and had repaid as a result of winning the lottery or being left a large sum in a will, then Swynson could to that extent no longer have a claim against HMT. But he considered that considerations of justice, reasonableness and public policy made the present case different. This was because HMTs negligence had put Swynson and Mr Hunt in an invidious position, in which Mr Hunt had felt he had to provide funding to shore up Swynsons position on uncommercial terms which were not in the ordinary course of business. So, although Mr Hunt did not act out of pure benevolence, the position was analogous to cases of benevolence reviewed in Parry v Cleaver. Again, however, there is all the difference between a benevolent act which benefits a claimant (here Swynson) collaterally in an amount equivalent to a loss which it has incurred and satisfaction of the claimant Swynsons loss, by Mr Hunts funding of EMSL to repay Swynson. For these reasons, I do not consider that the result reached by Rose J and by the majority of the Court of Appeal can be justified by reference to the primary ground on which they put it. This conclusion is also consistent, in my opinion, with the Court of Appeals reasoning and conclusion in Preferred Mortgages Ltd v Bradford & Bingley Estate Agencies Ltd [2002] EWCA Civ 336; [2002] PNLR 35, and with the reasoning of, in particular, Stephenson LJ in London and South of England Building Society v Stone [1983] 1 WLR 1242; 1261D 1262A. The latter case involved a claim by lenders against negligent valuers (who had failed to spot subsidence) for the difference of 11,880 between the amount advanced and the amount which would have been lent upon a proper valuation. The borrowers ultimate repayment of the original advance out of the proceeds of the eventual sale of the house was ignored in the latter case by concession (per OConnor LJ at p 1248H), the rationale being (per OConnor LJ at p 1249E F) that the repayment had in effect only been achieved out of the lenders own further advances totalling 29,000, made to cover repairs necessary to make good the subsidence which the valuers had negligently failed to spot. The lenders therefore continued to suffer, and to be entitled to recover, loss up to the cap imposed by the difference between the amount advanced and the amount which would have been advanced on a proper valuation. The Court of Appeals reasoning and decision in that very different factual situation do not affect the present, where Swynsons loss as lender has been fully extinguished by the repayment which Mr Hunt procured of the first two EMSL loans. Swynsons alternative grounds: (b) transferred loss and (c) unjust enrichment There are however two further grounds on which Swynson submits that the result reached below can and should be upheld. One is unjust enrichment, which, it is submitted, operates by preserving Swynsons rights against HMT for the benefit of Mr Hunt as subrogee to the extent necessary to indemnify him against his outlay paying off Swynsons loan. This basis was accepted in the Court of Appeal by Sales LJ, but would not have been accepted by Longmore and Davis LJJ, as an alternative basis for the result reached. The other, transferred loss, was mentioned in, but not considered in depth by any member of, the Court of Appeal. (b) Transferred loss Recovery for transferred loss can, in my view, be addressed quite briefly. The normal principle is that a claimant in an action for breach of contract cannot recover damages in respect of loss caused by the breach to some third person not party to the contract: see The Albazero [1977] AC 774, 846 B C per Lord Diplock. But there are, as Lord Diplock went on to say, exceptions. One exception, recognised and applied in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd and St Martins Property Corp Ltd v Sir Robert McAlpine Ltd (St Martins) [1994] 1 AC 85 exists where it was in the contemplation of the parties when the contract was made that the property, the subject of the contract and the breach, would be transferred to or occupied by a third party, who would in consequence suffer the loss arising from its breach: see Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68 and the narrow ground of decision expressed by Lord Browne Wilkinson at p 114G H in St Martins, in which all members of the House joined. In such a situation, the claimant is seen as suing on behalf of and for the benefit of the injured third party and is bound to account accordingly: see St Martins, per Lord Browne Wilkinson at p 115A B and McAlpine Construction Ltd v Panatown Ltd (Panatown) [2001] 1 AC 518, per Lord Clyde, at pp 530E F and 532D E. Another broader principle was suggested by Lord Griffiths in St Martins, at p 96F 97D and reviewed inconclusively by Lord Browne Wilkinson at pp 111F 112F as well as by the members of the House in Panatown. This is that a contracting party might itself have an interest in performance enabling it to claim damages without proving actual loss. In both cases the principle was being suggested in the context of contracts for supply, whether of goods or services. In St Martins the suggestion was made in circumstances where the claimant had actually incurred costs of repair, but was entitled to recover them from the associated company to which the building had been transferred before the breach. In Panatown the property was from the outset owned by an associated company of the company which contracted for its construction, and the construction defects which emerged did not lead to the latter company incurring any outlay. The reason why, in the majority view, the latter company was not entitled to recover damages was not that it had incurred no outlay, but was that there existed a deed of care deed entitling the owning company to make a direct claim against the contractors. Potential difficulties about the theory of performance interest are that it cannot prima facie embrace consequential losses suffered by the company actually (as opposed to contractually) interested in the quality of the property or services and that it is not clear whether or on what basis the company contractually entitled may be liable to account to the company actually interested: see on this latter point per Lord Clyde in Panatown at pp 532E F, 534B C and 535F. Neither the narrow or the broad version of the transferred loss principle is in my view of assistance to Swynson. As to the narrow principle, it is clear that Swynson did not contract with HMT on behalf of or for the benefit of Mr Hunt. As to the broad principle, even if accepted, I do not see how it can apply in circumstances where Swynson itself suffered loss through being induced to support the management buyout by lending to EMSL, but the loan was ultimately repaid by EMSL. This is not a case where Swynson had any performance interest other than being indemnified in respect of the loss which it incurred in lending moneys to support the management buyout. That performance interest has been satisfied. The fact that it was satisfied by Mr Hunt making moneys available to EMSL to repay Swynson does not bear on or expand Swynsons performance interest. (c) Unjust enrichment I turn then to unjust enrichment. Swynsons and Mr Hunts submission is that relief by way of unjust enrichment is available to preserve Swynsons otherwise discharged claim against HMT for the benefit of Mr Hunt to the extent necessary to meet what are, it is submitted, the imperatives of the circumstances in which Mr Hunt effectively enriched HMT by arranging the repayment of the sums outstanding under the first two loans made by Swynson to EMSL, by reference to which sums HMTs liability would, otherwise, have fallen to be measured. Longmore and Davis LJJ were not prepared to accept this as a potential basis of recovery for two reasons. The first was difficulty in seeing how subrogation could arise in favour of Mr Hunt in respect of a claim by Swynson which had been discharged, unless, Longmore LJ relevantly added, the theory of fictionalised assignment expounded by Lord Hoftmann in Banque Financiere (see para 20 below) at p 236E solves this particular problem. The second was doubt whether any mistake had been sufficiently demonstrated. Both Longmore and Davis LJ saw the case as involving causative ignorance, rather than any incorrect conscious belief or incorrect tacit assumption, referring for this distinction to Pitt v Hunt [2013] 2 AC 108. Sales LJ took a different view and would, if necessary, have recognised Mr Hunt as enjoying a right of subrogation to Swynsons discharged claim against HMT. The basic questions in a claim in unjust enrichment were summarised by Lord Steyn in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221, 227A C in terms recently adopted by the Supreme Court in the judgment delivered by Lord Reed in Commissioners for Her Majestys Revenue and Customs v The Investment Trust Companies (In Liquidation) (ITC) [2017] UKSC 29. The four questions are: (1) Has the defendant benefited or been enriched? (2) Was the enrichment at the expense of the claimant? (3) Was the enrichment unjust? (4) Are there any defences? More detailed examination and application of these questions in particular cases has proved controversial: see in particular Menelaou v Bank of Cyprus [2014] 1 WLR 854 and its academic aftermath. However, the comprehensive review of their significance in Lord Reeds judgment in ITC now provides the essential basis for further consideration and application of the questions. As to the first, there is, in the light of my conclusions on the issue of res inter alios acta, no doubt that HMT were, indirectly, enriched by the discharge by EMSL of the loan due to Swynson. The discharge had the immediate effect of reducing (in this case to nil) the damages in respect of the 2006 and 2007 loans which (subject to the overall 15m cap) Swynson could otherwise have recovered from HMT on account of HMTs negligence. A relevant benefit for the purposes of unjust enrichment can consist in the discharge of a debt or (as in Banque Financire) of the promotion of a second charge due to the discharge of part of a prior secured debt. In principle, it seems to me that it can consist in the reduction of a loss, which would otherwise be recoverable by way of a claim for damages for breach of contract and/or duty. The second question raises the issue what counts as enrichment at the expense of the claimant. That this issue can prove less straightforward is evident from the examination of its conceptual base in paras 37 to 63 in ITC. Usually, as Lord Reed points out (paras 46 50) the parties will have dealt directly with one another, but there are situations which are legally equivalent to direct provision and there may be other apparent exceptions or possible approaches, which it is not intended to rule out. The claimant must incur a loss by conferring a benefit on the defendant, but economic reality is not the test (paras 59 60). However, the reality, rather than the formal shape, of a transaction, or of a co ordinated series of transactions, can show that the claimant has conferred a benefit on the defendant, despite the absence of a direct relationship between them. Thus, in Banque Financire itself, the transaction was structured so that Banque Financire (BFC) advanced the relevant moneys to Mr Herzig who on lent on different terms to Parc; the purpose was to reduce Parcs borrowing from Royal Trust Bank (Switzerland) (RTB), which had a first charge over Parcs assets; the moneys was actually remitted directly by BFC to RTB; and BFC believed, on the basis of a postponement letter written by Mr Herzig, that there had been agreement by all relevant companies in the Parc group that the advance made to Parc would have priority over other inter group lending to Parc, including by OOL. In fact Mr Herzig had no authority to write the letter and so there had been no such agreement. The unintended effect of the advances paying off RTB was therefore to promote OOLs second charge on Parcs assets pro tanto. In these circumstances, BFC was treated, as against OOL, as subrogated to RTBs (otherwise discharged) secured debt to the extent necessary to cover the advance which it had made. BFCs failure to take proper precautions to ensure that Mr Herzig had authority to write the postponement letter was no ground for holding that the enrichment was not unjust: see per Lord Hoffmann at p 235F G. In reaching this conclusion, all five members of the House held that, despite Mr Herzigs interposition, OOL was enriched at the expense of BFC. Lord Steyn (p 227B E), Lord Clyde (p 238B C) and Lord Hutton (p 239E G) each referred to this as the reality. Lord Hoffmann (p 235C E) with whose reasons Lord Steyn (p 228F), Lord Griffiths (p 228F G) and Lord Clyde (p 238D E) also agreed, gave as the reason that there was no difficulty in tracing BFCs money into the discharge of the debt due to RTB; the payment to RTB was direct. In this respect, the case is stronger than in Boscawen v Bajwa [1996] 1 WLR 328. In Boscawen v Bajwa, money was advanced by a building society for the purchase of a property and was to be secured by a first charge. The purchasers solicitors passed the money on to the vendors solicitors, who, in circumstances not involving any want of probity but to some extent contributed to by the purchasers solicitors issue of a dishonoured cheque, used it to discharge a mortgage on the property without any transfer of the property to the intended purchaser ever occurring. The building society was held entitled to be subrogated to the discharged mortgage to the extent of its outlay, on the basis that the moneys were traceable into the discharged mortgage debt. Where claimants property is traceable into a receipt or property held by the defendant, there is the equivalent of a direct transfer. In the present case, there is also no difficulty in tracing the advance made by Mr Hunt to EMSL into the discharge of Swynsons borrowing from EMSL. It was a term of Mr Hunts loan to EMSL that it should be used for such discharge: para 7 above. Without more, this discharge would have been a benefit to Swynson alone, and that was no doubt how Mr Hunt saw it at the time. In fact, as I have held, the discharge of EMSLs indebtedness to Swynson had the unforeseen consequence of eliminating any loss which Swynson would be able to show in respect of the 2006 and 2007 loans if it pursued a claim for damages against HMT, and did so moreover in circumstances in which Mr Hunt himself might (as proved to be the case) have no personal claim himself against HMT. But the transfers which Mr Hunt arranged cannot be regarded as received by HMT, or as traceable into any sort of discharge of HMTs liability to Swynson. It can however be argued that, even in Banque Financire, the transfers made by Banque Financire were not actually received, or converted into property held, by OOL. OOL was simply enriched by the promotion of its charge, which occurred due to BFCs payment off of RTBs loan. So here, it may be argued, HMT was enriched at Mr Hunts expense by the payment off through EMSL of Swynsons loan. This is however to over simplify and there are a number of potentially significant points that need to be considered. First and most importantly, in Banque Financire BFC bargained for, and mistakenly believed it was obtaining, priority over other group claims when it provided the moneys to discharge RTBs loan. In the present case, Mr Hunt was not dealing with HMT, or addressing or discharging, or bargaining either to preserve or to step into the shoes of Swynson for the purposes of, any contractual or tortious claim which Swynson had against HMT. Second, HMT submits that there can be no relevant benefit if all that can be shown is that the defendant is not liable because a fundamental component of the cause of action against him (namely loss) is missing. But subrogation by virtue of unjust enrichment is an equitable remedy which operates by adjusting relationships on a fictionalised basis. Thus, in Banque Financire, part of RTBs secured claim was treated as alive, as against OOL only, as if it had not been discharged by payment by BFC, but had been assigned to BFC (see per Lord Hoffmann, p 236E F). So, here, it seems to me that it could be possible, if the other ingredients of subrogation were all present, to treat Swynsons claim against HMT as alive as if Swynsons loss had not been discharged by the payment arranged by Mr Hunt through EMSL, and as if Swynsons claim had been assigned to Mr Hunt. Longmore LJs qualification recognising the potential relevance of this fictionalised basis of subrogation was to that extent well founded. Third, Mr Hunt, when advancing to EMSL the money necessary to repay the first and second loans made by Swynson, acquired a countervailing right in law to repayment of those loans by EMSL. The value of that right depended on Evo and its future performance. The December 2008 refinancing was made on the basis that the EMSL loan was impaired (see per Rose J, paras 47 48 and Longmore LJ, para 7). Mr Hunts letter of claim of 24 August 2010 stated that Evo had long been in desperate straits and that it had never in Mr Hunts view been more than a pig in a poke. But the management accounts, summarised in the expert report of Ian Robinson produced at the request of Swynson and Mr Hunt for use before Rose J, indicate that there still existed hope that Evo might return to profitable trading in and after 2010. Mr Robinsons opinion was also that as at December 2008 Evo had a net asset value in the order of USD 8m or a value on an earnings basis in the order of USD 4 to 5m. Evo did ultimately yield some realisations (para 42 above), though this fell far short of covering Mr Hunts loan and the interest on it. In summary, it would seem unrealistic to regard Mr Hunt as suffering no loss at all in December 2008, as a result of advancing the money he did to EMSL to pay off Swynson. With the benefit of hindsight, it seems clear that his loss increased thereafter, as Evos position continued, despite his efforts, to deteriorate. However, this analysis highlights a feature of Mr Hunts claim that HMT has been unjustly enriched at his expense. The existence and extent of any enrichment could not be determined by simple reference to the amount that Mr Hunt lent to EMSL in December 2008. They would depend on Evos and EMSLs subsequent fortunes. A fourth point, arising from some observations of the Supreme Court in ITC, concerns the significance of the limited benefits intended and obtained from the repayment of the first and second loans made by Swynson to EMSL. These consisted in a tax saving (para 43 above) and the removal of the perceived disadvantage to Swynson of having an impaired debt on its books: see Rose Js judgment, para 47. In different ways, the existence of a tax liability without receipt of any corresponding income and the impaired debt were both disadvantages resulting from the original management buyout on the basis of HMTs original negligent advice. Their elimination was a step taken by Mr Hunt in the course of dealing with that disastrous investment. But it was a step taken by him personally, albeit in order to benefit his company Swynson. The difficulties on this appeal arise because (a) the step he took had the unforeseen, consequential effect of depriving Swynson of any claim against HMT and (b) the highest that Mr Hunt can put the matter is to say that he himself thereby suffered loss in his capacity as owner of Swynson, in circumstances where, as has been held, he himself had no direct right of action against HMT. A fifth point, which I mention in passing, is that, had Swynsons loan to EMSL been good, the same tax liability would have been incurred but in respect of moneys actually received, while the impairment would have been avoided. Apart from the repayment of the EMSL loan procured by Mr Hunt on 31 December 2008, Swynsons damages claim against HMT could have included the full amount of the interest which EMSL had failed to pay to Swynson (which would no doubt have been taxable in Swynsons hands as a business receipt, even if EMSL had paid it). Swynson having in fact been repaid by EMSL, Mr Hunt, if he were to have any subrogation claim against HMT, would probably have to give credit, against his gross loss for the purposes of that claim, for the amount of the tax on interest in respect of which he in effect indemnified Swynson (any subrogation recovery by him from HMT in respect of such interest not presumably being taxable). I understood Mr Sims QC for Mr Hunt to accept as much (transcript, 22 November 2016, p 125 ll.22 23.) But, in any event, as Mr Sims went on to point out, this would be likely to be irrelevant, as any such reduction in Mr Hunts gross claim for subrogation purposes would not reduce it below HMTs maximum liability of 15m as at 31 December 2008, plus interest since then. Turning to the significance of these points for Mr Hunts claim to be subrogated to Swynsons claim against HMT, in ITC, paras 52 to 58, Lord Reed noted that, where the provision of a benefit to a third party is incidental to work done or expenditure incurred in pursuit of a persons own interests, any enrichment may either not be regarded as being at the expense of the person doing the work or incurring the expenditure or may not be regarded as unjust. One man heats his house, and his neighbour gets a great deal of benefit the classic example given by Lord President Dunedin in Edinburgh and District Tramways Co Ltd v Courtenay 1909 SC 99, 105 clearly involves circumstances in which it would be absurd, as the Lord President said, to suppose that the former could claim a contribution from the latter. The case of TFL Mangement Services v Lloyds Bank plc [2013] EWCA Civ 1415 was wrongly decided for this reason, as the Court held in ITC and as the Scottish jurisprudence cited by Lord Reed at para 55 in ITC presciently suggested nearly two centuries ago. In such situations, the questions whether a benefit was obtained at the expense of the claimant and whether it would be unjust for the defendant to retain it are likely to be difficult to separate. If a person with a view to obtaining a small benefit for himself at the same time unintentionally and by mistake incurs a much larger loss in conferring a much larger benefit on a third party, the picture changes, and one is again potentially in the field of unjust enrichment. The particular features of the present appeal, on which attention must necessarily focus, are that it concerns deliberately structured transfers (by Mr Hunt to EMSL and EMSL to Swynson) which had unforeseen, consequential effects on Swynsons separate relationship with a third party, HMT, and/or on Mr Hunt, as noted, particularly, in paras 62 and 65 above. In these circumstances, I turn to consider whether there is here an unjust factor, which may make it appropriate to recognise the benefit conferred on HMT by the repayment of the first and second Swynson loans as giving rise to a claim by Mr Hunt. The primary case now sought to be advanced is that Mr Hunt was labouring under a mistake when he advanced the money to EMSL to pay off the loans. In the alternative, it is submitted that the unjust factor can be found in the failure of the basis on which Mr Hunt made such advance, or, in the further alternative, upon a more general policy based approach recognising the suggested unfairness of what has happened. I do not see these two alternative submissions as adding in the present case to the primary submission or offering any real prospect of success if it fails. In the present case, the basis of the advance could hardly be said to fail, if there was no relevant mistake. Likewise, it is difficult to see any reason why Mr Hunt should have a remedy in respect of an advance if he made it without any mistake, particularly when it offered his company, Swynson, some advantage. Having said that, there are cases which can be analysed as accepting such a subrogation claim simply in order to redress the defeat by unforeseen events of an expectation of benefit on the basis of which the claimant made a payment: see eg Banque Finanire and Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291. The underlying rationale of subrogation to redress unjust enrichment may well be to redress the defeat of such an expectation, mistake being only one context in which this can occur. But in each case, the nature of the expectation or mistake is also critical in determining whether there exists a subrogation claim to redress any enrichment. This brings one back to the closeness of its relationship with the right to which the subrogation claim relates. The first problem which arises on this appeal regarding mistake is that it was not explicitly pleaded, leading to a submission by HMT that it would be unfair to treat it as a basis on which this appeal could or should be decided against them. This makes it necessary to examine the way in which the case was put and has developed. The first relevant reference in the pleadings is in the reply dated 14 June 2013, where in para 35d the defence plea that HMT owed no separate duty to Mr Hunt was addressed, and Swynson advanced three heads of positive case: in summary, res inter alios acta, equitable subrogation and transferred loss. The second was put simply on the basis that Swynson suffered the losses claimed herein before any refinancing and is entitled to recover the same for itself and Mr Hunt on the basis that Mr Hunt should be treated in equity, by way of equitable subrogation or otherwise, as entitled to his pro rata share. Then, in its skeleton argument dated 8 May 2014 for the trial which began on 14 and continued to 23 May 2014, Swynson gave notice that it relied in support of its claim of subrogation on both Banque Financire and Menelaou. At trial, Mr Hunt gave apparently uncontradicted evidence, which Rose J in any event expressly accepted to the following effect: It should be obvious from what I have said that there was no intention on my part or Swynsons part to relieve HMT from any liability due to the refinancing exercise. As far as I was concerned the claim against HMT remained unaffected by this refinancing and was of no concern of theirs. As between me and Swynson the consideration of who technically would be entitled to recover the money from HMT did not matter as I was the owner of Swynson, but it was implicitly understood that the recovery would be held pro rata according to the unpaid lending advanced. In written closing submissions dated 21 May 2014, Swynson submitted (para 27) that: Mr Hunt should be entitled to a subrogation remedy, having regard to the implied common intention of Hunt & Swynson [viz that after what was called the refinancing any recoveries would be shared as them in accordance with their outstanding and unpaid lending], on the principles analogous to the insurance cases, or to the remedy on the equitable principles of unjust enrichment as set out in Banque Financire [1999] AC 221; see as to the former at 231E, and as to the latter 234G H, 227B C &228D E. As for the latter basis for the remedy, Mr Hunts decision to step in and take over some of the lending to EMSL was not intended to give HMT (or more substantially its insurer) a windfall. No one could possibly suggest there was any discussion, intention or agreement that HMT would benefit by reason of Mr Hunts desire to give Evo an interest free loan and save Swynson from paying deemed interest. In these circumstances HMT would be unjustly enriched at his expense if it was held that any claim against it should be reduced by the extent to which he took over the lending previously owed to Swynson. Rose J recited the three heads of case which were advanced, decided the case on the basis of res inter alios acta, and did not need to consider the other two heads: see paras 49 and 55 of her judgment. In the Court of Appeal the matter was put squarely on the basis that it had been a mistake to make the 2008 Partial Refinance in order to relieve HMT of liability (skeleton dated 11 May 2015, para 29) and that Mr Hunt made a mistake in the way he structured this back in 2008 (transcript of opening, p 55B C). In response on this head of claim, counsel for HMT submitted that there had been no pleading of mistake and that Mr Hunts evidence, accepted by the judge (para 68 above), did not establish a mistake. Asked directly by Sales LJ at this point whether she was saying that the argument was not available, counsel replied that HMT did not have to put it that high, but yes (transcript, p 67D F). So HMT were, if necessary, taking a point on admissibility. In further submissions about the case of subrogation based on unjust enrichment, which it was accepted was before the judge, counsel submitted that there was lacking that missing right which required subrogation in order to fix the gap. When Sales LJ suggested that the missing right is Mr Hunt thought that he was going to make this loan but there would still be the benefit of the cause of action against HMT, the reply was that that was not enough for subrogation. For subrogation, there needs to have been a right bargained for and not achieved. The Court of Appeal did not deal formally with the admissibility of the case based on mistake. But, having heard these submissions, it gave a judgment on 25 June 2015 in which all three members of the Court dealt on the merits with the issue of unjust enrichment based on the case of mistake which Swynson had advanced before it. Longmore and Davis LJJ rejected that case on its merits, for reasons summarised in para 55 above, while Sales LJ would have accepted it. In these circumstances, I conclude that the Court of Appeal determined that the case based on mistake was fairly open to Swynson, and should be addressed on its merits, although the majority concluded that it should fail on the evidence. I see no basis on which to reach a different conclusion on the question whether the case was and is open. Indeed, I would myself have reached the same conclusion. The case on mistake needs to be addressed on its merits accordingly. In my opinion it is clear that Mr Hunt was labouring under a form of mistake when he was advised to and did arrange to fund EMSL to pay off Swynsons first and second loans. Not only did he have no intention thereby to relieve HMT of any liability, he gave positive evidence which Rose J accepted that As far as I was concerned the claim against HMT remained unaffected by this refinancing and [the refinancing] was of no concern of theirs (para 72 above). The fact that he did not think it important whether the claim against HMT was Swynsons or his does not seem to me to matter in assessing whether he was acting under a mistake. It clearly belonged to one or other. What matters is that he mistook the significance of payment off of the Swynson loans. In Pitt v Holt [2013] 2 AC 108, Lord Walker, in a judgment with which all members of the Supreme Court agreed, addressed suggestions in prior caselaw that a line fell to be drawn between mere causative forgetfulness or ignorance and a mistaken conscious belief or mistaken tacit assumption, concluding as follows in para 108: I would hold that mere ignorance, even if causative, is insufficient, but that the court, in carrying out its task of finding the facts, should not shrink from drawing the inference of conscious belief or tacit assumption when there is evidence to support such an inference. In the present case, I consider that, contrary to the view taken by the majority of the Court of Appeal, the accepted evidence, recited in paras 71 and 78 above, is of a conscious belief on Mr Hunts part that funding the repayment of the Swynson loans would have no effect on any claim against HMT. At the very least, however, it establishes a tacit assumption. This belief (or assumption) has been shown to be mistaken (a) as regards a negligence claim by Mr Hunt personally against HMT, by Rose Js judgment and (b) as regards a claim by Swynson against HMT, by the Supreme Courts present judgment. As to (a), if he had had a claim in his own name, then he would have been able to recover in full from HMT. His repayment of the Swynson loans would in this context have constituted a step taken in continuing mitigation of the effects of HMTs breach of duty towards him. As to (b), if Swynson had retained a claim against HMT, Mr Hunt would, as Swynsons owner, have been covered indirectly in respect of any loss arising to him from the December 2008 arrangements. How far Mr Hunt was acting under advice in the arrangements he made is not known. It is certainly possible to suggest that it was in a general sense careless to make them without considering their implications. At least in so far as his mistake was to think that Swynson would, if necessary, retain its claim against HMT despite the December 2008 arrangements, it could be said in response that the mistake was understandable, since the Supreme Court has concluded that it was shared by both courts below. But, even if it were right to conclude that any mistake by Mr Hunt involved carelessness, that by itself is no bar to equitable relief, unless the circumstances show that Mr Hunt deliberately ran, or must be taken to have run, the risk of being wrong: see Banque Financire, 235E G per Lord Hoffmann (cited in para 58 above) and Pitt v Holt [2013] 2 AC 108, 114, per Lord Walker. It seems clear that Mr Hunt did not intend to run or believe that he was running any such risk. Nonetheless, the arrangements he in fact made did involve the risk that he might himself have no direct claim, while paying off EMSLs debt to Swynson meant that Swynson could no longer claim to have suffered loss recoverable from HMT, with the result that there was no basis on which either Swynson or Mr Hunt could claim any substantial damages from HMT. Was any mistake causative? Like Sales LJ (para 59), I do not think that there is any chance that Mr Hunt would have made the payments in the way he did had he thought that they might have the effect of eliminating the liability of HMT in respect of the 2006 and 2007 loans. The advantages for Swynson in terms of tax and standing (para 43 above) would have been dwarfed by the loss of a claim for 15m (plus interest) against HMT. He could not conceivably have allowed any claim by Swynson to be fatally undermined in this way. Was Mr Hunts mistake one in respect of which equity should grant relief, by way of subrogation keeping alive for that purpose Swynsons claim against HMT to the extent that it was discharged by the payment off of the two Swynson loans? It is necessary to consider, first, in respect of what type of mistake such relief may be available. In this connection, Lord Walker in Pitt v Holt, paras 114 145, addressed a distinction suggested in prior authority between a mistake about the nature or characteristics of a transaction and the consequences or advantages to be gained by entering into it. After close analysis of authority, he concluded (para 122): I can see no reason why a mistake of law which is basic to the transaction (but is not a mistake as to the transactions legal character or nature) should not also be included, even though such cases would probably be rare. I would provisionally conclude that the true requirement is simply for there to be a causative mistake of sufficient gravity; and, as additional guidance to judges in finding and evaluating the facts of any particular case, that the test will normally be satisfied only when there is a mistake either as to the legal character or nature of a transaction, or as to some matter of fact or law which is basic to the transaction. Lord Walker was speaking in the particular context of the equitable jurisdiction to set aside a transfer for mistake. Mr Hunt has no possible claim to set aside the transfers which he arranged. If one takes Lord Walkers approach, admittedly out of context, and applies it to the present context, it highlights a difficulty which Mr Hunt faces in showing any sufficient connection between the transfers to which he directed his attention and the relationship between Swynson and HMT under which HMT benefitted as a result of those transfers. That brings one back to the submission on which HMT focused in the Court of Appeal (para 75 above), that a mistake relating to the effect on third party rights (Swynsons against HMT) is not enough, because For subrogation, there needs to have been a right bargained for and not achieved. Before the Court of Appeal, this was developed more specifically as follows (transcript, p 70G H): this is critical a lender cannot claim subrogation if he obtains all security which he bargains for or where he has specifically bargained on the basis that he would receive no security. Now, the bargain that Mr Hunt made in this case was a bargain with EMSL that he would make them a loan and EMSL would repay it. He did not make a bargain with Swynson to take an assignment of Swynsons rights. He did not make a bargain with HMT. There was not even any clause in his bargain with EMSL that asked EMSL to acquire an assignment of Swynsons rights against HMT. There was nothing missing. There is nothing in the contract between Mr Hunt and EMSL, which gives rise to the whole base of this claim. There is nothing missing that he bargained for and did not get. Reference was made in this context before the Court of Appeal to Banque Finanire and Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291. In neither case, was there of course a bargain in the sense of any enforceable right or binding obligation. Otherwise, cadit quaestio. But in Banque Financire, BFC thought, however carelessly, that it had arranged priority for its loan. And in Appleyard, the lender, C & G, obtained what it thought and intended should be a first charge, but one of two prior chargees did not accept that it had been repaid and C & Gs charge was as a result purely equitable and was recorded as such at the Land Registry (see para 7 in the judgment). In giving the judgment of the court in Appleyard, Neuberger LJ identified 13 propositions of law, of which the tenth, relied on by HMT in the present case in the Court of Appeal, read: Tenthly, subrogation cannot be invoked so as to put the lender in a better position than that in which [he] would have been if he had obtained all the rights for which he bargained: see Banque Financire at 235D and 236G 273B per Lord Hoffmann. This point was also made by Lindley MR in Wrexham [re Wrexham Mold and Connahs Quay Railway Co [1899] 1 Ch 440] at 447. The message here, and in the passages cited, is that subrogation cannot improve a lenders position, by giving him more than he expected to get. The lender need not actually to have contracted for or agreed some benefit which he did not obtain. Thus, it was enough in Banque Financire that BFC thought, however carelessly, that it had obtained such a benefit by virtue of the postponement letter. But any transfer of value must have been on the mistaken basis that it would yield a benefit which did not materialise. Subrogation can redress the position where a claimant has bargained for a benefit which does not materialise, by putting the claimant in the position which he expected. Here, Mr Hunt bargained for nothing in relation to Swynsons claim against HMT. The most that he can say is that there was an indirect transfer of value by him to HMT, as the unforeseen and indirect result of the directly intended effects of the actual arrangements he made on a separate relationship pre dating those arrangements by over two years. That is in my opinion the crux of this appeal. Mr Hunts loan to EMSL and EMSLs consequent discharge of Swynsons loan were exactly as Mr Hunt specified and intended. They had indirect consequences, evidently overlooked by Mr Hunt or his advisers, for Swynson, for Swynsons separate relationship with HMT, and so indirectly for both Swynson and Mr Hunt: see, in particular, paras 62, 65 and 68 above. These circumstances do not establish any normative or basic defect in the arrangements which Mr Hunt made. In so far as Mr Hunt thought that he might, as owner of Swynson, himself have a claim for breach of contract and/or duty against HMT, he was not mistaken in any way which concerned the relationship between Swynson and HMT or which could give him any arguable claim to be subrogated to a claim by Swynson against HMT. In law, however, the only person with a claim against HMT was Swynson, as Rose J held. Again, the arrangements he made for EMSL to pay off Swynson did not address or concern the relationship between Swynson and HMT, or the consequences of such arrangements for any claim which Swynson might have against HMT. Again, Mr Hunt never envisaged obtaining any sort of direct interest in any such claim. Further (although I should not be taken as suggesting this is critical to the outcome of the issue of unjust enrichment), the arrangements which Mr Hunt made were not by way of gift, but by way of a loan to EMSL, which in December 2008 had at least some prospect, however remote, of being repaid. What matters is that any transfer of value by Mr Hunt to HMT was not just unintended, it was incidental and indirect and arose from the consequences of Mr Hunts deliberately structured arrangements on a relationship quite separate from that which the arrangements addressed in exactly their intended way. In these circumstances, I do not consider that Mr Hunt can establish a basis for being subrogated to any claim which Swynson would have had against HMT, had its loss in respect of the 2006 and 2007 loans not been reduced to nil. In a very general sense, I can understand it being said that it is an injustice to Swynson or Mr Hunt and a pure windfall for HMT, if HMT benefits by avoiding paying damages. This is particularly so, when (as I believe to be the case) Mr Hunt made a mistake which was causative in the but for sense, that, apart from the mistake, he would not have structured the arrangements in the way he did. But mere but for causation is not sufficient: see ITC, para 52. Any benefit which HMT has from Mr Hunts mistake is no more than an indirect and incidental consequence of those arrangements on Swynsons separate and pre existing relationship with HMT. This is too remote to be the basis for a claim that HMT has been unjustly enriched at Mr Hunts expense, or for reversal of the consequences of Mr Hunts arrangements by treating him as having a (fictionalised) interest which he never expected, in respect of a claim by Swynson to recover from HMT a loss otherwise reduced to nil by the arrangements he made. This conclusion can be explained under the scheme indicated in Banque Financire either on the basis that there was no sufficiently direct transfer of value from Mr Hunt to HMT, or on the basis that there is no relevant unjust factor, or both. More generally, this conclusion underlines the fact that it is not the role of the law of unjust enrichment to provide persons finding to their cost that they have made a mistake with recourse by way of subrogation against those who may indirectly have benefitted by such a mistake under separate relationships which those making the mistake were not addressing. For these reasons, I have, not without some sympathy for Mr Hunts position, come to the conclusion that Mr Hunt has no right by way of unjust enrichment as against HMT or by way of subrogation in respect of any claim for damages that Swynson would have had against HMT apart from EMSLs discharge of its indebtedness to Swynson. Conclusion It follows that I would allow HMTs appeal against the judgment of the Court of Appeal upholding Rose Js judgment in favour of Swynson. The parties should have 21 days in which to make submissions on the form of any order and declarations to give effect to these conclusions and on costs. LORD NEUBERGER: (with whom Lord Clarke agrees) The background HMT admit that they were negligently in breach of their professional duty as accountants when advising Swynson in connection with its decision in October 2006 to advance a substantial loan (the original loan) to EMSL. At that time, EMSLs financial position was significantly worse than HMT had reported it to be, and thereafter it deteriorated further, and EMSL eventually ceased business, and was unable to meet its liabilities. HMT nonetheless contend that they have no liability for damages on the ground that Swynson has suffered no loss, because EMSL repaid Swynson the whole of the original loan in December 2008. On the face of it at any rate, it is hard to see any answer to HMTs contention, which amounts to the simple point that this is a case of avoided loss. The arguments to the contrary are based on the circumstances in which the original loan was repaid. Given that EMSLs finances were in a parlous state at the time, the repayment was only possible because Mr Hunt, the controlling shareholder of Swynson, advanced a new, short term, non interest bearing loan (the new loan) to EMSL for the specific purpose of enabling EMSL to repay Swynson the original loan. Mr Hunt did this for two reasons, namely (i) so long as the original loan was outstanding, Swynson was treated for tax purposes as if it was receiving interest on the original loan, even though no interest was being paid, and (ii) Mr Hunt did not want Swynson to have a non performing loan on its books. It is also Mr Hunts contention that he did not appreciate that, as a result of his providing the funds to enable EMSL repay the original loan, Swynson lost the right to recover substantial damages from HMT for their breach of duty without his ever having had a similar right or obtaining such a right. Based on those facts, Swynson and Mr Hunt dispute HMTs contention that it has no liability for their breach of duty on three separate grounds. Those grounds are (i) the repayment of the original loan should be treated as res inter alios acta, and should therefore be disregarded when assessing Swynsons claim against HMT; (ii) despite the repayment of the loan, Swynson should be entitled to recover I shall consider these three grounds in turn. damages on the basis of the principle of transferred loss, namely the loss which Mr Hunt suffered as a result of making the new loan; and (iii) HMT have been unjustly enriched as a result of the repayment of the original loan, the enrichment was at Mr Hunts expense, and he therefore should be treated as subrogated to Swynsons claim against HMT. Res inter alios acta Swynsons argument based on res inter alios acta was accepted by Rose J at first instance and by Longmore and Sales LJJ in the Court of Appeal. Nonetheless, in agreement with Davis LJ, I consider that this argument should be rejected. Mr Hunt did not advance the new loan in order to mitigate any loss which Swynson was suffering: the new loan was advanced for commercial reasons. Although those reasons would not have existed if the original loan had not been in difficulties, Davis LJ was right when he said at [2016] 1 WLR 1045, para 33, that the argument in this case revolves around avoidance of loss, not mitigation. Therefore, the reasoning in British Westinghouse Co Ltd v Underground Electric Railways Co Ltd [1912] AC 673, which was relied on by both Rose J and Longmore LJ, is simply not in point. Further, I do not consider that the reasoning in Parry v Cleaver [1970] AC 1 assists Swynsons first argument. In Parry, the House of Lords addressed the question whether a plaintiff was bound to bring into account insurance payments, charitable payments, pension payments and the like, which were payable owing to the injury suffered as a result of the defendants tort, when assessing the damages which could be recovered from the defendant. Lord Reid stated at [1970] AC 1, 13 that the answer should depend on justice, reasonableness and public policy; however, this should not be treated by judges as a green light for doing whatever seems fair on the facts of the particular case. Ignoring cases of mitigation, and while it would be wrong to pretend that there could never be any exceptions, it seems to me that the effect of the reasoning in Parry is that the types of payments to a claimant which are not to be taken into account when assessing damages, are either those which are effectively paid out of his own pocket (such as insurance which he has taken out, whether through his employer, an insurance company or the government), or which are the result of benevolence (whether from the government, a charity, or family and friends), all of which can be characterised as essentially collateral in nature. In this case, the payment in question was the repayment to Swynson of the original loan by EMSL. Even though that repayment was only effected as a result of the new loan, I rather doubt that it would be appropriate for the purposes of this first argument to look more widely and address the basis upon which Mr Hunt provided the new loan to EMSL. But, even if it is appropriate to look more widely, the new loan was not a gift, but a short term repayable loan, albeit carrying no interest. If such a loan had been provided by someone other than Mr Hunt, the consequent repayment of the original loan would plainly not have been res inter alios acta, and, as Lord Reid said in Parry [1970] AC 1, 15, the question whether such a transaction should be ignored should depend on its intrinsic nature rather than on the identity of the source of the payment. It is true that the money provided in the form of the new loan to EMSL could have been made available to Swynson (or even possibly to EMSL) by Mr Hunt in a way which would not have resulted in Swynsons loss being avoided, but that cannot possibly justify the conclusion that it must therefore be treated as if it had that effect. The fact that a transaction could have been differently arranged does not mean that it must have the same consequences as if it had been differently arranged. As a matter of logic, such a proposition would lead to an impossible situation, and as a matter of experience, it is by no means unusual to encounter cases where a transaction could be structured in two (or more) different ways, each of which would have different consequences both in law and in commercial reality. Transferred loss The second argument raised by Swynson is based on the principle of transferred loss; it was expressly not considered by Rose J and all three members of the Court of Appeal rejected it. I think that they were right to do so. The principle of transferred loss applies where there is a contract between A and B relating to As property which is subsequently acquired by C, and the principle enables A to recover damages for Bs breach of contract which injures the property, even though the loss flowing from that injury is suffered by C and not by A. Self evidently, it is an anomalous principle bearing in mind the well established conventional rules relating to recovery of damages for breach of contract, namely that, subject to the terms of the contract, scope of duty, foreseeability and mitigation, A can only recover damages in respect of loss which A suffers as a result of Bs breach of contract. For that reason, the principle should only apply in defined and limited circumstances. Examples of such circumstances are described in two decisions of the House of Lords. In Albacruz (Cargo Owners) v Albazero (Owners) [1977] AC 774, 847, following a number of earlier cases starting with Dunlop v Lambert (1839) 2 Cl & F 626, Lord Diplock held that the principle applied where it is in the contemplation of the parties that cargo may be transferred from the contracting shipper to a third party, and it is the intention of both the shipper and the contracting shipowner that the contract of carriage is treated as entered into for the benefit of such a third party as well as the shipper. In Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, it was held that the principle applied where a contractors construction of a building had been defectively in breach of its contact with the developer, but the loss had been suffered by a purchaser of the building from the developer. Lord Browne Wilkinson explained that at the time of the contract both contractor and developer knew the building was going to be occupied, and possibly purchased, by third parties and not by [the developer] itself and that any loss from defective construction work would be likely to be suffered by a future purchaser, not the developer. There is force in the proposition that these two decisions suggest that the law has moved to the point where it is possible to identify the circumstances in which the courts will accept that the principle of transferred loss can be invoked in order to avoid a black hole into which what would otherwise be a valid claim for damages has disappeared, to use the metaphor first judicially articulated in this context by Lord Stewart in J Dykes Ltd v Littlewoods Mail Stores Ltd 1982 SLT 50, 54 (col 2). The circumstances in which the principle summarised in para 102 above can apply are where (a) at the time of making the contract with A, B would reasonably have anticipated that A would transfer the property to a person such as C and that that person would suffer loss if B breached the contract, so that the contract can be seen as having been entered into by B partly for Cs benefit, and (b) there is nothing in the contract or the surrounding circumstances which negatives the conclusion that the principle should apply. The subsequent decision of the House of Lords in Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 appears to me to support the notion that the scope of the principle is as I have suggested. In that case, it was decided, albeit by a bare majority, that one circumstance which would negative the application of the principle can be where the third party, C, had his own contractual rights against the contract breaker. It is fair to say that the Panatown decision leaves a number of points open in this difficult area. One of those points is the correctness of another version of the principle, which was first articulated by Lord Griffiths in Lenesta Sludge, namely that B could be liable if A retains an interest in B performing his obligations, even though A has transferred away the property. However, it is unnecessary to address that point in this case, because it plainly could not apply in this appeal: following repayment of the original loan, Swynson cannot sensibly claim to have retained an interest in the performance of HMTs duties. I consider that the transferred loss argument on this appeal suffers from two defects. First, this cannot be said to be a case of injury to an asset or property which came into the hands of Mr Hunt, because the loss suffered by Mr Hunt is not the same as the loss which would have been suffered by Swynson if the new loan had not led to the original loan being redeemed. The losses may be very similar in nature (non repayment of a loan made to EMSL), in cause (EMSLs financial problems), and in quantum (as the new loan was very similar in amount to the original loan and identical to the extent that it was used to pay off the original loan). However, Mr Hunt has suffered loss in relation to the new loan whereas Swynson would have suffered a loss in relation to the original loan. Secondly, the principle cannot apply because, at the time HMT were advising Swynson, it was not reasonably foreseeable that Swynson would have the original loan repaid through the medium of a fresh loan made to EMSL by a third party. Of course, as with most financing arrangements, it was reasonably foreseeable that some sort of subsequent re financing of EMSL might happen one day, but that is not enough in order for the principle to apply. If it is to apply, Swynson would have to go further and demonstrate that it was anticipated that some such refinancing would occur, so that a person such as Mr Hunt, the new lender, can fairly be said to have been an intended beneficiary of Swynsons contractual rights against HMT. That seems to me to be an untenable proposition in this case. Unjust enrichment A claim in unjust enrichment based on mistake was not raised on behalf of Swynson or Mr Hunt in front of Rose J, but it was raised in the Court of Appeal, where it was rejected by Longmore and Davis LJJ, but accepted by Sales LJ. I have concerns about a claim based on mistake being raised for the first time on appeal, particularly as the issue of mistake did not play a significant part in the argument or evidence before Rose J, and only assumed importance once the unjust enrichment claim was raised. However, for the reasons given by Lord Mance, I think that it is open to Mr Hunt to advance his unjust enrichment case in this Court, However, I consider that his unjust enrichment claim must fail. As has been stated in a number of cases, most recently by Lord Reed in Commissioners for HM Revenue and Customs v The Investment Trust Companies (in liquidation) [2017] UKSC 29, para 24, an unjust enrichment claim can usefully be analysed by reference to four sequential questions, namely: i) Has the defendant benefitted in the sense of being enriched? ii) Was the enrichment at the claimants expense? iii) Was the enrichment unjust? iv) Are there any defences? In effect, the claimant in unjust enrichment has to satisfy the first three questions, and, if they are satisfied, it is then for the defendant to invoke the fourth question. When considering these questions, indeed when considering claims based on unjust enrichment generally, there is an inevitable tension between the desire to achieve justice or fairness in the individual case and the need to adopt or apply an approach which is principled and predictable. Concepts such as enrichment and expense may appear to be relatively uncontroversial, but even those concepts, particularly expense, can raise problems (as in Bank of Cyprus v Menelaou [2016] 1 AC 176, paras 69 73 and the Investment Trusts case at paras 32 74). And the question whether enrichment is unjust can often lead to the risk of unpredictable value judgments unless a relatively structured approach is adopted. Lord Goff made this point in the first case in which the House of Lords accepted the doctrine of unjust enrichment, Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548, 578. And, more recently, Lord Reed made the same point very clearly in the Investment Trusts case, para 39. It is also important to remember that the four questions are not statutory or contractual requirements which have to be satisfied before an unjust enrichment claim can succeed. They constitute a useful, summarily expressed, and practical approach to be adopted to an unjust enrichment claim. Further, although they may appear to be self contained, there can often be a degree of overlap between some of the four questions when applied to a particular set of facts. With that, I turn to consider whether the first three questions set out above are satisfied by Mr Hunt. I consider that Mr Hunt can succeed on the first question. At any rate it is arguable that it is not a natural use of colloquial language to describe HMT as enriched because they have (subject to the unjust enrichment claim) been effectively released from a very substantial potential liability for damages for professional negligence. However, in economic terms they have undoubtedly been enriched, and in my view, avoidance of a pre existing liability must be capable of being enrichment for present purposes. It is also true that the enrichment in this case can be described as incidental or collateral, but I think that that is a point better considered in relation to the second and third questions. Turning to the second question, I do not have any difficulty with the fact that there were two stages by which Mr Hunts money got to Swynson, in that Mr Hunt made the new loan to EMSL and then EMSL used the loan to pay off the original loan made by Swynson. I accept that the normal rule is that the defendant must be directly enriched by the claimant at whose expense the enrichment is said to have occurred, but there can be exceptional cases. It would be inappropriate to discuss this further in the light of Lord Reeds clear analysis in the passages in the Investment Trusts case referred to above. However, I consider that in this case, as in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221 and in Menelaou [2016] 1 AC 176, the fact that the money passed from Mr Hunt to EMSL and then from EMSL to Swynson does not present a problem for an unjust enrichment claim. The new loan was advanced not merely on the basis that it was expected to be used to pay off the original loan: it was required to be used for that purpose. However, the fact that Mr Hunt can be treated as having incurred expense of paying off the original loan is not enough to dispose of the second question in his favour. What Mr Hunt has to establish is that the enrichment of HMT, not the enrichment of Swynson, was at his expense. While the repayment of Swynsons original loan can be said to have be at the expense of Mr Hunt because it was funded by his new loan, and while HMT were enriched, I am unconvinced that HMT were enriched at Mr Hunts expense. I do not find it easy to reconcile the reasoning of Lord Reed in the Investment Trusts case with the notion that the enrichment of HMT was sufficiently directly effected by Mr Hunts advance of the new loan (even treating it as incorporating the repayment of the original loan) to satisfy the second question. As Lord Reed said in para 52, a claimant is not normally treated as having incurred a relevant loss where the provision of the benefit was merely an incidental or collateral result of his expenditure. But, even assuming that this is one of those exceptional cases where the second question is satisfied by an indirect payment, I do not consider that Mr Hunt can satisfy the third question. Of course, in the broadest sense, on the facts of this case, it can be argued that it would be unjust if HMT could be relieved of a substantial liability and that Mr Hunt and his companies (to treat them as a single entity) could lose a valuable claim. This would be on the basis that this is a result of Mr Hunt deciding to restructure the financing of EMSL as between him and one of his companies, and the benefit to HMT is wholly adventitious and the loss to Mr Hunt and his companies was due to an oversight on the part of Mr Hunt and/or his advisers. But unjustness in the context of unjust enrichment is not, in my view, of the palm tree variety. It must be based on some principle. As Lord Reed explains in para 52 of the Investment Trusts case, situations where the defendant has received a benefit merely as an incidental consequence of the claimants pursuit of some other objective are often situations where the enrichment of the defendant is not unjust. It is true that in this case Mr Hunt made a mistake in that he assumed that the effect of making the new loan and repaying the original loan would not affect the claim which he and/or Swynson had against HMT. However, while I see the attraction of the contrary view, in my opinion, that is not the sort of mistake which renders it unjust for HMT to escape liability for their negligence in the context of an unjust enrichment claim. The purpose of unjust enrichment is to correct normatively defective transfers of value usually by restoring the parties to their pre transfer positions, as Lord Reed pithily put it in para 42 of the Investment Trusts case. Thus, in the context of an unjust enrichment claim arising out of a transaction, there must, in my view, at least normally (and quite possibly always), be some defect in the transaction itself for the doctrine of unjust enrichment to come into play. In other words, for some reason, including but not limited to a mistake on his part, the claimant must be able to show that he did not get all that he expected or thought that he had bargained for. As Lord Sumption shows in paras 21 29, that analysis is consistent with Banque Financire [1999] 1 AC 221 and Menelaou [2016] 1 AC 176, and the cases referred to in the judgments in those decisions. In this case, Mr Hunt got precisely what he thought he was getting from the transaction in question, namely repayment to Swynson of the original loan, and a right to recover the new loan from EMSL. It is of course true that he did not appreciate that he was indirectly relieving HMT of a substantial liability to Swynson (without replacing it with some equivalent claim in his favour against HMT), but that cannot be characterised as a defect in the transaction. Unless we were to hold that the facts of this case justify a departure from the normal scope of unjust enrichment cases as described by Lord Reed in the Investment Trusts case, para 42, it must follow that Mr Hunts unjust enrichment claim fails. I can see no good reason for upholding the present unjust enrichment claim given that it is not within the normal scope of such claims. On the contrary: given the absence of any telling reasons justifying such a course, if we held that the claim in this case succeeded, we would risk throwing the law on unjust enrichment claims into serious uncertainty, particularly bearing in mind that we have only very recently confirmed the scope of such claims in the Investment Trusts case. Conclusion For these reasons, and for the reasons given by Lord Sumption and Lord Mance (in relation to res inter alios acta and transferred loss) and by Lord Sumption (in relation to unjust enrichment), I consider that neither Mr Hunt nor Swynson has a claim which can be maintained against HMT, and I would therefore allow HMTs appeal. It is only fair to add that I do not see any significant variation in the reasoning of Lord Sumption and Lord Mance on the unjust enrichment issue. However, given the ability of ingenious lawyers to identify possible differences between concurring judgments, I consider that it is safer to take a course which minimises the risk of such an occurrence in this area of law, given its current stage of jurisprudential development.

UK-Abs

This appeal arises from an unsuccessful management buyout of Evo Medical Solutions (Evo) made through Evo Medical Solutions Ltd (EMSL) in 2006. The buyout was funded by an interest bearing loan of 15m to EMSL by Swynson Ltd (Swynson), a company owned and controlled by Mr Hunt, a wealthy investor. Prior to the buyout, Swynson instructed an accountancy firm formerly known as Hurst, Morrison Thomson, now Lowick Rose LLP (in liquidation) (HMT), to carry out due diligence on Evo. It is common ground that HMT was negligent in failing to draw attention to fundamental problems about Evos finances, and that the transaction would not have gone ahead but for that failure. By July 2007, Evo was at risk of financial collapse. As a result, Mr Hunt caused Swynson to lend EMSL a further 1.75m in July 2007 and 3m in June 2008. At or about the same time, Mr Hunt acquired the majority beneficial ownership of EMSL. In December 2008, the 2006 and 2007 loans were refinanced. Mr Hunt and EMSL entered into a loan agreement under which Mr Hunt personally made a short term non interest bearing loan of 18.663m to EMSL. This was for the specific purpose of enabling EMSL to repay Swynson the original loan, with the aim of cleaning up Swynsons balance sheet and reducing its liability to tax. EMSL duly repaid the loan, but eventually ceased business and was unable to meet its liabilities. Swynson and Mr Hunt brought proceedings against HMT seeking to recover damages for losses resulting from the buyout and the making of all three loans in 2006, 2007 and 2008. HMT contends that they have no liability for damages on the basis that Swynson has suffered no loss, because EMSL repaid Swynson the whole of the original loan in December 2008. The Court of Appeal by a majority upheld the judges award of damages of 15m. This was because they held that the judge had been right to regard the December 2008 refinancing as res inter alios acta. It did not therefore affect the amount of Swynsons recoverable loss. The Supreme Court unanimously allows HMT (Lowick Rose LLP)s appeal. Lord Sumption gives the lead judgment, with which Lord Neuberger, Lord Clarke and Lord Hodge agree. Lord Neuberger and Lord Mance give concurring judgments. Res inter alios acta The general rule that loss which has been avoided is not recoverable as damages is subject to an exception in respect of collateral payments (res inter alios acta), where these are received independently of the circumstances giving rise to the loss [11]. The payments made by Mr Hunt to EMSL and by EMSL to Swynson to pay off the 2006 and 2007 loans cannot be regarded as collateral. First, the transaction discharged the very liability whose existence represented Swynsons loss [13]. Secondly, the money Mr Hunt lent to EMSL in December 2008 was not an indirect payment to Swynson, even though it ultimately reached them. Mr Hunts agreement to make that loan and the earlier agreements of Swynson to lend money to EMSL were distinct transactions between different parties, each made for valuable consideration [13]. Thirdly, the consequences of refinancing could not be recoverable as the cost of mitigation, because the loan to EMSL was not an act of Swynson and was not attributable to HMTs breach of duty [13; 45; 97]. Transferred loss The judge and Court of Appeal were correct to reject Swynsons second argument, based on the principle of transferred loss. This principle is a limited exception to the general rule that a claimant can recover only loss which he has himself suffered [14 15; 52 53; 102 105]. It does not arise here because it was no part of the object of the engagement of HMT, or any other aspect of the 2006 transaction, to benefit Mr Hunt [17; 54; 108]. Unjust enrichment HMT was not unjustly enriched by Mr Hunts provision of funds to EMSL to repay Swynson, with the result that Mr Hunt may not be subrogated to Swynsons claims against them: i. Lord Sumption is prepared to assume for the sake of argument that HMT was enriched [20], while Lord Neuberger and Lord Mance consider that HMT has undoubtedly been enriched in economic terms as a result of the discharge by EMSL of the loan due to Swynson [113; 57]. ii. Lord Sumption is again prepared to assume that if HMT was enriched, it was at Mr Hunts expense [20]. Lord Neuberger considers that HMTs enrichment was not sufficiently directly effected by Mr Hunts advance of the new loan [114 115], while Lord Mance notes that the questions whether a benefit was obtained at the expense of the claimant and whether it would be unjust for the defendant to retain it are difficult to separate in the present case [58 68]. iii. Mr Hunts case is that the enrichment of HMT was unjust because he made a mistake in assuming that the December 2008 refinancing would not affect the claim he and/or Swynson had against HMT [21; 78]. But the purpose of the law of unjust enrichment is to correct normatively defective transfers of value [22; 117]. The role of equitable subrogation in this context is to replicate as far as possible the element of the transaction whose absence made it defective [31; 86]. The December 2008 refinancing was not a defective transaction: Mr Hunt got precisely what he intended to get, namely the discharge of EMSLs debt to Swynson and a right to recover the new loan from EMSL [32 35; 119; 87]. As Lord Neuberger and Lord Mance also note, the fact that HMT received a benefit as an unforeseen and incidental consequence of Mr Hunts pursuit of those objectives does not establish any normative or basic defect in the arrangements made [117; 87 89].

The claimant, Lady Brownlie, is the widow of the distinguished international lawyer Sir Ian Brownlie QC. In January 2010, she and her husband were on holiday in Egypt, staying at the Four Seasons Hotel Cairo at Nile Plaza. Lady Brownlies evidence is that on a previous visit to the hotel, she had picked up a leaflet published by the hotel advertising safari tours which it provided. Before leaving England on the subsequent trip, she telephoned the hotel and booked with the concierge an excursion to Fayoum in a hired chauffeur driven car. The excursion took place on 3 January, and ended in tragedy. The car left the road and crashed. The passengers, in addition to Sir Ian and Lady Brownlie, were his daughter Rebecca, and Rebeccas two children. Sir Ian and Rebecca were killed. Lady Brownlie and the two children were seriously injured. Lady Brownlie subsequently began proceedings for (i) damages for personal injury in her own right, (ii) damages under the Law Reform (Miscellaneous Provisions) act 1934 in her capacity as Sir Ians executrix, and (iii) damages for bereavement and loss of dependency under the Fatal Accidents Act 1976 in her capacity as her late husbands widow. The First Defendant, Four Seasons Holdings Inc (Holdings), is the holding company of the Four Seasons hotel group. It is incorporated in British Columbia. The Second Defendant, Nova Park SAE (Nova Park) is an Egyptian company which was identified by Lady Brownlies solicitors as the owner of the hotel building. The claim form has not been served on Nova Park and, apart from the issue of the claim form, no attempt has been made to pursue the claim against them. Nor have they been represented at any stage. The present appeal is concerned only with the position of Holdings, which has applied to set aside the claim form and service thereof out of the jurisdiction so far as it relates to them. Before permission can be given for the service of originating process out of the jurisdiction, it is necessary for the claimant to establish (i) that the case falls within at least one of the jurisdictional gateways in CPR 6BPD, para 3.1, (ii) that she has a reasonable prospect of success, and (iii) that England and Wales is the proper place in which to bring the claim. The third of these conditions reflects the principle of forum conveniens, and there is no issue about it in this case. It is accepted that England is a proper place in which to bring the present claim if the first two conditions are satisfied. So far as the claim is founded on contract, Lady Brownlies application for permission to serve out was based on CPR 6BPD, para 3.1(6)(a) (the contract was made within the jurisdiction). So far as it was founded on tort, it was based on CPR 6BPD, para 3.1(9)(a) (damage was sustained within the jurisdiction). Holdings says, first, that Lady Brownlie has not established that the contract with the hotel was made in England, but that wherever it was made, it was not made with them. Their case is that they are a group holding company whose subsidiaries provide certain central services to hotels of the Four Seasons hotel chain but neither own nor operate them. Gateway (6)(a) does not therefore apply. Secondly, they say that gateway (9)(a) does not apply because the damage which is the basis of the claim in tort was not sustained in England. Thirdly, they say that Lady Brownlie does not satisfy the requirement of CPR 6.37(1)(b) that there should be a reasonable prospect of success. It is common ground that any relevant contract for the services of the car and driver was governed by Egyptian law. The evidential standard Some of the jurisdictional gateways in CPR 6BPD merely require that the claim should be of a particular character. For example it is a claim for an injunction regulating conduct within the jurisdiction. Others, including gateways 6(a) and 9(a) on which Lady Brownlie relies, depend on the court being satisfied of some jurisdictional fact. A relevant contract must, for example, have been made or breached in England or relevant damage sustained there. There are two closely related problems about this. The first is a legal one, namely that none of the laws established evidential standards satisfactorily meets the case. The second is a practical one, namely that some jurisdictional facts, for example the existence of the contract said to have been made or breached in England, may be in issue at trial if the case is allowed to proceed, when they will in all probability be determined on fuller material than is likely to be available at the interlocutory stage. The same is true of the more general requirement that if it proceeds the claimant should have a reasonable prospect of success. The leading modern cases are the decisions of the House of Lords in Vitkovice Horni a Hutni Tezirstvo v Korner [1951] AC 869 and Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438. Vitkovice was about the evidential standard to be applied to the applicability of the jurisdictional gateways. It concerned what was then RSC order 11, rule 1(e) (the claim is brought in respect of a breach committed within the jurisdiction of a contract made within or out of the jurisdiction). The Appellate Committee held that each element of the gateways factual requirements had to be established, namely the contract, the breach and its geographical location. However, it rejected the view expressed by Lord Goddard CJ in Malik v Narodni Banka Ceskoslovenska [1946] 2 All ER 663 that the evidential standard for establishing that one of the jurisdictional gateways applied was the civil burden of proof, on the ground that such a test in effect amounted to a trial of the action or a premature expression of opinion on its merits: see Lord Simonds, at p 879. It also rejected the suggestion that it was enough to show a prima facie case, because that test depended on the legal adequacy of the factual case advanced by the claimant. The application of such a test would not be consistent with the practice, which allowed a factual challenge to the evidence led by the claimant on the point. Lord Simmonds (p 880), with whom Lord Normand agreed, adopted from Counsel the expression a good arguable case, which appeared to him to import more than a prima facie case but less than a balance of probabilities. Lord Radcliffe, with whom Lord Tucker agreed, spoke of a strong argument or a strong case for argument (pp 883, 884, 885). In Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, Lord Goff, with the agreement of the rest of the Committee, endorsed Lord Simmonds formulation as applied to the gateways, and suggested that Lord Radcliffes formulation meant the same thing. At the same time, he held that the existence of a reasonable prospect of success fell to be determined according to a lesser standard, namely that there should be a serious issue to be tried. This has been held to correspond to the test for resisting an application for summary judgment: Altimo Holdings and Investments Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804, para 71. Since Lord Goff considered that the evidential standard applicable to jurisdictional facts relevant to the availability of the gateway was derived from RSC order 11, rule 4(2) (No such leave shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction under this Order), he must also have thought that the standard was the same whether the jurisdictional fact in question would or would not be in issue at a trial on the merits. I think that that must be right, and equally true of the current rules, although the language of CPR 6.36, which limits the courts jurisdiction to cases falling within the gateways, is not precisely the same. An attempt to clarify the practical implications of these principles was made by the Court of Appeal in Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547. Waller LJ, delivering the leading judgment observed at p 555: Good arguable case reflects that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, ie of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction. When the case reached the House of Lords, Waller LJs analysis was approved in general terms by Lord Steyn, with whom Lord Cooke and Lord Hope agreed, but without full argument: [2002] AC 1, 13. The passage quoted has, however, been specifically approved twice by the Judicial Committee of the Privy Council: Bols Distilleries (trading as Bols Royal Distilleries) v Superior Yacht Services Ltd [2007] 1 WLR 12, para 28, and Altimo Holdings, loc cit. In my opinion it is a serviceable test, provided that it is correctly understood. The reference to a much better argument on the material available is not a reversion to the civil burden of proof which the House of Lords had rejected in Vitkovice. What is meant is (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the Court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. I do not believe that anything is gained by the word much, which suggests a superior standard of conviction that is both uncertain and unwarranted in this context. The correct defendant The choice of defendants in this case was difficult because of the diffused character of the Four Seasons hotel chain, and the complex and undisclosed contractual arrangements governing the relationship between individual hotels and the Four Seasons group. On 7 June 2010, Lady Brownlies solicitors Kingsley Napley wrote to the legal department of Four Seasons Hotels and Resorts in Toronto, outlining the basis of the proposed claim. They asserted that the contract was made with Four Seasons Hotel Group without specifying the particular entity to which they were referring. They invited them to accept liability or failing that to identify their defence and disclose certain documents. They received a reply from Ms Marilyn Waugh, Corporate Legal Adviser to Four Seasons Hotels and Resorts, saying that their letter had been passed to the Four Seasons Hotel Cairo at Nile Plaza. This was followed by a letter from a firm of lawyers in Cairo, dated 22 August 2010, acting for the Cairo hotel, who denied liability. They asserted that the driver was employed by an independent car hire company, the role of the hotel being simply to relay Lady Brownlies request to them. Accordingly, they said, the contract was made with the car hire company and the hotel was under no liability. Kingsley Napley eventually wrote back on 9 May 2011 to Ms Waugh in Toronto and to the Egyptian lawyers in Cairo saying that they did not accept this analysis. Their letter to the Cairo hotels lawyers asked for particulars of the relevant corporate entities: Your letter refers to both the Four Seasons Hotels and Resorts and the Four Seasons Hotel Cairo at Nile Plaza. We are unclear as to whether these are separate corporate entities, but if they are, please will you confirm which corporation was responsible for the contract whereby our client booked accommodation at the Hotel. Please will you also explain the status of these two corporate entities under Egyptian law, and their relationship with the parent company in Canada. The letter to Ms Waugh contained no corresponding request. It simply asked them to nominate solicitors to accept service, failing which they would serve the claim form on the Four Seasons Hotel in Park Lane, London. This elicited a response from Ms Waugh saying that Lady Brownlie should sue the car hire company. The claim form was issued in December 2012. Holdings was sued on the footing that it was the owner and the manager of the Cairo hotel business and the provider of the drivers services, or alternatively the agent for an undisclosed principal who provided the drivers services. In due course, an application was made to Master Yoxall for permission to serve it on Holdings out of the jurisdiction. This was supported by a witness statement in which that company was described as a corporate entity engaged, among other things, in the ownership and/or operation and/or organisation of a chain of international hotels which includes the Four Seasons Cairo at Nile Plaza Hotel, Cairo, Egypt. It exhibited draft Particulars of Claim in which that statement was repeated. It was alleged that the contract for the excursion was made with Holdings and that they were vicariously liable for the negligence of the driver of the car. Master Yoxall gave permission for service out. Service was effected on Holdings in Canada and, for good measure, on the Four Seasons Hotel in Park Lane, London. At this point, Messrs Kennedys came on to the scene, acting for Holdings. They applied to set aside the order of Master Yoxall. Mr Newman of that firm made a witness statement in which he said that hotels of the Four Seasons chains were owned by different owners, who entered into agreements with a number of Four Seasons entities covering licensing, management and advisory issues. The Cairo hotel was owned by Nova Park. Holdings was a management company which did not own either the Cairo or the Park Lane hotel and had no contractual relationship with either of them. Mr Donovan responded by reasserting that the contract was made with Holdings. The basis of this assertion was said to be that internet research suggested that Holdings was the parent company of the Four Seasons group, that it operated a central reservation system and website for the worldwide chain, and that it was the owner and licensor of the trade marks used by the Cairo hotel. Master Cook set aside the order for service out on the ground that in the face of Mr Newmans evidence these assertions were not enough to support the contention that Lady Brownlie had contracted with Holdings or that Holdings was vicariously liable for the driver of the car. On appeal from Master Cook, the matter came before Tugendhat J, who allowed the appeal and restored the order for service out. Tugendhat J was clearly irritated by the failure of any Four Seasons company to answer the question put to the lawyers for the Cairo Hotel in Kingsley Napleys letter of 9 May 2011 about the identity of the corporate entity responsible for taking the booking for Lady Brownlies excursion. His irritation may have coloured his assessment of the evidence. His reasons for allowing the appeal were, in summary, that Mr Newmans evidence that the Hotel was owned by Nova Park was not to be taken at face value, first because it was expressed in the present tense and did not necessarily relate to the position in 2009 and, secondly, because he did not identify the source of his information. He concluded that in the absence of acceptable evidence about who owned the Cairo hotel, the inferences of Kingsley Napley were enough to support the case that Holdings was vicariously liable for the negligence of the driver. He observed that having failed to supply acceptable evidence, Four Seasons Hotels and Resorts could have no complaint if the court ignored points that might be made at trial. The judges reasoning on this point was endorsed by the Court of Appeal, but I confess to finding it rather unsatisfactory. On the face of it, even assuming that individual Four Seasons hotels used a central reservation system operated by Holdings and centrally owned trade marks owned by Holdings, that would not identify Holdings as the owner or operator of the hotel or the employer of the concierge who took the booking. It is true that Mr Newmans evidence was technically defective, but ultimately the party who would lose by discarding it was Lady Brownlie. If Holdings did not own or operate the hotel, this would inevitably become apparent at trial, with the result that her claim would be dismissed after a great deal of additional delay and expense. This would be in the interest of neither party, and certainly not in the interests of justice. For that reason, this court took the exceptional course of inviting Mr Palmer QC, who appeared for Holdings, to take instructions on the precise distribution of corporate responsibility for the operation of the Cairo hotel and to serve more circumstantial evidence on the point in a form which complied with the rules. The result was a witness statement of Ms Barbara Henderson, Vice President, Corporate Finance of an associated company of Holdings, setting out the position in detail, with supporting exhibits. It is entirely clear from this material that Holdings is a non trading holding company. It neither owns nor operates the Cairo hotel, which has at all material times been owned by Nova Park, a company with no corporate relationship to any Four Seasons company. A Dutch subsidiary of Holdings called Four Seasons Cairo (Nile Plaza) BV entered into an agreement with Nova Park to operate the hotel on behalf of Nova Park, although at the material times the actual operator was an Egyptian subsidiary of Holdings, FS Cairo (Nile Plaza) LLC, which assumed the contractual obligations of the operator by assignment. Other subsidiaries of Holdings supplied advice and specific services such as sales, marketing, central reservations and procurement, and licensed the use by Nova Park of the Four Seasons trade marks. It follows that on the information now available, which substantially corresponds to that given more summarily in Mr Newmans witness statement before Master Cook, there is no realistic prospect that Lady Brownlie will establish that she contracted with Holdings, or that Holdings will be held vicariously liable for the negligence of the driver of the excursion vehicle. Lady Brownlies claim does not satisfy the specific factual requirements of the gateways. A fortiori, it does not satisfy the general requirement that there should be a reasonable prospect of success. Since Holdings was not party to the relevant contract, it is unnecessary to deal with the question where that contract was made, which may in due course have to be determined as against other parties. But I think it right to draw attention to the artificial nature of the issue as the law currently stands. The argument on the point turned on the question who uttered the words which marked the point at which the contract was concluded and where the counterparty was physically located when he or she heard them. This is the test which has for many years been applied where the contract was made by instantaneous exchanges, eg by telephone: see Entores v Miles Far East Corpn [1955] 2 QB 327 (CA). It differs from the test applied to contracts made by post, which are complete when and where the letter of acceptance is posted: Adams v Lindsell (1818) 1 B & Ald 681, Dunlop v Higgins (1848) 1 HLC 381. These rules were adopted for reasons of pragmatic convenience, and provide a perfectly serviceable test for determining whether a contract has been concluded at all. However, their deployment for the purpose of determining when or where a contract was made is not at all satisfactory. It depends on assumptions about the point at which an offer is accepted or deemed to be accepted, which are particularly arbitrary when the mode of communication used is instantaneous (or practically so). It also gives rise to serious practical difficulties. The analysis of an informal conversation in terms of invitation to treat, offer and acceptance will often be impossible without a recording or a total recall of the sequence of exchanges and the exact words used at each stage, in order to establish points which are unlikely to have been of any importance to either party at the time. This may be unavoidable under the current wording of gateway 6(a). But the whole question could profitably be re examined by the Rules Committee. The claims in tort In those circumstances, the correct interpretation of the tort gateway in CPR 6BPD, para 3.1(9)(a) does not arise, and anything that may be said on the subject is obiter. If there had been sufficient reason for treating Holdings as the owner and operator of the hotel, I would in any event have held that the order for service out could not stand so far as it concerned the claims in tort. In the case of the claim for bereavement and loss of dependency under the Fatal Accidents Act 1976, the reason is that that Act operates as part of the proper law of the tort, and has no application to a tort which is not governed by English law: Cox v Ergo Versicherung AG [2014] AC 1379. Since it is accepted that the proper law governing the drivers negligence was that of Egypt, Lady Brownlies claim under the Act of 1976 has no prospect of success. The only sustainable pleaded claims are her claims on behalf of her husbands estate and in respect of her own injuries. It may well be that other claims, including a claim for bereavement and loss of dependency, will be available to her under Egyptian law, but as matters stand no such claims are advanced. The more difficult question is whether the English court has jurisdiction in respect of the claims for damages for personal injury caused by negligence. This depends on whether the claim falls within PD6B, para 3.1(9), which currently permits the English court to assume jurisdiction if: (9) A claim is made in tort where (a) damage was sustained [or will be sustained] within the jurisdiction; or (b) damage [which has been or will be] sustained results from an act committed [or likely to be committed] within the jurisdiction. I have placed square brackets around the words which were added by amendment with effect from 1 October 2015. Leaving aside the statutory causes of action under the Fatal Accidents Act 1976, the losses claimed are (i) funeral, memorial, repatriation and probate expenses and reimbursement of the cost of the holiday, claimed on behalf of Sir Ian Brownlies estate; (ii) medical expenses occasioned by Lady Brownlies injuries; and (iii) non pecuniary damage for Lady Brownlies pain, suffering and loss of amenity. All of these can loosely be described as after effects of the accident. It may be assumed that they were experienced, at least in part, in England. Accordingly, the question at issue on this appeal is whether, when a tortious act results in personal injury or death, damage is limited to the direct damage, ie the physical injury or death, or extends to the indirect damage, ie the pecuniary expenditure or loss resulting. On the latter view, the English court would have jurisdiction. The 2015 amendment extends the test to prospective torts and prospective damage, but will not affect the question what damage means in this context. Rules substantially similar to CPR 6BPD, para 3.1(9)(a) have been interpreted in Canada and New South Wales as extending jurisdiction to the court of the place where the financial consequences of physical damage were experienced: see, as to Canada, Skyrotors Ltd v Carrire Technical Industries (1979) 102 DLR (3d) 323 (Ont) and Vile v Von Wendt (1979) 103 DLR (3d) 356 (Ont CA); and as to New South Wales Challenor v Douglas [1983] 2 NSWLR 405 and Flaherty v Girgis [1984] 1 NSWLR 56, [1985] 4 NSWLR 248. These decisions have been followed in England. In Booth v Phillips [2004] 1 WLR 3292 Nigel Teare QC, sitting as a deputy judge of the Queens Bench Division, held that jurisdiction in respect of a fatal accident in Egypt was properly established in England by virtue of the fact that the widows loss of dependency under the Fatal Accidents Act 1976 and the cost of the deceaseds funeral had been sustained in England where she lived. This decision was followed by Tugendhat J in Cooley v Ramsey [2008] ILPr 27 and applied to non fatal injuries sustained in a road accident in Australia but leading to significant care costs in England, where the claimant lived. Both cases were followed by Haddon Cave J in Wink v Croatia Osiguranje DD [2013] EWHC 1118 (QB) (unreported), by Sir Robert Nelson in Stylianou v Toyoshima [2013] EWHC 2188 (QB) (unreported) and by Stewart J in Pike v Indian Hotels Co Ltd [2013] EWHC 4096 (QB) (unreported). The English cases were all decided at first instance, and they have been questioned on appeal. In Erste Group Bank AG (London Branch) v JSC VMZ Red October [2015] EWCA Civ 379, paras 104 105, the Court of Appeal considered that they gave an extraordinarily wide effect to the tort gateway and expressed serious misgivings as to whether they were right, but did not decide the point. In the present case, the Court of Appeal effectively overruled them. I think, although for somewhat different reasons, that they were right to do so. The main reason given by Arden LJ, giving the leading judgment in the Court of Appeal, was based on an analogy with article 4 of the Rome II Regulation EC 864/2007 on the Law Applicable to Non contractual Obligations. Article 4 provides: Unless otherwise provided for in this Regulation, the law applicable to a non contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur. The argument, which Arden LJ accepted, was that article 4 demonstrated that damage was confined to direct damage for the purpose of choice of law, and the same concept should be applied to questions of jurisdiction. It is common ground that the effect of this provision is that the present claim is governed by Egyptian law. But I am not persuaded that Rome II has any bearing on the construction of the jurisdictional gateways in the Practice Direction or indeed the corresponding provision of the Brussels Convention and Regulations governing the position as regards EU domiciled defendants. It is undoubtedly convenient for the country of the forum to correspond with that of the proper law. It is also true that both jurisdiction and choice of law can broadly be said to depend on how closely the dispute is connected with a particular country. But there is no necessary connection between the two. The Practice Direction contemplates a wide variety of connecting factors, of which the proper law is only one and that one is relevant only to contractual liabilities. For the purpose of identifying the proper law, damage is limited to direct damage because article 4 of Rome II says so in terms. It does this because there can be only one proper law, and the formulation of a common rule for all EU member states necessarily requires a more or less mechanical technique for identifying it. By comparison, indirect damage may be suffered in more than one country and jurisdiction in both English and EU law may subsist in more than one country. There is, however, a more fundamental reason for concluding that in the present context damage means direct damage. It concerns the nature of the duty broken in a personal injury action and the character of the damage recoverable for the breach. There is a fundamental difference between the damage done to an interest protected by the law, and facts which are merely evidence of the financial value of that damage. Except in limited and carefully circumscribed cases, the law of tort does not protect pecuniary interests as such. It is in general concerned with non pecuniary interests, such as bodily integrity, physical property and reputation which are inherently entitled to its protection. Of these, bodily integrity has been described as the first and most important: Parkinson v St James and Seacroft University Hospital NHS Trust [2002] QB 266, at para 56 (Hale LJ). Where these interests are deliberately or negligently injured, the tort is complete at the time of the injury, notwithstanding that damage is an essential element of it. This is the basis of the rule that all the damage flowing from bodily injury or damage to property must be claimed in one action, which may be brought as soon as the claimant has been injured or his property damaged. And, although damage is an essential element of the cause of action in tort, the limitation period in respect of any damage flowing from the breach will run from that time. I would readily accept that that damage as that word is used in the rule is not necessarily limited to the damage which serves to complete a cause of action in tort. But the two concepts are clearly related, even if they are not coterminous. These points may be illustrated by reference to tortious damage to physical property, another interest which is inherently protected by the law of tort. The law in this area has been largely made in the context of collisions at sea and, more recently, damage to road vehicles. The measure of damages in a collision action is the resulting diminution in the value of the ship and its earning potential. The damage is sustained as soon as the collision occurs, notwithstanding that at that stage there has been no out of pocket pecuniary loss or expense. The cost of repair is no more than the prima facie measure of the diminution of value of the ship. The injury to the ships earning potential arising from the physical damage is represented by the amount of the earnings lost or the cost of hiring a replacement in order to avoid loss of earnings. These points were made by Lord Hobhouse in Dimond v Lovell [2002] 1 AC 384, 406 in the context of collision damage to a car: Mrs Dimond was at the time of the accident the owner and person in possession of her car. It was damaged. Its value was reduced. This can be expressed as a capital account loss. This loss can be measured as being the cost of making good the damage plus the value of the loss of its use for a week. Since her car was not unrepairable and was not commercially not worth repairing, she was entitled to have her car repaired at the cost of the wrongdoer. Thus the measure of loss is the expenditure required to put it back into the same state as it was in before the accident. This loss is suffered as soon as the car is damaged. If it were destroyed by fire the next day by the negligence of another, the second tortfeasor would only have to pay damages equal to the reduced value of the car and the original tortfeasor would still have to pay damages corresponding to the cost of putting right the damage which he caused to the car. These questions are liable to arise in relation to any damaged chattel and have long ago received authoritative answers in cases concerning ships: The Glenfinlas (Note) [1918] P 363; The Kingsway [1918] P 344; The London Corpn [1935] P 70. It follows that if the property is damaged in country A, that is where the damage to the interests protected by the law of tort is sustained, notwithstanding that the repairs may be carried out in country B or the loss of earnings suffered in country C where the ship would have proceeded to load cargo and earn freight, or country D where the freight would actually have been paid. At an emotional level, it might be thought to belittle the gravity of bodily injury suffered by a human being to treat it as analogous to physical damage to a mere chattel or the profits derived from it. But the analysis is essentially the same. The law protects the claimants bodily integrity from deliberately or negligently inflicted harm. The damage to that interest is suffered as soon as the bodily injury has occurred, even if subsequent events are relevant to determine the pecuniary measure of that damage. Thus, until the position was altered by statute in 1982, a right to damages for loss of expectation of life was held to accrue at the moment of the accident although the victim was killed. It was therefore to be recoverable for the benefit of the estate under the Law Reform (Miscellaneous Provisions) Act 1934: Rose v Ford [1937] AC 826. As Lord Roche put it (at p 857), the initial bodily injuries [carry] with them from the outset a diminished expectation of life. The same principle was applied to damages representing the loss of prospective earnings, before that too was changed by statute: Gammell v Wilson [1982] AC 27. In principle, the same must apply to pain, suffering and loss of amenity. These are consequences of greater or lesser duration which (to borrow Lord Roches phrase) are carried with the bodily injury sustained at the time of the accident. It follows, as in the case of damage to property, that the damage to the interest protected is sustained in country A where the claimant has been injured or killed. The pecuniary measure of that damage may depend on things that happened elsewhere. For example, medical or care costs may be incurred in country B, or earnings may be lost which would have been earned in country C or paid in country D, but the damage has not been sustained in these places. Where the interest protected by the relevant legal duty is a purely financial interest, the same distinction will usually fall to be made between the damage sustained by the interest which the law protects and the expenditure which is merely evidence of its amount. Where the relevant duty is not to cause a purely financial loss, the relevant interest may be located and damaged in more than one country, something which is conceptually harder to envisage in the case of bodily injury or injury to property. But the fact that the amount of that damage falls to be measured by expenditure which has been incurred somewhere else is irrelevant. Thus, if I carry on a single business in France and Germany, and an actionable conspiracy damages that business, the interest protected is the business, and it may sustain damage for the purpose of the rule in both countries. But the fact that I am an English company whose balance sheet suffers in England, or that I incur expenditure in England to make the damage to my business good, is of no relevance. This point may be illustrated by the facts of the European cases considered in para 29 below. It would have been possible for the draftsman of the Practice Direction to provide that damage should extend to the financial or physical consequences of the damage, but there is nothing in the language to suggest that he has done so, and two policy considerations which to my mind strongly suggest that nothing like that was intended. The first is that in different ways all the jurisdictional gateways in the Practice Direction are concerned to identify some substantial and not merely casual or adventitious link between the cause of action and England. This is a purpose which is better served by locating jurisdiction in the place where the relevant interest of the claimant was damaged than by asking where he or she experienced the effects of the damage. To revert to the example of a ship damaged in a collision, the physical damage sustained at the time of the collision has a real connection with the country in which it happened, whereas the connection with the country where it was repaired or would have earned freight is likely to be adventitious. In the context of personal injury, a principle which located damage in the place where the pecuniary consequences of the accident were felt or where any continuing pain, suffering or loss of amenity were experienced would in the great majority of cases confer jurisdiction on the country of the claimants residence. It would confer on the English courts what amounts to a universal jurisdiction to entertain claims by English residents for the more serious personal injuries suffered anywhere in the world. Yet that would be far too wide to be consistent with principle. English law has never asserted a jurisdiction for its courts on the basis of the English identity of the claimant, whether by virtue of residence, domicile or nationality. Personal connections between the parties and England are generally relevant to jurisdiction only in the case of the defendant, for example because the claim form can be served on him there or because CPR 6 BPD, para 3.1(1) applies by virtue of the defendants English domicile. This is the fundamental reason why I am unable to accept Baroness Hales analysis of this issue. It appears to me to produce a test for jurisdiction so wide as to conflict with the purpose of the rule. The second policy consideration concerns the history of the tort gateway and its relationship with article 5.3 of the Brussels Convention and Regulations. Article 5.3 is one of a number of provisions for special jurisdiction. It authorises proceedings in tort in the courts for the place where the harmful event occurred or may occur, notwithstanding the general rule that suit must be brought in the jurisdiction of the defendants domicile. The place where the harmful event occurred was interpreted by the Court of Justice in Handelskwerij G J Bier v Mines de Potasse dAlsace SA (Case C 21/76) [1978] 1 QB 708 as referring at the plaintiffs option either to the place where the damage was sustained or to the place (if different) where the act was done that gave rise to it. The issue in Bier arose out of the wrongful emission of pollutants into the Rhine in France which damaged the plaintiffs seed beds in the Netherlands. Since the physical damage and its financial consequences were all suffered in the Netherlands, it was unnecessary for the Court to consider what losses or expense were encompassed by the word damage. That question did, however, arise in Netherlands v Ruffer (Case C 814/79) [1995] ECR I 3807, where the Court of Justice adopted precisely the same distinction as I have done between the damage sustained by the interest which the law protects, and the expenditure which serves as the measure of that damage. The facts were that a barge had sunk, allegedly by the carelessness of its German domiciled owner, in waters that were deemed for the relevant purpose to be part of Germany. The Dutch state sought to claim in its own courts the cost of raising and disposing of the wreck. It argued that the harmful event had occurred in the Netherlands because that was where it had incurred the cost of disposal and suffered the financial losses associated with it. Advocate General Warner, at p 3836, rejected that contention because (i) the cost of disposal merely quantified a loss consisting in the blockage of the waterway; and (ii) acceptance of the argument would be tantamount to holding that under the Convention a plaintiff in tort had the option of suing in the courts of his own domicile, which would be quite inconsistent with the scheme of article 2 et seq of the Convention. The Court was able to deal with the matter without reference to this point. In Socit Commerciale de Rassurance v Eras International Ltd (The Eras Eil Actions) [1992] 1 Lloyds Rep 570, 591, however, Mustill LJ, delivering the judgment of the Court of Appeal, treated the Advocate Generals analysis as unanswerable and equally applicable to the tort gateway under the Rules of the Supreme Court. In Dumez France SA v Hessische Landesbank (Case C 220/88) [1990] ECR I 49, the Court of Justice adopted the same analysis. The plaintiffs had sought to recover in France the loss which they claimed to have sustained there as a result of the insolvency of their German subsidiaries, said to have been caused by the defendants wrongful acts in Germany. The Court of Justice held that the damage had been sustained in Germany. The harm alleged to have occurred in France was merely the indirect consequence of the financial losses initially suffered by their subsidiaries (para 13). The Court expanded and clarified this statement in Marinari v Lloyds Bank Plc (Case C 364/93) [1996] QB 217. Mr Marinari sought to sue the defendant bank in Italy for the act of staff at its Manchester branch in impounding certain promissory notes which he had deposited with them, asserting that he had suffered the financial consequences in Italy, where he was domiciled. The Court rejected this contention, holding that damage in article 5.3 cannot be construed so extensively as to encompass any place where the adverse consequences of an event that has already caused actual damage elsewhere can be felt. Consequently, that term cannot be construed as including the place where, as in the present case, the victim claims to have suffered financial damage consequential on initial damage arising and suffered by him in another contracting state. (paras 14 15) It is fair to say that the construction of the Brussels Convention and Regulations depends in part on policy considerations which are irrelevant in the context of the English rules governing jurisdiction over non EU defendants. Both the Convention and the English rules recognise the possibility that there may be more than one eligible jurisdiction for a given dispute. But the Brussels Convention and Regulations are a code for allocating jurisdiction between EU member states. Acceptance of jurisdiction allocated in accordance with them is mandatory, and not merely permissive as it is under the English rules. Nonetheless, I consider that the principle adopted by the Court of Justice should be followed for two reasons. The first is that they embody an analysis of what constitutes damage which, like Mustill LJ in the Eras Eil Actions, I regard as unanswerable. It is not so much a proposition of law as the application of basic logic to the facts. The second reason is that in its current form, the jurisdictional gateway in the English rules for claims in tort was deliberately drafted so as to assimilate the tests for asserting jurisdiction over persons domiciled in an EU member state and persons domiciled elsewhere. Before 1987, service out of the jurisdiction was permitted by RSC order 11, rule 1(1)(h) where the action was founded on a tort committed within the jurisdiction. This expression was interpreted as referring to the place where in substance the wrongful act was done: Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458. The location of the damage (if different) was irrelevant. Under the pre 1987 rules, the English court would plainly not have had jurisdiction to hear Lady Brownlies claims in tort. Article 5.3 of the Brussels Convention, as interpreted by the Court of Justice, was broader. In relation to actions against persons domiciled in the EU, it conferred special jurisdiction on the courts of the place where the damage was sustained as well as the place where the wrongful act was done. Effect was given to the Brussels Convention in England by the Civil Jurisdiction and Judgments Act 1982 and by amendments to the Supreme Court Rules (SI 1983/1181) which were expressed to take effect when the Act came into force (in the event, 1 January 1987). The changes effected by these instruments might have been limited to the cases covered by the Convention, which did not extend to actions brought against persons domiciled outside the EU. In fact, they were not. The new rules of court expanded the tort gateway in RSC order 11 so as to correspond with article 5.3 of the Convention as interpreted in Bier. The new RSC order 11, rule 1(1)(f) provided that jurisdiction could be exercised in a non Convention case where the claim is founded on a tort and the damage was sustained or resulted from an act committed within the jurisdiction. Although the language changed when the gateways were transferred to a Practice Direction in 2000, the substance of the rule remained the same, except for the omission of the definite article before damage. That omission appears fairly clearly to have been intended to exclude the suggestion that all the damage had to be sustained within the jurisdiction, thus allowing for the possibility that jurisdiction might be founded on the occurrence of some of the damage in England. At any rate, the result is that RSC order 11, rule 1(1)(f) and the corresponding provisions of CPR 6BPD, para 3(9)(a) have generally been construed in the light of the case law of the Court of Justice: see Metall und Rohstoff AG v Donaldson, Lufkin and Jenrette Inc [1990] 1 QB 391, 424 (CA); Socit Commerciale de Rassurance v Eras International Ltd (The Eras Eil Actions) [1992] 1 Lloyds Rep 570, 589 (Mustill LJ); Bastone & Firminger Ltd v Nasima Enterprises (Nigeria) Ltd [1996] CLC 1902 (Rix J); ABCI v Banque Franco Tunisienne [2003] 2 Lloyds Rep 146, at paras 41, 43 (Mance LJ). It would be strange if the effect of expanding the gateway to match the wider special jurisdiction authorised in Convention cases had been to make it very much wider than even the Convention authorised. Tugendhat J in Cooley v Ramsey and Haddon Cave J in Wink v Croatia Osiguranje rejected the two policy considerations which I have described because they considered that the risk that the gateway would be too wide could be managed through the courts overriding discretion jurisdiction as to forum conveniens. The scheme of the Brussels Convention and Regulations is different, it is said, because its mandatory character excludes discretion: see Owusu v Jackson (Case C 281/02) [2005] QB 801. That view of the matter derives energetic support from Professor Briggs in his book Civil Jurisdiction and Judgments, 6th ed (2015), para 4.73, and in various articles. Indeed, Professor Briggs has gone further, proposing that in the light of my own comments in Abela v Baaderani [2013] 1 WLR 2043, the time has come to downgrade and eventually abolish the jurisdictional gateways and make forum conveniens (and presumably reasonable prospect of success) the sole criteria for service out: see Service out in a shrinking world [2013] LMCLQ 415. In my opinion, this approach is contrary to principle, and is not warranted by anything that was said in Abela v Baaderani. The jurisdictional gateways and the discretion as to forum conveniens serve completely different purposes. The gateways identify relevant connections with England, which define the maximum extent of the jurisdiction which the English court is permitted to exercise. Their ambit is a question of law. The discretion as to forum conveniens authorises the court to decline a jurisdiction which it possesses as a matter of law, because the dispute, although sufficiently connected with England to permit the exercise of jurisdiction, could be more appropriately resolved elsewhere. The main determining factor in the exercise of the discretion on forum conveniens grounds is not the relationship between the cause of action and England but the practicalities of litigation. The purpose of the discretion is to limit the exercise of the courts jurisdiction, not to enlarge it and certainly not to displace the criteria in the gateways. English law has never in the past and does not now accept jurisdiction simply on the basis that the English courts are a convenient or appropriate forum if the subject matter has no relevant jurisdictional connection with England. In Abela v Baaderani, I protested against the importation of an artificial presumption against service out as being inherently exorbitant, into what ought to be a neutral question of construction or discretion. I had not proposed to substitute an alternative, and equally objectionable, presumption in favour of the widest possible interpretation of the gateways simply because jurisdiction thus conferred by law could be declined as a matter of discretion. Conclusion I would allow the present appeal and declare that Holdings not being the owner or operator of the Four Seasons Hotel at Nile Plaza Cairo, or vicariously liable for the driver of the car, the court has no jurisdiction to try any of the claims presently made in this action. In those circumstances it is unnecessary to make any order on the cross appeal which Lady Brownlie has brought against the Court of Appeals order that there was no jurisdiction to entertain her claims in tort for personal injury to herself and on behalf of Sir Ians estate. The parties should make submissions in writing on the form of order and on costs within 21 days. I would remit all other consequential matters to the High Court, so as to enable Lady Brownlie to make such applications as she may be advised to join additional parties, amend the draft Particulars of Claim or seek other relief. I express no opinion, even tentative, about the prospects of any such applications. LADY HALE: As we agree that this action cannot continue against the current defendant, everything which we say about jurisdiction is obiter dicta and should be treated with appropriate caution. For what it is worth, I agree (1) that the correct test is a good arguable case and glosses should be avoided; I do not read Lord Sumptions explication in para 7 as glossing the test; and (2) that the action in tort is governed by Egyptian law and so the Fatal Accidents Act 1976 cannot apply to it, although Egyptian law may in fact allow for a similar claim, should permission ever be given to plead it. Also for what it is worth, (3) this is not the place to cast doubt upon the longstanding rule in Entores Ltd v Miles Far East Corpn [1955] 2 QB 327, nor could the Rules Committee change that rule by changing the rules relating to jurisdiction in contractual claims; but it could consider avoiding the factual problem which has arisen in this case by adopting a broader formulation of the rule in CPR 6BPD, para 3.1(6)(a); the inclusion of contracts made by or through an agent trading or residing within the jurisdiction in para 3.1(6)(b) suggests that this would not be wrong in principle. Above all, however, (4) I wish to sound a note of special caution as to the correct interpretation of the gateway for claims in tort, contained in para 3.1(9) of the Practice Direction, which currently reads (the words in square brackets having recently been added): 3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where (9) A claim is made in tort, where (a) damage was sustained [, or will be sustained,] within the jurisdiction; or the damage which has been [or will be] sustained (b) results from an act committed, or likely to be committed, within the jurisdiction. Although this has been done many times before, it may be helpful to trace the genesis of this rule. Before the advent of the Civil Procedure Rules 1998, service out of the jurisdiction was governed by the Rules of the Supreme Court, order 11, rule 1(1)(f). Before the Civil Jurisdiction and Judgments Act 1982 came into force, this referred only to cases founded on a tort committed within the jurisdiction. It was amended, with effect from the date when that Act came into force, to read The claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction. This broadened the gateway, because the Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters 1968, to which the United Kingdom acceded in 1978, and which was incorporated into United Kingdom law by the 1982 Act, provided a special jurisdictional rule, in article 5.3, that a person domiciled in a contracting state could be sued in another contracting state in matters relating to tort, delict or quasi delict in the courts for the place where the harmful event occurred; in Bier v Mines de Potasse dAlsace (Case C 21/76) [1978] 1 QB 702, the European Court of Justice had interpreted this phrase to refer both to the place where the damage occurred and the place of the event giving rise to it, so that the claimant could choose between them; it appears that the words harmful event were deliberately chosen because it was not considered appropriate for the Convention to be specific between the two. In that case, damage had been done to horticultural nurseries in the Netherlands by the discharge into the Rhine of saline waste from operations in France. In Bier, the damage was all sustained in one place. In Dumez France SA v Hessische Landesbank (Case C 220/88) [1990] ECR I 49, the French Companies were complaining of financial losses suffered because of the insolvency of their German subsidiaries, brought about by the suspension of construction projects in Germany allegedly because the defendant German banks had cancelled loans to finance the projects. The European Court of Justice pointed out that article 5.3 was an exception to the general rule that defendants were to be sued in their country of domicile. The aim of the Convention was to avoid a multiplicity of jurisdictions, with the heightened risk of irreconcilable decisions creating problems for the mutual recognition and enforcement of judgments. So article 5.3 did not permit a claimant claiming for damage, which was the consequence of harm suffered by other persons who were the direct victims of the harmful act, to bring proceedings in the place where the claimant sustained the damage. In Marinari v Lloyds Bank plc (Case C 364/94) [1995] ECR I 2715, the Grand Chamber affirmed both Bier and Dumez and took the latter a stage further. The claimant brought proceedings in Italy alleging financial loss and damage to his reputation caused when the defendant bank reported him to the police in England because promissory notes he had lodged with them appeared suspicious; this led to his arrest and the confiscation of the promissory notes. The court held that article 5.3 did not cover every place where adverse consequences of an event which had already caused actual damage elsewhere could be felt. It did not refer to the place where the victim claimed to have suffered financial loss consequential on actual damage arising and suffered by him in another member state. The Brussels Convention was replaced by Council Regulation (EC) No 44/2001 (the Brussels I Regulation) which was in turn replaced by Regulation (EU) No 1215/2012 (the recast Brussels I Regulation). Article 7.2 repeats the wording of article 5.3 of the Convention. Marinari is still the authoritative interpretation of where the harmful event occurred in European law. It goes without saying, however, that we are not here concerned with a claim which is governed by the jurisdictional rules of European law. We are dealing with a claim against a defendant who is not domiciled in a member state, which is therefore governed by the jurisdictional rules of the law of England and Wales, now contained in the Civil Procedure Rules 1998 (CPR). Under the CPR, the equivalent rule to RSC order 11(1)(f) was contained in CPR 6.20(8): a claim is made in tort, where (a) damage was sustained within the jurisdiction; or (b) the damage sustained resulted from an act committed within the jurisdiction. The definite article was omitted from (a), in line with the holding of the Court of Appeal in Metall und Rohstoff AG v Donaldson Inc [1990] 1 QB 391, at p 437, that (a) did not require all the damage to be sustained in England; it was enough if some significant damage had been sustained here; and similarly that (b) did not require that all the acts constituting the tort be committed in England; it was enough if the tort was in substance committed here. Neither the Rules of the Supreme Court nor the Civil Procedure Rules required that permission be given to serve out of the jurisdiction if the relevant gateway applied; there was always a discretion not to do so, exercised in accordance with the principles laid down in Spiliada Maritime Corpn v Cansulex Ltd [1987] AC 460. In the CPR, this was reflected in rule 6.21(2A): the court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim. There is a consistent line of first instance decisions holding that, in a case which is not governed by the European jurisdictional rules, a claim in tort may be brought in England if damage is suffered here as a result of personal injuries inflicted abroad. The first is Booth v Phillips [2004] EWCA 1437 (Comm), a decision of Nigel Teare QC (as he then was). This was a widows claim in negligence for her own loss of dependency and the funeral expenses of the estate of her deceased husband who had died while working as chief engineer on a vessel in Egypt. The judge rejected the argument that damage referred to the damage which completed the cause of action. This was not what the rule said. The words used should be given their ordinary and natural meaning, namely, harm which has been sustained by the claimant, whether physical or economic (para 35). Dropping the definite article reflected the decision in Metall that it was enough that some significant damage had been sustained here. He also rejected the argument that this was improbably wide, because the court had also to be satisfied that it was appropriate, in Spiliada terms, to exercise jurisdiction. It does not appear that any argument based upon the Brussels Regulation was advanced in Booth, but it was advanced most vigorously, as it happens by Mr Howard Palmer QC, before Tugendhat J in the next case, Cooley v Ramsay [2008] EWHC 129 (QB). He accepted that RSC order 11, rule 1(1)(f) had been changed to give effect to the 1982 Act, but Parliament had not fully assimilated the rules relating to non party states with those relating to the European member states. It had left in the significant difference that there was no discretion in the Convention and the Regulation, but there was such a discretion under the CPR. The object of the Convention and Regulation was to provide a clear and certain attribution of jurisdiction, but the CPR were more flexible. Hence a claimant who was severely disabled, with continuing needs for care, support and medical attention in this country as a result of a road accident in New South Wales, could bring his claim here. By the time of the next case, the CPR had been amended. CPR rule 6.36 now refers to the various jurisdictional gateways set out in Practice Direction 6BPD CPR (no doubt to increase flexibility), but rule 6.37(3) repeats the rule that the court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim. In Harty v Sabre International Security Ltd [2011] EWHC 852 (QB), the claimant was severely injured in a road accident in Iraq while working as a security consultant with the defendant. The defendant did not challenge the gateway, no doubt anticipating that MacDuff J would follow Booth and Cooley, and so the argument focussed on the discretion. In the next case, Wink v Croatia Osiguranje DD [2013] EWHC 1118 (QB), where the claimant had been seriously injured in a road accident while on holiday in Croatia, a spirited attack upon the correctness of Booth and Cooley was mounted before Haddon Cave J, arguing that 6BPD should be interpreted consistently with European law, so that in a claim where both direct and indirect damage is alleged it is only the place where the direct damage is sustained which is relevant. The judge pointed to a number of obvious problems with this argument: there are no such limiting words in 6BPD, para 3.1(9)(a); the natural and ordinary meaning of damage is any damage; the defendants argument was tantamount to saying that damage was sustained only where the injury occurs, which is plainly not so in many cases; it was this construction rather than that in Booth which required re writing (paras 33 35). Agreeing with the comprehensive analysis in Cooley, he held that the two schemes in the Regulation and the Rules were fundamentally different in structure and policy (para 41). In Stylianou v Toyoshima [2013] EWHC 2188 (QB), the claimant was very severely injured in a road accident in Western Australia and repatriated six weeks later. This time, the defendants argued that Booth and Cooley were incorrect, because they were decided before Regulation (EC) 864/2007 of the European Parliament and Council on the law applicable to non contractual obligations (the Rome II Regulation) came into force. Article 4.1 provides that the applicable law shall be the law of the country in which the damage occurs, irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occurred. Sir Robert Nelson rejected the argument that the CPR should be interpreted in the same way. He pointed out that article 2.1 of the Rome II Regulation provides that damage shall cover any consequence arising out of the tort/delict , so that article 4.1 was expressly excluding what would otherwise be included in the word damage. There was no reason to interpret damage in the CPR as in the specific article 4.1 rather than in the general article 2.1. In any event, Rome II was not about jurisdiction and did not override the CPR. The courts discretion was a valuable safety valve rendering unnecessary a narrow definition of damage (para 53). Trying another tack, the defendant in Erste Group Bank AG (London Branch) v JSC VMT Red October [2003] EWHC 2926 (Comm), argued that the judges in Cooley and Wink had failed to appreciate that the Rules Committee was intending to mirror the Brussels Convention as interpreted by Professor Jenard in his preparatory report. Flaux J rejected that argument as hopeless: the consistency argument had been rejected because the English rules were wider and that would not have been affected by anything that Professor Jenard had said (para 147). This was an action, inter alia, for the torts of conspiracy and interference with contract allegedly resulting in the failure of a Russian company to meet its obligations under a loan agreement. The case was taken to the Court of Appeal: [2015] EWCA Civ 379. Were it not for the string of first instance decisions to the contrary, the Court would have regarded as very attractive the submission that the tort gateway was intended to reflect the European jurisprudence (para 103) and expressed very serious reservations as to whether those decisions were right. But they preferred not to decide the point as they did not need to do so, having found that the damage was all sustained in New York. Finally, in Pike v Indian Hotels [2013] EWHC 4096 (QB), where the claimants had been injured trying to escape from the Taj Mahal Palace in Mumbai during the terrorist attack, Stewart J agreed with Sir Robert Nelsons comprehensive demolition of arguments based on European Union law and held that outside the European context the previous decisions were correct. It is clear from reading these first instance decisions that each of these judges was not slavishly following the decisions which preceded his own. They carefully considered and rejected the ever more sophisticated arguments against them but clearly considered that they were correct. So do I. In the first place, I entirely agree with Lord Sumption that the argument based on the Rome II Regulation, accepted by the Court of Appeal in this case, should be rejected. Applicable law and jurisdiction are two different matters. There is no necessary coincidence between the country with jurisdiction and the country whose law is applicable. It is accepted that in this case Egyptian law is applicable to the tort claims. Furthermore, there can only be one applicable law, whereas even in European law there can often be more than one country with jurisdiction. Indeed, I see no reason to think that those who framed the RSC and CPR intended them precisely to mirror the interpretation later given to the Brussels Convention. The language used in the Rules, although no doubt intended to widen the gateway so as to encompass the cases covered by the Brussels Convention, is quite different from the language of the Convention. The Dumez and Marinari decisions came afterwards, to restrict the scope of the language used in the Convention, but they do not override the language of the Rules in non EU cases. They are of no help in construing Rules which have remained in essentially the same language ever since. If the Rules Committee had wanted to assimilate the Rules after the decisions in Booth and Cooley, they could easily have done so, and now more easily, as the gateways are contained in a Practice Direction rather than a Rule. It is also necessary to bear in mind the difference between the two schemes. The European scheme deliberately eschews any discretion in favour of clear and certain rules, in the context of a scheme which governs, not only jurisdiction, but also recognition and enforcement of the resulting judgments. No doubt that is why the Court of Justice was anxious to restrict the scope of the Bier decision by drawing the direct/indirect distinction. That is not a feature of the English scheme, which retains the valuable safety valve of discretion, a discretion which need not be limited to the Spiliada principles, but can concentrate on the real question, which is the proper place for the resolution of the dispute (as Professor Briggs puts it). I also have great difficulty with the approach to damage adopted by Lord Sumption. He appears to equate damage in the Rule with the damage which completes the cause of action. It is true that damage is an essential component of some torts, such as the tort of negligence and the economic torts, so that it is necessary to know if and when the cause of action is complete for purposes such as limitation. But damage is not an essential part of every cause of action in tort. There are many torts which are actionable per se, without proof of damage: trespass to the person, trespass to goods, libel and some slanders are the obvious examples. There is no particular reason to think that completion of the cause of action is what the framers of the Rules had in mind when they used the word damage. They are more likely to have had the ordinary and natural meaning of the word in mind. I would be very reluctant to disagree with the several first instance judges who held that this refers to the actionable harm caused by the wrongful act alleged. In this they have the support of a very distinguished Court of Appeal in New South Wales, in Flaherty v Girgis (1985) 63 ALR 466, where Kirby P and Samuels JA agreed with McHugh JA, construing a similar jurisdictional rule, that damage, therefore, is to be contrasted with the element necessary to complete the cause of action; it includes all the detriment, physical, financial and social which the plaintiff suffers as a result of the tortious conduct of the defendant (p 482). Furthermore, it is quite clear that damage can be suffered by the same person in more than one place, just as the wrongful acts can be committed in more than one place. The Court of Appeal in Metall must have been right to say that the Rules contemplated the possibility of there being jurisdiction in more than one place. Nor do I find the distinction between direct and indirect damage easy to draw in all cases. If I am seriously injured in a road accident, the pain, suffering and loss of amenity that I suffer are all part of the same injury and in cases of permanent disability will be with me wherever I am. I do, of course, take the point that the claimant should not be in the position of choosing where to bring the claim. But in my view the discretion should be robust enough to prevent that. It is looking for a substantial reason to allow a claim against a foreign defendant to be brought in the courts of this country and the courts have always treated such cases with caution. And it is important to bear in mind that, in a tort claim, the applicable law will be the law of the country where the events took place. I was for a while attracted by a middle course, which would restrict damage to the continuing bodily (physical or psychological) effects of the wrongful act, because these are part and parcel of the initial injury, but excluding consequential financial losses. But it is difficult to find a warrant for that in the language used and in some torts the damage is wholly financial, so that separating out the direct and the consequential would be even more difficult. In the end, therefore, I would adopt the ordinary and natural meaning of the language used in the Rules. LORD WILSON: judgment of Lord Sumption with which she agrees. It may, however, be appropriate for it to be no part of the actual decision of this court today that, as a majority of us considers, the claimants claims for personal injury both to herself and, as his executrix, to her late husband (the two tort claims) fall within para 3.1(9)(a) of Practice Direction 6B in the Civil Procedure Rules (the CPR). For, had it been part of the decision, it would have been far reaching; and the need for the court at the hearing of this appeal to address other issues, in particular, in an exercise uncharacteristic of it, at last to extricate the facts which I agree with the judgment of Lady Hale and therefore with those parts of the have established the impossibility of any recovery against the particular company within the Four Seasons group which is presently sued, may have led to less full argument about the meaning of para 3.1(9)(a) than its importance requires. In para 22 above Lord Sumption refers to Regulation EC 864/2007 (the Rome II Regulation). It requires a member state which determines a claim in tort to apply the law there identified even when such is not the law of another member state. Were these two tort claims to proceed in our courts, it would require them to be determined by reference to Egyptian law. The law of a foreign state is more easily applied in the courts of that state; and in what I will call the appropriate forum inquiry, namely into whether our courts are clearly the appropriate forum for the trial of an action, also described in rule 6.37(3) of the CPR as the proper place in which to bring the claim, any requirement for it to apply foreign law will always be a negative factor and sometimes a powerful one: see the Spiliada case, cited at para 40 above at pp 478B and 48IH. But the Rome II Regulation is irrelevant to the existence of the jurisdiction of the courts of the member states; and I agree that the Court of Appeal was, with respect, wrong to hold otherwise. What, by contrast, can be relevant to the existence of the jurisdiction of the courts of member states is Regulation (EU) No 1215/2012 (the recast regulation). It recast Council Regulation (EC) No 44/2001, which in turn had replaced the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (the 1968 convention). Importantly, however, by article 4 the recast regulation governs the jurisdiction of those courts only when the defendant is domiciled in the EU. In relation to a case such as the present, in which the defendant is not so domiciled, article 6 of the regulation recognises that the jurisdiction of the courts of a member state is governed by its own law. Limited, as it therefore is, to the allocation of jurisdiction between the courts of member states in relation to claims against persons domiciled in the EU, the regulation is understandably prescriptive. A member state can, for example, rely on the fact that each of its fellow members is obliged by article 6 of the European Convention on Human Rights, and in relation to the assertion of rights under EU law by article 47 of the EU Charter of Fundamental Rights, to afford to litigants a fair hearing of their claims within a reasonable time; and there is, in the words of recital 26 to the regulation, mutual trust in the administration of justice in the Union. It permits no collateral attack upon its allocation of jurisdiction to the courts of one member state by reference to any conclusion that in all the circumstances it would be more appropriate for the case to proceed in the courts of another member state. Articles 4 and 5 are specific: a person domiciled in a member state may be sued in the courts of another member state only by virtue of the rules which then follow and, subject to them, he must be sued in the courts of the state in which he is domiciled. It has therefore been necessary for our procedural rules in respect of service of claims outside England (and, which will go without saying, also Wales) to be wide enough to permit service in circumstances in which the recast regulation and its predecessors have allocated jurisdiction to English courts to determine a claim against a person domiciled elsewhere in the EU. In 1978 the Court of Justice in Luxembourg determined the Bier case, cited and explained in para 29 above, which disclosed a rare situation in which an allegedly unlawful physical act in one member state caused direct physical damage only in a second member state. The courts construction of the location of the harmful event in what was then article 5(3) of the 1968 convention, namely that it had occurred in the second state as well as the first and that it was for the claimant to choose in which of them to bring his claim, therefore required an amendment, which came into force in 1987, to what was then rule 1(1)(f) of Order 11 of the Rules of the Supreme Court. The rule then began to provide for service out of the jurisdiction if, among other things, the damage was sustained within England as well as if it resulted from an act committed here. Our procedural rules for such service have therefore needed to be wide enough to enable us to comply with our duties under EU law. But it does not follow that, even if the natural construction of our rules indicates a wider gateway to service out of the jurisdiction in the case of a claim unconstrained by EU rules of jurisdiction, construction of them should be narrowed to the size of the gateway set by the EU rules, as interpreted by the Court of Justice. In the Metall und Rohstoff case, cited at para 30 above, the 1968 convention did not apply to the issue of the courts jurisdiction. The defendants were domiciled in the state of New York, and argued that, were any action to be brought against them, it should be brought there. But the Court of Appeal held that the English court had jurisdiction to determine one group of the various tort claims made against them. The court considered whether, for the purpose of rule 1(1)(f), the alleged torts within the group resulted from [acts] committed in England or alternatively in New York. It was enough, so the court held at p 449D, that as a matter of substance the acts were committed here. But the court also considered whether the damage was sustained in England or alternatively in Switzerland or Belgium. It observed at p 437C D: It was argued for [the second defendant] that since the draftsman had used the definite article and not simply referred to damage, it is necessary that all the damage should have been sustained within the jurisdiction. No authority was cited to support the suggestion that this is the correct construction of the Convention to which the rule gives effect and it could lead to an absurd result if there were no one place in which all the plaintiffs damage had been suffered. The judge rejected this argument and so do we. It is enough if some significant damage has been sustained in England. At p 449E the court proceeded to hold that significant damage, by which in the light of the above it meant a significant part of the damage, had indeed been sustained in England and that therefore the alternative ground for service out of the jurisdiction set by the rule also existed. Indeed in 2000, when rule 6.20(8) of the CPR replaced rule 1(1)(f) of Order 11, the definite article was removed from the words the damage was sustained in order to reflect the decision in the Metall case. The passage of the courts judgment in the Metall case set out above leads (and entitles) Lord Sumption at para 30 above to cite the case as exemplifying construction of rule 1(1)(f) and its successors in the light of the case law of the Court of Justice. But it is, I suggest, of greater significance that, as Lord Sumption explains in para 29 above by reference in particular to the judgment of the Grand Chamber in the Marinari case, the Court of Justice has rejected any suggestion that the requisite harmful event has occurred in a member state in circumstances in which only a significant part of the damage has been sustained there. If, unlike in the Bier case, damage is sustained in the state in which the causal act took place, the recast regulation does not confer jurisdiction upon the courts of a second state even if significant further damage is sustained there: see paras 14 and 15 of that judgment. Where, by contrast, the jurisdiction of the English court is not governed by EU law, the decision in the Metall case demonstrates that our rules create a gateway wider, as is now clear, than EU law would permit. I, for my part, would not interpret the word damage in para 3.1(9)(a) of Practice Direction 6B by reference to the damage which violates the interest protected by the law and which completes a cause of action in tort. The absence of the definite article demonstrates the contrary; and, in that it therefore has to be accepted (as Lord Sumption accepts in para 23 above) that damage for the purposes of the paragraph can be wider than the damage which violates the interest and which completes the cause of action, I find the relevance of the latter concept, whatever its importance in the substantive law of tort, to be elusive. It would, to put it at its lowest, be legitimate to interpret the word damage as extending to the secondary damage which the claimant and her husbands estate sustained in England and which flowed from the primary damage sustained in Egypt. Rule 1.2(b) of the CPR obliges a court which interprets another of its rules to seek to give effect to the overriding objective of enabling it to deal with cases justly. So, if an otherwise legitimate interpretation better serves the ends of justice, it ought in principle to be adopted. Take the case of Pike v The Indian Hotels Co Ltd cited in para 21 above. Mr Pike, an English tourist, was staying at the Taj Mahal Palace in Mumbai on the night of the terrorist attack in 2008. He suffered spinal injuries which rendered him paraplegic. Following his return home, he aspired to sue the operator of the hotel in England. Stewart J found at para 58 that, were Mr Pike to sue the operator in the courts of India, the case would not be concluded for 15 to 20 years; and he held at para 71 that it would therefore be a denial of justice to prevent him from suing the operator in England. The judge held that the word damage extended to the secondary damage sustained by him in England, which was also the proper place to bring the claim. The facts of Mr Pikes case were no doubt extreme but they illumine the injustice to which any narrow interpretation of the word damage can give rise. Is it possible that proponents of the narrow interpretation fail to invest due confidence in the appropriate forum inquiry? Is not that inquiry sufficiently muscular to exclude claims founded only on a tenuous amount of damage sustained in England? Lord Sumption contends in para 31 above that the main factor which determines such an inquiry is the practicality of litigation. But in the Spiliada case, cited at para 40 above, Lord Goff of Chieveley held at p 480B C that the court had to take into account the nature of the at p 474F G that the question was not one of mere practical i) convenience; ii) dispute as well as the legal and practical issues which it raised; and iii) at p 480G that the fundamental requirement was to identify the forum in which the case might suitably be tried in the interests of all the parties and of the ends of justice. The relevance of the jurisdiction of the courts of Ontario and New South Wales to entertain a claim in tort on the basis only of secondary damage sustained there is necessarily limited. But the long standing existence of the jurisdiction there should allay fears that a broader interpretation of para 3.1(9)(a) would encourage abuse. A claim which requires service of the form out of the jurisdiction will not lightly be brought, not least because of the likely complexity of attempts to enforce any judgment ultimately obtained; and a rigorous exercise of the appropriate forum inquiry should in my view yield the proportionate outcomes which all of us, on both sides of what in the present case reduces only to a discussion, no doubt intend that our law should achieve. LORD CLARKE: In so far as there are issues between Lady Hale and Lord Wilson on the one hand and Lord Sumption and Lord Hughes on the other, I prefer the reasoning of Lady Hale and Lord Wilson for the reasons they give. In particular, like Lady Hale and Lord Wilson, I prefer the reasoning in the various decisions of first instance judges to which they refer. In particular I agree with Lord Wilson in his para 64 that, in the absence of the definite article in para 3.1(9)(a) of Practice Direction 6B, it has to be accepted that damage for the purpose of the paragraph can be wider than the damage which violates the claimants interest and which completes the cause of action. There is no particular reason to think that completion of the cause of action is what the framers of the Rules had in mind when they used the word damage. They are more likely to have had the ordinary and natural meaning of the word in mind. I would be very reluctant to disagree with several first instant judges who held that this refers to actionable harm caused by the wrongful act alleged. In this they have the support of a very distinguished Court of Appeal in New South Wales, in Flaherty v Girgis (1985) 63 ALR 466, where Kirby P and Samuels JA agreed with McHugh JA, construing a similar jurisdictional rule, that damage, therefore, is to be contrasted with the element necessary to complete the cause of action; it includes all the detriment, physical, financial and social which the plaintiff suffers as a result of the tortious conduct of the defendant. Further, I agree with Lady Hales analysis of the various first instance decisions to which she refers. I would endorse the last three sentences of her para 52 as follows:

UK-Abs

In January 2010 Lady Brownlie and her husband, Sir Ian Brownlie QC, were on holiday in Egypt, staying at the Four Seasons Hotel Cairo at Nile Plaza. Her evidence is that she had telephoned the hotel from England and booked an excursion in a chauffeur driven car. During the excursion, the car crashed. The passengers, in addition to Sir Ian and Lady Brownlie, were his daughter Rebecca, and Rebeccas two children. Sir Ian and Rebecca were killed. The others were seriously injured. Four Seasons Holdings Inc (Holdings) is the holding company of the Four Seasons hotel group. It is incorporated in British Columbia, Canada. Lady Brownlie issued a claim against Holdings, seeking: (i) damages for her own personal injuries, (ii) damages under the Law Reform (Miscellaneous Provisions) Act 1934 as Sir Ians executrix, and (iii) damages for her bereavement and loss of dependency under the Fatal Accidents Act 1976. In order to serve her claim form on Holdings in Canada, Lady Brownlie required permission from the court for service outside England and Wales. Master Yoxall initially granted permission, but Master Cook subsequently set aside that order on the basis that the English court lacked jurisdiction. Lady Brownlie appealed to Mr Justice Tugendhat, who restored the original order of Master Yoxall. The Court of Appeal permitted service outside England and Wales in respect of Lady Brownlies contractual claim and her claim under the 1976 Act, but disallowed it in respect of her claim under the 1934 Act and her claim for damages for her own injuries. The Supreme Court unanimously allows the appeal. Lord Sumption gives the lead judgment, with which Lord Hughes agrees. Lady Hale gives a partially concurring judgment with which Lord Clarke and Lord Wilson agree. Lord Wilson also gives a partially concurring judgment, with which Lord Clarke agrees. Before permission can be given for service of a claim form outside the jurisdiction, it is necessary for the claimant to establish that: (i) the case falls within at least one of the jurisdictional gateways in paragraph 3.1 of Practice Direction 6B (6BPD) to the Civil Procedure Rules (CPR), (ii) his or her claim has a reasonable prospect of success, and (iii) England and Wales is the proper place in which to bring the claim. Lady Brownlies contractual claim relies on a contention that the contract was made within the jurisdiction (the gateway in paragraph 3.1(6)(a)), whereas her tortious claims rely on a contention that damage was sustained within the jurisdiction (the gateway in paragraph 3.1(9)(a)) [3]. In order to satisfy the Court of such jurisdictional facts, a claimant must show a good arguable case on the issue. This means: (i) that the claimant must supply plausible evidence for the application of the relevant jurisdictional gateway in paragraph 3.1; (ii) that if there is an issue of fact about it, or some other reason for doubting whether the gateway applies, the Court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at this interim stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it [4 7]. The Supreme Court invited Holdings to provide further evidence, which clarified that at the material times the Cairo hotel had been owned by a company unrelated to Holdings and operated by Holdings Egyptian subsidiary. There is consequently no realistic prospect of Lady Brownlie establishing that she contracted with Holdings, nor of Holdings being held liable for the drivers negligence. It follows that her claim against Holdings lacks reasonable prospects of success [13 15]. It is therefore unnecessary to consider where the contract was made. Lord Sumption adds (obiter) that the law governing that question is artificial but that its application may be unavoidable under the current wording of paragraph 3.1(6)(a) [16]. Lady Hale adds (obiter) the Rules Committee could consider a broader formulation of paragraph 3.1(6)(a)[33]. In those circumstances the correct interpretation of the gateway in paragraph 3.1(9)(a) does not arise. Anything said on the subject is obiter [17, 32]. The claim under the Fatal Accidents Act 1976 has no prospect of success because the 1976 Act has no application to a tort which is not governed by English law. The drivers alleged negligence is governed by the law of Egypt [18, 32, 55]. The Court of Appeal was wrong to base its interpretation of paragraph 3.1(9) on the Rome II Regulation, which is concerned with applicable law rather than jurisdiction [21 , 48 50, 57]. Lord Sumption and Lord Hughes would have held that the other tortious claims did not fall within paragraph 3.1(9)(a) [17]. This is because there is a fundamental difference between the damage done to an interest which the law protects (in this case, bodily integrity) and subsequent expenditure which is merely evidence of its amount [22 25]. The draftsman of 6BPD could have provided that damage should extend to the financial or physical consequences of the damage, but nothing in the language suggests that he did so. Policy considerations strongly suggest that that was not intended. In particular, (i) the current rules were intended to assimilate the test to that which applies in Brussels regulation cases, which has always disregarded the secondary consequences of physical damage; and (ii) if the test is satisfied by the occurrence of any of the subsequent physical or financial consequences of the damage in England, the result will in practice be to confer jurisdiction by virtue of the claimants place of residence [26 30]. Lady Hale, Lord Wilson and Lord Clarke consider Lady Brownlies tort claims to fall within paragraph 3.1(9)(a) insofar as they seek damages for personal injury to herself and, as his executrix, to her late husband [56]. Lady Hale observes that, under the CPR and its predecessors, the Court has always retained a discretion to refuse permission to serve proceedings outside the jurisdiction [34 39]. There is a consistent line of first instance decisions permitting claims in tort to be brought in England and Wales if damage is suffered here a result of injuries inflicted abroad. The judges in those decisions carefully considered and correctly rejected the arguments to the contrary [40 47]. There is no reason to think that the authors of paragraph 3.1(9) were contemplating anything but the ordinary and natural meaning of the word damage. The various judges who have held that damage refers to actionable harm are supported by the approach of the New South Wales Court of Appeal towards a similar jurisdictional rule [51]. Furthermore, damage can be suffered by the same person in more than one place and the distinction between direct and indirect damage is not easy to draw in all cases [51 53]. Lord Wilson and Lord Clarke consider that the relevant jurisdictional rules have widened as required by EU law; but it does not follow that those rules, in a claim unconstrained by EU law, should be narrowed to the size of the gateway set by EU law [58 62]. Paragraph 3.1(9)(a) refers to damage rather than the damage [63]. A narrow interpretation of the word damage, requiring claimants to litigate elsewhere, could lead to injustice [64]. It is questionable whether claims in which only a tenuous amount of damage is suffered in England and Wales will satisfy the separate test of whether that is the proper place in which to bring the claim [57, 65]. The courts of Ontario and New South Wales have a long standing jurisdiction to entertain claims based only on the occurrence of secondary damages within those jurisdictions, which ought to allay fears that this interpretation would encourage abuse [66].

The Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co operation in respect of Parental Responsibility and Measures for the Protection of Children, concluded on 19 October 1996 (the 1996 Convention), came into force in the United Kingdom on 1 November 2012. This is the first case about that Convention to reach this Court. It concerns the scope of the jurisdiction conferred by article 11 in all cases of urgency upon the Contracting State where a child is present but not habitually resident. The facts The child, whom I shall call Saleem, was born in England in January 2007. His parents are both Moroccan citizens, although they also hold British citizenship. The father lived in England from 1996 until 2009. He married the mother in Morocco in 2005 and the mother came to join him here. From 2009 to 2011, the family lived in Saudi Arabia, where the father held an academic post. Then in 2011 they moved to Morocco, so that the father could take up the academic post which he now holds. However, from August 2011 there were problems in their marriage, and in December 2011, the father instituted proceedings for divorce. In the spring of 2012, the mother moved with the child to her parents home in another city, some 50 miles from where the family home is. The local Family Court made an order divorcing the parents on 12 July 2012. The mother was granted residential custody of the child. The mother was also ordered to allow the father to visit his child on Sundays and holidays, from 9.00 am until 5.00 pm, under the condition that the child must spend the night at his mothers residence. The order also provided for the father to pay maintenance for the child. It did not say anything about whether the mother could, or could not, take the child out of the country. Mother and child lived with the mothers parents for the rest of 2012, but in January 2013, the mother came to England, leaving the child in the care of her parents. The mothers case is that she met her current partner, a Moroccan living in England, when he visited Morocco in 2012. They went through an Islamic ceremony of marriage in January 2013, after the mothers arrival in England, and they have lived here together since then. They have a child together, born in November 2014. The fathers case is that he and the child were in regular and frequent contact while the mother was away and in particular that the child spent the whole of the 2013 summer holiday, from 1 July until he went back to school in September, in his fathers care (this is borne out by what the child told the Cafcass officer). However, on 14 September 2013 the mother removed the child from her parents home and brought him to England. He has lived here with her and her new partner ever since. He has had some contact with his father by phone and skype but no face to face contact since he left Morocco. The father suffered from polio as a child and has problems with mobility. Regular and frequent international travel is difficult for him and he also lacks the means to afford it. On 23 September 2013, the father applied to the Family Court in the district where the child had been living to revoke the order of 12 July 2012, granting the mother residential custody and child maintenance, and to grant him the residential custody of the child. That application was refused on 16 January 2014. The mother had asked the court to reject the application due to lack of evidence on the nature of [her] stay abroad. The court concluded that Since the applicant could not provide any evidence whether the respondents departure with her child to England was intended to be a casual and temporary or a permanent stay, and since he has no females available to look after his child, his request does not meet the legal and religious conditions required to allow him to look after his own child pursuant to article 400 of the [Family] Code. These proceedings On 14 March 2014, the father brought proceedings in the High Court, seeking an order that the child be made a ward of court and directions for his summary return to Morocco. The final hearing of this application did not take place until 10 October 2014. Some of this delay was occasioned by the need to locate the mother and child, some by enabling her to seek legal aid and legal representation, some by attempts to obtain clarification of Moroccan law through the Moroccan Central Authority, and, that having been unsuccessful, by the parties jointly instructing an expert in Moroccan law. The mother had also to be ordered to disclose details of her relationship with her new husband and her pregnancy. In the meantime, Saleem had been interviewed by a Cafcass officer, who filed her report on 15 August 2014. Although Morocco has acceded to the 1980 Hague Convention on the Civil Aspects of International Child Abduction (the 1980 Convention), that accession has not yet been accepted by the European Union, and thus by the United Kingdom. The case therefore proceeded before Roderic Wood J as an application under the inherent jurisdiction of the High Court: [2014] EWHC 3588 (Fam). He referred (at para 1) to the proceedings also having been brought under the 1996 Convention, and mentions that his attention had been drawn to articles 5, 7, 19 and 22 (but not 11) of that Convention. However, in his section headed The law, he refers only to article 22, which deals with applicable law, and not with jurisdiction. He dealt with the case as a straightforward application of the principles applicable to such non Hague applications for summary return, as contained in the decision of the House of Lords in In re J (A Child)(Custody Rights: Jurisdiction) [2005] UKHL 40, [2006] 1 AC 80. The judge dealt with the matter on the basis of the written evidence and submissions only. The parties had agreed that it was not necessary to call the Cafcass officer to give oral evidence. The judge refused applications by the mother for her to give oral evidence and for supplementary questions to be asked of the expert in Moroccan law. The judge found as a fact that the father had not consented to the mothers removal of the child from Morocco. Her own version was that she had told the father of her plans but he just swore at me and that she had been saying to the father for quite some time that I wanted to return to the United Kingdom with S[aleem]. I do not know whether he believed me or not when I used to say this. Her own evidence, therefore, fell a very long way short of consent. Saleem himself had told the Cafcass officer that he did not know where they were going on 14 September 2013 until they got to the airport. This suggested strongly that she knew that Saleem would tell his father if he knew beforehand and that was a thing she wished to avoid (para 16). The father not having given his consent to the removal, the judge also found that it was wrongful (para 37). He also found that mother and father and child were habitually resident in Morocco before the mother wrongfully removed the child (para 37). In a further reference to the 1996 Convention, articles 5 and 6, he commented that it is clear that the Moroccan court had, and continues to have, jurisdiction in this matter based on the continuing habitual residence of S[aleem] in that country, which was not terminated by his mothers wrongful removal of him (para 45). No argument was addressed to him that the effect of the 1996 Convention was that the English court had no jurisdiction at all in the matter. He considered, therefore, whether under the established principles this was an appropriate case for summary return and concluded that it was. Saleem had told the Cafcass officer that he liked his maternal grandparents and his father. Asked what was good about Morocco he spoke of swimming and his holidays with his father (he shivers at an English winter). He had nothing bad to say about his life in Morocco. But he was happy about coming to England because he wanted to live with his mother (para 22). He liked his school in England. He would be sad if the judge ordered his return to Morocco because he wants to stay with his mother. But he did not seem to have contemplated the possibility that his mother might return to Morocco with him. If the judge decided that he should stay here, he would like to go to Morocco and see his father in the school holidays, If the judge decided he should go to Morocco, he would like to come back to the United Kingdom to see his mother in the school holidays (para 23). The Cafcass officers conclusions were that Saleem is a well presented, intelligent and polite child with a good command of English. He was a resilient child who did not appear to be badly caught up in the conflict between his parents. He had nothing bad to say about his father or about life in Morocco. He was clear about his reasons for wanting to remain in the United Kingdom, which was to be with the mother, but showed no outward sign of distress at the mention of a possible return to Morocco (para 24). The questions asked of the expert in Moroccan law were directed to two subjects: first, the general principles of Moroccan law concerning the allocation of parental responsibility, custody, access and relocation; and second, whether there was jurisdiction to allow one parent to move to another country and if so how it was exercised. The expert answered by reference to the Moroccan Family Code of 2004, of which we have an unofficial translation. Custody of children during the marriage is the responsibility of both parents (article 164). When the marriage is terminated by divorce, custody goes first to the mother, then to the father, then to the maternal grandmother (article 171). It would appear that the general rule is that the mother loses custody on remarriage, as long as the father claims it within a year of finding out about it (article 176). But her remarriage does not cause her to lose custody if the child is aged seven or less, or will suffer harm from being separated from her, or has a health condition or handicap which will render custody of the non mother extremely burdensome, or if the mothers new husband or the mother herself is the childs legal representative (not so here, as the father is the childs legal representative) (article 175). The Code does not mention anywhere the relocation of the child to another country. It does state that the mother does not lose custody if she moves permanently to another town in Morocco (article 178). The lawyers opinion was that If such Lawsuit to relocate the child to another country is brought, the Family Court in giving its decision may consider the childs best interests and the ability of the non custodian parent to visit the child. The expert was not asked whether the effect of the order of 12 July 2012 was to prohibit the mother from removing the child permanently from Morocco without consent. Roderic Wood J held that the terms of the order make it abundantly clear that the intention was that the mother and children [sic] should live in Morocco, for if it permitted the mother to move countries, the provision for the fathers contact would be otiose (para 10). Nor was the expert asked whether the Moroccan court had power to make an order compelling the mother to return the child from England to Morocco. At that stage in the proceedings, no one had focussed their mind on the precise nature and extent of the jurisdiction of the English court. Roderic Wood J concluded that this was an appropriate case in which to deal with matters summarily (para 33). Overall, he had no hesitation that it is in S[aleem]s best interests to return to Morocco where he was habitually resident for the courts of that country to adjudicate, if required to do so, on welfare issues relating to [him] (para 46). He ordered the mother to return the child, or cause the return of the child, to Morocco no later than 4.00 pm on 11 January 2015. The delay was permitted because the mother was about to give birth. The mother sought permission to appeal on a number of grounds, but again these did not question the jurisdiction of the English court. She was refused permission to appeal against the finding that Saleem was habitually resident in Morocco before his removal to this country and that his removal had been wrongful. When the father applied for permission to appeal to this Court, she applied to cross appeal against the finding of wrongful removal. She was refused permission so to do. The mother cannot now challenge the findings that the child was habitually resident in Morocco before his removal to this country and that his removal was wrongful. The mother was, however, given permission to appeal to the Court of Appeal on three grounds: (i) that the judge had erred in his consideration of the expert evidence, by failing to allow oral evidence and cross examination, and by drawing the wrong conclusions from it; (ii) that in considering the childs welfare and the Cafcass report, (a) he failed to carry out a sufficiently deep, thorough and realistic analysis of the childs welfare needs and wishes, (b) was unclear as to the approach adopted, and (c) erred in his evaluation of the welfare considerations; and (iii) that he erred in failing to consider article 9 of the 1996 Convention. However, when giving judgment in the Court of Appeal ([2015] EWCA Civ 329; [2015] 3 WLR 747), Black LJ stated that When I gave permission, like the parties I was thinking in terms of whether the well known principles in In re J (A Child)(Custody Rights: Jurisdiction) [2006] 1 AC 80 would need modification in the light of the coming into force of the 1996 Hague Convention (para 76). It had, however, become clear to her that the impact of the 1996 Hague Convention is far more radical (para 77). The focus of the Court of Appeals attention was entirely upon the 1996 Convention. It will be necessary to return to the precise reasoning later. In summary, Black LJ explained that article 11(1) imports three conditions before a court can exercise jurisdiction: (i) The case is one of urgency, (ii) The child (or, where relevant, property belonging to the child) is present in the contracting state of the court in question; (iii) The steps the court is going to take are necessary measures of protection (para 68). Measures of protection has a wider meaning than might be thought and was capable of including a return order (para 70). There may be cases in which a return order is urgent and necessary (para 71), but this was not one of them (para 72). Six months had passed before the father took action here and over a year before the judges decision. A speedy application to the Moroccan court was possible and there was no explanation for why the father had not applied for a return order rather than a change of residence. Accordingly the judge did not have jurisdiction under article 11 (para 73) and there was no other basis upon which he could assume jurisdiction (para 74). Hence the appeal was allowed and the fathers application dismissed. Black LJ pointed out that the consequence may seem rather strange. If the father were now to make a fresh application (presumably under the inherent jurisdiction or the Children Act 1989), it was possible that the childs habitual residence had changed, and the Moroccan jurisdiction was no longer preserved by article 7 of the 1996 Convention. The English court would therefore have full jurisdiction under article 5 (para 83). Others have pointed out that the consequence of the interpretation of article 11 adopted by the Court of Appeal is also rather strange. A procedure which had been adopted for many years by the English court in order to effect the summary return of an abducted child from this country to his home country had apparently been precluded by a Convention, which was designed to improve the protection of children in international situations. The 1996 Convention The Preamble to the 1996 Convention states that the State parties, in agreeing its provisions, had six objectives: Considering the need to improve the protection of children in international situations; Wishing to avoid conflicts between their legal systems in respect of jurisdiction, applicable law, recognition and enforcement of measures for the protection of children; Recalling the importance of international co operation for the protection of children; Confirming that the best interests of the child are to be a primary consideration; Noting that the Convention of 5 October 1961 concerning the powers of authorities and the law applicable in respect of the protection of minors is in need of revision; Desiring to establish common provisions to this effect, taking into account the United Nations Convention on the Rights of the Child of 20 November 1989. Article 1 sets out the objects of the Convention, which include (a) to determine the state whose authorities have jurisdiction to take measures directed to the protection of the person or property of the child. Article 3 provides, so far as relevant: The measures [of protection] referred to in article 1 may deal in particular with (a) the attribution, exercise, termination or restriction of parental responsibility, as well as its delegation; (b) rights of custody, including rights relating to the care of the person of the child and, in particular, the right to determine the childs place of residence, as well as rights of access including the right to take the child for a limited period of time to a place other than the childs habitual residence; (c) guardianship, curatorship and analogous institutions; (d) the designation and functions of any person or body having charge of the childs person or property, representing or assisting the child; (e) the placement of a child in a foster family or in institutional care, (f) the supervision by a public authority of the care of a child by any person having charge of the child; This is a non exhaustive list and it is apparent that measures of protection goes far wider than the public law measures of child care and protection to which an English lawyer might otherwise think that they referred (although those are also included). The exclusions from the Convention in article 4 include (a) the establishment or contesting of a parent child relationship; (b) decisions on adoption, measures preparatory to adoption, or the annulment or revocation of adoption; (c) the names and forenames of the child; None is relevant in this case, but the exclusions do indicate that the focus of the Convention is on the care and upbringing of the child (or the protection of his property). In my view the Court of Appeal was entirely right to consider that an order for the return of the child to the country of his or her habitual residence is a measure of protection for the purpose of the Convention, as indeed would be an order prohibiting the child from being taken out of that country. The primary rule of jurisdiction is contained in article 5: (1) The judicial or administrative authorities of the Contracting State of the habitual residence of the child have jurisdiction to take measures directed to the protection of the childs person or property. (2) Subject to article 7, in case of a change of the childs habitual residence to another Contracting State, the authorities of the State of the new habitual residence have jurisdiction. Article 7 deals with jurisdiction after wrongful removal or retention: (1) In case of wrongful removal or retention of the child, the authorities of the Contracting State in which the child was habitually resident immediately before the removal or retention keep their jurisdiction until the child has acquired a habitual residence in another State, and (a) each person, institution or other body having rights of custody has acquiesced in the removal or retention; or (b) the child has resided in that other state for a period of at least one year after the person, institution or other body having rights of custody has or should have had knowledge of the whereabouts of the child, no request for return lodged within that period is still pending, and the child is settled in his or her new environment. (2) The removal or retention of a child is to be considered wrongful where (a) it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the state in which the child was habitually resident immediately before the removal or retention; and (b) at the time of removal or retention those rights were actually exercised, ether jointly or alone, or would have been so exercised but for the removal or retention. The rights of custody mentioned in sub paragraph (a) above, may arise in particular by operation of law or by reason of a judicial or administrative decision, or by reason of an agreement having legal effect under the law of that State. (3) So long as the authorities first mentioned in paragraph 1 keep their jurisdiction, the authorities of the Contracting State to which the child has been removed or in which he or she has been retained can only take such urgent measures under article 11 as are necessary for the protection of the person or property of the child. Article 11 supplies an additional jurisdiction in limited circumstances: (1) In all cases of urgency, the authorities of any contracting state in whose territory the child or property belonging to the child is present have jurisdiction to take any necessary measures of protection. (2) The measures taken under the preceding paragraph with regard to a child habitually resident in a Contracting State shall lapse as soon as the authorities which have jurisdiction under articles 5 to 10 have taken the measures required by the situation. (3) The measures taken under paragraph 1 with regard to a child who is habitually resident in a non Contracting State shall lapse in each Contracting State as soon as measures required by the situation and taken by the authorities of another State are recognised in the Contracting State in question. There are several things to note about this provision. First, it bears a striking resemblance to article 20 of Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and matters of parental responsibility, otherwise known as the Brussels II revised Regulation (the Regulation). Article 20, however, merely allows one member state to take provisional, including protective measures in respect of persons or assets in that State as may be available under the law of that member state, even if, under the Regulation, the court of another member state has jurisdiction. Article 11, in contrast, confers an additional jurisdiction upon the State where the child or the property is. An order made under article 20 is not enforceable in another member state: Purrucker v Valles Perez (No 1) (Case C 256/09) [2011] Fam 254. In contrast, an order made under article 11 is enforceable in the other Contracting States in accordance with Chapter IV of the 1996 Convention. The order can thus have extra territorial effect, although it will lapse in accordance with article 11(2) once the authorities in the State of primary jurisdiction have taken the measures required by the situation. Secondly, this means that the assistance to be gained from decisions of the Court of Justice of the European Union in relation to article 20 is limited. In particular, in the Court of Appeal, at paras 67 and 72, Black LJ placed some emphasis upon the case of Detiek v Sgueglia (Case C 403/09 PPU), [2010] Fam 104, at para 42: Since article 20(1) of Regulation No 2201/2003 authorises a court which does not have jurisdiction as to the substance to take, exceptionally, a provisional measure concerning parental responsibility, it must be considered that the concept of urgency in that provision relates both to the situation of the child and to the impossibility in practice of bringing the application concerning parental responsibility before the court with jurisdiction as to the substance. Since it was not obviously impossible for the father in this case to take his case to the Moroccan court, she held that this was not a case or urgency within the meaning of article 11. However, the interpretation of a word in the context of a provision giving a purely ancillary power is not necessarily transferable into the context of a provision giving a substantive, albeit additional, jurisdiction. In particular, if the child needs protection now, it is not obvious why the courts of the country where the child is should refrain from granting that protection while inquiries are made about the possibility of bringing proceedings in the home country. If the courts of the home country do take action, the measures they take will trump those taken in the presence country. But if no action is taken, the measures taken in the presence country will continue to operate throughout the Convention space. That is a very different situation from that in Detiek, where the Italian court which had jurisdiction under the Regulation had made a custody order in favour of the father and the mother had taken the child to Slovenia, where she persuaded the Slovenian court to make a completely different order. Thirdly, it must be borne in mind that article 11 confers jurisdiction on the presence country in all situations to which its terms apply. It is not limited to cases of wrongful removal or retention covered by article 7. Article 7 is concerned with the very specific situation where jurisdiction is retained in the country of former habitual residence because the child has been wrongfully taken or kept away from that country. But a child may be habitually resident in one country but present in another in a whole host of situations which do not involve an unlawful removal or retention. Take, for example, a family who come here on holiday or for short term study or employment and an incident of serious domestic violence takes place between the parents, as a result of which the parents separate. It may very well be necessary to decide where the children shall live while they remain here. The local authority may well consider that unless the children are safeguarded in the care of the non violent parent it will be necessary to take steps to remove them temporarily from the family for their own safety. It cannot be the case that the courts of the presence country are prohibited from taking those steps because it has not been shown to be impossible for the courts of the home country to do so. Fourthly, where there has been a wrongful removal or retention, article 11 has proved very helpful in securing a soft landing for children whose return to their home country is ordered. As Dr Hans van Loon observes, in a study prepared for the European Parliament, The Brussels IIa Regulations: towards a review?, at paragraph 3.1.3, the Regulation does not contain the equivalent of articles 7(3) and 11 of the 1996 Convention: Under the 1996 Convention, where the court of refuge orders return subject to certain undertakings by the parties or to protective measures as are necessary for the protection of the person or property of the child, these orders will be urgent measures under its article 11. They must be recognised and enforced under Chapter IV of the Convention, and remain effective until the court of origin has taken the measures required by the situation. As practice under the 1980 Convention has shown, without this enforcement obligation, undertakings and protective measures will often not be respected and remain ineffective. This has given rise to the need to obtain mirror or safe harbour orders in the state of origin, but these may not always be available, or, again, not be effective. Articles 7(3) and 11 1996 Convention, therefore, strongly reinforce the return mechanism of the 1980 Convention. Dr van Loon noted the English case of B v B [2014] EWHC 1804 (Fam), where Mostyn J used the 1996 Convention for just this purpose, when ordering the return of a child to Lithuania pursuant to the 1980 Convention, so as to ensure that there was no grave risk of harm within the meaning of article 13(1)(b) of that Convention. Dr van Loons understanding of the 1996 Convention is of particular relevance, as he was Secretary General of the Hague Conference on Private International Law from 1996 to 2013. It would obviously place in jeopardy this valuable aspect of the 1996 Convention, in assisting the objectives of the 1980 Convention, if the courts in the presence country could not invoke the article 11 jurisdiction without first assuring themselves that it was impossible for the courts of the home jurisdiction to take action. Indeed, Dr van Loon recommends that the Regulation be amended so as to delete article 20 and insert the equivalent of article 11. If there is no pre condition to jurisdiction under article 11 that it be impossible or impracticable for the courts of the country of habitual residence to exercise jurisdiction, then how is it to be interpreted? It requires, as Black LJ pointed out, (i) a case of urgency, (ii) the presence of the child or his or her property, and (iii) that measures of protection be necessary. In my view that demands a holistic approach. It may be helpful for the court to ask itself three questions. Is the child here? Are measures of protection necessary? Are they urgent? But that is not to suggest that these questions must always be asked in that order. The article should be applied according to its terms. It is obviously consistent with the overall purposes of the Convention that measures of protection which the child needs now should not be delayed while the jurisdiction of the country of habitual residence is invoked. On the other hand, the article 11 jurisdiction should not be used so as to interfere in issues that are more properly dealt with in the home country. It is a secondary, and not the primary, jurisdiction. Thus it is one thing to use the article 11 jurisdiction in support of the home country, for example, by facilitating a return there after a wrongful removal. It is quite another thing to set up the article 11 jurisdiction in opposition to that of the home country (as happened in Detiek). Clearly it was not intended for that purpose. We have received very helpful written submissions from three interveners: Reunite International Child Abduction Centre, the AIRE Centre, and the International Centre for Family Law, Policy and Practice. All are broadly supportive of the above approach. Reunite argues that, in cases of wrongful removal or retention, no left behind parent should be shut out from invoking the jurisdiction under article 11. It is then a question for the court whether the circumstances are such that a return order is necessary. At this stage, questions of long delay, or possible objections to return, analogous to those in article 13 of the 1980 Convention, may become relevant. In this way, the position under the 1996 Convention would broadly mirror that under the 1980 Convention in child abduction cases. On the other hand, this view of the matter does not emerge either from the Explanatory Report on the 1996 Convention by Paul Lagarde (HCCH Publications 1998) or from the Practical Handbook on the Operation of the 1996 Hague Child Protection Convention, the most recent edition of which is dated 2014. The Lagarde Report points out, at para 68, that the Convention does not define the notion of urgency, but as it is a derogation from the normal rule it ought to be construed rather strictly. It might be present where the situation, if remedial action were only sought through the normal channels of articles 5 to 10, might bring about irreparable harm for the child. However, he later puts it more broadly, when explaining the justification for this concurrent jurisdiction. If this jurisdiction had not been provided, the delays which would be caused by the obligation to bring a request before the authorities of the state of the childs habitual residence might compromise the protection or the interests of the child. The examples he gives are an urgent surgical operation or the rapid sale of perishable goods. The Practical Handbook suggests that A useful approach for Authorities may therefore be to consider whether the child is likely to suffer irreparable harm or to have his/her protection or interests compromised if a measure is not taken to protect him/her in the period that is likely to elapse before the authorities with general jurisdiction under articles 5 to 10 can take the necessary measures of protection (para 6.2). The examples given cover (1) medical treatment to save the childs life or prevent irreparable harm occurring to the child or his interests being compromised; (3) a rapid sale of perishable goods; but also (2) the child is having contact with a non resident parent outside his home State and makes an allegation of abuse against that parent such that contact needs to be suspended immediately and alternative care arranged; (4) there has been a wrongful removal or retention of the child and, in the context of 1980 Hague Convention proceedings, measures need to be put in place to ensure the safe return of the child (para 6.4). Among the fuller example scenarios given (in para 6.12) is the case where a mother wrongfully removes the child from Contracting State A to Contracting State B, the father makes an application under the 1980 Convention, but the mother is not permitting any contact to take place and the proceedings may take two months. The authorities in Contracting State B may consider that the lack of contact between father and child will cause irreparable harm or otherwise compromise the protection or interests of the child and make an order for interim contact. Two comments seem appropriate. First, it would be unfortunate if words in the Explanatory Report were treated as if they were words in the Convention itself. There is a world of difference between irreparable harm and compromising the protection or interests of the child. Neither expression is in the Convention, which merely asks whether the measure is necessary and the case urgent. Secondly, the Report and the Handbook clearly have abduction in mind, but only in the context of proceedings for return under the 1980 Convention. In that context, both interim contact orders and safe harbour orders are contemplated. Abduction in cases where the 1980 Convention does not apply is not considered, yet the 1996 Convention clearly provides for wrongful removal and retention in article 7. Far from derogating from the jurisdiction of the home state in these circumstances, the use of article 11 would be supporting it. It would be extraordinary if, in a case to which the 1980 Convention did not apply, the question of whether to order the summary return of an abducted child were not a case of urgency even if it was ultimately determined that it was not necessary to order the return of the child. While I would not, therefore, go so far as to say that such a case is invariably one of urgency, I find it difficult to envisage a case in which the court should not consider it to be so, and then go on to consider whether it is appropriate to exercise the article 11 jurisdiction. It would obviously not be appropriate where the home country was already seized of the case and in a position to make effective orders to protect the child. However, as Lord Wilson pointed out in the course of argument, the courts of the country where the child is are often better placed to make orders about the childs return. Those courts can take steps to locate the child, as proved necessary in this case, and are likely to be better placed to discover the childs current circumstances. Those courts can exert their coercive powers directly upon the parent who is here and indeed if necessary upon the child. The machinery of going back to the home country to get orders and then enforcing them in the presence country may be cumbersome and slow. Getting information from the home country may also be difficult. The childs interests may indeed be compromised if the country where the child is present is not able to take effective action in support of the childs return to the country of his or her habitual residence. Appeal dismissing the fathers application. Next steps Mr James Turner QC, who appears for the mother, first argued that, were we to allow this appeal, the case should return to the Court of Appeal, so that it could deal with the other grounds upon which the mother had been given permission to appeal (see para 17 above). That would simply add to the inordinate delays which have already taken place in this case and further delay the proper consideration of the substance of the matter. Any complaints about how the judge decided the case when approaching it as a standard In re J exercise are now water under the bridge I would therefore allow this appeal and set aside the order of the Court of (although they do not appear to me to have much substance, given the task on which the judge thought that he was engaged). Mr Henry Setright QC, who appears for the father, first argued that we should restore the judges order for return. That too would not be right. It is necessary for this case now to be approached on its proper footing: should the English High Court exercise the jurisdiction conferred by article 11 of the 1996 Convention and if so in what way? That question will have to be answered on the basis of up to date information about the child and his circumstances and, to the extent deemed necessary, about Moroccan law. Under article 15(1) of the 1996 Convention, in exercising their jurisdiction under Chapter II Contracting States are to apply their own law. However, under article 15(2) in so far as the protection of the person or the property of the child requires, they may exceptionally apply or take into consideration the law of another State with which the situation has a substantial connection. The International Centre for Family Law, Policy and Practice has helpfully pointed out that one option which does not appear to have been canvassed in the Court of Appeal, either by the parties or the court, was whether it was necessary to make an order for interim contact in any event. Research by Professor Marilyn Freeman for the Centre has made it clear that contact with the left behind parent is of crucial importance in preserving the relationship between the child and that parent, as well as in ending the abduction itself in some cases. Black LJ herself acknowledged the potential harm to Saleem in not keeping up his relationship with his father by direct contact (para 72). For the reasons given earlier, there may well be a need for such protection, protection which may have become more urgent the longer this case has gone on. The obvious solution is to return the case to Roderic Wood J in the High Court, for him to decide whether he can exercise the jurisdiction provided for in article 11 of the 1996 Convention and, if so, in what way.

UK-Abs

This appeal concerns the application of the 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co operation in respect of Parental Responsibility and Measures for the Protection of Children (the 1996 Convention); in particular the scope of the jurisdiction conferred by article 11 in all cases of urgency on a contracting state where a child is present but not habitually resident. The 1996 Convention came into force in the United Kingdom on 1 November 2012 and has not previously been considered by the Supreme Court. The subject of the proceedings is a child, called Saleem in the judgment, who was born in January 2007. His parents are both from Morocco and hold Moroccan and British citizenship. The parents lived in England when Saleem was born but moved first to Saudi Arabia in 2009 and then to Morocco in 2011. The marriage broke down in December 2011. Saleem lived with his mother, who was granted residential custody by the local Family Court in 2012. His father was granted and exercised visiting rights. Saleems mother moved to England in January 2013 but Saleem remained in the care of his maternal grandparents until 14 September 2013, when the mother brought Saleem to England. Since then he has lived here with her and her new husband, whom she married in January 2013 and with whom she now has another child. Saleems father has had no face to face contact with him since. Saleems father applied on 23 September 2013 to the Moroccan Family Court for an order granting him residential custody of Saleem but this was refused on 16 January 2014. On 14 March 2014 the father brought proceedings in the High Court seeking an order that Saleem be made a ward of court and directions for his summary return to Morocco. The judge found that the father had not consented to the removal of Saleem from Morocco, which was wrongful, and that Saleem had been habitually resident in Morocco before his removal. He ordered the mother to return Saleem to Morocco. It was not argued before him that the effect of the 1996 Convention was that he had no jurisdiction to make the order he did. The mother appealed to the Court of Appeal, which held that the English courts did not have jurisdiction under the 1996 Convention, or on any other basis, on the facts of this case. In cases where a child was habitually resident in another state, as in Saleems case, jurisdiction only arose in cases of urgency under article 11. This was not such a case because the father could have made an immediate application to the Moroccan court for a return order. The Supreme Court unanimously allows the appeal, holding that it is open to the English courts to exercise the article 11 jurisdiction in cases of wrongful removal under the 1996 Convention, and it orders that the case be returned to the High Court for a decision as to whether it is appropriate to do so in the circumstances of this case. Lady Hale, with whom the other justices all agree, gives the only substantive judgment. The focus of the 1996 Convention is on the care and upbringing of the child and an order for the return of a child to the country of his or her habitual residence is a measure of protection falling within its scope [23]. Jurisdiction in wrongful removal cases remains with the authorities of the contracting state in which the child was habitually resident immediately before the removal (article 7) and article 11 supplies an additional jurisdiction to the courts of the territory where the child is present in the limited circumstances of cases of urgency [26]. An order made under article 11 can have extra territorial effect and can thus be contrasted with the purely ancillary power in article 20 of the Brussels II Revised Regulation [26 29]. It is not limited to cases of wrongful removal but extends to safeguarding children who are lawfully present in another country [30]. It can secure a valuable soft landing for children whose return to their home country is ordered under the 1980 Hague Convention on the Civil Aspects of International Child Abduction (the 1980 Convention) [31]. It would place these objectives in jeopardy if the courts could not invoke the article 11 jurisdiction without first assuring themselves that it was impossible for the courts of the home jurisdiction to take action [32]. In the absence of this pre condition, the interpretation of article 11 demands a holistic approach. It is consistent with the overall purpose of the 1996 Convention that measures of protection which the child needs now should not be delayed, provided they are in support of rather than in opposition to the jurisdiction of the home country. It is a secondary, not the primary jurisdiction [33 34]. Although this approach does not emerge from either the Explanatory Report of Paul Lagarde in 1996 or from the Practical Handbook on the operation of the 1996 Convention, they should not be treated as if they were words in the Convention, and the focus of both is orders in the context of proceedings for abduction governed by the 1980 Convention, rather than cases to which the 1980 Convention does not apply [39]. An abduction case governed solely by the 1996 Convention is not invariably one of urgency but it is difficult to envisage a case in which the court should not consider it to be so and go on to consider whether it is appropriate to exercise the article 11 jurisdiction. The courts of the country where the child is present are often better placed to make orders about the childs return, as they can take steps to locate the child and exert any necessary coercive powers. The machinery of obtaining and then enforcing orders made by the home country may be cumbersome and slow. The childs interests may be compromised if the country where he or she is present is not able to take effective action in support of their return [39]. Accordingly the appeal is allowed. It is not right, however, simply to restore the judges order for return. The case should be returned to him for a new decision approached on the proper footing, namely whether the English court should exercise the jurisdiction conferred by article 11 of the 1996 Convention and, if so, in what way. The question will be answered on the basis of up to date information about Saleem and, if necessary, about Moroccan law, and attention can also be given to the important question of whether an order for interim contact between Saleem and his father should be made [41 44].

The issue raised on this appeal and cross appeal is whether three products manufactured by the Actavis group of companies (Actavis) would infringe a patent whose proprietor is Eli Lilly & Company (Lilly), namely European Patent (UK) No 1 313 508 (the Patent), and its corresponding designations in France, Italy and Spain. This judgment was circulated in draft to the parties legal representatives in the normal way on 5 July 2017, on the basis that it would be handed down a week later. On the following day, just after midday, Actaviss solicitors emailed the Court expressing concern about the potential prejudice which their clients could suffer if they did not know of the outcome of this appeal until 12 July. Not least because publication of our decision could have an effect on the share prices of Actavis or Lilly or both of them, the Court proposed to the parties respective solicitors that we should announce our decision at once, while maintaining the intention, in accordance with this Courts usual practice, to hand down the judgment a week after circulation of the draft. This was agreed by both solicitors, and accordingly on 7 July at 11.30 am, the following announcement appeared on the Courts website: The Supreme Court allows Eli Lillys appeal and holds that Actaviss products directly infringe Eli Lillys patent in the United Kingdom, France, Italy and Spain. The Court dismisses Actaviss cross appeal on the basis that if its products did not directly infringe, they would indirectly infringe to the extent held by the Court of Appeal. Accordingly, these are technically the reasons for those conclusions. The factual and technical background The factual background Pemetrexed is a chemical which has been known for some time to have therapeutic effects on cancerous tumours. However, when used for that purpose on its own, pemetrexed can often have seriously damaging, sometimes even fatal, side effects. Accordingly, its use as an anti cancer drug was effectively precluded in practice. The essential disclosure of the Patent was that the damaging side effects could largely be avoided if a compound called pemetrexed disodium was administered together with vitamin B12. This has enabled pemetrexed disodium to be used for treatment in the form of a medicament which includes the vitamin. Such a medicament has been successfully marketed, under the brand name Alimta, by Lilly since 2004. The Patent primarily claims the use of pemetrexed disodium in the manufacture of a medicament for use in combination with vitamin B12 (and, optionally, folic acid) for the treatment of cancer. Pemetrexed itself is a member of a class of chemicals known as antifolates, and its molecular structure is shown below, with C, N, O and H being respectively the chemical symbols for carbon, nitrogen, oxygen and hydrogen; and the unallocated points on the chains and the rings being carbon. The presence of the two CO2H units results in pemetrexed being an acid (hence it is also known as pemetrexed diacid), or as it is sometimes called, a free acid. When pemetrexed is dissolved in water, the hydrogens in those two units separate from the rest of the molecule as positively charged entities, protons, and the rest of the molecule becomes a negatively charged entity called an anion. The structure of pemetrexed disodium is similar except that, instead of the two CO2H units, it has two CO2Na units (Na being the symbol for sodium). Pemetrexed disodium dissolves in water, where the two sodiums separate from the rest of the molecule as positively charged entities called cations, and the rest of the molecule becomes an anion. Because it is the pemetrexed anion which is of interest, the sodium cation is often referred to as a counter ion. A substance such as pemetrexed disodium, where the acidic hydrogens have been replaced, is known chemically as a salt. Although one might have thought that the actual invention should have been characterised as a disclosure that pemetrexed could be administered safely if it was combined in a medicament with vitamin B12, the claimed invention in the Patent is, as mentioned in para 4 above, the manufacture of such a medicament. This formulation was required by the then prevailing law contained in article 52(4) of the European Patent Convention 1973 (EPC 1973), which prohibited from patentability any method of treatment of humans or animals. This led to inventions which otherwise might have been expected to be expressed as being new therapeutic treatments being cast as manufacturing claims. Such claims are known as Swiss form claims, and they were illuminatingly discussed by Kitchin J in Ranbaxy (UK) Ltd v Astrazeneca AB [2011] FSR 45, paras 42 to 60. As he explained, the prohibition was substantially modified in article 53 in the European Patent Convention 2000 (EPC 2000), but that modification had not come into force when Lilly applied for the Patent. Actaviss proposed products involve pemetrexed compounds being used together with vitamin B12 for cancer treatment. However, rather than pemetrexed disodium, the active ingredient in those products (the Actavis products) is (a) pemetrexed diacid, (b) pemetrexed ditromethamine, or (c) pemetrexed dipotassium. In other words, rather than including the disodium salt referred to in claim 1 of the Patent, the Actavis products include as the active ingredient (a) pemetrexed itself (ie the free acid), or pemetrexed with the hydrogens on the two CO2H units replaced by (b) tromethamine, or (c) potassium. Actavis contend that, because they intend to use the Actavis products which do not include pemetrexed disodium, the claims of the Patent, which are expressed as involving the use of pemetrexed disodium, would not be infringed. By contrast, Lilly contends that there would be either direct or indirect infringement of the Patent if Actavis launch any of the Actavis products on the market in the UK or in France, Italy, or Spain. The allegation of direct infringement is based simply on the proposition that marketing or use of the Actavis products would infringe the Patent; indirect infringement is said to arise because pemetrexed disodium is claimed to be involved in the preparation of the Actavis products before they are administered. After a four day trial, Arnold J decided that none of the Actavis products would directly or indirectly infringe the Patent in the UK or in France, Italy or Spain [2015] Bus LR 154; [2015] RPC 6. The Court of Appeal allowed Lillys appeal to the limited extent of holding that there would be indirect infringement in the four jurisdictions, but they agreed with the Judge that there would be no direct infringement [2015] Bus LR 1068. Lilly appeals against the rejection of its case that there would be direct infringement, and Actavis cross appeal against the rejection of their case that there would be no indirect infringement. As Floyd LJ explained in the Court of Appeal, the appeal raises the issue of the correct approach under UK law (and the law of the three other states) to the interpretation of patent claims, and in particular the requirement of EPC 2000 to take account of equivalents, and also the extent to which it is permissible to make use of the prosecution history of a patent when determining its scope. The issue on the cross appeal is rather more fact specific, namely whether the application of the law of contributory infringement justifies a finding of indirect infringement in this case. It is appropriate to start by setting out the relevant provisions of the Patent and the knowledge of its assumed addressee, topics on which my account is largely taken from the clear judgment of Floyd LJ in the Court of Appeal. I will then turn to the issue of direct infringement, which involves considering the proper approach to that issue generally, and also the relevance of the prosecution history. I will then consider the position in the three other states and finally I will address the issue of indirect infringement. The specification and claims in the Patent The Patent is entitled Combination containing an antifolate and methylmalonic acid lowering agent, and it has a claimed priority date of 30 June 2000. The specification begins at para [0001] by stating that [p]otentially, life threatening toxicity remains a major limitation to the optimal administration of antifolates. It then explains at para [0002] that antifolates work by inhibiting anti folate requiring enzymes by competing with reduced folates for binding sites on those enzymes. The specification identifies several antifolate drugs as being in development, including Lillys branded product Alimta. The specification then explains at para [0003] that a limitation to the development of these drugs is that they may be associated with substantial toxicity, including mortality, for some patients. These toxicity effects had led to the abandonment of the development of some antifolates. In para [0004] the specification explains that previous work had been done on the use of folic acid as a treatment for toxicity in this area. It also records work on vitamin B12 as a predictor of cytotoxic events. The specification then states in para [0005]: Surprisingly and unexpectedly, we have now discovered that certain toxic effects such as mortality and non hematologic events, such as skin rashes and fatigue, caused by antifolates, as a class, can be significantly reduced by the presence of a methylmalonic acid lowering agent as vitamin B12, without adverse adversely affecting therapeutic efficacy. The present invention thus generally relates to a use in the manufacture of a medicament for improving the therapeutic utility of antifolate drugs by administering to the host undergoing treatment with a methylmalonic acid lowering agent as vitamin B12. Para [0006] of the specification continues: Additionally, we have discovered that the combination of a methylmalonic acid lowering agent as vitamin B12 and folic acid synergistically reduces the toxic events associated with the administration of antifolate drugs. Although, the treatment and prevention of cardiovascular disease with folic acid in combination with vitamin B12 is known, the use of the combination for the treatment of toxicity associated with the administration of antifolate drugs was unknown heretofore. These early, general statements are made in relation to antifolates as a class. However, at para [0010] the specification says, in what is known as a consistory clause, that the invention: specifically provides the use of the antifolate pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with a methylmalonic acid lowering agent selected from vitamin B12 and pharmaceutical derivatives thereof. Having referred specifically to pemetrexed disodium, the specification reverts to generality at para [0016], where it states: The current invention concerns the discovery that administration of a methylmalonic acid lowering agent such as vitamin B12 or a pharmaceutical derivative thereof, in combination with an antifolate drug such as pemetrexed disodium reduces the toxicity of the said antifolate drug. Para [0022] contains a definition: The terms antifolate and antifolate drug generally refer to a chemical compound which inhibits at least one key folate requiring enzyme of the thymidine or purine biosynthetic pathways . by competing with reduced folates for binding sites of these enzymes. The antifolate or antifolate drug for use in this invention is Pemetrexed Disodium (ALIMTA), as manufactured by Eli Lilly & Co. The invention is then illustrated by reference to a number of examples relating to animal and human tests, in which the only antifolate used is pemetrexed disodium. At para [0035] the specification states that animals were treated with pemetrexed disodium (ALIMTA) (100 mg/kg or 150 mg/kg) once daily by intraperitoneal injection alone or along with folic acid. The specification also indicates at para [0044] that, in a typical clinical evaluation using cancer patients, the antifolate is to be administered in four doses over a two week period by rapid intravenous injection. Turning to the claims, it is only necessary for present purposes to refer to claims 1 and 12, which are in these terms: 1. Use of pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof [which it then specifies]. 12. A product containing pemetrexed disodium, vitamin B12 or a pharmaceutical derivative thereof said pharmaceutical derivative [which it again specifies], and, optionally, a folic binding protein binding agent selected from [a specified group of chemicals including folic acid], as a combined preparation for the simultaneous, separate or sequential use in inhibiting tumour growth. The notional addressee of the Patent A patent is interpreted on the basis that it is addressed to a person or group of persons who is or are likely to have a practical interest in the claimed invention, ie through the eyes of a person or persons skilled in the article There is now no challenge to the Judges conclusion that the notional addressee of the Patent would be a group consisting of an oncologist and a chemist, a conclusion upheld by the Court of Appeal. The Judge found that the common general knowledge of an oncologist as at the relevant time, 2001/2002, included the following: i) Antifolates were used in cancer chemotherapy, but their use caused toxic side effects which it would be desirable to avoid or reduce. ii) Pemetrexed was the subject of clinical trials for use in chemotherapy, and it targeted multiple enzymes and was administered intravenously. iii) The only form of pemetrexed which had been shown to be effective and safe to any extent was pemetrexed disodium, which was manufactured by Lilly under the trade mark Alimta. iv) The characteristics of both vitamin B12 and folic acid were well understood, and it was well known that there were many different safe and effective forms of both available. The Judge also concluded that oncologists did not think about drugs such as pemetrexed in their ionic form, nor did they consider issues regarding the choice of counter ion or the effect, if any, of counter ions on the efficacy, safety or other properties of the drug. This was the province of the chemist and, because the properties of different salt forms and free acids were difficult to predict, a chemist would need to address any such issue by conducting experiments. The Judge made the following findings as to the common general knowledge of a chemist as at 2001/2002: i) Where a drug is or is based on an acid, different salts of the parent acid can be formed by reacting it with a complementary base or acid. The salt will often have different properties from the parent acid, and different salts will often have different properties from each other. So, salt screening is a routine but important exercise in determining the most suitable form of a drug. ii) The facts set out in paras 5 and 6 above. iii) Solid salts consist of the anions and cations regularly arranged in a fixed lattice structure. Because the cations and anions are present in fixed proportions and in fixed relative positions it is possible to speak meaningfully of the salt as being present in solid form. iv) When a salt is dissolved in water, the ions dissociate, forming free cations and anions in solution. Although the salt ceases to exist, it is common to refer to a salt solution or a salt in solution. v) The salt form can have a significant impact on the effectiveness of a drug in that it can modify many aspects of the drug. vi) When considering a drug for intravenous chemotherapy, the solubility of the salt form is crucial, as good solubility is an indicator of how likely it is that the drug will be absorbed in the gut. vii) But if a salt is too soluble, it cannot be made in solid form. viii) In general, there can be many dead ends and false leads when attempting to prepare salts of a parent molecule for the first time. ix) One cannot predict (a) whether one could make a particular salt form of a parent molecule, (b) what its properties would be once it was made or (c) whether it would affect the efficacy of the drug. The Judge made specific findings about a chemists state of knowledge about three types of salts and about free acids: i) Sodium was generally the preferred counter ion, and so would be first choice. Sodium salts generally were not toxic, and would be expected to be reasonably soluble, but they were not always easy to make. ii) Potassium salts were also generally soluble, but there were exceptions. There were concerns about the potential toxicity of such salts, which was particularly significant if large quantities of the drug were involved. iii) There were only a small handful of examples of tromethamine salts being used in 2001. It was known that tromethamine salts might well be too soluble, so one would not be able to make and harvest the solid form. In principle, the acidic parent molecule could be administered in the iv) form of the free acid. But it was often necessary to change from the free acid to a salt form for various reasons including solubility. Direct infringement In a nutshell, the rival contentions are these. Lilly argues that the Actavis products infringe the Patent because they are medicaments to be used as a treatment for cancer consisting of pemetrexed diacid, or a pemetrexed salt, with vitamin B12, which represents the essence of the teaching and claim of the Patent. By contrast, Actavis argues that their products do not infringe because the claims of the Patent are limited to a specific pemetrexed salt, namely pemetrexed disodium, and the Actavis products contain either pemetrexed diacid or different pemetrexed salts. The legislative context The domestic provision governing direct patent infringement is section 60(1) of the Patents Act 1977. However, section 130(7) declares that certain provisions of that Act, including section 60, are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention have in the territories to which [that Convention applies]. Accordingly, it is common ground that it is appropriate to consider the present case by reference to the EPC 2000. Article 69(1) EPC 2000 provides that [t]he extent of the protection conferred by a European patent shall be determined by the claims, although it is followed by another sentence, namely [n]evertheless, the description and drawings shall be used to interpret the claims. As a matter of ordinary language, it is quite clear that the only type of pemetrexed compound to which the Patents claims expressly extend is pemetrexed disodium. One only needs to read claim 1 and claim 12 to justify that: as a matter of ordinary language, pemetrexed disodium means that particular salt, and no other salt, let alone the free acid. If the first few words of each claim were not enough to make this good, the contrast between the specific reference to pemetrexed disodium and the wider reference to vitamin B12 or a pharmaceutical derivative thereof underlines the point. As Floyd LJ said, this conclusion is also supported by what is said in the specification eg in paras [0010] and [0022] quoted above. It is fair to say that para [0016] could be said to point the other way, but it is far too weak a basis for even arguing that the Patents claims extend, as a matter of language, to pemetrexed compounds other than pemetrexed sodium. In these circumstances, The Protocol on the Interpretation of article 69 as amended in 2000 (the Protocol) is crucial to Lillys contention that the scope of protection afforded by the Patent extends to the Actavis products. The Protocol provides: Article 1 General principles Article 69 should not be interpreted as meaning that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving an ambiguity found in the claims. Nor should it be taken to mean that the claims serve only as a guideline and that the actual protection conferred may extend to what, from a consideration of the description and drawings by a person skilled in the art, the patent proprietor has contemplated. On the contrary, it is to be interpreted as defining a position between these extremes which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. Article 2 Equivalents For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims. The original Protocol was agreed in 1973; the amendments made in 2000 effected very slight modifications to what is now article 1, and introduced article 2 for the first time. The drafting of the Protocol bears all the hallmarks of the product of a compromise agreement. This is unsurprising. There is an inevitable conflict between the desirability of giving an inventor an appropriate degree of protection in a particular case and the need for clarity of principle as to the extent of such protection generally; and, of course, there is an unavoidable tension between the appropriateness of giving an inventor a monopoly and the public interest in maximising competition. In addition, the EPC 2000 and the Protocol apply in many different states which have different traditions and approaches in relation to the law of patents. In that connection, as the Supreme Court observed in Schtz (UK) Ltd v Werit (UK) Ltd (Nos 1 to 3) [2013] Bus LR 565; [2013] RPC 16, para 40, complete consistency of approach between different national courts of the EPC states is not a feasible or realistic possibility at the moment, but nonetheless it is sensible for national courts at least to learn from each other and to seek to move towards, rather than away from, each others approaches. More specifically, two points appear to be clear from the Protocol. The first, which can be deduced from article 1, is that the scope of protection afforded to a patentee is not to be limited by the literal meaning of the claims. However, it is not at all clear how far a court is permitted to move away from the literal meaning. I do not consider that the last part of the first sentence of article 1 only enables the description (ie the specification) and the drawings to be taken into account when interpreting the claims, in cases where the claims would otherwise be ambiguous. Any doubt about this must be put to rest by the second and third sentences, which make it clear to my mind that that would be too narrow a reading. However, it is very hard to be confident how far they were intended to permit a court to go beyond the actual language of a claim when interpreting a claim. Secondly, it is apparent from article 2 that there is at least potentially a difference between interpreting a claim and the extent of the protection afforded by a claim, and, when considering the extent of such protection, equivalents must be taken into account, but no guidance is given as to precisely what constitutes an equivalent or how equivalents are to be taken into account. The question of how far one can go outside the wording of a claim to enable the patentee to enjoy protection against products or processes which are not within the ambit of the actual language, construed in accordance with ordinary principles of interpretation, has been considered in three significant UK cases and in a number of significant cases decided in the courts of other Convention states. The domestic case law The UK case of Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 was decided under the previous, purely domestic, legislation, the Patents Act 1949. At pp 242 to 243, Lord Diplock deprecated the notion that there were two types of infringement, textual infringement and infringement of the pith and marrow of the invention, and said that there was a single cause of action, which involved asking the question: He continued: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked. The question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked. Nor does it arise unless at the date of publication of the specification it would be obvious to the informed reader that this was so. Where it is not obvious, in the light of then existing knowledge, the reader is entitled to assume that the patentee thought at the time of the specification that he had good reason for limiting his monopoly so strictly and had intended to do so, even though subsequent work by him or others in the field of the invention might show the limitation to have been unnecessary. It is to be answered in the negative only when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect upon the way in which the invention worked. In that case, the patent was for a novel type of galvanised steel lintel, which the relevant claim described as including a rear support back plate extending vertically from a horizontal plate. The allegedly infringing article included a rear support member which was inclined between 6 degrees and 8 degrees from the vertical. Overruling the Court of Appeals decision that this meant that there was no infringement, Lord Diplock said at p 244, that it would have been: obvious to a builder familiar with ordinary building operations that the description of a lintel in the form of a weight bearing box girder of which the back plate was referred to as extending vertically from one of the two horizontal plates to join the other, could not have been intended to exclude lintels in which the back plate although not positioned at precisely 90 degree to both horizontal plates was close enough to 90 degree to make no material difference to the way the lintel worked when used in building operations. He then added this: No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention. On the contrary, to do so would render his monopoly for practical purposes worthless, since any imitator could avoid it and take all the benefit of the invention by the simple expedient of positioning the back plate a degree or two from the exact vertical. A few years later, Hoffmann J (as he then was) gave judgment in Improver Corpn v Remington Consumer Products Ltd [1990] FSR 181. The case concerned a patent for a depilator, known as the Epilady, which worked by trapping hairs in a rotating coiled helical spring, and the alleged infringement worked in very much the same way save that, instead of a spring, it used a slotted rubber rod. The case had already gone on an interlocutory issue to the Court of Appeal, where it was held that Lord Diplocks approach in Catnic [1982] RPC 183 was consistent with the 1977 Act, the EPC 1973 and the Protocol as it then was see [1989] RPC 69. At [1990] FSR 181, 189, Hoffmann J suggested the following approach, largely based on his reading of the reasoning in Catnic [1982] RPC 183, 242 to 243: If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or a contextual meaning of a descriptive word or phrase in the claim (a variant) was nevertheless within its language as properly interpreted, the court should ask itself the following three questions: (1) Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim. If no (2) Would this (ie that the variant had no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art? If no, the variant is outside the claim. If yes (3) Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? If yes, the variant is outside the claim. On the other hand, a negative answer to the last question would lead to the conclusion that the patentee was intending the word or phrase to have not a literal, but a figurative meaning (the figure being a form of synecdoche or metonymy) denoting a class of things which included the variant and the literal meaning, the latter being perhaps the most perfect, best known or striking example of the class. Hoffmann J then proceeded to apply those three questions to the facts of the case before him. He held that the first two questions were to be answered in the patentees favour and then turned to the third question. On that question, he held that the patentee failed for the reasons he gave at p 197, namely that [t]he rubber rod is not an approximation to a helical spring, that the spring [cannot] be regarded as an inessential or the change from metal spring to rubber rod as a minor variant, and that it could be appreciated that the patentee would wish to restrict his claim to helical springs as [i]t would be obvious that the rubber had problems of hysteresis which might be very difficult to overcome. Thereafter, for the next 15 years or so, this three stage approach was almost routinely applied by judges in UK patent infringement cases, where the three Improver questions were subsequently renamed the three Protocol questions see Wheatley v Drillsafe Ltd [2001] RPC 7, para 23. Lord Hoffmann (as he had by then become) addressed the issue again in his speech in Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 9, where one of the issues was whether a protein manufactured by gene activation infringed a patent relating to production of the same protein by recombinant DNA technology. At paras 27 to 35, Lord Hoffmann discussed the English rules of construction. At paras 30 to 32 he effectively equated Lord Diplocks approach to patents in Catnic [1982] RPC 183, 243 with purposive construction of commercial contracts. At para 34, he said that [t]he question is always what the person skilled in the art would have understood the patentee to be using the language of the claim to mean. And for this purpose, the language he has chosen is usually of critical importance. Lord Hoffmann then turned to the doctrine of equivalents, which he explained in para 37 had been developed in the United States courts and allow[ed] the patentee to extend his monopoly beyond his claims, so as to prevent the unscrupulous copyist [from making] unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the copied matter outside the claim, and hence outside the reach of law, quoting Jackson J in Graver Tank & Manufacturing Co Inc v Linde Air Products Co 339 US 605, 607 (1950). Lord Hoffmann expressed concern that once the monopoly had been allowed to escape from the terms of the claims, it is not easy to know where its limits should be drawn, and concluded that, rather than adhering to literalism and adopting the doctrine, the solution was to adopt a principle of construction which actually gave effect to what the person skilled in the art would have understood the patentee to be claiming, as Lord Diplock had done in Catnic [1982] RPC 183. He also said that article 69 EPC 2000 firmly shuts the door on any doctrine which extends protection outside the claims (see at paras 39 and 42 to 44). Having considered the issue in the three preceding paragraphs of his speech, at para 48 Lord Hoffmann stated that the approach adopted by Lord Diplock was precisely in accordance with the Protocol, as it was intended to give the patentee the full extent, but no more than the full extent, of the monopoly which a reasonable person skilled in the art, reading the claims in context, would think he was intending to claim. He concluded his discussion by quoting with approval the passages quoted above from Catnic [1983] RPC 183, 243 and Improver [1990] FSR 181, 189, and saying in para 52 that the principle of purposive construction as Lord Diplock and he had explained it, gave effect to the requirements of the Protocol and was the bedrock of patent construction, universally applicable, whereas the Protocol or Improver questions were simply guidelines for applying that principle to equivalents , more useful in some cases than in others. The approach in the courts of other EPC states In Germany, the Bundesgerichtshof has stated that a variant will infringe if (i) it solves the problem underlying the invention with modified but objectively equivalent means, (ii) this would be recognised by the person skilled in the relevant art, and (iii) that person focus[sing] on the essential meaning of the technical teaching protected in the patent would regard the variant as being equivalent to the solution offered by the invention see Case No X ZR 168/00, 2002 GRUR 519 (Schneidmesser I), para 30. (It is worth noting that in paras 36 to 38 of its judgment in that case, the Bundesgerichtshof expressly considered the approach which had been adopted in Catnic [1982] RPC 183 and Improver [1990] FSR 181.) Judge Meier Beck of the Bundesgerichtshof, writing extra judicially (The Scope of Patent Protection The Test for Determining Equivalence (2005) 36 IIC 339, 342 to 343) has suggested that the second step involves asking whether the person skilled in the art, using his specialist knowledge, [would be] able to find the modified means at the priority date as having the same effect, which he then says has the meaning that no inventive step is needed. That seems to be supported by what was said by the Bundesgerichtshof in Case No X ZR 156/97, 1999 GRUR 977, (Rumschild), paras II.2(c)(aa) and III.1. Further guidance as to the German approach to equivalents was very recently given by the Munich Oberlandesgericht, upholding the decision of the Landgericht, in Case No 6 U 3039/16 (Eli Lilly & Co v ratiopharm GmbH), when considering whether pemetrexed ditromethamine infringed the German equivalent of the Patent in this case. At para II.B.3(a), the Oberlandesgericht said that in order for an embodiment that deviates from the literal meaning of the claim to be within the scope of protection, generally three requirements must be met. The first was that the embodiment must solve the problem underlying the invention with means that are indeed modified, but are objectively equivalent. The second requirement was that the expertise of the person skilled in the art must enable him to discover the modified embodiment with its divergent means to be equivalent. Thirdly, the thought processes that the person skilled in the art has to perform in order to do so must be oriented on the meaning of the teaching protected in the claim. In para II.B.3(b)(aa), the Oberlandesgericht suggested that the decisive factor was what individual effects the features according to the patent provide in order to attain the object underlying the claims and whether these effects are achieved through other means by the [allegedly infringing] embodiment. The court added that the doctrine of equivalence would apply to an embodiment if it not only essentially achieves the entire effect of the invention, but specifically also achieves the effect that the feature, which has not been literally implemented, is supposed to achieve. French law, according to the expert witnesses in this case, applies the doctrine of equivalents where the variant is different in form but perform[s] the same function as the invention, but only where the function [claimed in the patent] is a new one. This seems to be supported by Azma and Galloux, Droit de la proprit industrielle, 7th ed (2012), which distinguishes at p 442 between two categories of patents. The first category is those which in general terms claim the means that provide for a particular function (moyens gnraux), or as Arnold J put it in para 160 of his judgment, claims which cover general means. The second category is patents which indicate the particular means which infer such function (moyens particuliers), or claims which are narrowly worded to cover specific means as Arnold J expressed it. The doctrine is only normally applicable to the first category of claims. Arnold J added in para 160 that the categorisation of a patent for this purpose may depend in part on what was known at the priority date see the decisions of the Cour de Cassation in Appeal S 09 15668 Institut Pasteur v Chiron Healthcare, 23 November 2010 and of the Paris Tribunal de Grande Instance in Case 09/01863 Mundipharma Laboratories GmbH v Sandoz SAS, 2 July 2010. As Arnold J also explained in para 159 of his judgment, there is no need for the claim to be unclear or for it to be widely worded for the doctrine of equivalents to be invoked in the French court. Thus, in the decision of the Cour de Cassation in Appeal No 06 17915 B2M Industries v Acome, 20 November 2007, the function of the particular integer that was said to be infringed pursuant to an equivalent was held to be novel, and therefore because the means that was said to be equivalent to that integer performed the same function and produced the result sought by the invention the means was equivalent to that integer, to quote from para 161 of Arnold Js judgment. In the Italian courts, the expert witnesses in this case agreed that a variant would be held to infringe if (i) it reproduced the inventive core of the patent and (ii) it was an obvious variation, although (iii) the fact that the variant included some modifications which were not obvious and/or the fact that the variant does not include some of the elements of the patent claim does not necessarily prevent the variant infringing see per Arnold J at para 171 of his judgment. This analysis is supported by the Corte di Cassazione decisions in Case No 257, Forel SpA v Lisec (13 January 2004), Case No 30234, Barilla GER Fratelli SpA v Pastifico Fazion SpA (30 December 2012) and Case No 622, Entsorga Italia Srl v Ecodeco Srl (11 January 2013). At any rate at local appellate level, Spanish courts appear to have effectively adopted the approach embodied in the three questions suggested by Hoffmann J in Improver [1990] FSR 181 see for instance Laboratorios Cinfa SA v Eli Lilly & Co Ltd (Olanzapine) Court of Appeal of Barcelona judgment no 8/2008, 17 January 2008. Following circulation of this judgment in draft, Actavis referred us to a decision of the Spanish Tribunal Supremo Lundbeck v Cinfa, no 223/2015, 29 April 2015. In the closely reasoned section ELEVEN of its judgment, the Tribunal Supremo (i) recorded the fact that none of the parties challenged the approach of the Court below which applied the three Improver questions (para 5), (ii) stated that the real issue in the case centred on the second question (para 6), (iii) cast some doubt on the applicability of the Improver questions in Spanish law (para 10), (iv) disapproved the notion that the test for obviousness in patentability is necessarily applicable to the second Improver question (paras 10 and 14), (v) disapproved the notion that, for the second Improver question to be answered yes, the skilled person must be absolutely certain that the variant would work successfully in resolving the technical problem faced by the patented invention (paras 11 and 12), (vi) preferred instead, a test of easy to see or comprehend and a degree of predictability (paras 11 and 18), which involves a high probability, rather than a reasonable expectation that the variant would work (paras 15 and 18), and (vii) concluded on this basis that the Court of Appeal was right to rule that the allegedly infringing products in that case did not infringe (paras 18 and 19). As for the Netherlands, helpful guidance may be found in a lecture given in 2016 by Judge Kalden, the head of the IP division in the Court of Appeal in The Hague Article 69 EPC the Scylla and Charybdis of the European Patent Convention Which route did the Dutch courts take? (2016 Symposium German Bundespatentgericht). She said that, although there have been subtle changes of emphasis in its decisions, the Supreme Court tends to focus on the inventive concept in order to prevent a too literal interpretation of the claims, which could do injustice to fair protection for the patentee (or lead to an unnecessary broad interpretation). She also explained that the doctrine of equivalents applies if (i) the variant is foreseeable at the priority date, (ii) the inventive concept is sufficiently broad to cover [the] variant, (iii) the variant makes use of and thus benefits from the inventive concept, and (iv) reasonable legal certainty [is not thereby] unduly compromised. She added that, despite the first condition: Variants that are not foreseeable at the priority date may well, due to later developments, become an obvious variant at a later date. This may happen in case of a pioneer invention, where at the priority date the full breadth of the possible applications could or has not been fully recognised and therefore was not sufficiently taken into account when drafting a claim. Another possibility is that a new technique becomes available after the patent was granted, which makes available an obvious variant. It would be harsh and contrary to fair protection for the patentee to deny him the right to attack those, again provided such variant falls within the inventive concept and reasonable legal certainty is taken into account. So infringement by equivalence is not limited to foreseeable variants only. It may be of some significance that the product which Hoffmann J concluded in Improver [1990] FSR 181 was non infringing was held by the German, Italian and Dutch courts to infringe. Of course, the fact that courts of two states reach different conclusions on the same issue does not of itself mean that there is a difference in the law of those states, let alone that one court is wrong and the other right: the evidence may be different, and there may be issues of judgment on which reasonable judges could differ. However, consideration of the judgments in those three other courts does suggest a difference of approach. Thus, in Germany, the Dsseldorf Oberlandesgericht based its conclusion on the propositions that a person skilled in the art will not interpret the coil spring as a spring, but as an elastic body with gaps . as it is obvious that the helical spring is not used as a spring per se, and that its only essential function, which was shared by the allegedly infringing products slitted rubber rod, was that it could enter between adjacent areas of the body (walls), and that the walls must approach it up to clamping it see Epilady Germany II (1993) 24 IIC 838. In Italy, the Milan District Court held that there was infringement because the slitted rubber rod had structural characteristics which enabled it to perform the same function in the same way as the coiled spring referred to in the patent in suit see Epilady Italy (1992) Giur Ann Dir Ind, Case No 2823. In the Netherlands, the Gerechtshof upheld the first instance decision that the allegedly infringing device embodies an application of the patented invention, on the grounds that the hair engaging component [ie the slitted rubber rod] of the device is a mechanical equivalent of the helical spring specified in the patent claims, and the rod was not state of the art in the field of depilatory devices Epilady Netherlands III (1993) 24 IIC 832, paras 9 and 11. The proper approach to infringement claims Any patent system must strike a balance between the two competing factors referred to at the end of article 1 of the Protocol, namely a fair protection for the patent proprietor [and] a reasonable degree of legal certainty for third parties. The balance cannot be struck on an ad hoc case by case basis without any guiding principles, as that would mean that there was no legal certainty. On the other hand, striking the balance by adopting a normal approach to interpretation would risk depriving patentees of a proper measure of protection; as explained in paras 37 to 39 and 52 above, that is clear from the approach of all the courts which considered the Epilady patent, where it could not seriously have been suggested that, as a matter of language, a slotted rubber rod falls within the expression helical metal spring, even if one was construing those words in the context of the claim in the patent in suit. But, if one departs from ordinary language, it is necessary to have some guidance or to draw some lines, as Lord Hoffmann implied in Kirin Amgen [2005] RPC 9, para 37. That is why he promulgated his three questions in Improver [1990] FSR 181, 189. By means of an extended version of the ordinary concept of construction or interpretation, Hoffmann J explained how our domestic law, as laid down in Catnic [1982] RPC 183, implements article 2 of the Protocol and thus, as I see it, how it gives effect to the doctrine of equivalents. That approach was (perhaps unsurprisingly) then adopted in Kirin Amgen [2005] RPC 9. In my view, notwithstanding what Lord Diplock said in Catnic [1982] RPC 183, 242, a problem of infringement is best approached by addressing two issues, each of which is to be considered through the eyes of the notional addressee of the patent in suit, ie the person skilled in the relevant article Those issues are: (i) does the variant infringe any of the claims as a matter of normal interpretation; and, if not, (ii) does the variant nonetheless infringe because it varies from the invention in a way or ways which is or are immaterial? If the answer to either issue is yes, there is an infringement; otherwise, there is not. Such an approach complies with article 2 of the Protocol, as issue (ii) squarely raises the principle of equivalents, but limits its ambit to those variants which contain immaterial variations from the invention. It is also apparent that the two issues comply with article 1 of the Protocol in that they involve balancing the competing interests of the patentee and of clarity, just as much as they seek to balance the encouragement of inventions and their disclosure with the need for a competitive market. In my view, issue (i) self evidently raises a question of interpretation, whereas issue (ii) raises a question which would normally have to be answered by reference to the facts and expert evidence. In Kirin Amgen [2005] RPC 9, Lord Hoffmann, following his approach in Improver [1990] FSR 181 (which itself had followed Lord Diplocks analysis in Catnic [1982] RPC 183) effectively conflated the two issues, and indicated that the conflated issue involved a question of interpretation. I have considerable difficulties with the notion that there is a single conflated, or compound, issue, and, even if that notion is correct, that that issue raises a question of interpretation. Indeed, in my view, to characterise the issue as a single question of interpretation is wrong in principle, and unsurprisingly, therefore, can lead to error. While normal principles of interpretation could, I think, accommodate the notion that vertically extended to an item which was not at precisely 90 to another item, I do not see how such principles could possibly lead to the conclusion that a slotted rubber rod was within the expression helical metal spring. As Hoffmann J said in Improver [1990] FSR 181, 197, the angle of the support member [in the allegedly infringing product in Catnic [1982] RPC 183] can be regarded as an approximation to the vertical, but [t]he rubber rod is not an approximation to a helical spring. The problem with treating the issue as one of normal interpretation is thus that that point alone may be thought to have been sufficient to put an end to the patentees infringement argument on facts such as those in Improver [1990] FSR 181, and there would seem to have been little purpose in going through the three questions in that case. I had wondered whether the question whether issue (ii) truly involves a question of interpretation raised what was merely an arid issue of categorisation. However, I have concluded that that nettle needs to be grasped, because, so long as the issue is treated as one of interpretation, it will lead to a risk of wrong results in patent infringement cases and it will also lead to a risk of confusing the law relating to the interpretation of documents. In my opinion, issue (ii) involves not merely identifying what the words of a claim would mean in their context to the notional addressee, but also considering the extent if any to which the scope of protection afforded by the claim should extend beyond that meaning. As Sir Hugh Laddie wrote in his instructive article Kirin Amgen The End of Equivalents in England? (2009) 40 IIC 3, para 68, [t]he Protocol is not concerned with the rules of construction of claims but with determining the scope of protection. I might add that the notion of a product or process which infringes despite an immaterial variation from the invention as claimed is by no means new to domestic patent law. That point is convincingly demonstrated by Sir Hugh in his article at paras 33 to 39. Thus, in Walton v Potter & Horsfall (1843) 1 WPC 585, Tindal CJ told the jury that they had to decide whether the defendants product was perfectly distinct from the patented product, or whether it varied only in certain circumstances, which are not material to the principle and substance of the invention. And Lord Cairns LC in Clark v Adie (1877) 2 App Cas 315, 320, referred to the alleged infringer having really taken and adopted the substance of the instrument patented, and having taken in substance the pith and marrow of the invention. The patents in these cases included relatively primitive forms of claim, but that does not undermine the fact that our domestic law has long recognised that an immaterial variation does not get an infringer off the hook. Particularly in the light of what he said in Catnic [1983] RPC 183, 242, it is worth mentioning that Lord Diplock himself in Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153, 200 rejected a submission that [t]he increasing particularity with which claims are drafted has made the doctrine [of pith and marrow] obsolete, and said that the doctrine still remains a part of patent law. Turning to the two issues identified in para 54 above, issue (i), as already mentioned, involves solving a problem of interpretation, which is familiar to all lawyers concerned with construing documents. While the answer in a particular case is by no means always easy to work out, the applicable principles are tolerably clear, and were recently affirmed by Lord Hodge in Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095, paras 8 to 15. In the present case, there is no doubt that, according to normal principles of interpreting documents, the Actavis products do not infringe the Patent, as in no sensible way can pemetrexed free acid, pemetrexed ditromethamine, or pemetrexed dipotassium mean, ie be said to fall within the expression, pemetrexed disodium in claim 1 of the Patent, any more than a slotted rubber rod can be said to be within the expression a helical metal spring in the claim in the Improver patent. According to normal principles of interpreting documents, then, this would be the end of the matter. However, the second issue poses more difficulties of principle: what is it that makes a variation immaterial? In that connection, I consider that Hoffmann Js three questions in Improver [1990] FSR 181 provide helpful assistance, a view supported by the fact explained in paras 44 to 52 above that similar but not identical tests have been adopted in other EPC jurisdictions. However, each of the three questions requires some exegesis, and, particularly the second question, some reformulation. The first Improver question, which asks whether the variant has a material effect on the way in which the invention works, seems generally satisfactory. It is a question which was framed in the context of a mechanical patent, and is not wholly aptly expressed for every type of case. However, in practice, the question as framed by Hoffmann J, with its emphasis on how the invention works, should correctly involve the court focussing on the the problem underlying the invention, the inventive core, or the inventive concept as it has been variously termed in other jurisdictions. In effect, the question is whether the variant achieves the same result in substantially the same way as the invention. If the answer to that question is no, then it would plainly be inappropriate to conclude that it could infringe. If, by contrast, the answer is yes, then it provides a sound initial basis for concluding that the variant may infringe, but the answer should not be the end of the matter. The second Improver question is more problematic. In my view, it imposes too high a burden on the patentee to ask whether it would have been obvious to the notional addressee that the variant would have no material effect on the way in which the invention works, given that it requires the addressee to figure out for himself whether the variant would work. The facts of the present case serve to make that proposition good. As Floyd LJ explained in para 65 of his judgment below, because a chemist would not be able to predict the effect of [a] substitution [for the sodium counter ion] without testing at least the solubility of the [active ingredient in the Actavis products], it followed that predicting in advance whether any particular counter ion would work was not possible, and therefore that the second Improver test could not be answered yes. However, as mentioned in para 25(i) above, salt screening is a routine exercise in determining suitability, and as Floyd LJ said, the chemist would be reasonably confident that he would come up with a substitute for the sodium counter ion. In those circumstances, given that the inventive concept of the patent is the manufacture of a medicament which enables the pemetrexed anion to be administered with vitamin B12, it appears to me that application of the second Improver question fails to accord a fair protection for the patent proprietor as required by article 1 of the Protocol. In my opinion, the second question is better expressed as asking whether, on being told what the variant does, the notional addressee would consider it obvious that it achieved substantially the same result in substantially the same way as the invention. In other words, it seems to me that the second Improver question should be asked on the assumption that the notional addressee knows that the variant works to the extent that it actually does work. That, I think, would be a fair basis on which to proceed in terms of balancing the factors identified in article 1 of the Protocol, and it is, I think, consistent with the approach of the German, Italian and Dutch courts. It is also consistent with the fact that the notional addressee is told (in the patent itself) what the invention does. This reformulated second question should also apply to variants which rely on, or are based on, developments which have occurred since the priority date, even though the notional addressee is treated as considering the second question as at the priority date. Such an approach is supported by the desirability of both consistency of approach and pragmatic justice. It seems right in principle to have the same question, including the same assumption (ie that the variant works) for all cases. As to pragmatism, the point is touched on by Judge Kalden in the passage quoted at the end of para 51 above: while the notional addressee may answer the reformulated second question affirmatively even where the variant was unforeseeable at the priority date, he is less likely to do so than in relation to a variant which was unforeseeable as at that date. The second test applied by the German courts, as I understand it, at least sometimes appears to require the variation not to be inventive, but I am not sure that that is an appropriate requirement, although it is unnecessary to decide that point on this appeal. If the variation represents an inventive step, while it may render it less likely that the patentee will succeed on the second reformulated question, I find it hard to see why that alone should prevent the resultant variant from infringing the original invention. It may entitle the infringer to a new patent, in the same way as the invention of a novel use for a patented invention can itself be patented, but like such a novel use I see no reason why the variant should not infringe the original patent. Having said that, it should be added that the German version of the second test will, I suspect, usually produce the same result as the reformulated second question. The third Improver question as expressed by Hoffmann J is whether the notional addressee would have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention. That is in my view an acceptable test, provided that it is properly applied. In that connection, I would make four points. First, although the language of the claim is important, consideration of the third question certainly does not exclude the specification of the patent and all the knowledge and expertise which the notional addressee is assumed to have. Secondly, the fact that the language of the claim does not on any sensible reading cover the variant is certainly not enough to justify holding that the patentee does not satisfy the third question. Hence, the fact that the rubber rod in Improver [1990] FSR 181 could not possibly be said to be an approximation to a helical spring (to quote from p 197) was not the end of the infringement issue even in Hoffmann Js view: indeed, as I have already pointed out, it was because the rubber rod could not possibly be said to be a helical spring that the allegedly infringing product was a variant and the patentee needed to invoke the three Improver questions. Thirdly, when considering the third question, it is appropriate to ask whether the component at issue is an essential part of the invention, but that is not the same thing as asking if it is an essential part of the overall product or process of which the inventive concept is part. So, in Improver [1990] FSR 181, 197, Hoffmann J may have been (and I mean may have been) wrong to reject the notion that the spring could be regarded as an inessential: while it was undoubtedly essential to the functioning of the Epilady, the correct question was whether the spring would have been regarded by the addressee as essential to the inventive concept, or inventive core, of the patent in suit. Fourthly, when one is considering a variant which would have been obvious at the date of infringement rather than at the priority date, it is, as explained in para 63 above, necessary to imbue the notional addressee with rather more information than he might have had at the priority date. In these circumstances, given the weight that has been given by courts in this jurisdiction (and indeed in some other jurisdictions) to the three Improver questions, I think it must be right for this court to express in our own words our reformulated version of those questions. In doing so, it is right to emphasise, as Lord Hoffmann did in Kirin Amgen [2005] RPC 9, para 52, that these questions are guidelines, not strict rules (as indeed the Oberlandesgericht indicated in Case No 6 U 3039/16, when saying that it was generally true that three requirements must be met). While the language of some or all of the questions may sometimes have to be adapted to apply more aptly to the specific facts of a particular case, the three reformulated questions are as follows: i) Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, ie the inventive concept revealed by the patent? ii) Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention? iii) Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention? In order to establish infringement in a case where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was yes and that the answer to the third question was no. Provisional conclusion on direct infringement in the UK Given that the Actavis products do not infringe on the basis of a normal interpretation of claim 1 of the Patent, it is necessary to consider whether they represent an immaterial variation on that claim. I propose to address that issue initially disregarding the prosecution history, and having reached a provisional conclusion, I will then address that history and its effect on the provisional conclusion. In my view, application in the present case of the three questions just identified results in the conclusion that the Actavis products infringe. So far as the first question is concerned, there can be no doubt but that those products work in the same way as the invention: they all ultimately involve a medicament containing the pemetrexed anion and vitamin B12. Thus, they achieve substantially the same result in substantially the same way as the invention. Indeed, as in the Court of Appeal, Actavis realistically accept that the first question is to be answered yes. As to the second question, it seems to me clear that the notional addressee of the Patent would appreciate (and would have appreciated as at the priority date) that each of the Actavis products would work in precisely the same way as pemetrexed disodium when included in a medicament with vitamin B12. When it comes to different versions of pemetrexed medicaments, it is clear that the use of a free acid, and of ditromethamine and dipotassium salts was in each case well established as at the priority date see para 26(ii) to (iv) above. Furthermore, the notional addressee of the Patent would regard investigating whether pemetrexed free acid, pemetrexed ditromethamine or pemetrexed dipotassium worked as a purely routine exercise see para 25(i) above. The reason why I differ from the Court of Appeal and Arnold J on this second question is that, in accordance with the second question as formulated in Improver [1990] FSR 181, 189, they considered that the notional addressee should not be treated as knowing that the Actavis products did in fact work at all, whereas, as explained above, that seems to me to involve too strict a test. Turning to the third question, the Court of Appeal considered that the notional addressee would understand that the patent was clearly limited to the disodium salt, and did not extend to the diacid, or the dipotassium or ditromethamine salts. They based this conclusion on the fact that the specification of the Patent contains a number of passages (eg in Para [0022] of the specification, quoted in para 19 above) which refer to anti folates and the like and other passages which refer to pemetrexed disodium, which is a highly specific chemical compound, and the fact that the claim is limited to pemetrexed disodium would therefore lead the notional addressee to conclude that the claim is indeed intended to be so limited (see paras 71 and 72 of Floyd LJs judgment). In my opinion, the Court of Appeal adopted an approach which places too much weight on the words of the claim and not enough weight on article 2 of the Protocol (and it is only right to add that, in doing so, they were, like Arnold J at first instance, following Lord Hoffmanns guidance in Kirin Amgen [2005] RPC 9). Thus, when considering the third test, Floyd LJ made the point at para 72(ii) of his judgment that there is no obvious leeway as a matter of language for giving it a broad as opposed to a narrow construction. That seems to me to demonstrate the risk of treating the issue raised by the third question as being one of normal interpretation. (Another way of looking at the point is, in the language of Sir Hugh Laddie, that it involves wrongly conflating the issue of interpretation with the issue of scope of protection.) As already explained, if it was a decisive point it would make a nonsense of asking the three questions: if one cannot depart from the language of the claim when considering those questions, what is the point of the questions in the first place? More specifically, I do not agree with the Court of Appeals view that, because the specification referred to anti folates and anti folate drugs, the fact that the claims were limited to pemetrexed disodium means that the drafter of the Patent would have been understood to intend that the other pemetrexed compounds would not infringe. As Mr Mitcheson QC contended in his well argued case, the point is neutral because there is no reference to pemetrexed salts as a class in the specification, and the contrast therefore does not help on the question whether pemetrexed salts other than pemetrexed disodium were intended to be excluded. Further, contrary to the Court of Appeals reasoning, I would have thought that if the specification had not referred to anti folates but had only referred to pemetrexed disodium, that would have been a more powerful indication that the patentee was intending to limit himself to pemetrexed disodium. The very fact that the specification teaches that there are other anti folate drugs which have a similar effect to pemetrexed disodium (coupled with the fact that it was generally known that cations other than sodium could be successfully used with anti folates) highlights a point similar to that made by Lord Diplock in Catnic [1982] RPC 183, 244, namely No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention as to limit the scope of protection afforded by the Patent to pemetrexed disodium a telling but not always conclusive point. Additionally, there is no teaching in the specification which relates to the relevance or importance of the sodium cation. Looking at matters more broadly, the addressee of the Patent would, as I see it, understand that the reason why the claims were limited to the disodium salt was because that was the only pemetrexed salt on which the experiments described in the specification had been carried out. However, it does not follow that the patentee did not intend any other pemetrexed salts to infringe: the suggestion confuses the disclosure of the specification of a patent with the scope of protection afforded by its claims. Particularly given the facts set out in para 25 above, it seems to me very unlikely that the notional addressee would have concluded that the patentee could have intended to exclude any pemetrexed salts other than pemetrexed disodium, or indeed pemetrexed free acid, from the scope of protection. Accordingly, I would conclude that, subject to considering the prosecution history, the Actavis products infringe claim 1 of the Patent. The effect of the prosecution history The application for the patent was filed at the EPO in June 2001, and it contained claims directed to a method of treatment, claims in Swiss form, and purpose related product claims. In January 2003, Dr Burnside, Lillys patent attorney, filed a revised set of claims which omitted the method of treatment claims. Claims 1 and 2 were as follows: 1. Use of a methylmalonic acid lowering agent in the preparation of a medicament useful in lowering the mammalian toxicity associated with an antifolate, and the medicament is administered in combination with an antifolate. 2. Use of a methylmalonic acid lowering agent in the preparation of a medicament useful in lowering the mammalian toxicity associated with an antifolate, and the medicament is administered in combination with an antifolate and a FBP binding agent. Claim 10 was a dependent claim wherein the antifolate is ALIMTA. As Floyd LJ said, these claims are in the reverse order from the claims ultimately granted (as they start with the use of the methylmalonic lowering agent rather than pemetrexed disodium), but nothing hangs on that. The essential point is that these claims were entirely general as to the identity of the antifolate. In March 2004, the EPO examiner wrote raising various objections including some under articles 83 and 84 EPC 2000 (disclosure and clarity). The clarity and lack of disclosure objections were that the claims related to too many possible combinations of compounds by using general expressions such as antifolate, methylmalonic acid lowering agent and FBP binding agent. Moreover, the examiner was concerned that the claims covered all compounds having these characteristics or properties, whereas the application provided support and disclosure for only a very limited number of such compounds. Dr Burnside replied in a letter of December 2004, under cover of which he filed new claims 1 and 2, this time starting with the use of the antifolate, now limited to pemetrexed in these terms: 1. Use of pemetrexed in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof. 2. Use according to claim 1 wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof and a folic binding protein binding agent [which was then defined]. In support of these new claims, Dr Burnside said that, in order to expedite the application proceeding to grant, Lilly had elected to amend the claims so as to reflect more closely the specific examples provided. However, he added, the amendments were made without prejudice to Lillys right to obtain protection for other patentable subject matter in one or more divisional applications. Notwithstanding these amendments, in May 2005 the EPO examiner formally objected to the admissibility of the new claims. He contended that the amendments introduced subject matter beyond the content of the originally filed documents, contrary to article 123(2) EPC 2000. Thus, he said, the inclusion in claim 1 of use of pemetrexed . and similar provisions in other claims did not find any basis in the application documents as filed. According to the examiner, pemetrexed was a distinct compound from pemetrexed disodium. (This is supported by the Chemical Abstracts Service Registry, where the pemetrexed is recorded as being the free diacid.) The patent does contain one mention of the term pemetrexed at para [0004] of the specification, followed by a Lilly reference number which shows it to be pemetrexed disodium. It was therefore, at best, uncertain as to what the term pemetrexed on its own was intended to refer. Dr Burnside replied in March 2006 by a letter under cover of which he filed new claims, which this time were limited to pemetrexed disodium, and are now embodied in the claims of the Patent as set out in para 21 above. Dr Burnside said: The Claims have been amended to refer to the preferred embodiment, the use of pemetrexed disodium (ALIMTA) as manufactured by Eli Lilly and Company, as the antifolate drug. The Claims have also been amended to incorporate the list of vitamin B12 derivatives set out on p 7 lines 6 7 of the application as filed. The EPO examiner accepted the claims in this form, and the application proceeded to grant. Actavis contends that the prosecution history, as summarised in paras 76 to 80 above, makes it clear that the claims of the Patent should be interpreted as being limited to pemetrexed disodium not only as a matter of language, but in the sense that the use of any other pemetrexed compound, including other pemetrexed salts and the free acid, could not infringe. This contention gives rise to two issues. The first is one of relatively general application, namely whether and if so when it is permissible to have recourse to the prosecution history of a patent when considering whether a variant infringes that patent. The second issue is whether the prosecution history of the Patent in this case alters the provisional conclusion reached in para 75 above. So far as the first issue is concerned, Lord Hoffmann said in Kirin Amgen [2005] RPC 9, para 35: The courts of the United Kingdom, the Netherlands and Germany certainly discourage, if they do not actually prohibit, use of the patent office file in aid of construction. There are good reasons: the meaning of the patent should not change according to whether or not the person skilled in the art has access to the file and in any case life is too short for the limited assistance which it can provide. It is however frequently impossible to know without access, not merely to the file but to the private thoughts of the patentee and his advisors as well, what the reason was for some apparently inexplicable limitation in the extent of the monopoly claimed. In the absence of good reason to the contrary, it would be wrong to depart from what was said by the House of Lords. It is said by Actavis that there is good reason to depart from what Lord Hoffmann said on the ground that he was wrong in his description of the German and Dutch approaches to this issue, and that anyway he failed to have regard to the jurisprudence of other European courts. In my view, Lord Hoffmann was right about the approach of the German and Dutch courts to this issue. Thus, the Bundesgerichtshof, in a decision involving the German equivalent of the instant Patent, Case No X ZR 29/15 (Eli Lilly v Actavis Group PTC), paras 39 40, stated that it is permissible to use statements made by the applicant [and the examiner] during the grant procedure as an indication of how the person skilled in the art understands the subject matter of the patent but such indications cannot be readily used as the sole basis for construction. And in Ciba Geigy AG v Ot Optics BV (1995) 28 IIC 748, the Dutch Supreme Court said that a court will only be justified in using clarifying information from the public part of the granting file, when it holds that even after the average person skilled in the art has considered the description and the drawings, it is still open to question how the contents of the claims must be interpreted. It is argued by Actavis that this limited approach to the circumstances in which reference can be made to the prosecution file may be more restrictive than the approach adopted in France, Italy, and Spain, as analysed by Arnold J. Thus, he said in para 162 of his judgment, that the Cour dAppel observed in Case No 08/00882, Hewlett Packard GmbH v Agilent Technologies Deutschland GmbH (27 January 2010) that the patentee who amended its clauses to give them a limited scope may not, without putting the safety of third parties at risk, claim that the amendments were not necessary, nor that the limited claims have the same scope as the broader claims. However, the court in that case had already decided on the natural meaning of the patent, and the contents of the file were merely being invoked to confirm the decision. The position in Italy, according to Arnold J in para 174 of his judgment, is that there is no doctrine of prosecution history estoppel and there is no clear rule as to the relevance, if any, of the prosecution history as an aid to the interpretation of claims. In Spain there is a doctrine of actos propios, which as Arnold J explained in para 184, is the doctrine of ones own acts, but it only justifies relying on the prosecution file in relation to statements which are unequivocal, clear, precise, conclusive, undoubted and [do] not reflect any kind of ambiguity. While the French courts appear to be more ready to refer to the prosecution file on issues of interpretation or scope than the German or Dutch courts, it is unclear how much, if any, difference there is in outcome. The position in relation to the Italian courts is more unclear, and it may well be that the effect of the approach of the Spanish courts is the same in outcome as that of the German and Dutch courts. In those circumstances, particularly as it may be inevitable that there is a degree of difference in the approach of different national courts on such an issue, there is nothing in the French, Italian, or Spanish jurisprudence which causes me to depart from the conclusion expressed by Lord Hoffmann. In my judgment, it is appropriate for the UK courts to adopt a sceptical, but not absolutist, attitude to a suggestion that the contents of the prosecution file of a patent should be referred to when considering a question of interpretation or infringement, along substantially the same lines as the German and Dutch courts. It is tempting to exclude the file on the basis that anyone concerned about, or affected by, a patent should be entitled to rely on its contents without searching other records such as the prosecution file, as a matter of both principle and practicality. However, given that the contents of the file are publicly available (by virtue of article 128 EPC 2000) and (at least according to what we were told) are unlikely to be extensive, there will be occasions when justice may fairly be said to require reference to be made to the contents of the file. However, not least in the light of the wording of article 69 EPC 2000, which is discussed above, the circumstances in which a court can rely on the prosecution history to determine the extent of protection or scope of a patent must be limited. While it would be arrogant to exclude the existence of any other circumstances, my current view is that reference to the file would only be appropriate where (i) the point at issue is truly unclear if one confines oneself to the specification and claims of the patent, and the contents of the file unambiguously resolve the point, or (ii) it would be contrary to the public interest for the contents of the file to be ignored. The first type of circumstance is, I hope, self explanatory; the second would be exemplified by a case where the patentee had made it clear to the EPO that he was not seeking to contend that his patent, if granted, would extend its scope to the sort of variant which he now claims infringes. Turning to the second issue, I do not consider that the contents of the prosecution file in this case justify departing from the provisional conclusion expressed in para 75 above. It seems to me clear that the reason why the examiner considered that the claims in the patent should be limited to pemetrexed disodium was because the teaching in the specification did not expressly extend to any other anti folates. It is unnecessary to decide the issue, but, at least as at present advised, I am inclined to think that the examiner was wrong in taking that view. Indeed, in the course of his well presented argument for Actavis, Mr Alexander QC seemed to accept that Lilly could have expressed its claims more widely than it did (albeit that this was not a point which was carefully explored). However, even if the examiner was right or at least justified in taking the stance that he did, I do not consider that that consideration can have any bearing on the question whether any pemetrexed salts other than pemetrexed disodium should be within the scope of the patent pursuant to the doctrine of equivalents. The whole point of the doctrine is that it entitles a patentee to contend that the scope of protection afforded by the patent extends beyond the ambit of its claims as construed according to normal principles of interpretation. This point was well made by the Dutch Court of Appeals in Boston Scientific Ireland Ltd v Cordis Europa NV 01/639 (unreported) 3 July 2003, when they held that the contents of the prosecution file were of no assistance, as they related to a concern which the examiner had expressed about added matter which went to disclosure, whereas that had no relevance to the point at issue which was the scope of the claim which properly included equivalents. I draw comfort from the fact that neither party was able to refer to a case where a French or Spanish Court had relied upon the patentees response to a disclosure or added matter objection by the examining officer as being relevant to the scope of claim. It is true that the Madrid Appeal Court in Inmobiliaria Masife SL v Vale y Tino SA (decision 268/2013) (unreported) 27 September 2013 held that a patentee was bound by an exclusion which he had agreed during prosecution but that was to overcome an objection of the examiner based on the prior art, a very different point. I draw even greater comfort from the fact that the Bundesgerichtshof reached the same conclusion on this very issue in relation to the German equivalent of the Patent in this case in Case No X ZR 29/15 (Eli Lilly v Actavis Group PTC), para 72. Direct infringement in France, Italy and Spain Having concluded that the Actavis products directly infringe the Patent as a matter of UK law, it is necessary to consider whether the same result obtains under French, Italian and Spanish law. In my judgment, direct infringement is established in those jurisdictions as well. Turning first to French law, it appears to me that the answer to the question of direct infringement ultimately turns on whether the Patent in this case falls into the moyens gnraux category or the moyens particuliers category, because, as discussed in para 46 above, the doctrine of equivalents is apparently only applicable to patent claims in the former category. With some diffidence, I have reached a different conclusion from Arnold J on this issue and have concluded that the Patent in this case falls into the former category. It is of course true that an appellate court should be very slow indeed to differ from the trial judge on a question of fact. However, the notion that the resolution of a dispute as to foreign law involves a factual finding rather than a legal conclusion is somewhat artificial, and in any event, the Judge did not hear any oral evidence from the expert foreign law witnesses. We are therefore in as good a position as he was to analyse the effect of the evidence as to foreign law. The Judge considered that the Patent in this case represents a moyen particulier, because pemetrexed disodium was the relevant means and the Patent did not reveal it having a novel function: it merely revealed a new and better way in which its function could be achieved. To my mind the better analysis is that the Patent discloses that pemetrexed disodium could be used for a function for which it could not previously have been satisfactorily or safely used in practice; specifically, that pemetrexed disodium could be used with vitamin B12 to achieve an end which could not have been achieved by either chemical on its own, pemetrexed disodium because of its harmful side effects and vitamin B12 because it would not have worked. The essential point, as I see it, is that the Patent revealed for the first time the existence of a combined means which functioned in a certain way, namely to alleviate certain cancers without serious side effects. It would be different if the overall function of the combination of the two chemicals had not been new. Support for this conclusion appears in the book referred to in para 46 above, Droit de la proprit industrielle, whose two authors were the expert witnesses on French law in this case. At para 719, p 443, they wrote when the claim is over a combination of means for which global function is novel, any combination of means with a different structure but achieving the same global function is a priori equivalent and thus infringing. That passage was effectively applied by the Cour de Cassation in Appeal P08 14741, Diffusion Equipements Loisirs v Helge, 15 September 2009. As to Italian law, Arnold J said at paras 178 and 179 of his judgment that he had concluded that the Actavis products did not infringe the Italian designation of the Patent on two grounds. The first (which he only accepted with some hesitation) was because on its face the patent clearly demonstrated a conscious intention of the patentee to limit the claims to pemetrexed disodium. The second ground was because if there was any doubt about that, it was amply confirmed by the prosecution history. It is clear that (as one would expect) the Italian courts accept the doctrine of equivalents, and accordingly for the reasons given in paras 70 to 74 above, I would reject the first ground; and, for the reasons given in paras 91 to 93 above, I would reject the second ground also. So far as Spanish law is concerned, it is common ground that the Spanish courts have followed the United Kingdom approach, which leads to the difficult question whether one should assume that they would follow this decision in modifying the Improver questions and in particular the second question. I incline to the view that judicial comity would tend to suggest that the Spanish courts would follow this court in modifying the Improver questions, not least because this appears to render the UK courts and therefore the Spanish courts more consistent with the German and Dutch courts, and no more inconsistent with the French and Italian courts. In a written note dated 10 July 2017, Actavis applied for what would amount to a reconsideration of the conclusion expressed in para 97 above, on the ground that the reasoning of the Spanish Tribunal Supremo in the Lundbeck decision, discussed in para 50 above, should lead to the opposite conclusion, namely that marketing Actaviss products in Spain would not infringe the Patent. In my view, it is too late for Actavis to raise such an argument. Lilly had sought to rely on the Lundbeck decision in its written case in this appeal, and Actavis had objected on the ground that the decision had been given after the Court of Appeal decision in these proceedings. It seems to me that in these circumstances it would be wrong to permit Actavis to raise the Lundbeck decision to support their case, especially as they are seeking to do so after knowing the result of this appeal and the reasons for that result. I am unimpressed by Actaviss argument that their application is nonetheless justified because the reasoning in para 97 above was not raised on this appeal. Actaviss written case stated that Spanish law has been directly modelled on Catnic and Improver, and in paras 182 and 187 of his judgment on this case Arnold J effectively treated the Improver questions as part of Spanish law. It appears to me that the conclusion that, if the UK Supreme Court modifies the Improver questions, the Spanish courts would adopt any such modification, was therefore within the scope of the argument raised in this Court. Furthermore, I consider that it would be wrong for Actavis to be permitted to raise a new ground in support of their contention that their products would not infringe in Spain, after publication of our decision, which was done with their consent and at their instigation following receipt of our draft judgment which concluded that their products would infringe in Spain. It is not as if Actavis had come across new information since they had agreed to that publication. It is true that, as explained in para 2 above, Actaviss solicitors wrote to the Court very shortly after they received the draft judgment, but thereafter they had nearly a full 24 hours within which they could have withdrawn their agreement to publication of our decision. In any event, there is obvious force in the simple point that, having agreed to publication of the decision in advance of the handing down of the judgment, they have to take the consequences. I do not suggest that, in every case where the decision is published with the consent of the parties after they have seen the draft judgment, it would be impossible for either party to invite the court to change the decision, or any aspect of it. However, it seems to me that, in the absence of a good reason, the interests of finality and certainty should prevail, and I do not consider that Actavis have come up with a good enough reason in this case. It is right to add that I am by no means convinced that, even if we had permitted Actavis to re argue their case in relation to Spain, on the basis of the Lundbeck decision, I would have reached a different conclusion from that expressed in para 97 above. Quite what constitutes a degree of predictability or a high probability when it comes to assessing whether the notional addressee would expect the variant to work must be fact sensitive. Further, if, as seems likely but not, I accept, certain, the German, Dutch, French and Italian courts would all hold that Actaviss products infringed, there would have been much to be said for the view, which I have already expressed, that the Spanish courts would follow suit. Accordingly, I would hold that the French, Italian and Spanish designations of the Patent are also directly infringed by the Actavis products. Indirect infringement In these circumstances, Actaviss cross appeal, which seeks to challenge the Court of Appeals conclusion that its products indirectly infringed does not, I think, arise in the sense that it has no practical effect on the parties (other, perhaps, than on the issue of costs). However, as the point was fully argued, gave rise to a disagreement between the Court of Appeal and the trial judge, and can be dealt with shortly, it is appropriate to consider it. Indirect infringement is provided for in section 60(2) of the 1977 Act, and it states that a person infringes a patent if, without the patentees consent, he supplies or offers to supply in the United Kingdom to someone not authorised by the patentee with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect. The reason why Lilly contends that, even if they did not directly infringe, the Actavis products would indirectly infringe is because, when they are supplied to a doctor or a pharmacist, they are, as Actavis would know, dissolved in a saline solution in order to enable them to be administered to patients. Saline is a solution of common salt, ie sodium chloride, in water, and when common salt is dissolved in water, it separates into sodium cations and chloride anions. Accordingly, when one of Actaviss products, say that containing pemetrexed dipotassium, is dissolved in saline, the solution contains pemetrexed anions and potassium cations plus sodium cations and chloride anions. In those circumstances, argues Lilly, even if pemetrexed dipotassium would not of itself infringe if it was administered with vitamin B12, at least provided that the ratio of sodium ions to pemetrexed ions was at least 2:1, there will be infringement when it is administered in saline solution, because the solution which is administered will contain pemetrexed disodium. The Court of Appeal, disagreeing with the Judge, acceded to Lillys argument on this point. Actavis argue that a solution consisting of, or including, pemetrexed ions and sodium ions is not within the expression pemetrexed disodium in the Patent, because it is limited to the solid, or crystalline, chemical. I agree with Floyd LJ in rejecting that argument. There is no reason to think that the patentee intended to limit the expression in that way; quite the contrary. It is clear that solubility was an important issue, and indeed that was one of the two main reasons on which Actavis rested their contention that their products did not infringe, as discussed in paras 24 to 25, 59, and 66 above. Further, and even more in point, as Floyd LJ said, in the passages quoted in para 19 above the specification made it clear that references to pemetrexed disodium extended to that chemical in solution. Actavis also argue that there is an inconsistency between the Court of Appeal holding, when considering direct infringement, that the notional addressee could not be assumed to know that pemetrexed dipotassium would dissolve, and holding, when considering indirect infringement, that pemetrexed dipotassium did in fact dissolve. Even if I had not concluded that the notional addressee should be treated as knowing that pemetrexed dipotassium could dissolve, I would have rejected that argument which seems to me to involve a non sequitur. By the time that they were ready to market their products, Actavis knew perfectly well that they were all soluble. Actavis further argue that a solution of pemetrexed dipotassium dissolved in saline does not in any event contain pemetrexed disodium within the meaning of that term in the Patent; it is simply pemetrexed dipotassium dissolved in saline. In my view that is a bad point. If dissolving pemetrexed disodium in an aqueous solution of potassium chloride can be said to result in a solution containing pemetrexed disodium (as Actaviss argument impliedly accepts), then it must follow as a matter of elementary chemical logic that dissolving pemetrexed dipotassium in saline also result in a solution which contains pemetrexed disodium: the two solutions are chemically identical, as each would consist of potassium and sodium cations and chloride and pemetrexed anions in water. Actavis additionally argue that it is irrational to hold that there could be indirect infringement because it would all depend on the solvent in which the Actavis product is dissolved, and, even if that solvent was saline, it would depend on the proportion of sodium ions and pemetrexed ions in the solution which would vary by reference to the weight of the patient. The fact that infringement may depend on the nature of solvent and the relative amounts of ions in the solution does not seem to me to be irrational. It is simply a result of the extent of the scope of protection afforded by the patent given that (as determined by the Court of Appeal) its claims are limited to pemetrexed disodium, which, when dissolved in water produces two sodium cations to every one pemetrexed anion. Finally, Actavis argue that, rather than being used in the manufacture of a medicament as described in claim 1 of the Patent, pemetrexed disodium is part of the medicament. Like the Court of Appeal, I do not agree. The pemetrexed disodium comes into the manufacturing process rather later than it would if the original medicament included pemetrexed disodium rather than pemetrexed dipotassium, but that cannot alter the fact that, before it is administered to the patient, the medicament includes pemetrexed disodium and vitamin B12. Accordingly, I would uphold the Court of Appeals determination that Actavis are liable to Lilly for indirect infringement in the United Kingdom with respect to their products if Actavis know, or it is obvious in the circumstances, that ultimate users will dilute in saline or at least Actavis would be liable for indirect infringement if they were not liable for direct infringement. The Court of Appeal said that this conclusion would apply equally to France, Italy, and Spain, and there is no challenge to that from Actavis. Conclusion For these reasons, I would (i) allow Lillys appeal in direct infringement and hold that the Actavis products infringe the Patent in the United Kingdom, and also in France, Italy and Spain, (ii) dismiss Actaviss cross appeal on the basis that if its products did not directly infringe, they would indirectly infringe to the extent held by the Court of Appeal.

UK-Abs

The appeal concerns whether three products manufactured by the Actavis group of companies (Actavis) would infringe a patent whose proprietor is Eli Lilly & Company (Lilly), namely European Patent (UK) No 1 313 508 and its corresponding designations in France, Italy and Spain. The patent relates to the use of the chemical pemetrexed. This has therapeutic effects on cancerous tumours, but, when used on its own it can have seriously damaging side effects. The Patent discloses that these side effects can largely be avoided if a compound called pemetrexed disodium is administered together with vitamin B12. Such a medicament has been successfully marketed, under the brand name Alimta, by Lilly since 2004. Actavis proposed products (the Actavis products) involve pemetrexed compounds being used together with vitamin B12 for cancer treatment; however, rather than pemetrexed disodium, the active ingredient is (a) pemetrexed diacid; (b) pemetrexed ditromethamine, or (c) pemetrexed dipotassium. Actavis contend that because they intend to use the Actavis products which do not include pemetrexed disodium, the claims of the Patent would not be infringed. At trial, Arnold J decided that none of the Actavis products would directly or indirectly infringe the Patent in the UK, or in France, Italy or Spain [2015] RPC 6. The Court of Appeal allowed Lillys appeal to the limited extent of holding that there would be indirect infringement in the four jurisdictions, but agreed with the Judge that there would be no direct infringement [2015] Bus LR 68. Lilly appeals to the Supreme Court against the holding that there would be direct infringement and Actavis cross appeal against the holding that there would be no indirect infringement. The appeal raises the issue of the correct approach to the interpretation of patent claims, and the requirement of the European Patent Convention 2000 (EPC) to take account of so called equivalents. It also raises the issue of the extent to which it is permissible to make use of the prosecution history of a patent when determining its scope. The issue on the cross appeal is whether the application of the law of contributory infringement would justify a finding of indirect infringement in this case. The Supreme Court unanimously allows Lillys appeal and holds that the Actavis products would infringe the Patent in the United Kingdom, and in France, Italy and Spain. Actavis cross appeal is unanimously dismissed, so that, if its products would not directly infringe, they would indirectly infringe as held by the Court of Appeal. On direct infringement, Article 1 of the Protocol on the Interpretation of Article 69(1) EPC provides that the scope of protection afforded to a patentee is not to be limited by the literal meaning of the claims. Article 2 provides that there can be a difference between the interpreted scope of a claim and the scope of protection afforded by it, and when considering the scope of protection equivalents must be taken in to account [33 34]. Further guidance is needed to guide a court through this exercise [53]. Whether an item directly infringes a patent is best approached by addressing two questions through the eyes of the notional addressee of the patent, i.e. the person skilled in the relevant art, namely: 1. Does the item infringe any of the claims as a matter of normal interpretation; and if not, 2. Although the item may be characterised as a variant, does it nonetheless infringe because it varies from the invention in a way which is immaterial? If the answer to either question is yes, there is an infringement; otherwise there is not [54]. On question 1, according to normal principles of interpretation the Actavis products do not infringe the Patent [58]. Question 2 raises the issue of equivalents and poses a more difficult question of principle [59]. The following questions should be considered by a court as a guide to the question of materiality [66]: 1. Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, i.e. the inventive concept revealed by the patent? 2. Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention? 3. Would such a reader of the patent have concluded that the patentee nonetheless intended strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention? To establish infringement where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was yes and the answer to the third was no [66]. The Actavis products directly infringe the Patent [68]. They all involve a medicament containing the pemetrexed anion and vitamin B12, and achieve substantially the same result in substantially the same way as the invention. Once he or she knew that the Actavis products achieved substantially the same result as the invention, the notional addressee of the Patent would have thought it obvious that this was so, particularly as he or she would have regarded investigating whether pemetrexed free acid, pemetrexed ditromethamine or pemetrexed dipotassium worked as a routine exercise [69]. On the third question, the Court of Appeal had placed too much weight on the words of the claim. It is very unlikely that the notional addressee would have concluded that the patentee could have intended to exclude any pemetrexed salts other than pemetrexed disodium from the scope of protection [70 74]. Direct infringement is also established under French, Spanish and Italian law [92 102]. Recourse to the contents of the prosecution file by a UK court will only be appropriate in limited circumstances, particularly if they clearly resolve a genuine ambiguity in the patent or it would be contrary to the public interest to disregard the file [87 88]. The contents of the file do not justify departing from the conclusion in this case [89]. In the circumstances, Actavis cross appeal does not arise. However, the Supreme Court would have upheld the Court of Appeals determination that Actavis are liable to Lilly for indirect infringement in the United Kingdom [103 112].

The underlying claim in this appeal arises out of a series of contracts between the appellant, Taurus Petroleum Ltd (Taurus), a Swiss domiciled oil trading company, and the respondent, State Oil Marketing Company of Iraq (SOMO), for the sale of crude oil and LPG. Disputes arose between the parties which were referred to UNCITRAL arbitration in accordance with the contracts. Although the seat of the arbitration was Baghdad, by agreement all hearings took place in London before Mr Ian Hunter QC as sole arbitrator. It was nevertheless agreed that the seat remained in Baghdad. In due course a partial final award was made on 23 October 2012 and a final award was made on 13 February 2013, whereby SOMO was ordered to pay Taurus US$8,716,477. SOMO declined to honour the award and has paid nothing towards it, save that the debt has been reduced by set off of orders for costs made in favour of SOMO at first instance and in the Court of Appeal in these proceedings. SOMO made an application to set aside the partial final award before the Iraqi courts on the basis that it was not fair and failed to recognise justice. The application was dismissed by a judgment of the Iraqi court dated 27 December 2012 on the ground that the application was premature because the partial final award did not deal with all the issues between the parties and because neither SOMO nor Taurus had asked the Iraqi court to ratify the award. Since then, neither SOMO nor Taurus has taken steps to have either award ratified in Iraq and SOMO has made no further challenge to either award in the Iraqi courts. Taurus is now seeking to enforce the award in England. The issue in these proceedings is whether Taurus is entitled to enforce the award or judgment by means of a combination of third party debt orders and/or receivership orders to recover moneys owed to Taurus. Under CPR 72 it is the pre requisite to the making of a third party debt order that there should be a debt due or accruing due to the judgment debtor from the third party. I can take the underlying facts from the judgment of Moore Bick LJ in the Court of Appeal: [2015] EWCA Civ 835; [2016] 2 All ER Comm 1037. Taurus learned that a company in the Shell group (in the event Shell International Eastern Trading Co) had purchased two parcels of crude oil from SOMO, the price of which was to be paid under letters of credit issued by the London branch of the French bank Crdit Agricole SA (Crdit Agricole). Taurus applied to the High Court without notice for leave to enforce the award as a judgment under section 66(1) of the Arbitration Act 1966, for an interim third party debt order and for the appointment of a receiver in respect of the funds receivable by SOMO under the letters of credit. On 11, 13 and 22 March 2013 the High Court made orders in those terms and on 22 March 2013 Crdit Agricole paid the sum of US$9,404,764.08 into court. SOMO has not challenged the order under section 66(1) or the courts jurisdiction to make it. SOMO did however challenge the other orders. It originally did so principally on the grounds of want of jurisdiction and state immunity but also on the true construction of the letters of credit. In summary, each of the letters of credit provided for payment to be made in New York to the Iraq Oil Proceeds Account at the Federal Reserve Bank of New York and each contained a separate promise on the part of Crdit Agricole in favour of the Central Bank of Iraq (CBI) to make payment in that way. SOMO contended that the debts created by the letters of credit were therefore situated in New York and that the High Court had no jurisdiction to make third party debt orders in respect of them. SOMO also argued that the debts were the property of the Republic of Iraq and were therefore immune from execution. On 18 November 2013 Field J ([2014] 1 All ER (Comm) 942) held that the debts were situated in London rather than New York and that SOMO was a separate entity from the state of Iraq and did not contract as its agent. As a result, if the debts under the letters of credit had been owed to SOMO alone, they would not have been immune from execution. However, each letter of credit contained a single joint promise in favour of SOMO and CBI and thus a joint debt in respect of which the court could not make a third party debt order. He also held that the debts, being the property of CBI as the Central Bank, were in any event immune from execution under sections 13(2) and 14(4) of the State Immunity Act 1978. He therefore set aside the interim third party debt orders and the receivership orders. He also granted permission to appeal and ordered a stay of execution. Both parties appealed to the Court of Appeal, comprising Moore Bick, Sullivan and Briggs LJJ. They dismissed the appeals and the cross appeal on 28 July 2015, albeit (as explained below) in some respects for different reasons. The Court of Appeal made the same orders as the judge but refused permission to appeal. Permission to appeal to this Court was subsequently granted by Lord Neuberger, Lord Toulson and Lord Hodge. The international background As Moore Bick LJ, who gave the leading judgment, explained, as was well known, in 2003 the United Nations Security Council passed a Resolution imposing sanctions on Iraq under which the proceeds of sales of oil by Iraq were to be paid into an account held by CBI at the Federal Reserve Bank in New York designated the Oil Proceeds Receipts Account. The bulk (95%) of receipts was to be used for development within Iraq; the balance (5%) was to be used to provide reparations to Kuwait. By 2011 the formal requirements of the sanctions regime had been relaxed in relation to the use of funds for the benefit of Iraq, but the government of Iraq decided to continue the existing arrangements under which it used the Oil Proceeds Receipts Account to receive the proceeds of export sales of oil and gas from which 95% would be transferred to a separate account in the name of CBI and 5% would continue to be paid into the UN compensation fund for Kuwait. The decision was confirmed by a Note Verbale dated 29 April 2011. The letters of credit construction It is convenient to consider first the construction of the letters of credit, an issue which divided the Court of Appeal. It was submitted by Mr Pollock QC on behalf of Taurus that letters of credit are intended to be self contained, in the sense that they stand apart from the commercial transactions which they are intended to support and must therefore be construed in accordance with their terms without taking into account the wider background. For that reason, he argued, the arrangements made by Iraq for receiving and disposing of its oil revenues were of no relevance to the construction of these letters of credit. Moore Bick LJ said (in para 5) that in his view that approach was broadly correct. Although a bank must carefully assess the creditworthiness of its own customer before agreeing to open a letter of credit at its request, the actual process of doing so is essentially mechanical. The terms of the credit are likely to be determined largely, if not entirely, by the seller and will be communicated by the buyer to its bank. The bank in its turn will then issue the credit in the terms required, undertaking a liability to the beneficiary against which it will seek an indemnity from its customer. Moore Bick LJ added that one should therefore be very cautious before construing letters of credit by reference to extraneous circumstances of the kind he described and there was no evidence before the court of the extent to which those engaged in financing the trade in Iraqi oil were or were not generally aware of the arrangements to which he had referred. Moore Bick LJ further added that in those circumstances he was not persuaded that they provide any assistance in construing the letters of credit, the terms of which were prescribed by the standard form of sale contract used by SOMO. I agree. Each of the letters of credit was issued by Crdit Agricole in London and was sent in the form of a telex (as Moore Bick LJ put it) typical of this kind of business. It was addressed to CBI and provided, so far as material, as follows: Please advise our following irrevocable documentary credit to Oil Marketing Company (SOMO) after adding your confirmation. Our reference GBRM300017 We hereby establish our irrevocable documentary letter of credit Number GBRM3000017 By order of: [Shell] In favour of: Oil Marketing Company (SOMO). For a maximum amount of USD Expiry: 20 April 2013 at the counters of Central Bank of Iraq, Baghdad. This letter of credit is available by deferred payment at thirty (30) days from bill of lading date against presentation not later than 20 April 2013 of the following documents at the counters of the Central Bank of Iraq, Baghdad for negotiation. SOMOs duly signed original commercial invoice This letter of credit is not assignable and not transferable. All banking charges within Iraq are for beneficiarys account whereas all charges outside Iraq are for applicants account. [A] Provided all terms and conditions of this letter of credit are complied with, proceeds of this letter of credit will be irrevocably paid in to your account with Federal Reserve Bank New York, with reference to Iraq Oil Proceeds Account. These instructions will be followed irrespective of any conflicting instructions contained in the sellers commercial invoice or any transmitted letter. [B] We hereby engage with the beneficiary and Central Bank of Iraq that documents drawn under and in compliance with the terms of this credit will be duly honoured upon presentation as specified to credit CBI A/c with Federal Reserve Bank New York. [[A] and [B] added] This credit is subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision) International Chamber of Commerce Publication No 600. Special Instructions to Central Bank of Iraq: Upon receipt of your authenticated telex/SWIFT confirming that you have taken up documents in strict conformity with credit terms and conditions and couriered them to us, we undertake to effect payment at maturity as per your instructions, provided that such telex/SWIFT is received at least 1 New York/London banking day prior to due date. Otherwise, payment will be made 1 New York/London banking day later. If our cover does not reach you in time to reimburse you for your payment under the credit on due date, we hereby undertake to compensate you for any loss of interest incurred by you due to this delay. In the course of the argument particular attention was paid to the two provisions which I have italicised above, which were referred to by Moore Bick LJ in para 8 of his judgment as A and B respectively. As Moore Bick LJ said at para 7, Mr. Pollock submitted that, although these letters of credit included some clauses that are not routinely to be found in documents of this kind, their basic structure follows the pattern which has been established over many years for documentary credits incorporating the Uniform Customs and Practice (UCP). The opening section contains the instructions to the advising bank, in this case CBI, to notify a named party, in this case SOMO, after adding its own confirmation, that a documentary credit has been established in terms which are then set out in the body of the letter. There follow the basic terms of the issuing banks undertaking, identifying the person on whose instructions the credit has been opened, the person in favour of whom it has been opened, the expiry date, the place at which documents are to be presented and a detailed description of the documents that are required. Moore Bick LJ added at para 8 that Mr Pollock further submitted that SOMO was the sole beneficiary of each of the letters of credit. He expressed the view that in conventional terms that was correct. The opening section states that the credit is opened in favour of SOMO and to regard SOMO as the beneficiary of the undertaking is consistent with the way the term beneficiary is used in the special conditions in contradistinction to CBI. However, he noted that that leaves open the question of the meaning and effect of the special conditions A and B quoted above. Moore Bick LJ then noted at para 9 that Mr Pollock emphasised that the issue of a documentary credit ordinarily gives rise to a bundle of separate bilateral obligations reflecting the relationships between the different parties involved in the transaction. None of them, however, constitutes a joint obligation. On that basis Mr Pollock submitted that the two conditions contained nothing more than a collateral promise by Crdit Agricole in favour of SOMO and CBI which is separate from the primary obligation to make payment under the letter of credit. That obligation was owed to SOMO alone as the beneficiary. It followed that CBI had no interest of a proprietary nature in the debt due under the letter of credit; it was simply the beneficiary of a separate promise on the part of Crdit Agricole that the debt to SOMO would be discharged by making a payment into the designated account in New York. In para 10 Moore Bick LJ summarised the position of Mr Dunning QC on behalf of SOMO. Mr Dunning did not challenge Mr Pollocks analysis of the rights and obligations which arise under an ordinary letter of credit, but he submitted that the special conditions included in this particular letter of credit prevented SOMO from being anything more than a nominal beneficiary. It was unable to vary any of the terms governing the method of payment, which made it impossible for it to receive any of the funds due under them itself. In truth, SOMO was not really the beneficiary of Crdit Agricoles obligation; there was in substance one obligation to make payment, which was owed to CBI alone. No one other than CBI could take the benefit of it and enforce it. The critical part of Moore Bick LJs judgment is set out at his paras 11 and 12, which can be summarised thus. He agreed that in the ordinary way a documentary credit gives rise to a bundle of separate bilateral obligations of the kind described by Mr Pollock, none of which is joint in nature. That is because in almost all cases each of the parties to the transaction is a person or company acting solely on that partys own behalf. He could see no reason in principle why a letter of credit should not be issued in favour of joint beneficiaries, as for example if goods or property were being sold by joint owners. However, that was not much help in interpreting the special conditions in these particular letters of credit. He described the first difficulty as being to identify who is the beneficiary of the promise contained in condition A. The telex from Crdit Agricole was sent to CBI, not to SOMO, but since it contained a request to notify SOMO of the terms of the banks undertaking, it must be taken to have been addressed principally to SOMO rather than CBI. He thus concluded that that paragraph was to be read as directed to SOMO and as containing an undertaking to pay the sum due under the letter of credit to CBIs Iraq Oil Proceeds Account at the Federal Reserve Bank in New York. He added that whether that made CBI an agent for collection in the usual sense did not matter for present purposes. The reference to the beneficiary in condition B, on the other hand, must be to SOMO and accordingly it was clear that that paragraph did contain a joint promise in favour of SOMO and CBI that the proceeds of the letter of credit would be paid into CBIs account in New York. Moore Bick LJ accepted that letters of credit, like other commercial contracts, must be construed as a whole in accordance with established principles, but he did not think that, when dealing with such a well recognised and familiar form of financial instrument, it was right to ignore the established structure within which the parties must be taken to have been working. He accepted that SOMO was the beneficiary of these letters of credit in the conventional sense and was therefore, in the absence of a clear statement to the contrary, the party to whom Crdit Agricole incurred the primary obligation to make payment. Again critically, he added that the fact that Crdit Agricole was required to discharge that obligation by making payment to the account of CBI did not detract from that position. Nor did the fact that it also entered into a separate, independent, obligation to CBI to pay the funds due under the letters of credit to its account in New York. In these circumstances he concluded that Mr Pollock was right to submit that each of the letters of credit gave rise to two separate obligations: an obligation to pay the proceeds into the account of CBI in New York, which was owed to SOMO alone and sounded in debt, and a separate collateral obligation to pay the proceeds into that account which was owed to SOMO and CBI jointly and sounded in damages. I agree with Moore Bick LJs construction of the letters of credit and prefer it to that advanced by Sullivan and Briggs LJJ and indeed Lord Neuberger and Lord Mance. The language of the letters of credit seems to me to bear out Moore Bick LJs approach. It begins as follows: Please advise our following irrevocable documentary credit to Oil Marketing Company (SOMO) after adding your confirmation. Our reference GBRM300017 We hereby establish our irrevocable documentary letter of credit Number GBRM3000017 By order of: [Shell] In favour of: Oil Marketing Company (SOMO). A little further down the letters of credit expressly refer to SOMOs duly signed original commercial invoice as one of the documents to be presented at the counters of CBI in Baghdad. The letters of credit thus identify SOMO throughout as the sole beneficiary of the letter of credit, which, as Moore Bick LJ observed was clear from the expression We [ie Crdit Agricole] engage with the beneficiary and CBI. This view is also supported by the provision that the credit was subject to UCP 600, in which Beneficiary is defined in article 2 as the party in whose favour a credit is issued. UCP 600 also contains many other references to the expression beneficiary. In article 18 it states that, subject to one irrelevant exception, a commercial invoice must appear to have been issued by the beneficiary. As I see it, it follows from UCP 600 that SOMO was the sole beneficiary in this case. This is in my opinion of some importance because UCP 600 commands world wide support. In its foreword it describes its objective as follows: The objective, since attained, was to create a set of contractual rules that would establish uniformity in that practice, so that practitioners would not have to cope with a plethora of often conflicting national regulations. The universal acceptance of the UCP by practitioners with widely divergent economic and judicial systems is a testament to the rules success. What then was the status of CBI under the letters of credit? I agree with Lord Mance that the references to you and your in the letters of credit are references to CBI. However their role was said in the first sentence of the letters of credit quoted above to be to advise our (ie Crdit Agricoles) following irrevocable documentary credit to SOMO after adding your (ie CBIs) confirmation. Thus one possibility is that CBI was to be a confirming bank, which is defined in article 2 of UCP 600 as meaning the bank that adds its confirmation to a credit upon the issuing banks authorisation or request. In fact it appears that, whatever was originally intended CBI was simply a notifying bank and did not in the event add its confirmation. In para 57 Briggs LJ expressed these conclusions in respect of each letter of credit: its unusual terms make CBI not SOMO the only creditor in respect of the money promised to be paid, and therefore solely entitled to property in the debt thereby created, and that it conferred on SOMO (rather than CBI) only a non proprietary right to seek damages for breach of contract. That would of course have been fatal to the imposition of a TPDO in relation to the debt, regardless of the rule as to situs in Power Curber [infra]. The knock on consequence of that view is that I would also have concluded that, since the debt was the property of CBI and not SOMO, it was therefore immune from execution under section 14(4) of the [State Immunity] Act [1978] including by way of equitable execution. In my opinion, given that it is clear that SOMO was and remained the beneficiary of the letters of credit, I do not think that it is correct to conclude that the debt was the sole property of CBI and not SOMO. As I see it, Moore Bick LJ was correct to hold that in the absence of a clear statement to the contrary, SOMO was the party to whom Crdit Agricole incurred the primary obligation to make payment. Moore Bick LJ expressed his conclusion thus at the end of para 12, which I have summarised in para 15 above. In short, each of the letters of credit gave rise to two separate obligations: an obligation to pay the proceeds into the account of CBI in New York, which was owed to SOMO alone and sounded in debt, and a separate collateral obligation to pay the proceeds into that account which was owed to SOMO and CBI jointly and sounded in damages. I accept Mr Pollocks submission that it is a startling proposition that a promise to pay a debt owed to a named beneficiary via a nominated bank account in the name of another substitutes the latter for the former as the only beneficiary under a letter of credit. In my opinion it does not. This is an important conclusion because, as Field J said at para 13, if Crdit Agricoles obligation to pay under the credits was owed to SOMO and CBI jointly, the debt due under that promise could not be attached by a third party debt order pursuant to CPR Part 72.2(1) because the words any debt due or accruing due to the judgment debtor from the third party connote a debt owed solely to the judgment debtor. Field J added at the end of para 13: Otherwise, since payment to the judgement creditor in compliance with a TPDO discharges the debt owed to the judgement creditor (CPR 72.9 (2)), the joint promisee would be cut out of his interest in the debt. Nor in my view could execution be made in respect of the debt under the letters of credit by virtue of the receivership order because either CBI would be deprived of its interest as a joint promisee or Credit Agricole would have to pay twice, once to Taurus and again to CBI. Given that conclusion on the construction of the letters of credit, Moore Bick LJ did not have to consider a further submission made by Mr Pollock that, even if CBI was the beneficiary of the banks promises to pay under these letters of credit, they were not promises which it could enforce, because they were not supported by consideration. He did not consider this point in any detail but did say that he would be loath to hold, particularly in a commercial context, that a promise which both parties intended should be relied on was unenforceable for want of consideration. So would I. For the reasons given above, I would allow the appeal on the true construction of the letters of credit and hold that SOMO was the beneficiary of and thus the sole owner of the debts created by the letters of credit and the sole entity to which Crdit Agricole incurred the primary obligation to make payment. In all the circumstances I would accept Mr Pollocks submission that CBI had no proprietary interest in the debt and that any promise made to SOMO or to CBI as to how the debt in favour of SOMO would be paid was no bar to those debts being taken in execution at the instance of Taurus as a judgment creditor of SOMO. Lord Sumption and Lord Hodge reach similar conclusions for similar reasons, with which I agree and need not repeat here. State Immunity Before the judge and the Court of Appeal SOMO argued that it had state immunity against execution on the ground that it was an emanation of the Iraqi state. However that argument was rejected in both courts below and is no longer pursued. Situs of the debts It is common ground that all property, whether tangible or intangible, has a situs for legal purposes. It is further common ground that, as Moore Bick LJ put it in para 14, in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260 the House of Lords held that a third party debt order is a proprietary remedy, which, when complied with, operates to discharge the debt and to release the debtor from his obligation. Since it involves dealing with property, the English courts do not have jurisdiction to make such an order in respect of debts situated outside the jurisdiction, unless by the law applicable in that place an English order would be recognised as discharging the liability of the third party to the judgment debtor: see, in particular, per Lord Bingham of Cornhill at para 26. The parties agree that it is therefore necessary to identify the situs of the debts which Crdit Agricole owes to SOMO. Taurus argument is that in the case of debts the rule chosen and applied by English law is that the situs of a debt is the debtors residence, the place where the debt is recoverable. This is a long standing rule which goes back at least to the beginning of the last century. As Mr Pollock correctly put it, its nature and application were explained in detail by Lord Hobhouse in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260, 287 288. As explained above, the letters of credit were issued by the London branch of Crdit Agricole, which also had places of business in France. Insofar as there was a relevant account, it would have been the account of the opener of the letters of credit, Shell, with Crdit Agricole in London. In the case of letters of credit the position of a bank with different branches has been specifically addressed by the UCP 600, which provides by article 3 that Branches of a bank in different countries are considered to be separate banks. I would accept Mr Pollocks submission that on this basis it follows that for the purposes of the letters of credit the London branch of Crdit Agricole is to be treated as a separate bank, and that therefore the sole residence of the debtor under the letters of credit is London. It further follows that, in accordance with the general rule as to the situs of debts the situs of the debts due under the letters of credit is England. The Court of Appeal did not however resolve this issue on that basis because of the decision of the Court of Appeal in Power Curber International Ltd v National Bank of Kuwait SAK [1981] 1 WLR 1233, where it was held by a majority that in the case of debts due under letters of credit the situs of the debt was the place of payment. Lord Denning MR and Griffiths LJ comprised the majority on this point, with Waterhouse J dissenting. The Court of Appeal in this case was bound by that decision but we are not. Mr Pollock invites us to hold that Power Curber was wrongly decided and submits that we should not follow it. I would accept that invitation. The reasoning of the majority was not extensive. The case involved a sale of goods paid for under a letter of credit. There were issues as to whether (a) the proper law of the contract and (b) its situs were North Carolina or Kuwait. Payment of the price was to be made against presentation of documents in North Carolina. The National Bank of Kuwait was the paying bank which was held to be in default. The Court of Appeal held that the proper law of the contract was the law of North Carolina. However, we are concerned only with what was said about the lex situs. Lord Denning said this at p 1240F: Nor can I agree that the lex situs of the debt was Kuwait. It was in North Carolina. A debt under a letter of credit is different from ordinary debts. They may be situate where the debtor is resident. But a debt under a letter of credit is situate in the place where it is in fact payable against documents. I would hold therefore that Parker J. was right in giving summary judgment against the National Bank of Kuwait for the sums due. The reasoning of Griffiths LJ was similarly brief. He said at p 1242G: Secondly, it was submitted that payment was unlawful according to the lex situs of the debt which it is said is Kuwait. But this is a debt that is owed in American dollars in North Carolina; I do not regard the fact that the bank that owes the debt has a residence in Kuwait as any reason for regarding Kuwait as the lex situs of the debt. The lex situs of the debt is North Carolina, and this ground for giving leave to defend cannot be supported. Waterhouse J agreed with the majority as to the result of the appeal but on the lex situs point he said this at p 1244B D: The more difficult issue for me has been that relating to the lex situs of the debt. A debt is generally to be looked upon as situate in the country where it is properly recoverable or can be enforced and it is noteworthy that the sellers here submitted voluntarily to the dismissal of their earlier proceedings against the bank in North Carolina. We have been told that they did so because of doubts about the jurisdiction of the North Carolina court, which was alleged in the pleadings to be based on the transaction of business by the bank there, acting by itself or through another named bank as its agent. As for the question of residence, the bank has been silent about any residence that it may have within the United States of America. In the absence of any previous binding authority, I have not been persuaded that this debt due under an unconfirmed letter of credit can be regarded as situate in North Carolina merely because there was provision for payment at a branch of a bank used by the sellers in Charlotte: and I do not regard the analogy of a bill of exchange or a security transferable by delivery as helpful. We were not referred to any other English case which has considered Power Curber. The only English text to which we were referred was para 22 033 of the 15th ed (2012) of Dicey, Morris and Collins on the Conflict of Laws, which shows no enthusiasm for the decision. It says that, according to the decision of the Court of Appeal in Power Curber a claim under a letter of credit is situate where it is payable against documents, even if (it seems) the debtor is not resident there. It adds, by reference to the short passages from the case quoted above: This exception to the general rule appears to have been laid down for reasons of policy. Under the general rule, it is more likely that the debt would be situate in the buyers country; under the exception, it is more likely to be situate in the sellers country. The effect of the exception is, therefore, to increase the sellers security, since the courts of his country are less likely to interfere with payment (by seizing or attaching the debt) than those of the buyers country. To attain this policy objective, however, it was necessary to sacrifice the link between situs and recoverability. In the Power Curber case, the issuing bank was a Kuwaiti bank. The place of payment (and hence, according to the Court of Appeal, the situs of the debt) was North Carolina. The bank apparently had no branch there. When it failed to pay (because the debt had been attached by a court in Kuwait), the plaintiff initially brought proceedings in North Carolina, but these were discontinued. Instead it sued in England, where the bank had a branch. It seems that there was some doubt whether the courts of North Carolina had jurisdiction; so the debt was probably not recoverable there. In view of this, it could be argued that it was wrong to regard the debt as situate there. In the last part of that passage the editors specifically refer to part of the judgment of Waterhouse J noted above. I detect a distinct lack of enthusiasm for the majority view. For my part, I prefer the general rule identified in paras 30 to 31 above, which is supported by the UCP. It is fair to say that Mr Dunning provided the court with a review of the position in other common law jurisdictions on the situs of a debt under a letter of credit. Many of them apply both the same general principle as is applied in England for the situs of a debt and the same exception as was derived in England from Power Curber. The respondents note addresses five jurisdictions: (i) Singapore; (ii) Australia; (iii) Malaysia; (iv) New Zealand and (v) Canada. Halsburys Laws of Singapore, Australia and Malaysia all state that the situs of a debt under a letter of credit is the place where it is payable. However, Power Curber is the only, or primary, authority cited in support of this statement. So none of them provides support for the reasoning in Power Curber. It is accepted on behalf of the respondent that the situs of a debt under a letter of credit does not appear to have been addressed under New Zealand law. The passage cited in Butterworths The Laws of New Zealand does not specifically address the position under New Zealand law as to the situs of a debt under a letter of credit. Canada is the only jurisdiction referred to in the note in which the principle in Power Curber appears to have actually been applied. The two cases in which it has been applied are both decisions of the Superior Court of Quebec. In neither of them did the case turn exclusively on the question of where the debt was situated. In HL Boulton Co v Banque Royale du Canada [1944] JQ 1448 and [1995] RLQ 213 the defendant asked the court to decline jurisdiction under article 3135 of the Civil Code, which provides that even though a Quebec authority has jurisdiction to hear a dispute, it may exceptionally decline jurisdiction if it considers that the authorities of another country are in a better position to decide. It was agreed that the Quebec court was competent to hear the dispute, as the defendant had its head office in Montreal. The question was whether British Columbia was a more appropriate forum. The court decided it was. The only link between the case and Quebec was the registered office of the defendant. The confirmation of the letter of credit was in Vancouver and payment was to take place in Vancouver where the respondents place of business was. All the witnesses from both sides were in British Columbia. The court stated that in addition, under private international law, the situs of a LC was where it was payable. It cited only Power Curber and a Canadian text on conflict of laws as authority, but did not provide any analysis of its own. The second case was Alessandra Yarns LLC v Tongxiang Baoding Textile Co Ltd [2015] QCCS 346. This case was about whether the fraud exception to a letter of credit had been met such that the court should issue an interlocutory injunction to prevent the beneficiary claiming under the letter of credit. There were four criteria that had to be met in order to grant the injunction: (1) urgency; (2) a serious question to be tried or a strong prima facie evidence of fraud by the beneficiary of the credit; (3) irreparable harm; and (4) if the prima facie case is doubtful, the balance of convenience favours granting the injunction. The situs of the debt under the letter of credit was a factor that was relevant to the fourth question. The court stated that the situs of a letter of credit is the place in which it is payable citing HL Boulton Co v Banque Royale du Canada but did not provide any further analysis. In addition, the court had already answered questions (1) to (3) in the affirmative, so arguably did not need to answer the fourth question. Those cases do not add to the reasoning in Power Curber, such as it is. None of the references persuades me to alter my conclusion that Power Curber was wrong in principle and should not be followed. As stated above, I would hold that the lex situs of the letters of credit in this case was England. Honest dealing Under this head at paras 25 to 28 Moore Bick LJ considered Mr Dunnings submission that the existence of the undertaking by Crdit Agricole to CBI to pay the proceeds of the letters of credit into the designated account in New York was itself enough to prevent the court from making third party debt orders in relation to them. Given the conclusion of the Court of Appeal on the lex situs point, this argument did not strictly arise. However, given my conclusion on the point, it does in principle arise. Moore Bick would have rejected it if it had arisen. He would have done so shortly for these reasons. The argument was based on certain comments to be found in In re General Horticultural Co, Ex p Whitehouse (1886) 32 Ch D 512, which Moore Bick LJ discussed at para 25. He summarised the position thus: In that case Wills, to whom a sum had been allowed in a winding up for work done for the liquidator, charged the amount due to him as security for the payment of three debts, the total amount of which exceeded the sum due to him from the company. Notice of the first charge was duly given to the liquidator. Some time later Whitehouse obtained a judgment against Wills, which he sought to enforce by garnishee order nisi against the sum due from the company. Later, the second and third of Wills creditors gave notice to the liquidator of their charges. It was accepted that the interest of the first chargee could not be overridden by the garnishee order, but a question arose whether Whitehouse was entitled to execute on the remainder of the debt, notwithstanding the second and third chargees. Chitty J held that he could not because a garnishee order charges only what the judgment debtor can himself honestly deal with. He pointed out that the assignment by way of charge between Wills and the second and third creditors was binding as between them and that the equitable doctrine of notice was concerned only to determine priority between competing incumbrancers. To allow the garnishee order to override the charges would enable the judgment creditor to obtain not the property of the judgment debtor, but that of someone else. Field J accepted that argument on the basis that, since SOMO had no interest in or rights over CBIs account with the Federal Reserve Bank in New York, the debts which Taurus sought to attach were never within SOMOs free disposition and could therefore not be the subject of a third party debt order. Moore Bick LJ disagreed. In para 28 he accepted Mr Pollocks submission, which he set out in para 27, that In re General Horticultural Co does not establish any independent principle of honest dealing; it merely reaffirms that a judgment creditor cannot by means of a third party debt order levy execution on property that does not belong to the judgment debtor. Moore Bick LJ accepted the submission that in that context it may be said that the judgment debtor cannot honestly deal with a debt which he has assigned to a third party and that the judgment creditor cannot execute on such a debt, but that is because it is no longer the property of the judgment debtor. He also referred to Rogers v Whitely (1889) 23 QBD 236. submission in this way: In para 28 Moore Bick LJ expressed his reasons for accepting Mr Pollocks The cases do not support the proposition that there is an independent principle limiting the scope of third party debt orders to debts with which the judgment debtor can honestly deal, otherwise than by reference to the existence of proprietary interests. Although in the present case SOMO had no control over funds once they reached the account of CBI, CBI itself had no proprietary interest of a recognised kind in the debts arising under the letters of credit until they had been paid. In my view the judge was wrong to hold that the terms of the letters of credit and SOMOs inability to control funds in CBIs account were sufficient to prevent the attachment of the debts by third party debt order. I agree with those reasons. Receivership order All three members of the Court of Appeal concluded that the receivership order should be discharged even if the debt was owed to SOMO. The grounds for this view were set out in the judgment of Moore Bick LJ. His reasoning was twofold: first, that the link between SOMO and the English jurisdiction created by the order under section 66 of the Arbitration Act 1996 was too tenuous to justify the exercise of the receivership jurisdiction; and second, that payment by Crdit Agricole to a receiver would deprive CBI of the benefit of the collateral promise made to it that payment to SOMO would be made by means of a bank account held in the name of CBI. The relevant principles are not in dispute. They were set out by Collins LJ in Masri v Consolidated Contractors International (UK) Ltd (No 2) [2008] EWCA Civ 303; [2009] QB 450. Moore Bick LJ set out the key parts of Lawrence Collins LJs judgment in paras 30 to 32 of his own judgment in this case. In particular, he noted the view expressed by Lawrence Collins LJ in para 35 of Masri that the mere fact that an order is in personam and is directed towards someone who is subject to the personal jurisdiction of the English court does not exclude the possibility that the making of the order would be contrary to international law or comity, and outside the subject matter jurisdiction of the English court. In para 31 Moore Bick LJ set out paras 50 and 51 of Lawrence Collins judgment in Masri, which he said followed a reference to the Socit Eram case, as follows: 50. In my judgment, there is no rule that the court cannot ever make a receivership order by way of equitable execution in relation to foreign debts and that the judge did not exceed the permissible limits of international jurisdiction in making such an order in the circumstances of this case. In summary my reasons are that (a) the order has no proprietary effect and acts in personam against the judgment debtor; (b) any adverse effects which the order might have on foreign parties with knowledge of the order are removed by the Babanaft provisos; (c) since the nineteenth century the English courts have recognised the legitimacy of the appointment by the court of receivers in relation to foreign property; (d) the fact that those appointments in the reported cases have been receivers appointed by the court on the application of debenture holders, or receivers appointed prior to judgment, does not affect that conclusion in relation to receivers appointed by way of equitable execution; (e) nothing in the Socit Eram Shipping Co case affects the conclusion. 51. In para 32 Moore Bick LJ said that Lawrence Collins LJ added this caveat: 59. As I have said, the fact that [the court] acts in personam against someone who is subject to the jurisdiction of the court is not determinative. In deciding whether an order exceeds the permissible territorial limits it is important to consider (a) the connection of the person who is the subject of the order with the English jurisdiction; (b) whether what they are ordered to do is exorbitant in terms of jurisdiction; and (c) whether the order has impermissible effects on foreign parties. Moore Bick LJ gave careful consideration to the question whether the order should have been made. He observed that the same obstacles did not exist as in the case of a third party debt order but that some caution was required as noted by Lawrence Collins LJ. One of the factors which led him to conclude that such an order should not be made was that, on his view of the case, as described above, the debt was not situated in England and Wales. He said in para 33 that SOMOs connection with this country was tenuous unless it can be said to be the owner of a debt which [is] situated in this country and for the reasons I have given I do not think that is the case. For the reasons I have given above, I have concluded that the situs of the debt was in this country. It follows from Moore Bick LJs approach that he would have taken a different view of the connection if he had held as I have done that that was the case. I note in passing that he concluded in para 35 that to make a receivership order in this case would not infringe the rights of Crdit Agricole. In all the circumstances it seems to me to be likely that, if Moore Bick LJ had concluded that the lex situs was England, he would have taken a different view. As I see it, it is open to us to consider this part of the case afresh. I would accept Mr Pollocks submissions on this point as follows. International trade, and particularly the international oil trade, is conducted predominantly by means of letters of credit. London is one of the two major financial centres of the world and enormous numbers of letters of credit are issued by international banks from their London branches. It would have been entirely foreseeable by SOMO that a majority of the letters of credit against which they sold oil would be issued out of London and subject to English law. SOMOs trade therefore involved a long term connection with the jurisdiction. Successful international commerce depends upon the enforcement of contracts, the enforcement of arbitration awards and the enforcement of judgments. Both the international plane, through the 1958 New York Convention and the UNCITRAL Model Law and Rules, and the domestic plane, through the Arbitration Act 1996, evince a clear policy to ensure the efficient recognition and enforcement of arbitration awards. In these circumstances it was predictable that, if SOMO failed to honour an UNCITRAL arbitration award, it would find itself sued in an English court for the purpose of enforcing that award in accordance with international norms. The Arbitration Act 1996 allowed the English court to assert jurisdiction over SOMO for the purpose of enforcing an award as a judgment of the High Court. The court did so, and SOMO has challenged neither that jurisdiction, nor the judgment. I would further accept Mr Pollocks submission that it seems inconsistent to allow an international arbitration award to be turned into an English judgment for the purpose of enforcing the award and then to limit the means available for enforcement on the grounds of an allegedly insufficient connection with the jurisdiction. Mr Pollock further challenges para 37 of Moore Bick LJs judgment as follows. He concluded that the effect of a receivership order would be to prevent CBI obtaining the benefit of Crdit Agricoles promise that the funds would be paid to SOMO via CBIs account in New York. However, CBI has no interest of any type in the Letter of Credit debts. Its account is merely the conduit via which moneys paid from Crdit Agricole at the instance of Shell pass onwards into the Iraqi government budget. If the promise as to the route of payment to SOMO is breached because of interception by judicial execution, the CBI has suffered no loss and could make no complaint, whether against Crdit Agricole or against SOMO. The obligation on Crdit Agricole to pay in accordance with its promised method is necessarily subject to the implicit qualification that the funds have not been intercepted by judicial intervention. There appears to me to be some force in that submission. Further, it appears that Crdit Agricole has so far advanced no objection to the making of a receivership order and no evidence has been adduced by SOMO to the effect that the making of the order would in any way prejudice Crdit Agricole. Mr Pollock concedes that Crdit Agricole would in any event have an opportunity to make representations hereafter should it wish to do so. In all the circumstances, I would restore the receivership order. I would only add that, given the above conclusion that the third party debt orders should be restored, I am not sure in what circumstances the receivership orders will be effective. Conclusion For these reasons I would allow the appeal and restore the third party debt orders and the receivership orders. The parties should make written submissions on the form of order and on costs within 28 days of the handing down of the judgments in this appeal. LORD SUMPTION: I agree with the disposal proposed by Lord Clarke, and with his reasons. I also agree with the concurring judgment of Lord Hodge. I add a judgment of my own because the Court is divided and it appears to me to be useful in response to some highly intricate arguments to identify the salient points of principle which have led me to this conclusion. In doing so, I shall use the same abbreviations as Lord Clarke. The first question is whether there is a debt due or accruing due to the judgment debtor [SOMO] from the third party [Credit Agricole] for the purposes of CPR Part 72, which regulates Third Party Debt Orders. This turns on the construction of a most unusual form of letter of credit. For all its unusual features, however, the instrument must be construed as a whole, and as far as possible in such a way as to make each part of it consistent with every other part. Moreover, it must as far as possible be read consistently with the UCP, which are expressly incorporated into it. The UCP may be modified or excluded in specified respects by the terms of the credit, but otherwise it is a code of rules which enables letters of credit to be routinely dealt with by banks across the world on a common basis. It is therefore fundamental to their acceptability in international commerce. The essential obligation of the issuing bank is to pay, conditionally on the presentation of conforming documents. Under the terms of this credit, it is I think clear that SOMO is the sole beneficiary of the issuing banks obligation to pay. The credit is expressed to be issued in favour of SOMO. Under UCP article 2, the party in whose favour a letter of credit is issued is the beneficiary. The purpose of the credit is to secure a debt identified in the commercial invoice, which is usually one of the documents to be presented, as it was in this case. UCP article 18 provides that the commercial invoice required to be presented, must appear to have been issued by the beneficiary, ie SOMO. The specified documents in this case included SOMOs duly signed original commercial invoice. Nothing in Conditions A and B purports to alter the identity of the beneficiary as that expression appears in the credit itself or in the UCP. Indeed, Condition B is framed as an engagement on the part of the bank with the beneficiary and Central Bank of Iraq, a formulation which necessarily identifies SOMO and not CBI as the beneficiary. The letter of credit is expressed not to be assignable or transferrable. The effect of this is to exclude the provision expressly made in UCP article 38 for transfer to another beneficiary. In the context of a credit in favour of SOMO, what is the effect of the irrevocable undertaking in Conditions A and B to honour the credit by paying into CBIs account with the Federal Reserve Bank New York? There are two possibilities. The first is that the parties have thereby agreed to treat CBI as the issuing banks debtor, subject to the presentation of conforming documents. But that cannot be inferred from the mere fact that the money is contractually payable to CBI. This is because the second possibility is that the parties have agreed that the debt is owed to SOMO as beneficiary, but that the manner of its discharge is to be by payment into CBIs account with the Federal Reserve Bank. In my opinion the latter is the better construction of Conditions A and B in this case. It accords better with the insistent identification of SOMO as the beneficiary and the exclusion of assignment or transfer of the credit to any one else. One can infer from the fact that the promise to pay into CBIs account is irrevocable and is made to CBI as well as SOMO that CBI must have had some interest of its own in the debt being discharged in that particular way. But nothing can be inferred from the terms of the credit about the nature of that interest. There are a number of possibilities: (i) CBI may have a proprietary interest in the conditional debt created by the credit, in effect by way of equitable assignment of the credit; or (ii) CBI may have stipulated for an equitable interest in the proceeds once they have been paid or, which amounts to the same thing, for there to be no liability to account to SOMO for the proceeds once it has reached CBIs New York account; or (iii) it may have a purely commercial, administrative or political interest in receiving the funds. The issuing bank would be directly affected by (i) but not by (ii) or (iii). Since either (ii) or (iii) would sufficiently explain the existence of the direct undertaking to CBI, I see no reason to assume that there was more to it than that. If the parties had wanted to make CBI the debtor, the obvious way of doing it would have been to make the credit transferrable in accordance with UCP article 38, a possibility which they have ostentatiously excluded. This is why, quite apart from the absence of any basis for it in the terms of the credit, I am unable to accept Lord Neubergers suggestion that Conditions A and B record an assignment or novation of the credit itself. In my view the credit gave rise to a debt due to SOMO as beneficiary which was required to be discharged by payment into CBIs New York account. It did not give rise to a debt owed to CBI itself. It follows, in my view, that the undertakings given jointly to CBI and SOMO are correctly analysed by Mr Pollock as collateral undertakings sounding in damages. I do not find this result odd, let alone pretty strange or mystical. As it happens, we know that the interest of the CBI was not in fact in the debt, but in the mechanics of its discharge. It had an interest in the use of its account with the Federal Reserve Bank of New York as the prescribed mode of receipt by SOMO, because of the political arrangements made by the state of Iraq to comply with the United Security Council resolution governing the use of Iraqi oil revenues. CBIs account in New York was no more than the conduit pipe used for that purpose. This fact is not relevant to the construction of the credit, which is an autonomous instrument. But it provides a condign warning of the dangers of treating Conditions A and B as a transfer of the conditional debt arising under the credit when that is in reality no more than a speculation about why Conditions A and B might have been (but were in fact not) required under arrangements to which the issuing bank was not privy. On that footing, the next question is whether a purely contractual obligation owed to CBI as to the manner in which the debt owed to SOMO would be discharged is a ground for declining to make a Third Party Debt Order. The argument is that the judgment creditor steps into the shoes of the judgment debtor and cannot succeed to any right the he did not have. If therefore the judgment debtors right to dispose of some asset is restricted by his contractual engagements to third parties, the judgment creditor cannot be any better off. The principal authority cited for this proposition is the statement of Chitty J in In re General Horticultural Co (1886) 32 Ch D 512, 515 that a garnishee order charges only what the judgment debtor can himself honestly deal with. I would not accept this statement without reservation. The context in which it was made was the attachment of a debt that had been assigned to a third party, but without notice being given to the debtor. The court held that the assignment was still binding as between the assignor and the assignee, and that notice to the debtor was relevant only to the priorities between competing assignees. It followed that the assignor had parted with his interest in the debt, and the rights of the garnishor were defeated. In Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy [2014] EWCA Civ 1603, the position was substantially the same. The debt sought to be attached was said to be owed by a bank to the judgment debtor Naftogaz. But the bank had received the money from Naftogaz as the agent bank under a loan agreement for distribution to the loanholders. It was not therefore, in the banks hands, a debt payable to Naftogaz. By comparison, in Rekstin v Severo Sibirsko Gosudarstvennoe Aksionernoe Obschestvo Koseverputj and the Bank for Russian Trade Ltd [1933] 1 KB 47 the result was different because the debt sought to be attached represented moneys deposited by the judgment debtor with a bank which had merely received a revocable instruction from the judgment debtor to pay it to another bank. The garnishee order was held to operate as a revocation of that instruction. These cases reflect what is in my view the general rule, namely that the essential condition for the effectiveness of a Third Party Debt Order, as with any process of enforcement against assets, is that there should be a subsisting debt owed to the judgment debtor. They are authority, on more or less complex facts, for the straightforward proposition that execution cannot be levied against a debt if the judgment debtor has parted with his interest in it. In my opinion it is necessary to distinguish between an arrangement between (i) the judgment debtor and a third party which passes a proprietary interest, legal or equitable, in the relevant asset to a third party, and (ii) a purely personal obligation owed to a third party as to the disposal of that asset. The essential point about a Third Party Debt Order is that it modifies purely personal obligations. A third party owes money to the judgment debtor. He has a personal obligation to pay the judgment debtor. The Third Party Debt Order overrides that obligation by requiring it to be paid to the judgment creditor instead. Otherwise a judgment debtor could defeat any process of execution against his assets simply by undertaking for good consideration not to comply with an order by way of enforcement. It is different if the judgment debtor has parted with his interest in the debt by assigning it, in law or equity, to another. In that case, he no longer has the asset against which enforcement is sought to be made. In the present case, on the footing that the debt created by the letter of credit was owed to SOMO, as I think it was, the issuing bank had a personal obligation to SOMO to pay it by crediting CBIs New York account. That obligation was modified by the overriding effect of the Third Party Debt Order. On the footing, which I also think correct, that the obligation owed by the issuing bank to CBI was to discharge the debt owed to SOMO by crediting CBIs New York account, that obligation depended on the continued existence of the debt owed to SOMO. Once it had been discharged by operation of law by payment to the judgment creditor in accordance with the Third Party Debt Order, there was no subsisting debt to be paid by the issuing bank into the New York account. I would agree with Lord Neuberger and Lord Mance that a Third Party Debt Order ought not to be made unless compliance with it would discharge the third party debtor. But this argument is only a reformulation of the one which I have already considered. The obligation owed by the issuing bank to SOMO is a debt and the obligations owed to both SOMO and CBI is an obligation as to the manner in which that debt is to be discharged. The subject matter of both obligations is one and the same debt. Upon its discharge neither obligation has any further content. It follows that compliance with the Third Party Debt Order would discharge the issuing bank as against both SOMO and CBI. LORD HODGE: I agree with Lord Clarke and Lord Sumption that this appeal should be allowed. In this short judgment, I will use the acronyms and abbreviations which Lord Clarke has used. I gratefully adopt Lord Clarkes summary of the relevant facts in the interest of brevity. While there is agreement as to the situs of the debt, the question of state immunity (which was not argued in the appeal) and the making of a receivership order, this court is divided on (a) whether Crdit Agricoles debt under the letter of credit is owed to SOMO or to CBI and (b) whether the contractual commitment to CBI in the letter of credit prevents the making of a TPDO. I confine my comments to the questions which divide us. To whom the debt is owed? The answer to the first question is found by construing the unusual terms of the letter of credit. A letter of credit has to be construed according to its terms which establish the nature and conditions of the banks duty to pay. Like other contracts, a letter of credit must be construed as a whole: individual clauses must be interpreted in their contractual context. In ascertaining the meaning of a particular clause or clauses, especially in an unusual contract such as this letter of credit, it is helpful and often necessary to adopt an iterative process by which an initial prima facie view as to meaning is tested against indications of another meaning or other meanings which the document gives when considered as a whole. It is well established law that a letter of credit creates an obligation to pay which is independent of and detached from the underlying contract between a seller and a buyer. The autonomous nature of a letter of credit means that, subject to qualifications which are irrelevant in this case, the conditions governing the issuing banks obligations to pay are to be found exclusively in the terms of the letter of credit. The background to the letter of credit is the international sanctions against Iraq following the invasion of Kuwait and the later continuation by the government of Iraq of the arrangement for the payment of the proceeds of sales of oil by Iraq of which a portion was used to finance the UN compensation fund for Kuwait. But I agree with Moore Bick LJ that that background in this case does not assist the construction of the letter of credit, not least as there does not appear to have been evidence of the banks knowledge of those arrangements. The focus therefore is exclusively on the terms of the letter of credit. Lord Clarke has set out the relevant parts of the letter of credit in para 9 of his judgment. In carrying out an iterative interpretation I choose in this case to start at the beginning. The letter of credit is addressed to CBI and asks CBI to advise SOMO that it has established the documentary credit by order of Shell in SOMOs favour. In that regard CBI is to act as the advising bank. The letter of credit envisages that CBI would also be the confirming bank, but in the event no such confirmation was given. Payment under the letter of credit is to be made on presentation of SOMOs duly signed original invoice. The letter of credit is stated to be neither assignable or transferable. Thus far, the letter of credit is straightforward and follows a familiar pattern: a documentary credit is created by Crdit Agricole on the order of the buyer in favour of the seller, suggesting that the debt thereby created is owed to the seller, SOMO. But the letter of credit then contains the two conditions [A] and [B] which the parties have added and which differ from the standard letter of credit, by constituting, in condition [A], an irrevocable undertaking in favour of CBI that the proceeds of the letter of credit will be paid into its (CBIs) Iraq Oil Proceeds Account with the Federal Reserve Bank, New York, and in Condition [B], an engagement to both SOMO (described as the beneficiary) and CBI so to pay the money on presentation of the documents which comply with the letter of credit. I agree with each of Lord Clarke, Lord Neuberger and Lord Mance, that the undertaking in Condition [A] is addressed to CBI. Read by itself or along with Condition [B], it might constitute a debt in favour of CBI. It is necessary to reconcile the provisions which I summarise in para 74 above with those in para 75 above. In my view that reconciliation is assisted by the paragraph of the letter of credit which follows the added conditions. It makes the credit subject to UCP 600, which seeks to facilitate the flow of international trade by creating a set of international rules that establish uniformity in the practice (ie the handling) of letters of credit. To my mind, it is both legitimate and necessary to look at UCP 600 as a guide to the interpretation of the letter of credit both because of its incorporation into the letter of credit and because the letter of credit reflects an established structure of documentary credit, which is consistent with UCP 600, but with the two conditions added. As Lord Clarke points out (para 19) UCP 600 (article 2) defines beneficiary as the party in whose favour a credit is issued. Further, as Lord Clarke observes, the term beneficiary is used repeatedly in UCP 600, including in article 18, which requires, subject to an irrelevant exception, that a commercial invoice must appear to have been issued by the beneficiary. There is no doubt in my mind that SOMO is the beneficiary of the letter of credit as envisaged by UCP 600. The use in Condition [B] of the word beneficiary to describe SOMO is consistent with this understanding. It is also consistent with the view that Conditions [A] and [B] are not intended to alter the person in whose favour the credit was issued. On this approach there is no need to struggle to give content to the use of the term beneficiary in the added Condition [B] or to the idea, which the use of that word encapsulates, that the letter of credit is in favour of SOMO. I construe the added conditions in their contractual context, which is that SOMO is the beneficiary of the letter of credit and that the credit in its favour is not assignable (para 74 above). Those two provisions are to my mind critical to the interpretation of the letter of credit and dictate a narrow view of the effect of the added conditions. Absent an assignment of the credit to CBI, which the letter of credit expressly forbids, CBI has no proprietary interest in the debt due by Crdit Agricole. But that does not denude the added conditions of content. The added conditions entail an undertaking by Crdit Agricole to SOMO and CBI jointly as to the mode of payment of SOMOs debt. It is not possible to discover from within the four corners of the letter of credit what was the relationship between SOMO and CBI which explains why SOMOs debt had to be paid into CBIs bank account and whether CBI had to account to SOMO for its receipt. It appears that one public body has required that its debt be paid into the bank account of another public body, for a purpose which the letter of credit does not disclose. But I see no basis for inferring from the terms of the letter of credit that SOMO has transferred any beneficial interest in the debt to CBI. In agreement with Lord Clarke and Lord Sumption, I conclude that the Crdit Agricoles debt was owed to SOMO. Does the contractual commitment to CBI exclude a TPDO? If I am correct in concluding that the letter of credit created a debt in which SOMO had both the legal interest and the beneficial interest, the TPDO would, if made, override and discharge Crdit Agricoles obligation to SOMO. Were that to occur, I do not see how there would be any content in the obligation as to the mode of payment of that debt which Crdit Agricole owed to both SOMO and CBI. The discharge of the debt would discharge the ancillary obligation as to the mode of its payment, leaving CBI with no claim for damages or otherwise against the issuing bank. I therefore agree that CBIs rights under the added conditions do not bar the making of a TPDO. The contrary views In so concluding, I find myself in respectful disagreement with Lord Neuberger and Lord Mance. In relation to Lord Neubergers judgment, we differ as I attach more significance to the established practice of documentary credits in construing the letter of credit and in particular to the incorporated terms of UCP 600, to which Condition [B] indirectly refers in its description of SOMO as the beneficiary. I see no basis for inferring an assignment by SOMO to CBI of the beneficial interest in the debt. In relation to Lord Mances judgment, the principal difference again appears to be that I attach more significance to the established structure of letters of credit upheld by UCP 600 and the use of its terminology in Condition [B] in providing the contractual context of the added conditions, to which he and Lord Neuberger have given priority over the other terms. To my mind, our differences are not ones of principle but of the construction of an unusual document, which on my reading (a) creates a debt in favour of SOMO but (b) requires that the money to discharge that debt be paid into CBIs bank account. On such a reading, no violence is done to the law of garnishee orders or third party debt orders. Conclusion In summary, I conclude (i) that Crdit Agricoles debt was and is owed to SOMO, (ii) the separate and ancillary obligation owed to CBI as well as SOMO was merely an obligation as to the manner of payment of SOMOs debt, and (iii) on the discharge of SOMOs debt by the making of the TPDO, the ancillary obligation as to the mode of payment also would be discharged. LORD MANCE: (dissenting) I agree with Lord Clarke for the reasons he gives that the situs of the debts constituted by the letters of credit should be held to be at the London branch of Crdit Agricole which issued the letters of credit. I would therefore allow the appeal. Debt capable of being subject of a third party debt order I am however unable to agree that there was or is any debt owed or due to SOMO under either letter of credit opened by Crdit Agricole, capable of being attached by a third party debt order under CPR72. Under that rule, it is a pre requisite to the making of a third party debt order that there should be a debt due or accruing due to the judgment debtor from the third party. Here, that means a debt due or accruing due from Crdit Agricole to SOMO. It is of no relevance to refer to any debt by way of the price of oil which may, or may not, have been owed by a company in the Shell group to SOMO outside or apart from the letter of credit. If there is a fundamental principle which is presently relevant, it is that a letter of credit is a contract separate from any underlying sale contract: UCP 600, article 4. So it must be construed according to its own terms. The issue whether a third party debt order can be made in respect of Crdit Agricoles undoubted indebtedness to someone under each letter of credit has two at points related aspects. The first is the correct construction of the letters of credit. The second is a correct understanding and application of the principles governing the making of third party debt orders. As to construction, the difference between the majority and minority conclusions may, in the grand scheme, be relatively unimportant. But, in my view, the majority judgments of Lord Clarke, Lord Sumption and Lord Hodge are forcing the present arrangement, in Procrustean fashion, into a pre conceived model (reflecting the conventional position when conforming documents are presented by a named beneficiary under a letter of credit) into which it in no way fits. In doing so, they are in this instant case also over riding rights clearly given to CBI. As to the principles governing third party debt orders, the majority judgments raise a more general concern. They fail in my view to give proper effect to the governing principles, they risk creating confusion and, on the facts of this case, they prejudice, without justification, the deliberately agreed rights of a fourth party (CBI). I add that it is in retrospect surprising (though it may reflect the respondents view about the obviousness of the principles involved) that not all the relevant authorities on third party debt orders were put before the Court, and that their case only addressed the caselaw in two short paragraphs and a footnote. Principles governing construction of the letters of credit As to construction, the general principles of construction are, I hope, well established to the point where they need little discussion. As Lord Hodge, speaking for the Supreme Court, said in Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] 2 WLR 1095: 10. The courts task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. Interpretation is a unitary exercise; where there are 11. rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause ; and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. 12. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each. Principles governing the making of a third party debt order There is no magic about the general concept of a debt. Jowetts Dictionary of English Law (3rd ed) defines it as A sum of money due from one person to another, points out that A debt exists when a certain sum of money is owing from one person (the debtor) to another (the creditor), and adds that Debt denotes not only the obligation of the debtor to pay, but also the right of the creditor to receive and enforce payment. In The Scottish Law of Debt, W A Wilson, Lord President Reid Professor of Law at Edinburgh University, quotes the definition of debts in Bell, Commentaries, II, 15, as mere rights to demand payment of money at a stipulated time, going on to distinguish a debt from an obligation to account. The concept of a debt for the purposes of a third party debt order, or its predecessor the garnishee order, is particularly well settled by authority. First, The test of debt due is whether it is one for which the creditor could immediately and effectually sue: Pagets Law of Banking 14th ed (2014), para 31.8; see also Allinsons Enforcement of a Judgment 12th ed (2016), para 8 03. The test goes back at least to Webb v Stanton (1883) 11 QBD 518. There a garnishee order was obtained against a trustee purporting to attach the beneficiarys share of the trust income. No income was however in the trustees hands which he was at that time due to pay to the beneficiary. The garnishee order was set aside, on the basis that the trustee could not be said to be a debtor unless he has got in his hands money which it is his duty to hand over to the cestui que trust (p 526, per Lindley LJ); see also p 530, per Fry LJ). The Court of Appeal pointed out that an available and appropriate course in this situation would be to apply for the appointment of a receiver. The trustees receipt of income is in this situation a pre condition to the existence of a debt. So too the fulfilment of any other pre condition, such as the obtaining of an architects certificate as a pre condition to a contractors entitlement to be paid for works completed: see Dunlop & Ranken Ltd v Hendall Steel Structures Ltd [1957] 1 WLR 1102. Secondly, and as a concomitant of the first principle, a judgment creditor cannot stand in a better position than the judgment debtor did in relation to the third party against whom the third party debt order is sought: Ferrera v Hardy [2015] EWCA Civ 1202; [2016] HLR 9, para 13, per Floyd LJ, approving the commentary to rule 72.2.1 in the Civil Procedure White Book to that effect. In In re General Horticultural Co (1886) 32 Ch Div 512, 515, the issue was whether a judgment creditor could by garnishee order attach a third party debt which the judgment debtor had assigned in equity, although the assignee had given no notice of the assignment to the third party. In holding that notice was irrelevant in this context (as opposed for example to a situation of competing assignments), Chitty J said that a garnishee order: charges only what the judgment debtor can himself honestly deal with; that rule is now settled. [Counsel argues] that I ought not to apply the well settled rule to this case. But I see no reason why any Act of Parliament or Rules of Court should be so interpreted as to make a man do a dishonest act, and yet if I were to allow [counsels] argument the judgment creditor would obtain, not the property of the judgment debtor, but that of some one else. In parenthesis, this principle means that the court will look at the judgment debtors actual entitlement to sue for the money. What the third party debtor in In re General Horticultural Co would have said about the identity of the person to whom he owed money, before he had notice of the assignment, was irrelevant. Thirdly, and again as a further concomitant of the previous two principles, where a judgment debtor has precluded itself contractually from having any immediate right to recover what would otherwise be a third party debt, a third party debt order cannot be obtained. There is in this respect no difference in principle between a fetter which arises contractually and for proprietary reasons. A requirement for an architects certificate (para 89 above) is a form of contractual fetter. In Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy [2014] EWCA Civ 1603, Merchant International Co Ltd (MIC) had an outstanding judgment against Naftogaz. Naftogaz had, by agency agreement, engaged BNYM as its principal paying agents for the purposes of loan notes under which Naftogaz owed interest instalments to loanholders. Naftogaz made a payment to BNYM to meet one such instalment, but its use for that purpose was interrupted by a third party debt order obtained by MIC against BNYM. Naftogaz then arranged for the interest instalment to be paid by a second payment. The first payment would have been repayable but for a Supplemental Agreement covering the second payment. This provided that the first payment should, notwithstanding the discharge of the relevant interest instalment, be retained by BNYM for the purposes of the agency agreement, pending a court order in the third party debt proceedings or further written agreement in terms acceptable to BNYM. By a second third party debt order MIC sought to attach the repayment which it alleged was in substance due from BNYM to Naftogaz. MIC submitted that, despite the Supplemental Agreement, the first payment was in BNYMs hands no different to moneys in a bank account repayable on demand. The Court of Appeal rejected the submission on the basis that the Supplemental Agreement had a commercial purpose; it was designed to preserve the status quo in view of the unexpected impact of, inter alia, the first third party debt order (para 48). The parties mutual arrangements negated any immediate and unconditional obligation on BNYMs part to make a repayment. Another in relation to the circumstances of the present appeal, very telling authority is Rekstin v Severo Sibirsko Gosudarstvennoe Akcionernoe Obschestvo Komseverputj and the Bank for Russian Trade Ltd [1933] 1 KB 47. There, the judgment debtors instructed their bank to close a current account, and transfer the moneys in to another body, to whom they owed nothing. The bank closed their account, but had not yet made or informed the other body of the proposed transfer. The judgment creditors at that stage obtained a garnishee order against the bank. The instructions were held still to be revocable, and to have been revoked by service of the garnishee order, which was therefore valid. What had been done by the bank, by way of closing the account, was mere internal machinery for recording what was to be done. But what is for present purposes significant is the Court of Appeals identification of the relevant test of the existence of a debt as being whether the direction was revocable, and not subject to any contrary commitment towards the other body: see per Lord Hanworth MR, at p 64, Slesser LJ at p 69 and Romer LJ at pp 71 72. In this connection, Lord Hanworth MR cited with approval a note at the end of Gibson v Minet (1824) 1 Car & P 247, 250 on the case of Williams v Everett (also reported at (1811) 14 East 582 in slightly different terms), according to which note Lord Ellenborough said: The remitter may give and countermand his directions, as often as he pleases, and the persons to whom it was remitted, may hold the bill, or its amount, for the use of the remitter himself, until by some engagement entered into by themselves, with the person who is the object of the remittance, they have precluded themselves from so doing, and have appropriated the remittance to the use of such person. After such a circumstance, they cannot retract the consent they have once given. In short (a) a mere naked authority to pay given to a banker can be revoked, but (b), once the banker has not only been authorised to pay but has committed itself to pay a fourth party, there is no debt which can form the basis of a garnishee or third party debt order. The present case falls precisely within (b), and the majority are in error in treating it as if it fell within (a). Finally, a basic principle governing third party debt orders was underlined by the House of Lords in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260. It is, as stated in the headnote to that case: an integral feature of the procedure, established by legislation and the rules of court, that where a final order [is] made the third party, in making payment in compliance with the order, [is] discharged from his liability in respect of the debt to the extent of his payment, and it [is] not open to the court to make an order where it appear[s] that such discharge would not be available under the law which govern[s] the debt. Construction of the letter of credit Each letter of credit identified SOMO as the beneficiary of the letter of credit as well as the relevant seller whose invoice in that capacity was among the documents required for presentation under the letter of credit. However, it is important not to be mesmerised by the term beneficiary or by the normal expectations which it generates. What matters is, as the citations from Wood v Capita Insurances Services Ltd (para 86 above) state, the effect of the particular arrangements which parties have put in place, viewed as a whole. I of course accept that, under a more normal form of letter of credit, the expectation arising from the description beneficiary would be that SOMO would also be the person to whom the proceeds of such presentation would be owed or due and who could sue in debt if they were not paid. This would be so, even if the letter of credit stipulated for their payment to a particular bank account in the name of someone other than the beneficiary; that would correspond with the simple situation identified by Lord Hodge at the end of his para 80. The potential recipient would not have or be given the benefit of any promise of payment to itself under the credit. Any payment to it would simply represent the means agreed between the issuing bank and the beneficiary for discharge of a debt which remained due to the beneficiary alone. Here matters go much further, because of two special and unusual provisions, which have been set out and identified by Lord Clarke as conditions A and B. Each letter of credit contains contractual arrangements made between three parties, Crdit Agricole by whom it is issued, Central Bank of Iraq (CBI) to whom it is in the first place directed, and SOMO to whom CBI was asked by Crdit Agricole to advise (and, although this did not happen, confirm) the credit. There is not, and could not consistently with important and well established principles governing letters of credit be, any suggestion that these arrangements were not supported by consideration or that they are not binding according to their terms, as between all these three parties. As I read the special conditions, the first, condition A, contains a promise made to CBI. Moore Bick LJ erred in reading it as containing a promise to SOMO. There is common ground between Lord Clarkes and my judgment on this point. My reasons for this conclusion are as follows. The reference to payment to your account with Federal Reserve Bank New York, with reference to Iraq Oil Proceeds Account must to my mind be a reference to CBIs account at that Bank in New York, to which the second, condition B, expressly refers. It is most improbable that the two conditions were referring successively to the same account as being both SOMOs and CBIs, quite apart from the fact that the reference Iraq Oil Proceeds Account points towards an account of CBI, rather than SOMO. A second reason for concluding that your in the first special condition refers to CBI, to whom each letter of credit is addressed, is that this is so on all the other occasions when the letter of credit uses the word your or you: see the first paragraph of the credit, the special instructions to CBI (following shortly after the two special conditions) whereby Crdit Agricole undertook to pay as per your instructions after receipt of confirmation that you have taken up documents and the next paragraph with its five further references to CBI by the words you or your. A third reason is that the first special condition makes little if any sense, read as an undertaking confined to SOMO. It would amount to an engagement to SOMO to pay the proceeds of the credit to a particular Federal Reserve Bank account irrespective of any conflicting instructions contained in the sellers [ie SOMOs] invoice or any transmitted letter. What is the sense, or legal force, of an undertaking to X to do something even if X gives contrary instructions? In contrast, an undertaking to CBI to pay CBI even if SOMO gives contrary instructions is comprehensible and valuable. Fourthly, the fact that the first special condition is addressing primarily CBI and its (your) account, rather than SOMO or any account of its, is highlighted by the contrasting use of the phrase sellers commercial invoice when reference did come to be made to SOMO in that condition. So read, the two special conditions are mutually reinforcing. They constitute a tri partite agreement between Crdit Agricole, CBI and SOMO that the proceeds of the letter of credit will be paid, and paid only by irrevocable agreement, to CBI. It is, as I have indicated, now accepted, realistically, that whatever contractual arrangements are contained in the letters of credit are binding, and that no problem relating to absence of consideration arises. That being so, I am unable to see how any debt can, upon presentation of the required documentation, be said to be owed by Crdit Agricole to anyone save CBI. No doubt, Crdit Agricole is party to a binding and irrevocable agreement with both SOMO and CBI that payment will be made to, and only to, CBI. No doubt SOMO might seek an order for specific performance of that obligation on Crdit Agricoles part towards CBI, or damages for its non performance, if SOMO could show any. But the only party which can be said to have a right to the payment, upon and following such presentation, is CBI. The only debt which can be said to be due is to CBI. When three parties have agreed between themselves, irrevocably and bindingly, that a debt which would otherwise have been payable by A to S will instead be paid, and paid only, by A to C, I cannot see how it can be said that the debt still remains, in some metaphysical world, due from A to S and that payment to C remains a means of discharging a continuing liability to section The tripartite nature of the agreement means that it is goes beyond simple assignment, in two respects: first, the debt never becomes due by the third party debtor (Crdit Agricole) to SOMO in the first place; it is from the outset due to CBI; and, second, Crdit Agricole has promised CBI, directly and irrevocably, to pay CBI the proceeds. The first reason also means that the situation goes beyond novation. But these respects make it even less permissible for a court to conclude that any debt exists in favour of SOMO. Tauruss submission that each letter of credit can be analysed as giving rise, upon presentation of the required documents, to, first, a debt in favour of SOMO, coupled with a collateral agreement that the debt would be met by paying, and paying only, CBI is, to my mind, extremely odd. Whatever the position under any sale contract (which is here irrelevant: see para 84 above), there is under the letter of credit no antecedent debt or Urschuld. This is a composite letter of credit, creating one set of rights, which must be construed as a whole. There is no question of any right to payment by Crdit Agricole arising prior to or outside the terms of the credit, and the only right to payment which the credit creates is, by agreement of all concerned, in favour of CBI. I can think of no precedent for an analysis (see per Lord Clarke in para 23 of his judgment) which would mean that, under one and the same tri partite contract, Crdit Agricole owed and could be obliged to pay moneys to SOMO (which is the precondition for a third party debt order by Taurus), but would, by performing this obligation towards SOMO, be in breach of contract towards, and become liable to pay damages to, CBI. Why an obligation to pay CBI money should only sound in damages, rather than debt, is also unexplained. I address later in this judgment the majoritys further suggestion that Crdit Agricoles obligation to CBI to pay CBI, or to pay damages in default, to CBI would somehow be conditional upon no third party debt order having been made against SOMO: see paras 109 and 110 below. I add, for completeness and not because it is critical in this case, that, even if CBI was to receive the sum of money as trustee for SOMO, still it would be CBI that would be owed the sum, not SOMO. Even if it could be suggested that the irrevocable tripartite agreement was for CBI to receive the sum simply as SOMOs banker (rather than by virtue of some arrangement giving CBI its own interest in receiving the moneys and in the moneys received), still the terms of the letter of credit make it impossible for SOMO to intervene and insist on payment to itself; the only debt due to SOMO, and capable of being the subject of a third party debt order, would on this hypothesis be the debt due by CBI as banker to SOMO, once CBI had received the proceeds of the credit. In fact, however, it is clear that CBI was not simply receiving the moneys as SOMOs banker or for the credit of SOMO, but in order to hold them for the credit of the State of Iraq in the Oil Proceeds Account, from which 95% of such moneys would be transferred to the States Oil Development Fund, while 5% would go to the United Nations Compensation Fund Account for reparations to Kuwait. It is common ground, as Field J records in para 69 of his judgment, and it was also expressly accepted by Mr Gordon Pollock QC for Taurus in his submissions before the Supreme Court, that, once the money reached CBI, it was gone, and SOMO would have no interest or rights in or over it. The effect of the parties tripartite and irrevocable agreement is, without more, to give CBI an interest of its own in the debt being discharged by payment to it. It also clear, as Lord Sumption accepts (para 64) that this must been created to protect a wider general interest in the ultimate disposition of the proceeds. Whether that wider general interest engaged CBI itself or only those for whom it was to hold the proceeds is however irrelevant. It is irrelevant to engage in speculations about possibilities, as Lord Sumption goes on to invite in para 64. The enforceable interest given to CBI sounds in debt, whether it was given to protect CBI itself or those to whom CBI was to account for the proceeds. However, if we do look at the facts, the State of Iraq and/or the United Nations Compensation Fund had the clearest interest in CBI being entitled to receive as well as receiving the moneys which it was CBIs role to hold to their credit. One can readily infer that it was to protect that interest that it was ensured that each credit contained the tripartite agreement irrevocably committing Crdit Agricole to pay the letter of credit moneys to the credit of CBI, rather than of SOMO. To attach relevance to the possibility that CBI was not thereby ultimately going to benefit itself ignores the fact that contractual arrangements are frequently made for the benefit of third parties. That does not make them any the less valid or enforceable. If the arrangements involve the creation of an obligation to CBI to pay CBI a specific sum of money, that it enforceable as such as a debt. If (contrary to the position here) the arrangements take some other form, their breach will give rise to a claim for whatever damages may flow, and be recoverable in law, as a result of that breach. (Under the doctrine of transferred loss such damages might in some cases even embrace loss suffered by the other parties for whose benefit the arrangements were made, but, whether that is so or not is irrelevant to the binding nature of the contractual arrangements themselves). References to the possibility of a transfer of the credit under UCP 600, article 38 (Lord Sumption, para 64) carry matters nowhere. Article 38 concerns transfer of the benefit of a credit to a different beneficiary, to enable it to present in its own name conforming documents in respect of all (or, where a credit is divisible, some) of the transactions to which the credit relates. It has nothing to do with and in no way impacts upon either (a) an assignment to a person other than the named beneficiary of the debt resulting from the presentation of conforming documents by the named beneficiary or (b) the present case, where all parties to the credit agreed from the outset that payment of the debt should be due, and due only and irrevocably, to such a person (here CBI). The majoritys suggestion is that a debt which remains owed to SOMO can be severed from a collateral obligation existing to pay it to CBI. The first point about this is that it begs the question to describe the obligation to pay CBI as collateral. It is the obligation to pay under the letter of credit. That is a point which takes one back to the proper construction of each credit. The second point is, however, that the suggested collateral obligation is said to entitle CBI, if it does not receive payment, at least to claim damages against Crdit Agricole (para 23 of Lord Clarkes judgment). But that on its face at once exposes Crdit Agricole to double liability contrary to Socit Eram. The answer which Lord Clarke and Lord Sumption apparently give to this objection is that the making of a third party debt order against the debt owed to SOMO would in some way or another discharge Crdit Agricoles liability to pay CBI: see their paras 56 and 69 70. Lord Sumption speaks of a third party debt order as modifying or over riding personal obligations. That is fair enough if one is talking about the effect of such an order in requiring a third party debtor, who actually owes money to a judgment debtor, to pay the money instead to the judgment creditor. As long as the third party debt is sited in the jurisdiction making the third party debt order, the effect of such payment will be to discharge the third party debtor. The third party debtors obligations are only modified to the extent of the destination of its payment. As long as whatever payment it makes discharges its liability, the modification is of no concern to the third party debtor; it is not disadvantaged. Lord Sumptions proposition is, in contrast, that a third party debt order can modify the rights of an unconnected fourth party to whom the judgment debtor and the third party have in fact contracted that the third party will pay any indebtedness. That is a completely novel proposition and contrary to principle. No feature of the legislation, rules or case law relating to third party debt orders exists, or has hitherto ever been suggested to exist, that could in this way discharge the contractual rights of a person in CBIs position owing no debt whatever to Taurus. Lord Sumption suggests (para 69) that: Otherwise a judgment debtor could defeat any process of execution against his assets simply by undertaking for good consideration not to comply with an order by way of enforcement. This suggestion is, with respect, difficult to follow. A judgment debtor clearly cannot contract with anyone not to comply with a court order. Such a contract would, among other things, be contrary to public policy. But a judgment debtor can part with assets or enter into arrangements which give another person rights that would in other circumstances be the judgment debtors. If, as here, a judgment debtor has effectively agreed that a contractual asset that might otherwise have been his, should enure solely and irrevocably to another person, the judgment debtor does not possess that asset. Lord Clarke (para 56) suggests an alternative route to his desired answer, viz that Crdit Agricoles obligation to pay in accordance with its promised method is necessarily subject to the implicit qualification that the funds have not been intercepted by judicial intervention. But implicit qualifications are no exception to the usual rules of contractual implication. There is no basis (still less any necessity) for implying that CBI (still less those to whom it was to channel the moneys) would be prepared to forego CBIs contractual right to payment, merely because a judgment creditor of SOMO happened to seek or obtain a third party debt order. The legal position is quite the opposite. It is integral to the principles governing third party debt orders, and clear beyond doubt in the caselaw discussed above, that the making of a third party debt order depends on the existence of contractual indebtedness by the third party to the judgment debtor alone, in which no fourth party has any other legally enforceable interest. Lord Sumptions more developed suggestion is that, since the obligation owed by the issuing bank to CBI was to discharge the debt owed to SOMO by crediting CBIs New York account, that obligation depended on the continued existence of the debt owed to SOMO (para 70). This again takes one back to construction of the credits. But in doing so it highlights the extent to which the majoritys construction ignores the agreement by all parties to the credits that CBI (and indirectly those for whom CBI would be receiving the proceeds) should have an interest protected by an irrevocable promise in payment being made, and made only, to CBI. One may ask: what is left of that promise if its enforcement is conditional on the debt owed to SOMO not being discharged? The logic of Lord Sumptions suggestion is, indeed, that, if, quite irrespective of any third party debt order, Crdit Agricole had chosen to pay SOMO rather than CBI, any right which CBI had to receive payment would have ceased to exist. If, on the other hand, Lord Sumption would, in some way, seek to distinguish between voluntary discharge by Crdit Agricole of the supposed debt to SOMO and forced discharge by payment to Taurus under a third party debt order, the distinction is neither explained nor justified. It would give a third party debt order a priority over the rights of innocent fourth parties which is, again, contrary to the caselaw and unprincipled. Summary In the present context, and in the light of the terms of each letter of credit and the well established principles governing construction and the meaning of debt for the purposes of third party debt orders, I am quite unable to see how SOMO itself can be said to have been owed a debt, when the terms of the letter of credit constitute an irrevocable agreement between Crdit Agricole, CBI and SOMO that (i) any payment under the credit should be made to CBI, and that (ii) SOMO should have no right itself to demand, receive from or enforce against Crdit Agricole any such payment (except no doubt a right to demand that Crdit Agricole make any payment to CBI). More particularly, the majoritys emphasis on SOMOs role as beneficiary is incapable of justifying the majority conclusion. SOMO as beneficiary has rights, which it is entitled to enforce. It can insist on performance of the letter of credit terms. But its rights do not, under the terms of this letter of credit, include the right to require or obtain payment to itself. This right it has foregone, by a binding contractual engagement, which it committed itself contractually not to revoke. Further, to hold, in these circumstance, that Crdit Agricole owes SOMO a debt, which can be the subject of a third party debt order, is in direct contradiction with the principle that a judgment creditor cannot stand in a better position than the judgment debtor did in relation to the third party against whom the third party debt order is sought: Ferrera v Hardy [2015] EWCA Civ 1202; [2016] HLR 9, para 13, per Floyd LJ, cited in para 90 above. This is, as I see it, precisely the same principle as Chitty J put in slightly more moralistic terms, when he said (para 90 above) that a third party debt order: charges only what the judgment debtor can himself honestly deal with; that rule is now settled. [Counsel argues] that I ought not to apply the well settled rule to this case. But I see no reason why any Act of Parliament or Rules of Court should be so interpreted as to make a man do a dishonest act, and yet if I were to allow [counsels] argument the judgment creditor would obtain, not the property of the judgment debtor, but that of some one else. Here, it is clear that the relevant property the contractual right to claim payment to itself under each credit was vested, by agreement of all concerned, in CBI, not SOMO. The majority judgment is also inconsistent with the reasoning of Lord Ellenborough cited with approval by the Court of Appeal in the Rekstin case (para 92 above). The suggested distinction between and co existence of inconsistent principal and collateral obligations under one and the same tri partite contract (paras 103 and 108 above) is a remarkable, and to my mind incoherent, novelty in our law, with potential to create confusion in future. Just as importantly, the majority judgment undermines the clarity and simplicity of the law regarding garnishee or third party orders as hitherto understood. Finally, it appears irreconcilable with the underlying principle governing third party debt orders highlighted by the House of Lords in Socit Eram. State immunity I prefer to express no opinion on this subject. It does not arise on the view I take of the case, because there is on that basis no question of making any third party debt order (or receivership order). Since I cannot accept the analysis of a (principal) debt owed to SOMO, with an irrevocable collateral obligation to pay it to CBI, which would then hold the proceeds for the State of Iraq (and, as to 5%, the United Nations), I find it difficult to address the implications of such an analysis. I would not exclude the possibility that, on this analysis, the making of a third party debt order against Crdit Agricole might constitute indirect impleading with the right to the proceeds which the State of Iraq would otherwise have enjoyed. But I would wish, if it had been appropriate or necessary, to consider the point further. A receivership order Had the debt under each credit been owed by Crdit Agricole to SOMO alone, with no question of any obligation (whether described as collateral or otherwise) owed to CBI to pay CBI, then I would have agreed that a receivership order could and should be made. But on the majoritys analysis of the case as involving a principal debt owed by Crdit Agricole to SOMO with a collateral obligation at the same time owed to CBI to pay it to CBI, I am unable to see how it would be appropriate to make a third party receivership order against Crdit Agricole. Such an order should not be made to interfere with the rights of an uninvolved fourth party (CBI) owing nothing to the judgment debtor (Taurus) which is what CBI on any view is. Conclusion The reasons I have given in paras 84 to 117 above for dismissing this appeal correspond broadly with, though expand upon, reasons given by both Sullivan and Briggs LLJ. They also correspond broadly with those given by Lord Neuberger whose judgment I have had the benefit of seeing after preparing the bulk of paras 84 to 117. I therefore consider that the Court of Appeal reached the right conclusion, that there was no basis for a third party debt order over the proceeds of the letters of credit in favour of Taurus and that the appeal should be dismissed on this point. LORD NEUBERGER: (dissenting) Introductory This appeal arises out of an application by Taurus Petroleum Ltd (Taurus) to enforce an Iraqi arbitration award for some US$8.7m against State Oil Marketing Company of the Ministry of Oil (SOMO) by means of a third party debt order (TPDO) under CPR 72. The TPDO sought by Taurus is in relation to sums payable pursuant to certain letters of credit (the Letters of Credit), which were issued at the request of Shell International Eastern Trading Co (Shell) by the London branch of Crdit Agricole SA, and which named SOMO as the beneficiary. Those Letters of Credit provided for payment to be made to an account in the name of the Central Bank of Iraq (CBI) at the Federal Reserve Bank of New York (FRB) in New York, and included a promise in favour of CBI that payment would be made in that way. Each of the Letters of Credit is in identical form and has been drafted by inserting two paragraphs, condition A and condition B, into the middle of what is otherwise a fairly familiar or standardly worded letter of credit, without careful thought having apparently been given to the interrelationship between those two conditions and the rest of the document. The precise terms of the Letters of Credit are as set out in para 9 of the judgment of Lord Clarke. There are five issues to which this application potentially gives rise. Those issues are as follows: a. What is the situs of the debts created by the Letters of Credit? A TPDO can only be made in respect of a debt outside the jurisdiction if compliance with the TPDO would be recognised in that jurisdiction as discharging the primary debtors liability; if the debts in this case are sited not in London but in New York, as was held below, this requirement would not be satisfied. b. To whom are the debts created by the Letters of Credit owed? Under CPR 72.2(1), a TPDO can only be granted in respect of a debt due or accruing due to SOMO; Taurus accordingly have to establish that the debts are owed to SOMO (as Moore Bick LJ held); Taurus cannot succeed if (as Field J held) the debts were also owed to CBI, let alone if (as Sullivan and Briggs LJJ held) they were not owed to SOMO at all but to CBI. c. If the debts could otherwise be subjected to a TPDO, should the commitment to CBI in the Letters of Credit prevent the court from making a TPDO? Moore Bick LJ considered that it should not. d. Does state immunity prevent the making of TPDO? The Court of Appeal decided that section 14(4) of the State Immunity Act 1978 would preclude the making of a TPDO if the debts were owing to CBI (as the sole or a joint debtor), but state immunity did not apply if the debts were owed to SOMO alone; there is no appeal against either limb of this conclusion. e. Should a receivership order be made against SOMO? The Court of Appeal decided that such an order should not be made. Taurus appeals against that decision. Although this is not quite the same order as that in which the points were argued, it seems to me that it is more logical to discuss first the self contained issue of the situs of the debts created by the Letters of Credit, then to deal with the other questions relating to the TPDO issue, all of which arise from the unusual provisions conditions A and B, and finally to address the free standing receivership issue. The first issue: the situs of the debts Lord Clarke has explained in paras 29 to 41 above why the Court of Appeal concluded that the situs of the debts created by the Letters of Credit was New York and why he considers that conclusion is wrong. For the reasons which Lord Clarke succinctly gives in para 31, the situs of the debts in this case is London. The reason the court below held that it was New York was because they were bound by the majority decision of the Court of Appeal on the situs of debt issue in Power Curber International Ltd v National Bank of Kuwait SAK [1981] 1 WLR 1233. In that case, Lord Denning MR and Griffiths LJ decided, without explaining why, that [a] debt under a letter of credit is different from ordinary debts, to quote Lord Denning at p 1240F. At p 1244B D, Waterhouse J dissented on this point, and he was quite right to do so. I can see no reason for holding that a debt due under a letter of credit should be differently treated from other debts for the purpose of deciding its situs. Such unreasoned distinctions do the common law, and in particular, commercial law, no favours. Consistency, certainty and clarity should be guiding principles. Ironically, because the decision on this point in Power Curber has stood unchallenged for over 35 years, it must be accepted that there is an argument based on certainty for not departing from it. Hence the valuable analysis of the textbooks and cases in this and other common law jurisdictions in paras 36 to 40 above. In agreement with Lord Clarke, I consider that this analysis clearly establishes that Power Curber has not been nearly well enough established as representing the law to justify us following its mistaken conclusion on this issue. The second issue: to whom are the debts owed? The issue to be resolved is the nature of the right granted to CBI as a result of the inclusion of conditions A and B in the Letters of Credit. Taurus argues that those conditions involve Crdit Agricole as debtor (i) agreeing with SOMO as the person owed the debt that the debt will be met by the sums due under the Letters of Credit (the Sums) being paid into CBIs account at FRB, and (ii) collaterally agreeing with CBI that it will pay the Sums into CBIs account at FRB. By contrast, SOMO argues that the effect of the inclusion of the two conditions in the Letters of Credit is that Crdit Agricole as debtor (i) agrees with CBI to pay the Sums into CBIs account at FRB, thereby rendering CBI the person owed the debt, and (ii) agrees with SOMO, as the initial beneficiary of the Letters of Credit, and CBI, as the person owed the debt, to comply with that obligation. The first analysis is consistent with the opening part of the Letters of Credit, bearing in mind in particular that the Letters of Credit are stated to be to SOMO, and in favour of SOMO and that SOMO is therein described as the beneficiary. Those expressions indicate that, in the normal way, the Sums due from the buyer requesting the issue of the Letters of Credit, Shell, are owing to SOMO, as the seller and beneficiary under the Letters of Credit. That, of course, reflects the fact that, as between buyer and seller at the time of issue of the Letters of Credit, there was simply a debt owing from the buyer, Shell, to the seller, SOMO, which, in the absence of any contrary provision one would expect to see reflected in the Letters of Credit. If conditions A and B simply contained a commitment by Crdit Agricole to pay the sums due into CBIs account with FRB, it would make no difference to this conclusion. However, in my opinion, the problem with the first analysis lies in the fact that conditions A and B involve commitments to CBI. Reading conditions A and B together, there can be no doubt that the your in condition A must refer to CBI, given that condition B requires payment into CBIs account at FRB as specified, and condition A is an obligation to pay into your account with FRB with reference to Iraq Oil Proceeds account. Accordingly, under condition A, Crdit Agricole agrees with CBI that it will ensure that the Sums will be paid into an account in the name of CBI not of SOMO. To put it at its lowest, that is a pretty good indication that the beneficiary, or at least a beneficiary, of the right to be paid the sums in question is CBI: if X agrees with Y that X will pay a sum of money into Ys account, the natural inference is that the debt is owed to Y. The opening words of the condition add nothing, as the sum would not have to be paid in any event unless all terms and conditions of this letter of credit [were] complied with. The point is reinforced by the irrevocability of the commitment as recorded in the last sentence of condition A, and also in my opinion by condition B. That condition is a promise to, or engagement with, SOMO as well as CBI, but, subject to any other provision of the Letter of Credit, this appears to me only to amount to a separate contractual commitment by Crdit Agricole to SOMO, as well as to CBI, to pay the Sums into CBIs account with FRB as already stated in condition A ie a collateral commitment. A contract by X with Y and Z to pay money to Y, it would, at least normally, create a debt in favour of Y, and not of Z, who merely has a contractual right to require X to pay the sum to Y. All the more so in the case of condition B, given that it follows on from condition A. Turning back to the part of the Letters of Credit preceding conditions A and B, I do not consider that there is any provision which calls into question the conclusion that the debt created by the document is owed to CBI alone. It is true that each Letter of Credit is described as being issued [i]n favour of SOMO, and that SOMO must be the person described as the beneficiary (because SOMO is clearly the beneficiary in condition B). However, in the light of conditions A and B, I am unpersuaded that those features justify the conclusion that the SOMO thereby is to be treated as entitled to the sums payable under the Letters of Credit. As I have mentioned, the Letters of Credit were issued to and in favour of SOMO as beneficiary because SOMO was providing the oil to Shell, and, therefore, subject to any agreement to the contrary, would be entitled to the Sums. However, the fact that the Letters of Credit were issued to and in favour of SOMO as beneficiary is by no means inconsistent with the notion that SOMO was obliged to ensure, and was therefore irrevocably directing, that payment of the Sums were to be made to CBI for CBIs benefit. In effect, viewed in this context, conditions A and B can be seen as recording a formal acknowledgment, binding on SOMO, CBI and Crdit Agricole, of an irrevocable assignment by SOMO to CBI of the right to receive the Sums or a novation of the contractual right to be paid those sums. A right can properly be described as created in favour of X in a case where, in the document creating or recording the right, X irrevocably assigns the whole of the right to Y or the right is novated in favour of Y. I do not regard Crdit Agricoles commitment to SOMO in condition B as inconsistent with such an analysis: the fact that the debt became vested in CBI does not mean that SOMO had no interest in where or to whom it was paid. It is true that in article 2 of UCP 600, referred to in paras 18 and 19 above, beneficiary is defined in article 2 as the party in whose favour a credit is issued. However, as I have sought to explain, that does not, at least in my view, assist Taurus in these proceedings. The Letters of Credit in this case can fairly be said to have been issued in favour of SOMO, but as at the moment they were issued the benefit of the right to be paid was effectively accepted, and irrevocably accepted, as having been divested from SOMO and vested in CBI. Accordingly, I agree with Briggs LJ when he said at para 57 of his judgment in the Court of Appeal that the unusual terms of the Letters of Credit in this case make CBI not SOMO the only creditor in respect of the money promised to be paid, and therefore solely entitled to property in the debt thereby created and that they conferred on SOMO only a non proprietary right to seek damages for breach of contract. Although I must confess to having been initially attracted by it, I have considerable difficulty with the conclusion reached by the majority, namely that, as Lord Clarke puts it, each Letter of Credit gave rise to two separate obligations: an obligation to pay the proceeds into the account of CBI , which was owed to SOMO alone and sounded in debt, and a separate collateral obligation to pay the proceeds into that account which was owed to SOMO and CBI jointly and sounded in damages. Where X agrees with Y and Z that a sum of money will be paid to Y, it is a pretty strange conclusion (unless Z is Ys principal, trustee or the like) that the debt is owed to Z (and that Z is the creditor) and Y only has a collateral right in contract to enforce payment. Conceptually, it may be possible for an agreement to have that effect, but to my mind it would require very clear words to rebut the natural presumption, namely that the debt is owed to Y (and that Y is the creditor) and Z is the beneficiary of a collateral contractual commitment from X. In my view, far from rebutting the natural presumption, the terms of the Letters of Credit support it. I have already explained why that is my view, but, in summary terms it is as follows. Conditions A and B spell out the tripartite nature of the arrangement. Condition A, being an irrevocable promise to CBI pay the Sums into its bank account, appears to bear all the hallmarks of identifying the creditor as CBI: it is a promise to CBI (and CBI alone) to pay and specifically to pay into CBIs bank account. Condition B, being a promise to CBI and SOMO to honour this irrevocable promise as specified, bears all the hallmarks of a purely contractual obligation collateral to that in condition A: it comes after, and refers back to, condition A, and it is a promise to SOMO as well as to CBI. Further, it seems to me somewhat odd to treat each Letter of Credit as imposing on Crdit Agricole an obligation to pay the proceeds into the account of CBI which was owed to SOMO alone and sounded in debt when condition A contains a clear commitment to CBI to pay the proceeds into the account of CBI. I appreciate that Lord Clarkes analysis is based on the earlier part of the Letters of Credit, but, for the reasons I have given, it does not appear to me that they undermine what appears to me to be the clear effect of conditions A and B. If this conclusion is right, the third issue does not arise. However, in view of the majority conclusion on this second issue, it does arise. In any event, it would be right to decide the issue, as it involves a point of some significance. The third issue: the effect of the agreement with CBI This issue has to be approached on the basis that (as the majority of this court have concluded and contrary to my view) SOMO is owed, and CBI is not owed, the debts created by the Letters of Credit. In other words, this issue must be approached on the assumption that each Letter of Credit gave rise to two separate obligations: an obligation to pay the proceeds into the account of CBI , which was owed to SOMO alone and sounded in debt, and a separate collateral obligation to pay the proceeds into that account which was owed to SOMO and CBI jointly and sounded in damages, to quote again Lord Clarkes conclusion. At first sight, the conclusion that SOMO is the sole creditor in respect of the debts appears to justify the conclusion that a TPDO can be made in respect of them. But it is argued by SOMO that such an order would be inconsistent with what is sometimes called honest dealing, because it would cut across the rights of third parties. In this case, even assuming that the sum payable under each of the Letters of Credit was a debt owed to SOMO alone, each Letter of Credit also contained a contractual commitment to CBI to pay the sum into its account at FRB in New York. Despite the fact that Moore Bick LJ and the majority of this Court have concluded that CBIs contractual rights as recorded in the Letters of Credit should not prevent the court making a TPDO, it seems to me that it would be inappropriate for a TPDO to be made. If the TPDO is made, then the debts owing to SOMO under the Letters of Credit would be discharged through payment of the Sums to Taurus by virtue of the TPDO, but I do not see why that should mean that the separate right enjoyed by CBI under condition A should be treated as discharged by such payment. In other words, even if the TPDO is granted and has effect, I consider that CBI should still be able to sue to enforce its contractual right under condition A to have the sum paid into its account. The enforcement of CBIs right, on this hypothesis, would only sound in damages, but it is hard to see how the measure of damages would not be an amount equal to the sum. In effect, therefore, the making of a TPDO would impose on Crdit Agricole the obligation to pay the sum due under each of the Letters of Credit twice, once as a debt to Taurus pursuant to the TPDO, and once by way of damages to CBI. In my view, if that is the result of the making of a TPDO, then it cannot be right to make such an order. It would, in my judgment, be an abuse of the courts power to make a TPDO if it had such an effect. It may well be that, as I think is suggested by Lord Mance, this conclusion can be justified by reference to a general principle that a TPDO (like its predecessor, a garnishee order) will only be made in respect of a sum which is otherwise due to be paid to the person on whose liability the applicant for the TPDO relies see eg Webb v Stanton (1883) 11 QBD 518, at pp 526 and 530, per Lindley LJ and Fry LJ respectively. Condition B does not call this conclusion into question, as it is additional to condition A. In fact it provides another ground for the same conclusion. Condition B involves a promise for the joint and/or several benefit of SOMO and CBI to have the Sums paid into CBIs account. Given that the promise is for the joint benefit of SOMO and CBI, it cannot be satisfied by a payment which can only be treated as being for the benefit of SOMO alone. It is right to add that, even if I am wrong in my view expressed in para 141 above that CBIs contractual claim would survive the grant and enforcement of the TPDO sought by Taurus, I would still consider it wrong to grant the TPDO. On this hypothesis, the grant of the TPDO would deprive CBI of its separate contractual right to be paid the sums due under the Letters of Credit. For the court to grant a TPDO would, on this hypothesis, involve enabling Taurus to obtain a right over the Sums which is superior to the rights of CBI, even though CBIs rights in relation to those sums would pre date those of Taurus, and Taurus would have had notice of CBIs rights when the TPDO was granted, indeed when it applied for the TPDO. That would seems to be contrary to normally accepted commercial practice and legal principle. I agree with Lord Mance that this conclusion derives support from the recent decision of the Court of Appeal in Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy [2014] EWCA Civ 1603. The argument that the grant of a TPDO would give Taurus a proprietary right over the debts created by the Letters of Credit, which is superior to CBIs simple contractual right to have the debts satisfied by payment into its account at FRB, takes matters no further in my view. It involves Taurus dragging itself up by its own bootstraps: the primary issue is whether a TPDO should be granted, not the effect of a TPDO once it is granted. As at the date that the TPDO was sought, Taurus was simply a creditor of SOMO with no rights in relation to the debts created by the Letters of Credit, whereas CBI had a contractual right to have the sums meeting the debts paid into its account. As I have said, and subject to what I say in the next paragraph of this judgment, it seems to me that it would be an abuse of the courts powers to grant a TPDO to Taurus if it would deprive CBI of its prior and bona fide contractual rights created in the very document giving rise to the debt which Taurus is seeking to divert. And if the TPDO does not prevent CBI from enforcing its contractual rights, then it would still be an abuse, as it would land Crdit Agricole with the obligation of having in effect to pay the same debt twice. In my view, the only way in which Taurus can get round this problem would be if CBIs contractual right under the Letters of Credit is no more than a right to insist on Crdit Agricole complying with its obligations to SOMO under the Letters of Credit. If that were the right analysis, then there would be no problem about making a TPDO: the making and implementing of a TPDO would not represent a breach of SOMOs rights, and therefore would not represent a breach of CBIs rights. However, I find it very difficult to accept that it is the right analysis. Even if the effect of conditions A and B is to give CBI no more than a contractual right against Crdit Agricole to have the Sums paid into its account, I do not consider that those conditions can be sensibly interpreted as limiting CBIs rights to those to which SOMO is entitled. Condition A is expressed as being an unqualified obligation, and I see no reason for implying into it a limitation of this nature. At least equally tellingly, condition B is expressed as being an obligation to both SOMO and CBI, without any suggestion that either of them is subordinate to the other. The fact that the debts arising from the Letters of Credit are (as I am assuming in connection with the third issue) owed to SOMO does not justify giving the limited effect to CBIs rights under the two conditions as, at least in my view, is required if a TPDO is to be granted. The fourth issue: state immunity No argument was developed on the issue of state immunity, although it was an issue in the courts below. Given that it is accepted that Moore Bick LJ was right to conclude that state immunity would apply if CBI was the sole creditor or a joint creditor, but not if SOMO was the sole creditor, this is readily understandable. As explained in para 123(b) above, a TPDO could anyway only be made if SOMO was the sole creditor, so the state immunity issue has no effect on the outcome of this appeal. The fifth issue: should a receivership order have been made? I have read Lord Clarkes observations on this issue in paras 47 to 58 above. The principles are not in doubt, but their application in this case is not easy. I agree that we can consider the point afresh as Moore Bick LJs decision to refuse a receivership order was clearly affected by his (inevitable but mistaken) view that the situs of the debts was outside the jurisdiction in New York, whereas it is in London. On balance, I agree with Lord Clarke that a receivership order is appropriate for the reasons which he gives. Conclusions Accordingly, I conclude that: a. The situs of the debts created by the Letters of Credit is England and there is therefore no jurisdictional impediment to the grant of the TPDO sought by Taurus; b. However, the debts are owed to CBI, and not to SOMO, so it is not open to the court to grant a TPDO as it is SOMO, not CBI, which owes money to Taurus; c. If, contrary to my view, the debts are owed to SOMO, I would still hold that a TPDO could not be granted in the light of CBIs contractual rights under the Letters of Credit; d. As CBI has state immunity, that is another reason why a TPDO cannot be granted; but if the debts were owed solely to SOMO, it would not have state immunity; e. A receivership order could properly be made against SOMO. Accordingly, in the light of my conclusions in paras 148(b), (c) and (d) above, I would dismiss Tauruss appeal so far as it challenges the refusal of the Court of Appeal to grant a TPDO, but, in the light of my conclusion in para 148(e) above, I would allow Tauruss appeal in so far as it challenges the refusal of the Court of Appeal to make a receivership order.

UK-Abs

The appellant, Taurus Petroleum Limited (Taurus), contracted with the respondent, State Oil Marketing Company of the Ministry of Oil, Republic of Iraq (SOMO). Disputes arose and in 2013 Taurus obtained an arbitral award against SOMO. Shell International Eastern Trading Co had purchased two parcels of crude oil from SOMO. The price was to be paid under two letters of credit, issued by the London branch of Crdit Agricole S.A. (CA) addressed to Central Bank of Iraq (CBI) instructing it to advise each credit to SOMO. Under each letter of credit, SOMO was identified as the beneficiary, but it was provided that payment was to be made in New York to the Iraq Oil Proceeds Account at the Federal Reserve Bank of New York. Each contained a promise on the part of CA in favour of CBI to make payment in that way, irrespective of any conflicting instructions which might be given by SOMO. The letters stated that the credit was subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision) (UCP). SOMO presented conforming documents to CA. Taurus obtained an order permitting the award to be enforced as a judgment in England. Taurus also obtained a third party debt order (TPDO) in respect of the proceeds due under the credits, with a view thereby to satisfying SOMOs judgment debt to it, together with an associated receivership order. SOMO challenged these orders, which the High Court set aside. The Court of Appeal upheld that result, albeit for different reasons. Taurus appealed to the Supreme Court. The issues argued on appeal were: (i) whether SOMO was the sole creditor or a creditor at all of CA under the letters of credit, (ii) whether CAs obligations to CBI under the letters prevented the court from making a TPDO, (iii) the location of the debts and (iv) whether a receivership order was appropriate in the circumstances. The Supreme Court allows the appeal by a majority of three to two. Lord Clarke gives the lead judgment, and. Lord Sumption and Lord Hodge concurring judgments. Lord Neuberger and Lord Mance dissent. The interpretation of the letters of credit The court could make the TPDO only if CAs debt was owed to SOMO as the sole creditor, notwithstanding CAs obligation to make payment to an account in the name of CBI. [3, 9]. SOMO was the sole beneficiary of the letters of credit because: (i) the language of the letters expressly identifies SOMO as the beneficiary [18 19, 62 63, 76] and (ii) that conclusion fits with the use of the term beneficiary in articles 2 and 18 of the UCP, which must be considered in interpreting the letters and to which the credit was subject [19 20, 62, 76]. In the absence of a clear statement to the contrary, CAs primary obligation to make payment was owed to SOMO alone. CAs separate obligation, owed jointly to SOMO and CBI under each letter, was collateral to that primary obligation [23, 65, 79]. Lord Sumption adds that, if the parties had intended CBI to be the debtor, the obvious solution would have been a transfer or assignment of credit to CBI, as permitted by article 38 of the UCP [64]. Lord Sumption and Lord Hodge each reason that nothing in the terms of the letters shows any such transfer, and the terms expressly exclude that possibility [64, 77]. The location of the debt Debts have a location for legal purposes. If CAs debts were situated outside England and Wales, the court would be unable to make a TPDO in respect of them unless, under the law of the location, payment in compliance with the TPDO would discharge CA from those debts to the extent of CAs payment [29]. The debts were located in England, because that was where they were recoverable [30 31]. The Court of Appeal had been bound by its own reasoning in Power Curber v National Bank of Kuwait SAK [1981] 1 WLR 1233, so had instead concluded that the debts were located where they were payable. The reasoning in that case was not extensive, has not become well established, and was incorrect [32 41]. The effect of CAs obligations to CBI There is no independent rule that a TPDO can be made only in respect of property with which the judgment debtor can honestly deal. The rule is only that a TPDO cannot be made in respect of property which does not belong to the judgment debtor. Unpaid debts under the letters of credit were not CBIs property [45 46]. Lord Sumption and Lord Hodge each add that the TPDO modified CAs primary obligation, which was owed to SOMO and which was to pay money into CBIs account, so that payment in compliance with the TPDO discharged CA from its debt to SOMO. CAs collateral obligation to CBI was to discharge that primary obligation by a particular payment method. Once the primary obligation was discharged, that collateral obligation falls away. Compliance with the TPDO would consequently discharge CA from its liabilities to the extent of its payment. As a result, CAs obligations to CBI could not prevent the court from making the TPDO [70 71, 79]. The receivership order A receivership order is appropriate because: (i) it was predictable, in all the circumstances, that SOMO would be sued in England, under English law, for the purpose of enforcing the arbitral award if SOMO declined to honour that award; (ii) domestic and international policy favours the efficient recognition and enforcement of arbitration awards; (iii) it would be inconsistent to treat the arbitration award as a judgment of the English courts for enforcement purposes, whilst limiting the available enforcement methods on the basis of an insufficient connection to this jurisdiction [54 55]. CBIs account in New York is merely the conduit via which monies paid from CA pass onwards into the Iraqi government budget. There is no evidence that CA would be prejudiced by the receivership order. [56 58]. Dissenting judgments Lord Mance and Lord Neuberger give dissenting judgments. They each conclude that the letters of credit created debts which were owed to CBI alone [94 101, 126 138]. Lord Mance further considers that the TPDO would contravene the principle that a TPDO cannot place a judgment creditor (Taurus) in a better position than the judgment debtor (SOMO) in relation to the third party (CA) [90 91, 115]. There is no basis, in his opinion, for regarding CAs obligations to pay CBI as collateral to, or conditional on, some primary obligation to pay the proceeds to SOMO [112 113, 117]. Lord Neuberger reasons further that CAs compliance with the TPDO could not discharge any separate obligation owed to CBI, effectively requiring CA to pay the sums due under the credits twice: once pursuant to the TPDO, and once pursuant to its obligations to CBI. The TPDO was inappropriate for that reason [141] and/or because it would grant Taurus rights to the sums which prevailed over those of CBI, in circumstances where Taurus knew of CBIs prior rights [143].

Unlike some other systems, English law recognises the freedom of individuals to dispose of their assets by will after death in whatever manner they wish. There are default succession rules in the event of intestacy, but by definition those only come into play if the deceased left no will. Otherwise the law knows of no rule of automatic succession or forced heirship. To this general rule, the statutory system of family provision imposes a qualification. It has provided since 1938 for the court to have power in defined circumstances to modify either the will or the intestacy rules if satisfied that they do not make reasonable financial provision for a limited class of persons. That power was first introduced by the Inheritance (Family Provision) Act 1938 (the 1938 Act). The present statute is the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act). The key features of the operation of the 1975 Act are four. First, it stipulates no automatic provision; rather the will (or the intestacy rules) apply unless a specific application is made to, and acceded to by, the court and a specific order for provision is made. Second, only a limited class of persons may make such an application; they are confined to spouses and partners (civil or de facto), former spouses and partners, children, and those who were actually being maintained by the deceased at the time of death. Third, all but spouses and civil partners who were in that relationship at the time of death can claim only what is needed for their maintenance; they cannot make a claim on the general basis that it was unfair that they did not receive any, or a larger, slice of the estate. Those three features are laid down expressly in the 1975 Act. The fourth feature is well established by case law both under this Act and its predecessor of 1938. The test of reasonable financial provision is objective; it is not simply whether the deceased behaved reasonably or otherwise in leaving the will he did, or in choosing to leave none. Although the reasonableness of his decisions may figure in the exercise, that is not the crucial test. The present case concerns one kind of claimant, namely an adult child who has lived quite independently of her parent, the deceased testator, for many years, but who is in straitened financial circumstances. That is only one of the types of case which may raise difficult individual questions under the 1975 Act, which have to be resolved on a case by case basis. Applications by spouses may do so, whether living with the deceased at the time of death or separated or divorced. Some cases involve difficult balancing of competing claims by several persons upon limited estates. Yet others involve assessing the circumstances in which the deceased was supporting the claimant in some way up to the time of his death; those circumstances may give rise to a claim that future maintenance is reasonably required, or they may demonstrate that support was given in circumstances in which there is no obligation to continue it after death. Some of the factors inevitably dealt with in this judgment may apply also to types of case other than those of adult children living separately from the deceased, but there is no occasion for this court to attempt to meet every difficulty to which claims for family provision may give rise. The facts of the present case The testator, Mrs Jackson, was widowed after only four years of marriage and when expecting her only child, a daughter, now Mrs Ilott. In 1978, when Mrs Ilott was 17, she left home secretly to live with her boyfriend, of whom Mrs Jackson did not approve. There followed a lifelong estrangement between mother and daughter which lasted 26 years until the formers death in 2004 at the age of 70. Mrs Ilott married the man she left home to live with, without telling her mother at the time, although the latter learned of it afterwards. They are still together, and have had five children. They have lived their entire married lives independent of any financial connection whatever with Mrs Jackson, and for much the greatest part of that time in complete isolation from her. District Judge Million reviewed in some detail the evidence of the very limited contacts which mother and daughter had over the extended intervening years. Mrs Jackson had kept a diary and Mrs Ilott gave her own detailed account. There had been three attempts at reconciliation, but all had foundered. The first, after the birth of the first of Mrs Ilotts children in Spring 1983, had lasted the longest. It had been fostered by Mr Ilotts mother, and had resulted in Mrs Jackson visiting the new mother in hospital and in several subsequent telephone calls between them. However, these had not in the main been amicable and they ended after an unpleasant row between Mr Ilott and Mrs Jackson, as to which the District Judge held that Mrs Ilotts evidence about what her husband had said was deliberately evasive. Later conversations between mother and daughter occurred many years later in 1994 and 1999 after chance encounters in public places, but these were very short lived and also failed to establish significant common ground. District Judge Million went on to find that Mrs Jackson was capricious and unfair in many of the criticisms of Mrs Ilott recorded in letters, and that her decision to exclude her altogether from her estate was harsh and unreasonable. He found that the hurt felt by Mrs Jackson at the original and sustained rupture of her family, and what she saw as being deprived of her grandchildren, was so entrenched that little short of rejection by Mrs Ilott of her husband would have satisfied her; a written apology sent at one stage by Mrs Ilott did not meet her needs. Equally, he found that Mrs Ilott and her husband contributed to some of the difficulties in sustaining a reconciliation. It will be necessary later to refer to the limits to the relevance of these findings. Whatever the rights and wrongs of the family feud may have been, there is no doubt that it was sustained for a quarter of a century and was the reason why Mrs Jackson decided not to make any provision for her daughter in her will. This was not a decision taken in haste. She had made it at least as early as Spring 1984, when she made a will and recorded a letter of wishes. This was at a time when there was some contact between mother and daughter, during the first attempt at reconciliation and about two months before the row which ended it. The side letter of wishes stated her decision as follows, after referring to Mrs Ilotts initial departure from home in 1978: She did not get in touch with me and I heard from her husbands parents that she had a baby boy. When I heard about this, I visited her in hospital and took flowers and brought up her perambulator and other presents. However, she made herself very unpleasant and wished to have nothing to do with me. Therefore she receives nothing from me at my death. There is no reason to think that Mrs Ilott was aware of this 1984 will at the time that it was made, nor to suppose that it had anything to do with the breakdown of the then fragile attempt at reconciliation. But the decision remained firm and Mrs Jackson reiterated it in 2002 when she made her last will, and again left a side letter. It similarly stated her settled conclusion that no provision should be made for Mrs Ilott, saying that she felt no moral or financial obligation towards her in view of what had happened, and it instructed her executors to resist any claim which Mrs Ilott might make. Mrs Ilotts evidence made clear that her mother told her of this decision and the District Judge found that she and her family had managed their lives for many years without any expectation of benefit from the estate. Apart from a modest legacy to a benevolent association connected with her late husbands employment, Mrs Jacksons will left her estate to charities with which she had had no particular connection during her lifetime, but which represented her freely made and considered choice of beneficiaries. The estate, of which the largest single component was a house in the home counties, was worth in round figures 486,000. Mrs Ilotts financial circumstances were conservatively described by the District Judge as modest. The family lived in a house rented from a Housing Association. At the time of his decision, four of the children were living at home, one of them, aged 20, in work. Mrs Ilott had elected since the birth of the first of their children to remain at home and was not employed except as her husbands bookkeeper for 240 pa. Her husband had intermittent work as a supporting actor and earned a little over 4,100 pa net after charging some expenses such as car costs which brought some benefit in kind. Leaving aside any small contribution from the 20 year old son, the rest of the family income was in the form of child benefit (1,878) and working tax credits (8,112). The family was also entitled to housing benefit and council tax benefit, together worth about 5,100 pa. The District Judge assessed the net annual income, after including the limited benefit in kind, at 20,387. He then allowed for some limited, and unspecified, earning capacity in Mrs Ilott, at least in part time work, although in the past her decision to remain at home for the children was perfectly understandable. The family had lived on that or similar income for many years. Mrs Ilott was not insolvent. The family had a small sum by way of savings (about 4,000). They lived within their means. But the clear evidence was that she and her family were distinctly limited in what they could do. The household equipment was all old and much of it worn out, but they could not afford to replace it as necessary. The car had cost 245 and kept breaking down. The carpets and decoration needed renewal but they could not provide for this. They had never been able to afford a family holiday. They could not contemplate, for example, music or sports lessons for the children. Before both the Court of Appeal and this court it was common ground that some of the benefits received by Mrs Ilott and her family were subject to a means test based on available savings or capital. Both housing benefit and council tax benefit are not payable if there are savings in excess of 16,000, other than in the form of the capital value of the family home. Neither working tax credit nor child benefit is similarly affected by capital. As will be seen, the incidence of benefits was central to the re evaluation of the claim which the Court of Appeal made. Mrs Ilott was entitled to buy her present home at a concessionary price, as a sitting tenant. The price at the time of the hearing before the District Judge was 186,000, but by the time of the Court of Appeal judgment now under appeal it had fallen to 143,000. The statutory framework The 1975 Act, as it stood at the time of Mrs Jacksons death in 2004 and omitting subsequent amendments to include civil partners as qualified claimants and to give further definition to those whom the deceased was maintaining at the time of death, provided as follows. 1. Application for financial provision from deceaseds estate (1) Where after the commencement of this Act a person dies domiciled in England and Wales and is survived by any of the following persons the wife or husband of the deceased; a former wife or former husband of the (a) (b) deceased who has not remarried; (ba) any person (not being a person included in paragraph (a) or (b) above) to whom subsection (1A) below applies; a child of the deceased; (c) (d) any person (not being a child of the deceased) who, in the case of any marriage to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage; (e) any person (not being a person included in the foregoing paragraphs of this subsection) who immediately before the death of the deceased was being maintained, either wholly or partly, by the deceased; that person may apply to the court for an order under section 2 of this Act on the ground that the disposition of the deceaseds estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant. (1A) This subsection applies to a person if the deceased died on or after 1 January 1996 and, during the whole of the period of two years ending immediately before the date when the deceased died, the person was living (a) and in the same household as the deceased, (2) (b) as the husband or wife of the deceased. In this Act reasonable financial provision (a) in the case of an application made by virtue of subsection (1)(a) above by the husband or wife of the deceased (except where the marriage with the deceased was the subject of a decree of judicial separation and at the date of death the decree was in force and the separation was continuing), means such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance; in the case of any other application made (b) by virtue of subsection (1) above, means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance. [Supplemental provisions relating to persons treated as 2. (3) being maintained by the deceased] Powers of court to make orders (1) Subject to the provisions of this Act, where an application is made for an order under this section, the court may, if it is satisfied that the disposition of the deceaseds estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant, make any one or more of the following orders an order for the making to the applicant (a) out of the net estate of the deceased of such periodical payments and for such term as may be specified in the order; (b) an order for the payment to the applicant out of that estate of a lump sum of such amount as may be so specified; (c) an order for the transfer to the applicant of such property comprised in that estate as may be so specified; (d) an order for the settlement for the benefit of the applicant of such property comprised in that estate as may be so specified; an order for the acquisition out of property (e) comprised in that estate of such property as may be so specified and for the transfer of the property so acquired to the applicant or for the settlement thereof for his benefit; an order varying any ante nuptial or post (f) nuptial settlement (including such a settlement made by will) made on the parties to a marriage to which the deceased was one of the parties, the variation being for the benefit of the surviving party to that marriage, or any child of that marriage, or any person who was treated by the deceased as a child of the family in relation to that marriage; [supplemental provisions for the form of [allows the court to order part of the estate to be (2) periodical payments orders] (3) set aside to meet periodical payments orders] (4) An order under this section may contain such consequential and supplemental provisions as the court thinks necessary or expedient for the purpose of giving effect to the order or for the purpose of securing that the order operates fairly as between one beneficiary of the estate of the deceased and another and may, in particular, but without prejudice to the generality of this subsection (a) order any person who holds any property which forms part of the net estate of the deceased to make such payment or transfer such property as may be specified in the order; (b) vary the disposition of the deceaseds estate effected by the will or the law relating to intestacy, or by both the will and the law relating to intestacy, in such manner as the court thinks fair and reasonable having regard to the provisions of the order and all the circumstances of the case; confer on the trustees of any property (c) which is the subject of an order under this section such powers as appear to the court to be necessary or expedient. 3. Matters to which court is to have regard in exercising powers under section 2 (1) Where an application is made for an order under section 2 of this Act, the court shall, in determining whether the disposition of the deceaseds estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters, that is to say the financial resources and financial needs (a) which the applicant has or is likely to have in the foreseeable future; (b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future; (c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future; (d) any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased; (e) deceased; (f) any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased; (g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant. the size and nature of the net estate of the (2) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(a) or 1(1)(b) of this Act, the court shall in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the age of the applicant and the duration (a) of the marriage; the contribution made by the applicant to (b) the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family; and, in the case of an application by the wife or husband of the deceased, the court shall also, unless at the date of death a decree of judicial separation was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce. (2A) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(ba) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to (a) the age of the applicant and the length of the period during which the applicant lived as the husband or wife of the deceased and in the same household as the deceased; (b) the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family. (3) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(c) or 1(1)(d) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the manner in which the applicant was being or in which he might expect to be educated or trained, and where the application is made by virtue of section 1(1)(d) the court shall also have regard (a) to whether the deceased had assumed any responsibility for the applicants maintenance and, if so, to the extent to which and the basis to the liability of any other person to upon which the deceased assumed that responsibility and to the length of time for which the deceased discharged that responsibility; (b) to whether in assuming and discharging that responsibility the deceased did so knowing that the applicant was not his own child; (c) maintain the applicant. (4) [additional considerations applicable to applications made under section 1(1)(e) by persons being maintained by the deceased.] In considering the matters to which the court is (5) required to have regard under this section, the court shall take into account the facts as known to the court at the date of the hearing. (6) In considering the financial resources of any person for the purposes of this section the court shall take into account his earning capacity and in considering the financial needs of any person for the purposes of this section the court shall take into account his financial obligations and responsibilities. Maintenance The concept of reasonable financial provision is thus, by the closing words of section 1(1), made central to the jurisdiction to depart from the will or intestacy rules, as the case may be. In the case of current spouses or civil partners, subsections 1(2)(a) and (aa) say that reasonable financial provision is what it would be reasonable for the applicant to receive, whether or not required for maintenance. The supplementary provisions of section 3(2) add for applicants in that limited class the direction to the court to have regard to the provision that the spouse or civil partner might have been expected to obtain in the event of divorce or dissolution, so that the assessment of this kind of claim may well be an exercise similar to that undertaken by the family court on an application for financial remedies after divorce or dissolution with, of course, the difference that the other spouse or partner is now dead. In the case of all other applicants, however, section 1(2)(b) makes clear that reasonable financial provision means such provision as it would be reasonable for the applicant to receive for maintenance. This limitation to maintenance provision represents a deliberate legislative choice and is important. Historically, when family provision was first introduced by the 1938 Act, all claims, including those of surviving unseparated spouses, were thus limited. That demonstrates the significance attached by English law to testamentary freedom. The change to the test in the case of surviving unseparated spouses was made by the 1975 Act, following a consultation and reports by the Law Commission: Law Com No 52 (22 May 1973) and Law Com No 61 (31 July 1974). The latter report made it clear that the recommendation was designed not to introduce, even in the case of surviving present spouses, a general power to re write the testators will, but rather to bring provision for such spouses into line with the developing approach of the family court. That court had by then relatively recently acquired expanded powers to make lump sum and property adjustment orders, which were not limited to maintenance provision but increasingly recognised other factors such as the length of the marriage, the contributions to the family and so on (see section 25 Matrimonial Causes Act 1973). The mischief to which the change was directed was the risk of a surviving spouse finding herself in a worse position than if the marriage had ended by divorce rather than by death. For claims by persons other than spouses the maintenance limitation was to remain, and has done so. See in particular paras 14, 16, 19 and 24. The concept of maintenance is no doubt broad, but the distinction made by the differing paragraphs of section 1(2) shows that it cannot extend to any or every thing which it would be desirable for the claimant to have. It must import provision to meet the everyday expenses of living. In re Jennings, deceased [1994] Ch 286 was an example of a case where no need for maintenance existed. The claimant was a married adult son living with his family in comfortable circumstances, on a good income from two businesses. The proposition that it would be reasonable provision for his maintenance to pay off his mortgage was, correctly, firmly rejected see in particular at 298F. The summary of Browne Wilkinson J in In re Dennis, deceased [1981] 2 All ER 140 at 145 146 is helpful and has often been cited with approval: The applicant has to show that the will fails to make provision for his maintenance: see In re Coventry (deceased) [1980] Ch 461. In that case both Oliver J at first instance and Goff LJ in the Court of Appeal disapproved of the decision in In re Christie (deceased) [1979] Ch 168, in which the judge had treated maintenance as being equivalent to providing for the well being or benefit of the applicant. The word maintenance is not as wide as that. The court has, up until now, declined to define the exact meaning of the word maintenance and I am certainly not going to depart from that approach. But in my judgment the word maintenance connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him. The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature. This does not mean that the provision need be by way of income payments. The provision can be by way of a lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure. Nor am I suggesting that there may not be cases in which payment of existing debts may not be appropriate as a maintenance payment; for example, to pay the debts of an applicant in order to enable a him to continue to carry on a profit making business or profession may well be for his maintenance. Thus in that case a claim against a large estate by an adult son failed when it was put as a claim for a capital sum to meet the capital transfer tax payable on a sizeable gift made to the claimant by the deceased during his lifetime, which gift the former had wasted away. The judge made the assumption, perhaps generously to the claimant, that bankruptcy would be likely if such a legacy were not directed, but that did not make the suggested sum provision for maintenance; the claimant was well able to work, despite a chequered history of drifting from occupation to occupation, and even if bankrupt was well capable of maintaining himself. The level at which maintenance may be provided for is clearly flexible and falls to be assessed on the facts of each case. It is not limited to subsistence level. Nor, although maintenance is by definition the provision of income rather than capital, need it necessarily be provided for by way of periodical payments, for example under a trust. It will very often be more appropriate, as well as cheaper and more convenient for other beneficiaries and for executors, if income is provided by way of a lump sum from which both income and capital can be drawn over the years, for example on the Duxbury model familiar to family lawyers (see Duxbury v Duxbury (Note) [1992] Fam 62). Lump sum orders are expressly provided for by section 2(1)(b). There may be other cases appropriate for lump sums; the provision of a vehicle to enable the claimant to get to work might be one example and, as will be seen, the present case affords another. As Browne Wilkinson J envisaged (obiter) in In re Dennis (above) there is no reason why the provision of housing should not be maintenance in some cases; families have for generations provided for the maintenance of relatives, and indeed for others such as former employees, by housing them. But it is necessary to remember that the statutory power is to provide for maintenance, not to confer capital on the claimant. Munby J (as he then was) rightly made this point clear in In re Myers [2004] EWHC 1944 (Fam); [2005] WTLR 851 at paras 89 90 and 99 101. He ordered, from a very large estate, provision which included housing, but he did so by way not of an outright capital sum but of a life interest in a trust fund together with power of advancement designed to cater for the possibility of care expenses in advanced old age. If housing is provided by way of maintenance, it is likely more often to be provided by such a life interest rather than by a capital sum. Reasonable financial provision The condition for making an order under the 1975 Act is that the will, or the intestacy regime, as the case may be, does not make reasonable financial provision for the claimant (section 1(1)). Reasonable financial provision is, by section 1(2), what it is reasonable for [the claimant] to receive, either for maintenance or without that limitation according to the class of claimant. These are words of objective standard of financial provision, to be determined by the court. The Act does not say that the court may make an order when it judges that the deceased acted unreasonably. That too would be an objective judgment, but it would not be the one required by the Act. Nevertheless, the reasonableness of the deceaseds decisions are undoubtedly capable of being a factor for consideration within section 3(1)(g), and sometimes section 3(1)(d). Moreover, there may not always be a significant difference in outcome between applying the correct test contained in the Act, and asking the wrong question whether the deceased acted reasonably. If the will does not make reasonable financial provision for the claimant, it may often be because the deceased acted unreasonably in failing to make it. For this reason it is very easy to slip into the error of applying the wrong test. It is necessary for courts to be alert to the danger, because the two tests will by no means invariably arrive at the same answer. The deceased may have acted reasonably at the time that his will was made, but the circumstances of the claimant may have altered, for example by supervening chronic illness or incapacity, and the deceased may have been unaware of the full circumstances, or unable to make a new will in time. In re Hancock, deceased [1998] 2 FLR 346 illustrates another possibility. The deceased had acted entirely reasonably in leaving his business land to those of his children who were active in the business, but after his death part of the land acquired a development value six times its probate assessment, and, that being the case, there was a failure to make reasonable provision for another daughter who was in straitened circumstances. Thus there can be a failure to make reasonable financial provision when the deceaseds conduct cannot be said to be unreasonable. The converse situation is still clearer. The deceased may have acted unreasonably, indeed spitefully, towards a claimant, but it may not follow that his dispositions fail to make reasonable financial provision for that claimant, especially (but not only) if the latter is one whose potential claim is limited to maintenance. In In re Jennings, for example, the deceased had unreasonably failed, throughout the minority of his son, the claimant, to discharge his maintenance obligations towards him. Many might say, as indeed the trial judge did, that this failure imposed an obligation on the deceased belatedly to provide for his son. But by the time of his death many years later the son had made his own successful way in the world and stood in no need of maintenance; his claim accordingly failed, correctly, in the Court of Appeal. The right test was well set out by Oliver J in In re Coventry [1980] Ch 461 at 474 475 in a passage which has often been cited with approval since: It is not the purpose of the Act to provide legacies or rewards for meritorious conduct. Subject to the courts powers under the Act and to fiscal demands, an Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases or, if he chooses to do so, to leave that disposition to be regulated by the laws of intestate succession. In order to enable the court to interfere with and reform those dispositions it must, in my judgment, be shown, not that the deceased acted unreasonably, but that, looked at objectively, his disposition or lack of disposition produces an unreasonable result in that it does not make any or any greater provision for the applicant and that means, in the case of an applicant other than a spouse for that applicants maintenance. It clearly cannot be enough to say that the circumstances are such that if the deceased had made a particular provision for the applicant, that would not have been an unreasonable thing for him to do and therefore it now ought to be done. The court has no carte blanche to reform the deceaseds dispositions or those which statute makes of his estate to accord with what the court itself might have thought would be sensible if it had been in the deceaseds position. Next, all cases which are limited to maintenance, and many others also, will turn largely upon the asserted needs of the claimant. It is important to put the matter of needs in its correct place. For current spouses and civil partners (section 1(2)(a) and (aa)), need is not the measure of reasonable provision, but if it exists will clearly be very relevant. For all other claimants, need (for maintenance rather than for anything else, and judged not by subsistence levels but by the standard appropriate to the circumstances) is a necessary but not a sufficient condition for an order. Need, plus the relevant relationship to qualify the claimant, is not always enough. In In re Coventry the passage cited above was followed almost immediately by another much cited observation of Oliver J: It cannot be enough to say here is a son of the deceased; he is in necessitous circumstances; there is property of the deceased which could be made available to assist him but which is not available if the deceaseds dispositions stand; therefore those dispositions do not make reasonable provision for the applicant. There must, as it seems to me, be established some sort of moral claim by the applicant to be maintained by the deceased or at the expense of his estate beyond the mere fact of a blood relationship, some reason why it can be said that, in the circumstances, it is unreasonable that no or no greater provision was in fact made. Oliver Js reference to moral claim must be understood as explained by the Court of Appeal in both In re Coventry itself and subsequently in In re Hancock, where the judge had held that there was no moral claim on the part of the claimant daughter. There is no requirement for a moral claim as a sine qua non for all applications under the 1975 Act, and Oliver J did not impose one. He meant no more, but no less, than that in the case of a claimant adult son well capable of living independently, something more than the qualifying relationship is needed to found a claim, and that in the case before him the additional something could only be a moral claim. That will be true of a number of cases. Clearly, the presence or absence of a moral claim will often be at the centre of the decision under the 1975 Act. Oliver Js reference to necessitous circumstances not by themselves always being sufficient is illustrated by Cameron v Treasury Solicitor [1996] 2 FLR 716. The claimant was the former wife of the deceased. She had been divorced from him 19 years before his death and their matrimonial finances had been settled by a lump sum paid to her as a clean break. There had been no financial relationship between them for the next 19 years, although they had remained in touch. The fact that she was in necessitous circumstances was held not to create any obligation on him to provide for her from his estate; that there was no other claimant and his small estate passed as bona vacantia to the Crown did not alter the fact that their personal and financial relationship was long in the past. Thus cases of long estrangement may, according to the judges assessment of the particular facts, be an example of the proposition that needs are not always enough to justify a claim under the Act. In most cases of clean break matrimonial settlement, the family court order will these days incorporate, as often as not by consent, a direction under section 15 that neither spouse shall be entitled to make any claim under the 1975 Act from the estate of the other. Nor, if the conclusion is that reasonable financial provision has not been made, are needs necessarily the measure of the order which ought to be made. It is obvious that the competing claims of others may inhibit the practicability of wholly meeting the needs of the claimant, however reasonable. It may be less obvious, but is also true, that the circumstances of the relationship between the deceased and the claimant may affect what is the just order to make. Sometimes the relationship will have been such that the only reasonable provision is the maximum which the estate can afford; in other situations, the provision which it is reasonable to make will, because of the distance of the relationship, or perhaps because of the conduct of one or other of the parties, be to meet only part of the needs of the claimant. It has become conventional to treat the consideration of a claim under the 1975 Act as a two stage process, viz (1) has there been a failure to make reasonable financial provision and if so (2) what order ought to be made? That approach is founded to an extent on the terms of the Act, for it addresses the two questions successively in, first, section 1(1) and 1(2) and, second, section 2. In In re Coventry at 487 Goff LJ referred to these as distinct questions, and indeed described the first as one of value judgment and the second as one of discretion. However, there is in most cases a very large degree of overlap between the two stages. Although section 2 does not in terms enjoin the court, if it has determined that the will or intestacy does not make reasonable financial provision for the claimant, to tailor its order to what is in all the circumstances reasonable, this is clearly the objective. Section 3(1) of the Act, in introducing the factors to be considered by the court, makes them applicable equally to both stages. Thus the two questions will usually become: (1) did the will/intestacy make reasonable financial provision for the claimant and (2) if not, what reasonable financial provision ought now to be made for him? There may be some cases in which it will be convenient to separate these questions, particularly if there is an issue whether there was any occasion for the deceased to make any provision for the claimant. But in many cases, exactly the same conclusions will both answer the question whether reasonable financial provision has been made for the claimant and identify what that financial provision should be. In particular, questions arising from the relationship between the deceased and the claimant, questions relating to the needs of the claimant, and issues concerning the competing claims of others, are all equally applicable to both matters. The Act plainly requires a broad brush approach from the judge to very variable personal and family circumstances. There can be nothing wrong, in such cases, with the judge simply setting out the facts as he finds them and then addressing both questions arising under the Act without repeating them. Nor should there normally be any occasion for a split hearing. Moreover, Goff LJs observations ought not to be thought to mean that the approach of an appeal court should differ as between the two parts of the process. Whether best described as a value judgment or as a discretion (and the former is preferable), both stages of the process are highly individual in every case. The order made by the judge ought to be upset only if he has erred in principle or in law. An appellate court will be very slow to interfere and should never do so simply on the grounds that its judge(s) would have been inclined, if sitting at first instance, to have reached a different conclusion. The well known observations of Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360 esp at 1373 1374 are directly in point. It is to kill the parties with kindness to permit marginal appeals in cases which are essentially individual value judgments such as those under the 1975 Act should be. The present case, as it happens, is an example of much to be regretted prolongation, and presumably expensive prolongation, of the forensic process. Submissions were made in the present case as to the date at which the facts fall to be assessed. The answer is given by section 3(5). Where a court has to assess whether reasonable financial provision has been made, and/or what it should be, the relevant date is the date of hearing. Of course, on an appeal, if the question is whether the trial judge made an error of principle the facts and evidence must be taken as they stood before him. And if it should fall to the appellate court to remake the decision on the merits, as ordinarily it should not, any request to adduce further evidence will have to be judged by ordinary Ladd v Marshall principles (see [1954] 1 WLR 1489). The course of proceedings in the present case District Judge Million found that the deceaseds will did not make reasonable provision for Mrs Ilott. He awarded her 50,000. Mrs Ilott was dissatisfied with the amount and appealed. Her claim has varied over time, but both before the District Judge and on appeal from him she sought capital provision amounting to half or more of the estate. The charitable beneficiaries, who had not appealed thus far, then cross appealed challenging the conclusion that there had been any failure of reasonable financial provision. The appeal and cross appeal came on before Eleanor King J (as she then was) with a tight timetable. She was invited to deal first with the cross appeal. She concluded that the District Judge had erred in law/principle in asking himself whether the deceased had acted reasonably rather than whether there had been a failure to make reasonable provision, and that he should have held that there was no lack of reasonable provision. The cross appeal having thus been allowed, Mrs Ilotts appeal on quantum did not arise. Mrs Ilott appealed to the Court of Appeal against King Js decision. She succeeded, because that court held that the District Judge had not made the error claimed. He had perhaps at one stage been at risk of appearing to found his decision upon his judgment about the reasonableness of the deceaseds decision to make no provision for her daughter, going in some little detail into the rights and wrongs of the failed attempts at reconciliation. But he had then gone on properly to confront the section 3 factors and to pose the correct question as set out in In re Coventry, which he cited, namely whether, objectively viewed, reasonable financial provision for the claimant had been made. The court remitted back to the High Court Mrs Ilotts appeal as to the amount of the order. That appeal then came before Parker J, who upheld the District Judges order. Mrs Ilott then appealed that decision also. The Court of Appeal, thus visiting the case for a second time, held that the District Judge had fallen into two errors of principle in arriving at his award of 50,000. It proceeded to make its own evaluation of the claim. It awarded Mrs Ilott (1) 143,000 to buy the house she lived in and (2) an option to receive a further 20,000 in one or more instalments. The present appeal to this court is from that last order. Whether or not there have been avoidable delays at various stages, in particular in mounting the first appeal to the Court of Appeal, the whole process has taken an unconscionable time. The deceased died in July 2004. The appeal before this court was argued in December 2016. The decision of the Court of Appeal now under appeal The Court of Appeal [2016] 1 All ER 932 held that the District Judge had fallen into two fundamental errors of principle. It was these which justified it in re evaluating the claim for itself. Those two errors were said to be: i) he had held that the award should, in the light of the long estrangement and Mrs Ilotts independent life and lack of expectation of benefit, be limited, but he had not identified what the award would have been without these factors and thus the reduction attributable to them; and ii) he had made his award of 50,000 without knowing what the effect of it would be upon the benefits which Mrs Ilott and her family presently received. Having on these grounds set aside the order of the District Judge, the Court of Appeal arrived at its own assessment of the proper award by the following route. i) It held that in order to balance the claims on the estate fairly it was necessary to treat a claimant who is in receipt of state benefits in the same way as a claimant who is elderly or disabled, as having for that reason increased needs for living expenses. The benefits, it held, must be preserved. ii) Accordingly it made an award of a capital sum sufficient to enable the claimant to buy the house in which she lived. That was an award expressly made on the basis that it would not affect benefits entitlement. The court added that it would, if the claimant chose, enable her to augment her income later by way of equity release. iii) It then added a further award of 20,000. This was expressed as an option with provision for drawing in instalments at the election of the claimant. Although that sum was said to be such as to provide a small additional income, it too was expressly awarded in order to enable the claimant to draw it down bit by bit in such a way as to avoid any impact on benefit entitlement. These principal conclusions were expressed by the court in the leading judgment of Arden LJ as follows: 60. In my judgment, what the court has to do is to balance the claims on the estate fairly. There is no doubt that, if the claimant for whom reasonable financial provision needs to be made is elderly or disabled and has extra living costs, consideration would have to be given to meeting those. In my judgment, the same applies to the case where a party has extra financial needs because she relies on state benefits, which must be preserved. Ms Reed submits that the provision of housing would not do this. I disagree. The provision of housing would enable her both to receive a capitalised sum and to keep her tax credits. If those benefits are not preserved then the result is that achieved by DJ Millions order in this case: there is little or no financial provision for maintenance at all. 61. The claim of the appellant has to be balanced against that of the Charities but since they do not rely on any competing need they are not prejudiced by what may be a higher award than the court would otherwise need to make. 62. In my judgment, the right course is to make an award of the sum of 143,000, the cost of acquiring the Property, plus the reasonable expenses of acquiring it. That would remove the need to pay rent though some of that money may be required for meeting the expenses that she will have as owner. As Ms Stevens Hoare submits, having the Property will enable her to raise capital (by equity release) when she needs further income in the future. 63. In addition, I would add to the award a further sum to provide for a very small additional income to supplement her state benefits without the necessity of an equity release. If my Lords agree, I would provide that she has an option, exercisable by notice in writing to the [executors] within two months of the date of this order (or within such longer period as the appellant and [they] may agree) to receive a capital sum not exceeding of 20,000 out of the estate for this purpose. According to the current Duxbury tables in At a Glance for 2015/6, the sum 20,000 [sic] would if invested give her 331 net income per year for the rest of her life. This is not a large amount because of the factors which weigh against her claim, particularly the fact that she is an adult child living independently, Mrs Jacksons testamentary wishes and to a small extent the appellant's estrangement from Mrs Jackson. 64. The option may be exercised in part more than once provided that the total sum of 20,000 is not thereby exceeded. I have expressed the provision of a capital sum as an option so that, if the award of a capital sum would result in the loss of benefits, she can if she wishes take a lesser sum, or (as she may prefer to do if she is advised that her benefits will not be prejudiced) she may take the lesser sum and spend it, and then exercise the option for an amount or amounts not exceeding the balance. The first suggested error The Court of Appeal held that the first error was revealed by para 67 of the judgment of the District Judge. He had said this: 67. In my judgment all of the above factors has produced an unreasonable result in that no provision at all was made for Mrs Ilott in her mothers will in circumstances where Mrs Ilott is in some financial need. However, I also accept that Mrs Ilott has not had any expectancy of any provision for herself. Mr and Mrs Ilott have managed their life over many years without any expectancy that Mrs Ilott would receive anything. That does not mean that the result is a reasonable one in the straightened financial circumstances of the family. But it does mean, in my judgment that any provision now must be limited. As to that, the Court of Appeal said, at para 35: at the end of para 67 of his judgment DJ Million states that because of the appellant's lack of expectancy and her ability to live within her means, her award should be limited. In the paragraphs which follow he does not state how he has limited the award to reflect those matters Those matters might justify a less generous award than would otherwise be made, but, even if that was so, it was wrong in law to state that the award had been limited for those reasons without explaining what the award might otherwise have been and to what extent it was limited by the matters in question. It was a situation in which reasons were required so that the appellant could consider whether the reductions were excessive (which might give her an arguable error for the purposes of any appeal), and it is of the essence of a judicial decision that adequate reasons are given on material matters. The Act requires a single assessment by the judge of what reasonable financial provision should be made in all the circumstances of the case. It does not require the judge to fix some hypothetical standard of reasonable provision and then either add to it, or discount from it, by percentage points or otherwise, for variable factors. To the contrary, the section 3 factors, which are themselves all variables and which are likely often to be in tension one with another, are all to be considered so far as they are relevant, and in the light of them a single assessment of reasonable financial provision is to be made. There is no warrant in the Act for requiring a process of the kind suggested by the Court of Appeal. If the judge were to arrive at a figure for reasonable financial provision without one or more of the relevant facts in the case, he would not be undertaking the assessment required by the Act. Which of the facts is he to ignore for the purpose of arriving at a hypothetical or headline figure, before adjusting it? The District Judge did not make the suggested or any error in taking into account the nature of the relationship between the deceased and the claimant. In many cases this will be of considerable importance. If, by contrast with the present case, the claimant were a child of the deceased who had remained exceptionally and confidentially close to her mother throughout, had supported and nurtured her in her old age at some cost in time and money to herself, and if she had been promised many times that she would be looked after in the will, it could not be said that the judge was required first to assess reasonable financial provision on the basis of some supposed norm of filial relationship, neither particularly close nor particularly distant, and then to lift the provision by an identified amount to recognise the special closeness between the two ladies. But without going through any such exercise, and yet adhering to the concept of maintenance, a judge ought in such circumstances to attach importance to the closeness of the relationship in arriving at his assessment of what reasonable financial provision requires. In the paragraphs leading up to the one criticised by the Court of Appeal, this Judge had dutifully worked his way through each of the section 3 factors. The long estrangement was the reason the testator made the will she did. It meant that Mrs Ilott was not only a non dependent adult child but had made her life entirely separately from her mother, and lacked any expectation of benefit from her estate. Because of these consequences, the estrangement was one of the two dominant factors in this case; the other was Mrs Ilotts very straitened financial position. Some judges might legitimately have concluded that the very long and deep estrangement had meant that the deceased had no remaining obligation to make any provision for her independent adult daughter as indeed did Eleanor King J when it appeared that she had scope to re make the decision. As it was, the judge was perfectly entitled to reach the conclusion which he did, namely that there was a failure of reasonable financial provision, but that what reasonable provision would be was coloured by the nature of the relationship between mother and daughter. The second suggested error The Court of Appeal described this as follows: 36. The second fundamental error in my judgment is this. The judge was required to calculate financial provision for the appellants maintenance. Yet he did not know what effect the award of 50,000 would have on her state benefits. He made a working assumption at the end of para 74 of his judgment that the effect of a large capital payment (which would include an award such as he ultimately made) would disentitle the family to most if not all of their state benefits, Failure to verify this assumption undermined the logic of the award. That proposition was allied to the conclusion which appears at the end of para 60 of the judgment, cited above, namely that there would be little or no benefit for Mrs Ilott in the District Judges award because of the effect it would have on state benefits. What the court meant was that capital beyond 16,000 would disentitle Mrs Ilott from two of the benefits her family received, namely housing benefit and council tax benefit (see para 9 above). Since those two benefits paid a little over 5,000 per year to the family, the court was no doubt right to say that the reduction in benefits would equal or probably exceed the annual sum produced if the District Judges capital award were invested on Duxbury lines. addressing. He recorded it as follows. It is relevant to note the case made for Mrs Ilott which the District Judge was 70. At the end of his final submissions, under pressure from me to quantify his claim, Mr Smith descended to some figures. On behalf of Mrs Ilott he sought: (1) 186,000 to permit her to purchase their own home (with a discount under the right to buy provisions); (2) 53,000 to pay for a single storey extension to the house, to give more living room for the family (including the four children who live at home); (3) A capitalised sum equivalent to an income of 10,000 per year for life. (He put no figure on this, but the Duxbury tables in At A Glance indicate a sum of 173,000 for a woman aged 46.); (4) Some further capital sum to permit the refurbishment and re equipment of the house after its purchase. According to a list produced during the final hearing such a sum might amount to 40,950 (27,450 plus 13,500). 71. The claimant also produced a proposed annual budget for the family which totalled 34,600. Allowing for Mr Ilotts income from his part time earnings at 5,304 (that is 4,164, plus 900 plus 240), and the current child benefit of 1,570, this would have required an additional annual income of 27,776. Capitalised for life for a female aged 46 years would require a sum of about 562,000 (using figures from At a Glance). This exceeds the size of the estate. 72. was presented in an ill thought out and unhelpful way. 73. I must keep in mind that under section 1(2)(b) of the Act the financial provision is for maintenance that is, income based. Mr Smiths justification for the capital sum sufficient to buy the family home was that it would free up income which would be spent otherwise on rent. But, because of the incidence of housing benefit, the net income released would be about I regret to say that the claimants case on these matters 912 per year (76 per month). This is the net amount of rent paid by the family after housing benefit. 74. Further, I was presented with no figures which showed the net effect (after benefits and tax credits) of providing an income of 10,000 per year. Also, when advancing the proposal for a capitalised sum I was presented with no figures to show the net effect which took into account the state benefits which the family receive. I assume that the practical consequence of a large capital payment would be that the family would lose most, if not all, of their benefits. None of these consequences appeared to have been thought through. 75. I have therefore been left to deal with this case with a more rough and ready approach. Faced with this position, the District Judge rejected the distinctly ambitious claim made. Nobody now suggests he was not entitled to do that. He did not fail to address the impact on benefits of any order which he might make. On the contrary, although he had been provided on behalf of Mrs Ilott with no materials at all on this (as clearly he should have been if it was her case that the point was relevant), he was, unsurprisingly as a District Judge sitting regularly in the Principal Registry of the Family Division, sufficiently familiar with the structure of state benefits to work on the basis of the likely consequences for them. As can be seen, he specifically addressed the impact of benefits twice. First, in rejecting the part of the claim which was for the purchase price of the house, he concluded, correctly, that the income effect of enabling Mrs Ilott to buy the house would be limited to about 912 pa precisely because Housing Benefit was meeting the bulk of the rent. He might have added that that figure would be reduced by house maintenance costs which were presently met by the landlords. Secondly, he made the assumption (which can only have been in favour of the claimant) that a capital award of the kind that he made would disentitle her from most if not all of the benefits presently received. He appears to have been (correctly) distinguishing between benefits and credits (and probably including child benefit in the latter). If so, he was right. If not, then he over rather than under estimated the effect of such an award, since working tax credits and child benefit (between them about 10,000 pa) would be unaffected. Although the Court of Appeal criticised him for not calling of his own motion for chapter and verse on the relevance of capital to benefits claims, it cannot be suggested that he was wrong to the disadvantage of the claimant in either of these conclusions. The real gravamen of the Court of Appeals criticism is not so much that the District Judge did not verify the benefits rules, but that he produced an award which had little or no value to the claimant because of the impact on benefits. If that were so, and certainly if it were done in ignorance of the true position, it might indeed be a legitimate error of principle justifying an appellate court in setting aside his order. But in fact it was not only not done in ignorance; it was not an award of little or no value to the claimant. It was a central feature of Mrs Ilotts financial position that although the family could manage just on its income, this was at the cost of being unable to maintain the ordinary domestic equipment on which every household depends. She produced a telling list of the equipment which needed replacement, and of elementary refurbishment required, in order to enable the household to function adequately. The District Judge referred to it directly at para 70(4), set out above. Although some of the list itemised repairs to the structure, which would chiefly arise only if the house were to be purchased, and although no doubt some of the other items may not have been costed conservatively, one has only to read the document to see that Mrs Ilott made a strong case for the necessity of spending a substantial sum on items which could properly be described as necessities for daily living. They included such things as essential white goods, basic carpeting, floor covering and curtains, and the replacement of worn out and broken beds. That list did not include other similar necessities such as a reliable car, nor a holiday. Although the District Judge arrived at his figure of 50,000 by reference to the income which it might produce, perhaps because he interpreted the statutory requirement for the award to be for maintenance as pointing to such an approach, these items which Mrs Ilott needed to make the household function properly can perfectly sensibly fit within the concept of maintenance. The Court of Appeal rightly said that the 1975 Act is not designed to provide for a claimant to be gifted a spending spree. But this kind of necessary replacement of essential household items is not such an indulgence; rather it is the maintenance of daily living. Moreover, how the claimant might use the award of 50,000 was of course up to her, but if a substantial part of it were spent in this way, the impact on the familys benefits would be minimised, because she could put the household onto a much sounder footing without for long retaining capital beyond the 16,000 ceiling at which entitlement to Housing and Council Tax Benefits is lost. Conclusions It follows that the District Judge did not, on fuller analysis, make either of the two errors on which the Court of Appeal relied to revisit his award. That is enough to require this court to set aside the order of the Court of Appeal. The claimant pressed on this court the submission that the District Judges award was vitiated by errors other than those attributed to him by the Court of Appeal. It was said that he wrongly took the level of tax credits and child benefit (he attributed half to Mrs Ilott and thus about 4,000 pa) as a benchmark of basic maintenance income as recognised by the government. True it is that he referred to this as an indication of minimum income needs, and checked his figure of 50,000 against the capital sum which would produce an annual 4,000 on a Duxbury basis, namely about 69,000. But he did not make his award on this basis. He confronted the submission for the charities that Mrs Ilotts maintenance needs should be met by the sum of about 3,000 5,000 to pay for driving lessons and to see her back into work. He concluded that her reasonable needs were significantly greater than simply driving lessons and a small starter sum of capital. He accordingly provided a much greater capital sum, saying that there was a significant degree of approximation in it. Since he made clear that the award was limited to take account of the estrangement, and given the arguments put before him, his order is not to be taken as vitiated by erroneous reliance on the level of income produced by the working tax credits and child benefit. It was in fact an award which met many of Mrs Ilotts needs for maintenance. There was nothing about it which was outside the generous ambit of judgment available to him. His order ought to be restored. There were in any event a number of potential difficulties about the Court of Appeals proposed order. Plainly some judges might legitimately have concluded that this was a case in which reasonable financial provision for the claimant should be made by way of housing, even though the actual benefit of doing so would be much reduced by loss of housing benefit. In the absence of error of principle by the District Judge the occasion for the Court of Appeal to say what its own order might have been did not of course arise. But even if it had arisen, the right order would be likely to have been a life interest in the necessary sum, rather than an outright payment of it. There was no discussion of this question in the judgment. The rather incidental reference to the possibility of equity release was founded no doubt on a tactically astute argument advanced on behalf of Mrs Ilott in the Court of Appeal, designed to clothe the claim for the price of the house with a vestige of income provision, but it was not supported by any evidence of how the figures might work, nor of the impact on benefits which understandably concerned the court. It also seems likely that in the absence of a discretionary trust the additional option to draw down 20,000 at will would fall foul of exactly the same capital disqualification rules as to benefits, because those rules treat capital which is available to the claimant, but of which he has deprived himself, as being in his possession: see Housing Benefit Regulations 2006, SI 213/2006, regulations 49 & 50, (consolidated with the Council Tax Benefit Regulations SI 215/2006), together with the Guidance Manual issued to officers by the Department of Work and Pensions BW1 (13 September 2013), to which it does not seem the Court of Appeal was referred. The treatment of benefits by the Court of Appeal at its para 60, cited above, might raise difficulty if taken literally. The court clearly cannot have meant that dependence on benefits increases the claimants needs, as disability is likely to do. In some circumstances, different from those of the present case, receipt of state support greater than the testator could sensibly provide may be an understandable reason why it was reasonable for the deceased not to make financial provision for the claimant see for example the observations of Stamp J in In re E, deceased [1966] 1 WLR 709 at 715C. More generally, benefits are part of the resources of the claimant, and it is relevant to consider whether they will continue to be received. The court must have meant that, at least if they are means tested, receipt of them is likely to be a very relevant indication of her financial position. More critically, the order under appeal would give little if any weight to the quarter of a century of estrangement or to the testators very clear wishes. The Court of Appeal indeed offered the view (at para 51) that these factors counted for little, and that Mrs Ilotts lack of expectation of any benefit from the estate was likewise of little weight, in part because the charities had no expectation of benefit either. Those observations should be treated with caution. The claim of the charities was not on a par with that of Mrs Ilott. True, it was not based on personal need, but charities depend heavily on testamentary bequests for their work, which is by definition of public benefit and in many cases will be for demonstrably humanitarian purposes. More fundamentally, these charities were the chosen beneficiaries of the deceased. They did not have to justify a claim on the basis of need under the 1975 Act, as Mrs Ilott necessarily had to do. The observation, at para 61 of the Court of Appeal judgment, cited above, that, because the charities had no needs to plead, they were not prejudiced by an increased award to Mrs Ilott is, with great respect, also erroneous; their benefit was reduced by any such award. That may be the right outcome in a particular case, but it cannot be ignored that an award under the Act is at the expense of those whom the testator intended to benefit. It was not correct to say of the wishes of the deceased that because Parliament has provided for claims by those qualified under section 1 it follows that that by itself strikes the balance between testamentary wishes and such claims (para 51(iv)). It is not the case that once there is a qualified claimant and a demonstrated need for maintenance, the testators wishes cease to be of any weight. They may of course be overridden, but they are part of the circumstances of the case and fall to be assessed in the round together with all other relevant factors. Lastly, for the reasons adverted to above, it was not correct that so long and complete an estrangement was of little weight. The Court of Appeal suggested that this was so because (a) the claimant had not wished for the estrangement, (b) she had made a success of her life as a mother and home maker and (c) it might well be that the estrangement was not really a matter of fault on either side, thus simply, in effect, a sad fact of family life. It was certainly true that the claimant had made a success of her home life, but that does not bear at all on the relationship between mother and daughter. As to the other two considerations, the District Judge had indeed held that both sides were responsible for the continuation of the estrangement, whilst attaching the greater responsibility to the deceased. These matters of conduct were not irrelevant, but care must be taken to avoid making awards under the 1975 Act primarily rewards for good behaviour on the part of the claimant or penalties for bad on the part of the deceased. It is clear that the District Judge gave effect to his findings as to the causes of the estrangement in allowing the claim, as he was entitled to do, but it does not follow that the relationship between mother and daughter was of insignificant weight to the exercise, and he rightly held that it was not. Disposal For all these reasons, the appeal of the charities should be allowed. The order of the Court of Appeal should be set aside and the order of the District Judge restored. This court was told that this appeal was brought by the charities largely on principle because of the possible impact of the decision below on other cases, and that some arrangement has been arrived at between these parties in the event that the appeal succeeded. Given the very protracted nature of these proceedings, that is clearly likely to have been sensible, but the court has rightly not been concerned with its details, and it has no relevance to the order now made. LADY HALE: (with whom Lord Kerr and Lord Wilson agree) This case raises some profound questions about the nature of family obligations, the relationship between family obligations and the state, and the relationship between the freedom of property owners to dispose of their property as they see fit and their duty to fulfil their family obligations. All are raised by the facts of this case but none is answered by the legislation which we have to apply or by the work of the Law Commission which led to it. Maxwell, 1950), Michael Albery commented: In his book on The Inheritance (Family Provision) Act 1938 (Sweet & The protection of the rights of the family as an essential unit in society is a primary concern of most systems of law. Complete freedom of testation, as enjoyed under English law for a brief period of 47 years, is therefore by the standards of contemporary jurisprudence an anomaly. In many modern legal systems, mostly those descended from Roman Law, complete freedom of testation is unknown. Members of the family enjoy fixed rights of inheritance to the estate of a deceased, which leave only limited scope for the deceased to make his own dispositions. In some systems, consanguinity is preferred to affinity. The claims of descendants of the deceased are favoured over the claims of a surviving spouse. The theory is that the property belongs to the family or lineage rather than to the owner for the time being and should pass down the blood line. Other systems favour affinity over consanguinity. Early English law also recognised certain fixed rights of inheritance, but these were only between husbands and wives, and the limited rights given to widows and widowers disappeared long ago. In 1971, the Law Commission published a wide ranging consultation paper on Family Property Law (Working Paper No 42), discussing, among other things, both community of property between husbands and wives and fixed rights of inheritance for spouses and children. In the course of discussing the latter, the Commission suggested (para 4.13) that: The principle of absolute freedom of testation is acceptable only if the view were taken that it is more important to be able to dispose of property than to meet natural and legal obligations to the family. We do not believe this view to have any degree of support. Nevertheless, although they raised the possibility that a surviving spouse might have fixed inheritance rights, they rejected the idea that a surviving child might do so. In their view, the moral obligation to provide for children was as great as that to provide for a spouse. But children play less part in building up the family assets than do spouses; are more likely to be self supporting adults independent of their parents; and it would be difficult for a fixed rights system to distinguish between dependent and independent adult children. The better solution, therefore, was discretionary family provision rather than fixed rights (para 4.16). When the Commission came to make their Report in relation to the various matters canvassed in their Working Paper, they concluded that it was neither necessary nor desirable to introduce a system of fixed inheritance rights for the surviving spouse: see First Report on Family Property: A New Approach (1973, Law Com No 52). This was on the basis that their proposals for improving the system of discretionary family provision would be implemented. Those proposals were contained in their Second Report on Family Property: Family Provision on Death (1974, Law Com No 61) and implemented in the Inheritance (Provision for Family and Dependants) Act 1975, with which (as amended) we are concerned in this case. Freedom of testation is thus the default position in the law of England and Wales, subject to the courts limited discretionary powers. Freedom of testation seems also to enjoy strong support from public opinion, although the need to interfere in certain circumstances is also recognised. When the Law Commission returned to the subjects of intestacy and family provision in 2008, family forms were a great deal more varied than they had been in the early 1970s. Many more couples lived together without marrying. Many more children were born to unmarried parents. Many more married or unmarried partners separated and formed new relationships, often blending children from earlier relationships with children from the new. The Commission recommended a variety of improvements in the present law, but none which is directly relevant to the dilemma posed by this case (see Intestacy and Family Claims on Death, Consultation Paper No 191, 2009, and Law Com No 331, 2011). However, the Commission did have the benefit of two empirical studies of attitudes towards inheritance, both of them under the auspices of the highly respected National Centre for Social Research, the findings of which are of some interest. G Morrell, M Barnard and R Legard, The Law of Intestate Succession: Exploring Attitudes Among Non Traditional Families (NatCen, 2009) used focus groups of people from such non traditional families to explore attitudes on the basis of a series of vignettes. This revealed strong emotional support for testamentary freedom, linked to ideas of individualism and human rights. But underlying this was an assumption of reasonableness, that testators had good reasons for doing what they did, and that it would not necessarily be possible to ascertain what their reasons were, so it should be assumed that they were reasonable. Nevertheless, there were circumstances in which it should be possible to challenge a will. One was where there was good reason to think that the will did not reflect the true wishes of the testator. The other was where his decisions were clearly unreasonable: this might be because they were unfair, cutting someone out of a will who had contributed directly or indirectly to the deceaseds wealth or who had earned a share by caring for the deceased while he was alive. It might also be unfair to cut children out of wills because of the contribution they had made to enriching the lives of their parents or to exclude a potential beneficiary who was disabled or vulnerable and the alternative was that the state would have to look after him. When it came to the intestacy rules, however, different opinions were expressed about the claims of adult descendants: some who viewed the importance of the bloodline as paramount took the view that adult children should always be able to benefit from the deceaseds estate. Others took a more flexible view, depending on the relative claims and needs of surviving partners and adult children. The other study was by A Humphrey, L Mills and G Morrell of the National Centre and G Douglas and H Woodward of Cardiff University, Inheritance and the family: attitudes to will making and intestacy (NatCen, 2010). This used a combination of quantitative and qualitative approaches. The quantitative study asked for respondents views on will making and what should happen on intestacy in a variety of scenarios. One was a married man survived by his wife and two children over 18. 80% thought that the whole estate should go to the widow or that she should have priority over the children, 16% thought it should be shared equally, and the remainder that the children should have priority or get it all. There was stronger support for the grown up children when a woman died survived by a man with whom she had lived for 25 years and their two children over 18. A quarter thought that the estate should be shared equally and almost a quarter thought that the children should have priority or have it all. There was even stronger support if a man died survived by a wife and grown up children from his first marriage. 35% thought that the estate should be shared equally and 19% that the children of the first marriage should have priority or get it all. The qualitative study explored the reasons for respondents views, including their views on testamentary freedom, and found three approaches: complete testamentary freedom in all circumstances; challenging a will being permitted in some circumstances; and challenging a will being permitted in all circumstances. Some favoured the entitlement of children to challenge based on lineage and expectations. These respondents tended to favour equal distribution amongst descendants. Others favoured an entitlement based on need or providing care for the deceased. The overriding influence on those who favoured a right to challenge in all circumstances was the importance of retaining property within the family. When it came to the intestacy rules, there were some who felt that the age of descendants should have no effect on their entitlement; some who felt that adult descendants were less entitled than child descendants; and some who felt that age should not affect entitlement as such but should affect how and when the descendant actually inherited their share of the estate. It will therefore be seen that, unsurprisingly, there is a variety of reasons why people believe that descendants should be entitled to a share of the deceaseds estate. The bloodline or lineage is undoubtedly one of these, and seems to have featured strongly in both studies. Another is need, whether stemming from disability or poverty, although others felt strongly that descendants should be treated equally irrespective of need. And a third is desert, having earned a share by caring for the deceased or contributing directly or indirectly to the acquisition of his wealth. The point of mentioning all this is to demonstrate the wide range of public opinion about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere. That range of opinion may very well be shared by members of the judiciary who have to decide these claims. The problem with the present law is that it gives us virtually no help in deciding how to evaluate these or balance them with other claims on the estate. Nor does the Law Commission Report which led to the 1975 Act. That Report recommended that any child or child of the family of the deceased should be able to apply, irrespective of age, sex or marital status, thus removing the restrictions imposed by the 1938 Act (para 79). The argument against doing that was that it might encourage able bodied sons capable of supporting themselves to apply for provision from the estate, thereby possibly incurring costs to be paid from the estate and reducing the share of the surviving spouse or other beneficiaries; but the Commission argued that such sons (or even daughters!) could not succeed unless the deceased had failed to make reasonable provision for them (para 74). The Commission considered limiting adult claims to children who were actually dependent on the deceased when he died, but rejected that because: this would rule out a claim against the estate of a parent who had unreasonably refused to support an adult child during his life time where it would have been morally appropriate to provide such support. Moreover an adult child, who is fully self supporting at the time of the parents death, may quite suddenly thereafter cease to be so. Hence their final recommendation was to remove all age limits leaving the court to distinguish between the deserving and the undeserving (para 76). But the Commission gave no further guidance as to who should be thought deserving and who should not. The only guidance the court is given is: (1) the threshold question is whether the estate makes reasonable financial provision for the applicant; (2) if it does not, the actual provision to be ordered is limited to what is reasonable for the claimants maintenance (unless the applicant is a spouse or civil partner); and (3) that in deciding both of those questions, the court has to have regard to the matters listed in section 3 (see para 11 above). These look at the actual and foreseeable financial resources and needs of the applicant, any other applicant and any beneficiary; the obligations and responsibilities of the deceased towards any applicant or beneficiary; the size and nature of the estate; any physical or mental disability of any applicant or beneficiary; and any other matter, including the conduct of the applicant or any other person, which the court may consider relevant. In the case of children, the court must also consider the manner in which the claimant has been, is being or might be expected to be educated or trained. Section 1(7) of the 1938 Act, requiring the court to have regard to any reasons given by the deceased for making or not making the dispositions in his will, has been repealed: the reasonableness or otherwise of the testators dispositions was to be tested objectively; the Commission agreed with Michael Albery that if the testators reasons were good and founded on fact they would be relevant under other matters, so there was no need to mention them separately (para 3.23). As Black LJ wisely observed when this case first came before the Court of Appeal: [2011] EWCA Civ 346; [2011] 2 FCR 1, para 88: A dispassionate study of each of the matters set out in section 3(1) will not provide the answer to the question whether the will makes reasonable financial provision for the applicant, no matter how thorough and careful it is. [S]ection 3 provides no guidance about the relative importance to be attached to each of the relevant criteria. So between the dispassionate study and the answer to the first question lies the value judgment to which the authorities have referred. It seems to me that the jurisprudence reveals a struggle to articulate, for the benefit of the parties in the particular case and of practitioners, how that value judgment has been, or should be, made on a given set of facts. How then is the court to distinguish between the deserving and the undeserving? It might be thought, for example, that in the case of a large estate consisting mostly of inherited property, the children ought to inherit even if they are not in need. But that would run counter to the restriction of their claims to reasonable maintenance. It would also run counter to the approach long taken in the law of inter vivos financial provision for adult children. Thus in Lord Lilford v Glynn [1979] 1 WLR 78, the judge had ordered a father, in addition to making periodical payments and providing for his daughters education, to make an immediate settlement upon them of 25,000 (a not inconsiderable sum in those days). The Court of Appeal held that a father even the richest father ought not to be regarded as under financial obligations [or] responsibilities to provide funds for the purpose of such settlements as are envisaged in this case on children who are under no disability and whose maintenance and education is secure (p 85). That, of course, was a value judgment which may or may not have been based on a view that such provision ought to be earned. But it could be justified under the Matrimonial Causes Act 1973, because it contains age limits on the provision which may be ordered for children unless they are disabled, with the obvious aim of seeing them into adulthood and beyond that only to the end of their education. The 1975 Act contains no such age or disability related limits. So once again we are driven to ask what makes an adult child deserving or undeserving of reasonable maintenance? One factor which is not in the list, but which does feature elsewhere in family law, is the public interest in family members discharging their responsibilities towards one another so that these do not fall upon the state. In the well known case of Hyman v Hyman [1929] AC 601, the House of Lords held that the courts statutory powers to order a divorced husband to maintain his former wife were granted partly in the public interest to provide a substitute for this husbands duty of maintenance and to prevent the wife from being thrown upon the public for support (per Lord Atkin, at p 629; see also Lord Hailsham LC, at p 608). However, while the common law recognised a husbands duty to maintain his wife and his infant children (reluctant though it was to provide effective means of enforcing this), it did not recognise a duty to maintain adult children. Public law, similarly, has not (at most periods) imposed the intra familial maintenance duties which are known, for example, in French law. So what, if anything, is the relevance of the fact that an applicants household is very largely dependent on state benefits (in this case some 75% of their income) to the threshold question, let alone to the quantification of any order to be made? For these reasons, I have every sympathy for the difficult position in which District Judge Million found himself. He was faced with the complete disinheritance of an adult child in favour of charities in which the deceased had shown little or no interest while alive. The adult child was in straitened circumstances, living in rented accommodation which was almost entirely financed by the public purse, through housing and council tax benefit. These benefits were means tested by reference to income and to capital and would be lost if there were capital of more than 16,000. The family lived within its modest means, but these too were largely derived from the public purse, the husbands meagre earnings being supplemented by tax credit, child tax credit and child benefit. Apart from child benefit, these were means tested, but by reference only to income and not capital. The household goods were old and dilapidated the family could do with another car, some furniture and carpets and white goods, and had never had a holiday, so it might be regarded as reasonable to spend money on these and thus quite quickly reduce a capital sum to below 16,000 without incurring penalties. On the other hand, mother and daughter had been estranged since the daughter left home to live with and then marry her husband, of whom the mother disapproved, three attempts at reconciliation having failed. The mother had left a letter explaining why she had disinherited her daughter, which the district judge did not find wholly founded on truth. So what was he to do? A respectable case could be made for at least three very different solutions: (1) He might have declined to make any order at all. The applicant was self sufficient, albeit largely dependent on public funds, and had been so for many years. She had no expectation of inheriting anything from her mother. She had not looked after her mother. She had not contributed to the acquisition of her mothers wealth. Rather than giving her mother pleasure, she had been a sad disappointment to her. The law has not, or not yet, recognised a public interest in expecting or obliging parents to support their adult children so as to save the public money. Thus it is not surprising that Eleanor King J regarded this as the reasonable result: [2009] EWHC 3114 (Fam); [2010] 1 FLR 1613. The Court of Appeal allowed the appeal on the basis that the District Judge had not erred in law and the exercise of his discretion had not been plainly wrong, so Eleanor King J should not have interfered. But Sir Nicholas Wall P commented that (as Wilson LJ had observed when giving permission to appeal) had the District Judge dismissed the claim I doubt very much whether the appellant would have secured reversal of that dismissal on appeal (para 59). (2) He might have decided to make an order which would have the dual benefits of giving the applicant what she most needed and saving the public purse the most money. That is in effect what the Court of Appeal did, by ordering the estate to pay enough money to enable her to buy the rented home which the housing association was willing to sell to her and a further lump sum to draw down as she saw fit. Housing is undoubtedly one of the first things that anyone needs for her maintenance, along with food and fuel. This was benefits efficient from her point of view, because it preserved the familys claims to means tested income benefits. It was benefits efficient from the publics point of view, because it saved the substantial sums payable in housing benefit. She would lose the benefit of the landlords repairing obligations, but how valuable this would be is a matter of speculation. It is difficult to reconcile the grant of an absolute interest in real property with the concept of reasonable provision for maintenance: buying the house and settling it upon her for life with reversion to the estate would be more compatible with that. But the court envisaged her being able to use the capital to provide herself with an income to meet her living costs in future. (3) He might have done what in fact he did for the reasons he did. He reasoned that an income of 4,000 per year would provide her with her share of the households tax credit entitlement and capitalised this in a rough and ready way, taking into account some future limited earning potential, at 50,000. He did not expressly consider, and was not presented with the information to enable him to consider, the effect that this would have on the familys benefit entitlements, and in particular the fact that they would lose their entitlement to housing benefit until their capital was reduced below 16,000. Some might think that the best choice was between options (1) and (2). Option (1) was not, however, open to the Court of Appeal this time round and is not open to this Court now. The case for option (2) is that, if it is reasonable for the applicant to receive some support, it is reasonable for that support to be meaningful to her and her family, as well as to the public purse. Securing her accommodation is more meaningful than proving her with a capital sum which will be of little use unless she is able properly to reduce it within a relatively short time. This is not to down play the public interest in charitable giving and the importance of legacies in the funding of charitable activities. But just as the applicant had no expectation of a legacy, neither did the charities. However, the greater the weight attached to testamentary freedom, the smaller the provision which might be thought reasonable in an unusual case such as this. It is, as Black LJ observed, a value judgment. The District Judge did not make his order on the express basis that it would enable the applicant to buy much needed household goods and have a family holiday, but that will be its beneficial effect. Hence I agree with Lord Hughes that it was entirely open to him to make the order that he did, and just as it should not have been disturbed first time round it should not have been disturbed this time either. I have written this judgment only to demonstrate what, in my view, is the unsatisfactory state of the present law, giving as it does no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance. I regret that the Law Commission did not reconsider the fundamental principles underlying such claims when last they dealt with this topic in 2011.

UK-Abs

The appeal arises out of a claim for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act (the Act), brought against the estate of Mrs Jackson by her daughter, Mrs Ilott. Mrs Ilott and her mother had been estranged for the majority of the 26 years preceding Mrs Jacksons death in 2004. The estrangement began when Mrs Ilott left home at 17 to live with her now husband, with whom she has five children. Since that time Mrs Ilott has lived independently of her mother but in straitened financial circumstances. Mrs Ilott and her family received a number of benefits, with a net annual income of around 20,000. In her last will of 2002, Mrs Jackson left the majority of her estate to a number of charities, and made no provision for her daughter. This was a decision Mrs Jackson had made as early as 1984, reflected in her will of that year. Mrs Ilott had been aware for many years of this decision and had lived without any expectation of benefit from the estate. The District Judge found that Mrs Jacksons will did not make reasonable financial provision for Mrs Ilott and awarded her 50,000. The charitable beneficiaries under the will initially challenged the finding that there was any lack of reasonable provision, but that challenge failed and the dispute has since proceeded only on the issue of the quantum of the award, which Mrs Ilott appealed as too low. The Court of Appeal held the District Judge had made two errors of principle in his approach. Firstly, he held the award should be limited in light of the long estrangement and lack of expectation of benefit, but did not identify what the award would have been without these factors and the reduction attributable to them. Secondly, he made his award without knowing what the effect of it would be on the benefits which Mrs Ilott and her family presently received, some of which were subject to a means test and which would not payable if Mrs Ilott had savings in excess of 16,000. The Court of Appeal re evaluated the claim for itself, and awarded Mrs Ilott 143,000 to buy the home she lived in, and an option to receive 20,000 in one or more instalments. The award was designed to avoid affecting Mrs Ilotts benefits entitlement. The Supreme Court unanimously allows the charities appeals. Lord Hughes gives the judgment, with which the rest of the Court agrees. Lady Hale gives a supplementary judgment, with which Lord Kerr and Lord Wilson agree. The District Judge did not make either of the two errors on which the Court of Appeal relied to revisit his award, and so the Court of Appeals order must be set aside and the District Judges order restored. The matters to which the court must have regard in exercising its power to award reasonable financial provision are listed under s.3 of the Act. For an applicant other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable for her to receive for maintenance only. This is an objective standard, to be determined by the court. The limitation to maintenance provision represents a deliberate legislative choice and demonstrates the significance attached by English law to testamentary freedom. Maintenance cannot extend to any or everything which it would be desirable for the claimant to have, but is not limited to subsistence level. The level at which maintenance may be provided is clearly flexible and falls to be assessed on the facts of each case, as at the date of hearing. Although maintenance is by definition the provision of income rather than capital, it may be provided by way of a lump sum. [12 25] As to the first suggested error, the process suggested by the Court of Appeal is not warranted by the Act. The Act does not require the judge to fix some hypothetical standard of reasonable provision and then increase or discount it with reference to variable factors. All of the s.3 factors, so far as they are relevant, must be considered, and in light of them a single assessment of reasonable financial provision should be made. The District Judge worked through each of the s.3 factors, and was entitled to take into account the nature of the relationship between Mrs Jackson and Mrs Ilott in reaching his conclusion. As to the second suggested error, the District Judge specifically addressed the impact on benefits twice. The Court of Appeals criticism that his award was of little or no value to Mrs Ilott was unjustified. A substantial part of the award could be spent on replacing old and worn out household equipment which the family had previously been unable to afford. This fell within the provision of maintenance of daily living, and would avoid Mrs Ilott retaining capital for long above the 16,000 threshold. [29 41] Reasonable financial provision can in principle include the provision of housing, but ordinarily by creating a life interest rather than a capital and inheritable sum, which possibility appeared not to have been considered by the Court of Appeal. To the extent that the benefits means test was relevant, it was likely to apply also to the additional sum of 20,000 apparently awarded with a view to avoiding that test. The statement in the Court of Appeal that a claimant in receipt of benefits should be treated in the same way as a disabled claimant was problematic; what must have been meant was that receipt of means tested benefits is likely to be a relevant indication of a claimants financial position. Finally, the Court of Appeals order gave little weight to Mrs Jacksons very clear wishes and the long period of estrangement. The Court of Appeals justification for this approach was that the charities had little expectation of benefit either. This approach should be treated with caution, given the importance of testamentary bequests for charities, and because the testators chosen beneficiaries, whether relatives, charities or otherwise, do not need to justify their claim either by need or by expectation. [44 47] Lady Hale in her judgment reviews the history of the Act and preceding legislation. She comments on the unsatisfactory state of the law, giving as it does no guidance as to the weight of the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance. The approach under the Act invariably involves a value judgment, which may be problematic as there is a wide range of opinion among the public and the judiciary about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere. [49 66]

Section 3C of the Immigration Act 1971 extends a persons leave to remain pending determination of an application to vary the period of leave, provided that the application is made before the expiry of the original leave. The principal issue raised by these three appeals is how section 3C applies where an application is made in time, but is procedurally defective for some reason. In two cases (Mr Iqbal and Mr Mirza) the defect related to non payment of fees; in the third case (Ms Ehsan), failure to provide biometric information. Statutory provisions Section 3C at the material time, as substituted by section 118 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) (and amended by section 11 of the Immigration, Asylum and Nationality Act 2006), read as follows: 3C Continuation of leave pending variation decision (1) This section applies if (a) a person who has limited leave to enter or remain in the United Kingdom applies to the Secretary of State for variation of the leave, (b) the application for variation is made before the leave expires, and (c) for variation having been decided. the leave expires without the application (2) The leave is extended by virtue of this section during any period when (a) decided nor withdrawn, . the application for variation is neither (3) Leave extended by virtue of this section shall lapse if the applicant leaves the United Kingdom. (4) A person may not make an application for variation of his leave to enter or remain in the United Kingdom while that leave is extended by virtue of this section. (5) But subsection (4) does not prevent the variation of the application mentioned in subsection (1)(a). (6) The Secretary of State may make regulations determining when an application is decided for the purposes of this section; Procedure and fees Section 50 of the Immigration, Nationality and Asylum Act 2006 (the 2006 Act) enabled the Secretary of State to lay down in immigration rules requirements for the procedure for applications, including the use of specified forms, and provision about the manner in which a fee is to be paid; and to make provision for the consequences of failure to comply. Section 51 enabled her by order to require an application to be accompanied by a specified fee, and to make regulations specifying the amount of the fee, and making provision about the consequences of failure to pay a fee (section 51(3)(d)). The relevant rules (which to this extent were in the same form at the time of the three applications) required an application to be on a specified form, and to comply with certain requirements including: any specified fee in connection with the application or claim must be paid in accordance with the method specified in the application form, separate payment form and/or related guidance notes, as applicable, (rule 34A(ii)). Rule 34C provided: Where an application or claim in connection with immigration for which an application form is specified does not comply with the requirements in paragraph 34A, such application or claim will be invalid and will not be considered. The relevant statutory instruments in respect of fees (in Mr Iqbals case) were the Immigration and Nationality (Fees) Order 2011 and the Immigration and Nationality (Fees) Regulations 2011 (the 2011 Order and the 2011 Regulations). Regulation 37 of the 2011 Regulations provided: Consequences of failing to pay the specified fee 37. Where an application to which these Regulations refer is to be accompanied by a specified fee, the application is not validly made unless it has been accompanied by that fee. Earlier but equivalent provisions applied at the time of Mr Mirzas application. Biometric information The power to require biometric information was derived from regulations made under section 5 of the UK Borders Act 2007 (the 2007 Act). Section 7 (Effect of non compliance) provided that regulations under section 5 must include provision about the effect of failure to comply with a requirement of the regulations (section 7(1)), and: (2) In particular, the regulations may require or permit an application for a biometric (a) immigration document to be refused; require or permit an application or claim in (b) connection with immigration to be disregarded or refused; (c) leave to enter or remain in the United Kingdom; (d) a notice under section 9; [penalty notice] require the Secretary of State to consider giving require or permit the cancellation or variation of (e) provide for the consequence of a failure to be at the discretion of the Secretary of State. At the time of Ms Ehsans application, the Immigration (Biometric Registration) Regulations 2008 (regulation 3) provided that a person subject to immigration control must apply for the issue of a biometric immigration document where certain conditions were satisfied, as they were in her case. Regulation 23 provided that on failure to comply the Secretary of State may take any of the actions specified in paragraph (2): (2) The actions specified are to refuse an application for a biometric immigration (a) document; (b) disregard the person's application for leave to remain; (c) remain; and (d) refuse the person's application for leave to cancel or vary leave to enter or remain. Regulation 23 was amended from 29 February 2012, (inter alia) to substitute for sub paragraph (2)(b) the following: treat the persons application for leave to remain as (b) invalid The facts Javed Iqbal Mr Iqbal was granted entry clearance in January 2007 to come to the UK as a student, extended thereafter to 30 April 2011. In October 2010 his wife was allowed entry as a dependant until the same date. On 19 April 2011 he applied for further leave to remain as a student at William Shakespeare College. Unaware that the fee had been recently increased, he paid the old fee (29 short). By letter dated 26 April, received by him on 2 May 2011, his application was rejected by the Secretary of State as invalid for that reason. On 6 May 2011 he resubmitted his application for leave to remain as a student at the same college. In October 2011, before the application had been determined, he sought and received confirmation from the Secretary of State that he was free to alter the named educational institution. On 2 May 2012 he varied his application to name the Equinox College, having obtained a Confirmation of Acceptance for Studies (CAS) from that college. However, the colleges sponsor licence was revoked on 16 May 2012, with the result that his CAS became invalid. If he had been entitled to extension of leave under section 3C, he would have been given 60 days in which to identify another approved institution. This concession was not available because the new application had been made after his leave had expired. On 18 March 2013 his application was refused because he had failed to identify an approved college. His notice of appeal to the First tier Tribunal was rejected because, not having leave to remain at the time of the relevant application, he had no right of appeal. He then commenced the present judicial review proceedings, for which following refusal by the Upper Tribunal, permission was granted by the Court of Appeal. Muhammad Mirza Mr Mirza entered the country on 27 July 2002 under a student visa which was in due course extended until 31 March 2009. He made an application to extend leave on 27 March 2009, which was rejected in error but resubmitted on 4 April 2009. On 24 April 2009 the Secretary of State attempted unsuccessfully to take the 295 application fee from the bank details provided by Mr Mirza. His application was rejected for non payment of the fee. On 1 April 2012, following completion of his studies, he submitted a further application to remain as a Tier 1 (Post Study Work) Migrant. On 10 December 2012 his application was refused because he did not meet the relevant requirements of the rules, primarily that: (1) he did not have leave to remain as a student or a Tier 4 Migrant between 1 September 2010 and 17 March 2012; and (2) his application for further leave to remain as a Tier 1 (Post Study Work) Migrant was made more than 12 months after obtaining the relevant qualification, awarded on 17 March 2011. He applied for judicial review of the Secretary of States decision. Following refusal of permission in the High Court permission was granted by the Court of Appeal. Humaira Ehsan Ms Ehsan arrived on 8 March 2011 with entry clearance as a Tier 4 (General) student valid until 28 December 2011. On 23 December 2011 she made an application for further leave as a Tier 4 (General) student. The Secretary of State thereafter wrote requesting her to make an appointment to provide certain biometric information. By letter dated 24 February 2012 she was told that, unless she booked and attended an appointment within 17 days, or provided a reasonable explanation for failure to do so, her application would be rejected as invalid. In a letter dated 26 March 2012 she was told that her application was being returned as invalid because of her failure to make and attend an appointment for providing biometric information. On 3 April 2012 she submitted a new application for leave to remain as a Tier 4 (General) student. On 21 April 2012 the Secretary of State wrote asking her to make an appointment to provide biometric information within 15 days, which she did. In September 2012 the college which had sponsored her had its licence revoked. On 9 January 2013 her application for further leave was rejected on the grounds that she had not obtained the necessary number of points, no points being attributable to the now invalid CAS. Had her leave been extended under section 3C, she would have been able to take advantage of the 60 day concession to find a replacement institution. She sought judicial review, which following refusal of permission by the High Court, was allowed by the Court of Appeal. The issues in the Court of Appeal The nature of the issues, and the positions of the parties, have shifted markedly during the progress of these cases through the courts. In the Court of Appeal, departing from the position taken before the Upper Tribunal, the appellants (through Mr Malik of counsel) contended that an application which was invalid under the regulations was still effective to engage the automatic extension provisions. The Secretary of State did not contend otherwise, even though (as counsel accepted on her behalf) this represented a change from her position in previous cases. Instead as Elias LJ explained (para 22) she now relied on the next stage, that is the effect of the Secretary of States notice rejecting such an application as invalid, which she submitted should be treated as a decision on the application, thereby bringing the leave to an end under section 3C(2)(a). Although the Secretary of State has now reverted to her previous position, it is right to refer to the policy reasons which led to the interpretation advanced by her in the Court of Appeal. The submissions on her behalf spoke of the strong policy reasons for the Secretary of States re examination of her previous approach, leading to her favoured interpretation as presented in that court: First, at the point at which the application is made, neither the Secretary of State nor the applicant will know for sure whether or not their application is valid. Applications may be made in good faith and believed to be valid, yet be invalid. This may have significant adverse consequences for bona fide applicants: for example, he may have continued working whilst waiting for a response from the Home Office on the application (as section 3C leave continues the leave the person has, on the same terms) but unbeknownst to him and his employer, this constituted illegal working because in fact his application was invalid. Second, the previous view that section 3C leave was not triggered by an invalid application has become very complex and difficult to understand both for applicants and caseworkers, giving rise to uncertainty in an area where it is important to be able to readily work out whether a person has had their leave extended pursuant to section 3C or not. Third, the previous view that section 3C leave was not triggered by an invalid application has become increasingly difficult in practice where the requirements for validity can arise after the application is made: for example the need to enrol biometric information. This adds a further layer of complexity and uncertainty to that which should be readily ascertainable This approach led in turn to the need to find some means of bringing the extended leave to an end. Otherwise, as Elias LJ pointed out, it would be possible for someone with limited leave to submit a defective application, and thereby secure an extension of time, which would become in effect indefinite because no valid decision could be made bringing it to an end (para 24). It was for this reason that the Secretary of State was constrained to argue that the rejection of the application as invalid could itself be treated as a decision on the application for that purpose. The Court of Appeal held, contrary to the primary submissions of both parties, that section 3C did not extend to an application which was not validly made in accordance with the rules (para 30). Elias LJ (with whom the other Lord Justices agreed) addressed his reasoning primarily to the case of Mr Iqbal, the other two being treated as covered by the same principles. He noted (para 14) that this had hitherto been assumed to be the effect of the rules, by all including the Court of Appeal (see JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78; [2009] Imm AR 499, para 35). He held that the powers in sections 50 and 51 of the 2006 Act to provide for the consequences of procedural failure gave sufficient Parliamentary endorsement for that position (para 30). He rejected as wholly unsustainable the Secretary of States argument that notification of invalidity could constitute a relevant decision for the purposes of section 3C, since the context clearly required a determination of the application, not its rejection or a decision that there is no valid application (paras 31 32). He also rejected a separate argument for Mr Iqbal that the procedure in his case was unfair, because of the failure to notify him of the defect in time for him to correct it before the expiration of leave. This submission relied on comments of the Upper Tribunal in Basnet v Secretary of State for the Home Department [2012] UKUT 113; [2012] Imm AR 673, relating to an argument that in this respect personal applications were treated more favourably than applications by post. Elias LJ accepted that in practical terms a personal applicant had the advantage that a defect could be more quickly remedied, but short of unreasonable delay (which the Upper Tribunal had not found) there was no obligation on the Secretary of State to prioritise cases where lack of the appropriate fee might be fatal (para 39). In this court, Mr Malik renews the argument that the word application in section 3C is unqualified by reference to any procedural requirements in subsequent regulations, and should not be interpreted by reference to them. He points to the strong policy arguments for that interpretation, previously recognised by the Secretary of State, to which he adds the fact that overstaying is a criminal offence for the applicant, and may result in a penalty for his employer (1971 Act section 24; 2006 Act section 15). He does not shrink from the possible consequence that leave may be extended indefinitely, but submits that the answer is in the hands of the Secretary of State by appropriate amendments to the regulations or if necessary to section 3C itself. He also points out that the application will be treated as withdrawn if the applicant applies for return of his passport to travel outside the common travel area (rule 34J). Legislative history Both parties have relied to some extent on the history of the legislative provisions in support of their respective cases. A brief account is therefore necessary. The need for a statutory mechanism to extend the right to remain pending a final decision on an application to vary was identified as a result of the decision of the House of Lords in Suthendran v Immigration Appeal Tribunal [1977] AC 359. The House held that the then right of appeal (under 1971 Act section 14) only arose if the applicant had leave at the date of both the application to vary and the notice of appeal. This problem was answered by the Immigration (Variation of Leave) Order 1976 (the 1976 Order), article 3 of which provided that where a person with limited leave to remain applies before the expiry of that period for variation, the duration of the leave would be extended for 28 days after the date of the decision or withdrawal of the application. Section 14(1) of the 1971 Act gave protection against removal while an appeal was pending. No formality was laid down for an application to vary. It was regarded as sufficient that there should be a request in unambiguous terms for a variation of leave (see Macdonald Immigration Law and Practice 4th ed (1995) p 83). In 1996 changes to the Immigration Rules introduced a requirement for applications for variation to be made on a prescribed form accompanied by specified documents and provided that An application for such a variation made in any other way is not valid. (HC395 rule 32). Rule 32 was challenged in judicial review proceedings by the Immigration Law Practitioners Association (ILPA), on the grounds that immigration rules under section 3(2) of the 1971 Act could not be used to change the law made by the 1976 Order. The challenge failed, even though the court accepted that under the new rule someone who does not make an application in the prescribed form would find that his application will not be valid so that he then becomes an overstayer and is thus subject to the criminal and other consequences that flow from that status. (R v Secretary of State for the Home Department, Ex p Immigration Law Practitioners Association [1997] Imm AR 189, 191 per Collins J) Both section 14 of the 1971 Act and the 1976 Order were replaced by provisions in the Immigration and Asylum Act 1999 with similar effect. They included the insertion into the 1971 Act of a new section 3C, providing for the extension of leave, but again depending on the making of an application before the expiry of leave. The 1999 Act also introduced for the first time power to make regulations for payment of fees, and provided for the consequences of failure to pay. Section 5(2) provided that where a fee was payable in connection with an application of a particular kind no such application is to be entertained by the Secretary of State unless the fee has been paid in accordance with the regulations. This section was not brought into force until 1 April 2003, and regulations imposing the first fees came into effect on 1 August 2003. Section 165 of the 1999 Act also inserted a new section 31A into the 1971 Act, giving power to prescribe by regulation the form of an application. Section 31A provided that where a form was prescribed the application must be made in that form, but it said nothing about the consequences of non compliance. No regulations were made at that time. As from 1 April 2003, section 3C of the 1971 Act was replaced (by 2002 Act section 118) by a new version taking the form set out earlier in this judgment (para 2). This version, subject to minor amendment by section 11 of the 2006 Act (not relevant to this appeal), was current at the time of the present applications. It differed from the previous version, in that the statutory extension of leave continued during the time when an appeal was pending, and came to an end upon the applicant leaving the country. The 2002 Act also introduced a new unified appeal structure with rights of appeal from an immigration decision as defined by section 82 of that Act (Part 5 of the 2002 Act). It appears to be common ground that there was no right of appeal against a decision on an application made after expiry of leave to remain. Section 31A of the 1971 Act was amended by the insertion of a new subsection (3A): (3A) Regulations under this section may provide that a failure to comply with a specified requirement of the regulations invalidates an application, (a) (b) does not invalidate an application, or invalidates an application (c) in specified circumstances (which may be described wholly or partly by reference to action by the applicant, the Secretary of State, an immigration officer or another person). As from 1 August 2003 (the same date as the first fees regulations), the Immigration (Leave to Remain) (Prescribed Forms and Procedures) Regulations 2003 (the 2003 Forms Regulations) set prescribed forms (regulations 3 9) and laid down prescribed procedures (regulation 11) for various types of application. Regulation 12 provided that failure to comply with certain procedural requirements would only invalidate the application if the applicant did not provide a satisfactory explanation and comply within 28 days of being notified of the failure. These regulations were amended or replaced on a number of occasions in similar form until 2007. Section 31A of the 1971 Act and section 5 of the 1999 Act were repealed by the 2006 Act. The relevant provisions of that Act, and of the subordinate legislation have already been set out (paras 3ff above). Finally, the UK Borders Act 2007 enabled the Secretary of State to make regulations requiring those subject to immigration control to apply for a document recording biometric information, and providing for its use in immigration procedures. Again the relevant provisions have been set out above (paras 6 7). Mr Malik relies on the original interpretation of the term application, as it appeared in the 1976 Order, as requiring no more than a request in unambiguous terms. He submits that there is no reason to interpret the same word any differently in the equivalent provisions in later statutory enactments, including the 2002 Act. There is no indication that Parliament intended the meaning of that word to be restricted by reference to later provisions relating to fees or biometric information which were not in contemplation at the time. The Secretary of State in turn relies on the decision of Collins J in the ILPA case as recognising the consequences of an invalid application, an analysis which should be taken as entrenched in subsequent legislation in similar form. Discussion I have found this a troubling case. It is particularly disturbing that the Secretary of State herself has been unable to maintain a consistent view of the meaning of the relevant rules and regulations. The public, and particularly those directly affected by immigration control, are entitled to expect the legislative scheme to be underpinned by a coherent view of their meaning and the policy behind them. I agree with the concluding comments of Elias LJ (para 49) on this aspect, and the overwhelming need for rationalisation and simplification. The problem is only too vividly demonstrated by the course of the arguments in this case. The policy concerns which underlay the Secretary of States position in the Court of Appeal were and remain very real. They should have been apparent to the Department at least since 1996, when judgment was given in the ILPA case. Against that background, there was surely a need to introduce some measure of flexibility to ensure that bona fide applicants were not unduly penalised for simple mistakes which could be readily corrected. There have been some examples of flexibility. Thus the 2003 Forms Regulations provided that particular procedural requirements should not result in invalidity in the event of a satisfactory explanation and compliance within 28 days. We have been given no explanation for the more rigid approach adopted in respect of fees. Although Parliament did not place any restriction on the power of the Secretary of State to provide for the consequences of failure, that did not absolve her of responsibility for achieving a fair balance between the competing policy considerations. There was some discussion in argument of the extent to which the Departments guidance to officers allowed for a degree of flexibility in the operation of the rules. After the hearing the Treasury Solicitor has helpfully submitted a note on relevant parts of the guidance on Specified application forms and procedures. It seems that this has proved to be a more onerous task than anticipated because of the number of versions in force at various times. The guidance does recognise a measure of discretion to depart from requirements of the rules in particular cases. Thus in version 6.0 of the guidance valid from 9 May 2012 there is a section headed Discretion (p 46). This explains for example that, if an application received more than three months ago does not meet the specified form requirements, you must use discretion and accept it as valid, since otherwise the applicant might be unfairly disadvantaged by rejection at that stage. On the other hand: You must not use discretion and accept an application as valid if a specified fee has not been paid. This difference is explained as due to the fees requirement being in the regulations rather than the rules. Whatever the logic of that distinction, it is not suggested by either side that it throws any light on the issue before us. We must accordingly decide the present appeals within the legislation as it stands, there being no challenge to the legality or rationality of the relevant rules and regulations. The issues have to be approached by the application of the ordinary principles of statutory interpretation. They start from the natural meaning of the words in their context. On that basis I have no doubt that, at least in respect of Mr Iqbal and Mr Mirza, the Court of Appeal reached the correct conclusion. There is no ambiguity in the words of regulation 37 of the 2011 Regulations. It provides in terms that if an application is not accompanied by the specified fee the application is not validly made. In ordinary language an application which is not validly made can have no substantive effect. There is nothing in the regulation to exclude section 3C from its scope. Nor is there anything in the history of the provisions to support a different approach. It is true that, at the time of the enactment of section 3C in its present form by the 2002 Act, Parliament could not have had in contemplation the relevant provisions of the 2006 Act or the regulations made under it. However, that is nothing in point. The powers given by Parliament in the later Act were made within the same legislative framework as the 2002 Act. In the absence of any limitation on the scope of the powers given to the Secretary of State to prescribe the consequences of procedural failure, there is no reason to exclude section 3C. That is not, as Mr Malik argues, to allow the executive to alter the interpretation of the primary legislation, but rather to determine the scope of the powers given to the executive by Parliament in the later statute. Conversely, the reasoning of Collins LJ in the ILPA case shows a clear understanding of the practical implications of invalidity, which formed part of the background of the new legislation, and must be assumed to have been taken into account by the drafters of the legislation, both primary and secondary. I also agree with the Court of Appeals rejection of Mr Iqbals separate ground of appeal based on alleged unfairness. The comments of the Upper Tribunal in Basnet while deserving respect cannot be treated as laying down a universal rule. It is unfortunate that he was caught out by a recent change in the level of fees. But it is not suggested that there was any failure by the Secretary of State to publicise the change. It was announced in Parliament on 28 February 2011. News items were published on the UK Border Agency website, and the new fees were set out in the relevant application form. There has been no challenge to the finding of the Upper Tribunal that the Secretary of State responded with reasonable promptness. The problem arose because the application had been made very close to the expiry of leave and left no time for correction. It follows that the appeals of Mr Iqbal and Mr Mirza must be dismissed. I find more difficulty with the case of Ms Ehsan. Mr Malik did not, as I understood him, rely on any material distinction between the applicable provisions in the three cases. However, there is a potentially important difference. The obligation to pay the fee arises at the time of the application. There is no conceptual difficulty in providing that an application unaccompanied by a fee is invalid from the outset. The requirement to apply for biometric information arises only at a later stage, on receipt of a notice from the Secretary of State. Thus in Ms Ehsans case the application was made in December 2011, but it was not until the following February that she was required to make an appointment. Even then it was accepted that there might be a reasonable explanation justifying further delay. It is difficult to see any reason why a failure at that stage should be treated as retrospectively invalidating the application from the outset, and so nullifying the previous extension under section 3C of her leave to remain. There appears to be nothing in section 7 of the 2007 Act to support such retrospective effect. The revised version of regulation 23(2)(b) (which was in force at the time of the March decision to reject her application as invalid) does no more than give the Secretary of State power to treat the application as invalid. There might be some question as to how that wording relates to the terms of section 7(2), but as I have said there was no challenge to its validity. In any event there is no reason to read it as having retrospective effect. The natural reading, which is consistent with the statutory purpose, is to give power to invalidate the application as from the time of the decision, but not before. However, this reading would not help Ms Ehsan herself. Even if her leave was treated as continuing until the date of the Secretary of States decision on 26 March 2012, it would not assist her in respect of her new application made on 3 April 2012. Conclusion For the reasons given above I would dismiss the three appeals and uphold the orders of the Court of Appeal.

UK-Abs

Section 3C of the Immigration Act 1971 extends a persons leave to remain pending determination of an application to vary the period of leave, so long as the application is made before the original leave has expired. All three appeals before the Court raise the issue of how section 3C applies where an application is made in time, but for some reason is procedurally defective. Sections 50 and 51 of the Immigration, Nationality and Asylum Act 2006 enable the Secretary of State to lay down in immigration rules procedural requirements for applications, including provision for the payment of a fee and the consequences of failure to comply. Similarly, sections 5 and 7 of the UK Borders Act 2007 provide the power to make regulations regarding the provision of biometric information and the effect of failure to comply with these. Mr Iqbal was granted entry clearance in January 2007 to come to the UK as a student, later extended to 30 April 2011. On 19 April 2011 he applied for further leave to remain as a student, although unaware that the fee had recently increased, he paid the old, lower fee. His application was rejected as invalid for that reason, and his leave expired. Mr Mirza entered the UK under a student visa which was valid until 31 March 2009. His application to extend leave was rejected for non payment of the fee when the Secretary of State was unable to take the 295 application fee from his bank. In Ms Ehsans case she had entry clearance until 28 December 2011. She applied for further leave on 23 December 2011 and was contacted by the Secretary of State, requesting that she make an appointment to provide certain biometric information. She was told by letter dated 26 March 2012 that her application was returned as invalid because of her failure to make and attend an appointment for providing biometric information. A new application made on 3 April 2012 subsequently failed. All three appellants applied for judicial review of the Secretary of States decisions, and following refusal of permission to apply for judicial review in the High Court/Upper Tribunal, permission to appeal was granted by the Court of Appeal. The Court of Appeal dismissed their joined appeals on the basis that section 3C did not extend to an application which was not validly made in accordance with the rules. The Supreme Court unanimously dismisses the appeals. Lord Carnwath gives the judgment, with which the other Justices agree. The public are entitled to the legislative scheme being underpinned by a coherent view of the meaning of the rules and regulations. The court agrees with the Court of Appeal as to the need for rationalisation and simplification [30]. The approach to the present appeals must be based on the legislation as it stands, since there has been no challenge to the legality or rationality of the rules and regulations. Ordinary principles of statutory interpretation are to be used, starting from the natural meaning of the words in their context. On this basis, the Court of Appeal in respect of Mr Iqbal and Mr Mirza reached the correct conclusion. There is no ambiguity in the words of regulation 37 of the 2011 Regulations: if an application is not accompanied by the specified fee it is not validly made. An application not validly made can have no substantive effect [33]. It does not matter that section 3C was enacted before the provisions of the 2006 Act or the regulations made under it, because the powers given by Parliament in the later Act were made within the same legislative framework as the 2002 Act. This does not equate with permitting the executive to alter the interpretation of primary legislation [34]. The Court of Appeal was also right in rejecting Mr Iqbals ground of appeal based on alleged unfairness. The comments of the Upper Tribunal in Basnet do not lay down a universal rule and although it is unfortunate that he was caught out by a change in fees, there was no failure by the Secretary of State to publicise that change. The problem only arose because the application had been made very close to the expiry of leave [35]. In the case of Ms Ehsan the situation is slightly different. While the obligation to pay fees arises at the time of the application, the requirement to apply for biometric information only arises at a later stage. Thus, while an application without the fee will be invalid from the outset, it is difficult to see why a failure at the biometric information stage should retrospectively invalidate an application from the outset, nullifying any section 3C extension to her leave to remain. There is no reason to read section 7 of the 2007 Act as having retrospective effect. Rather, the natural reading is to give power to invalidate the application from the time of the decision. However this reading would not help Ms Ehsan because even if her leave continued until the date of the Secretary of States decision on 26 March 2012, it would not assist her in respect of her new application made on 3 April 2012 [36 7].

This appeal raises a question of contractual interpretation. It concerns an indemnity clause in an agreement dated 13 April 2010 (the SPA) for the sale and purchase of the entire issued share capital of a company, Sureterm Direct Limited (the Company), which carries on business as a specialist insurance broker, primarily offering motor insurance for classic cars. The sellers of the Company were the respondent, Mr Andrew Wood (Mr Wood), who owned 94% of its share capital, and Mr Christopher Kightley and Mr Howard Collinge, who owned 1% and 5% of its share capital respectively. Each was a director of the Company and Mr Wood was its managing director. The purchaser was Capita Insurance Services Ltd (Capita). Mr Wood remained as managing director of the Company until the end of 2010. He brought proceedings against Capita arising out of the termination of his employment and Capita brought a counterclaim against him under the indemnity provision in the SPA, which is the subject matter of this appeal. Mr Kightley and Mr Collinge were, but are no longer, parties to the proceedings. It is not necessary to set out in any detail the circumstances in which Capita came to make its claim under the indemnity. It suffices to summarise Capitas claim as follows. In about August 2008 the Company began to sell motor insurance through online aggregator sites such as Confused.com. The sales were not completed online: potential customers obtained a quotation from the Company on the aggregator site and the Company then contacted the potential customer directly with a view to confirming their risk details before selling them the appropriate insurance policy. Shortly after Capitas purchase of the Companys share capital, employees of the Company raised concerns about the Companys sales processes, which had resulted in some customers paying substantially more than they had been quoted online. The employees alleged that the Company had presented customers with higher quotations without informing them why the quotations had increased. The Company had thus increased its own arrangement fees when neither the underwriting premium nor the risk profile had changed significantly. The Company responded to the allegations by carrying out a review of its sales between January 2009 and January 2011. This review revealed that in many cases the Companys telephone operators had misled customers into believing that an underwriter had required a higher premium or that their risk profile was worse than it was or had pressurised the customer to make sure that a sale was made. Capita and the Company were obliged to inform the Financial Services Authority (FSA) of the findings and did so on 16 December 2011. The FSA informed them that the customers had been treated unfairly and had suffered detriment and that there would have to be redress. After the FSA had conducted a risk assessment visit to the Company in November 2012, Capita and the Company agreed with the FSA to conduct a remediation scheme to pay compensation to customers who were identified as potentially affected by the Companys mis selling. Capita alleges that it, the Company and Capitas other subsidiaries have suffered loss as a result of the mis selling or suspected mis selling of insurance products in the period before the completion of the sale under the SPA. Capitas claim is for 2,432.883.10, comprising an estimate of the compensation at 1.35m, interest of about 400,000 and the costs of the remediation scheme. It is appropriate to record that some of Capitas allegations are disputed, including the extent of the mis selling and any detriment to customers. Other than, perhaps, the facts narrated in para 4 above (which do not appear to be disputed), they are not facts by reference to which the SPA is to be construed. But the circumstances in which Capita and the Company were required to set up the remediation scheme are of some importance because Mr Wood contends that they fall outside the scope of the indemnity clause which is the subject matter of this action. In particular, the requirement to compensate was not the result of a claim by one or more of the Companys customers or a complaint by those customers to the FSA or another public authority. It resulted, as I have said, from information about the internal review which Capita and the Company gave the FSA and the requirement by the FSA that compensation should be paid to the customers. Contractual interpretation In his written case counsel for Capita argued that the Court of Appeal had fallen into error because it had been influenced by a submission by Mr Woods counsel that the decision of this court in Arnold v Britton [2015] AC 1619 had rowed back from the guidance on contractual interpretation which this court gave in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900. This, he submitted, had caused the Court of Appeal to place too much emphasis on the words of the SPA and to give insufficient weight to the factual matrix. He did not have the opportunity to develop this argument as the court stated that it did not accept the proposition that Arnold had altered the guidance given in Rainy Sky. The court invited him to present his case without having to refer to the well known authorities on contractual interpretation, with which it was and is familiar. It is not appropriate in this case to reformulate the guidance given in Rainy Sky and Arnold; the legal profession has sufficient judicial statements of this nature. But it may assist if I explain briefly why I do not accept the proposition that Arnold involved a recalibration of the approach summarised in Rainy Sky. The courts task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. In Prenn v Simmonds [1971] 1 WLR 1381 (1383H 1385D) and in Reardon Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 989 (997), Lord Wilberforce affirmed the potential relevance to the task of interpreting the parties contract of the factual background known to the parties at or before the date of the contract, excluding evidence of the prior negotiations. When in his celebrated judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 Lord Hoffmann (pp 912 913) reformulated the principles of contractual interpretation, some saw his second principle, which allowed consideration of the whole relevant factual background available to the parties at the time of the contract, as signalling a break with the past. But Lord Bingham in an extra judicial writing, A new thing under the sun? The interpretation of contracts and the ICS decision Edin LR Vol 12, 374 390, persuasively demonstrated that the idea of the court putting itself in the shoes of the contracting parties had a long pedigree. Lord Clarke elegantly summarised the approach to construction in Rainy Sky at para 21f. In Arnold all of the judgments confirmed the approach in Rainy Sky (Lord Neuberger paras 13 14; Lord Hodge para 76; and Lord Carnwath para 108). Interpretation is, as Lord Clarke stated in Rainy Sky (para 21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause (Rainy Sky para 26, citing Mance LJ in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 2 All ER (Comm) 299 paras 13 and 16); and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: Arnold (paras 20 and 77). Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated: Arnold para 77 citing In re Sigma Finance Corpn [2010] 1 All ER 571, para 10 per Lord Mance. To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each. Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance. But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process, of which Lord Mance spoke in Sigma Finance Corpn (above), assists the lawyer or judge to ascertain the objective meaning of disputed provisions. On the approach to contractual interpretation, Rainy Sky and Arnold were saying the same thing. The recent history of the common law of contractual interpretation is one of continuity rather than change. One of the attractions of English law as a legal system of choice in commercial matters is its stability and continuity, particularly in contractual interpretation. The Sale and Purchase Agreement The SPA is a detailed and professionally drafted contract. It provided for the sale and purchase of the Companys share capital (clause 3) for the consideration of 7,681,661 payable on completion (clause 4), and it also provided for deferred consideration (Schedule 8). Clause 1 contained the following definitions which are relevant to the construction of the disputed indemnity: Authority means any local, national, multinational, governmental or non governmental authority, statutory undertaking, agency or public or regulatory body (whether present or future) which has jurisdiction over the Business or any decision, consent or licence which is required to carry out the Business and Authorities shall be construed accordingly. Company means Sureterm Direct Ltd Completion Date means the date of this Agreement. Employees has the meaning given to it at paragraph 6 of Schedule 4 [which refers to a list of all of the employees employed by the Company]. FSA means the Financial Services Authority and any body which supersedes it. Regulatory Authority means any body by which any part of the Business is or was regulated pursuant to any Applicable Financial Services Laws (including, but not limited to, the FSA, the Personal Investments Authority Ltd, the General Insurance Standards Council, the Insurance Brokers Registration Council and including the Financial Services Ombudsman and any voluntary regulatory body with whose rules the Company has agreed to comply). Relevant Person means an Employee or a former employee of the Company and any dependant of an Employee or a former employee of the Company. Shares means all of the issued shares in the capital of the Company. Warranties means the Tax Warranties and the warranties set out in Schedule 4. Clause 7 dealt with warranties and indemnities. Each of the sellers severally warranted to the buyer on a proportionate basis in terms of the Warranties (clause 7.1); the Warranties were qualified by matters which had been fairly disclosed in the disclosure letter (clause 7.2); and where a Warranty was qualified by an expression such as so far as the Sellers are aware that referred to the actual knowledge of the sellers, who confirmed that they had made due and careful enquiry of the Companys compliance manager, IT Director and HR Director (clause 7.3). The indemnity clause whose interpretation is in dispute is clause 7.11. It provided: The Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer and each member of the Buyers Group against all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and all fines, compensation or remedial action or payments imposed on or required to be made by the Company following and arising out of claims or complaints registered with the FSA, the Financial Services Ombudsman or any other Authority against the Company, the Sellers or any Relevant Person and which relate to the period prior to the Completion Date pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. This clause must be seen in its contractual context. Schedule 4 contained 30 pages of detailed warranties. In Part 12 of that Schedule, which concerned litigation, disputes and investigations, the sellers warranted that they were not aware of circumstances which were likely to give rise to any investigation or enquiry by any Authority (para 12.4) and that no breach of contract, tort, statutory duty or law had been committed for which the Company was or might be liable (para 12.5). Part 14 which was concerned with compliance and regulatory matters included the following para: 14.1 (a) The Company conducts, and has conducted the Business in accordance with the requirements of all Competition laws and Applicable Financial Services Laws applicable to the business and has not been and is not being investigated for any alleged non compliance or infringement of such Competition Laws and Applicable Financial Services Laws. (c) The Company has no reason to believe that any action will be taken against it in relation to any of its current or past activities based on any alleged non compliance or infringement of any Competition Laws and Applicable Financial Services Laws. Part 14 also contained detailed warranties that the Company had complied with its regulatory obligations and that correspondence between the Company and all Regulatory Authorities had been disclosed, that the Company, its officers and employees had not been subject to any regulatory sanction and that no such sanction was likely or pending; and that the Company had not been subject to a regulatory investigation and, so far as the Sellers were aware, there were no circumstances which could give rise to a visit by any Regulatory Authority. Clause 8 of the SPA provided for limitations on the sellers liability in Schedule 5, which in para 1 provided that the aggregate maximum liability of all claims under the SPA (with one exception) would not exceed the purchase price and that the liability of each seller would not exceed his proportionate liability (ie 94%, 5% and 1%). That limitation applied to claims under clause 7.11 as well as under the warranties. But paragraph 3 of Schedule 5 imposed time limits on the warranties by providing: 3.1 Save in respect of a Warranty Claim or a claim under the Tax Covenant notified in writing to the Sellers prior to such a date, the Sellers will cease to be liable: (a) for any claim under the tax warranties or under the Tax Covenant on the seventh anniversary of Completion; and (b) anniversary of Completion. for any other Warranty Claim on the second Thus in contrast to the indemnity under clause 7.11, the warranties relating to, among other things, regulatory compliance, had a lifespan of only two years. In a judgment dated 14 October 2014 ([2014] EWHC 3240 (Comm)) Popplewell J decided the preliminary issue of the interpretation of the indemnity clause and held, in effect, that it required Mr Wood to indemnify Capita even if there had been no claim or complaint by a customer. The Court of Appeal (Patten LJ, Gloster LJ and Christopher Clarke LJ) in a judgment written by Christopher Clarke LJ ([2015] EWCA Civ 839) disagreed. In its order dated 30 July 2015 the Court of Appeal declared that Mr Woods liability under the indemnity in clause 7.11 of the SPA: cannot arise unless the matter in respect of which indemnity is sought follows and arises out of either (i) a claim made against the Company, a Seller or a Relevant Person or (ii) a complaint registered with the FSA, the Financial Services Ombudsman or any other Authority against the Company, a Seller or a Relevant Person and, in either case, the claim or complaint (a) relates to the period prior to the Completion Date and (b) pertains to any mis selling or suspected mis selling of any insurance or insurance related product. Capita appeals against that order, arguing that the contractual indemnity is not confined to loss arising out of a claim or complaint. In this case both Popplewell J and the Court of Appeal have considered and weighed both the language of the disputed clause 7.11 and the commercial considerations. They have both started by examining the language but have reached opposing conclusions. This disagreement is not caused by any failure to apply the correct principles but is, in my view, the result of an opaque provision which, as counsel for each party acknowledged, could have been drafted more clearly. I have concluded that the Court of Appeal has come to the correct view as to the meaning of this difficult clause. I set out below my reasons, which are essentially the same as those which Christopher Clarke LJ presented. Discussion Clause 7.11 has not been drafted with precision and its meaning is avoidably opaque. My preliminary view of the meaning of the clause on a first reading was consistent with the view which the Court of Appeal favoured, namely that the indemnity covered loss and damage which (a) followed and arose out of claims or complaints against the Company, the Sellers or any Relevant Person, (b) related to the period before completion and (c) pertained to the mis selling or suspected mis selling of insurance products or services. But it is necessary to place the clause in the context of the contract as a whole, to examine the clause in more detail and to consider whether the wider relevant factual matrix gives guidance as to its meaning in order to consider the implications of the rival interpretations. The contractual context is significant in this case. The indemnity in clause 7.11 is an addition to the detailed warranties in Schedule 4. The mis selling which clause 7.11 addresses is also covered by the warranty in paragraph 14.1 of Schedule 4 (para 18 and para 19 above). But liability for the Schedule 4 warranties is time limited by Schedule 5. In particular paragraph 3.1(b) of that Schedule (para 20 above) required the Company to claim within two years of the completion of the sale and purchase. The scope of the clause 7.11 indemnity, breach of which gives rise to a liability which is unlimited in time, falls to be assessed in the context of those time limited warranties. All of the parties to the SPA were commercially sophisticated and had experience of the insurance broking industry. Capita was not involved in the management of the Company before the share purchase. The Sellers were the directors and the only shareholders of the Company. They were the people who knew or ought to have known how the Company had operated its business; Capita would in all probability not have that knowledge. The parties to the SPA would have known this. That lack of knowledge explains why Capita required the disclosures in the disclosure letter and the detailed warranties in Schedule 4; but it does not assist the court to determine the scope of the indemnity clause. The court is not aware of the negotiations which led to the SPA; they are not relevant to the task of interpreting that agreement: Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101. Business common sense suggests that Capita had an interest in obtaining as broad an indemnity against the adverse consequences of mis selling as it could obtain. But the sellers had given warranties of compliance with regulatory requirements, which covered such mis selling, subject to the agreed limits of quantum and time. The sellers were exposed to a potential liability under those warranties for the two years after the Completion Date, during which Capita could learn of the Companys sales practices. One may readily infer that they had an interest in minimising their further exposure to liability after that time had elapsed. Business common sense is useful to ascertain the purpose of a provision and how it might operate in practice. But in the tug o war of commercial negotiation, business common sense can rarely assist the court in ascertaining on which side of the line the centre line marking on the tug o war rope lay, when the negotiations ended. I therefore turn to examining the clause in more detail before returning to the commercial context. In order to illustrate the competing contentions of the parties Popplewell J helpfully divided clause 7.11 into its constituent parts. I set that presentation out below with the addition in (B) of the sub headings (i) and (ii) to assist my exegesis. Clause 7.11 thus divided provides: The Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer and each member of the Buyers Group against (1) all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and (2) all fines, compensation or remedial action or payments imposed on or required to be made by the Company following and arising out of claims or complaints (A) registered with the FSA, the Financial Services Ombudsman or any other authority against the Company, the Sellers or any Relevant Person (B) (i) and which relate to the period prior to the Completion Date (ii) pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. Counsel for Capita submitted that the clause should be read by treating (2) and (A) as a composite phrase so that the Sellers were bound to indemnify against both (1) and (2+A), each of which was subject to the two conditions in (B). This meant that it was only the fines etc in (2) which had to follow on or arise out of claims or complaints made to the FSA or other Authority against the Company etc as provided in (A). Thus, it was submitted, the indemnity covered all liabilities in (1) provided only that (i) they related to the period prior to the completion date and (ii) pertained to any mis selling or suspected mis selling of insurance products etc. Counsel for Mr Wood submitted that the clause was properly construed by treating both (1) and (2) as being subject to three conditions, namely (A), B(i) and (B)(ii). He submitted that (A) should be read as if there was a comma after claims, so that it provided as a condition for the triggering of the indemnity under (1) or (2) that there must be either claims by customers, or complaints made to the regulatory authorities, in each case against the Company, the Sellers or any Relevant Person. Thus, on his approach, either a claim by a customer against the Company, the Sellers or an employee or former employee of the Company, or a complaint to a regulatory authority against the Company, the Sellers or an employee or former employee of the Company would trigger the indemnity if the two conditions in (B) were met. Both counsel accepted that, because of the breadth of the terms used in (1), the types of loss and damage in (1) covered all of the types of loss and damage in (2). Thus it was suggested that (2) must have been included only for the avoidance of doubt. This means that on Mr Woods approach (2) was otiose while on Capitas approach the composite (2+A) was otiose. I find the latter proposition remarkable and unlikely for two reasons. First, and to my mind most significantly, (A) would serve no purpose by restricting the source of loss and damage if (A) governed only (2) and therefore (1) was unrestricted. (A) would not restrict the scope of the indemnity in any way. On Mr Woods construction the words in (A) have a purpose as they limit the scope of both (1) and the otiose (2). Secondly, if one airbrushes out (2+A) as otiose, the clause does not specify against whom the actions, proceedings and claims in (1) are directed. The clause would read: The Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer and each member of the Buyers Group against all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and which relate to the period prior to the Completion Date pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. The identity of the persons against whom the relevant claims etc could be made so as to trigger the sellers indemnity would, on Capitas approach, be left to implication. There must be a limit on who such persons could be as it would be absurd for Capita to have a claim against the Sellers for indemnity resulting from any mis selling on its part before the Completion Date. But, even assuming that the target was mis selling by or on behalf of the Company, it is far from obvious that the delimited class of persons would be the Company, the Sellers or any Relevant Person. Capita made three further points against Mr Woods interpretation. First, there is an element of tautology as the claims in (1) are said in (A) to follow and arise out of claims. But as Christopher Clarke LJ observed, tautology in commercial contracts is not unknown and the verbal exuberance (or torrential drafting) of (1) makes tautology difficult to avoid. Secondly, Capita pointed out that there is a comma after incurred at the end of (1) and no comma after Company at the end of (2). This could support the separation of (1) from (2) and the conjunction of (2) and (A). Similarly, Mr Woods interpretation would involve inserting in (A) a comma after claims and also after any other Authority so as to limit both the claims and the regulatory complaints to those against the Company, the Sellers or any Relevant Person. Again in agreement with Christopher Clarke LJ I do not think that the use of commas in this clause is a strong pointer in favour of Capitas interpretation, both because there are no set rules for the use of commas and in any event the draftsmans use of commas in this clause is erratic. Thirdly, the draftsman used an adjectival participle at the start of (A) (following and arising out of) and changed tone by using a relative pronoun (and which) at the start of (B). But the use of the adjectival participle does not tie (A) exclusively into (2) because in (B) the adjectival participle (pertaining to) unquestionably applies to both (1) and (2). These detailed points of style and syntax are of little assistance in construing an admittedly opaque clause. I return to the commercial context and the practical consequences of the rival interpretations. On Mr Woods interpretation it requires a customer or customers to make a claim, or complaint to the regulatory authorities, against the Company, the sellers or a Relevant Person in order to trigger the indemnity. Thus if a whistle blower alerted the regulatory authorities of suspected or actual mis selling, or if (as in fact occurred) management, complying with their regulatory obligations, reported such mis selling to the FSA, which ordered the payment of compensation, the indemnity would not be triggered. Yet in each case, the mis selling before the date of completion causes the Company loss. The general purpose of clause 7.11, to indemnify Capita and its group against losses occasioned by mis selling is clear. Had clause 7.11 stood on its own, the requirement of a claim or complaint by a customer and the exclusion of loss caused by regulatory action which was otherwise prompted might have appeared anomalous. But clause 7.11 is in addition to the wide ranging warranties in Part 14 of Schedule 4 (paras 18 and 19 above) which probably covered the circumstances which eventuated. Capita had two years after completing the purchase to examine the sales practices of the Companys employees and so uncover any regulatory breaches in order to make a claim under the Schedule 4 indemnities. Prima facie that was not an unreasonable time scale. Indeed, Capita was able to send its findings to the FSA within 20 months of the Completion Date. It is not contrary to business common sense for the parties to agree wide ranging warranties, which are subject to a time limit, and in addition to agree a further indemnity, which is not subject to any such limit but is triggered only in limited circumstances. From Capitas standpoint the SPA may have become a poor bargain, as it appears that it did not notify the sellers of a warranty claim within two years of Completion. But it is not the function of the court to improve their bargain. In this case, the circumstances which trigger that indemnity are to be found principally in a careful examination of the language which the parties have used. Conclusion I would therefore dismiss the appeal.

UK-Abs

Capita Insurance Services Limited (Capita) entered into an agreement (the SPA) with the respondent for the sale and purchase of the entire issued share capital of Sureterm Direct Limited (the Company), a company which primarily offers motor insurance for classic cars. Shortly after Capitas purchase of the Companys share capital, employees of the Company raised concerns about the Companys sale processes. A Company review revealed that in many cases the Companys telephone operators had misled customers to make a sale. Capita and the Company informed the Financial Services Authority (FSA) of the findings. Capital and the Company agreed to to pay compensation to customers affected by the mis selling. Clause 7.11 of the SPA was an indemnity clause. It provided the Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer [] against all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and all fines, compensation or remedial action or payments imposed on or required to be made by the Company following and arising out of claims or complaints registered with the FSA, the Financial Services Ombudsman or any other Authority against the Company, the Sellers or any Relevant Person and which relate to the period prior to the Completion Date pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. Capita brought a claim against the respondent under clause 7.11 alleging that it suffered loss as a result of the mis selling of insurance products in the period before the completion of the sale. The respondent claimed that the circumstances fell outside the scope of clause 7.11 as the requirement to compensate which had arisen was not as a result of a claim by the Companys customers or a complaint by those customers to the FSA or another public authority. The High Court held that clause 7.11 required the respondent to indemnify Capita even if there had been no claim or complaint. The Court of Appeal disagreed. It declared that the indemnity under clause 7.11 was confined to loss arising out of a claim or complaint. Capita appeals against the Court of Appeals order, arguing that it had fallen into error because it had been influenced by the respondents submission that the decision of the Supreme Court in Arnold v Britton [2015] AC 1619 had rowed back from the guidance on contractual interpretation which the Supreme Court gave in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900. Capita argued that this had caused the Court of Appeal to place too much emphasis on the words of the SPA and to give insufficient weight to the factual matrix. Capita submitted that clause 7.11 should be construed so that only the fines, compensation or remedial action or payments imposed on the Company had to arise out of complaints made to the FSA against the Company. The Supreme Court unanimously dismisses Capitas appeal. Lord Hodge gives the lead judgment, with which the other Justices agree. Contractual Interpretation The court must ascertain the objective meaning of the contractual language. It must consider the contract as a whole and, depending on the nature, formality and quality of its drafting, give more or less weight to elements of the wider context in reaching its view as to that objective meaning [10]. Where there are rival meanings, the court can reach a view as to which construction is more consistent with business common sense. However, in striking a balance between the indications given by the language and the practical implications of competing constructions, the court must consider the quality of the drafting of the clause. It must be alive to the possibility that one side may have agreed something which in hindsight did not serve his interest, or that a provision may be a negotiated compromise [11]. It does not matter whether the detailed analysis commences with the factual background and the practical implications of rival constructions or with an examination of the contractual language, so long as the court balances the indications given by each [12]. Textualism and contextualism are not conflicting paradigms in a battle for the exclusive occupation of the field of contractual interpretation [13]. On the approach to contractual interpretation, Rainy Sky and Arnold were saying the same thing [14]. Clause 7.11 The Court of Appeal was correct on the meaning of clause 7.11 [25]. Careful examination of the contractual language identifies the circumstances which trigger the clause [42]. Capitas suggested construction is unlikely for two reasons. Firstly, the suggestion that only the fines, compensation or remedial action or payments imposed on the Company had to arise out of complaints made to the FSA against the Company would not restrict the scope of the warranty in any way. The source of loss and damage in the rest of the clause would remain unlimited. Secondly, it would have the effect that the clause would fail to specify against whom the relevant actions, proceedings and claims in the remainder of the clause could be made. There must be a limit on who such persons could be as it would be absurd for Capita to have a claim against the Sellers for indemnity resulting from any mis selling on its part before the Completion Date [33 35]. The contractual context is also significant in this case. The mis selling which clause 7.11 addresses is also covered by the Schedule 4 warranties, which concern compliance and regulatory matters. The scope of clause 7.11, breach of which gives rise to a liability unlimited in time, must be assessed in the context of the detailed and time limited warranties in Schedule 4 [27]. Capita had two years after completing the purchase to make a claim under Schedule 4. That was not an unreasonable time scale. It is not contrary to business common sense for the parties to agree wide ranging warranties, which are subject to a time limit, and to agree a further indemnity, which is not subject to any such limit but is triggered only in limited circumstances [40]. The SPA may have become a bad bargain from Capitas standpoint, as it appears it did not notify the sellers of a warranty claim within two years of Completion. But it is not the function of the court to improve their bargain [41].

This appeal concerns the rights of so called Zambrano carers and their children to financial support from the state. That expression is derived from the decision of the Court of Justice of the European Union dated 8 March 2011, in Ruiz Zambrano v Office national de lemploi (Case C 34/09) [2012] QB 265. The case concerned a Colombian who had been living in Belgium with his wife, and working (and paying social security contributions), but without a right to reside. Their three children, born between 2003 and 2005, acquired Belgian nationality at birth, and with it European citizenship and the right of free movement, under article 20 of the Treaty on the Functioning of the European Union (TFEU). When in 2005 he lost his job, he was refused unemployment benefit, because under the relevant national law that depended on his having a right to reside. The European court held that the refusal of such a right was unlawful because it would result in the children being deprived of effective enjoyment of their rights as European citizens. The present appeal arises from a challenge to the legality of amendment regulations introduced in this country in November 2012 in response to the Zambrano decision. They were designed to limit the rights of Zambrano carers to claim certain categories of non contributory social security assistance to which those habitually resident would otherwise be entitled: more specifically, income related benefits, child benefit and child tax credit, and housing and homelessness assistance. The amendment regulations in question are: i) The Social Security (Habitual Residence) (Amendment) Regulations 2012 (SI 2012/2587), amending the Income Support (General) Regulations 1987 (SI 1987/1967). ii) The Child Benefit and Child Tax Credit (Miscellaneous Amendments) Regulations 2012 (SI 2012/2612), amending the Child Benefit (General) Regulations 2006 (SI 2006/223). iii) The Allocation of Housing and Homelessness (Eligibility) (England) (Amendment) Regulations 2012 (SI 2012/2588), amending the Allocation of Housing and Homelessness (Eligibility) (England) Regulations 2006 (SI 2006/1294). The effect of the amendment in each case is to add to the relevant list of exclusions from qualifying rights of residence, a right to reside existing by virtue of TFEU article 20, where that right arises because a British citizen would otherwise be deprived of the genuine enjoyment of the substance of their rights as a European Union citizen. The Secretary of States evidence (in a statement by Gareth Cooper, Policy Adviser) refers to the Explanatory Memorandum to the amendment regulations. This explained the purpose as being to maintain the existing policy that non European Economic Area (EEA) nationals are not entitled to claim income related benefits, following the ruling in the Zambrano case. Mr Cooper (para 8) quotes it as follows: the Home Office are amending their regulations to provide a right to reside and a right to work to a non EEA national who is a primary carer of a dependent British citizen only if the British citizen would otherwise be forced to leave the UK and be deprived of exercising their rights as an EU citizen. If the social security regulations are not amended such persons would become entitled to income related benefits. The amendments had been subject to consultation with local authority associations and the Social Security Advisory Committee, and had attracted no objection or substantive comment. According to Mr Cooper it had been estimated by the Home Office that there would initially be some 700 people a year qualifying for Zambrano rights, giving rise to a potential annual cost of between 3.8m and 9.4m in respect of income support, housing benefit and council tax benefit together. Mr Cooper does not indicate what consideration, if any, had been given to how children of workless Zambrano carers were to be supported, if not entitled to such assistance. The facts relevant to the present appellant, Mrs HC, can be shortly stated. She is an Algerian national who has been living in this country since 2008, having arrived with leave but over stayed. In 2010 she married a British national on whom she was financially dependent. She has two children by him, born in August 2011 and March 2013. Her relationship with him ended after domestic violence in late 2012, when she sought help from the Oldham City Council, in whose area she was then living. After an initial refusal, the council agreed to provide temporary housing and financial support under section 17 of the Children Act 1989. Separate judicial review proceedings against the council resulted in an interim order by His Honour Judge Pelling QC, under which she and her children were accommodated by the council in two bedroom accommodation and given 80.50 per week to cover subsistence and utility costs. Those proceedings were later stayed by consent on the councils agreement to carry out a further assessment of their needs, and to continue the support in the meantime. It is now common ground (following a decision of the First tier Tribunal in April 2014) that she is entitled to reside in the UK as a Zambrano carer. It is also not in dispute that that entitlement, taken with the financial support provided by the council, provides not only the legal right, but also the practical support, necessary to protect the children against being obliged to leave the territory of the European Union while under her care. Her case (para 36 of her second witness statement) is that this is not enough: As I cannot go back to Algeria and have no right to live in any other country my only option is to remain here, where at least I have the protection of a prohibited steps order and the British courts. Also my children are British. This is their home country and the only place they know. They are entitled to grow up here and, I pray, to enjoy the same benefits and opportunities of growing up in Britain that other British children have. At present when I see how they must live compared to their British cousins and step siblings I know that they do not in practice have the same rights. We are expected to make do with far less, the bare minimum, only enough to survive. In legal terms, Mr Drabble QC on her behalf submits that it was not legally possible for the amendment regulations to deny a Zambrano carer and her child mainstream welfare and housing provision, without contravening what he calls the fundamental principle of equal treatment that is part of EU law, as embodied in article 21 of the EU Charter of Fundamental Rights (the Charter). As a fall back position he relies also on article 14 of the European Convention on Human Rights (the Convention). Against this background, the following issues arise: i) The Zambrano principle. Does the principle require from the state more for the children and their Zambrano carer than bare protection (legal and practical) against being obliged in practice to leave the territory of the Union? ii) Discrimination: a) In so far as the regulations placed limits on the benefits available to Zambrano carers was the UK implementing Union law (within the meaning of article 51 of the EU Charter), so as to bring the Charter into play? If so, did those limits involve unjustified discrimination on grounds prohibited by article 21 of the Charter? b) Alternatively, did involve unjustified those discrimination contrary to article 14 of the Convention, taken with article 8 (right to respect for private and family life) or article 1 of the First Protocol (right to property)? limits The Zambrano principle I start from the formulation of the principle by the European court in Zambrano itself. Having described citizenship of the European Union as the fundamental status of nationals of the member state, the court said: 42. In those circumstances, article 20 TFEU precludes national measures which have the effect of depriving citizens of the European Union of the genuine enjoyment of the substance of the rights conferred by virtue of their status as citizens of the European Union 43. A refusal to grant a right of residence to a third country national with dependent minor children in the member state where those children are nationals and reside, and also a refusal to grant such a person a work permit, has such an effect. 44. It must be assumed that such a refusal would lead to a situation where those children, citizens of the European Union, would have to leave the territory of the European Union in order to accompany their parents. Similarly, if a work permit were not granted to such a person, he would risk not having sufficient resources to provide for himself and his family, which would also result in the children, citizens of the Union, having to leave the territory of the European Union. In those circumstances, those citizens of the European Union would, as a result, be unable to exercise the substance of the rights conferred on them by virtue of their status as citizens of the Union. 45. Accordingly, the answer to the questions referred is that article 20 TFEU is to be interpreted as meaning that it precludes a member state from refusing a third country national on whom his minor children, who are European Union citizens, are dependent, a right of residence in the member state of residence and nationality of those children, and from refusing to grant a work permit to that third country national, in so far as such decisions deprive those children of the genuine enjoyment of the substance of the rights attaching to the status of European Union citizen. (emphasis added) It is clear (particularly from the passages highlighted in para 44) that the reasoning of the court turned specifically and solely on the risk of being obliged to leave the territory of the Union. There was no issue as to the nature of financial support (if any) required, nor as to the extent of any right to benefits otherwise available to nationals. Once the right of residence, and with it the right to work, were established, the entitlement to and the amount of unemployment benefit followed as a matter of Belgian law. Indeed Advocate General Sharpston had dismissed arguments that there might be an unreasonable burden on public finances, pointing out that Mr Zambrano had worked full time for nearly five years, paid social security contributions, and thus contributed steadily and regularly to the public finances of the host member state (Opinion paras 118 120). Mr Drabble rightly does not suggest that in itself the judgment throws any light on the right to non contributory benefits. The same emphasis is found in the next significant case: Dereci v Bundesministerium fr Inneres (Case C 256/11) [2012] 1 CMLR 45. Mr Dereci, a Turkish national, had entered Austria illegally. He had married an Austrian woman and had three children who were EU citizens. He applied for a residence permit, but this was refused by the national authorities because the EU citizens concerned had not exercised their right of freedom of movement. The European court accepted that, in the light of its decision in Zambrano, the situation of Union citizens who have not made use of their freedom of movement could not for that reason alone, be assimilated to a purely internal situation (para 61). Having summarised the decision in that case, the court said: 66. It follows that the criterion relating to the denial of the genuine enjoyment of the substance of the rights conferred by virtue of EU citizen status refers to situations in which the Union citizen has, in fact, to leave not only the territory of the member state of which he is a national but also the territory of the Union as a whole. 67. That criterion is specific in character inasmuch as it relates to situations in which, although subordinate legislation on the right of residence of third country nationals is not applicable, a right of residence may not, exceptionally, be refused to a third country national, who is a family member of a member state national, as the effectiveness of Union citizenship enjoyed by that national would otherwise be undermined. 68. Consequently, the mere fact that it might appear desirable to a national of a member state, for economic reasons or in order to keep his family together in the territory of the Union, for the members of his family who do not have the nationality of a member state to be able to reside with him in the territory of the Union, is not sufficient in itself to support the view that the Union citizen will be forced to leave Union territory if such a right is not granted. 69. That finding is, admittedly, without prejudice to the question whether, on the basis of other criteria, inter alia, by virtue of the right to the protection of family life, a right of residence cannot be refused. However, that question must be tackled in the framework of the provisions on the protection of fundamental rights which are applicable in each case. That passage indicates both the exceptional nature of the Zambrano right (para 67); and that it is triggered not by the mere desirability of keeping the family together, on economic or other grounds, but solely by the threat of being forced to leave Union territory if the right were not granted (para 68). Subsequent authorities are to the same effect. We have been referred to no European court authority which extends Zambrano rights to include non contributory benefits of the kind in issue in the present appeal. A more recent example, on which Mr Drabble relies, is Rendn Marin v Administracin del Estado (Judgment: Citizenship of the Union) [2016] EUECJ C 165/14; [2017] QB 495, where the court described this line of cases as having the common feature that, although they are governed by legislation which falls, a priori, within the competence of the member states, namely legislation on the right of entry and residence of third country nationals outside the scope of provisions of secondary legislation which provide for the grant of such a right under certain conditions, they nonetheless have an intrinsic connection with the freedom of movement and residence of a Union citizen, which prevents the right of entry and residence being refused to those nationals in the member state of residence of that citizen, in order not to interfere with that freedom. (para 75) Mr Drabble asks us to note that the national (Spanish) court, in making the reference, had referred to its possible relevance to social benefits under domestic law (para 30). However, there is nothing in the European courts treatment of the case itself to suggest that the scope of EU law for these purposes extended beyond protection against being obliged to leave. Thus it was left for the national court to determine whether the refusal to grant residence to the father would mean that he had to leave the territory of the European Union with the result that the children could be compelled to go with him, and therefore to leave the territory of the European Union as a whole (para 78). In R (Agyarko) v Secretary of State for the Home Department [2017] UKSC 11; [2017] 1 WLR 823, paras 62 63, in a judgment agreed by the other members of the Supreme Court, Lord Reed referred to this line of cases and emphasised the specific and derivative nature of the rights so conferred. He cited a passage from the judgment of the European court in S v Secretary of State for the Home Department (Case C 304/14) [2017] QB 558; [2017] 2 WLR 180, para 29, holding that there are very specific situations in which, despite the fact that the secondary law on the right of residence of third country nationals does not apply and the Union citizen concerned has not made use of his freedom of movement, a right of residence must nevertheless be granted to a third country national who is a family member of his since the effectiveness of citizenship of the Union would otherwise be undermined, if, as a consequence of refusal of such a right, that citizen would be obliged in practice to leave the territory of the European Union as a whole, thus denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status. (emphasis added) The emphasised words in that citation are critical in defining the limited scope of the right. On this issue I agree entirely with the analysis of Elias LJ (Harrison (Jamaica) v Secretary of State for the Home Department [2012] EWCA Civ 1736; [2013] 2 CMLR 23, paras 63 70). As he said: The right of residence is a right to reside in the territory of the EU. It is not a right to any particular quality of life or to any particular standard of living. Accordingly, there is no impediment to exercising the right to reside if residence remains possible as a matter of substance, albeit that the quality of life is diminished (para 67) Baumbast and related cases It is convenient at this point to address Mr Drabbles argument based on a line of cases beginning with Baumbast v Secretary of State for the Home Department (Case C 413/99) [2002] ECR I 7091, followed in Ibrahim v Harrow London Borough Council and Teixeira v Lambeth Borough Council (Joined Cases C 310/08 and C 480/08) (both reported at [2010] ICR 1118). These were concerned directly with a quite different issue: the interpretation of EU Regulation 1612/68, on freedom of movement for workers. Article 12 provided that children of a national of a member state employed in the territory of another member state should be admitted to that states general educational courses under the same conditions as the nationals of that state, if such children are residing in its territory. In Bambaust itself there was an issue whether the childrens rights of residence under the article continued after a change in the position of the parents in the state concerned. It was held that the children retained their right under article 12 to reside for the purpose of attending educational courses, notwithstanding the facts that the parents had divorced, that the only Union citizen parent had ceased to be a migrant worker in the state concerned, and that the children were not themselves citizens of the Union (para 63). It was held further that the parent who was the primary carer, irrespective of nationality, must be permitted to reside with them in order to facilitate the exercise of their right. Mr Drabble relies in particular on the application of that principle in the second case, Ibrahim. That concerned a Somali national who entered with leave to join her Danish husband, who was at the time working here; their children began to attend school shortly after her arrival. They later separated, and the husband had ceased working here, and she was wholly dependent on social assistance. The question arose whether she had a right of residence derived from her childrens rights under article 12, or whether that was subject to the conditions laid down in the Citizenship Directive (2004/38), including that of sufficient resources. On a reference from the Court of Appeal, the CJEU held that the rights of both children and their primary carers were derived from article 12, and were not as such subject to any such conditions (under the Citizenship Directive or otherwise) (paras 50 59). Mr Drabble relies on this as showing that once the right of residence is established it was not necessary to show a positive right to claim social assistance. In the words of his case (para 4.34): The whole approach proceeds on the basis that if there is a right of residence which arises even if the individuals concerned are not self sufficient, the individuals who are exercising the rights derived from EU law will be able to claim the same benefits as nationals of the host state. By the same token, he submits, in the absence of any self sufficiency condition or other limitation, the residence rights of Zambrano carers should be treated as giving rise to the same benefits as those of other categories of resident. He adopts a passage from an article by Dr Charlotte OBrien Hand to mouth citizenship: decision time for the UK Supreme Court on the substance of Zambrano rights, EU citizenship and equal treatment: [2016] 38(2) JSWFL 228 at p 234: The CJEU [in Zambrano] created an EU citizenship based right to reside, which necessarily triggers a right to equal treatment under EU law. Nowhere did the CJEU suggest that those exercising that right were not intended to really have that kind of right. Given that the Zambrano case was a benefits case, it seems only fair to suppose that had the CJEU wished to invent a new equal treatment free right to reside, that is something they might have mentioned. We have been here before, and should have learnt from past experience. Following Baumbast UK authorities were adamant that Baumbast only applied to the self sufficient (ie the well off), even though the CJEU had not said so, and in spite of the incongruity with the case law. According to the UK the right to reside did not entail equal treatment. The Court of Appeal, while making the reference in Ibrahim [2008] EWCA Civ 386 was inclined to agree, expressing scepticism about the idea that they shouldnt read a self sufficiency condition into Baumbast (55). However, the CJEU in Ibrahim . made clear that there was no basis for a condition of self sufficiency in the legislation in question (52), or in the case law (53) and specifically pointed out that the ruling in Baumbast had not been based on a finding of self sufficiency I have two difficulties with the comparison so made with this line of cases. In the first place, the domestic law context was quite different. As the court noted in Ibrahim (para 14), entitlement under the national legislation turned on whether she had a right of residence conferred by EU law, but was otherwise unlimited. The issue was whether it was implicitly subject to a self sufficiency condition derived from EU law. No such issue arises here. The limitations are derived from the domestic legislation, and the only issue is their compatibility with EU law. Secondly, the proposition that the right of residence created in Zambrano necessarily triggers a right to equal treatment under EU law begs one of the principal issues raised by the present appeal a question to which I now turn. Discrimination under the Charter Although Mr Drabble has referred to what he calls the fundamental principle of equal treatment that is part of EU law, his submissions (rightly in my view) are not based on any such general principle. They are directed specifically to article 21 of the Charter, as applied by article 51, rather than any more general principle. At an earlier oral permission hearing of this case permission was refused for a separate ground of appeal based on article 18 of the Treaty, which prohibits discrimination on the grounds of nationality. That can have no application to a third country national, such as Mrs HC. As Lady Hale has said (Patmalniece v Secretary of State for Work and Pensions [2011] 1 WLR 783, para 83): This [article 18] is not a general prohibition of discrimination on grounds of nationality. Only the nationals of member states are protected. Discrimination against third country nationals is not prohibited. Indeed it is positively expected. The underlying purpose is to promote the objects of the Union and in particular the free movement of workers between the member states and the free establishment of businesses within them. Under the Charter, the starting point is article 51, by which the principles of the Charter apply to member states only when they are implementing Union Law. Mr Drabble submits that for this purpose it is sufficient that the Zambrano principle brings the carer and child within the scope of the EU treaties ratione personae (adopting the language of the CJEU in Martnez Sala v Freistaat Bayern (Case C 85/96), [1998] ECR I 2691). Alternatively, in setting the support to be provided to Zambrano carers, and in choosing between section 17 support and mainstream welfare benefits, the Secretary of State was choosing between different modes of implementing EU law, or (as Mr Banner puts it, for the AIRE Centre, as intervener) regulating the entitlement to financial assistance under EU law. Mr Coppel, for the Secretary of State, rejects that approach. It is not enough to say that Mrs HC is personally (ratione personae) within the scope of the Treaty by virtue of her derivative right of residence. Sala was directed specifically to the rights of EU citizens (see judgment paras 62 63), and was not in any event concerned with the application of the Charter. Nor is it enough that the national law is related in some way to EU law. There must be a direct link between the act in question and the implementation of that law. This is illustrated by reference to Ymeraga v Ministre du Travail, de lEmploi et de lImmigration (Case C 87/12) [2013] 3 CMLR 33. That concerned the refusal by the Luxembourg government, under a national law on freedom of movement, to grant a right of residence to family members of the first applicant (Mr Y). One issue concerned the application of the Charter to the law in question. The court considered whether the refusal was a situation involving the implementation of European Union law within the meaning of article 51. For that purpose it must be ascertained among other things whether the national legislation at issue is intended to implement a provision of EU law, what the character of that legislation is, and whether it pursues objectives other than those covered by EU law, even if it is capable of indirectly affecting that law, and also whether there are specific rules of EU law on the matter or capable of affecting it (para 41) The court accepted that the national law on freedom of movement was indeed intended to implement EU law, but that was not enough. The situation of the applicants was not governed by either of the EU directives relied on, nor did the refusal of a right of residence to Mr Ys family members have the effect of denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status as citizen of the Union. Accordingly the refusal did not involve the implementation of European Union law, and accordingly the Charter had no application (paras 41 43). Mr Coppel relies particularly on Dano v Jobcenter Leipzig (Case C 333/13) [2015] 1 WLR 2519 (Dano), as showing that decisions about the level of non contributory benefits, absent any specific requirement or condition of EU law, are not within the scope of the Charter. In that case a Romanian mother had been living in Germany with her son, where she was looking for work. Her application for benefits as a job seeker was refused because national law excluded such benefits for foreign nationals whose right of residence arose solely out of the search for employment. This was challenged as breaching their right to equal treatment under Parliament and Council Regulation No 883/2004 (which categorised such benefits as special non contributory cash benefits), article 4 of which provided that Union citizens residing in another member state should enjoy the same benefits as nationals of the host member state. It was held by the CJEU (in summary) that, although the benefits in question fell within the scope of article 4, they were linked to the right of residence under the Citizenship Directive and could be limited by reference to its conditions. A fourth question related to the application of certain provisions of the Charter. The court referred to article 51, and to article 6(1) of the EU Treaty, by which the provisions of the Charter are not to extend the competences of the EU as defined in the Treaties (paras 87 88). It noted that the relevant regulation did not lay down conditions for the rights in question; it was therefore for the legislature of each state to lay down those conditions (para 89). It concluded: 91. Consequently, when the member states lay down the conditions for the grant of special non contributory cash benefits and the extent of such benefits, they are not implementing EU law. In my view Mr Coppels approach is correct. The test is not whether Mrs HC is personally within the scope of EU law in some way. The issue must be judged by reference to the test set by article 51, which is directed to implementation of EU law. Once it is determined that EU law does not require more for the children of a Zambrano carer than practical support sufficient to avoid their being obliged to leave the Union, that also sets the limits of what is involved in its implementation. Although it is open to the state to provide more generous support (gold plating, as it is sometimes called), that is the exercise of a choice under national law, not EU law. To describe this as regulating the financial assistance given to the EU carer does not alter that fact. Just as Mr Ymeraga could not rely on the Charter to extend the derivative rights otherwise available to his family members, so Mrs HC cannot rely on it to give her any entitlement to financial assistance beyond the limited support required by the Zambrano principle itself. The point does not bear of much elaboration, but the conclusion is sufficient to dispose of this issue in favour of the Secretary of State. It is unnecessary therefore to consider the interesting questions which would have arisen under article 21, had the Charter been held to apply. Discrimination under the Convention I can deal relatively briefly with this issue, which was not developed in any great detail by Mr Drabble, other than by repetition of the arguments advanced in respect of article 21 of the Charter. In short, he submits that the amendment regulations have an impact within the ambit of article 8, or article 1 of the First Protocol, and that accordingly there is right under article 14 not to be discriminated against without reasonable justification. It is unnecessary for present purposes to enter into the continuing debate about the application to benefits of this kind of article 8, as opposed to article 1 of the First Protocol) (see per Collins J R (DA) v Secretary of State for Work and Pensions [2017] EWHC 1446 (Admin), paras 39 40). I am prepared to proceed on the basis that the case falls within the ambit of convention rights so as potentially to engage article 14. That article provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The status on which Mr Drabble relies, as I understand his submission, is either immigration status, or, more narrowly, the status of Zambrano carer and child. I do not think that either can assist him under article 14. Discrimination on the basis of immigration status is of course a fundamental and accepted part of both EU and national law, but cannot in itself give rise to an issue under article 14. In so far as Mrs HCs differential treatment arises from her status as a third country national, she can have no complaint. So far as concerns her Zambrano status, that is a creation of European law, and such differences of treatment as there are, as compared to other categories of resident, do no more than reflect the law by which the status is created. In any event, the Strasbourg court has long accepted that the allocation of limited public funds in the social security and welfare context is pre eminently a matter for national authorities, subject only to the requirement that their decisions should not be manifestly without reasonable foundation (see R (MA) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2016] 1 WLR 4550, para 32 per Lord Toulson). The governments reasons for not providing support to Zambrano carers, as explained in the evidence of Mr Gareth Cooper, included the objectives of reducing costs by allocating benefits to those with the greatest connection with this country, of encouraging immigrants here unlawfully to regularise their stay, of encouraging TCNs wishing to have children here to ensure that they had sufficient resources to support themselves and their children, and of reducing benefits tourism. Like Arden LJ in the Court of Appeal (para 96) in spite of criticisms made by Mr Drabble, I find it impossible to say that these objectives fall outside the wide margin of discretion allowed to national governments in this field. Section 17 As I have said, no issue arises in this appeal as to the scope of the local authoritys duties under section 17 of the Children Act 1989, and we have heard no argument upon them. However, it has emerged as an important aspect of the governments response to Zambrano principle, which may not have been anticipated at the time that the amending regulations were being prepared. There is no indication that it was the subject of discussion between central and local government at that time. Mr Cooper does no more than refer to the actions taken by the Oldham Borough Council, as the responsible local authority under that Act. He does not suggest that section 17 formed any part of the governments thinking when preparing the regulations, or of any impact assessment then carried out. Nor have we heard any submissions from the Oldham Borough Council itself. However some brief comment may be appropriate. Section 17(1) imposes a general duty on local authorities: to safeguard and promote the welfare of children within so far as is consistent with that duty, to promote the (a) their area who are in need; and (b) upbringing of such children by their families, by providing a range and level of services appropriate to those childrens needs. The services so provided may include providing accommodation and giving assistance in kind or in cash (section 17(6)). A child is taken to be in need for this purpose if (inter alia) he is unlikely to achieve or maintain, or to have the opportunity of achieving or maintaining, a reasonable standard of health or development without the provision for him of services by a local authority under this Part. (section 17(10)) More detailed provision as to how that duty is to be carried out is contained in Schedule 2 to the Act. Also relevant is section 11 of the Children Act 2004, which requires local authorities to make arrangements to ensure that their functions are discharged having regard to the need to safeguard and promote the welfare of children (section 11(2)(a)); and in so doing to have regard to any guidance given to them for the purpose by the Secretary of State (section 11(4)). The scope of the section 17 duty was considered by the Court of Appeal in R (C) v London Borough of Southwark [2016] EWCA Civ 707; [2016] HLR 36. That case concerned assistance provided to children of a Nigerian mother following the refusal of leave to remain, and pending their return to Nigeria. The court rejected, on the evidence, a claim that the authority had applied an unlawful policy of setting financial support by reference to levels of child benefit, or to amounts paid by the Secretary of State to asylum seekers, rather than by way of assessing their actual needs. In the leading judgment Ryder LJ described the duty in these terms: 12. It is settled law that the section 17 scheme does not create a specific or mandatory duty owed to an individual child. It is a target duty which creates a discretion in a local authority to make a decision to meet an individual child's assessed need. The decision may be influenced by factors other than the individual childs welfare and may include the resources of the local authority, other provision that has been made for the child and the needs of other children Accordingly, although the adequacy of an assessment or the lawfulness of a decision may be the subject of a challenge to the exercise of a local authoritys functions under section 17, it is not for the court to substitute its judgment for that of the local authority on the questions whether a child is in need and, if so, what that child's needs are, nor can the court dictate how the assessment is to be undertaken 14. A local authority that provides support for children in need under the 1989 Act is acting under its powers as a childrens services authority (a local social services authority with responsibility for children) not as a local social services authority performing functions relating to homelessness and its prevention, and not as a local housing authority. The limited nature of the local authority's power is important. The local authority appropriately remind this court of the statement of principle in this regard which is to be found in R (Blackburn Smith) v London Borough of Lambeth [2007] EWHC 767 (Admin) at para 36 per Dobbs J: the defendants powers [under section 17] were never intended to enable it to act as an alternative welfare agency in circumstances where Parliament had determined that the claimant should be excluded from mainstream benefits. As that judgment makes clear, section 17 is designed to cover a wide range of circumstances in which a local authority may need to take action to protect the interests of children in their area, temporary (as in that case) or more long lasting. The duty arising in the present context is perhaps unusual in that arises from a responsibility imposed by EU law on member states. It is also likely to continue so long as no other sources of support are available to the child. On the view I have taken the allocation of responsibility for that support, as between central and local government, is an issue of national rather than EU law. However, that does nothing to diminish the importance of the duty. It must always be remembered that the primary objective is to promote the welfare of the children concerned, including the upbringing of such children by their families. The assessment of need must remain the responsibility of the local authority (as Ryder LJ made clear), but, given that this is a national responsibility, it is clearly desirable that there should be a degree of consistency as between authorities. The legislation allows for the provision of national guidance. Judicial review is available as a backstop, but it is likely to be unsatisfactory for the levels of appropriate support to be left for determination by the individual authorities on a case by case basis, subject only to control by the courts by reference to conventional Wednesbury principles. On this aspect I agree also with the observations of Lady Hale at paras 43 46 of her judgment. Conclusion For the reasons given above, which are substantially the same as those of the Court of Appeal, I would dismiss the appeal. LADY HALE: I have found this a very troubling case. It is not a case about adults rights. It is a case about childrens rights specifically the right of these two very young British children to remain living in their own country and to have the support which they need in order to enable them to do so. Self evidently they need the support of their mother in the shape of the care which she is able to give them. But they also need support in the shape of a place to live and enough to live on. Yet this is not the way in which the policy makers who framed the various Regulations which are under attack in these proceedings saw the matter. They saw it solely in terms of the mother and other Zambrano carers like her, as third country nationals who should be put in the same position as any other third country national. Third country nationals are not, in general, entitled to income related benefits; and so (as Mr Gareth Cooper explains) the Department for Work and Pensions extended this rule to Zambrano carers. Third country nationals are only entitled to be allocated social housing or given homelessness assistance if this accords with the Governments immigration and asylum policy, broadly only if they have leave to enter or remain without a condition that they have no recourse to public funds; and so (as Ms Frances Walker explains) the Department for Communities and Local Government excluded Zambrano carers from eligibility. Third country nationals are only entitled to child benefit and child tax credits in broadly the same circumstances; and so (as Mr Phillip Dearne explains) Her Majestys Revenue and Customs excluded them from eligibility. Yet Zambrano carers are not like any other third country nationals. They have British (or other EU citizen) children dependent upon them. That is why, because of the Zambrano decision, the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) had to be amended to give them the right to live and work here. There is not a hint in the evidence which we have seen that any consideration was given to how these children would be supported if the parent looking after them was unable to work, whether because of the demands of child care or for any other good reason. We are told that the Department of Work and Pensions consulted the local government associations about the exclusion from benefits and the associations made no objection. We do not know whether it had occurred either to central or to local government that (unless there was family or charitable support) the only way in which these children could escape destitution was through the powers of local childrens services authorities under section 17 of the Children Act 1989. If that had been made clear, one imagines that the local government associations might well have expressed some concern about the transfer of this responsibility to them without some corresponding transfer of the considerable sums entailed in discharging this responsibility properly. Section 17 empowers and obliges local authorities to provide a range of services to safeguard and promote the welfare of children in need and, so far as is consistent with that duty, to promote their upbringing by their families. It is a development of a duty dating back to the Children and Young Persons Act 1963 to provide families with help in order to avoid the need for children to be taken into care or looked after by the local authority. It was not intended to be a long term substitute for social housing or means tested benefits. Fortunately, however, section 17(6) provides that The services provided by a local authority in the exercise of functions conferred on them by this section may include providing accommodation and giving assistance in kind or in cash. As originally enacted, cash could only be provided in exceptional circumstances, but those words were repealed in 2011, under powers granted by the Children and Young Persons Act 2008. Section 17 services have the great merit of flexibility. They can be adjusted to the needs of the particular child or family. They may well be in addition to the benefits and services to which the family are entitled under other legislation and thus may provide assistance at a higher level than that. But they have several disadvantages when compared with the benefits and services from which these children and their carers are excluded. First, they depend upon the local authority considering that the child is in need as defined in section 17(10) and (11) (see para 34). This is a judgment to be made by the local authority subject only to judicial review on the usual principles. Second, they are discretionary and not as of right to those who qualify. Indeed, it has been held that (unlike the duty to accommodate a child in section 20 of the 1989 Act) the section 17 duty is a target duty rather than a duty owed to any individual child. Third, there are no standard rates for assistance in cash, as there are with state benefits generally, with the consequent risk of inconsistency between authorities. Fourth, providing assistance in cash does not automatically bring with it entitlement to other assistance, such as free school meals, to which receipt of certain benefits is a passport. Fifth, the only way in which a family can seek to challenge the local authoritys decision is through judicial review, which is far more limited in scope and accessibility than an appeal to the social entitlement chamber of the First tier Tribunal. Thus, according to the mothers evidence, when she approached the local authority for the area where she was living with her husband, she was given her train fare to travel north to the area where her sister and family were living. This is a typical use of section 17 money. When she approached the local authority for that area, because her sister could not house and feed her and her child and her expected second child indefinitely, she was at first refused. But eventually she was offered one room in a local hotel and 45 per week in cash. That is how things stood when these proceedings were launched in July 2013. The local authority then reassessed the childrens needs and (through their Head of Safeguarding, Mr Saul Ainsworth) offered them two bedroomed accommodation of the sort which would be offered to a family who may be eligible for homeless accommodation and in effect to discharge her council tax liability; 55 a week for subsistence, based on the UK Border Agencys figures for the amount needed to meet the needs of one adult and two children under three (as they then were); and 25.50 a week for gas, electricity and water, based on local inquiries. The annual cost of this package was estimated at 11,368.76, while the local authoritys annual budget for section 17 support was 12,000 (which is an indication that it is not expected to be used to provide long term income support). It was on that basis that, on 1 August 2013, the proceedings against the local authority were stayed while the proceedings against the Department of Work and Pensions, the Department for Communities and Local Government and Her Majestys Revenue and Customs, challenging the various regulations, continued. We are told that that is still the position today, although of course the local authority may carry out a further review of the childrens needs, especially as they are older now, and will no doubt have to do so if these proceedings are concluded in the Governments favour. In carrying out that review, the local authority will no doubt bear in mind, not only their duties under section 17, but also their duty under section 11 of the Children Act 2004, to discharge all their functions having regard to the need to safeguard and promote the welfare of children, and their duty, under section 175 of the Education Act 2002, to exercise their education functions with a view to safeguarding and promoting the welfare of children. Safeguarding is not enough: their welfare has to be actively promoted. The authority will no doubt take into account that these are British children, born and brought up here, who have the right to remain here all their lives; they cannot therefore be compared with asylum seeking children or the children of asylum seeking parents, who may end up with no or only a limited right to remain. They will no doubt also wish to take into account the impact upon the proper development of these children of being denied a level of support equivalent to that of their peers, that is, the other British children around them whose families are dependent on income related benefits. That level of support is not fixed at a level designed to lift children out of poverty, as officially defined, but at a level much closer to subsistence. The above is, of course, premised on the dismissal of this appeal. Zambrano and the later cases say nothing about entitlement to benefits, but they do recognise that the children are dependent upon their parents, not just for care, but also for financial support, at least if it is derived from the parents ability to work. The situation of Zambrano carers and their children does not fall within the European Union legislation on access to social security and other welfare benefits. All that Zambrano requires is that the children are not effectively deprived of their rights as European citizens by the situation in which they find themselves. Section 17 support, at least if it is determined giving due weight to the factors suggested above, should be sufficient to ensure that they are not effectively deprived of their rights as British and European citizens. So the questions of EU law which arise are, first, does the Charter of Fundamental Rights apply, and second, what difference, if any, would it make if it did? By article 51 of the Charter, its provisions are addressed to the member states only when they are implementing Union law. The change to the 2006 Immigration Regulations, allowing Zambrano carers to live and work here, was of course implementing Union law. But were the changes to the Regulations at issue here doing so? They were in consequence of a development in Union law, but they were not implementing it in fact, quite the reverse. Supposing that there had been no fall back in the shape of section 17, this could well have been a failure to implement Union law, leaving these children and their carers without support in this country and thus effectively obliging them to leave. But there is section 17, and in my view it is the administration of section 17 which could be said to be implementing Union law, by enabling these children to remain living in this country. Assuming for the moment, without deciding, that the Charter can apply, not only to domestic legislation which implements Union law but also to domestic administration which does so, what difference would the Charter make in this context? Article 24(1) requires that Children shall have the right to such protection and care as is necessary for their well being; section 17 of the 1989 Act is designed as a way of doing this. Article 24(2) requires that In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration. This obligation is obviously derived from article 3(1) of the United Nations Convention on the Rights of the Child, as was the obligation in section 11 of the 2004 Act. Properly understood, they should amount to the same thing. By article 21(1) of the Charter, Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. The discrimination complained of here is between two types of British citizen child the child who is being cared for by a third country national with only Zambrano carers rights to be here, and the child who is being cared for by a parent (or anyone else) who is entitled to claim income related benefits, child benefit and child tax credit, and to seek social housing and homelessness assistance. In general, of course, member states are entitled to draw distinctions between different categories of their own citizens, as long as these are not based on the listed personal characteristics. But, at a stretch, it might just be possible to regard this as a ground such as those listed. If that were so, I am not impressed by the justifications given by the respondents witnesses. These were justifications for exclusion from mainstream benefits. They were addressed to the parents, viewed as third country nationals rather than Zambrano carers, and not to the children. A child focussed approach would have been quite different. Thus the first aim, allocating benefits to those with the greatest connection with this country, would obviously include allocating benefits to British children who were born here and have lived here all their lives. The second aim, of strengthening immigration control, is irrelevant to children who are not subject to it. Their Zambrano carers are only here to support them and for a long as they need that support. A third aim, of saving money, is less than compelling, given that what has in fact happened is a transfer of responsibility from one arm of government to another. As we have seen, the sums involved for a local authority such as this one are not negligible. But if there is a need to avoid discrimination against the children of Zambrano carers, this merely reinforces my view of what local authorities should be taking into account when making their decisions about the level of support to be provided under section 17. Section 17 is one way of providing these children with what they need and deserve. That fact that there are other, and in some respects preferable, ways of doing so does not mean that the United Kingdom is in breach of its obligations under EU law. But no doubt local authorities would welcome some guidance on how they should meet their responsibilities to children with Zambrano carers (and even some help in doing so). For these reasons, I agree that there is no question to be referred to the Court of Justice of the European Union and this appeal should be dismissed.

UK-Abs

Mrs HC is an Algerian national who has been living in the UK since 2009. She arrived with leave but then over stayed. In 2010 she married a British national on whom she depended financially. She had two children by him, in 2011 and 2013. Her children are British nationals. The relationship ended after domestic violence in late 2012, when Mrs HC sought help from her local authority. Oldham City Council, after initially refusing, agreed to provide Mrs HC and her children with temporary housing and 80.50 per week for subsistence and utilities, under section 17 of the Children Act 1989. It is common ground that Mrs HC is entitled to reside in the UK as the carer of her children, due to decision of the Court of Justice of the European Union (CJEU) in Zambrano v Office nationale de lemploi (Case C 34/09) [2012] QB 265. In Zambrano the CJEU held that an EU member state could not take measures in respect of a non EU citizen who was the primary carer (a Zambrano carer) of an EU citizen, where those measures effectively deprive that dependent EU citizen of the genuine enjoyment of his or her rights under EU law. In response to the Zambrano decision, the UK government introduced regulations which amended legislation to preclude Zambrano carers from claiming various income related benefits: (i) The Social Security (Habitual Residence) (Amendment) Regulations 2012; (ii) The Child Benefit and Child Tax Credit (Miscellaneous Amendments) Regulations 2012; (iii) The Allocation of Housing and Homelessness (Eligibility) (England) (Amendment) Regulations 2012 (collectively, the Regulations). Mrs HC challenges the legality of the Regulations. Mrs HC contends that the denial of mainstream welfare and housing provision to a Zambrano carer and her child is unlawful, because it amounts to unlawful discrimination under article 21 of the EU Charter of Fundamental Rights and Freedoms (the Charter) and/or under article 14 of the European Convention of Human Rights (ECHR). The Supreme Court unanimously dismisses the appeal. Lord Carnwath gives the lead judgment, with which Lord Clarke, Lord Wilson and Lord Sumption agree. Lady Hale gives a concurring judgment. In Zambrano and subsequent cases, the reasoning of the CJEU turned solely on the risk that the dependents of Zambrano carers might be forced to leave the EU, thereby being deprived of the enjoyment of their rights as EU citizens. That Zambrano right of residence is exceptional and is not triggered merely by the desirability of keeping the family together. It is not a right to any particular quality of life or standard of living [8 15]. It was argued on behalf of Mrs HC that in EU law, once a right of residence is established, the Zambrano carer is automatically entitled to the same social security assistance as nationals of the host state. That argument relied on the judgment of the CJEU in Baumbast v Secretary of State for the Home Department [2002] ECR I 7091, as followed in Ibrahim v Harrow London Borough Council and Teixeira v Lambeth Borough Council (Joined Cases C 310/08 and C 480/08) [16 20]. This Court rejects the analogy with those cases for two reasons. First, those cases concerned whether rights of residence were subject to conditions derived from EU law. The rights asserted in those cases were not limited by domestic law. Conversely the issue in this case is whether the Regulations, which limit Mrs HCs entitlement to assistance, comply with EU law. Second, the argument that a right of residence triggers a right to equal treatment under EU law relies on article 21 of the Charter. This begs the question of whether the Charter applies to this case at all [21]. According to article 51 of the Charter, the Charter applies to EU member states only when they are implementing EU law. As a result, the test for the applicability of the Charter is not whether Mrs HC was personally within the scope of EU law; it is whether the Regulations were implementing EU law [22 28]. EU law requires no more for the children of a Zambrano carer than the practical support necessary for them to remain in the EU. It is common ground that the limited financial support provided to Mrs HC and her children is sufficient for them to remain. It follows that Mrs HC cannot rely on the Charter to establish a right to further financial assistance [5, 28 29]. The measures adopted by the UK do not amount to unlawful discrimination under article 14 of the ECHR. Discrimination on the basis of immigration status is an accepted part of EU and national law and cannot in itself give rise to an issue under article 14. Insofar as Mrs HC relies on differences between her treatment as a Zambrano carer specifically and the treatment of others, such differences only reflect the rules of EU law which created her Zambrano carer status. In any event, the European Court of Human Rights has accepted that the allocation of public funds in the social security context is primarily a matter for national authorities, provided that allocations are not manifestly without reasonable foundation. The objectives underlying the Regulations cannot be said to fall outside that wide margin of discretion allowed to national governments [31 32]. No issue arises in the appeal as to the scope of the local authoritys duties under section 17 of the Children Act 1989, but that provision is now an important aspect of the governments response to the Zambrano principle. Section 17 confers a duty on local authorities to promote the welfare of the children in their area and, insofar as consistent with that, to promote the upbringing of such children by their families [33 34]. In this case, the duty arises from a responsibility imposed by EU law, but the allocation of that responsibility as between central and local government is a matter of domestic law only. That does nothing to diminish the importance of the duty under section 17. It is appropriate to provide guidance at a national level for the various local authorities discharging that duty [36 37]. In her concurring judgment, Lady Hale adds that a local authority reviewing the needs of the children for the purposes of section 17 will no doubt consider: (i) the need to promote actively the welfare of the children, when exercising various statutory powers; (ii) the fact that these children are British, with the right to remain here for the rest of their lives; (iii) the impact on the proper development of the children which would follow if they were denied a level of support equivalent to their peers [43 46]. The other members of the Court agree with those observations [37]. In Lady Hales view the administration of section 17, unlike the Regulations, could be said to implement EU law by enabling the children to remain in the UK. If the Charter were applicable to the administration of section 17, it might be possible to regard discrimination against the children of Zambrano carers in that context as falling within article 21 of the Charter. In that case, the justifications presently offered on behalf of the Secretary of State would be unimpressive. But section 17 is one way of providing these children with what they need and deserve. The availability of alternatives, which are in some ways preferable, does not mean that the UK is in breach of EU law [48 52].

The appellant Ms Vida Poshteh arrived in this country in 2003 as a refugee from Iran, where she had been subject to imprisonment and torture. She gained indefinite leave to remain in 2009. She lives with her son born in 2007. In October 2009 she applied to the respondent council for accommodation as a homeless person. Since then she has been housed in temporary accommodation provided by the council, which has been continued pending this appeal. The appeal arises from her refusal in November 2012 of a final offer of permanent accommodation at 52a Norland Road, London W11. Her grounds in short were that it had features which reminded her of her prison in Iran, and which would exacerbate the post-traumatic stress disorder, anxiety attacks and other conditions from which she suffered. Following a review, these grounds were held insufficient to justify her refusal. The councils decision was upheld on appeal by the County Court (HH Judge Baucher), and by the Court of Appeal (Moore-Bick and McCombe LJJ, Elias LJ dissenting). Permission to appeal to this court was granted on two issues: (1) Whether Ali v Birmingham City Council [2010] 2 AC 39 should be departed from in the light of Ali v United Kingdom (2015) 63 EHRR 20 and if so to what extent; (2) Whether the reviewing officer should have asked himself whether there was a real risk that the appellants mental health would be damaged by moving into the accommodation offered, whether or not her reaction to it was irrational, and if so, whether he did in fact apply the right test. The first issue raises an issue of general importance relating to the application in this context of article 6 of the European Convention on Human Rights. The second is directed to the reasoning of the reviewing officer in the particular case. The law It is unnecessary to rehearse the relevant provisions of the Housing Act 1996 Part VII in any detail. As is well known, the local housing authority is under a duty to secure provision of suitable accommodation for a person who is homeless and in priority need, and has not become homeless intentionally. The critical provisions in this case are section 193(7) and (7F) which deal with circumstances in which the duty ceases: (7) The local housing authority shall also cease to be subject to the duty under this section if the applicant, having been informed of the possible consequence of refusal and of his right to request a review of the suitability of the accommodation, refuses a final offer of accommodation under Part 6. (7F) The local housing authority shall not - (a) make a final offer of accommodation under Part 6 for the purposes of subsection (7); unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him to accept the offer. In the present case the issue turned not on the suitability of the accommodation, but on whether it was reasonable for the appellant to accept it. The decision-makers task was described by Ward LJ in Slater v Lewisham London Borough Council [2006] EWCA Civ 394 (in terms which have not been criticised): In judging whether it was unreasonable to refuse such an offer, the decision-maker must have regard to all the personal characteristics of the applicant, her needs, her hopes and her fears and then taking account of those individual aspects, the subjective factors, ask whether it is reasonable, an objective test, for the applicant to accept. The test is whether a right- thinking local housing authority would conclude that it was reasonable that this applicant should have accepted the offer of this accommodation. (para 34) The applicant may request a review of an adverse decision, by a senior officer who was not involved in the original decision (section 202). If the decision is confirmed, reasons must be given (section 203(4)). An appeal lies to the county court on a point of law only (section 204(1)). The proper approach of the court when reviewing such a decision was explained by Lord Neuberger in Holmes-Moorhouse v Richmond upon Thames London Borough Council [2009] UKHL 7; [2009] 1 WLR 413, paras 46ff. As he said: 47. review decisions are prepared by housing officers, who occupy a post of considerable responsibility and who have substantial experience in the housing field, but they are not lawyers. It is not therefore appropriate to subject their decisions to the same sort of analysis as may be applied to a contract drafted by solicitors, to an Act of Parliament, or to a courts judgment. 50. Accordingly, a benevolent approach should be adopted to the interpretation of review decisions. The court should not take too technical a view of the language used, or search for inconsistencies, or adopt a nit-picking approach, when confronted with an appeal against a review decision. That is not to say that the court should approve incomprehensible or misguided reasoning, but it should be realistic and practical in its approach to the interpretation of review decisions. The facts The background facts are set out in the leading judgment of McCombe LJ in the Court of Appeal. For present purposes it is sufficient to refer to the sequence of events following the offer of the accommodation in Norland Road on 14 November 2012. It was a first floor, two-bedroom flat in a purpose-built block dating from about 1985, owned by the Notting Hill Housing Group (NHHG). The living-room had two windows, one round window three feet in diameter, and the other rectangular three feet by five feet. Ms Poshteh went to see the flat on 16 November 2012, accompanied by a representative from NHHG. Her concerns about the physical features, not mentioned during the visit, were first raised in her letter of 29 November 2012, in which she said: [I] found the property scary given my history of post- traumatic stress. The windows in the sitting room were circle shaped and other windows were too small. The windows appeared to me as cell windows. I found them quite frightening and reminded me of when I was in prison in my country. I suffer from post-traumatic stress disorder, depression, panic and anxiety attacks, insomnia and nightmares due to torture that I experienced whilst back home in Iran. I therefore do not find it suitable to live in as my permanent home She enclosed letters from a therapist, and her GP (a Dr Sharma), which referred to her mental state and past trauma, and the need to avoid accommodation in a high rise building requiring a lift, but said nothing about the shape of the window. Her letter was treated by the council as a request for a review, which, following reference to the councils own medical advisers, led to confirmation of the decision. However, following her appeal to the county court, the council agreed to carry out a further review. A solicitors letter written on her behalf on 30 August 2013 expanded on her experience when viewing the property. This repeated her concerns, but for the first time stated that viewing the flat had sent her into a panic attack. The letter asserted (incorrectly) that the flat was in a high rise block with a lift. The solicitors also provided further letters relating to her medical condition, including a further letter from Dr Sharma, who understood the flat had been rejected - because the windows were very small and round and she felt like she was back in a prison and this made her scared because it reminded her of the torture she was subjected to. She thought that this type of property would be very unsuitable for her as it would continually trigger memories of her time in prison and the torture she suffered and this would not be good for mental state. A clinical therapist (Ms Baroni) wrote: In my opinion the effect of being housed in accommodation with very small dark rooms without windows at a normal height and looking out onto everyday life would inevitably remind her of both the cell she was confined in for six months, and the interrogation rooms she was tortured in on many occasions if she were housed in accommodation which would be frightening and stressful for her she might suffer a serious relapse and not be able to look after her son safely. On 7 October 2013 Ms Poshteh attended an interview with the reviewing officer. According to his note of the interview, her main reason for refusing the property was the round window in the living room which she said was exactly similar to the round windows of her cell in Iran. The note continues: When I questioned the applicant further about the window she admitted that the round window in the living room of the property was not exactly like the window in the prison cell. In fact, the applicant acknowledged that the window in the prison cell was much smaller and did not let in much light at all. She agreed with my description that it was like a porthole window. The applicant also acknowledged that there was a second large rectangular window located in the living room. However, she advised that it still led her to have a panic attack when she viewed the property. She stated that she could not adequately explain how she felt to the officer from NHHG who accompanied her to the viewing After discussion of other features of the flat which do not appear to have caused her serious concern, the note continues: Applicant stated at the interview that the property would have been OK as TA [temporary accommodation] but not as a permanent offer of accommodation in which she would have to live for ever. She confirmed again that this was because of the window which led her to think about her bad past She stated that she could not accept the property because of the round window in the living room. The reviewing officers decision came in a letter dated 17 October 2013, running to ten pages. He outlined the history of the case, including the medical evidence, the solicitors representations and the matters raised at the interview of 7 October, and he described the dimensions and physical features of the accommodation. The critical part begins at para 39 where, having found that the accommodation was objectively suitable, he said: I nevertheless acknowledge that objectively suitable accommodation may be unsuitable for a particular applicant if it causes them to suffer from symptoms of mental illness. Indeed, the main issue in reviewing our homelessness decision is to consider whether this offer of accommodation was reasonable for you to have accepted given your history of imprisonment and ill-treatment in Iran and your subsequent diagnosis of PTSD and associated problems of severe anxiety and depression. He then gave his reasons for answering that question in the affirmative (paras 41-45). He acknowledged that accommodation which is, for example, cramped or contains small or barred windows could exacerbate symptoms of PTSD in someone who has experienced trauma in prison. However, he thought it highly relevant that the medical evidence, while reporting her own concerns, did not purport to state that the property was unsuitable on medical grounds or that it was not reasonable for her to accept it. The clinical therapist had spoken of very small dark rooms without windows at a normal height and looking out onto everyday life as inevitably reminding her of her detention; but the reviewing officer did not think the property met this description. He turned to consider whether the assertions she had made to her physicians about the window size and the arrangement in the living room were consistent with the floor plan and photographs provided by NHHG: Far from being small, the circular window is in fact seven square feet in size and provides sufficient natural light to meet the relevant edition of the building regulations. When we discussed this at interview you acknowledged that the circular window was in fact much larger than the circular window in your prison cell, and that the only similarity lay in the fact that both were circular. Moreover, the circular window was not the only window in the living room, natural light being also provided by a large rectangular bay window (15 square feet in size) with views onto the street. The combination of these two windows far from creating the dark and airless conditions normally associated with a prison cell, maximised natural light in the living room. He continued: 45. Therefore, I cannot accept as objectively reasonable your assertion that the size or design of the window in the living room was reminiscent of a prison cell or that the windows or layout of the living room is such that it recreated the conditions of confinement or incarceration that is likely to have a significant impact on your mental health Having considered other factors, including the physical health of her and her child, he referred also to what he described as a social housing crisis in this borough and a severe shortage of permanent accommodation locally, which he regarded as a highly relevant factor in concluding that the offer was suitable and reasonable for her to have accepted (para 51). The proceedings As already noted, Ms Poshteh appealed unsuccessfully to the County Court. In the Court of Appeal there was a difference of view, McCombe LJ, with whom Moore-Bick LJ agreed, held that the reviewing officer had properly considered the relevant issues and reached a valid decision. Elias LJ held otherwise, focussing principally on the reasoning at the key passage in para 45 of the letter (set out above). As he put it: 50. The premise is that unless the relevant inciting stressor was one which, objectively considered, was reminiscent of a prison cell or recreated the conditions of confinement or incarceration, which this property did not, the panic attacks could effectively be ignored or at least treated as sufficiently trivial as not to be likely to affect her mental health. He thought this approach was flawed: If as a matter of fact the appellant would be likely to suffer panic or anxiety of such a nature and degree as to create a significant risk of damaging her mental health, it matters not whether it is an explicable or rational reaction. It would still be reasonable for the appellant to refuse the property, as in the El- Dinnaoui case. Alternatively, the officer might possibly have reasoned that absent an objectively explicable inciting stressor, any panic or anxiety induced by the premises would be minimal and unlikely to have an effect on the appellants mental health. If so, the analysis is still in my opinion flawed because there was no proper evidence to justify that inference. It is true that the medical evidence was to the effect that small and dark premises, obviously reminiscent of a prison cell, may well trigger the attacks, but that did not discount the possibility that the attacks may occur in other circumstances. In my judgment there was no basis for inferring simply from the nature of the inciting stressor that the attacks could not be significant enough to damage her mental health. (para 51) Moore-Bick LJ summarised what he understood to be the critical difference between the other judgments, and gave his own comment: 62. The point on which my Lords are divided is whether Mr Stack wrongly dismissed as objectively unreasonable Ms Poshtehs assertion that the round window in the living room reminded her of her prison cell and as a result ignored her evidence of experiencing a panic attack when she visited the property. If that were the case, I should agree with Elias LJ that he misdirected himself. Ms Poshtehs reaction to the round window, as evidenced by her panic attack, was an objective fact, even if it was irrational, and was a matter to be taken into account. However, reading para 45 as a whole in the context of the preceding paragraphs, I am not persuaded that Mr Stack did ignore Ms Poshtehs reaction when reaching his conclusion What Mr Stack actually said was that he did not accept as objectively reasonable her assertion that the size or design of the windows in the living room were reminiscent of a prison cell or that the windows or layout of the room recreated the conditions of confinement or incarceration that were likely to have a significant impact on her mental health. The first of those observations cannot in my view be criticised, since the size and design of the windows were not on any objective view reminiscent of a prison cell. Whether the windows or layout of the room recreated conditions of confinement or incarceration that were likely to have a significant impact on Ms Poshtehs mental health, on the other hand, was a matter of judgment which had to be determined by reference not only to the nature of the inciting stressor or her perception of the property but to the evidence as a whole In the case to which Elias LJ referred (El-Dinnaoui v Westminster City Council [2013] EWCA Civ 231; [2013] HLR 23), the appellants wife had a medically-confirmed history of anxiety due to fear of heights. They were offered a flat on the 16th floor. She became distressed on leaving after the inspection and collapsed at the lift, and an ambulance had to be called. The councils decision that this flat was suitable or reasonable for her to occupy was held by the Court of Appeal to be perverse and so unlawful. Issue (1) application of article 6.1 Article 6.1 of the Convention provides: In the determination of his civil rights and obligations everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law In Ali v Birmingham City Council [2010] 2 AC 39 this court decided that the duties imposed on housing authorities under Part VII of the 1996 Act did not give rise to civil rights or obligations, and that accordingly article 6 had no application. In Ali v United Kingdom (2015) 63 EHRR 20 the European Court of Human Rights (in a chamber presided over by the President Judge Raimondi) held that article 6.1 did apply, but accepted in any event that the procedure applied under the Act conformed to its requirements. The government did not at that stage ask for the issue to be referred to the Grand Chamber. This appeal provides the first opportunity for this court to decide whether the approach of the Strasbourg court should now be followed in this country, and if so with what practical consequences. The Secretary of State, as intervener, has invited us to confirm the decision of this court that article 6 has no application. His concern is as to the effect on decision-making procedures of extending article 6 into both this and other areas of government activity relating to community care and education. The domestic authorities In Ali v Birmingham City Council the courts conclusion that article 6 was not engaged by section 193 turned principally on the nature of the right so granted. In the words of the headnote: a distinction could be drawn between the class of social security and welfare benefits whose substance was defined precisely, and which could therefore amount to an individual right of which the applicant could consider herself the holder, and those benefits which were, in their essence, dependent upon the exercise of judgment by the relevant authority; that cases in the latter category, where the award of services or benefits in kind was dependent upon a series of evaluative judgments by the provider as to whether the statutory criteria were satisfied and how the applicants need ought to be met, did not amount to a civil right within the autonomous meaning which was given to that expression for the purposes of article 6 The right to accommodation under section 193 was held to fall within the latter category, and therefore outside the scope of article 6. This was the unanimous conclusion of the court following detailed consideration of the authorities domestic and European. The case was decided against the background of two domestic cases, in which this or related issues had been discussed at the highest level, but not decided: Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430 (in which the House had proceeded on the assumption, without deciding, that article 6 was engaged by section 193); and R (A) v Croydon London Borough Council [2009] 1 WLR 2557 (relating to a local authority decision whether or not to provide accommodation for a child in need under section 20(1) of the Children Act 1989). In the latter case Lady Hale (with whom the other justices agreed), found it unnecessary to reach any firm conclusions on the application of article 6 (para 34), but, after a review of the authorities, commented that she would be most reluctant to accept, unless driven by Strasbourg authority to do so, that article 6 requires the judicialisation of claims to welfare services of this kind, where every decision about the provision of welfare services has resource implications for the public authority providing the service (para 44). Concurring, but without specific agreement from the rest of the court, Lord Hope felt that it could now be asserted with reasonable confidence that the authoritys duty under section 20(1) did not give rise to a civil right (para 65). In Ali itself, Lord Hope giving the leading speech (agreed by Lady Hale and Lord Brown) noted Lord Hoffmanns observation in Runa Begum (paras 42-44) that it was not in the public interest for funds allocated to social welfare schemes to be unduly consumed in administration and legal disputes, quoting with approval the joint dissenting opinion in Feldbrugge v The Netherlands (1986) 8 EHRR 425, 443, para 15: The judicialisation of dispute procedures, as guaranteed by article 6.1, is eminently appropriate in the realm of relations between individuals but not necessarily so in the administrative sphere, where organisational, social and economic considerations may legitimately warrant dispute procedures of a less judicial and formal kind. Lord Hope observed that the article had now been extended to public law rights, such as social security or other cash under publicly funded schemes, but that no clearly defined stopping point to this process of expansion had been identified. He saw the instant case as an opportunity to introduce a greater degree of certainty into this area of public law (paras 5-6). He noted that in Runa Begum the House had preferred not to decide the question, one reason being the wish not to inhibit the government from developing the arguments in the Strasbourg court should it become necessary to do so (para 31); the balance of advantage now pointed in the direction of taking a decision and so ending the unhealthy uncertainty in the law (para 32). Reviewing the judgments in Runa Begum itself (paras 38-39), he noted with approval comments by Lord Bingham that to hold this to be a civil right would go further then Strasbourg had yet gone; by Lord Hoffmann that the whole scheme of Part VII was shot through with discretions ; by Lord Millett that, given the authority's discretion as to how it will discharge its duties and the fact that ultimately this called for an exercise of judgement, the claim could not be said to be for an individual, economic right flowing from specific rules laid down in a statute. He reviewed the relevant authorities since Runa Begum, including the Croydon case. Of the Strasbourg authorities Lord Hope noted in particular Tsfayo v United Kingdom [2007] BLGR 1; 48 EHRR 18, commenting there had been no dispute that the claim to housing benefit in that case concerned the determination of the applicants civil rights: This was not surprising, as the case fell within the mainstream of cases such as Salesi v Italy 26 EHRR 187 and Mennitto v Italy 34 EHRR 1122 where the issue was one as to the entitlement to an amount of benefit that was not in the discretion of the public authority. The case offers important guidance as to what is needed to satisfy the requirements of article 6.1. But it takes us no further on the question whether a statutory duty to provide benefits in kind as part of a scheme of social welfare falls within the scope of that article. (para 42) He referred to a number of straws in the wind in other cases pointing the other way, and supporting a distinction between - ... the class of social security and welfare benefits that are of the kind exemplified by Salesi v Italy 26 EHRR 187 whose substance the domestic law defines precisely and those benefits which are, in their essence, dependent upon the exercise of judgment by the relevant authority. (para 43) He referred for example to Loiseau v France (Application No 46809/99), 18 November 2003 (unreported), para 7 where the court had referred to a private right which can be said, at least on arguable grounds, to be recognised under domestic law and to an individual right of which the applicant may consider himself the holder. He concluded that article 6 was not engaged by decisions taken by the review officer (para 49). Lord Collins referred also to the decision in Schuler-Zgraggen v Switzerland (1993) 16 EHRR 405, relating to a contributory invalidity scheme, in which the Strasbourg court had spoken of the claim as being for an individual, economic right flowing from specific rules laid down in a federal statute (para 65). He distinguished the content of the statutory duty under section 193 which lacks precision and gave no right to any particular accommodation. Such factors together with the essentially public nature of the duty meant that it did not give rise to an individual economic right (para 73). To similar effect, Lord Kerr acknowledged the difficulty of finding a principled basis for the distinction between social security payments and social welfare provision, given that both require the expenditure of public resources, provide a valuable resource to the recipient; and are activated by a need on the part of the beneficiary. He concluded however that - the lack of similarity to (or, rather, the distinction that can be made with) a private insurance scheme, and the dependence on discretionary judgments not only to establish entitlement but also to discharge the states obligation and the way in which the obligation can be met, all combine to make this a different type of case from the Salesi v Italy (1993) 26 EHRR 187 or Mennitto v Italy (2000) 34 EHRR 1122 models. This is not an assertable right as that term was used in Stec v United Kingdom (2005) 41 EHRR SE 295. (para 75) I should note briefly Nzolameso v Westminster City Council [2015] UKSC 22; [2015] PTSR 549, the most recent Supreme Court decision to which we were referred on Part VII of the 1996 Act (taken with the Children Act 2004). That was principally concerned with the circumstances in which the authority could reasonably make a final offer of accommodation in another area (in that case more than an hour away from where she and her family had lived for many years). The councils decision was set aside on the facts of the case. However, the court recognised the pressures facing authorities dealing with such cases, and the range of considerations which needed to be taken into account, including the resources available to them, the availability of accommodation in their own areas, and the similar pressures on adjoining authorities. Finally, of the domestic authorities, mention should be made of R (King) v Secretary of State for Justice [2016] AC 384; [2015] UKSC 54, in which it was held that a disciplinary decision by a prison governor to order segregation did not engage article 6.1. Lord Reed (in a judgment agreed by the other members of the court) referred (para 113) to the Grand Chamber judgment in Boulois v Luxembourg (2012) 55 EHRR 32, concerned with release on licence, in which the court had said that for the civil limb of article 6.1 to be engaged there must be a dispute over a right which can be said, at least on arguable grounds, to be recognised under domestic law, adding (para 91): The court may not create by way of interpretation of article 6.1 a substantive right which has no legal basis in the state concerned. The starting-point must be the provisions of the relevant domestic law and their interpretation by the domestic courts. This court would need strong reasons to differ from the conclusions reached by the superior national courts by finding, contrary to their view, that there was arguably a right recognised by domestic law. Later in the judgment Lord Reed noted that the article had also been applied to cases concerning rights in public law regarded as closely resembling rights in private law, such as rights to state benefits. He commented that in Ali v Birmingham City Council - the critical feature of cases in the latter category was identified as being that the benefits in question were the subject of precise definition and could therefore amount to an individual right of which the applicant could consider herself the holder. Those were distinguished from benefits which were, in their essence, dependent on the exercise of judgment by the relevant authority. That is consistent with the approach adopted by the Grand Chamber in Boulois. (para 121) Ali v United Kingdom I turn to the judgment of the Strasbourg court. As part of the history of the case (paras 20-24) it referred to extracts from Lord Hopes judgment in Ali v Birmingham City Council (paras 20-24), but without further discussion of the courts reasoning. Under a section headed Judicial consideration of Part VII of the Housing Act 1996 it referred to only two cases: Adan v Newham London Borough Council [2002] 1 WLR 2120 CA, and Runa Begum in this court. Of the former, the judgment noted that the Court of Appeal had set aside the order of the County Court on jurisdictional grounds, but had gone on in an extended obiter dictum to consider the effect of article 6: In this regard, Hale LJ opined that the right to accommodation under section 193 is more akin to a claim for social security benefits than it is a claim for social or other services, where the authorities have a greater degree of discretion and resource considerations may also be relevant. (para 32) Of Runa Begum, the judgment referred to the courts conclusion that the review mechanism under Part VII complied with article 6, assuming it applied. On the issue whether article 6 did apply, the only citation was of the comments of Lord Millett (paras 91 and 93), in which he had noted the features which took the case beyond the existing case law, and which made it inappropriate for determination by the ordinary judicial process; but had found it more difficult, at least in principle, to justify withdrawing it from the protection of article 6.1. The court summarised the submissions of the parties, including the submission on the part of the UK government that the applicant had only a general right to be housed, not to any specific property; this was contrasted with the provision of a financial benefit where both the entitlement and the amount were determined by a clear set of conditions (para 49). Under the heading The Courts assessment the judgment began by setting out general principles including the need to start from the interpretation of the relevant provisions by the domestic courts (para 54). On the application of those principles to the facts of the case, it is appropriate to set out the substance of the reasoning in full: 56. In the case of [Runa] Begum the House of Lords accepted that section 193(2) of the 1996 Act imposed a duty on the Council to secure that accommodation was available for occupation by Ms Begum. Thus, a duty was owed which was enforceable by Ms Begum and which related to a matter of acute concern for her. In the present case the Council acknowledged in its letter of 7 November 2006 to the applicant that it owed her the main housing duty to provide accommodation to her and her family The Government also accept that she had a general right to be housed although the applicant could not point to any property to which she had any right. 57. The Court is satisfied that in the present case the applicant had a legally enforceable right by virtue of section 193 of Part VII of the 1996 Act to be provided with accommodation, albeit that this was a right that could cease to exist in certain conditions Moreover, the court proceedings in question clearly concerned a dispute over the continuing existence, if not the content, of that right; the dispute was genuine and serious; and the result of the proceedings was directly decisive for the right in question. It therefore falls to the Court to decide whether or not the right in question was a civil right for the purposes of article 6 para 1 of the Convention. 58. It is now well-established that disputes over entitlement to social security or welfare benefits generally fall within the scope of article 6 para 1 of the Convention [the footnote cites eg Tsfayo v United Kingdom 48 EHRR 18 para 40, Feldbrugge v Netherlands 8 EHRR 425, Deumeland v Germany (1986) 8 EHRR 448 and Schuler-Zgraggen v Switzerland 16 EHRR 405]. The Court has even recognised a right to a non- contributory welfare benefit as a civil right [citing eg Salesi v Italy (1993) 26 EHRR 187, para 19, and Tsfayo v United Kingdom, para 40]. However, the present case differs from previous cases concerning welfare assistance, as the assistance to be provided under section 193 of the 1996 Act not only was conditional but could not be precisely defined [comparing eg Tsfayo, in which the dispute concerned a fixed financial amount of housing benefit]. It concerns, as the Government noted, a benefit in kind and the Court must therefore consider whether a statutory entitlement to such a benefit may be a civil right for the purposes of article 6 para 1 59. It is true that accommodation is a benefit in kind and that both the applicants entitlement to it and the subsequent implementation in practice of that entitlement by the Council were subject to an exercise of discretion. Nonetheless, the Court is not persuaded that all or any of these factors necessarily militate against recognition of such an entitlement as a civil right. For example, in Schuler-Zgraggen v Switzerland 16 EHRR 405, in which the applicants entitlement to an invalidity pension depended upon a finding that she was at least 66.66% incapacitated, the Court accepted that article 6 para 1 applied. In any case, the discretion in the present case had clearly defined limits: once the initial qualifying conditions under section 193(1) had been met, pursuant to section 206(1) the Council was required to secure that accommodation was provided by one of three means, namely by providing accommodation itself; by ensuring that the applicant was provided with accommodation by a third party; or by giving the applicant such advice and assistance to ensure that suitable accommodation was available from a third party. In this regard, the Court agrees with Hale LJ in Adan v Newham London Borough Council, in which she opined that the right to accommodation under section 193 is more akin to a claim for social security benefits than it is a claim for social or other services, where the authorities have a greater degree of discretion and resource considerations may also be relevant. 60. In light of the above, as far as the applicability of article 6 para 1 is concerned, the Court sees no convincing reason to distinguish between the applicants right to be provided with accommodation, as acknowledged by the Council in its letter of 7 November 2006, and the right to housing benefit asserted by the applicant in Tsfayo. Article 6 para 1 therefore applies and, as such, the applicant had a right to a fair hearing before an independent and impartial tribunal. Having decided that article 6 did apply, the court agreed with the domestic courts that the procedure under Part VII was compliant, notwithstanding that the County Court did not have jurisdiction to conduct a full rehearing of the facts (para 83), but taking as a whole the legislative welfare scheme by virtue of which the applicant, as a homeless person, derived her civil right to be provided with accommodation (para 87). Discussion of issue (1) The review of the domestic authorities noted above, from Runa Begum onwards, shows a continuing debate on this issue, against the background of the uncertain Strasbourg jurisprudence. The unanimous judgment of this court in Ali v Birmingham City Council was intended to settle the issue at domestic level, after a full review of all the relevant Strasbourg authorities. Against this background it is necessary to consider whether the reasoning in the recent Chamber decision makes it necessary or appropriate for us to depart from that decision. The Chamber acknowledged (in line with the Grand Chamber decision in Boulois) the weight to be given to the interpretation of the relevant provisions by the domestic courts. It is disappointing therefore that it failed to address in any detail either the reasoning of the Supreme Court, or indeed its concerns over judicialisation of the welfare services, and the implications for local authority resources (see para 23 above). Instead the Chamber concentrated its attention on two admittedly obiter statements, respectively by Hale LJ (as she then was) in the Court of Appeal in Adan, and Lord Millett in Runa Begum. However, its treatment of these two statements is open to the criticism that they were taken out of context, and without regard to their limited significance in the domestic case law. In Adan the application of article 6 had been conceded by counsel. It is not clear that the passage quoted from the judgment of Hale LJ (para 55) was doing more than recording the basis of the concession. It is true that the passage was mentioned with approval by Lord Hoffmann in Runa Begum (paras 66-69). However, her own considered view on the issue is apparent from both her own judgment in the Croydon case, and her agreement with the leading judgment in Ali (in which Adan did not merit a mention). Nor is it clear from the decision that the Chamber fully appreciated the width of the discretion given to the authority, including questions of resource allocation (emphasised by Lady Hale herself in other cases). Lord Milletts comments needed to be read with the following sentence of his speech, which expressed his view that most European states possess limited judicial control of administrative decisions so that, if article 6 did not apply, such decisions might be outside judicial control altogether (para 93). It would have been interesting to know to what extent that perception of the inadequacies of other administrative law systems was shared by the members of the Chamber, with the benefit of their more direct knowledge. In any event, Lord Milletts views on this point were not shared by the rest of the House, and were overtaken by the considered and unanimous view of this court in Ali itself. Questionable also, with respect, is the Chambers reliance on the decision in Schuler-Zgraggen v Switzerland as an example of entitlement subject to discretion. As Lord Collins pointed out in Ali (at para 61), it was treated by the 1993 court as a claim to an individual economic right flowing from specific rules laid down in the statute. The case report shows that the statute in question gave a right to a full invalidity pension where incapacity of at least 66.66% was established (para 35). Once that level of incapacity was established, the financial entitlement followed as a matter of right, not discretion. It is hard to see any fair comparison with the range of factors, including allocation of scare resources, to which authorities are entitled to have regard in fulfilling their obligations under the housing legislation. In fairness to the Chamber, it may be that this was not spelt out in the governments submissions, as fully as it has been in recent domestic cases (see eg para 27 above). Our duty under the Human Rights Act 1998 section 2 is take account of the decision of the court. There appears to be no relevant Grand Chamber decision on the issue, but we would normally follow a clear and constant line of chamber decisions (see Manchester City Council v Pinnock [2011] 2 AC 104, para 48). This might perhaps be said of some of the previous decisions referred to in the judgment, including most recently Tsfayo v United Kingdom (2006) in which the application of article 6 was conceded by the government. However, it is apparent from the Chambers reasoning (see para 58 cited above) that it was consciously going beyond the scope of previous cases. In answer to Lord Hopes concern that there was no clearly defined stopping point to the process of expansion, its answer seems to have been that none was needed. That is a possible view, but one which should not readily be adopted without full consideration of its practical implications for the working of the domestic regime. The scope and limits of the concept of a civil right, as applied to entitlements in the field of public welfare, raise important issues as to the interpretation of article 6, on which the views of the Chamber are unlikely to be the last word. In my view, this is a case in which, without disrespect to the Chamber, we should not regard its decision as a sufficient reason to depart from the fully considered and unanimous conclusion of the court in Ali. It is appropriate that we should await a full consideration by a Grand Chamber before considering whether (and if so how) to modify our own position. Issue (2) - the correct test and reasons I turn to the second issue which was the subject of decision in the courts below. In this court Mr Westgate QC for Ms Poshteh supports the judgment of Elias LJ. In addition he relies on the public sector equality duty under section 149 of the Equality Act 2010 as underlying the sharp focus which should have been given by the officer to the effects of the applicants disability. For this purpose, he has subjected the decision letter to exhaustive critical analysis. In summary he says that letter fails to explain the link between the objective reasonableness or otherwise of Ms Poshtehs assertion that the round window reminded her of a prison cell, and the rejection of her claim that it would have a significant impact on her mental health. Nor did the letter-writer address adequately the subjective factors underlying her claim. In particular he should have addressed explicitly the panic attack suffered by her when she visited the property. This was a subjective fact, even if (as she was said to have admitted at the interview) the round window was not exactly like the one in her prison cell. In my view, the appeal on this issue well illustrates the relevance of Lord Neubergers warning in Holmes-Moorhouse (para 7 above) against over-zealous linguistic analysis. This is not to diminish the importance of the responsibility given to housing authorities and their officers by the 1996 Act, reinforced in the case of disability by the Equality Act 2010. The length and detail of the decision-letter show that the writer was fully aware of this responsibility. Viewed as a whole, it reads as a conscientious attempt by a hard-pressed housing officer to cover every conceivable issue raised in the case. He was doing so, as he said, against the background of serious shortage of housing and overwhelming demand from other applicants, many no doubt equally deserving. He clearly understood the potential importance of considering her mental state against the background of her imprisonment in Iran. His description of the central issue (para 39) has not been criticised. It is true that he did not in terms address her claim to have suffered a panic attack. But it is hard to criticise him for giving little weight to an incident which she had not mentioned at the time, either to the NHHG officer who accompanied or in her initial letter, nor apparently to either of her medical advisers. In this respect it was a very different case from El-Dinnaoui, to which Elias LJ referred (para 17 above), where the effect was immediate and obvious, and consistent with previous medical advice. Nor, on the other side, did he hold against her her admission at interview that, whatever her reaction during the visit, the flat would have been acceptable on a temporary basis. In any event, the issue for him was not her immediate reaction on one short visit, but how she would reasonably have been expected to cope with living there in the longer term. On that he was entitled to give weight to the medical evidence submitted by her, and to consider how far it supported her case. Taken in isolation the first sentence of para 45 could have been better expressed. But read in the context of the preceding paragraphs the tenor is reasonably clear. The medical evidence was based on a false premise; the assertions she had apparently made to them about the physical features of the property did not match the facts. This was a point he had fairly put to her at the interview, and she was unable to provide a convincing answer. It might well have been unreasonable to offer her (in the clinical therapists words) accommodation with very small dark rooms without windows at a normal height and looking out onto everyday life. But that was not a reasonable description of this particular property, nor a sufficient ground for her not accepting it. Seen in that light there is no difficulty in understanding his reasoning overall. Nor does it disclose any error of law. Finally I should notice Mr Westgates invitation to the court to address questions related to the standard of review by the court. He developed an elaborate argument by reference to recent authorities supporting a more flexible approach in different contexts, particularly where fundamental rights are a stake (eg Pham v Secretary of State for the Home Department [2015] 1 WLR 1591). This issue was not one on which permission to appeal was given, nor has Mr Westgate offered any convincing reason for extending its scope. I bear in mind also Lord Neubergers comments on the potentially profound constitutional implications of a decision to replace the traditional Wednesbury tests for administrative decisions in general (R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2016] AC 1355, para 132). I would agree with Mr Westgate that, since the creation of a statutory right of appeal to the county court, recourse to the highly restrictive approach adopted 30 years ago in the Puhlhofer case (R v Hillingdon London Borough Council, Ex p Puhlhofer [1986] AC 484) is no longer necessary or appropriate. However, the principles governing the right of appeal to the county court under the 1996 Act have been authoritatively established by the House of Lords in Runa Begums case and others following it (including Holmes-Moorhouse), and should be taken as settled. Proliferation of authorities Before leaving the case, I feel bound to say something about the volume of authorities presented in the court bundles. UKSC Practice Direction 6 deals with the form and content of such volumes (paras 6.5.2ff). The appellants are responsible for production of authorities in paper form in sufficient numbers for the court, subject in due course to the courts decisions on costs. Paragraph 6.5.5 states: I would accordingly dismiss the appeal on the second issue. The Court has on numerous occasions criticised the over- proliferation of authorities. It should be understood that not every authority that is mentioned in the parties printed cases need be included in the volumes of authorities. They should include only those cases that are likely to be referred to during the oral argument or which are less accessible because they have not been reported in the Law Reports. In this case the court was presented with eight bundles, including more than 90 cases, reproduced in full, together with 20 other items of statutory material, guidance and textbook extracts (extending in total to some 2,700 pages). The intervention of the Secretary of State was accompanied by two additional bundles, extending to more than 1,000 pages, and including 13 further authorities. The most relevant cases were helpfully, and correctly (PD6 para 6.5.2), brought together in the appellants volumes 1 and 2. Of the remainder the vast majority were not referred to in oral argument, and were unlikely on any view to be more than peripheral to the determination of the issues on which permission had been given. I take as an example volume 4 headed Precedent - whether to depart from previous/follow Europe (or not). This volume included no less than seven House of Lords or Supreme Court authorities, totalling almost 350 pages. The volume was not opened during the hearing. The propositions which the cases were apparently intended to support were familiar, uncontentious, and adequately summarised with appropriate citations, in the printed cases. Similarly, the subjects covered by volume 6 (absence of proper reasons and standard of scrutiny) can be taken as sufficiently familiar to the court not to require extensive citation; still less the inclusion in the bundle of the whole of the Wednesbury case [1948] 1 KB 223 (12 pages), Edwards v Bairstow [1956] AC 14 (26 pages) and Kennedy v Charity Commission [2015] AC 455 (107 pages). It is essential that those involved in the preparation of these bundles, whether as counsel or solicitors, take full responsibility for keeping their contents within reasonable bounds and exercise restraint. The warning against proliferation of authorities is intended for the protection not just of the court, but more for the parties on whom the costs will ultimately fall. In many cases (as I assume in this case) they will be borne in one way or another from public sources. Conclusion For these reasons I would dismiss the appeal, and confirm the decision of the reviewing officer.

UK-Abs

The appellant arrived in the UK in 2003 as a refugee from Iran, where she had been subject to imprisonment and torture. She gained indefinite leave to remain in 2009, the year in which she applied to the respondent council for accommodation as a homeless person. Part VII of the Housing Act 1996 includes the statutory provisions under which local housing authorities are required to secure provision of suitable accommodation for a person who is homeless and in priority need, and has not become homeless intentionally. Sub sections 193(7) and (7F) contain the critical provisions in this case, dealing with the circumstances in which that duty ceases, namely when the applicant refuses a final offer of accommodation. However, the housing authority shall not make a final offer of accommodation unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him to accept the offer. In November 2012 the respondent offered the appellant accommodation in Norland Road, London in a first floor, two bedroom flat. The appellants concerns about the physical features of the property (including the small size of the windows) were first raised in correspondence of 29 November 2012, including a letter from the appellants therapist and her GP, and in a solicitors letter of 30 August 2013. The appellant ultimately refused this final offer of permanent accommodation at the property on the basis that it had features which reminded her of her prison in Iran and which would exacerbate her post traumatic stress disorder, anxiety attacks and other conditions. The issue in the case turned not on the suitability of the accommodation, but whether it was reasonable for the appellant to accept it. Following a review these grounds were held to be insufficient to justify her refusal. The councils decision was upheld on appeal by the county court and by the Court of Appeal. The Supreme Court unanimously dismisses the appeal and confirms the decision of the review officer. Lord Carnwath gives the judgment, with which the other Justices agree. Two issues arise on this appeal: (1) whether the Supreme Court should depart from the its own decision in Ali v Birmingham City Council [2010] 2 AC 39 in light of the European Court of Human Rights (ECtHR) judgment in Ali v United Kingdom (2016) 63 EHRR 20, and if so to what extent; and (2) whether the reviewing officer should have asked himself whether there was a real risk that the appellants mental health would be damaged by moving into the accommodation offered, whether or not her reaction to it was irrational, and if so, whether he did in fact apply the right test [3]. Ali v Birmingham City Council In Ali v Birmingham City Council the Supreme Court decided that the duties imposed on housing authorities under Part VII of the Housing Act 1996 did not give rise to civil rights or obligations and so Article 6 of the European Convention on Human Rights did not apply to it. In Ali v United Kingdom the ECtHR held that Article 6.1 did apply, but accepted that in any event the procedure applied under the Housing Act conformed to its requirements [18]. The review of the domestic authorities shows a continuing debate on this issue, against the backdrop of uncertain Strasbourg jurisprudence. The unanimous judgment of the Supreme Court in Ali v Birmingham City Council was intended to settle the issue at domestic level after a full review of the Strasbourg authorities [32]. The Chamber in Ali v United Kingdom acknowledged the weight to be given to the interpretation of the relevant provisions by the domestic courts and it is thus surprising that it failed to address in any detail either the Supreme Courts reasoning or its concerns over judicialisation of the welfare services. The Chamber instead focused on two obiter remarks by Hale LJ (as she then was) and Lord Millett; its treatment of these two statements is open to the criticism that they were taken out of context [33, 34]. Further questions can also be raised about the Chambers reliance on the decision in Schuler Zgraggen v Switzerland as an example of entitlement subject to discretion: the statute in question gave a right to a full invalidity pension where incapacity of at least 66.66% was established. It is hard to see any fair comparison with the range of factors to which authorities are entitled to have regard in fulfilling their obligations under the housing legislation [35]. The Courts duty under the Human Rights Act 1998 is to have regard to the decision of the Strasbourg court Section. There appears to be no relevant Grand Chamber decision on the issue, but the Supreme Court would normally follow a clear and constant line of chamber decisions. In Ali v United Kingdom it is apparent from the Chambers reasoning that it was consciously going beyond the scope of previous cases and its answer to Lord Hopes concern that there was no clearly defined stopping point to the process of expansion seems to have been that none was needed. That is a possible view, but one which should not readily be adopted without full consideration of its practical implications for the working of the domestic regime [36]. This is a case in which the Supreme Court should not regard the Chambers decision as a sufficient reason to depart from its own fully considered and unanimous conclusion in Ali v Birmingham City Council. It is appropriate to await a full consideration by the Grand Chamber before considering whether (and if so how) to modify the domestic position [37]. The reviewing officers approach The appeal on this issue well illustrates the relevance of the warning against over zealous linguistic analysis. This is not to diminish the importance of the responsibility given to housing authorities under the 1996 Act (and reinforced in the case of disability by the Equality Act 2010). The decision letter viewed as a whole reads as a conscientious attempt by a hard pressed housing officer to cover every conceivable issue raised in the case: he clearly understood the importance of considering her mental state against the background of her imprisonment in Iran [39]. Although the officer did not in terms address the appellants claim to have suffered a panic attack, it is hard to criticise him for giving little weight to an incident which she had not mentioned at the time, nor apparently to her medical advisers. The issue for him was not her immediate reaction on one short visit, but show she would reasonably have been expected to cope with living there in the longer term. On that he was entitled to give weight to the medical evidence submitted by her, and consider how far it supported her case [40]. It might well have been unreasonable to offer her accommodation with very small dark rooms without windows at a normal height and looking out onto everyday life, but that was not a reasonable description of this particular property, nor a sufficient ground for her not accepting it. There is no difficulty in understanding the officers reasoning overall, nor does it disclose any error of law [41].

Was it unlawful for the Secretary of State for Health, the respondent, who had power to make provisions for the functioning of the National Health Service (the NHS) in England, to have failed to make a provision which would have enabled women who were citizens of the UK, but who were usually resident in Northern Ireland, to undergo a termination of pregnancy under the NHS in England free of charge? No, said the Court of Appeal (Moore Bick LJ, Elias LJ, who gave the substantive judgment, and McCombe LJ) on 22 July 2015, [2015] EWCA Civ 771, [2016] 1 WLR 331, when dismissing an appeal against an order to like effect made by King J on 8 May 2014, [2014] EWHC 1364 (Admin). Under section 1 of the Abortion Act 1967 (the 1967 Act) a medical termination of pregnancy is lawful in four specified circumstances, of which the first is, in essence, that the pregnancy has not exceeded 24 weeks and that its continuation would involve risk, greater than if the pregnancy were terminated, of injury to the physical or mental health of the woman. By section 7(3), the 1967 Act extends to England, Wales and Scotland but not to Northern Ireland. In Northern Ireland a termination of pregnancy is lawful when its continuation would threaten the womans life or when it would probably affect her physical or mental health but only if the effect would be serious and, in particular, permanent or long term: Family Planning Association of Northern Ireland v Minister for Health and Social Services and Public Safety [2004] NICA 37, para 12, Sheil LJ. The consequence of the requirement that the probable adverse effect should at least be long term is that abortion in Northern Ireland is lawful only in far narrower circumstances than in the rest of the UK. A challenge to the failure of the law in Northern Ireland to make abortion lawful even in cases of fatal foetal abnormality and of pregnancies caused by sexual crime has been upheld in the High Court of Northern Ireland and is subject to appeal: In re Northern Ireland Human Rights Commissions Application for Judicial Review [2015] NIQB 96, [2016] 2 FCR 418. But, irrespective of the ultimate outcome of those proceedings, the far narrower availability of lawful abortion in Northern Ireland than elsewhere in the UK seems likely to continue. The criminal law relating to abortion in Northern Ireland is a transferred matter within the meaning of section 4(1) of the Northern Ireland Act 1998 and so, subject to section 6, its amendment or otherwise falls within the legislative competence of the Northern Ireland Assembly rather than of Parliament in Westminster. The result of the narrower availability of abortion in Northern Ireland is a steady stream of women usually resident there who come to England in order to secure an abortion here. The evidence in these proceedings is to the following effect: (a) Unable (unless in an emergency) to obtain an abortion free of charge under the English NHS, these women attend private, fee paying clinics in England approved by the respondent under the 1967 Act. (b) Official statistics, based on records kept by the clinics, suggest that about 1,000 of them secure abortions in England each year. (c) But the statistics are likely to understate their number because some of the women are believed to hide the fact that they are usually resident in Northern Ireland. (d) The clinics charge about 600 for terminating a pregnancy of less than 14 weeks and up to 2,000 in the event that it is further advanced. (e) Additionally the women need to pay for their travel to and from England and, usually, an overnight stay. (f) Vulnerable and frightened, they often ask a friend or family member to accompany them, albeit, of course, at yet further cost. (g) For most of the women, the total cost represents a vast sum of money which they do not have. (h) The charity known as Abortion Support Network, being the fifth intervener in these proceedings, sometimes makes a contribution towards the womens costs. (i) Even if so, the women usually need to borrow the balance. (j) The stigma which in Northern Ireland surrounds unwanted pregnancy and its termination can inhibit the women from explaining the reason for their need to borrow. (k) The effect of any delay in raising the funds is that the pregnancy continues, that its termination usually becomes more complex as well as more costly and that its psychological consequences usually become more profound. (l) If, within the time frame set by the 1967 Act, they cannot raise the funds to secure a lawful abortion in England, the women have to choose either to undergo a self administered or back street abortion in Northern Ireland, by which they endanger their health and expose themselves to criminal prosecution and a likely sentence of imprisonment, or to proceed to give birth to a child for whom they may be ill equipped to care. Although this court must acknowledge respect for the ethical pro life convictions which inform the law in relation to abortions in Northern Ireland (together, of course, with equal respect for the contrary pro choice convictions), it remains easy to understand why the plight of women who find themselves in unwanted pregnancy there is deeply unenviable. The two appellants, A and B, are cases in point. In 2012 A, then aged 15, became pregnant. B is her mother. At all material times they have resided in Northern Ireland. With Bs support A decided to seek the termination of her pregnancy. It was conducted in October 2012 at the Marie Stopes International Clinic in Manchester. B had accompanied A there. The total cost was about 900, of which 400 was contributed by Abortion Support Network and 500 was borrowed from friends. Adding significantly to the emotional strain on both A and B of discovering As pregnancy and of enabling her to decide whether to secure its termination in England were the embarrassment, difficulty and uncertainty attendant on the urgent need to raise the necessary funds. C: LEGISLATIVE STRUCTURE OF THE NHS IN ENGLAND On 1 April 2013 there was a change in the legislative structure of the NHS in England. The present appeal, in which the claim is of a breach in 2012 of a duty owed to the appellants, therefore relates to the previous structure. The respondent makes a helpful concession: it is, as I will explain in para 13, that in 2012 he had a power which, if exercised, would (so the court may assume) have enabled UK citizens usually resident in Northern Ireland to undergo abortions under the NHS in England free of charge. But it is a power which he did not exercise; so the question is whether his failure to do so was unlawful. Section 1(1) of the National Health Service Act 2006 (the 2006 Act) was not materially affected by the change in 2013. In its current version it provides that the respondent must continue to promote in England a comprehensive health service designed to secure improvement (a) in the physical and mental health of the people of England, and (b) in the prevention, diagnosis and treatment of physical and mental illness. In my view correctly, King J described the provision as creating a target duty: the express focus of both parts of it is improvement. It identifies the general objectives by reference to which the respondent must exercise his functions under the Act. Such is made clear in subsection (2) of the same section, when, referring back to subsection (1), it provides that for that purpose he must (in the previous version of subsection (2)) provide services in accordance with the Act and (in the current version of it) exercise his functions so as to secure that they are so provided. Section 1(1) of the 2006 Act refers not to the people in England but to the people of England. In R (A) v Secretary of State for Health [2009] EWCA Civ 225, [2010] 1 WLR 279, Ward LJ suggested at para 55 that the reference is therefore to people who are part and parcel of the fabric of the place. I agree and suggest, more simply, that it is to the people who live in England. Other legislation imposes an analogous target duty on the health authorities in Wales, Scotland and Northern Ireland. Thus section 2(1)(a) of the Health and Social Care (Reform) Act (Northern Ireland) 2009 requires the Department of Health, Social Services and Public Safety in Northern Ireland to promote a system of health care designed to secure improvement in the physical and mental health of people in Northern Ireland. The general scheme is therefore that the health service for the people who live in Northern Ireland is to be provided for them there by the Northern Irish authority. The original version of section 3(1) of the 2006 Act provided: The Secretary of State must provide throughout England, to such extent as he considers necessary to meet all reasonable requirements (c) medical services, (d) such other services for the care of pregnant women as he considers are appropriate as part of the health service The provision of abortion services fell within either (c) or (d), indeed probably within (c). But the respondents duty was to provide them to such extent as he considers necessary to meet all reasonable requirements. When addressing the same words in the predecessor to section 3(1), the Court of Appeal, in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213, observed at para 24 that the respondent therefore had no duty to provide services if he does not consider they are reasonably required or necessary to meet a reasonable requirement. Although in my view the appellants are right to question whether the existence of a reasonable requirement was left to the determination of the respondent, his evaluation undoubtedly governed the extent to which it was necessary to meet it; so a broad area of the duty cast upon him by section 3(1) was left to be marked out by the exercise of his own judgement. In 2002, however, the respondents functions under what became section 3(1) of the 2006 Act were made exercisable on his behalf by primary care trusts (the trusts): see regulation 3(2) of the National Health Service (Functions of Strategic Health Authorities and Primary Care Trusts and Administration Arrangements) (England) Regulations (SI 2002/2375), (the Functions Regulations). Regulation 3(7) was important because it defined the categories of persons for whose benefit a trust should exercise the functions. In summary the categories were as follows: (a) persons registered, other than temporarily, with a GP in the area of the trust; (b) persons usually resident in its area; (c) persons resident outside the UK who were present in its area (albeit that other regulations required a trust to charge such persons for services); (d) persons suffering serious mental illness who were resident in other parts of the UK and who were present in its area; and (e) all persons present in its area but only for the provision to them of emergency and analogous services, treatment for certain infectious diseases and any other services which the [respondent] may direct. Although, therefore, a woman present in England but usually resident in Northern Ireland did not, save in the case of an emergency or if suffering serious mental illness, qualify for the provision by the trusts of abortion services in England, it was open to the respondent to make a direction under regulation 3(7) and section 7(1) of the 2006 Act that the function under section 3(1) of providing abortion services should be exercised by the trusts for the benefit of all persons present in their area who were citizens and residents of the UK. As I have already indicated, the case proceeds on the convenient if questionable assumption that, had the respondent done so, then, notwithstanding the broad area of judgement then exercisable by the trusts under section 3(1) and notwithstanding the target set under section 1(1) to secure improvement in the health of the people of England, they would have resolved to provide such services to UK citizens usually resident in Northern Ireland including, therefore, to A. The change on 1 April 2013 in the legislative structure of the NHS in England was wrought by the Health and Social Care Act 2012 (the 2012 Act). One of its purposes was to reduce the respondents role, even when only nominal, in the front line provision of services. It abolished the trusts. It revoked the Functions Regulations. It provided for the establishment of clinical commissioning groups (the groups). And it amended section 3(1) of the 2006 Act so that the provision of the services there identified, including, as before, medical services and services for the care of pregnant women, is now required to be arranged by a group. But the duty, which is qualified in terms much as before, is to make such arrangements only to such extent as it considers necessary to meet the reasonable requirements of the persons for whom it has responsibility. For whom, then, does a group have responsibility for this purpose? The answer lies in a new subsection, numbered (1A), introduced into section 3 by the 2012 Act: in principle (and apart from provision in emergencies, etc) it has responsibility for persons provided with primary medical services by a member of the group (ie persons registered, whether temporarily or otherwise, with a GP in the group) and for persons usually resident in the groups area if not registered with a GP in another group. At first sight, therefore, the perceived solution for the pregnant woman usually resident in Northern Ireland might be to come to England and to cause herself to be registered temporarily with a GP here. As it happens, that particular solution is precluded by regulation 2(2) of the National Health Service (Clinical Commissioning Groups Disapplication of Responsibility) Regulations 2013 (SI 2013/350), which excludes persons usually resident in Northern Ireland (and in Scotland and Wales) from those to whom a group owes duties under section 3(1) and (1A). In addition to its duties, however, a group also has a power in relation to those for whom, under section 3(1A), it has responsibility. The power is conferred by a new section, numbered 3A, introduced into the 2006 Act by the 2012 Act: it is to arrange for the provision to them of such services as it considers appropriate for securing improvement in their physical and mental health. So the woman usually resident in Northern Ireland but temporarily registered with a GP in England would qualify for any such services; and there is no such exclusion of her from qualification for the exercise of the groups power as precludes her qualification for the discharge of the groups duties. Just as in 2012, in relation to the case before the court, the respondent had power to make a direction which (so we are to assume) would have enabled UK citizens usually resident in Northern Ireland to undergo abortions in England free of charge under the NHS, so today the groups therefore appear also to have power to enable them to do so. Were it to have been unlawful for the respondent in that respect to have failed to exercise the power which he had prior to 1 April 2013, it would seem hard to understand why it has been otherwise than unlawful for the groups in that respect to have failed to exercise the power which they have had since that date. D: TWO GROUNDS OF CHALLENGE The appellants argue that the respondents failure to provide for A, as a UK citizen usually resident in Northern Ireland, to be entitled to undergo an abortion free of charge under the NHS in England was unlawful both in public law and because it was in breach of their human rights. E: PUBLIC LAW It is already apparent that, strictly speaking, the challenge is to a failure on the part of the respondent to have exercised a power, namely the power to make the direction identified in para 13 above. The appellants contend that, when he decided not to exercise the power, he took an irrelevant consideration into account and he accepts that, if he did so, his decision was unlawful. They also argue that his decision was more broadly irrational. But they go further. They submit that, in the light of its context, the respondents power to make the direction became a duty to do so. For, so their argument runs, the context was section 3(1) of the 2006 Act, which imposed on the respondent the duty identified in para 11 above. The respondent does not argue that, just because by 2012 the exercise of his functions under section 3(1) had been delegated to the trusts, the subsection had become irrelevant to the exercise of his power to make the direction. But, in my view correctly, he points to two features which significantly diminish the ability of the appellants to rely on the duty in the subsection: (a) A broad area of the duty was left to be marked out by the exercise of his own judgement: see para 11; and (b) the people who lived in England: see para 10. in discharging the duty, his target had to be to improve the health of The appellants submit that: (a) A was usually resident in part of the UK and thus, in principle, she was a UK tax payer and a contributor to the funding of the UK wide NHS; (b) she was also a UK citizen; (c) all UK citizens usually resident there should, at any rate in this context, be treated alike irrespective of the area within the UK of their usual residence; (d) the respondent chose to provide abortion services in England free of charge under the NHS for women usually resident in England on the basis (which was correct) that they had a reasonable requirement for it; (e) but women usually resident in Northern Ireland were, as he knew, generally unable to access such services there; (f) services for them in England. and so the only decision rationally open to him was to provide such Like the judges in the courts below, I would reject the appellants submissions set out above. Parliaments scheme is that separate authorities in each of the four countries united within the kingdom should provide free health services to those usually resident there. The respondent was entitled to make a decision in line with this scheme for local decision making and in accordance with the target reflective of it which was imposed on him by statute. But the respondent has taken his argument a stage further. In response to the letter before action sent on behalf of the appellants, he stated that it was the policy of the Government that, in general, the NHS should not fund services for residents of Northern Ireland which the Northern Ireland Assembly has deliberately decided not to legislate to provide, and which would be unlawful if provided in Northern Ireland. This is the consideration which the appellants submit to have been irrelevant. It was, so they argue, the assemblys decision which created the need and it could hardly also represent a reason for refusing to meet it. I disagree. The respondent was entitled to afford respect to the democratic decision of the people of Northern Ireland; was entitled to have in mind the undeniable ability of Northern Irish women lawfully to travel to England and to purchase private abortion services there; and was entitled to decide not further to alter the consequences of the democratic decision by making such services available to them free of charge under the public scheme in England for which he was responsible. F: HUMAN RIGHTS The appellants argue that the respondents decision not to exercise the power to make the direction identified in para 13 above was unlawful because it violated article 14 of the European Convention on Human Rights (the Convention) taken in conjunction with article 8 of it. Paragraph 1 of article 8 provides for a right, qualified in para 2, to respect for private and family life. Article 14 provides that the right shall be secured without discrimination on any ground such as national origin or other status. The appellants assert that enjoyment of their right to respect for their private and family life (more particularly perhaps for private life in the case of A and for family life in the case of B) was not secured without discrimination on the ground of status. But Bs asserted right is parasitic on that of A so, in what follows, it will be convenient to refer only to the latter. (i) Scope The respondent now accepts that a decision whether to provide abortion services to a group of women free of charge falls within the scope of their rights under article 8 to respect for their private life. It is indeed a decision which may profoundly erode their autonomy in relation to about the most intimate area of their private life. In A, B and C v Ireland (2011) 53 EHRR 13 the three applicants were residents and citizens of Ireland. The Grand Chamber of the European Court of Human Rights (the ECtHR) rejected the complaints of A and B that the Irish prohibition against their undergoing abortions there, even when in the interests of their health, had infringed their rights under article 8; but it upheld the complaint of C that Ireland had infringed her right under the article by having failed to enable her to ascertain whether, in her particular medical circumstances, she had a right to undergo an abortion there. At an early stage of its judgment, the Grand Chamber had said: 214. While article 8 cannot be interpreted as conferring a right to abortion, the court finds that the prohibition in Ireland of abortion where sought for reasons of health and/or well being about which the first and second applicants complained, and the third applicants alleged inability to establish her qualification for a lawful abortion in Ireland, come within the scope of their right to respect for their private lives and accordingly article 8. (ii) Other Status It is no criticism of the appellants to record that the ground of the alleged discrimination has been formulated in different ways. For the relevant concepts are difficult. It is clear that, at the centre of their argument, is a complaint based on usual residence. As I will try to explain, the complaint is that, by his decision, the respondent has treated women usually resident in Northern Ireland either differently from women usually resident in England or similarly to women usually resident outside the UK; and the context which makes such treatment significant and which allegedly creates indirect discrimination is that women usually resident in Northern Ireland have no general entitlement to undergo abortions there. A persons place of residence is, curiously, not one of the grounds of discrimination specified in article 14. But does it fall within the portmanteau of other status? In Carson v United Kingdom (2010) 51 EHRR 13 the applicants, who were entitled to the UK state retirement pension but resident outside the UK, complained about a rule which precluded index linking of the pension when paid to overseas residents. They claimed that it violated article 14 taken in conjunction with article 1 of Protocol 1 to the Convention. The Grand Chamber concluded at para 71 that place of residence constitutes an aspect of personal status for the purposes of article 14 but, in the event, it proceeded to reject the applications. How, then, can the respondent argue that usual residence in Northern Ireland does not constitute a status which can ground a complaint of discrimination in breach of article 14? He relies on the earlier decision of the ECtHR in Magee v UK (2000) 31 EHRR 35. The applicant, who had been arrested in Northern Ireland and denied access to a solicitor for over 48 hours, complained of a violation by the UK of article 14 taken in conjunction with article 6. He alleged that, had he been arrested in England and Wales, he would have been granted access to a solicitor at once. The court rejected the complaint; it held at para 50 that the basis for the alleged difference of treatment was that, at the time of his arrest, the applicant had been present in Northern Ireland rather than in England and Wales and that, in that such a basis was not related to any personal characteristic, it was not a ground falling within article 14. In the Carson case, at para 70, the court distinguished the Magee case in that same way. The respondent presents the complaint of the appellants as relating to a difference of treatment of women resident in Northern Ireland but only when present in England. But the respondents presentation itself reveals the personal characteristic at the heart of the complaint namely residence in Northern Ireland. The complaint of the appellants is indeed therefore of a difference of treatment on a ground of status within article 14. But, in my view wisely, they now seek to attach a qualification to the status of usual residence in Northern Ireland. Were the complaint to remain broadly that the respondent visited a significant difference of treatment upon women resident not in England but in Northern Ireland in which they have no general entitlement to undergo an abortion, it would logically extend to women resident not in Northern Ireland but in other countries, in particular Ireland, in which they too have no general entitlement to undergo an abortion. Thus, no doubt in order that their claim should not be unnecessarily ambitious, the appellants now seek to qualify the status of those alleged to have been unlawfully disadvantaged by a difference of treatment. The suggested status is therefore defined as women who are UK citizens, present in England and usually resident in Northern Ireland. The above qualification presents no problem for the appellants. Usual residence is recognised as falling within other status for the purpose of article 14. National origin is there specified as also a status for that purpose. A status for the purpose of article 14 can have more than one component; see, for example, the decision of the ECtHR in 2012 in BS v Spain (Application No 47159/08), in which (a) a woman who was (b) black and (c) a prostitute established a ground of discrimination contrary to article 14 by reference to the interaction of all three factors: see paras 52 and 62 of the judgment. What, then, is the group with which the appellants seek to compare the allegedly disadvantaged group as now defined? They give alternative answers. And they give them by reference to alternative presentations of the nature of the respondents decision. The obvious presentation of the nature of the respondents decision is that (save exceptionally) abortion services were to be made available free of charge under the NHS in England only to those usually resident in England. On this basis the comparator group suggested by the appellants is women present in England and usually resident in England. Here the claim is that the allegedly disadvantaged group should have been treated in the same way. The Convention does not require a state to make abortion services generally available, still less to make them free of charge, but, once it decides to make them available, whether free of charge or otherwise, the state must devise a framework for access to them which accords with Convention obligations: RR v Poland (2011) 53 EHRR 31, para 187. But, in the alternative, the appellants turn the nature of the respondents decision inside out. The alternative presentation of it is that (save exceptionally) abortion services were not to be made available under the NHS in England to those not usually resident in England. On this basis the comparator group suggested by the appellants is all other women present in England but not usually resident in England. Here the claim is that the allegedly disadvantaged group should have been treated in a different way from that in which the comparator group was treated. For, so the argument proceeds, the situation of women who are UK citizens, present in England and usually resident in Northern Ireland is significantly different from that of all other women present in England but not usually resident in England, even if the latter are usually resident in countries where abortion services are not generally available. The appellants contend that the legitimacy of this alternative answer is established by the decision of the Grand Chamber in Thlimmenos v Greece (2000) 31 EHRR 15. There the applicant, a Jehovahs Witness, had refused to enlist in the army for religious reasons and had therefore been convicted of a felony. The effect of a Greek decree was that a person convicted of a felony could not be admitted as a chartered accountant. The Grand Chamber upheld his complaint that, in failing to differentiate between felonies committed for religious reasons and felonies committed for other reasons, Greece had violated article 14 taken in conjunction with article 9 (the right to freedom of religion). It observed at para 44 that a violation occurred not only when States treat differently persons in analogous situations without providing an objective and reasonable justification but also when States without an objective and reasonable justification fail to treat differently persons whose situations are significantly different. I do not see how the appellants alternative presentation, based on the Thlimmenos case, adds anything to their first and obvious presentation apart from an extra level of unwelcome complexity. The respondent cannot deny that he treated women usually resident in England differently from women who, although UK citizens, were usually resident in Northern Ireland. But the difference of treatment does not amount to discrimination, and thus is not in breach of article 14, if it was justified. (iii) Justification If he is to establish justification, the respondent has to persuade the court to give an affirmative answer to the four well known questions posed, for example, by Baroness Hale of Richmond in R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57, [2015] 1 WLR 3820, at para 33. In my view an affirmative answer clearly falls to be given to the first three of them: for the aim of the respondents decision in relation to women who were UK citizens but usually resident in Northern Ireland, to which the decision was rationally connected, was to stay loyal to a legitimate scheme for health services to be devolved in the interests of securing local provision to residents in each of our four countries. Nor, with that aim, could he have reached any decision less intrusive upon the rights of such women to respect for their personal life. The issue surrounds the fourth question: did his decision strike a fair balance between their rights and the interests of the UK community as a whole? The respondents own conclusion that his decision struck a fair balance should, so he contends, be adopted unless it was manifestly without reasonable foundation. A central issue, so he says, is economic should the women have to pay for the abortion services which are available to them in England? and, although he does not contend that it would be impossible for the NHS in England to fund the provision to them of such services free of charge, he points out that the funding of other services would in that event be diminished. So, according to him, the central issue raises a second issue which relates to the allocation of resources. He proceeds to cite the decision of the Grand Chamber in Stec v United Kingdom (2006) 43 EHRR 47, at para 52, that, in relation to general measures of economic or social strategy, the Strasbourg court will generally respect the policy choice of national authorities unless it is manifestly without reasonable foundation. But it is now clear that, while this criterion may sometimes be apt to the process of answering the first question, and perhaps also the second and third questions, it is irrelevant to the question of fair balance, which, while free to attach weight to the fact that the measure is the product of legislative choice, the court must answer for itself: see In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, [2015] AC 1016, para 46, Lord Mance. The appellants correctly submit that, in interpreting Convention rights, the ECtHR now frequently refers to the text of international conventions and even to the recommendations of committees set up to oversee observance of them by the parties to them. They and the interveners urge the court to assess the fairness (or, as they submit, the unfairness) of the respondents decision in its application to women who were UK citizens but usually resident in Northern Ireland through the prism of such material. They therefore rely on article 12(2) of the United Nations Convention on the Elimination of All Forms of Discrimination against Women (1979) (CEDAW), which requires the UK, as one of the parties to it, to ensure to women appropriate services in connection with pregnancy , granting free services where necessary They also rely on CEDAW General Recommendation No 24, issued on 5 February 1999 by the committee set up by that Convention, in which, by way of elaboration on article 12, it recommended at para 31(c) that [w]hen possible, legislation criminalizing abortion should be amended, in order to withdraw punitive measures imposed on women who undergo abortion. And they further rely on General Comment No 22 (2016) of the UN Committee on Economic, Social and Cultural Rights, in which at para 28 parties to the International Covenant on Economic, Social and Cultural Rights, including the UK, are required to liberalize restrictive abortion laws and to guarantee women and girls access to safe abortion services. These three quotations represent the high point of the mass of such material now pressed upon the court. The conventions and the covenant to which the UK is a party carefully stop short of calling upon national authorities to make abortion services generally available. Some of the committees go further down that path. But, as a matter of international law, the authority of their recommendations is slight: see Jones v Ministry of Interior of the Kingdom of Saudi Arabia [2006] UKHL 26, [2007] 1 AC 270, para 23, Lord Bingham of Cornhill. At its highest one can say only that there is a trend in some of the international material to which the current law in Northern Ireland runs counter. The trend adds background colour to the inquiry into fair balance under the Convention. In my view, however, the appellants need material of a far more vivid hue to put into the balance against the respondents resolve to stay loyal to the overall scheme for separate provision of free health services within each of our four countries and to the democratic decision reached in Northern Ireland in relation to abortion services. In my view the balance struck by his decision was fair. G: CONCLUSION On any view the dissenting judgments of Lord Kerr and Lady Hale command considerable respect. Lord Kerr concludes that it was the duty of the Secretary of State (and is the duty of the groups) to provide for a UK citizen present but not usually resident in England the same medical services, free of charge, under the NHS as he provided (and as they provide) for those usually resident in England. Lady Hale agrees with him but also stresses that a requirement for abortion services represents a special case. It is, however, easy to think of other people suffering a grave medical condition who could mount an equally convincing special case. Lady Hale also suggests that the duty of the NHS in England to provide abortion services extends even to foreign citizens present in England; but its entitlement to charge such citizens, which Lady Hale recognises, might not negate the effect of the suggested extension on the functioning of the service. Irrespective, however, of its precise extent, the duty proposed to be cast upon the respondent by Lord Kerr and Lady Hale would, in my view, precipitate both a substantial level of health tourism into England from within the UK and from abroad and a near collapse of the edifice of devolved health services. In the end, for the reasons given above, I find myself unable to agree either that sections 1 and 3 of the 2006 Act or that the human rights of UK citizens generate the suggested duty. I would dismiss the appeal. LORD REED: (with whom Lord Hughes agrees) I agree entirely with the reasoning and conclusions of Lord Wilson. I have thought it right to make some additional observations about an aspect of the case which is of wider importance in the context of the devolved constitutional structure of the United Kingdom. That is the question whether laws or administrative practices adopted within one of the constituent parts of the UK, which differentiate between UK citizens according to whether they are or are not residents of that part, fall within the scope of article 14 of the European Convention on Human Rights. There are numerous decisions and judgments of the European Court of Human Rights, and of the former Commission, in which differential treatment based on a persons not having a right of residence in the country concerned, or on his being a resident of a foreign country, has been held to fall within the scope of article 14. The case of Carson v United Kingdom 51 EHRR 13, discussed by Lord Wilson at paras 24 25, was a case of that kind. There have also been cases concerned with situations in which a national law or administrative arrangement resulted in the differential treatment of people in different parts of the country concerned. In some cases of that kind preceding Carson, the Commission proceeded directly to consider whether the differential treatment was justified, without separately addressing the question whether it was based on an other status, within the meaning of article 14, and therefore fell within the scope of that article. Examples include Lindsay v United Kingdom (1979) 15 DR 247, and Gudmundsson v Iceland (Application No 23285/94), given 17 January 1996, unreported. A similar approach was adopted by the Court in later cases such as Orion Beclav SRO v Czech Republic (Application No 43783/98), given 9 July 2002, unreported, Posti v Finland (2003) 37 EHRR 6, and Alatulkkila v Finland (2005) 43 EHRR 34. Cases concerned with legislation or administrative rules introduced at a sub national level, within the context of a federal or devolved constitutional structure, which resulted in different rules applying in different constituent parts of the state in question, have been less common. An early example before the Court was the case of Dudgeon v United Kingdom (1981) 4 EHRR 149, concerned with legislation in Northern Ireland that criminalised homosexual behaviour which was lawful in the rest of the UK. The majority of the Court, having held that there was a violation of article 8, found it unnecessary to determine the complaint under article 14, but Judge Matscher, in a dissenting opinion, considered the complaint. In the course of doing so, he stated: The diversity of internal legislation in a federal state can never, in itself, constitute discrimination, and it is unnecessary to justify it. To claim the contrary would be to mistake totally the very essence of federalism. The Commission adopted a similar approach in a series of cases concerned with other differences between the laws of the different jurisdictions of the UK. An example is the case of P v United Kingdom (Application No 13473/87), given 11 July 1988, unreported, where the Commission stated: . in many, if not all, of the contracting states, different legal jurisdictions exist in different geographical areas within the state (eg cantons, communes, Lnder, etc) . the mere existence of variations between such jurisdictions within a state does not constitute discrimination within the meaning of article 14 of the Convention. Similar observations were made in Times Newspapers Ltd v United Kingdom (Application No 14631/89), given 5 March 1990, unreported. That was not, of course, to say that the laws of a jurisdiction within a state could not violate article 14: for example, the Commission noted in P v United Kingdom that there was no indication that the difference there in question was based on any ground such as association with a national minority. All that was being said was that differences between the laws in different jurisdictions were not in themselves discriminatory. Thus in Nelson v United Kingdom (1986) 49 DR 170, a complaint based on differences between the laws governing remission and parole in Scotland and England was dismissed because the differences were not related in any way to the personal status of the applicant. The Court considered differential treatment arising from differences between the law of Northern Ireland on the one hand, and England and Wales on the other hand, in the case of Magee v United Kingdom 31 EHRR 35, discussed by Lord Wilson at para 25. There, the Court stated (para 50): . in the constituent parts of the United Kingdom there is not always a uniform approach to legislation in particular areas. Whether or not an individual can assert a right derived from legislation may accordingly depend on the geographical reach of the legislation at issue and the individuals location at the time. For the Court, in so far as there exists a difference in treatment of detained suspects under the [Northern Irish legislation] and the legislation of England and Wales on the matters referred to by the applicant, that difference is not to be explained in terms of personal characteristics, such as national origin or association with a national minority, but on the geographical location where the individual is arrested and detained. This permits legislation to take account of regional differences and characteristics of an objective and reasonable nature. In the present case, such a difference does not amount to discriminatory treatment within the meaning of article 14 of the Convention. It is not entirely clear from that passage whether the Court meant that differences in treatment based on the jurisdiction to whose laws a person was subject by reason of his geographical location were not based on the persons status, within the meaning of article 14, or whether it meant that such differences required to be, and were in that case, objectively justified. The former interpretation is in my view to be preferred, for three reasons. First, the Courts general approach at that time to issues of status, within the meaning of article 14, was based on personal characteristics (I say at that time, because in later cases the Court has tended to refer instead to identifiable characteristics, in response to arguments that personal characteristics are necessarily immutable and inherent); and a persons geographical location cannot readily be regarded as a personal characteristic. Secondly, there are strong constitutional arguments against treating differences in the laws of different jurisdictions internal to a state as necessarily requiring justification, as was recognised by Judge Matscher in Dudgeon and by the Commission in the cases mentioned earlier. This has also been accepted by the Court of Justice of the European Union: R (Horvath) v Secretary of State for the Environment, Food and Rural Affairs (Case C 428/07) [2009] ECR I 6355 (where the constitutional system of a member state provides that devolved administrations are to have legislative competence, the mere adoption by those administrations of different . standards . does not constitute discrimination contrary to Community law: para 58). Thirdly, and most importantly, that is how Magee was interpreted by the Grand Chamber in Carson v United Kingdom 51 EHRR 13, para 70, to which I turn next. The case of Carson v United Kingdom was concerned with UK legislation which differentiated between residents of the UK and residents of other countries. One of the issues in the case, as identified in the heading to paras 66 71, was whether country of residence was an other status, within the meaning of article 14. The court held that it was. It stated at paras 70 71: 70. The Grand Chamber . has established in its case law that only differences in treatment based on a personal characteristic (or status) by which persons or groups of persons are distinguishable from each other are capable of amounting to discrimination within the meaning of article 14 . It further recalls that the words other status (and a fortiori the French equivalent toute autre situation) have been given a wide meaning so as to include, in certain circumstances, a distinction drawn on the basis of a place of residence. Thus, in previous cases the Court has examined under article 14 the legitimacy of alleged discrimination based, inter alia, on domicile abroad and registration as a resident. In addition, the Commission examined complaints about discrepancies in the law applying in different areas of a single contracting state (see Lindsay v United Kingdom and Gudmundsson v Iceland). It is true that regional differences of treatment, resulting from the application of different legislation depending on the geographical location of an applicant, have been held not to be explained in terms of personal characteristics (see, for example, Magee v United Kingdom, para 50). However, as also pointed out by Stanley Burnton J [R (Carson) v Secretary of State for Work and Pensions [2002] EWHC 978 (Admin)], these cases are not comparable to the present case, which involves the different application of the same pensions legislation to persons depending on their residence and presence abroad. In conclusion, the Court considers that place of 71. residence constitutes an aspect of personal status for the purposes of article 14. No question arose in Carson as to whether a persons residence or non residence in a constituent part of a country with a federal or devolved constitution was an other status. It is also true that the Grand Chamber, in distinguishing the Magee line of cases, referred to the fact that those cases were concerned with regional differences of treatment, as opposed to residence and presence abroad. On the other hand, the contrast drawn by the Court in the last two sentences of para 70 was between a difference in treatment resulting from the application of different legislation, according to where the person in question was located, and a difference in treatment resulting from the application of a single piece of legislation which differentiated between people according to where they resided. Differential treatment of the latter kind can be equally present whether the legislation in question is national or sub national in origin, and whether the residence test relates to residence within the country in question or within a constituent part of it. A law which treats the residents of a place differently from non residents therefore differentiates on the basis of personal status, within the meaning of article 14, whether the law in question has been passed by the Parliament of the United Kingdom and applies to the whole of the UK, or has been passed by the devolved legislature of one part of the UK and applies only in that part; and whether the differentiation is between residents and non residents of the UK, or between residents and non residents of a part of the UK. The same must be equally true of an administrative arrangement. That interpretation of para 70 is confirmed by the unqualified language of para 71: place of residence constitutes an aspect of personal status for the purposes of article 14: a phrase which has been repeated in later judgments (see, for example, Pichkur v Ukraine (Application No 10441/06), given 7 November 2013, para 47). The fact that the differential treatment of residents and non residents of a particular part of the UK falls within the scope of article 14, whether it arises by virtue of national or devolved legislation or by virtue of administrative arrangements, does not of course by any means entail that such treatment is in violation of the article. But it does mean that the difference in treatment requires to be justified. LORD KERR: (dissenting) A woman from Northern Ireland (NI) visiting England who suffers an acute attack of appendicitis will have, if it proves necessary, her appendix removed in a National Health Service hospital, without charge. The same woman, if she travels to England in order to obtain an abortion, must pay for that procedure. How can this be right? The answer is that it cannot be, and is not, right. It might be suggested that the two situations are not analogous because when the notional woman needs an appendectomy and happens to be in England, she is not exercising a choice in obtaining that treatment, whereas the same woman travelling to England for an abortion does so out of choice. In fact, of course, a woman who travels to England to obtain an abortion has, in the clear majority of cases, no true choice. She must travel away from her home and the support of her family and friends to obtain treatment of the most traumatic type in unfamiliar surroundings. If she wishes to obtain an abortion, she must travel to England. That is because, as Lord Wilson has explained, the circumstances in which that procedure may be carried out in NI are far narrower than in England. It is beyond question that a woman from NI who seeks an abortion in England may travel there lawfully and may lawfully obtain an abortion, provided she fulfils the conditions stipulated by the Abortion Act 1967. But she cannot obtain that treatment on the NHS. England is in practice the only place where a woman from NI can obtain an abortion. But, unlike an Englishwoman who likewise will only seek an abortion in England, the woman from NI must pay. Para 5 of Lord Wilsons judgment provides an admirably comprehensive account of the relevant factual background to this appeal. In that para Lord Wilson described the circumstances in which women from NI come regularly to England to secure abortions. He has recognised the plight into which many of these vulnerable women are cast by the decision of the Secretary of State for Health that treatment for their condition is not to be available on the NHS. The only matters beyond those referred to by Lord Wilson which, I believe, should be taken into account are: (i) it is an accepted fact that 15 16% of abortions carried out in England for non resident women are for women normally resident in NI. Official statistics suggest that around 1,000 abortions are carried out in England on NI women; (ii) even if one accepts the figure of 1,000 per annum, which, for the reasons given by Lord Wilson, is likely to be a significant underestimation, it is a considerable percentage of child bearing women in NI with a population of 1.8m and an annual birth rate there of some 24,000. In England and Wales, the number of abortions was 184,000 for a population of 56.1m. The 2006 Act Three primary issues arise concerning the correct interpretation of the principal provisions relevant to this appeal (sections 1 and 3 of the Act). The first is whether the phrase, the people of England introduces a demographic restriction which applies to section 1(1) of the Act generally. The second issue is, if the phrase in section 1 partakes of such a restriction, does it affect the geographical reach of section 3. The third issue is whether the section 1 duty is properly to be characterised as a target duty, and, if so, what significance should attach to that term. Before turning to the provisions, it is to be noted that the cross headings to Part I of the Act (in which both sections 1 and 3 are contained) are: Promotion and Provision of the Health Service in England and The Secretary of State and the Health Service in England. Of course, the use to which cross headings may be put as an aid to interpretation is limited. But it is of some interest that the opening words describing the nature of the succeeding provisions do not refer to any demographic restriction. It might be considered that confining the Secretary of States duty to one which required him to provide services to the people of England only would not reflect political and practical reality. The people of England is an amorphous phrase, capable, at least theoretically, of many meanings. As Lord Wilson observed, Ward LJ in R (A) v Secretary of State for Health [2010] 1 WLR 279, para 55 suggested that it meant people who are part and parcel of the fabric of the place. With respect, I find that interpretation may pose more questions than it answers, for who are to be regarded as constituting part of the fabric of a place? While not disagreeing with Ward LJs formulation, Lord Wilson suggested what it meant was the people who live in England. But, how is that to be defined? England attracts many people to her shores. Some wish to live here permanently but may have no legal right to do so, or even to have entered the country. Are they people of England while they live here? Others may be short or long term visitors. Imagine the case of a woman from NI who has come to visit relatives in England, intending to stay for six months. Is she a person of England during those months? She is certainly living here. And what if she fell pregnant half way through her stay? Would she have to pay for an abortion because she did not normally live in England? These considerations indicate how difficult it is to fix on a restricted meaning for the phrase, people of England. This difficulty can be avoided, however, by a clear understanding of the separate aims of section 1(1) and of the true nature of the objective to which the phrase people of England has been applied. The people of England and the provision of services in or throughout England Section 1 of the 2006 Act, as originally enacted, provides: 1. Secretary of States duty to promote health service (1) The Secretary of State must continue the promotion in England of a comprehensive health service designed to secure improvement (a) England, and (b) illness. in the prevention, diagnosis and treatment of in the physical and mental health of the people of (2) The Secretary of State must for that purpose provide or secure the provision of services in accordance with this Act. (3) The services so provided must be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed. The primary obligation imposed on the Secretary of State is to continue to promote in England a comprehensive health service. The comprehensive health service was to secure improvement in two separate areas. The first of these was the physical and mental health of the people of England. The second (and distinct from the first) was the prevention, diagnosis and treatment of illness. That second purpose did not have a qualification that it should apply to the people of England only. This is important because it clearly indicates that the Secretary of States duty was not fulfilled merely by bringing about an improvement in the health of the people of England. The duty also included the requirement to promote a comprehensive health service which would not only achieve that objective but would also advance the prevention etc of illness. Where subsection (2) provides that the Secretary of State must for that purpose secure the provision of services in accordance with the Act, this does not refer exclusively to the improvement of the health of the people of England. For that purpose must be taken to refer to all the objectives identified in subsection (1). These were (i) the continued promotion of a comprehensive health service; (ii) the improvement of the health of the people of England; and (iii) the prevention, diagnosis and treatment of illness. The duty under subsection (2) to secure the provision of services in accordance with the Act must reflect these separate objectives. It can be readily understood why the two objectives of the comprehensive health service were identified in separate sub paragraphs of section 1(1). It is understandable that the aspiration that a health service should improve the health of the nation can be expressed as applying to the people of England. After all, the Secretary of State does not have a responsibility to improve the health of other nations. When it comes to providing health services generally, however, a much wider constellation of issues arises. The diagnosis and treatment of illness, although it of course contributes to improving the health of the nation, involves more than fulfilling that objective. The treatment of individual patients, while it may contribute incidentally to an improvement in the health of people generally, requires the provision of adequate medical services, irrespective of the part that they may play in improving overall standards of health. When, therefore, one comes to section 3 of the Act, the Secretary of States duty to provide the services listed there is impelled, at least in part, by considerations other than improving the health of the people of England generally. The principally relevant parts of section 3 of the 2006 Act, as originally enacted, are set out in para 11 of Lord Wilsons judgment and I need not repeat them here. The duty is to provide the listed services throughout England. As Lord Wilson has pointed out, the Secretary of States duty was to provide them to such extent as he considers necessary to meet all reasonable requirements but the critical question was how were those reasonable requirements to be defined. In para 18(b) of his judgment Lord Wilson accepted the respondents argument that in discharging the duty, the Secretary of States target had to be to improve the health of the people who lived in England. For reasons that have been foreshadowed in earlier passages of this judgment and on which I will expand presently, I do not accept that argument. Before doing so, I should say that I agree with Lord Wilsons reservations about the correctness of the opinion expressed by the Court of Appeal, in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213, to the effect that the Secretary of State had no duty to provide services if he considered they were not reasonably required or necessary to meet a reasonable requirement. The Secretary of State surely does not enjoy a blanket immunity from challenge to his determination of what were the reasonable requirements in any given situation. True it is that his evaluation of what those requirements demanded will weigh heavily in any challenge to his decision but if that decision can be shown to be legally flawed by reason, for instance, of its irrationality or of the failure of the Secretary of State to take account of a plainly relevant consideration, the mere fact that he is charged with the statutory responsibility of reaching a decision on the question of reasonable requirements, does not render that decision invulnerable to challenge. The outcome of this appeal does not depend on this type of challenge. The primary issue here is whether the Secretary of State properly conceived the nature of his statutory obligation under section 3 of the 2006 Act. In my opinion, the Secretary of State was not obliged to view the discharge of his duty under section 3 through the lens of whether the services provided would improve the health of the people of England. To the contrary, the provision of those services was primarily concerned with the second objective in section 1(1)(b), namely, the prevention, diagnosis and treatment of illness. Implementation of that condition was unconstrained by the need to gear it to improvement of the health of the people of England. The conclusion that the focus was on fulfilling the second objective is reinforced by considering the type of services which the section requires the Secretary of State to provide, as well as the prefatory injunction that he provide the services throughout England as opposed to for the people of England. The services stipulated in sub paras (e) and (f) of section 3(1) plainly relate to the objective of section 1(1)(b). They are (e) such other services or facilities for the prevention of illness, the care of persons suffering from illness and the after care of persons who have suffered from illness as he considers are appropriate as part of the health service, and (f) such other services or facilities as are required for the diagnosis and treatment of illness. The Secretary of States obligation, therefore, was to ask himself what are the reasonable requirements in the provision of those services throughout England; not what are the reasonable requirements of the people of England for these services. The Secretary of State was therefore wrong to conclude that the discharge of his duties under section 3 was dominated by the people of England question. Of course, his primary obligation, so far as concerned the improvement of the health of the nation, was to the people of England, however that phrase is to be construed. But it did not provide a fetter on his consideration of how his statutory duty should be fulfilled. To the contrary, the discharge of his duties under section 3 should have been regarded by him as requiring a far wider consideration. In England, an abortion can only lawfully be provided under section 1 of the Abortion Act 1967 to avert a risk of physical or mental injury to the mother, the unborn child or any existing children in the family. As Laws LJ explained in ProLife Alliance v British Broadcasting Association [2002] 3 WLR 1080; [2002] EWCA Civ 297 at para 6: The great majority [of abortions] are performed on the third of the five permitted grounds under the Abortion Act 1967 as amended: that is that the continuance of the pregnancy would involve risk, greater than if the pregnancy were terminated, of injury to the physical or mental health of the pregnant woman. There is some evidence that many doctors maintain that the continuance of a pregnancy is always more dangerous to the physical welfare of a woman than having an abortion, a state of affairs which is said to allow a situation of de facto abortion on demand to prevail. Thus, while pregnancy is not, of course, itself an illness, allowing an unwanted pregnancy to continue to term carries a risk of physical or mental injury. There can therefore be no question but that Englishwomen who seek an abortion in England are being treated for the prevention of illness under sections 1(1)(b) and 3 of the 2006 Act. Women from NI provided with abortion services in England are likewise being treated under these provisions. The single difference is that women from NI cannot avail of section 1(3), whereas women from England can. It was argued for the respondent that differences in standards in treatment for all manner of illnesses and conditions differed in the different parts of the United Kingdom but that citizens of one part were not entitled to demand provision of what they might regard as superior services in a part of the kingdom in which they did not live. It was suggested that this was in keeping with individual schemes for health services being provided to residents in each of the four countries of the United Kingdom. But abortion services such as A required are not provided at all in Northern Ireland. This is not an instance of her seeking what she regarded as a better level of service in England. It was a case of her being obliged to come to the only medical service of which she could avail. The decision of the Secretary of State to refuse to allow NI women to obtain abortion services on the NHS in England was one taken in the knowledge that she could not obtain those services elsewhere. The power of the Secretary of State to direct that abortion services on the NHS should be available to women from Northern Ireland and his reasons for not exercising it As Lord Wilson has observed (in para 8 of his judgment), it was accepted that the Secretary of State had the power to enable UK citizens usually resident in Northern Ireland to undergo abortions under the NHS in England free of charge. I agree with all that he has said in paras 12 16 of his judgment about the continuing availability of that power. Indeed, all of this was a matter of concession by the Secretary of State. Given that the Secretary of State had that power, one must concentrate on his reasons for deciding not to have recourse to it. His decision not to do so was based on two considerations. The first was that whatever course he took should be consonant with his target to improve the health of the people of England. If that factor loomed over the decision, it seems almost inevitable that his conclusion would have to be not to allow women from NI to have abortions on the NHS. It is difficult to see how a decision to allow them to have abortions in England free of charge could be reconciled with an overriding obligation to promote the health service in order to improve the physical and mental health of the people of England. The very existence of a power to permit NI women to have abortions on the NHS seems inconsistent with such an obligation. Whatever of that, for the reasons that I have given, I believe that the Secretary of State was wrong to consider that his statutory duty was so confined. The second reason proffered by the Secretary of State was that it was the policy of the government that the NHS should not fund services for NI residents which the Northern Ireland Assembly has deliberately decided not to legislate to provide, and which would be unlawful if provided in Northern Ireland see the letter referred to in para 20 of Lord Wilsons judgment. This view was reached against the background that the Secretary of States primary obligation was to provide health services for the people of England. Notwithstanding my conclusion that this should not have been the framework within which the decision was taken, it is right that I should examine it as a possible defence even in what I consider was the correct legal context, namely, that the Secretary of State was under a duty to provide medical services throughout England unconstrained by the requirement that these be devoted to the people of England. Lord Wilson has said that the Secretary of State was entitled to afford respect to the democratic decision of the people of Northern Ireland (para 20). I agree. Indeed I would go further. He was bound to show such respect. But respect for what? The Northern Ireland Assembly had decided that abortion in that jurisdiction should not be provided on the same basis as in England. But it has expressed no view about the ability of women from NI to travel to England to obtain abortions. Assembly members, indeed all informed persons in the entire population of Northern Ireland, are plainly aware of the fact that many women from NI travel every year to England to obtain abortions and have done so for many years. The need for respect on the part of the Secretary of State, on behalf of the British government, did not extend to denying Northern Irish women the means of obtaining abortions in England. It was entirely right that this should be so. Why should affording Northern Irish women abortions on the NHS constitute a lack of respect, when countenancing and permitting such abortions does not? Lord Wilsons answer is that the Secretary of State was entitled to decide not to alter further the consequences of the democratic decision by making such services available to them free of charge. With regret, I cannot agree. If, as must be presumed to be the case, the NI Assembly regarded with equanimity the fact that many women from NI travelled each year to England to obtain abortions, I cannot see how allowing these abortions to take place on the NHS would involve a further alteration to the democratic decision of the Assembly. Indeed, I question whether providing NHS funding for abortions for women from NI involves any alteration to the democratic decision. Both the Assembly and the British government were aware that it was perfectly legal for them to travel to England to obtain abortions. Once in England, provided they satisfied the criteria of the Abortion Act 1967, it was perfectly legal for them to obtain abortions. The NI Assembly had no function or say in the exercise of the womens unalterable legal entitlement to obtain abortions in those circumstances. The democratic decision making in NI simply does not impinge on the exercise by NI women of their rights in England. By making it more difficult for women from NI to obtain abortions in England, the Secretary of State was not affording respect to the wishes of the electorate in Northern Ireland or the decision of NI Assembly. Unless, that is, it is considered that affording respect warrants the creation of problems for vulnerable women to exercise their right in a part of the UK solely because they come from a part of the kingdom where they are unable to exercise the right. That seems to me to partake of double standards. Women throughout the UK, apart from NI, are entitled to abortion services under the Abortion Act 1967 and the British government must be taken to approve of, or at least assent to, that position. On that account, they must be taken to disapprove of, or at least dissent from, the denial of that right to women from another part of the UK. Why then should they feel constrained, under the guise of affording respect to the NI Assemblys wishes, to make it more difficult for NI women to exercise, in England, rights to which they are undeniably entitled? A target duty? The Secretary of State argued that the duties owed under sections 1 and 3 of the 2006 Act were target duties and, on that account, they were unenforceable on the application of an individual. In support of that argument, reliance was placed firstly on the decision in R (Justice for Health Ltd) v Secretary of State for Health [2016] Med LR 599; [2016] EWHC 2338 (Admin), para 89 where Green J said that target duties: (a) . do not specify a particular or precisely defined end result as opposed to a broad aim or object and (b) their mandatory nature is diluted by the fact that they do not compel the achievement of that end result instead requiring the Secretary of State only to factor those objectives into consideration. These observations were made in relation to sections 1A 1G of the 2006 Act, as amended. Those provisions relate to specific duties of the Secretary of State, relevant to: terms and conditions of employment of those working in the NHS; the quality of services of those who avail of it; the planning and delivery of education and training of the professionals employed in the NHS; and reporting to Parliament. These are a quite different series of duties from those involved in the present appeal. In any event, Green J did not suggest that the failure of the Secretary of State to discharge any of the duties could not be the subject of judicial review by someone affected by the failure. The case provides no support for the respondents principal contention that target duties cannot be enforced by an individual. Next Mr Coppel QC for the Secretary of State relied on a passage from the speech of Lord Hope of Craighead in R (G) v Barnet London Borough Council [2003] UKHL 57; [2004] 2 AC 208 at para 91 where, in relation to the target duty the target duty in section 17(1) of the Children Act 1989, he said: I think that the correct analysis of section 17(1) is that it sets out duties of a general character which are intended to be for the benefit of children in need in the local social services authoritys area in general. [In] R v Barnet London Borough Council, Ex p B [1994] ELR 357 . Auld J observed that the duties under Part III of the [Children Act] 1989 fell into two groups, those which are general and those which are particular, and that the general duties are concerned with the provision of services overall and not to be governed by individual circumstances. As Mr Goudie for the defendants accepted, members of that section of the public [affected by the local authoritys decision] have a sufficient interest to enforce those general duties by judicial review. But they are not particular duties owed to each member of that section of the public of the kind described by Lord Clyde in R v Gloucestershire County Council, Ex p Barry [1997] AC 584, 610a which give a correlative right to the individual which he can enforce in the event of a failure in its performance. This citation, so far from supporting the respondents central thesis on the matter of target duties, seems to me to be entirely destructive of it. A and B do not suggest that their individual cases required the attention of the Secretary of State or that they were owed any obligation personal to them. But they were certainly affected by the Secretary of States decision in relation to the availability of abortion services to NI women. And, on that account they were entitled to enforce the Secretary of States general duties by way of judicial review. In relation to the section 3 duty in particular, Mr Coppel relied on the decision in R (Condliff) v North Staffordshire Primary Care Trust [2012] PTSR 460; [2011] EWCA Civ 910. In that case the claimant, a morbidly obese man, made a funding request to the trust for gastric surgery. This was refused because he did not meet the trusts policy of offering funding to people who had a body mass index which exceeded a certain level. The claimant sought judicial review of the trust's decision on the ground, inter alia, that it had breached his right to respect for his private and family life under article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). The application was dismissed, the Court of Appeal holding that article 8 of ECHR did not give rise to a positive duty on a statutory health care provider to consider non clinical, social or welfare considerations wider than the comparative medical conditions and medical needs of different patients when deciding on the allocation of funding for medical treatment. At para 4 Toulson LJ said of section 3 of the 2006 Act, this is a public law duty and not a direct duty owed to individual patients. He did not say, however, that an individual, affected by a decision was not entitled to challenge the legal validity of the policy. Mr Condliff had challenged the failure of the trust to depart from its policy because of his individual circumstances. This is not the species of challenge made by A and B. They challenge the policy, not a refusal to make an exception in their case. The Condliff decision is not germane to their circumstances. In my judgment, the arguments of the Secretary of State in relation to target duties must fail. I would therefore allow the appeal. The human rights challenge I fully agree with Lord Wilson, for the reasons that he gives, that the appellants complaint plainly comes within the ambit of article 8 of ECHR. I also agree with his conclusion, stated in para 31 of his judgment, that the respondent cannot deny that he treated women usually resident in England differently from women who, although UK citizens, were usually resident in Northern Ireland. But I cannot agree with his decision that that difference in treatment is justified. Lord Wilson has said (in para 32) that the legitimate aim of the Secretary of State, in deciding not to permit women from NI to have abortions on the NHS in England, was to stay loyal to a legitimate scheme for health services to be devolved in the interests of securing local provision to residents in each of our four countries. For the reasons that I have earlier given, I do not consider that there was any call on his loyalty to apply such an interdiction. Properly understood, section 1 of the 2006 Act imposed twin but distinct duties on the Secretary of State. Simply stated these were (i) to promote a health service that would bring about an improvement in the health of the citizens of the country for which he had responsibility, viz England; and (ii) to provide medical services that would lead to better diagnosis and treatment of illness in England. Permitting women who come from NI to have their abortions on the NHS involves no compromise on the scheme of having each of our four countries being responsible for local provision of medical services. Allowing NI women to have abortions on the NHS in England does not impinge on the NI Assemblys continuing responsibility for the provision of medical services in Northern Ireland. The important point on which to focus is that the responsibility is one which is discharged on a geographical basis. The English Secretary of State is responsible for providing proper medical services in England. The Northern Irish Minister for Health is responsible for providing such services in NI. If an Englishwoman is treated in NI on the NHS for a condition suffered during a visit to that country, no interference with the scheme for the four countries arises. Likewise, no interference would arise if NI women who are in England were permitted to have abortions on the NHS. If the avowed aim is that articulated by Lord Wilson, therefore, I cannot accept that this is legitimate. It cannot feature in any assessment of justification for the differential treatment. Two other conceivable aims should be mentioned as possible candidates for being a legitimate aim. The first is the decision that the NHS should not fund services for NI residents which the Assembly has decided not to legislate to provide, and which would be unlawful if provided in Northern Ireland. For the reasons given earlier, I do not consider that this can possibly qualify as a legitimate aim. The second is cost. This has never been put forward as a legitimate aim, although it did feature as a matter which the Secretary of State claimed should be taken into account as part of the balancing exercise, the fourth in the now well established four stage evaluation of claimed justification for interference with a Convention right see R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, [2011] UKSC 45; Bank Mellat v HM Treasury (No 2) [2014] AC 700, [2013] UKSC 39; and R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57; [2015] 1 WLR 3820. Whatever of its possible relevance to a balancing exercise it simply cannot be considered as a legitimate aim. Indeed, Mr Coppel, during oral argument, said on behalf of the Secretary of State, It has never been our position that the reason abortion [for women from NI] is not provided on the NHS is that it would be too costly. If no legitimate aim exists for the interference with the appellants article 8 rights, when read with article 14, the entire edifice of justification crumbles. It is therefore unnecessary for me to address the other three stages identified in Aguilar Quila and the other cases referred to in the preceding paragraph. I should like to say something about the issue dealt with by Lord Reed in his judgment concurring with Lord Wilson. Although academic in the present case (for reasons that I will give presently) the issue discussed by Lord Reed is an important and difficult one. Lord Reed has formulated the issue in this way: whether laws or administrative practices adopted within one of the constituent parts of the UK, which differentiate between UK citizens according to whether they are or are not residents of that part, fall within the scope of article 14 of the European Convention on Human Rights. As he has pointed out, although the issue was on, at least, the periphery of some cases considered by the European Court of Human Rights or the European Commission on Human Rights in Strasbourg, it has not often been directly dealt with. It was canvassed on the applicants behalf in Dudgeon v United Kingdom (1981) 4 EHRR 149 and raised in Nelson v United Kingdom (1986) 49 DR 170 as Lord Reed has said. The issue occupied centre stage in Magee v United Kingdom (2000) 31 EHRR 35, discussed by Lord Wilson at para 25 and more fully addressed by Lord Reed in paras 43 and 44 of his judgment. Lord Reed has referred to the important statement of principle in the dissenting opinion of Judge Matscher in Dudgeon where he stated in forthright terms that differences in legislation in different states in a federation could never amount to discrimination, and the question of justification for such differences simply did not arise. Judge Matscher did not address the question of whether Mr Dudgeon could have claimed other status, I suspect because he would have regarded the question as otiose. In Magee the principal reason that the applicant failed in his article 14 claim was that he had been arrested and detained under statutory provisions and a regime of detention that was unique to Northern Ireland among the jurisdictions of the United Kingdom and that his claim that he had received differential treatment from that which he would have received had he been arrested in any other part of the UK was not viable. However, the decision was expressed by the court (and I agree with Lord Reed that it is not entirely clear on which precise basis they reached their conclusion), the claim was bound to fail on the fundamental basis articulated by Judge Matscher in Dudgeon. Individual jurisdictions within a federal system are entitled to devise their own laws. They are not required to subscribe to a common model. In effect, Mr Magees claim, in order to succeed, would have had to assert that laws could not be enacted in Northern Ireland which had less favourable effect on those detained than did the relevant laws in other parts of the UK. The appellants case is fundamentally different. They do not assert that the law in Northern Ireland should correspond with that in England. They claim that when women from Northern Ireland are in England, they are entitled to be treated in the same way as Englishwomen in the provision of abortion services. To analogise with the position in Magee, if the applicant in that case had been arrested in England, he would have been entitled to the same detention regime as would have been afforded Englishmen arrested for the same offences. The appellants derive their status as women from NI who have been treated differentially from women in England. I therefore consider that they are entitled to succeed on their human rights claim also. LADY HALE: (dissenting) I too would have allowed this appeal, for the reasons given by Lord Kerr. In particular, I agree with him that the aim in section 1(1)(b) of the National Health Service Act 2006 is not limited to the prevention, diagnosis and treatment of illness in the people of England (whatever that may mean). It is only the aim in section 1(1)(a), the improvement of those peoples physical and mental health, which is so limited. I also agree that the relevant services listed in section 3(1), specifically, (a) hospital accommodation, (b) other accommodation for the purpose of any service provided under this Act, (c) medical, dental, ophthalmic, nursing and ambulance services are designed, or principally designed, to meet the aim of treating illness in section 1(1)(b) rather than health promotion in section 1(1)(a). The question, therefore, is whether a policy of not providing the medical service of terminating pregnancies under the Abortion Act 1967 to women who live in Northern Ireland is consistent with the duty to provide (or secure the provision of) such services as are necessary to meet all reasonable requirements. In considering what is reasonably required, regard must be had to some of the fundamental values underlying our legal system, values which were stressed in the helpful intervention on behalf of the Alliance for Choice, British Pregnancy Advisory Service, Birthrights, Family Planning Association and Abortion Support Network. These include autonomy and equality, both of which are aspects of an even more fundamental value, which is respect for human dignity. The right of pregnant women to exercise autonomy in relation to treatment and care has been hard won but it has been won. In St Georges Healthcare NHS Trust v S [1999] Fam 26, 50 Judge LJ, giving the judgment of the court, said this: In our judgment while pregnancy increases the personal responsibilities of a woman it does not diminish her entitlement to decide whether or not to undergo medical treatment. Although human, and protected by the law in a number of different ways set out in the judgment in In re MB (An Adult: Medical Treatment) [1997] 2 FCR 541, an unborn child is not a separate person from its [sic] mother. Its need for medical assistance does not prevail over her rights. She is entitled not to be forced to submit to an invasion of her body against her will, whether her own life or that of her unborn child depends on it. Her right is not reduced or diminished merely because her decision to exercise it may appear morally repugnant. The declaration in this case involved the removal of the baby from within the body of her mother under physical compulsion. Unless lawfully justified this constituted an infringement of the mothers autonomy. Of themselves the perceived needs of the foetus did not provide the necessary justification. That case was concerned with autonomy in the negative sense, the right to refuse medical treatment, even though it would save the babys life. The more recent case of Montgomery v Lanarkshire Health Board (General Medical Council intervening) [2015] UKSC 11; [2015] AC 1430, is concerned with the positive right to choose what treatment to have. The court emphasised that an adult person of sound mind is entitled to decide which, if any, of the available forms of treatment to undergo (para 87) and therefore to be provided with the information necessary to enable her to make that choice, a choice in which she is entitled to be guided by her own values and preferences (para 115). Of course, there are sometimes countervailing considerations which constrain her choices. Abortion is only available in Great Britain if both the substantive and the procedural requirements of the Abortion Act 1967 are complied with. But if they are, it is the womans choice whether or not to have that abortion. It is a reasonable requirement to provide her with a service, wherever she comes from. The NHS can charge women from abroad to whom they provide abortion services. But they cannot charge women from the United Kingdom, however great their need. This is to deny pregnant women from Northern Ireland the same right to choose what is done with their bodies as is enjoyed by all other pregnant citizens of the United Kingdom. It is inconsistent with the principle of equal treatment which underlies so much of our law. This is not to say that the law in Northern Ireland has to be the same as the law in the rest of the United Kingdom. That is not what this case is about. But it is to say that a woman from Northern Ireland who is in Great Britain ought not to be denied, as a matter of policy, the same rights as other women here enjoy. Nor is it to say that the NHS must always provide exactly the same services throughout the United Kingdom. There are often difficult choices to be made which will depend upon many factors, some of which will be local to the place where the services are provided. But pregnancy is a special case. As Lord Bingham of Cornhill explained in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52; [2004] 1 AC 309, at p 317, having a child that she did not want to have denies a woman the opportunity to live her life in the way that she wished and planned (I tried to explain the full extent of the denial of her autonomy in Parkinson v St James and Seacroft University Hospital NHS Trust [2001] EWCA Civ 530; [2002] QB 266). Many women will nevertheless choose to continue the pregnancy and take care of the child. But a lawful abortion restores her autonomy and respects her dignity. It is for those reasons that I also agree that the policy is incompatible with the Convention rights of women from Northern Ireland. The protection of dignity and autonomy is a core value underlying the rights guaranteed by article 8. The difference in treatment by the NHS in England between women from England and women from Northern Ireland cannot be justified by respect for the democratic decisions made in Northern Ireland as to what will be provided by the NHS there. In fact, the reason why abortion is only available on a very limited basis in Northern Ireland is not that the NHS has chosen to provide different services there. It is that the criminal law of Northern Ireland remains as it was in England before the Abortion Act 1967 was passed. The NHS there could not provide abortion on a wider basis there even if it wanted to do so. There is no question of trying to change the criminal law of Northern Ireland. But that law does not prohibit women from travelling to England to have an abortion which is perfectly lawful here. It cannot constitute a good reason for a policy of denying them health services which are lawful here.

UK-Abs

The criminal law relating to abortion in Northern Ireland falls within the legislative competence of the Northern Ireland Assembly by virtue of section 4(1) of the Northern Ireland Act 1998. Abortion is lawful in Northern Ireland only in far narrower circumstances than in the rest of the UK. Consequently, a steady stream of women usually resident in Northern Ireland come to England to secure an abortion. Many of these women attend private clinics which charge a fee for the service, as they are unable to obtain an abortion free of charge under the English NHS unless in an emergency. A, a resident of Northern Ireland, became pregnant in 2012 at the age of 15. With the support of her mother, B, A decided to seek the termination of her pregnancy. B accompanied A to a private clinic in Manchester where A underwent an abortion. The total cost was about 900. The appellants argued that the respondents failure to provide for A, as a UK citizen usually resident in Northern Ireland, to be entitled to undergo an abortion free of charge under the NHS in England was unlawful. Section 1(1) of the National Health Service Act 2006 (the 2006 Act) places a duty on the respondent to continue the promotion in England of a comprehensive health service designed to secure the improvement (a) in the physical and mental health of the people of England, and (b) in the prevention, diagnosis and treatment of illness. The respondent also had a duty under section 3(1) of the 2006 Act to provide throughout England, to such extent as he considers necessary to meet all reasonable requirements [] (c) medical services. The respondent had the power to make a direction under section 7(1) of the 2006 Act and regulation 3(7) of the NHS (Functions of Strategic Health Authorities and Primary Care Trusts and Administration Arrangements) (England) Regulations 2002 providing that the function of providing abortion services should be exercised by primary care trusts (latterly clinical commissioning groups) for the benefit of all persons present in their area who were citizens and residents of the UK rather than only for those usually resident in its area. The appellants contend, firstly, that in failing to make such a direction the respondent acted irrationally and unlawfully took into account the Northern Ireland Assemblys decision not to provide abortion services. Further, they argued section 3(1) required the respondent to make a direction. Secondly, the appellants argued that the respondents failure to make a direction violated article 14 of the European Convention on Human Rights taken in conjunction with article 8 because their right to respect for private and family life was not secured without discrimination on the ground of usual residence. The Supreme Court by a majority of 3 to 2 dismisses the appeal. Lord Wilson gives the lead majority judgment, with which Lord Reed and Lord Hughes agree. Lord Reed gives a concurring judgment, with which Lord Hughes agrees. Lady Hale and Lord Kerr give dissenting judgments. Lord Wilson expresses sympathy with the deeply unenviable position of those in the situation of the appellant, but rejects the public law challenge. Parliaments scheme is that separate authorities in each of the four countries in the United Kingdom should provide free health services to those usually resident there. The respondent was entitled to make a decision in line with this scheme for local decision making. Further, the respondent was entitled to afford respect to the democratic decision of the people of Northern Ireland not to fund abortion services, and to take into account the ability of Northern Irish women to lawfully travel to England and purchase private abortion services there [20]. Lord Wilson concludes that the human rights challenge fails as the difference in treatment was justified [35]. The respondents decision as to whether to provide abortion services to a group of women free of charge falls within the scope of article 8 [22]. The respondent treated women usually resident in England differently from women who, although UK citizens, were usually resident in Northern Ireland [31]. A difference of treatment between UK citizens present in England on the grounds of usual residence falls within the scope of other status for the purposes of article 14 [27]. The respondents aim to stay loyal to the devolved scheme for health services and the democratic decision reached in Northern Ireland in relation to abortion services was rationally connected to his decision not to make the direction sought by the appellants. With that aim in mind he could not have reached any decision less intrusive upon the article 8 rights of the appellants [32]. The respondents decision struck a fair balance between the appellants rights and the interests of the UK community as a whole and, accordingly, was justified. As such, the difference in treatment did not amount to discrimination [35]. In a concurring judgment, Lord Reed reviews decisions and judgments of the European Court of Human Rights and the former European Commission on Human Rights that relate to devolved laws which differentiate between UK citizens according to whether they are residents of that part of the UK [38 48]. Such differential treatment falls within the scope of article 14 and requires to be justified [49]. Lord Kerr would have allowed the appeal. While the aim in section 1(1)(a) of the 2006 Act relating to the improvement of physical and mental health is limited to the people of England, the aim in section 1(1)(b) relating to the prevention, diagnosis and treatment of illness is not so limited [59]. Northern Irish women who seek an abortion in England are being treated for the preventionof illness under section 1(1)(b) as allowing an unwanted pregnancy to continue to term carries a risk of physical or mental injury [69]. In failing to exercise his power, the respondent was wrong to believe that his section 3 duties were confined to the people of England [72] and that affording respect to the Northern Ireland Assembly required denying Northern Irish women the means of obtaining abortions in England. The Northern Ireland Assembly has expressed no view about the ability of Northern Irish women to travel to England to obtain abortions [74]. Allowing these abortions to take place on the NHS would not alter the democratic decision of the Northern Ireland Assembly [75]. In respect of the human rights challenge, Lord Kerr would have held that no legitimate aim exists for the interference with article 8 [87]. Allowing Northern Irish women abortions on the NHS would not compromise the scheme of local provision of medical services [84 85]. Further, neither democratic deference to the Northern Ireland Assembly nor cost can qualify as legitimate aims [86]. Lady Hale agrees with Lord Kerr [92]. Further, if the requirements of the Abortion Act 1967 are complied with then it is a reasonable requirement under section 3 of the 2006 Act that the respondent provide a woman with a service, wherever she comes from. The NHS can charge women from abroad in respect of abortion services. But they cannot charge women from the United Kingdom [94].

The respondent (VWFS) is a member of the Volkswagen Group, and is used (through its retail sector) to provide hire purchase (HP) finance for the sale of vehicles manufactured by the group. When a customer of a VW dealership wishes to purchase a vehicle using finance from VWFS, the vehicle is acquired by VWFS as part of the finance arrangements from the dealer and then supplied by it to the customer on deferred payment terms under an HP contract. The vehicles are sold on to the customer at the same price as they are purchased from the dealer. This appeal is concerned with the treatment of general business overheads, not directly attributable to particular supplies. The legal and factual background is set out in detail in the judgment of Patten LJ and need not be repeated. As he explained the issue arises in the context of a so called partial exemption special method (PESM) agreed with HMRC for the valuation of the proportion of residual input tax attributable to HP transactions. The issue is whether any of the residual input tax paid by VWFS in respect of such general overheads (so far as apportioned to the retail sector) is deductible against the output tax paid on the taxable supply of vehicles to customers. HMRCs primary contention is that the overheads are all attributable to the exempt supplies of finance and the input tax is therefore irrecoverable. VWFS contends that the residual input tax should be split in proportion to the ratio of taxable transactions to the whole, which has the effect of splitting the residual input tax 50/50 for HP transactions. That issue was decided in favour of VWFS by the First tier Tribunal (FTT), and by the Court of Appeal, although the Upper Tribunal had supported HMRCs approach. That remains the main issue in the appeal, but is one on which the court has decided that a reference to the CJEU is necessary to reach a conclusion. The present judgment is concerned with a secondary issue. Mr Thomas argues that HMRC had a fall back position on the amount of the apportionment, which the FTT had failed to consider. As Patten LJ explained: The First tier Tribunal proceeded on the basis that the only dispute about methodology was whether any part of the residual input tax was attributable to and could be set off against the taxable supplies of vehicles made in the retail sector of VWFSs business. But HMRC contend that they did challenge the apportionment formula contained in the proposed PESM on wider grounds and that a lower figure than 50% should be attributed to the taxable supplies of vehicles as part of the hire purchase contracts in terms of the use made of the allocated inputs. (para 13) Patten LJ expressed some surprise (which I share) that, in an appeal where both sides were represented by experienced counsel, such an issue had not been capable of resolution by agreement between them, or by reference to their written submissions or notes of the hearing. However, the court had been asked to resolve the issue on the available material. That included: i) HMRCs skeleton argument before the tribunal which had described the issue as being whether VWFS method produces a fair and reasonable attribution of residual input tax in the retail sector, but without putting forward a positive alternative to HMRCs preferred methodology, or suggesting a different apportionment. ii) HMRC had relied upon two witness statements made by Mr Jonathan Cannon, the second of which commented on the differences between the two approaches. He observed that VWFSs approach was realistic, perhaps more so than the HMRCs approach, but was open to two particular concerns, which he identified. Again he did not put forward an alternative apportionment. iii) made by Mr Thomas: Judge Berners notes of the hearing recorded the following submission [The] value of the car does not bear on the use of overheads. What [VWFS] says is [that] if [that is done] it would be 80%, but 50% is fair. But why? The appellant does not say. 50% is an arbitrary selection of a figure. No analysis has been put forward. [This] comes from the weighting exercise. HP contracts [are] treated as two transactions. [It is] wholly unexplained as [to] why it is fair to treat HP [transactions] 1:1. Why not another fraction? The Upper Tribunal (para 103) saw this extract as supporting Mr Thomass submission that he had asked the FTT to consider in the alternative whether a lesser figure than 50% should have been attributed to the taxable supplies. Patten LJ thought otherwise: But my own reading of the judges notes on these issues is that Mr Thomas was challenging the basis of the 50% attribution as arbitrary in the context, as Ms Shaw has submitted, of an argument that any attribution was impermissible. HMRC did not rely upon some alternative methodology which attributed to the use of the residual inputs by the taxable supply of vehicles a figure somewhere between 1% and 50%. I do not see how this court is in the position to gainsay Judge Berners understanding of the parties position on the appeals which the FTT heard and none of the materials we have been asked to look at demonstrate that the FTT misunderstood HMRCs case. (para 71) In this court Mr Thomas submits that the Court of Appeal failed to take account of the nature of the appeal to the tribunal, which allows the FTT to consider both issues of principle and the amount of the assessment. He relies on words of mine in Pegasus Birds Ltd v Revenue and Customs and Excise Comrs [2004] EWCA Civ 1015; [2004] STC 1509: The Tribunal should remember that its primary task is to find the correct amount of tax, so far as possible on the material properly available to it, the burden resting on the taxpayer. In all but very exceptional cases, that should be the focus of the hearing (para 38(i)) He relies also on Banbury Visionplus Ltd v Her Majestys Revenue and Customs [2006] EWHC 1024; [2006] STC 1568 para 48, where in a similar context to the present Etherton J held that there was nothing to exclude the jurisdiction of the tribunal to decide whether a particular method would achieve the statutory objective. Miss Shaw submits that those cases do not detract from the general principle that proceedings before the tribunal are not inquisitorial in nature; it is no part of the tribunals role to undertake a roving review of the dispute of its own motion. She relies on comments of Forbes J as to the adversarial nature of proceedings before the former VAT Tribunal (Tynewydd Labour Working Mens Club and Institute Ltd v Customs and Excise Comrs [1979] STC 570, 580). In my view, this issue does not require examination of general questions about the tribunals role. One of the strengths of the new tribunal system is the flexibility of its procedures, which need to be and can be adapted to a wide range of types of case and of litigant. In some areas, particularly those involving litigants in person, a more inquisitorial role may be appropriate. However, when the tribunal as here is dealing with substantial litigants, represented by experienced counsel, it is entitled to assume that the parties will have identified with some care what they regard as relevant issues for decision. My comments in Pegasus Birds should not be taken as indicating anything different. They were not of general application, but intended (as the following words made clear) to discourage undue attention to the Commissioners original exercise of best judgment, as opposed to the correctness of the result. Like Patten LJ, I would attach particular importance to the tribunals understanding of the issue before it. This is apparent from the tribunals own introduction to the detailed discussion. Having described the main issue, the tribunal continued: That is the full extent of the dispute. Other aspects of what amounts to a fair and reasonable attribution, such as ease of audit and operation, are not at issue. Nor, although the Tribunal itself asked for clarification, is the 50/50 weighting that VWFS proposes as between the taxable supplies of the vehicle and the exempt supplies of finance under the HP agreements. The evidence of Mr Cannan for HMRC shows that the weighting is accepted as realistic; indeed he concedes that it may be more realistic than that adopted by HMRCs method. The dispute is not on the weighting, but on whether any part of the residual input tax should be attributed at all to the taxable supply of the vehicle. (para 41, emphasis added) I agree with Patten LJ that we have no material which could justify going behind that clear statement of the position as the tribunal understood it, having itself apparently sought clarification. Mr Thomas says that he has no recollection of such a request. However, if there was any doubt about that, the time to have dealt with it was when the decision was received. If the tribunal was thought to have misunderstood HMRCs position, and failed to deal with a significant issue, the matter could have been raised with them and sorted out then and there, at a time when it was fresh in the minds of all involved. As it is the tribunals understanding seems to me entirely consistent with the lack of any specific reference to this issue in their written submissions or the evidence of their witness. I agree with Patten LJ that the passing reference in the note of cross examination adds nothing. For these reasons, in agreement with the Court of Appeal, I would dismiss this ground of appeal.

UK-Abs

The respondent is a member of the Volkswagen (VW) Group and is used (through its retail sector) to provide hire purchase (HP) finance for the sale of vehicles manufactured by the group. When a customer of a VW dealership wishes to purchase a vehicle using finance from the respondent, the vehicle is acquired by the respondent and supplied to the customer on deferred payment terms under an HP contract. In the course of its business the respondent incurs input tax as part of its expenditure. Where that expenditure is directly attributable to taxable supplies the input tax is deductible; where the supply is exempt the input tax is irrecoverable. This appeal concerns the treatment of general business overheads, not directly attributable to particular supplies: specifically, whether any of the residual input tax paid by the respondent in respect of general business overheads is deductible against the output tax paid on the taxable supply of vehicles to customers. In December 2007 the appellant agreed to a new, updated version of a partial exemption special method (PESM) with the respondent for determining the allowable proportion of residual input tax. It did not, however, agree to the respondents proposed methodology for retail (under which HP falls). The appellants approach is that overheads are all attributable to the exempt supplies of finance and the input tax is therefore irrecoverable. The respondent, meanwhile, argues that the residual input tax should be in proportion to the ratio of taxable transactions to the whole, which has the effect of splitting the residual input tax 50/50 for HP transactions. That issue was decided in favour of the respondent by the First Tier Tribunal (FTT) and Court of Appeal, while the Upper Tribunal (UT) had supported the approach of the appellant. A secondary issue between the parties is the appellants argument that it had a fall back position on the amount of the apportionment that the FTT had failed to consider. The UT considered an extract from the hearing notes of Judge Berner in the FTT as supporting the appellants claim that it had asked the FTT to consider in the alternative whether a lesser figure than 50% should have been attributed to the taxable supplies. The Court of Appeal, however, disagreed, holding that the appellant did not attempt to rely on an alternative methodology before the FTT. On the main issue in the appeal the Supreme Court makes a reference to the Court of Justice of the European Union (CJEU). On the second issue, the Court unanimously dismisses the ground of appeal. Lord Carnwath gives the judgment, with which the other Justices agree. On the primary issue in the appeal, the Court decides that a reference to the CJEU is necessary to reach a conclusion [3]. Its questions to the CJEU include: where general overhead costs attributed to hire purchase transactions (which consist of exempt supplies of finance and taxable supplies of cars), have been incorporated only into the price of the taxable persons exempt supplies of finance, does the taxable person have a right to deduct any of the input tax on those costs? Further, can it be legitimate in principle to ignore the value of the taxable supplies of cars (or their value) for the purposes of arriving at a special method under Article 173(2)(c) of Council Directive 2006/112/EC? Determination of the secondary issue does not require examination of general questions about the tribunals role. One of the strengths of the tribunal system is the flexibility of its procedures, which need to be adapted to a wide range of types of case and litigant. There may be some circumstances where a more inquisitorial approach is appropriate, but where the tribunal is dealing with substantial litigants represented by experienced counsel, it is entitled to assume that the parties will have identified what they regard as relevant issues for decision [7]. Particular importance is attached to the tribunals understanding of the issue before it, as apparent from the tribunals own introduction to the detailed discussion at paragraph 41 [8]. The Court has no material to go behind the clear statement of the position as the tribunal understood it, having itself apparently sought clarification. If the tribunal was thought to have misunderstood the appellants position and failed to deal with a significant issue, the matter could have been raised with them and sorted out at that point [9]. As the tribunals understanding is consistent with the lack of any specific reference to this issue in the appellants written submissions or in the evidence of its witness, this ground of appeal is dismissed.

The husband and wife (as it will be convenient to describe them notwithstanding the grant of a divorce) entered into a consent order dated 28 July 2010, by which they compromised their claims against each other for financial orders on the basis of a clean break between them. The wife wished to continue to live with the two children of the family, namely a girl then aged ten and a boy then aged eight, in the matrimonial home, which was held in the joint names of herself and the husband subject to a substantial interest only mortgage. Part of the order provided, by way of property adjustment, that the husband should transfer to the wife his legal and beneficial interest in the home subject to the mortgage. In return the husband was to be released from his covenants under the mortgage. His release from them was provided in undertakings given to the court by the wife which were recited as a prelude to the order. Thus she undertook at para 4.3 of the recitals to discharge all instalments payable under the mortgage; in any event to indemnify the husband against any liability under it; and to use her best endeavours to obtain the mortgagees agreement to release him from his covenants under it. Then, crucially, she undertook at para 4.4 of the recitals that, if the husband had not been released from his mortgage covenants by 30 September 2012, she would secure his release by placing the home on the market for sale and proceeding to sell it. The several other provisions of the order, including for the division between the husband and wife of responsibility for specified debts, are for present purposes irrelevant. On 18 November 2011 the wife issued an application which she described as being to vary her undertaking at para 4.4. In her statement in support of it she explained that she had not been able to secure the husbands release from his mortgage covenants and would not be able to do so by 30 September 2012. She said that, when she had given the undertaking at para 4.4, she had expected to be able to secure his release either by the provision instead by her brother or sister of guarantees to the mortgagee for the performance of her obligations under it or by her obtaining employment by reference to which she could persuade the mortgagee to accept her as the sole mortgagor; but that in the event neither the brother nor the sister had proved able to provide the guarantees and she had been unable to obtain employment. She explained that the two children were in fine schools in the vicinity of the home and that it would be gravely damaging to their interests for them to have to move home while still at school. In such circumstances she sought a variation of the undertaking at para 4.4. so as to postpone her obligation to secure the husbands release from his covenants under the mortgage by sale of the home from 30 September 2012 until (as she soon made clear) 15 August 2019, being the date of their sons 18th birthday. In 2012 the husband countered by contending, through counsel, that the court had no jurisdiction to hear the wifes application. He requested the court so to rule in the determination of a preliminary issue. In retrospect it is unfortunate that the court acceded to his request. As of now, in 2017, the merits or demerits of the wifes application have never been ventilated. On any view, albeit subject to the extent of prejudice suffered by the husband as a result of remaining a co mortgagor of the home, the wifes application for postponement of the sale for seven years was highly ambitious even if there was jurisdiction to hear it. But, unsatisfactory though it is, she has secured postponement for five of those years solely as a result of the continuing litigation in respect of the preliminary issue. So she is now able to present her request for postponement as being only for the two final years, being (so she says) more important than ever in the interests both of the parties daughter who is about to embark on the second and final year of her A level course and of their son who is about to embark on the first of them. On 15 January 2014 District Judge Chesterfield, sitting in the Watford County Court, concluded that the court had no jurisdiction to hear the wifes application and so ordered that it be dismissed. On 12 May 2014 HHJ Waller CBE upheld the district judges conclusion and dismissed the wifes appeal against his order. On 31 July 2015 the Court of Appeal (Gross and Kitchin LJJ, and McCombe LJ who gave the main judgment): [2015] EWCA Civ 833; [2016] 2 FLR 467 held that there was jurisdiction to hear the wifes application but that it was only a formal jurisdiction which existed only technically; that scope for its exercise was extremely limited indeed; and that, in the light of what the court had been told, there was no basis for its exercise upon the wifes application. Against the Court of Appeals dismissal of her second appeal the wife brings a third appeal to this court. All three lower courts adopted without demur the wifes description of her application as being to vary her undertaking. But her description betrays a conceptual confusion which it is as well to dispel as this early stage. An undertaking is a solemn promise which a litigant volunteers to the court. A court has no power to impose any variation of the terms of a voluntary promise. A litigant who wishes to cease to be bound by her (or his) undertaking should apply for release from it (or discharge of it); and often she will accompany her application for release with an offer of a further undertaking in different terms. The court may decide to accept the further undertaking and, in the light of it, to grant the application for release. Equally the court may indicate that it will grant the application for release only on condition that she is willing to give a further undertaking or one in terms different from those of a further undertaking currently on offer. In either event the courts power is only to grant or refuse the application for release; and, although exercise of its power may result in something which looks like a variation of an undertaking, it is the product of a different process of reasoning. In Cutler v Wandsworth Stadium Ltd [1945] 1 All ER 103 Morton LJ said at 105D E: the court does not vary an undertaking given by a litigant. If the litigant has given an undertaking and desires to be released from that undertaking, the application should be an application for release Litigants are not ordered to give these undertakings; they choose to give them, and an application to have an undertaking already given varied is wholly wrong in form. In my opinion these proceedings have been bedevilled by a failure to distinguish between the existence of the courts jurisdiction to release the wife from her undertaking (conditionally, on any view, upon her offering a further one in different terms) and the exercise of its jurisdiction. The preliminary issue has related only to its existence with the result that factors relevant to its exercise have not been the subject of investigation or argument. Nevertheless, influenced by a decision of the Court of Appeal in Omielan v Omielan [1996] 2 FLR 306 which will receive my careful consideration in paras 21 to 27 below, the lower courts have in my view looked over their shoulders at the ostensibly ambitious nature of the wifes application (being one of the factors relevant to exercise of the jurisdiction); and they have deployed it as a basis for denying the existence of the jurisdiction or, in the Court of Appeal, as a basis for concluding that the jurisdiction was no more than formal and technical (which, irrespective of what in this context those adjectives precisely mean, seems tantamount to a conclusion that, for practical purposes, the jurisdiction does not exist). In Russell v Russell [1956] P 283 the husband appealed against a judges refusal to release him from an undertaking that, unless he was out of work, he would not apply for a downwards variation of an order for maintenance in favour of the wife. Jenkins LJ said at 294: any undertaking given to the court is capable of being discharged by the court whenever it appears to the court that circumstances have arisen which make that course a proper one in the interests of justice. He repeated at 297 that it was always competent for the court to release a person from an undertaking as an exercise of its discretion in the interests of justice. In the light of what follows, however, it is worthwhile to note that, in proposing that the appeal be dismissed, Jenkins LJ there proceeded to explain that the husband had wholly failed to show any such change in circumstances as would warrant release. In Kensington Housing Trust v Oliver (1997) 30 HLR 608 the Court of Appeal stressed the universality of the jurisdiction to grant release from an undertaking. A tenant had caused flooding of flats underneath her flat. As a result the landlord had obtained an order for possession of it but it had undertaken to the court to offer the tenant specified alternative accommodation at basement or ground floor level before seeking to enforce the order. When, following further flooding in breach of a reciprocal undertaking which the tenant had given to the court, the landlord applied for release from its undertaking, a recorder held that the court lacked jurisdiction to grant release from it. The Court of Appeal held, however, that the recorder did have jurisdiction to grant release and that the court should itself exercise it. Both Butler Sloss LJ at 612 and Judge LJ at 616 quoted the statement of principle by Jenkins LJ in the Russell case, set out above. Butler Sloss LJ held at 612 that the principle applied to all civil litigation and at 613 that the fact that the undertaking was recorded as a prelude to a consent order was irrelevant. Judge LJ held at 617 that the principle was not confined to matrimonial proceedings. Thorpe LJ held at 614 that it applied in the fields both of family law and of civil law. Other than in the decisions of the Court of Appeal in Omielan, which pre dated the Kensington Housing Trust case, and in the present case, the universality of the jurisdiction to grant release from an undertaking has, it seems, never been doubted. But, outside the realm of undertakings given in proceedings for financial orders, there has been debate about the criteria by which the jurisdiction should be exercised. For, in the Kensington Housing Trust case, the Court of Appeal, applying the reference by Jenkins LJ in the Russell case to the interests of justice, appeared to hold that the sole criterion was whether it would be just to grant release. Giving the leading judgment, with which both Thorpe and Judge LJJ agreed, Butler Sloss LJ said at 613: I am in no doubt, therefore, that an undertaking wherever recorded which is accepted by the court can be discharged by the court at any stage if it is just to do so. In Mid Suffolk District Council v Clarke [2006] EWCA Civ 71, [2007] 1 WLR 980, the Court of Appeal considered whether it was correct to say that the jurisdiction fell to be exercised solely by reference to what was just. The council had taken proceedings against a farmer whose production of swill, for feeding to pigs, was emitting a smell which local residents found scarcely tolerable. Rather than suffer the making of an injunction against him, the farmer had undertaken not to cause a public nuisance at his premises. The duration of the undertaking was not limited in time. Thereafter the council took committal proceedings in which the farmer admitted that he had broken the undertaking by the continued emission of smells. The judge duly fined him but then decided to release him from part of his undertaking by limiting its further duration to two years. The Court of Appeal allowed the councils appeal. Lloyd LJ noted at para 20 that, as both parties had accepted, the court had jurisdiction to grant release from an undertaking, in whole or in part, and that the jurisdiction was discretionary. Both he and Buxton LJ then addressed the criteria by which the jurisdiction should be exercised. Having considered the remarks of Butler Sloss LJ in the Kensington Housing Trust case, both Lloyd LJ at para 17 and Buxton LJ at paras 55 and 56 held that it was no doubt necessary for a grant of release to be just but that it had also to be predicated on a significant change of circumstances, which in the present case did not exist. It is, I suppose, inconsistent with the admitted existence of a discretionary jurisdiction to say that it can never be exercised unless a particular fact, such as a significant change of circumstances, is established. If a discretionary jurisdiction is shackled in that way, the result is, instead, that the jurisdiction does not even exist unless the fact is established. For all practical purposes, however, the Court of Appeal in the Mid Suffolk case gave valuable guidance. I summarise it as being that, unless there has been a significant change of circumstances since the undertaking was given, grounds for release from it seem hard to conceive. By reference only to the reasoning in the cases of Russell, Kensington Housing Trust and Mid Suffolk, one would confidently conclude that there was a full jurisdiction to hear the wifes application for release, albeit that its exercise in her favour would be likely to attract lively debate. There is, however, a completely different line of reasoning. In my view it neatly leads to the same conclusion although, for reasons which I will explain, it led the courts below to the opposite conclusion. It relates to sections 24A and 31 of the Matrimonial Causes Act 1973 (the Act). Section 24A provides: (1) Where the court makes a property adjustment order, then, on making that order , the court may make a further order for the sale of such property as may be specified in the order, being property in which either or both of the parties to the marriage has or have a beneficial interest (4) Where an order is made under subsection (1) above, the court may direct that the order shall not take effect until the occurrence of an event specified by the court Section 31 provides: (1) Where the court has made an order to which this section applies, then, subject to the provisions of this section , the court shall have power to vary the order (2) This section applies to the following orders under this Part of this Act, that is to say any order made under section 24A (1) above for (f) the sale of property; . In exercising the powers conferred by this section the (7) court shall have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18, and the circumstances of the case shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates, It is worthy of note that, in my view correctly, Parliament did not in subsection (7) or elsewhere make a change of circumstances a condition for exercise of the jurisdiction to vary. Nevertheless, unless there has been a significant change of circumstances since the order was made, grounds for variation of it under section 31 seem hard to conceive. Both the district judge and the circuit judge held that the wifes undertaking in para 4.4 of the recital could instead have been framed as an order for the sale of the home pursuant to subsection (1) of section 24A of the Act, albeit subject to a direction pursuant to subsection (4) that it should not take effect unless by 30 September 2012 the wife had failed to secure the husbands release from his covenants under the mortgage. In the Court of Appeal neither party argued that the two judges had fallen into error in that respect. Nevertheless the court held that the undertaking could not have been framed as an order under section 24A. In paras 29 and 34 of his judgment McCombe LJ based his reasoning in this respect on the admitted fact that the wifes undertakings in para 4.3 of the recital, namely to discharge the mortgage instalments etc, could not have been framed as orders. He held that, since para 4.4 was linked to para 4.3, it followed that the undertaking in para 4.4 was likewise not susceptible of being framed as an order. Kitchin LJ agreed with the judgment of McCombe LJ, as did Gross LJ although he expressed doubts on this point. It is important to note, however, that at para 41 McCombe LJ observed that, even if he had held that the undertaking in para 4.4 could have been framed as an order for sale, he would still have concluded that in the circumstances the jurisdiction to release the wife from it was no more than formal and technical. Counsel for the husband realistically accepts that he cannot defend that part of the Court of Appeals reasoning in which it held that the undertaking in para 4.4 could not have been framed as an order for sale. With respect, the fact that the undertakings in para 4.3 could not have been framed as orders in no way precluded the making of a conditional order for sale in the terms set out above. In circumstances in which an undertaking could have been framed as an order, it would be illogical for answers to questions about the existence and exercise of the jurisdiction to grant release from it to be different from answers to questions about the existence and exercise of the jurisdiction to vary any such order. In L v L [2006] EWHC 996 (Fam), [2008] 1 FLR 26, the husband had accepted an obligation to make periodical payments to the wife but the obligation had been expressed as an undertaking on his part rather than as an order by consent for periodical payments pursuant to section 23(1)(a) of the Act. Such an order would have been variable under section 31(2)(b) of the Act. The husband subsequently sought to be released from his undertaking on the basis that, in return, the court would make an order for periodical payments against him in favour of the wife on different terms. But he cast his application for release as an application for variation under section 31(2)(b). Munby J declined to strike his application out. He held at para 113 that his entitlement to apply for variation is not in any way affected either by the fact that the order was a consent order or by the fact that the relevant provisions are contained in undertakings rather than in the curial part of the order. In the present case, therefore, the equivalence of the wifes undertaking at para 4.4 with an order for sale under section 24A of the Act, variable under section 31(2)(f) of it, seems clearly to confirm the existence of the courts jurisdiction to hear her application for release from it. But this conclusion the husband disputes. He does so by reference to the decision of the Court of Appeal in the Omielan case cited at para 6 above. In the Omielan case the husband and wife entered into a consent order which related in particular to their home, vested in their joint names, in which the wife wished to continue to reside with the children of the family. Part of the order was a property adjustment order: it was, specifically, a variation of settlement order under which the proportions of the beneficial ownership of the home were recast so as to become 25% for the wife and 75% for the children. But there was also an order for sale of the home under section 24A of the Act. It provided that the home be sold but only on the occurrence of any one of four trigger events, including the event that the wife had cohabited with another man for at least six months. Shortly after the order was made the husband and wife executed a deed of trust under which they declared themselves to be trustees of the home on the above terms. Subsequently, on discovering that the wife had cohabited with another man for at least six months, the husband applied for an order that the sale of the home should take place at once; and the wife countered with an application under section 31(1) and (2)(f) of the Act for the order for sale of the home to be varied so as to postpone it until the youngest child, then aged nine, attained the age of 18. In the Omielan case the Court of Appeal was clearly correct to allow the husbands appeal against a judges refusal to dismiss the wifes application for variation. There were patently no grounds for exercising the jurisdiction to vary the order for sale. In a judgment with which Butler Sloss and Peter Gibson LJJ agreed, Thorpe LJ pointed out at 313 that the vested beneficial interest of the children in reversion had, once the wife had cohabited for six months, become an interest in possession; and that she was seeking to put it back into reversion. But, coupled with that feature, there was (so I would add) the absence of any evidence of a relevant change of circumstances since the order was made: for the fresh circumstance of the wifes cohabitation was a specified ground for triggering the sale and could hardly be deployed as a ground for further postponing it. The trouble is, however, that, instead of allowing the husbands appeal in terms of a refusal to exercise the jurisdiction to vary the order for sale, the Court of Appeal in the Omielan case preferred to hold that the jurisdiction to vary it did not exist. In this regard Thorpe LJ referred at 310A to 311G to the following three authorities as most in point. (i) The first was Dinch v Dinch [1987] 1 WLR 252, in which the House of Lords made no reference to section 24A of the Act. (ii) The second was Thompson v Thompson [1986] Fam 38, in which an order had been made in 1981 for the home not to be sold until the youngest child had attained the age of 17 or further order. The Court of Appeal inevitably allowed the appeal of the wife, who was living in the home with the children, against a judges determination that he had no jurisdiction to entertain her subsequent application for an order for its sale prior to that childs 17th birthday; and the court remitted her application for the jurisdiction to be exercised. The court held at 53 that, even though the property adjustment order had been made before section 24A came into force, it provided the vehicle by which the wife could apply for the further order which the property adjustment order had envisaged. (iii) The third was Taylor v Taylor [1987] 1 FLR 142, in which an order had been made for the wife to have exclusive occupation of the home and on its sale to receive 40% of the net proceeds. A recorder had acceded to a subsequent application by the husband under section 24A for the immediate sale of the home. The Court of Appeal upheld the wifes appeal against the order for sale. But it expressly rejected her contention that the recorder had had no jurisdiction to make an order under section 24A. She alleged that it constituted an impermissible variation of such part of the property adjustment order as had conferred on her a right to occupy the home. But the court held that the effect of any order under section 24A on the property adjustment order was relevant to the discretionary exercise of the jurisdiction, which the recorder had not properly conducted, rather than to the existence of the jurisdiction conferred by the section when literally construed: see the judgments of Sir John Arnold P at 144F and 146D F and of Ralph Gibson LJ at 147B D. In the Omielan case Thorpe LJ proceeded to articulate a statement of principle which in my view is hard to square with the decisions in the Thompson case and, in particular, in the Taylor case. For there is an obvious correlation between the jurisdiction to vary an order for sale and the jurisdiction to make such an order in the first place; and his narrow view of the former was predicated on his narrow view of the latter. He said at 312H: Section 24A is a purely procedural section inserted into the statute to clarify or expand the courts power of implementation and enforcement. Any power to vary [an order made under] such a procedural enactment must be construed to be equally limited to matters of enforcement, implementation and procedure. In other words section 31(2)(f) gives the court jurisdiction to revisit the territory of the ancillary order under section 24A but not the territory of the primary order under section 24 which it supports. Prior to stating the above Thorpe LJ had stressed the fact that, for strong reasons of public policy, orders for property adjustment and (subject to para 26 below) for payment of a lump sum are not variable under section 31 of the Act. He was understandably concerned that the variation of an order for sale might, by the back door, amount to a variation of the property adjustment order which it had accompanied. It was, however, bold for the Court of Appeal to hold that, when Parliament had provided an ostensibly unrestricted jurisdiction to vary an order for sale, the jurisdiction was nevertheless restricted; and equally bold for it to hold that the jurisdiction was restricted by reference to territories, namely that it was restricted to the territory of the order for sale as opposed to the territory of the property adjustment order. It is worthwhile to note that an order for payment of a lump sum is occasionally variable even if, as is likely, the variation will directly prejudice the interests of the payee. Thus section 31(2)(d) of the Act expressly empowers the court to vary an order for payment of a lump sum by instalments. In the words of Bodey J (with whom Schiemann and Sedley LJJ agreed) in Westbury v Sampson [2001] EWCA Civ 407, [2002] 1 FLR 166, at para 18, the subsection not only empowers the court to re timetable / adjust the amounts of individual instalments, but also to vary, suspend or discharge the principal sum itself, provided always that this latter power is used particularly sparingly, given the importance of finality in matters of capital provision. Indeed, although there is no jurisdiction under section 31 to vary an order for a single payment of a lump sum, there is even an inherent jurisdiction in the court to direct a modest extension of the time for its payment provided in the order: Masefield v Alexander (Lump Sum: Extension of Time) [1995] 1 FLR 100. With respect to the Court of Appeal in the Omielan case, I cannot subscribe to its determination of that appeal by reference to the non existence of the jurisdiction to vary the order for sale rather than to a refusal to exercise it. Where Parliament has conferred jurisdiction on a court, I see no scope for a court to say that part of it does not exist. Nor in my view can the existence of jurisdiction sensibly be left to a demarcation of territories. I find the concept of different territories hard to apply to the terms of a financial order, which are usually interlinked and which, in the case of an order for sale under section 24A of the Act, can be made only as an accompaniment to an order for property adjustment or lump sum payment. I wonder whether underneath the concept of different territories lies no more than a rough and ready distinction between an apparently minor variation and an apparently major one. At all events the demarcation of territories within the order is no proper criterion for identifying the existence of a jurisdiction. Understandably the lower courts felt the need to identify the territory of the wifes application for release; and each concluded that it fell within the territory of the order for transfer to her of the equity in the home. There is no need to seek to determine whether their conclusion was correct in this regard. I would suggest, however, that perhaps it merited greater consideration than they saw fit to give to it. For insight into the territory of the wifes application might have been gained by seeking to identify the effect on the husband of the proposed postponement of the sale of the home. Since any resulting prejudice to the husband is on any view likely to be a highly relevant circumstance in the future disposal of the wifes application, it may be helpful to make three points in this regard. The first is obvious: the situation in the present case is unlike the more usual situation in which the respondent to the application for postponement of the sale (or a third party, or third parties as in the Omielan case) has any interest in its proceeds. So the inquiry into prejudice to the husband requires focus elsewhere, in particular into such prejudice as might flow from his remaining liable under his mortgage covenants. Perhaps the most obvious prejudice of that sort would be a call to pay under the mortgage. But, although not noticed in any of the judgments below, the second point is that, with the assistance at times of income support, the wife has discharged all the mortgage instalments in accordance with her undertaking, with the result that the husband has not been, and appears unlikely to be, called upon to make any payment under the mortgage notwithstanding his continued liability under it. That leaves third what may or may not prove to be substantial resulting prejudice in the form of a reduced capacity to obtain another mortgage loan for deployment in the purchase of a home for himself. In 2012 he disclosed mortgage promises from the Halifax of an advance of 180,000 in the event that he was released from his existing mortgage covenants and of only 117,000 in the event that he was not released from them. It follows that no inquiry has yet been conducted into what, even if those figures are reliable, he might have achieved with the larger advance but could not achieve with the smaller one. Nor has an inquiry yet been conducted into the likelihood that, if released from his covenants, he would have purchased, or would now purchase, a home of his own in the light of his previous cohabitation for about two years with a partner in her own home and of his present cohabitation with a second partner in rented accommodation. I propose that this court should allow the wifes appeal; should hold that jurisdiction exists to hear her application; and should remit to HHJ Waller, in the light of his past experience as the Senior District Judge of the Principal Registry, Family Division, the difficult and urgent inquiry into whether the jurisdiction should be exercised. In the light of the equivalence of the wifes undertaking with an order for sale, his inquiry will be conducted in accordance with section 31(7) of the Act, set out in para 15 above. He will give first consideration to the welfare while minors of the two children; but it is a consideration which may be outweighed by other factors. He will have regard to all relevant circumstances including in particular, so I suggest, whether the wife can establish a significant change of circumstances since her undertaking was given and whether, and if so to what extent, the husband has suffered, and is likely to continue to suffer, prejudice by remaining liable under his mortgage covenants. The husband, so this court was told, recently made an open offer to the wife that he would accede to the further postponement of the sale of the home until their sons 18th birthday on condition that she undertook to pay him 30% of the net proceeds of the sale. The wife has rejected it. It is not for this court to judge whether it would be appropriate to attach a condition of that character to the release of the wife from her undertaking. It seems that the parties cannot even agree upon the value of the home and thus upon the figure which 30% of the net proceeds would represent. If, however, the court finds that the husband has suffered prejudice as a result of the delay in selling the home, and/or would be likely to suffer prejudice as a result of any further delay, it is possible that it might favour compensating him by asking the wife to make provision for him out of the ultimate net proceeds as a condition of release. Since drafting the above, I have had the benefit of reading in draft the judgment of Lord Hughes. My respectful comments on it are as follows: a) I acknowledge the difficulty in some cases of exercising the power under section 31 of the Act to vary an order for sale under section 24A in the light of the absence of any power under it to vary an order either for property adjustment under section 24 of it or (subject to para 26 above) for payment of a lump sum under section 23(1)(c) of it. b) The variation of an order for sale, which is no more than an order for the conversion of one form of property into another, can never directly affect the allocation of property between the husband and wife in an order for property adjustment or lump sum. c) But it may have an indirect effect on the allocation, in particular in a case (unlike the present) in which a postponement of the date of sale would postpone a partys receipt into his possession of the capital allocated to him. Another example (also unlike the present) would be an order that the sale should proceed at a specified price. d) In determining whether, and if so how, to exercise its jurisdiction to vary an order for sale, a court should place in the balance any indirect effect of the suggested variation on the order for property adjustment or lump sum; and the effect might in some cases precipitate the dismissal of the application. But in my view there is no way in which this proposition can properly be expanded. e) In particular I, for my part, cannot subscribe to the acid test articulated by Lord Hughes in para 54, namely whether the application is in substance to vary or alter the final [capital] order or is to support it by working out how it should be carried into effect. This test is a reiteration in different words of the test of territories suggested, albeit as a demarcation of the jurisdiction itself, in the Omielan case. f) If, when applying the acid test, the court concludes that the application is in substance to vary the final capital order, it must, so it is said, be dismissed without wider inquiry. But this would run counter to Parliaments instruction in section 31(7) to have regard to all the circumstances. These include the welfare of the two children in the present case, to whom therefore Lord Hughes makes no reference even though their welfare is supposed to be the courts first consideration. g) Furthermore the acid test would in my view be difficult to apply in practice and would generate collateral dispute. Take this very application. Lord Hughes has no doubt that is in substance an application by the wife to vary the final capital order. But, in circumstances in which the husband stands to receive nothing upon the sale, I myself do not so regard it. h) The wifes application was indeed at first to postpone the sale by seven years. But five of those years have been spent in addressing the husbands denial of any jurisdiction to entertain it; and, were this court to determine that there is no need to remit it for hearing because it is now bound to fail, it should confront the reality that the application is now for a postponement of two years. i) An informal indication of the likely outcome of the applications for financial orders, given by the district judge prior to hearing evidence, should not carry weight sufficient to figure in this courts analysis. j) The court proceedings to date have never progressed to the point at which the wife has been able to present her case. We cannot assess the strength of it. k) It seems odd that this court should pre empt the conventional inquiry so as to leave the wife obliged to effect the immediate sale of the home in circumstances in which the husband has himself conceded its further postponement, albeit subject to a condition which it may or may not prove to be appropriate to put to her as the price of release. LORD HUGHES: (dissenting) I respectfully agree with Lord Wilsons insightful analysis of the difference between the existence of jurisdiction (power) in the (i) the nature of undertakings and the machinery by which the obligation which arises under them can be altered, namely by discharge either with or without requiring as a condition for such discharge the giving of a substitute undertaking in different terms; and (ii) court and the principles on which, if it exists, it ought to be exercised. I also agree that the present order, whilst framed by way of undertakings, could equally have been structured as an order for sale under section 24A, subject to one or more conditions pursuant to section 24A(4) and/or consequential or supplementary provisions under subsection (2). Exactly the same effect could have been achieved by such route(s). It follows that the remaining question in this case is: what are the principles for the exercise of the jurisdiction to vary an order for sale under section 24A of the Matrimonial Causes Act, or its equivalent achieved via undertakings? I do not think that it can be right to leave the exercise of that jurisdiction in quite the place that Lord Wilson does. It is one thing to say that the jurisdiction to vary an order for sale under section 24A is given by section 31(2)(f), as clearly it is and always has been. It is another to say that it follows that the exercise of that jurisdiction is open ended. In particular, to say that an order for sale under section 24A (or an undertaking to like effect) can be modified whenever the applicant demonstrates a significant change of circumstances since the order was made is, as it seems to me, too wide a gateway for variation. It would be likely to intrude upon an underlying clean break where, as is very often the case, that is what the order for sale is designed to serve. It may also operate as a regrettable deterrent to the inclusion in court orders of a provision for deferred sale, when that kind of provision is of real practical use to parties and to courts. It is trite to record that the scheme for financial provision after divorce contained in the 1973 Act seeks to combine two features. First, it aims to give the courts as flexible a set of powers as is practicable to re organise the financial affairs of parties when their marriage or partnership has collapsed. Such flexibility is necessary in order to achieve justice between the parties in the very wide range of different factual circumstances which may exist. It is needed to protect the more disadvantaged of the parties. It is particularly called for because whilst the marriage was successful it is very likely that many, perhaps most, couples will have treated their finances with great informality, and with much less regard for who owns what and for the source of expenditure than would be the case as between partners engaged in a commercial venture. Second, however, the Act aims to achieve finality in the re organisation of financial affairs when it can. That means avoiding continuing financial dependence between those who are now not happy together if this is not unavoidable. It also means putting as early an end as one can to litigation between them. This last is a goal of general application to all litigation but it is particularly important in the context of soured relationships, where the tendency to continue to ventilate old disputes may be especially strong and where the ordinary constraints of pragmatism are especially likely to be overcome by emotion. If not thus tempered by finality, the courts protective flexibility can easily become an unwitting tool for prolonged and painful litigation. The Act thus deals both with income provision, which is generally of necessity by way of continuing orders, and with capital or property allocation. Orders for continuing provision are necessarily ones which the court needs power to vary if circumstances change. The payers income may rise or fall; the recipients needs may wax or wane. Orders for capital or property allocation require no such power to vary. For the latter, the aim to bring finality prevails. A clean break is to be achieved where it can, although obviously it is not always possible. For this reason, the broad scheme of the Act has been for 40 years that continuing orders are subject to a power to vary, but that orders for capital provision are not. Orders for periodical payments (section 23(1)(a), (b), (d) and (e)) can be varied: see section 31(2)(a) to (c). Property transfer orders (section 24) cannot. Lump sum orders (section 23(c) and (f)) cannot ordinarily be varied, but only if they are given a continuing element by way of direction for payment by instalments (see section 31(2)(d)). The House of Lords confirmed as long ago as Minton v Minton [1979] AC 593 that this was the scheme of the Act. That case concerned an application for periodical payments made by a spouse after a previous order by consent had settled her capital claims by transfer to her of the former matrimonial home and had provided for nominal periodical payments only until that transfer was accomplished, whereupon they were to cease. There was thus no continuing order to be varied, and the House held that there was similarly no jurisdiction to entertain a second application after the first had been dismissed or, as there, ordered by consent to come to an end. At 608E Lord Scarman gave expression to the principle in terms which are now very well known: Once an application has been dealt with upon its merits, the court has no future jurisdiction save where there is a continuing order capable of variation or discharge under section 31 of the Act There are two principles which inform the modern legislation. One is the public interest that spouses, to the extent that their means permit, should provide for themselves and their children. But the other of equal importance is the principle of the clean break. The law now encourages spouses to avoid bitterness after family breakdown and to settle their money and property problems. An object of the modern law is to encourage each to put the past behind them and to begin a new life which is not overshadowed by the relationship which has broken down. Subsequently, this scheme of the Act was reinforced by provisions encouraging clean breaks, where possible, also in relation to periodical payments. Section 25A, inserted by the Matrimonial Proceedings and Property Act 1984, contains three subsections with this design. By subsection (1) the court must consider whether it is appropriate so to use its powers to make financial provision orders in such a way as to terminate the financial obligations of the parties towards each other as soon as just and reasonable. Subsection (2) requires the court to consider whether any periodical payments order ought to have a definite term set to it, to enable the recipient to adjust to termination of dependence on the other party. Subsection (3) spells out the power of the court to dismiss an application for periodical payments and to couple with the dismissal a direction that no further application may be made. It is well established law that if an application for financial provision is dismissed, no subsequent application can be made for that provision: L v L [1962] P 101 and Minton v Minton. In Miller v Miller [2006] UKHL 24; [2006] 2 AC 618 at para 130 Baroness Hale aptly described these provisions as devised to encourage and enable a clean break settlement. The question raised by the present case, as also by other situations, is in what circumstances is an order to be treated as in substance a continuing one, subject to the fullest power of variation in the interests of flexibility, and when is it to be treated as a clean break order, which should be final? That involves considering the nature and purpose of an order for sale made under section 24A. The power in section 24A to make an order for sale was introduced into the 1973 Act by the Matrimonial Homes and Property Act 1981 following the recommendation of the Law Commission (Law Com No 99, 13 February 1980) Family Law Orders for sale under the Matrimonial Causes Act 1973. The Commissions report made clear why this was done. It was that sometimes when operating the 1973 Act courts wished to order the sale of an asset in order to facilitate a financial provision order of a capital nature. There had been debate whether it was or was not necessary to employ the rather cumbersome machinery of a separate application under section 17 of the Married Womens Property Act 1882 (see for example Ward v Ward and Greene [1980] 1 WLR 4), but in any event that kind of application was probably not available when the asset to be sold was in the sole beneficial ownership of one party, so that some different device would have to be found to insist on a sale. The new provision was designed to put the power beyond doubt and to make it available to the court whether a party asked for it or not: see section 5 of the Commissions report. At para 9 the Commission gave examples of the kind of situation in which an order for sale is useful. Chiefly, it envisaged it being used when an asset needed to be sold to enable a lump sum order to be satisfied, particularly if the money was to come from realisation of the matrimonial home. Another case was that of a spouse who ought to be given a share of capital assets in a family business but had no claim to run it; in such a situation a transfer of shares would not achieve the aim but an order that some of them be sold and the proceeds paid over would. These examples still hold good, indeed the more so now that the principles of sharing and compensation are recognised (see Miller). The Commission summarised its proposal at para 8: Accordingly we propose that the power to order sale should be available whenever the court, in proceedings for divorce, judicial separation or nullity makes a lump sum, transfer or settlement of property, variation of settlement, or secured periodical payments order that is to say whenever it makes an order which involves capital assets. The key characteristic of the order for sale is thus that it is ancillary to a capital order. It is an aid to carrying such an order out. The description of section 24A by Thorpe LJ in Omielan v Omielan [1996] 2 FLR 306 at 312 as purely procedural may possibly involve modest oversimplification. The section gave a power which in some cases went somewhat beyond what might have been achieved by other routes such as the Married Womens Property Act; that was the whole point. But that description was nevertheless apt and was borrowed from the judgment of Oliver LJ in Thompson v Thompson [1986] Fam 38 at 53B. In Thompson a property adjustment (variation of settlement) order under section 24 had been made, by consent, before the commencement of section 24A. It had modified the trust for sale of the jointly owned matrimonial home by providing, in the familiar Mesher v Mesher [1980] 1 All ER 126 type form, that the wife and children should occupy it and that it should not be sold until the youngest child reached the age of 17, or completed his education, or further order. Quite soon afterwards, and well before the child had reached 17, the wife, who wished to move house, sought an order for earlier sale. It was the foundation of her argument that her application was for an order working out or giving effect to the original order but did not seek a variation of its substance (see 40G). The County Court judge had felt he had no jurisdiction to entertain the application because it amounted to varying a section 24 order. The Court of Appeal held that he had, because it did not. The Courts primary decision was that independently of the advent of section 24A, the order sought by the wife did not amount to an impermissible variation of the original order and that there was, accordingly, no jurisdictional obstacle to adjudicating upon it. Oliver LJ was at pains to formulate the question in the case as whether an application made under the liberty to apply reserved in a common form Mesher order is an application to vary the order, or an application for the working out of the order (46H). He held that whilst such an application might amount to an impermissible variation, it did not necessarily do so. The question was, in each case, which it was. He held, plainly correctly if I may say so, that orders deferring sale of jointly held property, in the common Mesher form, have an obvious need for scope to adjust them to work out the order. Whilst an application further to delay sale would, he held, ordinarily amount to an impermissible variation, an application for an earlier sale need not do so, and often would not. He instanced examples such as the resident spouse going bankrupt, or wishing to emigrate, or one of the residents becoming incapacitated. It would no doubt have been different if it had been the husband who had sought an earlier sale, thus significantly altering the protection given to the wife and children by the original order; that did not arise, but would, as it seems to me, plainly be the kind of application which would be treated under the approach of Oliver LJ as in substance one to vary the final property adjustment order, and as such one which therefore ought not to be entertained. It was necessary to address the then new section 24A only because it was argued that, notwithstanding the stipulation in the consent order for liberty to apply, the only source of jurisdiction to direct the husband to concur in the sale was found in the non matrimonial relief framework of section 30 Law of Property Act 1925, whilst the value of the house was outside the financial limits within which such power was available to the County Court. Concluding that that argument was correct, the court went on to hold that the new section 24A power to order sale was the kind of procedural provision which could be exercised in a case where the substantive order had been made before its commencement, without improper retrospectivity. It was in this context that Oliver LJ observed at 51H 52A that if the original order had been made after the commencement of section 24A there could have been no question of jurisdictional limits (ie the financial limits on the County Court). The jurisdiction being spoken of was a jurisdiction to make a new order for sale; variation of an order for sale which had already been made did not arise. There is accordingly nothing in the judgments in Thompson inconsistent with the approach subsequently adopted in Omielan, providing that the latter must be seen correctly as a statement of the basis on which a jurisdiction is to be exercised, rather than as defining the existence of the jurisdiction. On the contrary, the whole basis of Thompson was to identify the difference between substantive variation of the original order, which is not permitted, and further order to work out or give effect to the original order, which is. What the Court of Appeal subsequently held in Omielan is that exactly the same principles still need to be applied when considering section 31(2)(f). Thompson was applied in Taylor v Taylor [1987] 1 FLR 142. The original order was again made before the commencement of section 24A. It was not a common form Mesher order, because it fixed the beneficial interests of the spouses in the former matrimonial home, charged the property with the wifes two fifths interest, and gave her the occupation of it, but said nothing about whether or when it could or should be sold and the interests realised. The husband applied, something over 11 years afterwards, for an order for immediate sale. The Recorder had made such an order, ostensibly taking the view that such gave effect to the original order, but he had heard no evidence and given no consideration to any competing argument. The wifes appeal was thus allowed and the case was remitted for re hearing. Her additional argument that there was no jurisdiction to make a section 24A order for sale in relation to a pre commencement original order failed by the application of Thompson. Giving (extempore) judgment in the Court of Appeal, Sir John Arnold P expressly reserved any question of the basis on which the jurisdiction to make a (subsequent) section 24A order ought to be exercised. There was likely to be in that case an open question whether the original order, which Ralph Gibson LJ described as poorly drafted, had been intended to be a Mesher type order with sale after some deferred period contemplated, or had been meant to give the wife indefinite occupation of the house; thus there was an open question whether, in the terms used in Thompson, the application was to work out and give effect to the original order or was to vary it. Referring back to the approach in Thompson, the President said this of the argument that there should be no order for sale because the application was made not by the wife, who had the right of occupation, but by the husband who sought to bring that right to an end: While it may of course be a matter highly relevant to the exercise of discretion who makes the application, it cannot define, it seems to me, the jurisdictional limits of the section itself It is of course right that there is available to the wife in the present case an argument based on the observations in Thompson v Thompson to the effect that where the party with the right of occupation is not the applicant, the discretion will never be exercised in favour of a sale such as to defeat the right of occupation. Similarly, Ralph Gibson LJ, agreeing, summarised his conclusion as follows at p 147: Upon the reading of Thompson v Thompson . there is jurisdiction in the court to hear the application of the respondent for an order for sale under section 24A of the 1973 Act, but the discretion to make the order will not be exercised if the consequence would be to displace vested rights that is to say, rights vested under the order previously made. (emphasis supplied) As Lord Wilson says at para 24, there is an obvious correlation between the power to make a section 24A order for sale subsequently to the original order and the power subsequently to vary one made in the original order. The same principles ought to apply to the exercise of each of these powers. Both in Thompson and in Taylor the acid test was seen to be whether the power was being invoked to give effect to, and carry out, the original order, or was impermissibly to vary it. Thompson was also applied by the House of Lords in Dinch v Dinch [1987] 1 WLR 252. That was a case of a common form Mesher type order deferring sale of the former matrimonial home during the minority of the children and giving the wife occupation meanwhile. When the stipulated time arrived and the husband sought sale, the wife, who had powerful and legitimate complaints that the husband had failed to comply with periodical payments orders in her favour and had caused her some hardship, responded with counter applications for further postponement of sale, for a further transfer of property order in relation to the house, and for a lump sum. Those applications, which had been granted in part in the Court of Appeal, failed on the principles explained in Minton and similar cases, as well as on the basis of Thompson. They failed despite very considerable sympathy for the wife, who had a strong case on the general merits. There was no reference to section 24A, perhaps surprisingly, but perhaps because the original order had been pre commencement and the husbands entitlement to sale was sufficiently demonstrated by it; he needed no new section 24A order. But the principled approach to applications which are in substance to vary a final capital settlement was plainly stated by the House. Lord Oliver, with whom all their Lordships agreed, said this (at p 263) One has, as it seems to me, simply to look at the order and any admissible material available for its construction, and determine what the court intended or, in the case of a consent order, what the parties intended to effect by the order. If the conclusion is that what was intended was a final and conclusive once and for all financial settlement, either overall or in relation to a particular property, then it must follow that that precludes any further claim to relief in relation to that property. These three cases of Thompson, Taylor and Dinch were cited to the Court of Appeal in Omielan. As Thorpe LJ said, giving the judgment of himself and of Peter Gibson and Butler Sloss LJJ, none of the three was directly in point upon section 31(2)(f). But the principles which they enunciated were relied upon by that court for its decision. For the reasons largely set out above, I think that they were relevant, although what they led to was not the absence of jurisdiction, but clear principle on which the jurisdiction should be exercised. Given the terms of section 31(2)(f), it is impossible to say that there is no power to vary a section 24A order such as the one in the present case. I agree that in Omielan the court fell into this error. The judgment contains the following (at 312): section 31(2)(f) must be construed within the statutory context, namely that when post divorce capital adjustments have been incorporated in a final order, whether or not by consent the court has no jurisdiction to revisit the territory, in the absence of an element that might vitiate any court order such a fraud, misrepresentation, or material non disclosure. This cardinal principle was strongly maintained by Lord Oliver in both Thompson and Dinch. (emphasis supplied) As has been seen, in neither Thompson nor Dinch did the court say that there was no jurisdiction (there to make a subsequent section 24A order), and in Taylor it held that there was. What it said was that the jurisdiction could not be exercised so as effectively to vary the substantive original final capital order. But the force of those earlier cases, as also of the Minton line of authority, is not diminished by mischaracterising them as defining the jurisdiction rather than setting out the principles on which it is to be exercised. Thorpe LJ went on, correctly, to say that the principles underlying the earlier cases in relation to the making of (subsequent) section 24A orders must apply equally to applications to vary orders under that section. He said this: It is manifest to me that the considerations that dictated the conclusion in Dinch should equally dictate the conclusion in the present appeal. The same pointer is to be derived from both Thompson and Taylor. Section 24A is a purely procedural section inserted into the statute to clarify or expand the courts power of implementation and enforcement. Any power to vary [under] such a procedural enactment must be construed to be equally limited to matters of enforcement, implementation and procedure. That of course repeats the mischaracterisation of the principle. But if it is treated, as the earlier cases require, as a statement of the right approach to the exercise of the jurisdiction, it is, in my view, both firmly based on authority and correct in principle. It is of course true that on the particular facts of Omielan, there was the additional factor that the agreed (and ordered) trigger for sale had come about, and there had vested in the children beneficial interests in the former matrimonial home. Those were, in that case, powerful additional reasons why any attempt to vary the original order was doomed to failure. But the principle derived from the earlier lines of authority, and confirmed by the structure of the Act, does not depend on such additional factors. The outcome should, and clearly would, have been the same in the commoner case where the beneficial interests in the property are confined to the husband and wife and are already vested, and it should have been the same if the wifes application to delay sale had been made before the trigger event rather than after it. In all these instances, the effect of variation would be to undo a final capital order, whether made by consent or not. Any variation application under section 31 is governed, inter alia, by section 31(7). This requires the court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family under 18. A change in any of the factors which are made by section 25 material to the making of the original order is stipulated to be among all the circumstances of the case. There is nothing in this which requires the discarding of the principles, derived from Minton, Thompson, Taylor and Dinch, that the power to vary must not be used in a way which amounts to a disguised variation of a final capital order and an evasion of the rule that there can be no second application for capital orders, both of which are inherent, and in some instances explicit, in the terms of the Act itself. In particular, the interests of the children will have been first consideration at the time of the making of the original order: see section 25(1). Any order, whether following a contested hearing or a settlement, must be endorsed by the court, whose approval is no rubber stamp. The compatibility of any final order with the interests of the children can, and indeed must, be assumed. A change in the section 25 circumstances is but one of the factors relevant to an application to vary. It can perfectly properly become relevant only when there is no evasion of the rule against variation of final capital settlements. It is after all well established that, barring the kind of supervening event considered in Barder v Calouri [1988] AC 20, which is not suggested here, there is no power either to entertain a second application for a capital order, or to vary such an order, even if the calculations on which it was based have proved to have been misjudged by one party: see for example, amongst many other cases, the kind of events considered in Myerson v Myerson (No 2) [2009] EWCA Civ 282; [2010] 1 WLR 114. There may of course be difficult marginal cases where there is scope for real argument whether the new order sought is (permissibly) to work out or enforce the original order or (impermissibly) to vary it. Some cases of deferred sale orders may well give rise to this difficulty. It would be a mistake here to attempt to anticipate the kind of situations which might fall on one side of the line or the other. So long as the principles are kept firmly in mind that (1) the section 24A order has always been devised as ancillary to a capital order and (2) that final capital orders cannot be varied in their substance (whether or not there is a change of circumstance), so that (3) the acid test is whether the application is in substance to vary or alter the final order or is to support it by working out how it should be carried into effect, then cases ought to be capable of resolution and there should be sufficient certainty for those, on both sides, who are subject to the orders. If, on the other hand, the undoubted power to vary under section 31(2)(f) is taken to authorise a review of all the circumstances whenever there is a section 24A order, it is very difficult to see what weight judges who are asked to vary an order ought to accord to the fact that it was made as an ancillary to a final capital settlement. To say that that is one of the circumstances of the case poses, but wholly fails to answer, that question. It seems to me inevitable that if this is the position, the utility of an order for sale will be very much diminished. Orders for sale, and particularly orders for deferred sale, are not a universal panacea for matrimonial financial strife, but they can be very useful and are much resorted to. If a party is being advised in delicate negotiations about the settlement of the matrimonial finances, she will have to be told that if there is an order for sale, she is exposed to an application, at any time before the sale takes place, on the grounds at least of a suggested change of circumstances. Of course, such an application may fail. Sometimes its failure may be attended by adverse orders for costs. But the risk of further litigation, not necessarily confined to a first instance hearing, will always be there. It is very likely that she will not wish to run it, but instead will stand out for something which does not involve an order for sale, for then the capital order will indeed be final. The extremely lengthy litigation which has ensued in the present case is no doubt exceptional, but all applications take time to be dealt with, and sometimes much time. The same considerations will, perhaps to a lesser extent, be present to the minds of judges considering the best form of order to make. It is not in the general interest of spouse litigants, whether potential occupiers of the property concerned or out of occupation spouses awaiting sale, that this constraint should operate on the ancillary orders devised by the Law Commission in 1980 and operated ever since on the basis explained in Thompson, Taylor, Dinch and (although there mischaracterised) in Omielan. It should be recorded that Mr Hockman QC, for the wife in the present case, accepted the general principle that the power to vary a section 24A order should not be exercised in such a manner as to alter the substance of the original capital order. His case was confined to the argument that the wifes present application would not do so, because the beneficial interests in the proceeds of sale were not affected, the husband having transferred the whole of his interest to the wife as part of the settlement. In my view, his concession was realistic, although if Lord Wilson is right it went further than was needed, but his argument was not. Although there may be difficult marginal cases, I cannot for myself see that the present is one of them. This seems to me to be one where there is no doubt that the application is one which amounts to an attempt to vary, not to carry into effect, the originally agreed and court endorsed order. Other forms of settlement were plainly available, and indeed an indication was given by the District Judge that sale of the house looked inevitable. As it was, by agreement, sale was directed at a fixed date, not on the occurrence of a trigger event, unless in the meantime the husband was released from his liability under the mortgage. In effect he gave up all interest in the house and in return was to be relieved by a specific deadline of a substantial outstanding liability in relation to it. An application to extend the date by a month or two because the finances to release the husband were unexpectedly held up might well have been an application to carry the order into effect. But the application was to extend the period from two years to nine. Even if the wife is able to point to some change in her circumstances, that is no justification for re opening a final property settlement. Of course, if the correct rule of law is that the husband must face an open ended application to vary, he will indeed have to address exactly what difference it has made to him, over the past five years, to remain liable on a substantial mortgage. But it takes little imagination to understand that for all except the very wealthy such a liability makes a real impact on ones credit rating and ability to borrow, for any purpose, not necessarily for housing. It does not seem likely that the continuing liability has made no difference at all to his personal planning. In any event, whatever may have been the exact impact on him, the purpose of the original order was to give certainty and freedom of financial decision, in the face of competing cases about what should happen to the house and whether it was inevitable that the wife and children needed to move. The application has always been such as to remove the certainty which was the aim of the order. It seems to me that the Court of Appeal was right to hold that the application was bound to fail. For those reasons, I would myself dismiss the appeal and uphold the decision of the Court of Appeal, although on somewhat different grounds from those stated by it.

UK-Abs

The husband and wife entered into a consent order on 28 July 2010. Part of the order provided that the husband should transfer to the wife his legal and beneficial interest in the matrimonial home subject to the mortgage so that the wife could continue to live there with the two children of the family. In return the wife undertook at para 4.3 of the recitals to discharge all mortgage payments, to indemnify the husband against any liability under it and to use her best endeavours to release him from the covenants under it. Then, crucially, she undertook at para 4.4 of the recitals that, if the husband had not been released from his mortgage covenants by 30 September 2012, she would secure his release by placing the home on the market for sale and proceeding to sell it. On 18 November 2011 the wife, who had (and still has) duly discharged the mortgage payments, issued an application to vary her undertaking at para 4.4. She explained that she had not been able to secure the husbands release from his mortgage covenants and would not be able to do so by 30 September 2012. The children were in schools in the vicinity of their home and it would be gravely damaging to their interests for them to have to move home while still at school. In such circumstances she sought a variation of the undertaking at para 4.4, so as to postpone for seven years her obligation to secure the husbands release from his covenants under the mortgage by sale of the home until 15 August 2019, being the date of their sons 18th birthday. The husband argued that the court had no jurisdiction to hear the wifes application and requested that the court rule on that preliminary issue. He argued that the wifes undertaking was equivalent to an order for sale under section 24A of the Matrimonial Causes Act 1973 (the Act). And he relied on the Court of Appeals decision in Omielan v Omielan [1996] 2 FLR 306 that jurisdiction to vary the latter did not exist where it related to the territory of the property adjustment order. When the wifes appeal from an adverse decision below came before the Court of Appeal it held that its jurisdiction to hear the application was a formal jurisdiction which existed only technically; that scope for its exercise was extremely limited indeed; and that there was no basis for its exercise upon the wifes application. The Supreme Court by a majority of 4 to 1 allows the wifes appeal and holds that jurisdiction exists to hear the wifes application. Lord Wilson gives the lead majority judgment, with which Lady Hale, Lord Kerr and Lord Carnwath agree. Lord Hughes gives a dissenting judgment. The description of the application as being to vary the wifes undertaking is confused. The courts power is only to grant or refuse an application for release from the undertaking. Although the courts exercise of its power may result in something which looks like a variation of an undertaking, if it decides to accept a further undertaking, it is the product of a different process of reasoning [5]. The courts below wrongly concluded that they did not have jurisdiction to release the wife from her undertaking. They failed to distinguish between the existence of the courts jurisdiction to release the wife from her undertaking, and the exercise of its jurisdiction [6]. The case law indicates that there is full jurisdiction to hear the wifes application [12]. Further, in circumstances where the undertaking in para 4.4 could have been framed as an order for sale of the property under section 24A of the Act, variable under section 31(2)(f), it would be illogical for the existence and exercise of jurisdiction to grant release from the undertaking to differ from those in relation to the variation of any such order [17 18]. The equivalence of the wifes para 4.4 undertaking with a section 24A order for sale seems clearly to confirm the existence of the courts jurisdiction to hear her application for release from it [19]. Lord Wilson is unable to subscribe to the Court of Appeals determination of the appeal in Omielan by reference to the non existence of jurisdiction rather than a refusal to exercise its jurisdiction. Where Parliament has conferred jurisdiction on a court, there is no scope for a court to say part of it does not exist. The terms of a financial order are often interlinked and therefore it is difficult to apply the concept of different territories to such an order. The demarcation of territories within the order is no proper criterion for identifying the existence of a jurisdiction [27]. Parliament did not in section 31(7) or elsewhere in the Act make a change of circumstances a condition for the exercise of jurisdiction to vary a section 24A(1) order for sale. However, unless there has been a significant change of circumstances since the order was made, grounds for variation of it under section 31 seem hard to conceive [15]. The court remits to HHJ Waller the inquiry into whether the courts jurisdiction to vary the undertaking should be exercised. In light of the equivalence of the wifes undertaking with a section 24A order for sale, his inquiry will be conducted in accordance with section 31(7) of the Act. He will give first consideration to the welfare of the two children; but it is a consideration which may be outweighed by other factors. He will have regard to all relevant circumstances including in particular, whether the wife can establish a significant change of circumstances since her undertaking was given and whether, and if so to what extent, the husband has suffered, and is likely to continue to suffer, prejudice by remaining liable under his mortgage covenants [29]. If the court finds that the husband has suffered, and/or would be likely to suffer, prejudice as a result of delay in selling the home, the court might favour compensating him by asking the wife to make provision for him out of the ultimate net proceeds as a condition of release [30]. Lord Hughes gives a dissenting judgment, not on the existence of the jurisdiction to vary a section 24A order for sale, or its equivalent achieved via an undertaking, but on the principles for its exercise. It must be kept in mind that the section 24A order is ancillary to a capital order and that final capital orders cannot be varied in their substance (whether or not there is a change of circumstances). Lord Hughes states that the acid test should be whether the application is in substance (impermissibly) to vary or alter the final order or whether it is (permissibly) to support it by working out how it should be carried into effect [54]. The application in the present case is one which attempts to vary, not to carry into effect, the originally agreed and court endorsed order and therefore the Court of Appeal was right to hold that it was bound to fail [57]. Lord Hughes would dismiss the appeal [58].

The issue in this appeal is whether fees imposed by the Lord Chancellor in respect of proceedings in employment tribunals (ETs) and the employment appeal tribunal (EAT) are unlawful because of their effects on access to justice. ETs have jurisdiction to determine numerous employment related claims, most of which are based on rights created by or under Acts of Parliament, sometimes giving effect to EU law. They are the only forum in which most such claims may be brought. The EAT hears appeals from ETs on points of law. Until the coming into force of the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013, SI 2013/1893 (the Fees Order), a claimant could bring and pursue proceedings in an ET and appeal to the EAT without paying any fee. The Fees Order prescribes various fees, as will be explained. In these proceedings for judicial review, the trade union UNISON (the appellant), supported by the Equality and Human Rights Commission and the Independent Workers Union of Great Britain as interveners, challenges the lawfulness of the Fees Order, which was made by the Lord Chancellor in the exercise of statutory powers. It is argued that the making of the Fees Order was not a lawful exercise of those powers, because the prescribed fees interfere unjustifiably with the right of access to justice under both the common law and EU law, frustrate the operation of Parliamentary legislation granting employment rights, and discriminate unlawfully against women and other protected groups. The issues relating to discrimination are addressed in the judgment of Lady Hale, with which I respectfully agree. The present judgment deals with the remaining issues. The statutory basis of the Fees Order Section 42 (1) of the Tribunals, Courts and Enforcement Act 2007 (the 2007 Act) provides that the Lord Chancellor may by order prescribe fees payable in respect of anything dealt with by the First tier and Upper Tribunals or by an added tribunal. Section 42(3) defines an added tribunal as a tribunal specified in an order made by the Lord Chancellor. The ET and the EAT were so specified by the Added Tribunals (Employment Tribunals and Employment Appeal Tribunal) Order 2013 (SI 2013/1892). The background to the Fees Order Relationships between employers and employees are generally characterised by an imbalance of economic power. Recognising the vulnerability of employees to exploitation, discrimination, and other undesirable practices, and the social problems which can result, Parliament has long intervened in those relationships so as to confer statutory rights on employees, rather than leaving their rights to be determined by freedom of contract. In more recent times, further measures have also been adopted under legislation giving effect to EU law. In order for the rights conferred on employees to be effective, and to achieve the social benefits which Parliament intended, they must be enforceable in practice. In 1968 the Donovan Report (the Report of the Royal Commission on Trade Unions and Employers Associations, Cmnd 3623) recommended that labour tribunals should be established to provide an easily accessible, speedy, informal and inexpensive procedure for the settlement of employment disputes (para 578). As a result, the jurisdiction of industrial tribunals, originally established by the Industrial Training Act 1964 to hear appeals concerning training levies, was extended to include jurisdiction over a wide range of employment rights. In 1998, they were renamed employment tribunals. ETs are intended to provide a forum for the enforcement of employment rights by employees and workers, including the low paid, those who have recently lost their jobs, and those who are vulnerable to long term unemployment. They are designed to deal with issues which are often of modest financial value, or of no financial value at all, but are nonetheless of social importance. Their procedural rules, which include short limitation periods and generous rights of audience, reflect that intention. It is also reflected in the fact that, unlike claims in the ordinary courts, claims in ETs could until recently be presented without the payment of any fee. The Leggatt Report (the Report of the Review of Tribunals, 2001) identified the absence of fees as one of the three elements which had rendered ETs successful. In January 2011 the Government published a paper entitled Resolving Workplace Disputes: A Consultation, in which it announced its intention to introduce fee charging into ETs and the EAT. Charging fees was considered to be desirable for three reasons. First, and most importantly, fees would help to transfer some of the cost burden from general taxpayers to those that used the system, or caused the system to be used. Secondly, a price mechanism could incentivise earlier settlements. Thirdly, it could dis incentivise unreasonable behaviour, such as pursuing weak or vexatious claims. Detailed proposals were published in December 2011 in a consultation paper issued by the Ministry of Justice entitled Charging Fees in the Employment Tribunals and the Employment Appeal Tribunal. Two alternative options for ETs were discussed, one of which went on to form the basis of the system set out in the Fees Order. The option which was ultimately preferred (Option 1) based the fee on the subject matter of the claim (since the level of tribunal resources used generally depends on the complexity of the issues raised by the claim) and on the number of claimants (since claims brought by two or more people that arise from the same circumstances are processed together as multiple claims). It was proposed that an issue fee should be paid at the time of lodging the claim, and that a further hearing fee should be paid in advance of a final hearing. The paper explained that the main purpose of a fee structure was to transfer part of the cost burden from the taxpayer to the users of the service, since a significant majority of the population would never use ETs but all taxpayers were being asked to provide financial support for this service. However, fees must not prevent claims from being brought by making it unaffordable for those with limited means. A fee remission system would therefore be a key component of the fee structure. The other issues taken into account were the importance of having a fee structure which was simple to understand and administer, and the importance of encouraging parties to think more carefully about alternative options before making a claim. The paper noted that the impact of fees on the number of claims was difficult to forecast, in the absence of research concerned specifically with ET users. Research into the impact of fee charging in the civil courts suggested that tribunal users required to pay a fee would not be especially price sensitive. The charging of fees in two stages, at the commencement of the proceedings and prior to a final hearing, was intended to reflect the cost of the services provided at each stage, and to encourage users to consider settlement during as well as before the tribunal process. An impact assessment was published in May 2012. It concluded that it was not possible to predict how claimants would respond to the introduction of fee charging. Two alternative assumptions were therefore made for modelling purposes. On the low response scenario, demand was assumed to decrease by 1% for every 100 of fee. On the high response scenario, demand was assumed to decrease by 5% for every 100 of fee. The methodology was then to place an economic value on the costs and benefits of implementing Option 1. One of the non monetised benefits was identified as being reduced deadweight loss to society as consumption of ET/EAT services is currently higher than would be the case under full cost recovery. In that regard, the analysis proceeded on the basis that the consumption of ET and EAT services without full cost recovery resulted in a deadweight loss to society. As was stated: This assumes that there are no positive externalities from consumption. In other words, ET and EAT use does not lead to gains to society that exceed the sum of the gains to consumers and producers of these services. (p 38) Under the heading Justice Impact Test, the document adverted only to the financial impact on HM Courts and Tribunals Service (HMCTS). A response to the consultation and an equality impact assessment were published in July 2012. The response announced that the Government had decided to implement Option 1 with some amendments. Access to justice would be maintained by ensuring via the remissions scheme that those who could not afford to pay fees were not financially prevented from making a claim. Suggestions that the deterrence of individual claims would have wider societal impacts were rejected. On 25 April 2013 a draft of the Fees Order was laid before Parliament. It was debated and approved by both Houses under the affirmative resolution procedure. It was made on 28 July 2013 and came into force on the following day. The Fees The Fees Order makes provision for fees to be payable in respect of any claim presented to an ET and any appeal to the EAT. So far as the ET is concerned, article 4 provides that an issue fee is payable when a claim form is presented, and a hearing fee is payable on a date specified in a notice accompanying the notification of the listing of a final hearing of the claim. Fees are also chargeable on the making of various kinds of application. The amounts of the issue fee and hearing fee vary depending on whether the claim is brought by a single claimant or by a group, and also depending on whether the claim is classified as type A or type B. There are over 60 types of claim which are defined as type A. All other types of claim are type B. Type A claims were described in the consultation documents as claims which generally take little or no pre hearing work and usually require approximately one hour to resolve at hearing. Unfair dismissal claims, equal pay claims and discrimination claims are classified as type B. Type B claims generally require more judicial case management, more pre hearings, and longer final hearings, because of their greater legal and factual complexity. The fees for a single claimant bringing a type A claim total 390, payable in two stages: an issue fee of 160 and a hearing fee of 230. For a type B claim the fees for a single claimant total 1,200, comprising an issue fee of 250 and a hearing fee of 950. The fees payable by groups vary according to the type of claim and the number of claimants in the group. For the smallest groups, of between two and ten claimants, the fees total 780 for type A claims and 2,400 for type B claims. For the largest groups, of over 200 claimants, the fees total 2,340 for type A claims and 7,200 for type B claims. Counsel for the Lord Chancellor were unable to explain how any of the fees had been arrived at. In the EAT, fees of 1,600 are payable, again in two stages: 400 on the date specified in a notice issued by the Lord Chancellor following the EATs receipt of a notice of appeal, and 1,200 on the date specified in a notice issued by the Lord Chancellor following a direction by the EAT that a matter proceed to a final oral hearing. There is no distinction between different types of appeal or between single and group appellants. Comparison with court fees Many claims which can be brought in ETs are for modest financial amounts. The fee structure is however very different from that applied to small claims in the County Court. ET fees for single claimants are set at one of two fixed rates: 390 for type A claims, and 1,200 for type B claims. The difference reflects the tribunal time which the claims are expected to require, and therefore has the effect of penalising claimants according to the complexity of their claims. Although most claims of a kind attracting low monetary awards tend to be classified as type A, the fees prescribed by the Fees Order bear no direct relation to the amount sought, and can therefore be expected to act as a deterrent to claims for small amounts and non monetary claims. In the County Court, on the other hand, fees for small claims are graduated according to the value of the claim. For claims issued online, they begin at 50 for claims up to 300, and rise in stages to 745 for claims between 5,000 and 10,000. The fee structure has thus been designed in a way which is likely to have a less deterrent effect on the bringing of small claims. There is also no penalty for bringing a complex claim rather than a simple one. It is only once a claim exceeds 3,000 that the fees payable in the County Court exceed the ET fees for a type A claim. Even the highest fees in the County Court for small claims are well below the ET fees for type B claims. Remission Article 17 of the Fees Order makes provision for the remission of fees in accordance with Schedule 3. As substituted by the Courts and Tribunals Fee Remissions Order 2013 (SI 2013/2302), with effect from 7 October 2013, Schedule 3 provides that claimants and appellants are not entitled to remission unless they satisfy the disposable capital test: that is to say, their disposable capital must be less than a specified amount, which varies according to the amount of the fee. Disposable capital is the value of every resource of a capital nature belonging to the party on the date on which the application for remission is made, subject to certain exclusions. For these purposes, the disposable capital of a claimants partner is treated as the claimants disposable capital, unless the partner has a contrary interest in the matter to which the fee relates. In respect of any fee up to and including 1,000 (which includes all the fees payable by single claimants, except for the 1,200 hearing fee in the EAT), no remission is available if the claimant is treated as having 3,000 or more in disposable capital. There is no explanation of how that figure, or any of the other figures relating to remission, were arrived at. Where the fee is between 1,001 and 1,335 (including the EAT hearing fee of 1,200), no remission is available if the claimant is treated as having disposable capital of 4,000 or more. Thus, if a claimant and his or her partner have savings of 3,000, the claimant will have to pay the full 390 for a type A claim in the ET and the full 1,200 for a type B claim, regardless of their income. It has to be borne in mind that some potential claimants may have temporarily inflated capital balances, due for example to payments received on the termination of their employment or to savings made in anticipation of childbirth. So, for example, if a woman has been selected for redundancy on a discriminatory basis, she will be disqualified from receiving any remission in proceedings to challenge the discrimination if the redundancy payment amounts to 3,000 or more. If the disposable capital test is satisfied, then the amount of any remission is calculated by applying the gross monthly income test. To qualify for full remission, the gross monthly income (which includes any partners income as well as the claimants own, unless they have contrary interests in relation to the matter in dispute) must be below a specified amount, which varies depending on whether the claimant is single and whether he or she has children. The specified amount for a single person without children is 1,085 per month. That figure rises by 245 per month for each child. The specified amount for a couple without children is 1,245 per month. That figure also rises by 245 per month for each child. For example, for a couple with two children, the specified amount is 1,735 per month. Partial remission is available on the basis that, for every 10 of gross monthly income above the specified amount, the claimant must pay 5 towards the fee. For example, a claimant with a partner and no children has to pay a full issue fee for a type A claim once her and her partners gross monthly income exceeds 1,565, and a full hearing fee once it exceeds 1,705. A couple with two children have to pay the full issue fee for a type A claim once their gross monthly income exceeds 2,055, and the full hearing fee once their gross monthly income exceeds 2,195. So far as type B claims are concerned, a claimant with a partner and no children has to pay the full issue fee once her and her partners gross monthly income exceeds 1,745, and the full hearing fee once their gross monthly income exceeds 3,145. To put the figures discussed in the preceding paragraphs into perspective, the national minimum wage of 7.50 per hour produces an income of 1,300 per month, assuming a 40 hour week. That is before taking account of any benefits and tax credits (which, subject to specified exceptions, are included in the calculation of income under the remissions scheme). A couple each earning the national minimum wage would therefore have an income of 2,600 per month, before benefits and tax credits were taken into account. Such a couple would not normally qualify for any remission of fees for a type A claim, but might qualify for partial remission of the hearing fee for a type B claim. Exceptional circumstances Paragraph 16 of Schedule 3 to the Fees Order provides that a fee may be remitted where the Lord Chancellor is satisfied that there are exceptional circumstances which justify doing so. Non statutory guidance as to what are regarded as exceptional circumstances is published by HMCTS. The guidance has been amended on a number of occasions, but all versions indicate that remission under this head is confined to persons facing exceptional hardship. Unpublished guidance to HMCTS staff states: In considering whether an applicant cannot realistically afford to pay, it is not enough that it may be difficult for a claimant to pay the fee. It is reasonable that a person might need to forego (sic) other spending in order to pay the fee. Instead, in order to be entitled to remission, a person must be in a position where, realistically, they simply cannot afford the fee. The effect of non payment of fees Under the rules of procedure of the ET, a claim must be rejected unless it is accompanied by an issue fee or a remission application, and must be dismissed if a hearing fee (or other relevant fee) has not been paid and no remission application has been presented. Similar rules apply in the EAT: an appeal must be struck out if the appellant has not paid a fee or presented a remission application. The recovery of fees by successful parties The traditional view that ETs should be an inexpensive forum is reflected in the fact that the usual rule on costs which applies elsewhere in the civil justice system that costs follow success has never applied in ETs. In general, a party to ET proceedings is only required to pay costs where he has acted vexatiously, abusively, disruptively or otherwise unreasonably in either bringing or conducting the proceedings. The rules of procedure of the ET and the EAT were however amended, when the Fees Order came into force, so as to give them a discretionary power to make an order that one party should pay the other the amount of any fees paid under the Order. A series of decisions in the EAT have held that such an order should normally be made in favour of a successful party, although it will not be appropriate in every case (for example, where their success was only partial, or where the respondent is unable to pay the sums in question). Although it is therefore possible to recover fees in the event that a claim is successful, it is necessary to bear in mind that it is generally difficult to predict with confidence that a claim will succeed. That is so for a number of reasons. One is that estimating prospects of success is not an exact science, especially before proceedings have been initiated. Depending on the nature of the case, initial estimates can often change during the course of proceedings as new information comes to light. In that regard, it is relevant to note that the pre claim questionnaire procedure, under which an employer could be required to provide an explanation for a difference in treatment in advance of a claim being issued, was abolished in 2013. Secondly, a reliable estimate depends on legal judgment and experience, which may not be available to an employee contemplating bringing a claim in an ET: employment disputes generally fall outside the scope of legal aid. Thirdly, employment law is characterised by a relatively high level of complexity and technicality. It is also important to bear in mind that, even if an order is made for the reimbursement of fees, there is a significant possibility that the order will not be obeyed. This will be discussed shortly. More fundamentally, the right of access to justice, both under domestic law and under EU law, is not restricted to the ability to bring claims which are successful. Many people, even if their claims ultimately fail, nevertheless have arguable claims which they have a right to present for adjudication. The claims brought before ETs The majority of successful ET claims result in modest financial awards. For example, it appears from statistics published by the Ministry of Justice that in 2012/13 (pre fees), 34% of successful race discrimination claims resulted in awards of less than 3,000. 52% resulted in awards of less than 5,000. The corresponding figures for religious discrimination claims, and claims of unfair dismissal, were similar. Some types of claim generally result in much lower awards. Statistics published by the Department for Business, Innovation and Skills in June 2014 indicated, for example, that the median award in successful claims for unlawful deductions from wages in 2013 was 900, and that 25% of successful claimants were awarded less than 500 (Findings from the Survey of Employment Tribunal Applications, Research Series No 177). Some claims are for even smaller amounts: for example, claims for time off for ante natal care under sections 55 57 of the Employment Rights Act 1996 (implementing Directive 92/85/EEC), where the award is the amount of remuneration to which the employee would have been entitled had she been granted the time off; claims for a statement of reasons for dismissal, under sections 92 and 93 of the 1996 Act, where the award is of two weeks pay; and claims for unauthorised deductions of trade union subscriptions under sections 68 and 68A of the Trade Union and Labour Relations (Consolidation) Act 1992, where the award is the amount deducted. Leaving aside claims for unfair dismissal, breach of contract, unlawful deductions from wages, redundancy pay and discrimination, the median award in all other types of claim in 2013 was 1,000. Some important types of claim before ETs do not involve monetary awards. An example is a claim for a written statement of particulars of employment. The particulars set out important information about such matters as working time, pay and holidays, which is vital to the enforcement of other employment rights. Employers are required to provide employees with such particulars by section 1 of the Employment Rights Act 1996. Where an employer fails to provide a statement, or there is a question as to whether all the necessary particulars have been included, the employee is entitled to refer the matter to an ET under section 11. These provisions give effect to Directive 91/533/EEC. Article 2 of the Directive imposes an obligation to provide the particulars, and article 8 provides: 1. Member states shall introduce into their national legal systems such measures as are necessary to enable all employees who consider themselves wronged by failure to comply with the obligations arising from this Directive to pursue their claims by judicial process after possible recourse to other competent authorities. As the words consider themselves wronged make clear, the obligation imposed by article 8 is not confined to employees whose claims turn out to be well founded. A reference of this kind is classified as a type A claim. Some other claims in which no compensation is payable are classified as type B, with the consequence that fees of 1,200 are payable in order to proceed to a hearing. An example is the right of fixed term workers to obtain a declaration that they are permanent employees, under regulation 9(5) of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034), implementing clause 5 of the Framework Agreement on Fixed Term Work annexed to Directive 99/70/EC. Other claims may also result in no award of compensation, even if successful. An example is a claim by an employee that he has not been permitted to take rest breaks as required by the Working Time Regulations 1998 (SI 1998/1833). The employee is entitled to bring such a claim before an ET under regulation 30 of those regulations, implementing the Working Time Directive 2003/88/EC. Compensation may be awarded, but the ET is required to take into account whether the employee has sustained any loss. Such a claim is classified as type B. The enforcement of ET awards ET awards are enforceable in England and Wales by execution issued from a county court or otherwise as if they were payable under a county court order. An applicant has to pay a further fee of 44. A similar regime applies in the sheriff courts in Scotland. Many ET awards go unmet, even if enforcement proceedings are taken. A study carried out by the Department of Business, Innovation and Skills, shortly before the introduction of fees, found that only 53% of claimants who were successful before the ET were paid even part of the award prior to taking enforcement action (Payment of Tribunal Awards, 2013). Even after enforcement action, only 49% of claimants were paid in full, with a further 16% being paid in part, and 35% receiving no money at all. This was noted to be of particular concern in the light of the forthcoming introduction of fees. Although new provisions were brought into force in 2016 in order to enable the Department for Business, Energy and Industrial Strategy to enforce unpaid awards, under sections 37A to 37Q of the Employment Tribunals Act 1996 (as amended by section 150 of the Small Business, Enterprise and Employment Act 2015), they do not appear to have made a significant difference. Between 6 April 2016 and 20 January 2017 the new procedures resulted in the recovery of 31 unpaid awards, which is likely to have been a very small fraction of the total number. The effect of the Fees Order Impact on the number of claims (i) Information about the effect of the Fees Order on the number of claims can be derived from two sources. The first, relied on by the appellant, comprises the tribunal statistics published by the Ministry of Justice under the title Tribunals and Gender Recognition Certificate Statistics Quarterly. The court was referred to the statistics published in December 2016, which were not available to the courts below. The second source, relied on by the Lord Chancellor, is a consultation paper published by the Ministry of Justice in January 2017, entitled Review of the introduction of fees in the Employment Tribunals: Consultation on proposals for reform (Cm 9373) (the Review Report). It too was not available to the courts below. Both sources present a similar picture, although the figures are slightly different (those in the Review Report are not taken from the Ministrys published tribunal statistics, but are based on HMCTS management information for different periods). Although there are differences between the figures given in the different sources, the general picture is plain. Since the Fees Order came into force on 29 July 2013 there has been a dramatic and persistent fall in the number of claims brought in ETs. Comparing the figures preceding the introduction of fees with more recent periods, there has been a long term reduction in claims accepted by ETs of the order of 66 70%. The Review Report considered possible explanations, besides the introduction of the fees, and suggested that improvements in the economy would have been expected to result in a fall in single claims of about 8%. It concluded: The actual fall since fees were introduced has been much greater and we have therefore concluded that it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees. (para 105) The Report concluded that the overall scale of the fall . is troubling (para 336). (ii) Impact on the value of claims The Review Report referred to evidence submitted by the Council of Employment Judges, and by the Presidents of the ETs, that there had been a greater fall in lower value claims, such as claims for unpaid wages and unpaid annual leave, and in claims in which a financial remedy was not sought, such as claims to entitlement to breaks. They argued that this suggested that, at least for some types of case, the fees were disproportionate to what was at stake in the proceedings, and people were deciding that they were not economically worthwhile. The Review also reported a greater fall in type A claims, which tend to be of lower value, than in type B claims. These findings are consistent with research published by the Department for Business, Innovation and Skills prior to the introduction of fees (Findings from the Survey of Employment Tribunal Applications 2008, 2010), which found in surveys that those whose decision whether to bring an ET claim was most likely to be influenced by the payment of a 250 fee included the low paid (whose claims tend to be less valuable in so far as awards are related to earnings), and those with claims for unlawful deductions from wages (which, as explained earlier, tend to be for modest amounts). According to the published tribunal statistics, the proportion of successful claims receiving low awards has markedly decreased. For example, the proportion of successful race discrimination claims resulting in awards of less than 3,000 is recorded as having fallen from 34% in 2012/13 to 8% in 2015/16. For awards of less than 5,000, the fall was from 52% to 19%. There were corresponding falls (some larger in amount, some smaller) for all other categories of discrimination claim, and also for unfair dismissal claims. This change is also reflected in a marked rise in median awards in all categories of discrimination claim, and also in unfair dismissal claims. For example, the median award in race discrimination claims is reported to have risen over the same period from 4,831 to 13,760. (iii) The impact of remission The impact assessment published in May 2012 estimated that at least 24% of the pre fees population of claimants would receive full remission, and that a further 53% would receive partial remission on fees up to 950. In the event, the Review Report found that the proportion of the post fees population of claimants receiving full or partial remission was initially very low, but had increased by 2016 to about 29%. The proportion of claimants receiving remission is therefore far lower than had been anticipated. The actual number is even lower, compared with what had been anticipated, given the difference between the number of claimants before and after the introduction of fees. So far as concerns the Lord Chancellors discretionary power to remit fees in exceptional circumstances, in practice this power to remit has rarely been exercised. It was exercised 31 times during the period between 1 July 2015 and 30 June 2016: a period during which 86,130 individual claims were presented. It was exercised 20 times during the period between 14 July and 22 December 2016. (iv) Survey evidence In 2015 Acas published research carried out on its behalf, based on a survey of a representative survey of claimants (Evaluation of Acas Early Conciliation 2015). It included figures relating to claimants who were unable to resolve employment disputes through conciliation but who did not go on to issue ET proceedings. The most frequently mentioned reason for not submitting an ET claim was that the fees were off putting. More than two thirds of the claimants who gave that reason said that they could not afford the fees. Others said that the fee was more than they were prepared to pay, or that the value of the fee equalled the money they were owed. On the basis of that research, and additional management information, the Review Report concluded that, of the 83,000 claimants who had notified Acas of their claims during 2014/15, we estimate that the potential size of the group of people who said that the affordability of fees was the reason why they did not pursue a claim to the ETs would be around 8,000 (para 164). This estimate leaves out of consideration the claimants, identified in the Acas research, who gave as their reason for not bringing proceedings in the ET that the value of the fee equalled the money they were owed. It also leaves out of consideration the possibility that claimants who settled may have done so at a level which undervalued their claim, because they did not feel that they could afford the alternative of bringing proceedings in the ET. Nevertheless, in the Review Report the Ministry of Justice state that while there is clear evidence that ET fees have discouraged people from bringing claims, there is no conclusive evidence that they have been prevented from doing so (p 6). In relation to the survey of claimants, the Review states that it is not clear what respondents may have meant when they suggested that there were unable to afford to pay (sic), and refuses to accept that such persons cannot realistically afford to pay. It is suggested that they may have meant that affording the fees meant reducing some other areas of non essential spending in order to save the money, or that they may be unaware of, or believe that they would not qualify for, a fee remission, or that they may have been unaware of the Lord Chancellors power to remit fees in exceptional circumstances. That is also the position adopted by the Lord Chancellor in these proceedings. In relation to the first of these suggestions, a distinction was drawn in the responses to the survey between those who said that they could not afford to pay the fees and those who said that they were unwilling to do so, for one reason or another. In relation to the second and third suggestions, as explained earlier, the remission scheme is of very limited scope except in relation to type B hearing fees, and the Lord Chancellors power to remit in exceptional circumstances is exercised only in cases of exceptional hardship. More fundamentally, the implicit premise of all three suggestions is that anyone who does not qualify for full remission will, in all but exceptional cases (which can be addressed by the discretion to remit in exceptional circumstances), have non essential income or capital which can be used to pay the fees. It is on that basis that the Lord Chancellor argues that legal requirements as to access to justice are satisfied. It will be necessary to return to these issues. (v) Hypothetical claimants In addition to the tribunal statistics, the Review Report and the Acas research, the appellant has also produced details of the effect of the fees on a number of hypothetical claimants in low to middle income households. Two examples may be given. The first hypothetical claimant is a single mother with one child, working full time as a secretary in a university. She has a gross income from all sources of 27,264 per annum. Her liability to any issue or hearing fee is capped under the remission scheme at 470 per fee. She therefore has to pay the full fees (390) in order to pursue a type A claim to a hearing, and fees totalling 720 in order to pursue a type B claim. The net monthly income which she requires in order to achieve acceptable living standards for herself and her child, as assessed by the Joseph Rowntree Foundation in its report, Minimum Income Standards for the UK in 2013, is 2,273: an amount which exceeds her actual net monthly income of 2,041. On that footing, in order to pursue a claim she has to suffer a substantial shortfall from what she needs in order to provide an acceptable living standard for herself and her child. The Lord Chancellor disputes the use made of the Joseph Rowntree Foundations minimum income standards. On the Lord Chancellors approach, no provision should be made for any expenditure on clothing (for which 10 per week had been allowed), personal goods and services (12 per week), social and cultural participation (48 per week), or alcohol (5 per week), on the basis that all spending of these kinds can be stopped for a period of time in order to save the amount required to bring a claim. On that basis, the amount of the claimants net monthly income, after minimum living standards are met, is 202 per month. In order to meet the fees, she therefore has to sacrifice all other spending, beyond the matters accepted by the Lord Chancellor to be necessities, for a period of two months, in order to bring a type A claim, and for three and a half months, in order to bring a type B claim. The second hypothetical claimant has a partner and two children. She and her partner both work full time and are paid the national minimum wage. They have a gross income, when benefits and tax credits are also taken into account, of 33,380 per annum. The claimants liability to fees is capped under the remission scheme at 520. She therefore has to pay the full fees of 390 in order to pursue a type A claim, and fees totalling 770 in order to bring a type B claim. The net monthly income the family require in order to achieve an acceptable living standard, as assessed by the Joseph Rowntree Foundation, is 3,097: an amount which exceeds their actual net monthly income of 2,866. They therefore have to make further inroads into living standards which are already below an acceptable level if a claim is to be brought. On the Lord Chancellors approach, the family have a net monthly income available, after excluding all expenditure on clothing, personal goods and services and so forth, of 593 per month. On that basis, a claim can be brought if spending is restricted to items accepted by the Lord Chancellor to be necessities for a period of about a month. One problem with the Lord Chancellors approach to these calculations is that some of the expenditure which he excludes, such as spending on clothing, may not in fact be saved, but is simply postponed. For example, if the children need new clothes because they have outgrown their old ones, replacements have to be purchased sooner or later. The impact of the fees on the familys ability to enjoy acceptable living standards is not avoided merely by postponing necessary expenditure. A second problem is that claimants may not have prolonged periods of time available to them during which to save the amount required to pay the fees. Claimants are expected to bring their claims promptly, in keeping with the intention that the process should be speedy. The usual time limit for bringing a claim in the ET is three months, starting from the date of the event giving rise to the claim. The issue fee must be paid then, although more time is available before the hearing fee will be due. More fundamentally, the question arises whether the sacrifice of ordinary and reasonable expenditure can properly be the price of access to ones rights. (vi) Transferring the cost burden to users of the tribunals As explained earlier, the principal aim of the introduction of fees was to transfer part of the cost burden of the tribunals from taxpayers to users of their services. The Review Report states: Our original impact assessment estimated that the introduction of fees would achieve a cost recovery rate of around a third, taking into account fee remissions. The actual recovery rate has been much lower: 17% in 2014/15 and 19% in 2015/16. (para 140) (The recovery rates of 17% and 19% have been calculated without taking into account fee remissions. Once they are taken into account, the recovery rate in each of those years, on the figures given in the Review Report, was 13%.) Fees are thus making a much less significant contribution to costs recovery than had been expected. The Review Report attributes the difference to the fact that the actual fall [in the number of claims] since fees were introduced has been much greater [than predicted] (para 105). However, notwithstanding the evidence that the price elasticity of demand for ET and EAT services is much greater than had been estimated when the fees were fixed, the Review Report does not consider the possibility that reducing the fees might result in an increase in the number of claims, and consequently in an increase in fee income. (vii) The deterrence of unmeritorious claims A secondary objective of the introduction of fees was to deter the bringing of unmeritorious claims. The Review Report analysed the outcomes of single claims which had been presented after fees were introduced, and compared them with the outcome of cases during the three quarters preceding the introduction of fees. The results show that the proportion of successful claims has been consistently lower since fees were introduced, while the proportion of unsuccessful claims has been consistently higher. The tribunal statistics, which record the figures for all claims, show the same trend. The Lord Chancellor accepts that there is no basis for concluding that only stronger cases are being litigated. (viii) Encouraging earlier settlements A further aim of the introduction of fees (described in more recent documents as a hope) was to encourage the earlier settlement of disputes. The Review Report contains information about the number of people who contacted Acas and did not proceed to make an ET claim. That number, expressed as a proportion of the total number of employment disputes notified either to Acas or to ETs, has increased greatly since fees were introduced: from 22% in 2012/13 to 78% in 2014/15 and 80% in 2015/16. In the light of those figures, the Review Report claims that conciliation has helped more people to avoid the need to go to ETs. However, those figures include cases where no settlement was reached, but where for other reasons (including the persons view of the affordability of fees) the claim was not pursued. According to the tribunal statistics, in 2011/12 33% of claims were settled through Acas. The following year, the proportion was again 33%. In 2014/15, following the introduction of fees, 8% of claims settled through Acas. In 2015/16, the figure rose again to 31%. Even ignoring the exceptional figure for 2014/15, it appears that the proportion of cases settled through Acas has slightly decreased since fees were introduced. That is consistent with the view of commentators, noted in the Review Report, that some employers were delaying negotiations to see whether the claimant would be prepared to pay the fee. The history of the proceedings On 28 June 2013 the appellant issued a claim for judicial review (the First JR) in which it sought to have the Fees Order quashed on the grounds that it breached the EU principles of effectiveness and equivalence, was brought into force in breach of the Public Sector Equality Duty imposed by the Equality Act 2010, and was indirectly discriminatory. The Divisional Court (Moses LJ and Irwin J) dismissed the claim, holding that the proceedings were premature and that the evidence was insufficiently robust to sustain the grounds of challenge: [2014] EWHC 218 (Admin); [2014] ICR 498. The appellant was initially granted permission to appeal only on the effectiveness ground and to adduce fresh evidence showing the fall in the number of ET claims instituted. The appellant renewed its application for permission on the remaining grounds of challenge, and the respondent applied to set aside the order in so far as it granted permission to adduce fresh evidence. These applications were adjourned by consent to permit fresh judicial review proceedings to be commenced, taking into account the new evidence. On 23 September 2014 the appellant issued a second claim for judicial review (the Second JR) in which it sought to have the Fees Order quashed on two grounds, namely the effectiveness ground and the discrimination ground. The Divisional Court (Elias LJ and Foskett J) dismissed the claim: [2014] EWHC 4198 (Admin); [2015] ICR 390, citing with approval the conclusion in the First JR that the principle of effectiveness was not violated unless the fees were so high that the prospective litigant was clearly unable to pay them. It granted permission to appeal on both grounds of challenge. The Court of Appeal subsequently gave permission to appeal on the remaining grounds in the First JR, and the two appeals were joined. In the event, the equivalence ground in the First JR was not pursued. The Court of Appeal (Moore Bick, Davis and Underhill LJJ) dismissed the appeals: [2015] EWCA Civ 935; [2016] ICR 1. Underhill LJ, with whose judgment Moore Bick and Davis LJJ agreed, considered that the imposition of a fee would not constitute an interference with the right of effective access to a tribunal under EU law unless it made it impossible in practice to access the tribunal. That depended on whether the fee was unaffordable (para 41), and not on whether the payment of the fee would be a sensible use of money (para 45). In applying the affordability test to the evidence, Underhill LJ saw no safe basis for an inference that the decline [in the number of claims] cannot consist entirely of cases where potential claimants could realistically have afforded to bring proceedings but have made a choice not to (para 68: emphasis in the original). Only evidence of the actual affordability of the fees in the financial circumstances of typical individuals could enable the court to reach a reliable conclusion that the fees were realistically unaffordable in some cases (ibid). Underhill LJ also rejected the arguments based on the Public Sector Equality Duty and the discrimination ground. The issue concerning the effect of the Fees Order on access to justice was argued before the courts below on the basis of EU law, although some domestic authorities and judgments of the European Court of Human Rights were also cited. Before this court, it has been recognised that the right of access to justice is not an idea recently imported from the continent of Europe, but has long been deeply embedded in our constitutional law. The case has therefore been argued primarily on the basis of the common law right of access to justice, although arguments have also been presented on the basis of EU law and the European Convention on Human Rights. The appellant has also argued the discrimination ground, and has been permitted to advance a new ground of challenge, namely that the Fees Order is ultra vires because it frustrates the operation of a variety of statutory provisions. The argument advanced below on the basis of the Public Sector Equality Duty has not been pursued. Is the Fees Order unlawful under English law? In determining the extent of the power conferred on the Lord Chancellor by section 42(1) of the 2007 Act, the court must consider not only the text of that provision, but also the constitutional principles which underlie the text, and the principles of statutory interpretation which give effect to those principles. In that regard, there are two principles which are of particular importance in this case. One is the constitutional right of access to justice: that is to say, access to the courts (and tribunals: R v Secretary of State for the Home Department, Ex p Saleem [2001] 1 WLR 443). The other is the rule that specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different Act (R v Secretary of State for Social Security, Ex p Joint Council for the Welfare of Immigrants [1997] 1 WLR 275, 290 per Simon Brown LJ). In the context of the present case, there is a considerable degree of overlap between these two principles. For the sake of clarity, however, each of these principles will be considered in turn. The constitutional right of access to the courts The constitutional right of access to the courts is inherent in the rule of law. The importance of the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the users who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings. The extent to which that viewpoint has gained currency in recent times is apparent from the consultation papers and reports discussed earlier. It is epitomised in the assumption that the consumption of ET and EAT services without full cost recovery results in a loss to society, since ET and EAT use does not lead to gains to society that exceed the sum of the gains to consumers and producers of these services. It may be helpful to begin by explaining briefly the importance of the rule of law, and the role of access to the courts in maintaining the rule of law. It may also be helpful to explain why the idea that bringing a claim before a court or a tribunal is a purely private activity, and the related idea that such claims provide no broader social benefit, are demonstrably untenable. At the heart of the concept of the rule of law is the idea that society is governed by law. Parliament exists primarily in order to make laws for society in this country. Democratic procedures exist primarily in order to ensure that the Parliament which makes those laws includes Members of Parliament who are chosen by the people of this country and are accountable to them. Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade. That is why the courts do not merely provide a public service like any other. Access to the courts is not, therefore, of value only to the particular individuals involved. That is most obviously true of cases which establish principles of general importance. When, for example, Mrs Donoghue won her appeal to the House of Lords (Donoghue v Stevenson [1932] AC 562), the decision established that producers of consumer goods are under a duty to take care for the health and safety of the consumers of those goods: one of the most important developments in the law of this country in the 20th century. To say that it was of no value to anyone other than Mrs Donoghue and the lawyers and judges involved in the case would be absurd. The same is true of cases before ETs. For example, the case of Dumfries and Galloway Council v North [2013] UKSC 45; [2013] ICR 993, concerned with the comparability for equal pay purposes of classroom assistants and nursery nurses with male manual workers such as road workers and refuse collectors, had implications well beyond the particular claimants and the respondent local authority. The case also illustrates the fact that it is not always desirable that claims should be settled: it resolved a point of genuine uncertainty as to the interpretation of the legislation governing equal pay, which was of general importance, and on which an authoritative ruling was required. Every day in the courts and tribunals of this country, the names of people who brought cases in the past live on as shorthand for the legal rules and principles which their cases established. Their cases form the basis of the advice given to those whose cases are now before the courts, or who need to be advised as to the basis on which their claim might fairly be settled, or who need to be advised that their case is hopeless. The written case lodged on behalf of the Lord Chancellor in this appeal itself cites over 60 cases, each of which bears the name of the individual involved, and each of which is relied on as establishing a legal proposition. The Lord Chancellors own use of these materials refutes the idea that taxpayers derive no benefit from the cases brought by other people. But the value to society of the right of access to the courts is not confined to cases in which the courts decide questions of general importance. People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them. It is that knowledge which underpins everyday economic and social relations. That is so, notwithstanding that judicial enforcement of the law is not usually necessary, and notwithstanding that the resolution of disputes by other methods is often desirable. When Parliament passes laws creating employment rights, for example, it does so not merely in order to confer benefits on individual employees, but because it has decided that it is in the public interest that those rights should be given effect. It does not envisage that every case of a breach of those rights will result in a claim before an ET. But the possibility of claims being brought by employees whose rights are infringed must exist, if employment relationships are to be based on respect for those rights. Equally, although it is often desirable that claims arising out of alleged breaches of employment rights should be resolved by negotiation or mediation, those procedures can only work fairly and properly if they are backed up by the knowledge on both sides that a fair and just system of adjudication will be available if they fail. Otherwise, the party in the stronger bargaining position will always prevail. It is thus the claims which are brought before an ET which enable legislation to have the deterrent and other effects which Parliament intended, provide authoritative guidance as to its meaning and application, and underpin alternative methods of dispute resolution. A Lord Chancellor of a previous generation put the point in a nutshell, in a letter to the Treasury: (i) Justice in this country is something in which all the Queens subjects have an interest, whether it be criminal or civil. (ii) The courts are for the benefit of all, whether the individual resorts to them or not. (iii) In the case of the civil courts the citizen benefits from the interpretation of the law by the Judges and from the resolution of disputes, whether between the state and the individual or between individuals. (Genn, Judging Civil Justice (2010), p 46, quoting a letter written by Lord Gardiner in 1965) In English law, the right of access to the courts has long been recognised. The central idea is expressed in chapter 40 of the Magna Carta of 1215 (Nulli vendemus, nulli negabimus aut differemus rectum aut justiciam), which remains on the statute book in the closing words of chapter 29 of the version issued by Edward I in 1297: We will sell to no man, we will not deny or defer to any man either Justice or Right. Those words are not a prohibition on the charging of court fees, but they are a guarantee of access to courts which administer justice promptly and fairly. The significance of that guarantee was emphasised by Sir Edward Coke in Part 2 of his Institutes of the Laws of England (written in the 1620s, but published posthumously in 1642). Citing chapter 29 of the 1297 charter, he commented: And therefore, every Subject of this Realme, for injury done to him in bonis, terris, vel persona [in goods, in lands, or in person], by any other Subject . may take his remedy by the course of the Law, and have justice, and right for the injury done to him, freely without sale, fully without any deniall, and speedily without delay. Hereby it appeareth, that Justice must have three qualities, it must be Libera, quia nihil iniquius venali Justitia; Plena, quia Justitia non debet claudicare; & Celeris, quia dilatio est quaedam negatio [Free, because nothing is more iniquitous than saleable justice; full, because justice ought not to limp; and speedy, because delay is in effect a denial]; and then it is both Justice and Right. (1809 ed, pp 55 56) More than a century later, Blackstone cited Coke in his Commentaries on the Laws of England (1765 1769), and stated: A right of every [man] is that of applying to the courts of justice for redress of injuries. Since the law is in England the supreme arbiter of every mans life, liberty, and property, courts of justice must at all times be open to the subject, and the law be duly administered therein. (Book I, Chapter 1, Absolute Rights of Individuals) In more modern times, many examples can be found of judicial recognition of the constitutional right of unimpeded access to the courts (as Lord Diplock described it in Attorney General v Times Newspapers Ltd [1974] AC 273, 310, and again in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corpn Ltd [1981] AC 909, 977), which can only be curtailed by clear statutory enactment. Thus, in In re Boaler [1915] 1 KB 21, where the question was whether a statutory prohibition on vexatious litigants instituting legal proceedings extended to criminal proceedings, the Court of Appeal held that it did not. Scrutton J said at p 36 that although a statute might deprive a subject of the right to appeal to the courts, the language of any such statute should be jealously watched by the courts, and should not be extended beyond its least onerous meaning unless clear words are used to justify such extension. Similarly, in Chester v Bateson [1920] 1 KB 829, where delegated legislation prohibited the bringing of certain legal proceedings without a ministers consent, the Divisional Court held that the regulation was invalid. Avory J stated that nothing less than express words in the statute taking away the right of the Kings subjects of access to the courts of justice would authorize or justify it (p 836). To similar effect was the decision of the House of Lords in R & W Paul Ltd v The Wheat Commission [1937] AC 139, where an arbitration scheme established by delegated legislation disapplied the Arbitration Act 1889, under which arbitrators could state a special case for the opinion of the court on a point of law. That element of the scheme had not been expressly authorised by the enabling legislation, and was held to be ultra vires. As Viscount Simonds observed in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260, 286: It is a principle not by any means to be whittled down that the subjects recourse to Her Majestys courts for the determination of his rights is not to be excluded except by clear words. Another important general statement was made by Lord Diplock in Attorney General v Times Newspapers Ltd at p 309: The due administration of justice requires first that all citizens should have unhindered access to the constitutionally established courts of criminal or civil jurisdiction for the determination of disputes as to their legal rights and liabilities; secondly, that they should be able to rely upon obtaining in the courts the arbitrament of a tribunal which is free from bias against any party and whose decision will be based upon those facts only that have been proved in evidence adduced before it in accordance with the procedure adopted in courts of law; and thirdly that, once the dispute has been submitted to a court of law, they should be able to rely upon there being no usurpation by any other person of the function of that court to decide it according to law. Most of the cases so far mentioned were concerned with barriers to the bringing of proceedings. But impediments to the right of access to the courts can constitute a serious hindrance even if they do not make access completely impossible. More recent authorities make it clear that any hindrance or impediment by the executive requires clear authorisation by Parliament. Examples include Raymond v Honey [1983] 1 AC 1, where prison rules requiring a prison governor to delay forwarding a prisoners application to the courts, until the matter complained of had been the subject of an internal investigation, were held to be ultra vires; and R v Secretary of State for the Home Department, Ex p Anderson [1984] QB 778, where rules which prevented a prisoner from obtaining legal advice in connection with proceedings that he wished to undertake, until he had raised his complaint internally, were also held to be ultra vires. The courts approach in these cases was to ask itself whether the impediment or hindrance in question had been clearly authorised by primary legislation. In Raymond v Honey, for example, Lord Wilberforce stated at p 13 that the statutory power relied on (a power to make rules for the management of prisons) was quite insufficient to authorise hindrance or interference with so basic a right as the right to have unimpeded access to a court. Lord Bridge of Harwich added at p 14 that a citizens right to unimpeded access to the courts can only be taken away by express enactment. Even where a statutory power authorises an intrusion upon the right of access to the courts, it is interpreted as authorising only such a degree of intrusion as is reasonably necessary to fulfil the objective of the provision in question. This principle was developed in a series of cases concerned with prisoners. The first was R v Secretary of State for the Home Department, Ex p Leech [1994] QB 198, which concerned a prison rule under which letters between a prisoner and a solicitor could be read, and stopped if they were of inordinate length or otherwise objectionable. The rule did not apply where the letter related to proceedings already commenced, but the Court of Appeal accepted that it nevertheless created an impediment to the exercise of the right of access to justice in so far as it applied to prisoners who were seeking legal advice in connection with possible future proceedings. The question was whether the rule was authorised by a statutory power to make rules for the regulation of prisons. That depended on whether an objective need for such a rule, in the interests of the regulation of prisons, could be demonstrated. As Steyn LJ, giving the judgment of the court, stated at p 212: The question is whether there is a self evident and pressing need for an unrestricted power to read letters between a prisoner and a solicitor and a power to stop such letters on the ground of prolixity and objectionability. The evidence established merely a need to check that the correspondence was bona fide legal correspondence. Steyn LJ concluded: By way of summary, we accept that [the statutory provision] by necessary implication authorises some screening of correspondence passing between a prisoner and a solicitor. The authorised intrusion must, however, be the minimum necessary to ensure that the correspondence is in truth bona fide legal correspondence. (p 217) The decision in Leech was endorsed and approved by the House of Lords in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, which arose from a prohibition on visits to serving prisoners by journalists seeking to investigate whether the prisoners had, as they claimed, been wrongly convicted, except on terms which precluded the journalists from making professional use of the material obtained during such visits. The House considered whether the Home Secretarys evidence showed a pressing need for a measure which restricted prisoners attempts to gain access to justice, and found none. A similar approach was adopted in R (Daly) v Secretary of State for the Home Department [2001] UKHL 26; [2001] 2 AC 532, which concerned a policy that prisoners must be absent from their cells when legal correspondence kept there was examined. Lord Bingham of Cornhill, with whose speech the other members of the House agreed, summarised the effect of the earlier authorities concerning prisoners, including Raymond v Honey, Ex p Anderson, and Ex p Leech: Among the rights which, in part at least, survive [imprisonment] are three important rights, closely related but free standing, each of them calling for appropriate legal protection: the right of access to a court; the right of access to legal advice; and the right to communicate confidentially with a legal adviser under the seal of legal professional privilege. Such rights may be curtailed only by clear and express words, and then only to the extent reasonably necessary to meet the ends which justify the curtailment. (pp 537 538) After an examination of the evidence, Lord Bingham concluded that the policy provides for a degree of intrusion into the privileged legal correspondence of prisoners which is greater than is justified by the objectives the policy is intended to serve, and so violates the common law rights of prisoners (para 21). Since that degree of intrusion was not expressly authorised by the relevant statutory provision, it followed that the Secretary of State had no power to lay down the policy. Finally, in this overview of the common law authorities, it is necessary to note two cases concerned with court fees. First, the case of R v Lord Chancellor, Ex p Witham [1998] QB 575 concerned court fees prescribed by the Lord Chancellor under a statutory power. The order in question repealed a power to reduce or remit the fees on grounds of undue financial hardship in exceptional circumstances. The order had been made with the concurrence of all four Heads of Division, as well as the Treasury. It had also been laid before Parliament. The applicant was in receipt of income support of 58 per week, and wished to bring proceedings. The prescribed fee was either 120 or 500, depending on the amount claimed. The applicant said that he could not afford to pay a fee of either amount. There was also evidence that a person on income support could not afford the 10 fee to set aside a default judgment in debt proceedings, and that another person on income support who was facing eviction could not afford the 20 fee to be joined in possession proceedings. Laws J, with whom Rose LJ agreed, said that he saw no reason not to accept what was said, and concluded that there was a variety of situations in which persons on very low incomes were in practice denied access to the courts. Laws J accepted that, notwithstanding the wide discretion seemingly conferred on the Lord Chancellor by the relevant statutory provision, there were implied limitations upon his powers: the relevant provision did not permit him to exercise the power in such a way as to deprive the citizen of what has been called his constitutional right of access to the courts (p 580). The rule making power in the primary legislation contained nothing to alert the reader to any possibility that fees might be imposed in circumstances such as to deny absolutely the citizens right of access to the Queens courts (p 586). Since that was the practical effect of the fees, the order was declared unlawful. The second case is the decision of the Divisional Court in R (Hillingdon London Borough Council) v Lord Chancellor (Law Society intervening) [2008] EWHC 2683 (Admin); [2009] 1 FLR 39. The case concerned fees payable by local authorities in connection with applications made in public law family cases. The court rejected the Governments argument that the lawfulness of the fees orders depended on whether local authorities would (or there was a real risk that they would) be required to act inappropriately by failing to make applications which objectively should be made. Dyson LJ stated that the impact of the fees orders must be considered in the real world (para 61). The relevant question was therefore whether there was a real risk that the increase in fees will cause local authorities not to make applications which objectively should be made (ibid). The right of access to justice in the present case The 2007 Act does not state the purposes for which the power conferred by section 42(1) to prescribe fees may be exercised. There is however no dispute that the purposes which underlay the making of the Fees Order are legitimate. Fees paid by litigants can, in principle, reasonably be considered to be a justifiable way of making resources available for the justice system and so securing access to justice. Measures that deter the bringing of frivolous and vexatious cases can also increase the efficiency of the justice system and overall access to justice. The Lord Chancellor cannot, however, lawfully impose whatever fees he chooses in order to achieve those purposes. It follows from the authorities cited that the Fees Order will be ultra vires if there is a real risk that persons will effectively be prevented from having access to justice. That will be so because section 42 of the 2007 Act contains no words authorising the prevention of access to the relevant tribunals. That is indeed accepted by the Lord Chancellor. But a situation in which some persons are effectively prevented from having access to justice is not the only situation in which the Fees Order might be regarded as ultra vires. As appears from such cases as Leech and Daly, even where primary legislation authorises the imposition of an intrusion on the right of access to justice, it is presumed to be subject to an implied limitation. As it was put by Lord Bingham in Daly, the degree of intrusion must not be greater than is justified by the objectives which the measure is intended to serve. There is an analogy between the latter principle and the principle of proportionality, as developed in the case law of the European Court of Human Rights. These proceedings are not based on the Human Rights Act 1998, since the appellant is not a victim within the meaning of section 7(1) of that Act. Nevertheless, the case law of the Strasbourg court concerning the right of access to justice is relevant to the development of the common law. It will be considered in the context of the case based on EU law, on which it also has a bearing. To anticipate that discussion, however, it is clear that the ability of litigants to pay a fee is not determinative of its proportionality under the Convention. That conclusion supports the view, already arrived at by the common law, that even an interference with access to the courts which is not insurmountable will be unlawful unless it can be justified as reasonably necessary to meet a legitimate objective. Does the Fees Order effectively prevent access to justice? It is therefore necessary to consider, first, whether the Fees Order effectively prevents some persons from having access to justice. It is argued on behalf of the Lord Chancellor that the fees cannot be unlawful unless it is proved that they have prevented access to justice in specific cases. No one, however, has given evidence in these proceedings that they were unable to bring a claim because they could not afford the fees. Further, it is argued, the poorest people qualify for full remission. Those who do not so qualify have some income over and above the minimum necessary to meet the essentials of life, and can therefore save the amount needed to pay the fees if they choose to do so. In exceptional cases, the Lord Chancellor can exercise his discretionary power to remit the fees. Access to justice is not prevented where the decision on whether to make a claim is the result of making a choice between paying the fee and spending ones income in some other way. In order for the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission. The evidence now before the court, considered realistically and as a whole, leads to the conclusion that that requirement is not met. In the first place, as the Review Report concludes, it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees. While the Review Report fairly states that there is no conclusive evidence that the fees have prevented people from bringing claims, the court does not require conclusive evidence: as the Hillingdon case indicates, it is sufficient in this context if a real risk is demonstrated. The fall in the number of claims has in any event been so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable. In that regard, it is necessary to bear in mind that the use which people make of ETs is governed more by circumstances than by choice. Every individual who is in employment may require to have resort to an ET, usually unexpectedly: for example, if they find themselves unfairly dismissed or the victim of discrimination. Persons whose employment rights have been breached, or who believe them to have been breached, are often under a practical compulsion to apply to an ET for redress. Conciliation can be a valuable alternative in some circumstances, but as explained earlier the ability to obtain a fair settlement is itself dependent on the possibility that, in the absence of such a settlement, a claim will be presented to the ET. It is the practical compulsion which many potential claimants are under, which makes the fall in the number of claims indicative of something more than a change in consumer behaviour. Secondly, as explained earlier, the Review Report itself estimated that around 10% of the claimants, whose claims were notified to Acas but did not result either in a settlement or in a claim before an ET, said that they did not bring proceedings because they could not afford the fees. The Review Report suggests that they may merely have meant that affording the fees meant reducing other areas of non essential spending in order to save the money. It is not obvious why the explanation given by the claimants should not be accepted. But even if the suggestion in the Review Report is correct, it is not a complete answer. The question whether fees effectively prevent access to justice must be decided according to the likely impact of the fees on behaviour in the real world. Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable. Thirdly, that conclusion is strengthened by consideration of the hypothetical examples, which provide some indication of the impact of the fees on claimants in low to middle income households. It is common ground that payment of the fees would result in the hypothetical households having less income than is estimated by the Joseph Rowntree Foundation as being necessary to meet acceptable living standards. The Lord Chancellor argues that, if the households sacrifice all spending on clothing, personal goods and services, social and cultural participation, and alcohol, the necessary savings can be made to enable the fees to be paid. As was explained earlier, the time required to make the necessary savings varies, in the examples, between about one month and three and a half months. Leaving aside the other difficulties with the Lord Chancellors argument discussed earlier, the fundamental problem is the assumption that the right of access to courts and tribunals can lawfully be made subject to impositions which low to middle income households can only meet by sacrificing ordinary and reasonable expenditure for substantial periods of time. The court cannot be deflected from that conclusion by the existence of the Lord Chancellors discretionary power of remission. The statutory scheme of remission is of very restricted scope, as explained earlier. The effects of the Fees Order have occurred notwithstanding the existence of that scheme. The discretionary power of remission may be capable of greater use than has been the case in the past, but it can only be exercised where the Lord Chancellor is satisfied that there are exceptional circumstances which justify doing so. The problems which have been identified in these proceedings are not confined to exceptional circumstances: they are systemic. Furthermore, it is not only where fees are unaffordable that they can prevent access to justice. They can equally have that effect if they render it futile or irrational to bring a claim. As explained earlier, many claims which can be brought in ETs do not seek any financial award: for example, claims to enforce the right to regular work breaks or to written particulars of employment. Many claims which do seek a financial award are for modest amounts, as explained earlier. If, for example, fees of 390 have to be paid in order to pursue a claim worth 500 (such as the median award in claims for unlawful deductions from wages), no sensible person will pursue the claim unless he can be virtually certain that he will succeed in his claim, that the award will include the reimbursement of the fees, and that the award will be satisfied in full. If those conditions are not met, the fee will in reality prevent the claim from being pursued, whether or not it can be afforded. In practice, however, success can rarely be guaranteed. In addition, on the evidence before the court, only half of the claimants who succeed in obtaining an award receive payment in full, and around a third of them receive nothing at all. As explained earlier, the statistical evidence relating to the impact of the Fees Order on the value of awards, the evidence of the Council of Employment Judges and the Presidents of the ETs, the evidence collected by the Department of Business, Innovation and Skills, and the survey evidence collected by Acas, establishes that in practice the Fees Order has had a particularly deterrent effect on the bringing of claims of low monetary value. That is as one would expect, given the futility of bringing many such claims, in view of the level of the fees and the prospects of recovering them. For all these reasons, the Fees Order effectively prevents access to justice, and is therefore unlawful. Given that conclusion, the other issues arising in the appeal can be dealt with very briefly. Can the Fees Order be justified as a necessary intrusion on the right of access to justice? The primary aim of the Fees Order was to transfer some of the cost burden of the ET and EAT system from general taxpayers to users of the system. That objective has been achieved to some extent, but it does not follow that fees which intruded to a lesser extent upon the right of access to justice would have been any less effective. In that regard, it is necessary to point out an error in the Review Report, repeated in the Lord Chancellors submissions. The Review Report states that the Ministry of Justice have considered whether it would be more proportionate to charge lower fees, but that the result of reducing fees would reduce the income generated by fees, and thereby reduce the proportion of cost transferred to users from the taxpayer (para 307). That statement is unsupported by any evidence, and appears to be regarded as axiomatic. Similarly, in his written case, the Lord Chancellor states that, in pursuing the aim of transferring the costs of the tribunals from taxpayers to users, the higher the fees are, patently the more effective they are in doing so. This idea is repeated: in recovering the cost from users, it is said, the higher the fee, the more effective it is. However, it is elementary economics, and plain common sense, that the revenue derived from the supply of services is not maximised by maximising the price. In order to obtain the maximum revenue, it is necessary to identify the optimal price, which depends on the price elasticity of demand. In the present case, it is clear that the fees were not set at the optimal price: the price elasticity of demand was greatly underestimated. It has not been shown that less onerous fees, or a more generous system of remission, would have been any less effective in meeting the objective of transferring the cost burden to users. Nor, on the evidence before the court, have fees at the level set in the Fees Order been shown to be necessary in order to achieve its secondary aims: namely, to incentivise earlier settlements and to disincentivise the pursuit of weak or vexatious claims. These issues were discussed at paras 57 59 above. There is a further matter, which was not relied on as a separate ground of challenge, but should not be overlooked. That is the failure, in setting the fees, to consider the public benefits flowing from the enforcement of rights which Parliament had conferred, either by direct enactment, or indirectly via the European Communities Act 1972. Fundamentally, it was because of that failure that the system of fees introduced in 2013 was, from the outset, destined to infringe constitutional rights. Does the Fees Order cut down statutory rights? As explained earlier, the lawfulness of the Fees Order is also challenged on the basis that it contravenes the rule that specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different Act: R v Secretary of State for Social Security, Ex p Joint Council for the Welfare of Immigrants [1997] 1 WLR 275, 290. That case was concerned with subordinate legislation which deprived asylum seekers of income related benefits if they appealed against the Home Secretarys refusal of their claim. The Court of Appeal found that, if deprived of benefits, some asylum seekers with genuine claims would be driven by penury to forfeit them, either by leaving the country before their determination or through an inability to prosecute them effectively. That being so, the legislation was held to be unlawful. Simon Brown LJ stated at p 292 that these Regulations for some genuine asylum seekers at least must now be regarded as rendering these rights [of appeal] nugatory. In the circumstances of the present case, this ground of appeal does not add anything to the ground based on the common law right of access to justice. In so far as the Fees Order has the practical effect of making it unaffordable for persons to exercise rights conferred on them by Parliament, or of rendering the bringing of claims to enforce such rights a futile or irrational exercise, it must be regarded as rendering those rights nugatory. EU law The Court of Appeal identified 24 of the rights enforceable in ETs as having their source in EU law. They include, for example, the right to equal pay, the rights to equal treatment and maternity leave, and the various rights granted under the Working Time Directive. Subject to the exceptions discussed earlier, the ET is the only forum in which those rights can be enforced. It follows that, so far as applicable to these rights, restrictions on the right of access to ETs and the EAT fall within the scope of EU law. EU law has long recognised the principle of effectiveness: that is to say, that the procedural requirements for domestic actions must not be liable to render practically impossible or excessively difficult the exercise of rights conferred by EU law: see, for example, Impact v Minister for Agriculture and Food (Case C 268/06) [2008] ECR I 2483, para 46. It has also recognised the principle of effective judicial protection as a general principle of EU law, stemming from the constitutional traditions common to the member states, which has been enshrined in articles 6 and 13 of the European Convention on Human Rights and which has also been reaffirmed by article 47 of the Charter of Fundamental Rights of the European Union. Article 47 guarantees in its first paragraph that everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal. In terms of article 52(1): Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. In that regard, the court has said that although the interest of the proper administration of justice may justify the imposition of a financial restriction on access to a remedy, that restriction must retain a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved: see, for example, SC Star Storage SA v ICI (Joined Cases C 439/14 and C 488/14), judgment given 15 September 2016, para 55; DEB Deutsche Energiehandels und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (Case C 279/09) [2010] ECR I 13849, paras 47 and 60. The burden lies on the state to establish the proportionality of restrictions where, as in the present case, they are liable to jeopardise the implementation of the aims pursued by EU directives. Article 52(3) of the Charter provides that in so far as the Charter contains rights which correspond to rights guaranteed by the European Convention on Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the Convention. In considering the application of the first paragraph of article 47 of the Charter, it is therefore necessary to consider the case law of the European Court of Human Rights on the corresponding guarantee in article 6(1) of the Convention: see DEB, para 35. In that regard, one general point to note is the emphasis placed by the Strasbourg court on the protection of rights which are not theoretical and illusory, but practical and effective. That is consistent with the recognition in domestic law that the impact of restrictions must be considered in the real world. The Strasbourg court has accepted that various limitations, including financial ones, may be placed on the right of access to a court or tribunal. In particular, the requirement to pay fees to civil courts in connection with claims or appeals is not in itself incompatible with the Convention. However, such limitations must pursue a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved: Teltronic CATV v Poland, Application No 48140/99, judgment given 10 January 2006, para 47. That is consistent with the principle of domestic law that such rights may be curtailed only to the extent reasonably necessary to meet the ends which justify the curtailment. In the present proceedings, the Court of Appeal recognised that the fees payable in proceedings brought for the enforcement of rights conferred by EU law must be proportionate, but construed that requirement as meaning that the basic question is whether the fee payable is such that the claimant cannot realistically afford to pay it, or whether the difficulty of paying the fee was such as to make the payment of the fee impossible in practice (paras 41 and 43). Although the court accepted that the introduction of fees had the effect of deterring a very large number of potential claimants who might otherwise have brought proceedings to enforce rights conferred by EU law, it felt unable to infer that the decline [in the number of claims] cannot consist entirely of cases where potential claimants could realistically have afforded to bring proceedings but have made a choice not to (para 68: original emphasis). Since, in its view, it had not been shown that payment of the fees was impossible, it concluded that the requirement to pay them was proportionate. However, under the Convention, and under EU law, the ability to pay fees is not determinative of their proportionality: it is merely one among a number of relevant factors. As the Strasbourg court has repeatedly stated, the amount of the fees assessed in the light of the particular circumstances of a given case, including the applicant's ability to pay them, and the phase of the proceedings at which that restriction has been imposed, are factors which are material in determining whether or not a person enjoyed the right of access to a court: Teltronic CATV, para 48. It has emphasised that financial restrictions on access to a court which are unrelated to the merits of a claim or its prospects of success should be subject to particularly rigorous scrutiny: Teltronic CATV, para 61. In relation to the phase of the proceedings at which the restriction has been imposed, the court regards it as significant if non payment of a fee may result in a claims never being examined on its merits: Teltronic CATV, para 61. The fact that proportionality is not determined by ability to pay, and also the importance of a practical approach to the assessment of whether there has been an interference with the right, are illustrated by the case of Stankov v Bulgaria (2009) 49 EHRR 7. The case is particularly relevant to the present proceedings as it demonstrates that even a fee which the litigant can afford can violate the right of access to justice. The applicant in that case was required to pay, at the conclusion of the domestic proceedings, a fee equivalent to 90% of the compensation which had been awarded to him. The fee was held to violate article 6(1), although the applicant was able to pay it, and despite the fact that his case had been heard. Although the aims pursued by the imposition of the fee were compatible with the administration of justice, the fee was disproportionate in view of the difficulty of assessing the likely award in advance (which had led the applicant to overstate the amount of his claim, leading to liability to a higher fee), taken together with the relatively high and totally inflexible rate of court fees (para 67). The Lord Chancellor argues that that case should be distinguished from the present case, on the basis that it concerned domestic proceedings in which the state was the defendant. Certainly, that feature made the violation of article 6(1) particularly egregious: the state was taking away with one hand the compensation which it had been ordered to pay with the other. Nevertheless, the same principles would have equally applied in proceedings between private parties. As the court stated: In practical terms, the imposition of a considerable financial burden due after the conclusion of the proceedings may well act as a restriction on the right to a court. The costs order against the applicant constituted such a restriction. (para 54) That would be so because of the size of the financial burden, regardless of the identity of the defendant. That is illustrated by the case of Kniat v Poland, Application No 71731/01, judgment given 26 July 2005, which concerned fees payable in divorce proceedings. At the conclusion of the proceedings, the applicant was ordered to pay a court fee of 10,000 PLN. She was able to pay it, having received a share of the matrimonial property amounting to 300,000 PLN. Nonetheless, the imposition of the fee was held to violate article 6(1), since the 300,000 PLN constituted apparently her only asset, and it did not seem reasonable to demand that she spend part of it on court fees, rather than build her future and secure her and her childrens basic needs after the divorce (para 44). A further illustration is the case of Kordos v Poland, Application No 26397/02, judgment given 26 May 2009, which concerned fees payable in an action of damages between private parties. The applicant was awarded damages of 20,000 PLN and was required to pay a court fee of 3,726 PLN. The imposition of the fee was held to violate article 6(1), on the basis that the sum awarded was apparently her only asset, and it did not seem reasonable to demand that she spend it on the payment of the court fees rather than on securing her basic living needs. These judgments provide further support for the view that, particularly in cases involving modest financial awards (or none at all), the fees imposed by the Fees Order cannot be justified. Returning to the application of article 47 of the Charter, it follows that the proportionality of the Fees Order in issue in the present proceedings is not determined solely by the affordability of the fees (although if they are unaffordable by some people, then the Order is unlawful under EU law in so far as it applies to claims based on rights derived from EU law). Proportionality also requires other factors to be considered, including the stage of the proceedings at which the fees must be paid, and whether non payment may result in the claims never being examined on its merits. They also include a factor which is of particular importance in the present case, namely whether the fees are proportionate in amount to the sums being claimed in the proceedings. Ultimately, the question is whether the limitation of the right to an effective remedy resulting from the Fees Order respects the essence of that right and is a proportionate means of achieving the legitimate aims pursued, or has led to an excessive burden being placed on individuals who seek to enforce their rights. Given the conclusion that the fees imposed by the Fees Order are in practice unaffordable by some people, and that they are so high as in practice to prevent even people who can afford them from pursuing claims for small amounts and non monetary claims, it follows that the Fees Order imposes limitations on the exercise of EU rights which are disproportionate, and that it is therefore unlawful under EU law. Remedies It is argued on behalf of the Lord Chancellor that the evidence about the impact of the fees which is now available was not available at the time when the Fees Order was made. If the original decision to make the Fees Order was lawful, but the Lord Chancellor acted unreasonably in subsequently failing to decide that it should no longer be maintained in force, then it is argued that the appropriate form of relief is a declaration to that effect. That argument mistakes the nature of the illegality with which we are concerned. This is not a case in which an administrative decision is being challenged on the basis that relevant considerations were not taken into account, or on the basis that the decision was unreasonable. The Fees Order is unlawful under both domestic and EU law because it has the effect of preventing access to justice. Since it had that effect as soon as it was made, it was therefore unlawful ab initio, and must be quashed. The parties are invited to make written submissions on any consequential relief which may be appropriate in these circumstances. LADY HALE: (with whom Lord Neuberger, Lord Mance, Lord Kerr, Lord Wilson, Lord Reed and Lord Hughes agree) Lord Reed, with whose judgment I entirely agree, has dealt with all the issues raised in argument, save that of discrimination. As he has held that the Fees Order was unlawful ab initio, both at common law and under EU law (to the extent that the rights asserted before the Employment Tribunals are rights contained in EU law), it is unnecessary to reach a final conclusion on the discrimination issues. However, as the existing Fees Order is unlawful, the Lord Chancellor will no doubt wish to avoid any potentially unlawful discrimination in any replacement Order. Not all discrimination is unlawful. It is helpful, therefore, first to consider what prohibition the alleged discrimination might contravene. Most straightforward is that in section 29 of the Equality Act 2010. As relevant, this provides: (1) A person (a service provider) concerned with the provision of a service to the public or a section of the public (for payment or not) must not discriminate against a person requiring the service by not providing the person with the service. (2) A service provider (A) must not, in providing the service, discriminate against a person (B) as to the terms on which A provides the service (a) to B; (b) by terminating the provision of the service to B; (c) by subjecting B to any other detriment. (6) A person must not, in the exercise of a public function that is not the provision of a service to the public or a section of the public, do anything that constitutes discrimination, harassment or victimisation. This prohibition applies as much to public sector providers of services to the public as it does to the private sector. The Government clearly sees the provision of Employment Tribunals as a service to the public, to which the prohibition in section 29(2) would apply, as that is why it has chosen to charge the users for that service. But even if it were not seen as the provision of a service, it would clearly be the exercise of a public function, to which the prohibition in section 29(6) applies. Furthermore, to the extent that in providing for the claims which may be brought before an Employment Tribunal, the United Kingdom is implementing EU law, the United Kingdom must respect the Charter of Fundamental Rights of the European Union (article 51). Article 21.1 provides that: Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. It is not suggested that the Fees Order is directly discriminatory on any of the grounds prohibited either under the Charter or the 2010 Act. Rather, it is suggested that the Order is indirectly discriminatory within the meaning of section 19 of the 2010 Act, which is itself based on the concept of indirect discrimination in EU law: (1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of Bs. (2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of Bs if (a) A applies, or would apply, it to persons with whom B does not share the characteristic, (b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it, it puts, or would put, B at that disadvantage, and (c) (d) A cannot show it to be a proportionate means of achieving a legitimate aim. (3) The relevant protected characteristics are age; disability; gender reassignment; marriage and civil partnership; race; religion or belief; sex; sexual orientation. It is not suggested that the whole of the Fees Order amounts to a discriminatory provision, criterion or practice (PCP) for this purpose. Rather, it is suggested that the higher fees payable, either for Type B claims in general or for discrimination claims in particular, are indirectly discriminatory against women (and others with protected characteristics too). In relation to Type B claims in general, this is because a higher proportion of women bring Type B claims than bring Type A claims. Before the Court of Appeal, UNISON suggested that 54% of Type B claimants were women, whereas only 37% of Type A claimants were women. However, the Lord Chancellor put in figures suggesting that 45% of Type B claimants were women. The Court of Appeal accepted that this was still a disparate impact (para 85). This meant that the higher fees for Type B claims might put women at a particular disadvantage when compared with men. Both the Court of Appeal and the Divisional Court therefore proceeded on the basis that the situation had to be justified and this has not been challenged by the Lord Chancellor. Under section 19(2)(d), a PCP which puts or would put people with a protected characteristic at a particular disadvantage when compared with people who do not share that characteristic is not discriminatory if the person who applies it can show that the PCP is a proportionate means of achieving a legitimate aim. In other words, unlike the case of direct discrimination, it is the PCP itself which requires to be justified, rather than its discriminatory effect. So can the higher fees for Type B claims be justified? Given that we have already held that the whole Fees Order cannot be justified, this is a somewhat artificial exercise. The Divisional Court and Court of Appeal held that it was legitimate to charge more for what was assumed to be the more costly service. In fact, while that may be so of some kinds of Type B claim, UNISON suggests that it has not been shown to be true of them all working time claims and pregnancy dismissal claims, for example, do not take up much time. In the Divisional Court, Elias LJ accepted that some Type A claims might take longer than some Type B claims (para 69). Nevertheless, a rough and ready classification such as this was held acceptable if any distinction was to be made between different types of claim. The question, however, is not whether linking the level of fees to the assumed cost of providing the service is a legitimate aim: the question is whether charging higher fees for Type B claims is consistent with the aims of the Fees Order as a whole. Linking price to cost is not an end in itself, but one means of achieving the various stated aims: of transferring the cost of tribunals from the taxpayer to the users; deterring unmeritorious claims; and encouraging earlier settlements. The method chosen has to be a proportionate means of achieving those aims. In this connection, it may be relevant to consider several factors. Even if there is a correlation between the type of claim and the cost to the tribunal, there is no correlation between the higher fee charged for Type B claims and the merits of the case or the conduct of the proceedings by the claimant or the incentives to good litigation and settlement behaviour on each side. A Type B claimant with a good case is just as likely to be deterred from bringing it by the higher fee as is the claimant with a bad case. The case may have been conducted as efficiently as it possibly could be by the claimant. Alternatively, the respondent or the tribunal itself may be responsible for the length and cost of the proceedings. The fees may incentivise the claimant to settle but they may have the reverse effect upon the respondent, who may calculate that the claimant will be deterred from carrying on and thus refuse to settle when he should. In the great majority of cases, the respondent is already in much the more powerful position and the higher fees simply exacerbate that. It has simply not been shown that the higher fee charged for Type B claims is more effective in transferring the cost of the service from taxpayers to users. As Lord Reed has explained (para 100, above), the revenue derived from the supply of services is not maximised by maximising the price. Revenue is maximised by charging the right price, the price which potential claimants will see as constituting reasonable value for money. It might be thought, therefore, that the higher the price, the greater the deterrent effect. However, the evidence suggests that there has been a greater fall in Type A than in Type B claims (para 40, above). Nevertheless, there has been a dramatic fall in both types of claim, which suggests that neither has been priced correctly to maximise revenue. Hence, these factors combine to the conclusion that charging higher fees for Type B claims has not been shown to be a proportionate means of achieving the stated aims of the fees regime. The alternative way in which the discrimination case is put is that charging higher fees for discrimination claims is indirectly discriminatory against women, who bring the majority of such claims, and others with protected characteristics who also bring them. There is a superficial attraction to this argument. It is now clear that setting the fees at the rate they have been set has had a deterrent effect upon discrimination claims, among others. It is also now clear that it has deterred meritorious claims at least as much as, if not more than, unmeritorious claims (see para 57 above). This has put the people who bring such claims at a particular disadvantage. Deterring discrimination claims is thus in itself discrimination against the people, by definition people with protected characteristics, who bring them; and, it might be thought, even harder to justify than is charging higher fees for Type B cases generally, given the importance which has always been attached in EU law to the goal of achieving equality of treatment in the workplace and to gender equality in particular. The Divisional Court and Court of Appeal thought it impermissible to narrow down the PCP to one sub group of the people who were affected by the higher fees, namely discrimination claimants, for the purpose of making it easier to show that the PCP had a disparate impact upon people with a particular protected characteristic. The PCP in question should be the higher fees for all Type B claims, not just for discrimination claims. Section 19(2)(a) provides that the PCP must apply to everyone, whether or not they share a particular protected characteristic, so in this case to everyone who brings a Type B claim. Section 19(2)(b) then requires that the PCP put a sub group of those people, who have a particular protected characteristic, at a particular disadvantage when compared with others who do not share that characteristic. It is at this point, rather than the earlier point, that a sub group is carved out. Even if, for the sake of argument, we concentrate on the sub group of women who bring discrimination claims, it is difficult to see how they are put at any greater disadvantage by the higher fees than are all the other Type B claimants. They are all in the same boat, the women who bring discrimination claims and the men who bring unfair dismissal claims. There is no greater or different need to justify the higher fees in discrimination claims than there is in any other sort of Type B claim. It is not necessary finally to resolve this question in these proceedings, but I am inclined to accept that this is correct. If the fee charged for unfair dismissal claims had been lower than the fee charged for discrimination claims, then it might well have been necessary (and very difficult) to demonstrate that the higher fee for discrimination claims was a proportionate means of achieving a legitimate aim. But that is not this case. And in any event, it is accepted that the higher fees generally have a disparate impact and in my view it has not been shown that they are justified.

UK-Abs

Parliament has conferred statutory rights on employees, including through legislation giving effect to EU law. Most employment rights can only be enforced in employment tribunals (ETs) and the employment appeal tribunal (EAT). Until the coming into force of the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013, SI 2013/1893 (the Fees Order) on 29 July 2013, a claimant could bring and pursue proceedings in an ET and appeal to the EAT without paying any fees. The stated aims of the Fees Order were to transfer part of the cost burden of the tribunals from taxpayers to users of their services, to deter unmeritorious claims, and to encourage earlier settlement. The Fees Order requires an issue fee to be paid when a claim form is presented to an ET, and a hearing fee prior to the hearing of the claim. The amounts depend on whether the claim is brought by a single claimant or a group, and whether the claim is classified as type A or type B. Type A claims are specified, and generally require little or no pre hearing work and very short hearings. All other claims are type B, including unfair dismissal, equal pay and discrimination claims. For a single claimant, the fees total 390 for a type A claim and 1200 for a type B claim. In the EAT fees are also payable in two stages, but without distinction between different types of appeal, or between single and group appellants. The Fees Order also makes provision for the full or partial remission of fees if a claimants disposable capital, together with their partners, is below a specified amount (in most cases, 3,000). The amount of remission depends on the claimants gross monthly income, together with their partners, and the number of children they have. A fee may also be remitted if the Lord Chancellor is satisfied that there are exceptional circumstances. A claim or appeal must be rejected unless it is accompanied by a fee or a remission application. This appeal arises out of proceedings for judicial review in which the trade union UNISON (the appellant) argued that the making of the Fees Order was not a lawful exercise of the Lord Chancellors statutory powers, because the prescribed fees interfere unjustifiably with the right of access to justice under both the common law and EU law, frustrate the operation of Parliamentary legislation granting employment rights, and discriminate unlawfully against women and other protected groups. The Supreme Court unanimously allows the appeal. Lord Reed gives the lead judgment, with which the rest of the Court agrees, dealing with all issues except for discrimination. Lady Hale gives judgment on the discrimination issue, with which the rest of the Court agrees. The Fees Order is unlawful under both domestic and EU law because it has the effect of preventing access to justice. Since it had that effect as soon as it was made, it was therefore unlawful and must be quashed. The constitutional right of access to the courts is inherent in the rule of law: it is needed to ensure that the laws created by Parliament and the courts are applied and enforced. Tribunals are more than merely the providers of a service which is only of value to those who bring claims before them [65 85]. As a matter of domestic law, the Fees Order is unlawful if there is a real risk that persons will effectively be prevented from having access to justice, or if the degree of intrusion into access to justice is greater than is justified by the purposes of the Fees Order [86 89]. While court fees for small claims are related to the value of the claim, the ET and EAT fees bear no direct relation to the amount sought and can therefore be expected to act as a deterrent to claims for modest amounts or non monetary remedies (which together form the majority of ET claims). The recoverability of costs upon success cannot be decisive of the question of access to justice as that right is not restricted to the ability to bring successful claims [20 37]. Indeed the evidence before the Court shows that the effect of the Fees Order was a dramatic and persistent fall in the number of claims brought in ETs, with a greater fall in the number of lower value claims and claims in which a financial remedy was not sought. Fees were the most frequently cited reason for not submitting a claim. Worked examples of the impact of fees on hypothetical claimants indicated that in order to meet the fees they would have to restrict expenditure that was ordinary and reasonable for maintaining living standards [38 55]. The question of whether fees effectively prevent access to justice must be decided according to the likely impact of the fees on behaviour in the real world. Fees must be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Where households on low to middle incomes can only afford fees by forgoing an acceptable standard of living, the fees cannot be regarded as affordable. Even where fees are affordable, they prevent access to justice where they render it futile or irrational to bring a claim, for example where in claims for modest or no financial awards no sensible claimant will bring a claim unless he can be virtually certain he will succeed, that the award will include recovery of fees, and that the award will be satisfied in full [90 98]. Further, although the stated purposes of the Fees Order are legitimate aims, it has not been shown that the Fees Order was the least intrusive means of achieving those aims [99 103]. The Fees Order is also unlawful because it contravenes the EU law guarantee of an effective remedy before a tribunal: it imposes disproportionate limitations on the enforcement of EU employment rights [105 117]. The Fees Order is indirectly discriminatory under the Equality Act 2010 because the higher fees for type B claims put women at a particular disadvantage, because a higher proportion of women bring type B than bring type A claims. The charging of higher fees was not a proportionate means of achieving the stated aims of the Fees Order. It had not been shown to be more effective at transferring the cost of the service from taxpayers to users, and in some type B cases (such as pregnancy dismissal) the higher fee did not correspond to a greater workload placed on the tribunal. Further, meritorious as well as unmeritorious claims might be deterred by the higher price, and there was no correlation between the higher fee and the merits of the case or incentives to settle [121 134].

Despite the significance of her name in Cartesian philosophy, the vessel Res Cogitans depends on bunkers. The parties submissions have in compensation lent a degree of metaphysical complexity to commonplace facts. We are told that many similar cases worldwide await our decision with interest. The essential problem arises from the insolvency of the OW Bunker Group and the concerns of vessel owners that they may be exposed to paying twice over, once to their immediate bunker supply group now insolvent, and again to the ultimate source of the bunkers who may claim rights under a reservation of title or maritime lien. The concerns stem from what are understood to be fairly typical conditions on which bunkers are supplied worldwide. The bunkers in this case were supplied to the vessel in the Russian port of Tuapse in the Black Sea on 4 November 2014. They were ordered on 31 October 2014 by the appellants, who are respectively owners and managers of the vessel and can be treated as one and referred to simply as the Owners. The immediate bunker supplier was the first respondent, OW Bunker Malta Ltd (OWBM), which obtained the bunkers under a contract with its parent company, OW Bunker & Trading A/S (OWBAS), another member of the OW Bunker Group, which was at the time the worlds largest bunker supplier and is now insolvent. OWBAS in turn obtained them from Rosneft Marine (UK) Ltd (RMUK), which itself obtained them from an associate, RN Bunker Ltd (RNB), which had facilities in Tuapse and made the actual delivery. On 6 November 2014, OWBAS announced that it was applying to the court in Aalborg for restructuring. The second respondent, ING Bank NV (ING) financed the OW Bunker Group and claims as assignees of any claim which OWBM has against the Owners. OWBMs contract with the Owners OWBMs supply contract with the Owners described itself as being for sale and delivery ex barge of 110 mt of gasoil at a price of USD 848 per mt and 1000 mt of fueloil at a price of USD 359 per mt (a total of USD 443,800), with Payment within 60 days from date of delivery upon presentation of invoice. But it was expressly subject to the OW Bunker Groups general terms (said in OWBMs printed Sales Order Confirmation to be well known to you and to be published on OWBMs website). The general terms start with the following General Introduction: A.1 This is a statement of the terms and conditions according to which the International OW Bunker Group (hereinafter called OWB) will sell marine bunkers. A.2 These conditions apply to all offers, quotations, orders, agreements, services and all subsequent contracts of whatever nature, except where otherwise is expressly agreed in writing by OWB. Clause P.1 provides for the agreement to be governed by English law and for arbitration in London of all disputes arising in connection with it. Clause G.12 under the heading Delivery provides: Delivery shall be deemed completed and all risk and liabilities, loss, damage, deterioration, depreciation, including contamination, evaporation or shrinkage to the Bunkers delivered and responsibility for loss, damage and harm caused by pollution or in any other manner to third parties shall pass to the Buyer from the time the Bunkers reach the flange/connecting pipe line(s)/delivery hoses provided by the Seller on the barge/tank truck/shore tank. Clauses H.1 and H.2 provide in summary that until full payment of all amounts due to OWBM, title and property rights were reserved to OWBM and the Buyer was in possession of the bunkers solely as Bailee for the Seller, and shall not be entitled to use the Bunkers other than for the propulsion of the Vessel. The full wording of clauses H.1 and H.2 is as follows: H.1 Title in and to the Bunkers delivered and/or property rights in and to such Bunkers shall remain vested in the Seller until full payment has been received by the Seller of all amounts due in connection with the respective delivery. H.2 Until full payment of the full amount due to the Seller has been made and subject to article G.14 hereof, the Buyer agreed [sic] that it is in possession of the Bunkers solely as Bailee for the Seller, and shall not be entitled to use the Bunkers other than for the propulsion of the Vessel, nor mix, blend, sell, encumber, pledge, alienate, or surrender the Bunkers to any third party or other Vessel. The Vessel is defined by clause B.1 of the terms as meaning the Buyers Vessel, Ship, Barge or Off shore Unit that receives the supply/bunkers; either as end user or as transfer unit to a third party. It is unnecessary to consider whether the recognition in clause B.1 that the vessel might serve as a transfer unit to a third party fits with the prohibition in clause H.2 of sale, alienation or surrender of the bunkers to any third party or other vessel. That situation is not in question here. What is clear is that the Owners accepted that, until full payment to OWBM, they would not acquire title or property rights in the bunkers, but would hold them as bailees for OWBM, subject only to a right to use them for the propulsion of the vessel Res Cogitans herself. RMUKs contract with OWBAS OWBASs purchase from RMUK priced the gasoil and fueloil at respectively USD 333 per mt and USD 830 per mt (a total of USD 416,000), and required payment within 30 days from date of delivery against hard copy of invoice. The purchase was subject to RMUKs terms and conditions, clause 10 of which provided, inter alia: Until such time as payment is made, on behalf of themselves and the Vessel, the Buyer agrees that they are in possession of the Marine Fuels solely as Bailee for the Seller. If, prior to payment, the Sellers Marine Fuels are commingled with other Marine Fuels on board the Vessel, title to the Marine Fuels shall remain with the Seller corresponding to the quantity of the Marine Fuels delivered. There was no express provision regarding consumption, but on the facts being assumed for the purposes of this case, RMUK was aware that the bunkers were being purchased for resale at a profit, that the OW Bunker Groups terms would be likely to include provisions to like effect to clauses H.1 and H.2 set out in para 6 above and that the bunkers were being purchased for immediate use and might be wholly or partly consumed within both the 30 day credit period allowed by RMUK and the 60 day credit period allowed by OWBM. Having contracted to supply the bunkers to OWBAS, RMUK then entered into a contract with RNB, under which RNB agreed to sell the bunkers to RMUK for delivery in accordance with the contract between RMUK and OWBAS. The assumed facts On the assumed facts, the Owners availed themselves of the right to consume the bunkers in the vessels propulsion and did so both within and, quite probably after, the 30 and 60 day periods allowed for payment under the contracts between respectively RMUK and OWBAS and OWBM and the Owners. The bunkers were in the event totally consumed without any payment ever being made by OWBM or OWBAS to RMUK. RMUK on the other hand paid RNB in accordance with its contract with RNB on 18 November 2014. On the day before doing so, RMUK, having become aware that it might not receive payment from OWBAS, sent a Demand of Payment to the Owners, asserting that it remained the owner of the bunkers and requesting immediate payment from the Owners of USD 416,000, the amount which it had invoiced to OWBAS. The Supreme Court was given no indication that RMUK has since then taken any formal steps to pursue this claim against the Owners. The proceedings to date By the end of November 2014, the Owners had commenced arbitration proceedings claiming a declaration that they had no liability to pay OWBM and/or ING for the bunkers. The parties agreed to submit a raft of detailed preliminary issues to the arbitrators (David Farrington, Ian Kinnell QC and Bruce Harris), and for the purposes of such issues agreed a series of assumed facts. The arbitrators, after a four day hearing, wrote an admirably analytical award dated 16 April 2015, giving their reasons for answers to each of such issues set out in its appendix 1 and holding inter alia that, on the assumed facts, OWBM/ING would be entitled to payment. The parties having agreed that this award on preliminary issues should be the subject of appeals on both sides without leave pursuant to section 69(2)(a) of the Arbitration Act 1996, Flaux J gave directions accordingly on 8 May 2015, and the matter came on 7 to 9 July 2015 before Males J, who with notable speed produced his judgment on 14 July 2015. He dismissed the Owners appeal, but went on, obiter, to express his opinion on an appeal by OWBM/ING, which would only have arisen for decision had the Owners appeal succeeded. Males J then gave the Owners permission to appeal to the Court of Appeal, while refusing OWBM/ING permission to go to the Court of Appeal on their cross appeal. The Court of Appeal (Moore Bick V P, Longmore and McCombe LJJ) on 22 October 2015 dismissed the Owners appeal. The Supreme Court granted permission to appeal on 11 February 2016. The issues and the award in more detail The arbitrators were evidently invited to treat the assumed facts as accepting that all the bunkers were used within the 60 day credit period allowed by OWBM to the Owners (see para 42 and footnote 18 to their award). But their reasoning was wide enough to cover what the Supreme Court has been told may be the actual position, which is that at most that part of the bunkers were so used, with any remainder being used later. Addressing OWBMs cross claim for the price, the arbitrators noted that section 2(1) of the Sale of Goods Act 1979 provides that: A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. Further, section 49 provides that: (1) Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods. (2) Where, under a contract of sale, the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed and the goods have not been appropriated to the contract. The arbitrators noted in footnote 7 to para 31 of their award that, if the contract was one of sale, then, according to authority binding on them, section 49(1) precluded recovery of the price of goods in circumstances where the property in goods had not passed to the buyer. The authority to which they were referring is F G Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd (often referred to as Caterpillar) [2014] 1 WLR 2365. This is an authority the correctness of which OWBM/ING would, if necessary, wish to challenge in the Supreme Court on this appeal. It is in dispute whether it is open to them to do so, in the light of the issues as addressed to and answered by the arbitrators as well as in the light of Males Js refusal of permission to OWBM/ING to cross appeal from his judgment to the Court of Appeal. Because of this dispute, it will be necessary to give an account of the arbitrators reasoning, award and answers to the preliminary issues which is fuller than it would otherwise have been. Having rejected section 49(1) as a basis for recovery of the price, the arbitrators considered and rejected three other ways in which OWBM suggested that it could recover the price of the bunkers if treated as sold within the Sale of Goods Act: (i) under section 49(2), as being payable on a day certain irrespective of delivery; (ii) under section 50, as damages for non acceptance; and (iii) on the basis that property passed for or in a nanosecond, as and when the bunkers went up in smoke. These being points raised by OWBMs cross claim, for which permission to appeal was refused by Males J, none of them is before the Supreme Court. Taking stock, the arbitrators considered that they could now answer certain of the agreed preliminary issues. They could answer issues 1, 2 and 3 to the effect that, on the assumed facts, OWBM never had property in the bunkers at any material time, and that the retention of title clause in its terms (in any event) prevented property passing to the Owners. On that basis, issue 4 then required the arbitrators to determine for the price under section 49 or section 50 of SOGA what is the consequence in respect of any claim that OWBM may seek to assert: (a) 1979; or (b) otherwise under the Contract; or (c) (d) (e) in bailment; or in restitution; or in tort? They held that they could answer issue 4(a) to the effect that No such claim could succeed, and issue 8, asking whether section 49(2) applied, with a simple no. On that basis, the arbitrators said (para 45) that it was now convenient to turn attention to issue 4(b). This, they said, concerns the possibility that [OWBM/ING] have a contractual claim falling outside constraints of [the Sale of Goods Act], and involves looking again at the contractual relationships between the parties, and in particular at that between OWBM and the Owners. In answering this issue, the arbitrators said (para 46): If, as we believe we must, we accept that section 49 of SOGA rules out the possibility of a claim against the Owners for the price of the bunkers supplied to the Vessel, and, as seems more obviously the case, that section 50 offers no alternative, does this also rule out the possibility of there being some other contractual remedy against the Owners arising out of their failure to pay OWBMs invoice? The Owners have suggested that the answer to this question is Yes. We do not agree. Whether or not one chooses to describe the contract between these two parties as a hybrid contract is, we consider, probably neither here nor there (although we would prefer to describe it and no doubt others like it as sui generis), but to suggest that the remedies that may follow from the failure to comply with its terms are solely and irrevocably those within the gift of SOGA appears to us to be unacceptable and quite unreal. In the next para (para 47), they continued: If all had gone in accordance with the parties expectations (and, of course, the Owners had had previous dealings with OWB Group companies), the Owners would have paid OWBMs invoice within the 60 days credit period. We are quite confident, that, when they did so, it would not have crossed anyones mind to enquire what bunkers had been consumed meanwhile in order to determine whether the invoice was being paid wholly or in part under a contract of sale (in respect of unconsumed bunkers), or otherwise (in respect of consumed bunkers). Regardless of the situation on board the Vessel, both parties would in our opinion understand that payment was being made simply in accordance with the express terms of the contract, which would have been the case. There is in our view no challenge to the provisions of SOGA or their effect in reaching the conclusion that we have unhesitatingly reached that, on the assumed facts, once the 60 days period of credit had elapsed the Owners were in breach of contract, the remedy for which was a claim in debt. We have seen nothing in the authorities to suggest that this simple and straightforward conclusion is incorrect. The arbitrators concluded that this reasoning enabled them to answer issues 4(b) and 6(a). Issue 6(a) was whether to the extent not resolved by the determination of issue 4 OWBM/ING had a claim under the contract. However, they added we have to say that we find the relationship (if any) between issues 4 and 6 somewhat unclear (para 48). They went on to say that we believe that we can at this point also tackle issue 9. Before doing so they addressed issue 5, rejecting OWBMs case that their supply to the Owners contained various implied terms, now no longer relied on. Turning to issue 9, this asks: Did [the Sale of Goods Act] apply to the Contract between the Owners/OWBM in any event and if not what is the effect on the parties respective claims? The arbitrators gave the straightforward answer: No, and none. shortly with issues 10 to 13, saying (para 53): In the light of this answer, the arbitrators concluded that they could deal As to Issue 10, OWBM was not required to own or to have property in the bunkers at the time of delivery because the contract between OWBM and the Owners did not require this. There was no modification of the requirements of SOGA because SOGA did not apply and its terms were not engaged. As to Issue 11, there was no such requirement. As to Issue 12, no terms were implied into the contract by virtue of section 12 of SOGA. And, finally, as to Issue 13, in so far as there were no such implied terms as suggested, there were none to be breached. It is unclear what, if any, other breaches of contract by OWBM are alleged, but none appears to have been established. Issues 10 to 13 and the answers given read as follows: 10. Do the OWBM T&Cs, on a true and proper construction, modify the requirements of section 12 of SOGA 1979 such that OWBM was required to own or have property in the Bunkers at the point of delivery? ANSWER: The OWBM T&Cs did not modify section 12 of SOGA 1979, but, under the Contract between the Owners and OWBM, OWBM was not required to own or have property in the Bunkers at the point of delivery, and section 12 did not apply. If not, what is the requirement imposed by the Contract, 11. on a true and proper construction, regarding the title OWBM is required to pass to the Owners? ANSWER: There was no such requirement. 12. What terms were implied into the Contract by virtue of section 12 SOGA? ANSWER: None, because section 12 did not apply. 13. Is OWBM in breach of Contract, and in particular the implied terms referred to at Issue 12 above (or any of them) and if so in what way? ANSWER: As there were no terms implied into the Contract by virtue of section 12 SOGA, there were none to be breached. No other breaches were specified, and on the basis of the Assumed Facts, none appears to have been established. The proceedings in court in more detail Males J in dismissing the Owners appeal held that OWBMs contract to supply bunkers to the Owners was not a contract to which the Sale of Goods Act applied, but was a contract containing a condition whereby OWBM undertook that the Owners would have the lawful right to use any bunkers which they in fact used pursuant to the liberty they were given by its terms (paras 48 and 52). He held that it was not subject to any further condition as regards the passing of property in any bunkers used. OWBM/INGs cross appeal, to recover the price under section 49 of an equivalent sum by way of damages, did not on this basis arise, but Males J nonetheless expressed some views on it, obiter. He thought (paras 66 and 74) that if the Act applied, that could only be because OWBM undertook, in the terms of section 2(1), to transfer the property in goods to the buyer, that it had failed to do so and was therefore (subject to two now immaterial arguments) in breach of the implied term contained in section 12(1), and that that would represent a total failure of consideration which, applying Rowland v Divall [1923] 2 KB 500, would provide the Owners with a defence to a claim for the price. Apart from this problem, he said that he would, however, have disagreed with the arbitrators on one point relating to the cross claim, in that in his view the credit terms would have satisfied the language of section 49(2). Having expressed these views, he refused permission, as already stated, in respect of the Owners cross appeal. The issues argued before the Court of Appeal were thus effectively limited to two: (1) Was the contract a contract of sale within the meaning of section 2(1) of the Sale of Goods Act? (2) If not, was it subject to any implied term that OWBM would perform or had performed its obligations to its supplier, in particular by paying for the bunkers timeously? Like the judge, the Court of Appeal was bound by the Caterpillar decision, so that it could have done no more than hold that section 49 of the Sale of Goods Act barred any claim to the price by OWBM if the contract was subject to the Act, even if that point was open and had arisen, for consideration. The Court of Appeal agreed substantially with the judge in answering the two main questions before it in OWBM/INGs favour. However, as appears from the following key passage in its reasoning, it also contemplated that the contract would or might be a contract of sale pro tanto to the extent that payment was made at a time when any part of the bunkers remained unconsumed. Moore Bick V P, giving the main judgment, with which the other members of the court agreed, said: 33. Whatever label one attaches to the contract (and I see nothing incongruous in describing it in commercial terms as a contract for the sale of goods), its essential nature is in my view reasonably clear. It is a contract under which goods are to be delivered to the owners as bailees with a licence to consume them for the propulsion of the vessel, coupled with an agreement to sell any quantity remaining at the date of payment, in return for a money consideration which in commercial terms can properly be described as the price. That may not satisfy the definition of a contract of sale of goods in section 2(1) of the 1979 Act, but there is no reason why the incidents of a contract of sale of goods for which the Act provides should not apply equally to such a contract at common law, save to the extent that they are inconsistent with the parties agreement. The difficulties in the present case stem entirely from the owners attempt to establish that the consideration for the payment of the price was the transfer of property in the whole of the goods to which the contract related, despite the fact that that does not correspond to the express terms of the contract relating to the use of the goods and the passing of title. The commercial background and the terms of the contract make it clear that what the owners contracted for was not the transfer of property in the whole of the bunkers, but the delivery of a quantity of bunkers which they had an immediate right to use but for which they would not have to pay until the period of credit expired. From the suppliers point of view the retention of title clause provided an ever diminishing degree of security for the payment of what was due to them. Since the contract provided for the transfer to the owners of property in any part of the bunkers remaining at the time of payment, it was to that extent a contract for the sale of goods to which the Act, including the implied condition in section 12, applied. A failure to pass title to any residue remaining at the time of payment would therefore involve a breach of contract, but it would not be one which entitled the owners to treat the contract as a whole as discharged, unless (contrary to all expectations) it represented such a large proportion of the quantity originally delivered that there could be said to have been a total failure of consideration. 34. For these reasons I agree with the judge that the transfer of property in the bunkers from OWBM to the owners was not the essential subject matter of the contract and that a failure to transfer property in the bunkers, all of which had been consumed when the period of credit expired, did not relieve the owners of the obligation to pay for them. The issues before the Supreme Court The issues on the Owners appeal to the Supreme Court remain as argued before the Court of Appeal and set out in para 22 above. But, in seeking to uphold the decisions of the courts below, Mr Robert Bright QC for OWBM/ING submits that it is open to OWBM/ING to rely on a point which was not open to his clients in those courts. That is that the decision of the Court of Appeal in the Caterpillar case, mentioned in para 13 above, was wrong and should be overruled. The correct position is, he submits, that, even though a contract is categorised as one of sale within the Sale of Goods Act, section 49 should not be read as excluding all possibility of claims to the price of goods sold, if the contract so provides, even though the circumstances cannot be brought within either of subsections (1) and (2). Whether this submission is open to OWBM/ING is, as I have stated in para 13 above, in dispute. For the Owners, Mr Jonathan Crow QC makes five basic, though over lapping, submissions about the nature of the contract. This, he submits, is a matter of substance, not form. Second, it must be determined at the date when the contract is made. Third, it depends on what the parties then agreed, not what happened subsequently or what they expected they might do subsequently. Fourth, the question must be answered once and for all, and fifthly it must be answered by reference to the statutory test set out in section 2(1) of the Act, not by reverse engineering, by which Mr Crow meant: not because the consequences of recognising the contract as one of sale within the statutory definition might seem unpalatable. Analysis of the nature of the contract Mr Crows first proposition is well established and needs no great elaboration: see eg Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537 (CA). An agreement may also be in substance a contract of sale, even though it has ancillary aspects, eg for after sales services, which do not involve the passing of property and are not by themselves sale. Here, Mr Crow is able to point out that the basic form and language of the contract is that of sale. That is true, as far as it goes. But clauses A.1 and A.2 make clear that sale may here be used in an expanded sense, since the general terms are to apply to all agreements and services and all subsequent contracts of whatever nature, and Buyer is under clause B.1 a defined term which includes any party requesting offers or quotations for or ordering Bunkers and/or Services (emphasis added). Even apart from that, however, clauses H.1 and H.2 make clear that the contract has special features. First, they expressly provide not only for retention of title pending payment, but also expressly that, until such payment, the Buyer is to be in possession of the bunkers solely as Bailee for the Seller. After going on to provide that the Buyer shall not be entitled to use the bunkers, the terms introduce the qualification other than for the propulsion of the Vessel. The qualification clearly reflects a reality. Bunker suppliers know that bunkers are for use. If they grant relatively long credit periods combined with a reservation of title pending payment in full, it is unsurprising that they do so combined with an express qualification authorising use in propulsion, since standard terms prohibiting any use would be uncommercial or in practice, no doubt, simply ignored. Mr Crow vigorously resisted the introduction of any such considerations, on the basis that they are speculative and that the nature of a contract cannot change according to the level of certainty with which parties are to be taken to have expected that bunkers supplied might or might not be used in propulsion before payment for them was made. But OWBMs (and RMUKs) contractual terms and the assumed facts (particularly paras 13, 20 and 30) together with an admissible modicum of commercial awareness on the courts part about how ships operate (and in particular how owners strive to keep them operating) and about the value of credit and the likelihood that full advantage of it will be taken all point in one direction. They demonstrate that the liberty to use the bunkers for propulsion prior to payment is a vital and essential feature of the bunker supply business. In these circumstances, OWBMs contract with the Owners cannot be regarded as a straightforward agreement to transfer the property in the bunkers to the Owners for a price. It was in substance an agreement with two aspects: first, to permit consumption prior to any payment and (once the theory of a nanosecond transfer of property is, rightly, rejected) without any property ever passing in the bunkers consumed; and, second, but only if and so far as bunkers remained unconsumed, to transfer the property in the bunkers so remaining to the Owners in return for the Owners paying the price. But in this latter connection it is to be noted that the price does not here refer to the price of the bunkers in respect of which property was passing, it refers to the price payable for all the bunkers, whether consumed before or remaining at the time of its payment. A contract of sale may under section 2(3) of the Act be either absolute or conditional; and under section 2(6) An agreement to sell becomes a sale when the conditions are fulfilled subject to which the property in the goods is to be transferred. Mr Crow submits on this basis that the contract can be regarded as an agreement to transfer property, conditional on the bunkers remaining unburned when payment is made. The difficulties with this submission are that: i) it categorises the whole agreement by reference to only one possibility relating to only one part of the bunkers covered by the agreement, namely the possibility of at least some bunkers surviving unused, after 60 days or whenever payment is made. Sections 2(3) and (6) can readily be applied where there is a condition regarding the passing of property to which all the goods covered by an agreement are subject, but that is not the case here; ii) it ignores the fact that there is no condition governing the transfer of property in the bunkers used before payment the property in bunkers consumed never passes and is never agreed to be passed; and iii) it focuses on the agreement to pass property in the bunkers surviving at the time of payment, when the agreement was a single contract to pay a single price for all the bunkers sold not later than 60 days after delivery, whatever had happened to such bunkers in the meantime; the agreement is a single agreement which cannot sensibly be treated as divisible. As the arbitrators said, aptly, in para 47 of their award quoted in para 17 above, in the ordinary course when Owners paid OWBMs invoice after 60 days: it would not have crossed anyones mind to enquire what bunkers had been consumed meanwhile in order to determine whether the invoice was being paid wholly or in part under a of sale (in respect of unconsumed bunkers), or otherwise (in respect of consumed bunkers). Mr Crow sought to avoid some of these difficulties by submitting at one point that the agreement could be analysed as one of sale, under which OWBM undertook that at the date of payment they would transfer property in any bunkers then remaining and that they could and would also have transferred property in any bunkers already consumed, had they not been consumed. That submission certainly has a metaphysical aspect. But it makes in my view neither legal nor commercial sense. All that mattered for the Owners was that they should have and had the right to consume the bunkers in the vessels propulsion as and when they did so prior to payment, and that upon payment they would acquire the property in, and thereby an absolute right to dispose of or use as they wished, any remaining bunkers. For similar reasons to those given in the preceding three paragraphs, I would also reject the Court of Appeals suggestion in para 33 of its judgment, quoted in para 23 above, that the contract can be analysed as a contract of sale to the extent that it provided for the transfer of property in any part of the bunkers remaining at the time of payment. That is again to divide up a single agreement covering the supply of all the bunkers (gasoil and fueloil) at a single price for each, irrespective of what had happened to them. However, I fully accept that, viewing in isolation the position of any bunkers remaining at the time of payment, the transaction relating to them is closely analogous to a sale. I also accept that, both as regards bunkers consumed and as regards any bunkers remaining at the time of payment, the contract, although not one of sale, would contain similar implied terms as to description, quality, etc to those implied in any conventional sale. The above analysis is consistent with the approach taken by the Court of Appeal in the somewhat complicated case of Harry & Garry Ltd v Jariwalla [1988] WL 1608652. The English buyers, Harry & Garry, had under contracts of sale received a quantity of sarees which they found defective and in respect of which they had not yet accepted the relevant bills of exchange, by reference to which, it appeared, the Indian sellers, the Jariwallas, had however already succeeded in raising some monies in India. In these circumstances, Harry & Garry agreed to accept the bills, so acquiring property in the sarees, while the Jariwallas agreed either to arrange the cancellation of the bills or to take back and pay for the sarees. Under this agreement, 2,494 sarees were then selected as sarees which the Jariwallas would, as they did, take back physically, and it was agreed that the Jariwallas would pay 46,763.45 for such sarees, with property being retained by Harry & Garry until this full amount was paid. Through a Mr Shah, the Jariwallas sold some 411 of these sarees, evidently with the consent of Harry & Garry despite the reservation of title. Harry & Garry sued for the full 46,763.45 agreed to be paid. In the court below, Judge Harris had seen the contract as being one of sale, and on that basis held that, since the circumstances did not fall within section 49(2), a claim for the price was precluded. In the Court of Appeal, Harry & Garrys appeal was allowed. Kerr LJ, giving the main judgment, noted that section 49(1) was in terms inapplicable, because of the reservation of title. But he went on to say of the judges approach that: It would be ironical if that were the correct analysis. One would be driven to the conclusion that although these goods had been delivered and had been accepted, the only remedy open to the plaintiffs, if indeed they were sellers of these goods, would apparently have been a claim for damages for non acceptance under section 50, there being no other provision of the Act which would have given the plaintiffs any remedy. With all due respect to the judge, no doubt influenced as he was by the complexity of this case and the arguments which were addressed to him, I cannot agree with that analysis for two reasons. First, in my view this was not a contract for the sale of goods within the terms of the 1979 Act. It was not, to quote section 2(1) of the Act, a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. Like many other contracts in complex situations, this was a sui generis transaction. In effect, what the Jariwallas agreed was that if the bills of exchange were accepted, which was their great concern, they would either have them cancelled or they would take the goods back and pay for them. When it then came to the specific agreement about the 2,494 selected sarees, I think the nature of the agreement was that in consideration of the plaintiffs allowing them to take that consignment away and seeking to dispose of it as agents for the plaintiffs, who remained the owners of it, they agreed again either to perform the first part of the option, to have the bills of exchange cancelled at any rate to the extent of the value of those selected goods, or to pay the sum of 46,763.45p. That was the nature of the agreement. Taking it on its own or taking it, as I think one should, as part of the agreement made on 23 December, I do not think it was a contract for the sale of goods to which the Act applied. As with the buy back contract in Harry & Garry, so here, in my opinion, the relevant agreement is, in Kerr LJs words, Like many other contracts in complex situations, a sui generis transaction, not a contract of sale. As I have already indicated, that does not mean that its terms, as regards undertakings as to description and quality, would not be modelled on those applying in the sale of goods. But, in its essential nature, it offered a feature quite different from a contract of sale of goods the liberty to consume all or any part of the bunkers supplied without acquiring property in them or having paid for them. The obligation on the part of OWBM to be able to pass the property in respect of any bunkers not so consumed against payment of the price for all the bunkers cannot make the agreement as a whole a contract of sale. Mr Crow drew our attention to first instance cases where the relationship between the suppliers of bunkers and charterer customers under a reservation of title was assumed to fall within the Sale of Goods Act, for the purposes of analysing whether, on the termination of the charter, the vessels owners had acquired title under section 25(1) of that Act: Forsythe International (UK) Ltd v Silver Shipping Co Ltd [1994] 1 WLR 1334, Angara Maritime Ltd v Oceanconnect UK Ltd [2010] EWHC 619 (QB); [2011] 1 Lloyds Rep 61. In neither case was the nature of the contract or the present issue questioned or directly addressed. Similarly, it was simply assumed that the transaction was one of sale within the Act in the appellate authorities of Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25 (CA) and Armour v Thyssen Edelstahlwerke AG [1991] 2 AC 339 the former case concerning an unsuccessful attempt to trace title reserved in resin into chipboard manufactured using it, the latter concerning a successful attempt to reclaim steel supplied subject to a reservation of title. I add that, even if on analysis these two cases could and should have been analysed as sui generis, like the present, it is difficult to think that could have had any effect on their outcome. None of these cases therefore really assists the resolution of the present appeal. I also add (with further reference to the Court of Appeals suggestion mentioned in para 31 above) that, even if the contract were (contrary to my above analysis) to be analysed as a contract of sale when made in that it contemplated the transfer of property in any bunkers unused at the date of payment, I do not see how this could assist the Owners. OWBM could not owe any obligation to transfer property in bunkers consumed before payment. The contract would be subject to a resolutive condition subsequent whereby it would cease to be a contract of sale as and to the extent that the Owners exercised their contractual right to consume the bunkers in the vessels propulsion, and would cease entirely to be a contract of sale if and when all such bunkers were consumed before payment. For the reasons I have given, the arbitrators were correct, in my opinion, in concluding that the contract was not one of sale within section 2 of the Sale of Goods Act, with the result that the Owners could have no possible defence under section 49 to the claim for the price. The Owners alternative ground of appeal I turn in this light to the Owners alternative ground of appeal, which is that there must, as a matter of obviousness and necessity, have been an implied term of the contract relating to performance of obligations in the contractual chain above OWBM, by virtue of which OWBM obtained the bunkers it supplied to the Owners. In the Court of Appeal at least initially and in the written case, this is put extremely briefly as an implied duty on OWBM to perform its obligations by making timeous payment to its supplier. The real reason why OWBM could not have passed any title to the Owners appears, however, to have been that OWBAS became insolvent and never paid RMUK. The Owners formulation of an implied term in their case would not address this. Not surprisingly, the matter was therefore put differently and more widely in the Court of Appeal, which was however left in the end in understandable uncertainty about the precise content of the alleged implied duty. For similar reasons to those given by Moore Bick LJ in para 36, I share the Court of Appeals conclusion that there is no basis or need for any such implied duty, however it is put. In short, the essential nature of the bargain is as I have stated in para 28 of this judgment. As a result, OWBMs only implied undertaking as regards the bunkers which it permitted to be used and which were used by the Owners in propulsion prior to payment was that OWBM had the legal entitlement to give such permission. In order to be so entitled, OWBM did not need to have or acquire title to the bunkers. It merely needed to have acquired the right to authorise such use under the chain of contracts by virtue of which it had obtained the bunkers. As regards bunkers in existence at the time of any payment, OWBM would of course have to have had or at least be able to pass title. Had they been unable to do so, then, maybe, the Owners could have treated OWBM as in breach of condition and terminated the contract, though they would at the same time have had to refrain from further use of the bunkers. OWBM would then have been unable to maintain a claim for the whole price, and would have had to assert either a contractual or a restitutionary claim (it is unnecessary to consider which) to pro rata payment for the bunkers consumed. But none of this is relevant, and for that reason it was not explored in submissions. What happened was quite different. No payment was ever tendered by the Owners. The Owners simply continued to use the bunkers under the contractual liberty until they were all consumed. So far as material, no basis appears for treating the contractual liberty as ending with the 60 day period for payment, if payment was not then made; so long as the contract remained in force, the liberty would continue on its face until payment or complete consumption of all the bunkers supplied. The issues before the court do not involve any claim that OWBM had no right to permit such use, or that the Owners are or may be exposed to any risk of double exposure, either by reason of RMUKs claim (never so far as appears formally pursued) or on any other basis. On the presently assumed facts, therefore the Owners are simply liable for the price, albeit under a contract sui generis, which is not one of sale. The position if the contract had been one of sale In view of the above conclusions, the position if the contract had been classified as a contract of sale within section 2 of the Sale of Goods Act cannot and does not arise. The Owners case was that, if the contract was one of sale, then section 49 would preclude any claim by OWBM/ING for the price of the bunkers used. OWBM/ING challenge this analysis and the Court of Appeal decision in Caterpillar which currently supports it. Since the point was fully argued and has general significance, I propose to say something on it. First, however, I should briefly address the preliminary question, very specific to this particular case, whether it would, if necessary, even have been open to OWBM to challenge the correctness of the Court of Appeals decision in Caterpillar. Not without some doubt, I conclude that it would have been. This is because of the way in which the arbitrators addressed issue 4(b), as set out in paras 16 18 above. They answered it in their reasons before and on the face of it independently of their conclusion under issue 9 that the Sale of Goods Act did not apply to the contract. Further, their reasons appear to postulate that the Sale of Goods Act could apply but that a contractual claim for payment (albeit not for a price) could still be maintained otherwise why the references to section 49 ruling out a claim for the price, to section 50 offering no alternative, and to their conclusion presenting no challenge to the Sale of Goods Act? On that basis, was the Court of Appeal correct in Caterpillar to conclude that, where goods are delivered under a contract of sale, but title is reserved pending payment of the price, the seller cannot enforce payment of the price by an action? In Caterpillar the goods had been agreed to be sold and were delivered by F G Wilson to John Holt & Co (Liverpool) Ltd (Holt Liverpool) which it was known would on deliver them to its subsidiary, John Holt plc (Holt Nigeria), a Nigerian company. The majority (Patten and Floyd LJJ) held that, under the relevant terms, Holt Liverpool (not having paid the price to F G Wilson) had delivered the goods to Holt Nigeria as fiduciary agents for F G Wilson, and that property had in this situation continued in law to reside in Holt Liverpool until such delivery, whereupon it had passed directly from F G Wilson to Holt Nigeria without Holt Liverpool ever acquiring it. Longmore LJ, although he had dissented on the passing of property, gave the principal reasoned judgment on the question which arose from the majoritys conclusion that property had not passed. This was whether F G Wilson could sue Holt Liverpool for the price. He concluded, after reviewing the authorities, that section 49 constituted a code, which precluded any action for the price outside its terms. The authorities included what Longmore LJ saw as two inconsistent previous Court of Appeal decisions, one Otis Vehicle Rentals Ltd v Cicely Commercials Ltd [2002] EWCA Civ 1064, the other the case of Harry & Garry, discussed above on another aspect and which Longmore LJs judgment records was unearthed by the industry of counsel appearing in Caterpillar. Section 49(1) enables an action for the price where the seller has transferred property, with or without delivery, and the buyer has failed to pay the price due. Conversely, the authorities cited by Longmore LJ establish that, where property has not passed, a seller cannot sue for the price of goods, delivery of which the buyer has refused to accept either physically (Atkinson v Bell (1828) 8 B & C 277; Otis Vehicle Rentals, cited above) or by refusing to take up the shipping documents (Stein Forbes & Co v County Tailoring Co (1916) 115 LT 215; Muller, Maclean & Co v Leslie & Anderson (1921) 8 Lloyds List Law Rep 328; Plaimar Ltd v Waters Trading Co Ltd (1945) 72 CLR 304) or by failing or refusing to make the necessary shipping arrangements (Colley v Overseas Exporters [1921] 3 KB 302). An established common law exception (see Dunlop v Grote (1845) 2 C & K 153) now reflected in section 49(2) of the Act exists where the price is payable on a day certain, in which case the seller may enforce its payment, provided that he is ready and able at the same time to deliver to the buyer the goods and property in them: Otis Vehicle Rentals, para 16 per Potter LJ. In Caterpillar, Longmore LJ expressed the view that a price payable on a day certain would embrace a situation where the price was expressed to be payable within 30 days of the date of the invoice. If so, it would embrace the situation under RMUKs contract with OWBAS or OWBMs contract with the Owners, whereby the price was payable within respectively 30 or 60 days of delivery. This was also Males Js view, differing on the point from the arbitrators. Leaving section 49(2) aside, the question of principle is whether section 49 excludes any claim to recovery of a price outside its express terms. The majority of the High Court of Australia in Minister for Supply and Development v Servicemens Co operative Joinery Manufacturers Ltd (1951) 82 CLR 621 can be read as accepting that similar statutory language did not exclude all such claims. However, whilst Latham CJ, one of the majority, made no express reference to section 49(2), he did refer to Dunlop v Grote, cited above, and to Benjamin on Sale, 7th ed (1931), p 861, which both deal with a price payable on a day certain. It is not clear that he necessarily intended to go further. In Colley v Overseas Exporters, cited above, McCardie J undertook a detailed examination of the pre 1893 Sale of Goods Act position at common law, concluding that there had been only two established counts available for recovery of the price of goods sold, both dependant on property passing and so falling within what became section 49(1). Section 49(2) was a limited exception. Support for this can be found in the illuminating discussion and judgments in Laird v Pim (1841) 7 M & W 474, to which McCardie J also referred. In that case, the defendant, having contracted to purchase and having been given possession of a plot of land, had refused to complete a conveyance or pay for it. During the proceedings, the analogy with the non acceptance of goods was drawn, and at one point Parke B pointed out that, since the land was still the plaintiffs at law, the plaintiff might bring ejectment. The plaintiff made clear however that it was not claiming the price of the whole purchase money, but only for the damages sustained by the non performance of the contract (p 479). To this counsel for the defendant responded (p 483) that Unless the defendants are bound to pay the purchase money, no damages can be recovered for the non payment of it: the plaintiff, therefore, must shew not only that the defendants did not pay, but also that they were bound to pay. But this argument failed. Parke B said (p 485) that the plaintiff was substantially in the same situation, for the purpose of recovering the money, as if all had been done on his part which he engaged to do. It does not follow that he shall recover the whole purchase money, but he is in the same situation for the purpose of recovering damages for the non payment of the price, as if all had been done by him. That approach, if adopted, at least answers the problem which Longmore LJ found in paras 55 56 in Caterpillar about accepting a claim for damages for non payment of money or seeing any remedy whatever open to the seller. I add three observations. First, it would seem to me that the non performance in a case like Laird v Pim could just as well be described in terms of failure to accept a transfer of the title to property, as failure to pay its price. Second, if described as a claim for failure to pay the price, the judgments in Sempra Metals Ltd v Inland Revenue Comrs [2008] AC 561 mean, I believe, that a claim for damages for non payment of money could quite readily be accommodated in the modern law. Third, in Laird v Pim, the damages might have had to be reduced to take account of the prospect of recovery of the property the law report does not address their measure more precisely than I have already indicated. In the present case, bearing in mind the complete consumption of the bunkers, there would be no difference between the agreed price and the damages for non payment of the price that would follow on the approach taken in Laird v Pim. Nonetheless, there is artificiality about treating the sellers claim as being for damages, after delivery was made albeit under retention of title, and particularly so where the buyer is authorised to consume the goods as here. Part of the thinking behind the rule in section 49(1) is no doubt, as Longmore LJ observed (para 43), that It would have been thought unfair to a buyer if, before delivery had occurred, the goods had perished or been damaged and yet the price was payable, unless the goods were actually his property, see Simmons v Swift (1826) 5 B & C 857. It would also be odd if a sellers creditors on bankruptcy could both seize goods still on his premises and sue the buyer for the price. However, it will be noted that both these rationales focus on situations where delivery has not been made, and, as appears from the judgments in Simmons v Swift, the real significance attached by the court to the fact that property had not passed in Simmons v Swift was that it meant that the goods were still at the risk of the sellers. The oddity mentioned by Longmore LJ would not have existed, if the goods had been at the buyers risk. Section 49(2) relaxes only partially the strictness of section 49(1), and it depends on the price being payable on a day certain. These are words which can no doubt be construed liberally, as Longmore LJ was minded to, but are not of indefinite expansion. Further, the main focus of section 49(2) may well have been on cases where delivery has not been made hence the phrase irrespective of delivery. Section 49 does not focus on the position existing where delivery is made, title is reserved but the price is agreed to be paid, albeit not on a particular day certain. Even less does it focus on the position where all these features are present and the buyer is permitted to dispose of or consume the goods or they are at the buyers risk and are destroyed or damaged. The question is whether in all these cases an action for the price is excluded, and the seller is forced to look around for other means of redress. The Court of Appeal, in an alternative reason for its judgment in Harry & Garry, did not think so. Kerr LJ, now approaching the case on the hypothesis that the buy back contract was subject to the Sale of Goods Act, said this: In any event, however and this is the second reason why I differ from the judge it is clear from the authorities to which we were referred that even in the realm of contracts for the sale of goods there can be situations in which a seller may be entitled, under the particular terms of the contract, to claim a sum which is in effect the price of the goods, even though he cannot bring himself within the terms of section 49. In that connection we were helpfully referred by Mr Bartlett to another section of the Act and a number of authorities. I can deal with them quite shortly. First, section 55 of the Act makes it clear that the provisions of the Act are not exhaustive, but that the parties may enter into agreements which negative or vary the rights, duties or liabilities which would otherwise arise under a contract of sale by virtue of the Act. Secondly, Mr Bartlett referred to a part of the speech of Lord Diplock in Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441, 501, in which he points out that the Sale of Goods Act is not an exhaustive code within which every transaction of the nature of a sale of goods must necessarily be brought, but that it is open to parties, if they have done so by the terms of their agreement, to create situations which, while being contracts for the sale of goods, are not governed exclusively by the terms of the Act. It is true that in Colley v Overseas Exporters [1921] 3 KB 302, 310, McCardie J expressed the obiter view that section 49(2) was an exhaustive statement (together with subsection (1)) of situations in which a seller is entitled to sue for the price. But that was clearly not the view of Wright J as expressed in Shell Mex Ltd v Elton Cop Dyeing Co Ltd (1928) 34 Commercial Cases at p 39, where he referred to what is now section 55 of the 1979 Act and the particular terms of the contract. He concluded that on its true construction the sellers were not entitled to recover the price, but without regard to the fact that on no view could the case have been brought within section 49. Kerr LJ went on to state that that had been the view of the majority of the High Court of Australia, in Minister for Supply and Development v Servicemens Co operative Joinery Manufacturers Ltd, before concluding: If, contrary to the primary view which I have expressed, this transaction recorded in the form of the document of 31 December 1982 was indeed a sale by the plaintiffs to the Jariwallas, then in my view, having regard to the agreement as a whole which the judge has found, it would still be open to the plaintiffs to sue for the 46,000 odd once a reasonable time had elapsed and it had become clear all of which has now happened that they were not going to be relieved from the bills of exchange. Accordingly, I would allow this appeal to the extent of judgment for the plaintiffs for 46,763.45p, with the appropriate interest. Like Longmore LJ in Caterpillar (para 53), I am unconvinced that the solution to the present problems is found in section 55 or in Lord Diplocks dicta in Ashington Piggeries. Both concern the negativing or variation of any right, duty or liability [which] would arise under a contract of sale of goods by implication of law, into which category it is difficult to fit the statutory provisions of section 49. I am also unconvinced that Wright Js judgment in Shell Mex is of present assistance, and I have already questioned whether both members of the majority in the High Court of Australia in the Minister of Supply case were necessarily speaking of situations outside section 49(2). Nevertheless, the 1893 Act was rooted in and intended to reflect common law authority, developed in an era when freedom of contract and trade were axiomatically accepted as beneficial. Certainly, a court could not now recognise a claim for the price in a case falling squarely within section 50, and it should be cautious about recognising claims to the price of goods in cases not falling within section 49. But I consider that this leaves at least some room for claims for the price in other circumstances than those covered by section 49. Harry & Garry is on its facts such a case. Title being reserved to Harry & Garry, the Jariwallas were nonetheless permitted to take possession under the buy back contract, and to dispose of some of the sarees of which possession was taken back. It seems entirely natural and appropriate that Harry & Garry should be entitled to recover for the price of all the sarees so taken back, on condition of course that they were ready and willing to transfer title in the remaining sarees to the Jariwallas in return. Another case covered by authority is that where the goods are at the buyers risk, but property has not passed. This situation was addressed in two successive cases in 1872: Castle v Playford (1872) LR 7 Ex 98 and Martineau v Kitching (1872) LR 7 QB 436. In the former, the contract for the sale of ice was for cash on delivery at the rate of 20s a ton as weighed on arrival and delivery in the United Kingdom, but it was agreed that the buyer should take upon himself all risks and dangers of the seas. The vessel was lost. The court (Cockburn CJ, Willes, Blackburn, Mellor, Brett and Grove JJ) found it unnecessary to decide whether property had passed. Whether or not it had, the true construction of the contract was from the buyers viewpoint, in Cockburn CJs words, at p 99: I will engage, when it arrives, to pay you according to what may be its value; and if, in the meantime, while it is upon the seas, it shall perish through the perils of the seas, I will undertake to pay you for it according to what may be estimated to have been its fair value at the time of going down. Blackburn J giving the other reasoned judgment said, at p 100: Now here, the ship and cargo have gone to the bottom of the sea; but in the cases of Alexander v Gardner (1835) 1 Bing NC 671, and Fragano v Long (1825) 4 B & C 219, it was held, that if the property did perish before the time for payment came, the time being dependent upon delivery, and if the delivery was prevented by the destruction of the property, the purchaser was to pay an equivalent sum. In the present case, when the ship went down there would be so much ice on board, and, in all probability, upon an ordinary voyage so much would have melted; and what the defendant has taken upon himself to pay is the amount which, in all probability, would have been payable for the ice. The two judgments define the sum payable in very slightly different ways, but both treat it as a sum payable for the goods under the contract terms. Three months later the second case came before Cockburn CJ, Blackburn, Lush and Quain JJ in the Queens Bench Division. Sugar was agreed to be sold, with the price payable Prompt at one month; goods at sellers risk for two months, to be kept at the sellers premises and drawn down by the buyers as wanted. After two months and after only some of the sugar had been drawn down by the buyers, a fire destroyed the rest. The buyer having disputed his liability to pay for the undelivered sugar which had been burned in the fire, the seller brought an action to recover the price of [the] sugars sold and the question was whether the sellers were so entitled (see pp 436, 441, para 21; and p 445). The court held that they were. Cockburn CJ did so on the basis that property had passed. But Blackburn, Lush and Quain JJ found it unnecessary to decide this, and they all decided the case on the basis that after two months the risk had passed. Blackburn J put the matter thus, at p 455: [A]ssume that [property] had not passed. If the agreement between the parties was, I contract that when you pay the price I will deliver the goods to you, but the property shall not be yours, they shall still be my property so that I may have dominion over them; but though they shall not be yours, I stipulate and agree that if I keep them beyond the month the risk shall be upon you; and then the goods perish; to say that the buyer could then set up this defence and say, Although I stipulated that the risk should be mine, yet, inasmuch as an accident has happened which has destroyed them, I will have no part of that risk, but will throw it entirely upon you because the property did not pass to me, is a proposition which, stated in that way, appears to be absolutely a reductio ad absurdum; and that is really what the argument amounts to. If the parties have stipulated that, if after the two months the goods remain in the sellers warehouse, they shall, nevertheless, remain there at the buyers risk, it would be a manifest absurdity to say that he is not to pay for them; and I think the case of Castle v Playford is a clear authority of the Court of Exchequer Chamber, that where the parties have stipulated that the risk shall be on one side, it matters not whether the property had passed or not. The parties here have by their express stipulation impliedly said, after the two months the goods shall be at the risk of the buyer, consequently it is the buyer who must bear the loss. The price may therefore be recovered in respect of goods undelivered which remain the sellers property but are at the buyers risk and are destroyed by perils of the seas or by fire. The present situation is in my opinion a fortiori. The price of bunkers, which remain the sellers property but which are both (i) at the buyers risk as regards damage or destruction (clause G.12) and (ii) also permitted by the express terms of the contract to be destroyed by use for the Owners commercial benefit, must be equally recoverable. I add that I do not suggest that this is the limit of the circumstances outside section 49 in which the price may be recoverable. The decision in Harry & Garry itself was that the price was recoverable for all the 2,494 sarees agreed to be bought back, although only 411 of them had been disposed of by the buyers with the sellers permission. The precise limits of such circumstances and the significance which may in particular attach to the use of retention of title clauses in combination with physical delivery of the goods and the transfer of risk must be left for determination on some future occasion. I would only add that, when that occasion arises, much benefit will be obtained (as I have done in writing this judgment) from the perceptive discussion by Professor Louise Gullifer in her article The interpretation of retention of title clauses: some difficulties (2014) LMCLQ 564. She also addresses some critical remarks to the other issue in the Caterpillar case, that is the interpretation of Holt Liverpools role as one of agency on behalf of F G Wilson in parting with the goods to Holt Nigeria. That issue does not arise here, but may well merit further consideration in another case in this court. It follows from what I have said that, had the contract been one of sale, I would have held, over ruling the Caterpillar case on this point, that section 49 is not a complete code of situations in which the price may be recoverable under a contract of sale, and that, in the present case, the price was recoverable by virtue of its express terms in the event which has occurred, namely the complete consumption of the bunkers supplied. Conclusion the contract between OWBM and the Owners was not one of sale, but In the result, I conclude that, on the assumed facts: (i) sui generis; (ii) that it was not subject to any such implied term or terms, regarding performance by OWBM (or OWBAS) of any supply contract higher up the chain, as the Owners have alleged though it was no doubt subject to an implied promise by OWBM that OWBM was entitled (in consequence of whatever were the arrangements under which the bunkers had been obtained directly or indirectly from whoever was interested in them) to supply them to the Owners on terms permitting their use for the propulsion of the vessel before payment; and (iii) price. that the Owners have no defence to OWBMs claim to the agreed Had I concluded on the other hand that the contract was one of sale, I would, again on the assumed facts, have held that section 49 of the Sale of Goods Act was also no bar to a claim by OWBM to payment of the agreed price.

UK-Abs

In October 2014, PST Energy 7 Shipping LLC and Product Shipping and Trading S.A., the owners and managers of the vessel Res Cogitans, (collectively, the Owners) ordered a quantity of marine fuel, (the bunkers) from OW Bunker Malta Ltd (OWB). The contract between OWB and the Owners provided for payment 60 days after delivery and included a clause under which property was not to pass to the Owners until payment for the bunkers had been made. It also entitled the Owners to use the bunkers for the propulsion of Res Cogitans from the moment of delivery. OWB obtained the bunkers from its parent company, OW Bunker & Trading A/S (OWBAS). OWBAS obtained the bunkers from Rosneft Marines (UK) Ltd (RMUK), which obtained them from RN Bunker Ltd (RNB). In November 2014 OWBAS announced that it was applying to the Danish courts for restructuring and subsequently became insolvent. ING Bank NV (ING) became the assignee of OWBs rights against the Owners. The Owners consumed all of the bunkers in the vessels propulsion, without making payment to OWB, which did not make payment to OWBAS, which in turn did not make payment to RMUK. RMUK paid RNB and demanded payment from the Owners, asserting that it remained the owner of the bunkers. The Owners commenced arbitration against OWB and ING, seeking a declaration that they were not bound to pay for the bunkers, or damages for breach of contract, on the grounds that OWB had been unable to pass title to them, owing to the application of section 2(1) and s.49 of the Sale of Goods Act 1979 (SoGA). The arbitrators determined that OWB did not undertake to transfer property in the bunkers to the Owners under the Contract and that the Owners therefore remained liable to pay OWB/ING. Males J agreed and the Court of Appeal dismissed a further appeal by the Owners. The Supreme Court unanimously dismisses the appeal by the Owners, PST Energy. Lord Mance gives the only judgment, with which the other Justices agree. There are three issues before the Supreme Court: (1) Was the contract a contract of sale within the meaning of section 2(1) of SoGA? (2) If not, was it subject to any implied term that OWB would perform or had performed its obligations to its supplier, in particular by paying for the bunkers timeously? (3) Should the Court of Appeal decision F G Wilson (Engineering) Ltd v John Holt & Co (Ltd) [2014] 1 WLR 2365 (known as Caterpillar) be overruled? [22, 24] Was the contract a contract of sale under section 2(1) the Sale of Goods Act 1979? section 2(1) of SoGA defines a contract of sale of goods as one by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. OWB argues that this was a contract of sale within that definition. But bunker suppliers know that bunkers are for use prior to payment [27]. OWBs contract with the Owners therefore cannot be regarded as a straightforward agreement to transfer the property in the bunkers to the Owners for a price under section 2(1). It was a sui generis (unique) agreement, with two aspects: first, to permit consumption prior to any payment and without any property ever passing in the bunkers consumed; and second, if and so far as bunkers remained unconsumed, to transfer the property in the bunkers remaining to the Owners in return for the Owners paying the price for all of the bunkers, whether consumed before or remaining at the time of payment [28, 34]. Even if the contract were to be analysed as a contract of sale, in that it contemplated the transfer of property in any bunkers unused at the date of payment, OWB could not owe any obligation to transfer property in bunkers consumed before payment. It would cease to be a contract of sale if and when all such bunkers were consumed before payment [36 37]. Was there an implied term that OWB would pay timeously? In consequence of his conclusion at [28] Lord Mance finds that OWBs only implied undertaking as regards the bunkers which it permitted to be used, and which were used by the Owners in propulsion prior to payment, was that OWB had the legal entitlement to give such permission [39, 59]. Should Caterpillar be overruled? The Court of Appeal held in Caterpillar that where goods are delivered under a contract of sale but title is reserved pending payment of the price, the seller cannot enforce payment of the price by an action [42]. section 49(1) of SoGA enables an action for the price where the seller has transferred property, with or without delivery, and the buyer has failed to pay the price due [44]. Lord Mance considers that section 49(2) reflects an established common law exception to the rule in section 49(1) [45]. The question of principle is whether section 49 excludes any claim to recovery of a price outside its express terms. section 49(2) relaxes only partially the strictness of section 49(1). The 1893 Act which introduced the wording now found in section 49(2) reflected the common law in an era when freedom of contract and trade were axiomatically accepted as beneficial. Therefore a court should be cautious about recognising claims to the price of goods in cases not falling within section 49 but this leaves at least some room for claims for the price in other circumstances [53]. For instance, the price may be recovered in respect of goods undelivered which remain the sellers property but are at the buyers risk and are destroyed by perils of the seas or by fire. The present situation is an even stronger example [57]. Lord Mance declined to set the precise limits for the circumstances in which the price may be recoverable outside section 49. Had the contract between OWB and the Owners been one of sale, Lord Mance would have held, over ruling the Caterpillar case on this point, that section 49 is not a complete code of situations in which the price may be recoverable under a contract of sale. In the present case the price was recoverable by virtue of its express terms in the event which has occurred, namely the complete consumption of the bunkers supplied [58, 60].

This judgment is in two parts. One part considers whether this Court has jurisdiction to hear this appeal. This is a question of United Kingdom law, depending upon the meaning of an EEA decision in regulation 2(1) of the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the 2006 Regulations) which transposed Parliament and Council Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the member states (the Citizens Directive) into UK law. Logically this question should come first. But as we have concluded that we do have jurisdiction, it will be simpler and clearer to explain our reasoning after we have considered the substantive issues in the case. These are questions of European Union law. Briefly, they concern the position under the Directive of a child who is a third country national but has been placed in the legal guardianship of European Union citizens under the Islamic kefalah system in her own country. Accordingly, Part 1 of this judgment discusses the substantive issues and refers three questions to the Court of Justice of the European Union. Part 2 discusses the jurisdiction issue. Part 1: The Substantive Issues The law before turning to the detailed facts and the history of this litigation. Article 1 of the Citizens Directive explains its subject matter thus: It is convenient to set out the applicable provisions of both EU and UK law This Directive lays down: (a) the conditions governing the exercise of the right of free movement and residence within the territory of the member states by Union citizens and their family members; (b) the right of permanent residence in the territory of the member states for Union citizens and their family members; (c) the limits placed on the right sets out in (a) and (b) on grounds of public policy, public security or public health. Article 2 contains definitions, including that of a family member, who enjoys the right to move with and reside with the Union citizen. This includes: (2) Family member means: (a) the spouse; (b) the partner with whom the Union citizen has contracted a registered partnership, on the basis of the legislation of a member state, if the legislation of the host member state treats registered partnerships as equivalent to marriage and in accordance with the conditions laid down in the relevant legislation of the host member state; (c) the direct descendants who are under the age of 21 or are dependants and those of the spouse or partner as defined in point (b); (Emphasis supplied.) Article 3 defines who are to be beneficiaries of the Directive, and makes in article 3.2 more limited and discretionary provision for those who do not qualify as family members within the meaning of article 2.2: 1. This Directive shall apply to all Union citizens who move to or reside in a member state other than that of which they are a national, and to their family members as defined in point 2 of article 2 who accompany or join them. 2. Without prejudice to any right to free movement and residence the persons concerned may have in their own right, the host member state shall, in accordance with its national legislation, facilitate entry and residence for the following persons: (a) any other family members, irrespective of their nationality, not falling under the definition in point 2 of article 2 who, in the country from which they have come, are dependants or members of the household of the Union citizen having the primary right of residence, or where serious health grounds strictly require the personal care of the family members by the Union citizen; (b) durable relationship, duly attested. the partner with whom the Union citizen has a The host member state shall undertake an extensive examination of the personal circumstances and shall justify any denial of entry or residence to these people. (Emphasis supplied.) (1) Subject to paragraph (2), for the purpose of these Regulations the following persons shall be treated as the family members of another person (b) direct descendants of his, his spouse or his civil partner who are under 21; or (i) (ii) dependants of his, his spouse or his civil partner; Regulation 7 of the 2006 Regulations transposes article 2.2(c) into UK law as follows: Regulation 8 makes provision for extended family members. At the time when this case was heard in the First tier Tribunal it provided as follows: (1) In these Regulations extended family member means a person who is not a family member of an EAA national under the regulation 7(1)(a), (b) or (c) and who satisfies the conditions in paragraph (2), (3), (4) or (5). (2) A person satisfies the condition in this paragraph if the person is a relative of an EEA national, his spouse or his civil partner and the person is residing in [a country other than the (a) United Kingdom] in which the EEA national also resides and is dependent upon the EEA national or is a member of his household; (b) the person satisfied the condition in paragraph (a) and is accompanying the EEA national to the United Kingdom or wishes to join him there; or the person satisfied the condition in paragraph (c) (a), has joined the EEA national in the United Kingdom and continues to be dependent upon him or to be a member of his household. (3) A person satisfies the condition in this paragraph if the person is a relative of an EEA national or his spouse or his civil partner and, on serious health grounds, strictly requires the personal care of the EEA national his spouse or his civil partner. (4) A person satisfies the condition in this paragraph if the person is a relative of an EEA national and would meet the requirements in the immigration rules (other than those relating to entry clearance) for indefinite leave to enter or remain in the United Kingdom as a dependent relative of the EEA national were the EEA national a person present and settled in the United Kingdom. (5) A person satisfies the condition in this paragraph if the person is the partner of an EEA national (other than a civil partner) and can prove to the decision maker that he is in a durable relationship with the EEA national. (6) In these Regulations relevant EEA national means, in relation to an extended family member, the EEA national who is or whose spouse or civil partner is the relative of the extended family member for the purpose of paragraph (2), (3) or (4) or the EEA national who is the partner of the extended family member for the purpose of paragraph (5). We doubt whether this regulation accurately transposed article 3.2 of the Directive in at least two respects. First, it imposed (and still imposes) a requirement that the dependant or member of the household be a relative of the EEA national. Second, it required that they both live or have lived in the same country outside the United Kingdom: however, that was rectified in November 2012 by the deletion of the words in which the EEA national also resides from regulation 8(2)(a). Under regulation 12(1), an Entry Clearance Officer (ECO) must issue an EEA family permit to a family member if certain conditions are met. Under regulation 12(2), an ECO may issue an EEA family permit to an extended family member if those conditions are met and (c) in all the circumstances, it appears to the Entry Clearance Officer appropriate to issue the EEA family permit. Also relevant and important in this appeal are the requirements of the law of England and Wales (there is separate but largely equivalent legislation in Scotland and Northern Ireland) relating to the adoption of children from abroad. The object is (i) to ensure, so far as possible, that such adoptions are in the best interests of the children concerned and attended by safeguards equivalent to those in UK law; (ii) to protect such children from the risk of exploitation, abuse and trafficking; and (iii) to ensure that the rights of the birth family are protected. By section 83 of the Adoption and Children Act 2002 (the 2002 Act), it is an offence to bring a child into the UK for the purpose of adoption here or having been adopted in another country, unless the Adoption with a Foreign Element Regulations 2005 (SI 2005/392) have been complied with. These require, inter alia, an assessment by a UK adoption agency of the suitability of the adopters to adopt. This does not apply to adoptions under the Hague Convention on Protection of Children and Co operation in Respect of Intercountry Adoption (1993) (the Hague Convention), implemented in UK law by the Adoption (Intercountry Aspects) Act 1999, because these children are protected by the safeguards in the Convention itself. In particular, article 4 requires that the state of origin should have determined that the child is adoptable; that an inter country adoption is in the childs best interests; that the required consents have been given freely and with proper information and counselling; and that consideration has been given to the childs own wishes and opinions, having regard to his age and degree of maturity, and his consent given where required. Section 66(1) of the 2002 Act lists those adoptions which are recognised by the law of England and Wales as conferring the status of adoption on the child. These are (a) an adoption order made in England and Wales, Scotland or Northern Ireland; (b) adoption by an order made in the Channel Islands or Isle of Man; (c) an adoption effected under the law of a Hague Convention country outside the British Islands and certified as having complied with the Convention requirements; (d) an overseas adoption; that is an adoption order made in one of the countries listed in (currently) the Adoption (Recognition of Overseas Adoptions) Order 2013 (SI 2013/1801), provided for in section 87 of the 2002 Act; and (e) an adoption recognised by the law of England and Wales and effected under the law of any other country; these will only be recognised if they satisfy the criteria for recognition at common law. For the sake of completeness, it should be mentioned that a child who does not qualify for entry under the Citizens Directive may qualify for entry as an adopted or de facto adopted child under the Immigration Rules. For a convenient account of the four routes available under the Rules as they then stood, see MN (India) v Entry Clearance Officer (New Delhi) [2008] EWCA Civ 38; [2010] 2 FLR 87, per Wilson LJ at paras 13 18. However, this judgment is concerned only with entry and residence under the Citizens Directive and the 2006 Regulations. The facts The appellant, whom I shall call Susana, was born in Algeria on 27 June 2010, so is now seven years old. She is a national of Algeria. Her male guardian, Mr M, is a French national of Algerian origin who has a permanent right of residence in the United Kingdom. Her female guardian, Mrs M, is a French national by birth. They married here in 2001. Finding themselves unable to conceive naturally, in 2009 they travelled to Algeria to be assessed as to their suitability to become guardians under the kefalah system. The First tier Tribunal judge found that this was a choice they made having learned that it was easier to obtain custody of a child in Algeria than it would be in the United Kingdom (para 35). Having been assessed as suitable, in a process described by the judge as limited, they were informed in June 2010 that Susana had been abandoned after her birth. They applied to become her guardians. There was then a three month waiting period, during which under Algerian law the birth parents were able to reclaim the child. On 28 September 2010, the Algerian Ministry of National Solidarity and Family in the province of Tizi Ouzou made a decree placing Susana, then aged three months, under their guardianship. On 22 March 2011, a legal custody deed was issued, having regard to the opinion of the public prosecutor, awarding them legal custody of Susana and transferring parental responsibility to them under Algerian law. The deed requires them: to give an Islamic education to the child put into his custody, keep her fit physically and morally, supplying her needs, looking after her teaching, treating her like natural parents, protect her, defend her before judicial instances, assume civil responsibility for detrimental acts. The deed also authorises them to get family allowances, subsidies and indemnities duly claimable, to sign all administrative and travel documents, and to travel with Susana outside Algeria. On 3 May 2011, the Court of Tizi Ouzou issued an order that Susanas surname as it appears on her birth certificate be changed to that of Mr and Mrs M. In October 2011, Mr M left Algeria and returned to the United Kingdom to resume his employment here as a chef. Mrs M remained in Algeria with Susana. In January 2012, Susana applied for a visa to visit the United Kingdom, which was refused. In May 2012, she applied for entry clearance as the adopted child of an EEA national under regulation 12(1), or alternatively 12(2) of the 2006 Regulations. The ECO refused this on the basis (i) that as Algeria was not a party to the 1993 Hague Convention on Intercountry Adoption and was not named in the Adoption (Designation of Overseas Adoptions) Order 1973 then in force, the Algerian guardianship was not recognised as an adoption in UK law; and (ii) no application had been made under section 83 of the 2002 Act for intercountry adoption. The First tier Tribunal dismissed Susanas appeal. The judge held that she did not qualify as either a legal or a de facto adopted child under the Immigration Rules, nor did she fall within the definitions of family member, extended family member or adopted child of an EEA national under the 2006 Regulations. On her appeal, the Upper Tribunal upheld the decision that she was not a family member under regulation 7 of the 2006 Regulations. However, it allowed her appeal on the basis that she did fall within the definition of extended family member under regulation 8. The case was therefore returned to the Secretary of State for her to exercise the discretion conferred upon her by regulation 12(2)(c). The Court of Appeal allowed the ECOs appeal: [2015] EWCA Civ 1109; [2016] Imm AR 239. The court correctly observed that the real question was not whether Susana fell within the definition of family member in regulation 7 or the definition of extended family member in regulation 8. Rather, it was whether she was a direct descendant within the definition of family member in article 2.2(c) of the Citizens Directive; or alternatively whether she fell within any other family members, , who, in the country from which they have come, are dependants or members of the household of the Union citizen having the primary right of residence in article 3.2(a). The court held that the Directive permitted Member States to restrict the forms of adoption which they would recognise for the purpose of article 2.2(c). Not having been adopted in a manner recognised by UK law, Susana could not fall within that article; and that being so, those restrictions could not be undermined by recognising that she might fall within article 3.2(a). This Court gave permission to appeal, initially only on the issues relating to article 3.2(a) of the Citizens Directive and regulation 8. However, in the course of the hearing before us on 23 March 2017, it emerged that there might also be issues relating to article 2.2(c) and regulation 7 which this Court should consider. The hearing was therefore adjourned for written submissions relating to those issues, as well as to the issue of jurisdiction which had been mentioned for the first time by the Secretary of State in her written case. After the adjournment, Coram Childrens Legal Centre (CCLC) and the Advice on Individual Rights in Europe (AIRE) Centre applied for and were given permission to intervene on both issues. In the light of written submissions from them and from the appellant, the court granted formal permission to appeal in relation to article 2.2(c) on 26 July 2017. Once the Secretary of States submissions on that issue had been received in October 2017, a further hearing was arranged for 29 November 2017. Article 3.2(a) This Court has little doubt that Susana would fall within article 3.2(a) if she does not fall within article 2.2(c). The 2006 Regulations have caused confusion by introducing the word relative which nowhere appears in article 3.2(a). Family member is a wider term than relative as it is well capable of including people who are not related by consanguinity or affinity. All that is required is that the person (i) falls within the broad concept of family member; (ii) was either a dependant or a member of the household of the Union citizen; and (iii) that dependency or household membership was in the country from which the person has or would come. A child for whom the Union citizen has parental responsibility under the law of the childs country of origin is clearly capable of being regarded as a family member; Susana was both a dependant and a member of the household of Mr and Mrs M; and this was in Algeria, the country from which she would be coming to this country. The obligation of the host member state is to facilitate entry and residence in accordance with its national legislation, to undertake an extensive examination of the personal circumstances, and to justify any denial of entry and residence. UK legislation relating to foreign adoptions is clearly relevant to that examination. A refusal of entry and residence would, in principle, be justified if there were reason to believe that the child was the victim of exploitation, abuse or trafficking, or that the claims of the birth family had not been respected. But the fact that the arrangements did not comply in every respect with the stringent requirements of UK adoption law would not be determinative. The Secretary of State and her officials are required by section 55 of the Borders, Citizenship and Immigration Act 2009 to discharge their functions in relation to immigration, asylum and nationality having regard to the need to safeguard and promote the welfare of children who are in the United Kingdom. This duty was imposed in the light of the UKs obligation under article 3.1 of the United Nations Convention on the Rights of the Child (1989) that In all actions concerning children the best interests of the child shall be a primary consideration. Under article 2.1 the rights set out in the Convention are to be secured to children within the jurisdiction, but the Secretary of State has made it clear that section 55 will also be observed in relation to children applying to enter this jurisdiction. The same obligation arises under article 24.2 of the Charter of Fundamental Rights of the European Union, which applies whenever a member state is implementing EU law. In a case such as this, the need to safeguard and promote childrens welfare would obviously encompass the need to protect all children from the dangers of exploitation, abuse and trafficking. But the best interests of the individual child must also be a primary consideration. This would depend upon factors such as whether the child had been abandoned by her birth family; whether if she had not been the subject of a kefalah arrangement she would have continued to be brought up in an institution; whether her guardians had been assessed as suitable by the authorities in her birth country; whether they had gone through all the appropriate legal procedures in that country; their reasons for not going through the appropriate procedures for intercountry adoption here; the cultural and religious background of both the child and her guardians, including whether adoption in the UK sense is compatible with their religious beliefs; how well her guardians are fulfilling their legal obligations towards her; and perhaps above all how well integrated she is into their family and household and how close and beneficial their relationships are with one another. In making that evaluation, the decision makers, whether in the Home Office or in the appellate system, would also have to bear in mind that the purpose of the Directive is to simplify and strengthen the right of free movement and residence for all Union citizens, freedom of movement being one of the fundamental freedoms of the internal market. Having to live apart from family members or members of the family in the wider sense may be a powerful deterrent to the exercise of that freedom. Article 2.2(c) However, this Court cannot simply allow the appeal and restore the order of the Upper Tribunal, on the basis that Susanas case should be considered under article 3.2(a), if in reality she falls within the definition of family member in article 2.2(c). In that event she enjoys the automatic rights of entry and residence conferred by the Directive. What then does direct descendant mean? Obviously, it refers to consanguineous children, grand children and other blood descendants in the direct line (query whether it also refers to step descendants). It has also been common ground in this case that it must include those descendants who have been lawfully adopted in accordance with the requirements of the host country. But there is reason to think that it goes further than that. Firstly, there is the Communication from the Commission to the European Parliament and the Council on guidance for better transposition and application of Directive 2004/38/EC (Com (2009) 313 final). Paragraph 2.1.2 is headed Family members in direct line and thus apparently refers to article 2.2(c). It says this: Without prejudice to issues related to recognition of decisions of national authorities, the notion of direct relatives in the descending and ascending lines extends to adoptive relationships or minors in custody of a permanent legal guardian. Foster children and foster parents who have temporary custody may have rights under the Directive, depending upon the strength of the ties in the particular case. There is no restriction as to the degree of relatedness. National authorities may request evidence of the claimed family relationship. (Original emphasis.) On the face of it, this would clearly include a child such as Susana, who is in the permanent legal guardianship of Mr and Mrs M. Secondly, as Advocate General Bot reminded us in his opinion in Secretary of State for the Home Department v Rahman (Case C 83/11) [2013] QB 249, at point 39: according to clearly established case law, the need for a uniform application of European Union law and the principle of equality require that the terms of a provision of European Union law which makes no express reference to the law of the member states for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union: see Ziolkowski v Land Berlin (Joined Cases C 424/10 and C 425/10) [2012] Imm AR 421, para 32 and the case law cited. Accordingly, if the wording of a provision of Directive 2004/38 does not give any guidance as to how the terms used in that provision are to be understood and does not contain any reference to national laws as regards the meaning of those terms either, those terms must be regarded, for the purpose of the application of that Directive, as designating an autonomous concept of EU law which must be interpreted in a uniform manner throughout the member states, by taking into consideration, inter alia, the context in which the terms occur and the purposes of the rules of which they form part: Ziolkowskis case, paras 33 and 34 and the case law cited. There is nothing in article 2.2(c) to suggest that the term direct descendant should be interpreted in accordance with the national law of the host member state. This is in contrast with article 2.2(b), which expressly relates the concept of registered partnership to the laws of the member state where it was contracted and to the treatment of such a partnership in the laws of the host member state. It would appear, therefore, that direct descendant is an autonomous term in EU law which should be given a uniform interpretation throughout the Union. Thirdly, that view is supported by the recent opinion of Advocate General Wathelet in Coman v Inspectoratul General pentru Imigrri (Case C 673/16) (ECLI EU:C:2018:2, as yet unreported), point 32: that the word spouse in article 2(1)(a) must be given an autonomous meaning and applies to a third country national of the same sex as the citizen of the European Union to whom he or she is married. Fourthly, such a uniform interpretation would accord with the purpose of the Directive. Again, as Advocate General Bot reminded us in Rahmans case, at point 36, albeit in the context of article 3.2: the right to family reunification is understood as the corollary of the right of free movement for the Union citizen, based on the principle that the latter may be dissuaded from moving from one member state to another if he cannot be accompanied by members of his family. Family reunification thus enjoys indirect protection by reason of the potential impairment of the effectiveness of Union citizenship. If some member states recognise kefalah children as direct descendants but others do not, this clearly places barriers to free movement for those European Union citizens who have such children. It also discriminates against those who, for religious or cultural reasons, are unable to accept the concept of adoption as it is understood in the UK and some other European countries, that is, as the complete transfer of a child from one family and lineage to another. On the other hand, the fact that the term direct descendant may have an autonomous meaning does not necessarily entail that it should have a broad meaning. We therefore cannot consider it acte clair that a child in Susanas position is not to be regarded as a direct descendant of her guardians for the purpose of article 2.2(c). At the same time, we are concerned that such an interpretation could, in some cases, create opportunities for exploitation, abuse and trafficking in children, which it was the object of the Hague Convention to prevent and deter. We are also concerned that an automatic right of entry for kefalah children might lead to some of them being placed in homes which domestically would have been rejected as unsuitable. Article 1(c) of the Citizens Directive recognises that limits may be set on the rights of free movement and residence on grounds of public policy, public security or public health. But these limits are restricted by the later substantive provisions. The relevant articles appear to us to be article 27 and article 35. Article 27 is subject to the procedural safeguards in articles 30 and 31. So far as immediately relevant, it provides: 1. Subject to the provisions of this Chapter, member states may restrict the freedom of movement and residence of Union citizens and their family members, irrespective of nationality, on grounds of public policy, public security or public health. These grounds shall not be invoked to serve economic ends. 2. Measures taken on grounds of public policy or public security shall comply with the principle of proportionality and shall be based exclusively on the personal conduct of the individual concerned. Previous criminal convictions shall not in themselves constitute grounds for taking such measures. The personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. Justifications that are isolated from the particulars of the case or that rely on considerations of general prevention shall not be accepted. This would only provide adequate protection for children who are or might be the victims of exploitation, abuse or trafficking, or otherwise placed in unsuitable homes, if (i) the individual concerned were the sponsoring Union citizen rather than the child seeking entry; (ii) such conduct were considered to affect one of the fundamental interests of society; and (iii) such conduct, whether in the past or the future, was capable of representing a genuine, present and sufficiently serious threat to such an interest. Article 35 provides for Abuse of rights: Member states may adopt the necessary measures to refuse, terminate or withdraw any right conferred by this Directive in the case of abuse of rights or fraud, such as marriages of convenience. Any such measure shall be proportionate and subject to the procedural safeguards provided for in articles 30 and 31. This article does not in terms state that it must be the person seeking entry who has abused his or her rights. It may therefore be wide enough to cater for a Union citizen who abuses the right of family reunification implicit in his freedom of movement to bring in a child who has been, or is at risk of being, the victim of exploitation, abuse or trafficking; but this is not clear. It also appears to us that the answers to the questions posed must be the same whether the child involved is a third country national or a national of another Member State. The relevant provisions do not distinguish between them. Thus, the Court refers the following three questions to the Court of Justice of the European Union for a preliminary ruling: (1) Is a child who is in the permanent legal guardianship of a Union citizen or citizens, under kefalah or some equivalent arrangement provided for in the law of his or her country of origin, a direct descendant within the meaning of article 2.2(c) of Directive 2004/38? (2) Can other provisions in the Directive, in particular articles 27 and 35, be interpreted so as to deny entry to such children if they are the victims of exploitation, abuse or trafficking or are at risk of such? Is a member state entitled to inquire, before recognising a child who (3) is not the consanguineous descendant of the EEA national as a direct descendant under article 2.2(c), into whether the procedures for placing the child in the guardianship or custody of that EEA national was such as to give sufficient consideration to the best interests of that child? As these proceedings concern a young child, whose application for entry clearance was made as long ago as May 2012, we hope that this reference can be dealt with as a matter of urgency. Part 2: Jurisdiction The Court of Appeal handed down judgment in this case on 4 November 2015 [2015] EWCA Civ 1109; [2016] Imm AR 239. This Court gave permission to appeal on 28 April 2016. At neither stage was it suggested that there was no right of appeal against the ECOs decision and thus that neither the tribunals or the courts had any jurisdiction to hear this case. Nor was the issue raised in the Statement of Facts and Issues agreed between the parties for the purpose of this appeal. However, on 6 June 2016, the Upper Tribunal held, in Sala v Secretary of State for the Home Department [2016] UKUT 411; [2017] Imm AR 141, paras 85, 87, that there was no statutory right of appeal against the refusal of a residence card to a person claiming to be an extended family member under the 2006 Regulations. This was first drawn to our attention for information in the Secretary of States written case dated 8 March 2017. We took the view, however, that we could not proceed with the issue relating to article 3.2(a) of the Directive and regulation 8 of the 2006 Regulations without determining whether we had jurisdiction to do so. It is a matter of great regret that the point was not drawn to our attention immediately after the Sala decision, because it could then have been dealt with as a matter of urgency and the delay in these proceedings avoided. The argument is a simple one. Under regulation 26(1) of the 2006 Regulations: Subject to the following paragraphs of this regulation, a person may appeal under these Regulations against an EEA decision. Except where an appeal lies to the Special Immigration Appeals Commission (which is not this case), the appeal lies to the First tier Tribunal (Immigration and Asylum Chamber). The following paragraphs do not exclude decisions relating to extended family members (indeed, one which was added later, paragraph 26(2A), deals with the evidence which must be produced by a person claiming to be in a durable relationship for the purpose of regulation 8(5)). Everything therefore turns on what is meant by an EEA decision. This was defined thus in regulation 2(1) at the relevant time: a persons entitlement to be admitted to the EEA decision means a decision under these Regulations that concerns (a) United Kingdom; (b) a persons entitlement to be issued with or have renewed, or not have revoked, a registration certificate, residence card, document certifying permanent residence or permanent residence card; or (c) (d) persons right to reside in the UK. a persons removal from the United Kingdom; or the cancellation, pursuant to regulation 20A of a In Sala, the Upper Tribunal decided that, because decisions concerning extended family members involve, not only a determination as to whether a person falls within the definition of extended family member, but also the exercise of a discretion whether to admit or grant a residence card to that person, they did not concern that persons entitlement to either. The Tribunal acknowledged that the point was not an easy one. It had long been assumed, both by appellants and by the Secretary of State, that there was such an appeal. Both parties maintained that position before the Tribunal: only an amicus appearing at the Tribunals request argued the contrary. (Indeed, regulation 26 had been amended in 2012 to introduce paragraph 26(2A), which made no sense if extended family members did not have a right of appeal; but that could not change the meaning which the Regulations already bore.) In the Tribunals view, the natural and ordinary meaning of paragraph (b) in the definition of EEA decision did not cover the refusal of a residence card (para 48) (which was the issue in that case). Shortly before the second hearing before us, the Court of Appeal handed down judgment in Khan v Secretary of State for the Home Department [2017] EWCA Civ 1755, in which the Secretary of State had refused to grant a residence card to the Pakistani nephew of a German national. The arguments were wide ranging, the Secretary of State now contending that Sala was correct. Nevertheless, the principal point at issue was whether the decision in question was one which concerns an entitlement to enter and be granted a residence card (para 42). In Sala, the Upper Tribunal had proceeded on the basis that this meant an existing entitlement (Khan, para 43). Both the appellant and the Secretary of State had argued then that there was a two stage process: first the factual decision whether the appellant fell within the definition of an extended family member; and second the decision whether it was appropriate to grant entry and a residence card; once granted, this would result in an entitlement to enter and reside; hence the decision concerns that entitlement because it is relevant to or important to, relates to or is about the entitlement to a residence card (see para 24). Irwin LJ held that a decision which concerns an entitlement appears to me naturally to include a decision whether to grant such an entitlement (para 45). Longmore LJ, agreeing, added that, even where there was a discretion, it had to be exercised in accordance with the correct legal principles: a litigant was entitled to a decision exercised in that way (para 48). Sir Terence Etherton MR agreed with both judgments. The decision in Sala was therefore overruled. That now being the interpretation of the 2006 Regulations as they stood at the date when this appeal was launched, it is for the Secretary of State to persuade us that the Court of Appeal was wrong to reach the conclusion that it did. That she has been unable to do. On the contrary, in our view the Court of Appeal was clearly correct and there is no need for us to rehearse the very wide ranging arguments put before them. Despite the breadth of the discretion in article 3.2 cases, there is nevertheless a duty to facilitate entry, to make full enquiries and to justify refusal. There will therefore be cases in which a refusal cannot be justified. Such a person will be entitled to a family permit and thereafter to be treated as a family member. As Lord Wilson pointed out in the course of argument, jurisdiction cannot depend upon fine judgments as to the proportionality of refusal. It also makes no practical sense in a case such as this, which turns on whether the appellant has a present entitlement under article 2.2(c) or a potential entitlement under article 3.2(a): on the Secretary of States present case and in the light of our conclusions on article 3.2(a) above, Susana would have a right of appeal to the tribunal in relation to her claims under article 2.2(c), but would have to bring judicial review proceedings in relation to her claim under article 3.2(a). We are satisfied, therefore, that the Court of Appeals decision in Khan was correct and that Sala should be overruled. For completeness, it should be recorded that on 20 February 2017, in Secretary of State for the Home Department v Banger ([2017] UKUT 125, unreported), a differently constituted Upper Tribunal referred a number of questions concerning the claim of the unmarried partner of a British national to the Court of Justice of the European Union. Among those questions, in the light of Sala, was this: Is a rule of national law which precludes an appeal to a court or tribunal against a decision of the executive refusing to issue a residence card to a person claiming to be an extended family member compatible with the [Citizens] Directive? Despite the decision in Khan, that question is not moot, as the 2006 Regulations have since been replaced by the Immigration (European Economic Area) Regulations 2016 (SI 2016/1052). These largely reproduce the 2006 Regulations, as amended, but decisions to refuse to issue an EEA family permit, a registration certificate or a residence card to an extended family member have been expressly excluded from the definition of an EEA decision in regulation 2(1). We understand that the oral hearing in Banger took place in January 2018. The issue is whether the procedural safeguards laid down in articles 15, 20 and 21 of the Directive require a full merits appeal to a court or tribunal or whether they can be satisfied by the UKs procedure for judicial review of administrative action: is that an effective remedy for this purpose? Given the conclusion we have reached in this case, it would be inappropriate for us to comment further on this issue. We shall await with interest the outcome of the reference in Banger.

UK-Abs

This appeal concerns the right under EU law for family members to move and reside with an EU citizen exercising the right of freedom of movement. The appellant SM, given the name Susana in the judgment, is a citizen of Algeria. She is a young child who has been placed into the legal guardianship of EU citizens under the Islamic kefalah system. Susanas guardians (Mr and Mrs M) are French nationals of Algerian ethnicity, who married in the United Kingdom in 2001. In 2009 they travelled to Algeria, where they were assessed as suitable to become guardians. Susana was abandoned after her birth in June 2010. Mr and Mrs M applied to become her guardians and after three months Susana was placed under their guardianship. A legal custody deed was later issued in Algeria. Mr M returned to the UK in 2011 and resumed his work as a chef. Mrs M remained in Algeria with Susana. In May 2012 Susana applied for entry clearance to the UK, as the adopted child of a EU national, under regulation 12(1) (as a family member) or 12(2) (as an extended family member) of the Immigration (European Economic Area) Regulations 2006 (the Regulations). The Regulations transposed Directive 2004/38/EC (the Directive) into UK law. The respondent refused Susanas application on the basis that the Algerian guardianship was not recognised as an adoption in UK law. Susanas appeal was refused by the First tier Tribunal but allowed by the Upper Tribunal. The Court of Appeal, allowing the respondents appeal, held that member states were permitted to restrict the forms of adoption which they would recognise as falling within the definition of family member, and that those restrictions could not be undermined by recognising the child as an extended family member. Susana appealed to the Supreme Court. Before the hearing, the Upper Tribunal in another case (Sala v Secretary of State for the Home Department [2016] UKUT 00411) held that there was no statutory right of appeal against the refusal of a residence card to a person claiming to be an extended family member, as it was not an EEA decision for the purposes of regulation 26(1) of the Regulations. A further issue therefore arose before the Supreme Court as to whether it had jurisdiction to hear the appeal. The Supreme Court unanimously holds (1) that it does have jurisdiction to hear the appeal, Sala having been wrongly decided; and (2) refers three questions to the Court of Justice of the European Union for a preliminary ruling. Lady Hale, with whom all the other justices agree, gives the only judgment. It was submitted on behalf of Susana that she fell within the definition of family member under article 2.2(c) of the Directive, which referred to direct descendants who are under the age of 21, and as such was entitled to move with and reside with Mr and Mrs M. Alternatively, she came within the discretionary provisions of article 3.2(a) as any other family members, irrespective of their nationality, not falling under the definition in point 2 of article 2 who, in the country from which they have come, are dependants or members of the household of the Union citizen. The transposition of Article 3.2(a) into Regulation 8 of the Regulations dealing with extended family members was inaccurate insofar as it imposed a requirement that the dependant or member of the household be a relative of the EEA national [7]. The Supreme Court had little doubt that Susana would fall within article 3.2(c) if she did not fall within article 2.2(c). The term family member is wide enough to include people who are not related by consanguinity or affinity, and is clearly capable of including a child for whom the Union citizen has parental responsibility under the law of the childs country of origin [17]. UK legislation relating to foreign adoptions was relevant to the examination of whether to exercise the discretion to facilitate entry and residence. Refusal would in principle be justified if there were reason to believe the child was the victim of exploitation, abuse or trafficking, or that the claims of the birth family had not been respected [18], but the fact that the arrangements did not comply in every respect with the stringent requirements of UK adoption law would not be determinative [19]. The best interests of the child were a primary consideration, and would depend on factors such as what would have happened to her if the kefalah arrangement had not been established, the background and how well integrated into the family and household she now was [20]. The purpose of the Directive to strengthen the right of free movement was a further consideration [21]. There was also reason to consider that Susana qualified for automatic rights of entry and residence as a direct descendant. This was an autonomous term in EU law and required a uniform interpretation throughout the Union [25]. It was not clear from existing case law whether a child in Susanas position should fall within article 2.2. The procedural safeguards and provisions against abuse of rights in the Directive might be ineffective to prevent a child being the victim of exploitation, abuse or trafficking [31], whether that child was a third country national or a national of another member state [32]. Accordingly, the Supreme Court refers three questions to the CJEU for a preliminary ruling: (1) Is a child who is in the permanent legal guardianship of a Union citizen or citizens, under kefalah or some equivalent arrangement provided for in the law of his or her country of origin, a direct descendant within the meaning of article 2.2(c) of the Directive? (2) Can other provisions in the Directive, in particular articles 27 and 35, be interpreted so as to deny entry to such children if they are the victims of exploitation, abuse or trafficking or are at risk of such? (3) Is a member state entitled to enquire, before recognising a child who is not the consanguineous descendant of the EEA national as a direct descendant under article 2.2(c), into whether the procedures for placing the child into the guardianship or custody of that EEA national was such as to give sufficient consideration to the best interests of that child? On the question of jurisdiction, Sala had rightly been overruled by the Court of Appeal in a subsequent decision on the interpretation of regulation 26 of the Regulations. Susana did enjoy a right of appeal in respect of both articles 2.2 and 3.2 [34 41].

The issue in this appeal is when time starts to run for a claim by a part time judge to a pension under the Part time Workers Directive (Directive 97/81) (PTWD), as applied by the Parttime Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551) (PTWR). The directive was required to be transposed into domestic law by 7 April 2000. The appellants are four judges, each of whom has held one or more appointments as fee paid part time judges, in some cases moving between such part time and full time salaried appointments. They are illustrative of the different ways in which such part time (PT) and full time (FT) appointments may be combined in a single career, as Mr Allen QC (for the appellants) explains in his printed case: The careers of Mr Haworth and Mr Sprack illustrate the common situation of a judge moving from PT to FT in the same jurisdictions: Mr Haworth as a Costs Judge, and Mr Sprack as an Employment Judge. Mr Sprack also reverted to working PT before finally retiring. The careers of Mr Fox and Mr Wain illustrate the kinds of judicial careers that are based on a portfolio of PT judicial appointments which can change over time prior to retirement. Additionally, Mr Wain also held a FT appointment as a District Judge between May 2004 and January 2011, though even then he also held a PT appointment as a Mental Health Tribunal judge. Each appellant lodged a claim with the Employment Tribunal more than three months after the end of a part time appointment, and therefore out of time if that is the relevant date; but within time, if the relevant date is the date of retirement. In a decision given on 2 January 2014 EJ Macmillan held that the period of three months started to run from the end of any part time appointment, and that the claims were accordingly out of time. He declined to exercise the discretion (under PTWR para 8(3)) to extend time as being just and equitable; that part of his decision is no longer in issue. Since then there has been no substantive judicial consideration of these issues at higher levels, the issues being treated as in substance turning on decisions, domestic and European, in the related case of OBrien v Ministry of Justice (see below). The statutory framework In Ministry of Justice v OBrien (No 2) [2017] UKSC 46; [2017] ICR 1101, para 10, Lord Reed summarised the domestic legislation governing judicial pensions: Domestic legislation provides for the payment of judicial pensions under two statutes, the Judicial Pensions Act 1981 and the Judicial Pensions and Retirement Act 1993. The 1981 Act applies to persons appointed prior to 31 March 1995, unless they elect to have their pension paid under the 1993 Act. The 1993 Act applies to persons appointed on or after 31 March 1995. Under the Acts, a pension is payable to any person retiring from qualifying judicial office, subject to their having attained the age of 65 and, under the 1993 Act, subject also to their having completed at least five years service in such office. At the material time, full time judges and salaried part time judges held a qualifying judicial office, but fee paid part time judges, such as recorders, did not. Under both schemes, the amount of pension payable to a full time judge is based on his or her final years salary and on his or her number of years service in a qualifying judicial office by the date of retirement. Under the 1981 Act, circuit judges must have served for 15 years in order to qualify for a full pension of one half of their last annual salary. The corresponding period under the 1993 Act is 20 years. Under both schemes, judges who have served for shorter periods receive a proportion of the full pension corresponding to the length of their service. There is also a lump sum payable on retirement, the sum being based on the amount of the annual pension. Judicial pensions were at the material time non contributory. Since 2012, judges have had to pay a contribution. For present purposes it is sufficient to refer to the provisions of the 1993 Act, which applied to those appointed on or after 31 March 1995. The basic concept in the 1993 Act is qualifying judicial office (1993 Act section 1(1)). By section 1(6): (6) For the purposes of this Act, a person shall be regarded as holding, or serving in, qualifying judicial office at any time when he holds, on a salaried basis, any one or more of the offices specified in Schedule 1 to this Act; Schedule 1 is a list of offices ranging from court judges at different levels, through court officers (such as Queen Bench Masters), to members of tribunals in a range of specified jurisdictions. It is to be noted that the focus (under section 1(6)) is not on individual offices or appointments, but on qualifying judicial office a composite term which may comprise any one or more of the listed offices. By section 2(1): Any person to whom this Part applies (a) who retires from qualifying judicial office on or after the day on which he attains the age of 65, and (b) who has, at the time of that retirement, completed, in the aggregate, at least five years service in qualifying judicial office, shall be entitled during his life to a pension at the appropriate annual rate. Later subsections deal with the variation of the pension entitlement in special cases: for early retirement on medical grounds (section 2(3)); early removal from office (section 2(4)); and resumption of qualifying office after beginning to take a pension (section 2(5)). Section 3 fixes the appropriate annual rate by reference to the aggregate length of service in qualifying judicial office at the point of retirement. The appellants, so long as not being paid on a salaried basis, were excluded from the definition of qualifying judicial office, and therefore also excluded from rights to pensions under the Act. The PTWR, which came into force on 1 July 2000, and gave effect to the PTWD, were designed to put part time workers on the same footing as their full time equivalents. Regulation 5 provided: 5(1) A part time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full time worker as regards the terms of his contract; or (a) (b) by being subjected to any other detriment by any act, or deliberate failure to act, of his employer Initially this did not assist the appellants, since regulation 17 provided: These Regulations do not apply to any individual in his capacity as the holder of a judicial office if he is remunerated on a daily fee paid basis. However, the Supreme Court later made clear (in the first OBrien judgment see below) that regulation 17 must be disapplied so as to bring the meaning of worker in the PTWR into line with the PTWD. This opened the way to claims by fee paid judges, such as the appellants, under the PTWR. The relevant time limit for a complaint to the Employment Tribunal is set by regulation 8 of the PTWR which provides: (2) Subject to paragraph (3), an employment tribunal shall not consider a complaint under this regulation unless it is presented before the end of the period of three months beginning with the date of the less favourable treatment or detriment to which the complaint relates or, where an act or failure to act is part of a series of similar acts or failures comprising the less favourable treatment or detriment, the last of them, (4) For the purposes of calculating the date of the less favourable treatment or detriment under paragraph (2) (a) where a term in a contract is less favourable, that treatment shall be treated, , as taking place on each day of the period during which the term is less favourable; OBrien v Ministry of Justice Dermod OBrien QC was appointed as a Recorder of the Crown Court from March 1978, initially for three years, but extended periodically until his retirement on 31 March 2005. Although his terms of service gave no right to a pension, he claimed to be entitled under the PTWR to a pension on terms equivalent to those applying to a circuit judge. Following a reference to the CJEU, in February 2013 his claim in principle was upheld by the Supreme Court (OBrien v Ministry of Justice [2013] UKSC 6; [2013] 1 WLR 522; [2013] ICR 499). The claim was remitted to the Employment Tribunal for determination of other matters in dispute, including a dispute as to the period to be taken into account in calculating his pension. The question was whether, in calculating the amount of his pension, account should be taken of the whole of his service since the beginning of his appointment on 1 March 1978 (a period of 27 years), or only his service since the deadline for transposing the directive expired (a period of less than five years). Following conflicting decisions of the Employment Tribunal and the Employment Appeal Tribunal, on 6 October 2015 the Court of Appeal held that only the shorter period should be taken into account (OBrien v Ministry of Justice [2015] EWCA Civ 1000; [2016] ICR 182). On 9 November 2015, the Court of Appeal dismissed the appellants appeals in the Miller cases without further analysis, treating them as governed by its judgment in OBrien. Following an appeal to the Supreme Court, the court decided on 12 July 2017 to refer a further question to the CJEU (OBrien v Ministry of Justice (No 2) [2017] UKSC 46; [2017] ICR 1101). In his judgment explaining the reference, Lord Reed (paras 15 20) cited Ten Oever v Stichting Bedrijfspensioenfonds voor het Glazenwassers en Schoonmaakbedrijf (Case C 109/91) [1995] ICR 74; [1993] ECR I 4879) (Ten Oever), as showing that the CJEU had treated occupational pensions as a form of pay, the entitlement to which accrues over the length of the employees service. Mr OBrien had argued that, consistently with the future effects principle, earlier periods of employment were to be taken into account when applying the directive in situations which arose after it should have been transposed. In contrast the Ministry had argued that, since (under Ten Oever) the entitlement to an occupational pension accrued at the time of the work, his non entitlement to pension in respect of his first 22 years of service must, in line with the non retroactivity principle, be left out of account having been definitively established before the directive entered into force. While accepting that the resolution of these conflicting arguments was not acte clair so that a reference was necessary, Lord Reed indicated the provisional view of the majority of the court in favour of Mr OBriens contention: The majority of the court are inclined to think that the effect of Directive 97/81 is that it is unlawful to discriminate against part time workers when a retirement pension falls due for payment. The directive applies ratione temporis where the pension falls due for payment after the directive has entered into force. In so far as part of the period of service took place prior to the directives entry into force, the directive applies to the future effects of that situation. On 7 November 2018, the CJEU handed down judgment in OBrien v Ministry of Justice (No 2) (Case C 432/17) [2019] ICR 505 (OBrien 2). The CJEU, in effect upholding the majority view, held that periods of service prior to the deadline for transposing the directive must be taken into account for the purpose of calculating the retirement pension entitlement. As the court explained, while a new legal rule does not apply to legal situations that arose and became definitive prior to its entry into force, it does apply to the future effects of a situation which arose under the old law (para 27). It was accordingly necessary to examine whether the gradual acquisition of pension entitlements over the period preceding the deadline [for transposition of the directive] has the effect that the legal situation of the claimant must be considered to have become definitive at that date. (para 29) It noted the argument for the government that at the end of each period of service the corresponding pension entitlement exhausts its effects, and therefore should be left out of account (para 30). However, (in a passage relied on by both parties in the present appeal) the court observed: with regard to the argument of the United Kingdom Government that the calculation of the period of service required to qualify for a retirement pension should be distinguished from the rights to a pension, it must be noted that it cannot be concluded from the fact that a right to a pension is definitively acquired at the end of a corresponding period of service that the legal situation of the worker must be considered definitive. It should be noted in this respect that it is only subsequently and by taking into account relevant periods of service that the worker can effectively avail himself of that right with a view to payment of his retirement pension. (para 35) The Ministry has accepted that judgment as determinative of the OBrien appeal in his favour. Innospec Ltd v Walker (Walker) Before returning to the present appeals, it is necessary to refer to another case which was heard by the Supreme Court at the same time as the OBrien but in which the court gave a final ruling rather than making a reference ([2017] UKSC 47; [2017] ICR 1077). The issue in Walker in short was whether the civil partner of Mr Walker (under a partnership registered in January 2006) was entitled to be paid a survivors pension calculated by reference to Mr Walkers service, both before and after the transposition date of Directive 2000/78/EC (the Framework Equality Directive), which outlawed discrimination on grounds of sexual orientation. Consistently with its view in OBrien, applying the Ten Oever principle, the Court of Appeal had held that only Mr Walkers service after the transposition date (2 December 2003) should be taken into account in calculating the survivors pension to which his partner would be entitled. This court rejected that approach. No issue arose as to the time limit for bringing the claim under regulation 8. However, Mr Allen relies on a paragraph in the majority judgment of Lord Kerr dealing with the Ten Oever argument: Mr Chamberlain [counsel for Mr Walker] submitted that the appeal tribunal wrongly took Advocate General Van Gervens description of pension benefits in the Ten Oever case as deferred pay as equating the time at which a pension right accrues with the time at which any discrimination in the provision of resulting benefits is to be judged. I agree that the appeal tribunal was wrong to do so. The point of unequal treatment occurs at the time that the pension falls to be paid. If Mr Walker married a woman long after his retirement, she would be entitled to a spouses pension, notwithstanding the fact that they were not married during the time that he was paying contributions to his pension fund. Whether benefits referable to those contributions are to be regarded as deferred pay is neither here nor there, so far as entitlement to pension is concerned. Mr Walker was entitled to have for his married partner a spouses pension at the time he contracted a legal marriage. The period during which he acquired that entitlement had nothing whatever to do with its fulfilment. (para 56, emphasis added) The Miller appeals Judge Macmillans reasoning It is right to pay tribute to Judge Macmillans commendably thorough and insightful treatment of the issues in the Employment Tribunal. He summarised his conclusion on the time limit issue at the outset of his judgment: 1. For the purposes of bringing a claim under the Part time Workers (Prevention of Less Favourable Treatment) Regulations 2000 in respect of denial of access to the judicial pension scheme, time runs from the ending of each fee paid appointment about which complaint is made, irrespective of whether the claimant then transfers into a salaried appointment or has other fee paid appointments which continue (paras 15 26) The paragraphs there referred to contain a careful analysis of the respective submissions before him, including discussion of the House of Lords decision in Barclays Bank plc v Kapur [1991] 2 AC 355. It is sufficient to quote the most relevant part of his conclusion: 25. I therefore reach the same conclusion as the tribunal in OBrien, namely that the act of discrimination complained of, denial of access to the scheme while a fee paid judge, must be distinguished from the consequences of that act, the failure to pay a pension reflecting fee paid service, a passage expressly approved by the Court of Appeal in OBrien. Barclays Bank plc v Kapur, in my judgment, far from being a trump card is in fact irrelevant. In a simple transfer case time therefore runs from the date on which the fee paid office about which complaint is made, ended. If that is true of the simple transfer cases it must, in my 26. judgment be true of the so called portfolio cases, that is those cases where at some point in their career a fee paid judge has held other fee paid offices which they no longer hold at the time the claim was presented. Time runs in those cases from the date on which each office was relinquished. The variants of the simple transfer case, where the salaried judge returns to fee paid office on retirement from the salaried post and where the fee paid judge continues to hold a fee paid office in addition to their salaried office, produce the same result although for different reasons. In the former case Mr Allen has failed to explain how, if the first period of fee paid service is out of time, the second period somehow resurrects the corpse. He has failed to explain it because no explanation is available. In the latter case the answer lies in regulations 5(1) and 8(4)(a). Any term in the parallel fee paid contract cannot be less favourable in the sense of the pension it fails to generate as the salaried terms and conditions are generating the maximum pension entitlement possible As already noted, there was no substantive consideration of this reasoning in the Employment Appeal Tribunal or the Court of Appeal, in view of the perceived link with the issues in OBrien. As Lewison LJ explained in the Court of Appeal: 1. The issue on these appeals is whether the appellants were in time in submitting their claims to the Employment Tribunal complaining of unlawful discrimination under the Part Time Workers Directive. That, in turn, depends on whether their pension rights are definitively acquired at the time of their service or only when they retired; which is a question of EU law. 2. In OBrien v Ministry of Justice [2015] EWCA Civ 1000, decided on 6 October 2015, this court held that a worker definitively requires pension rights attributable to a particular period of days during that period of service and does so by reference to the law applicable during that period of service. The decision in OBrien is equally applicable to these appeals with the consequence that the appellants applications were out of time. ([2015] EWCA Civ 1368, paras 1 2) The competing arguments in this court Ministry of Justice For the Ministry Mr Cavanagh QC accepts that, before the CJEU judgment in OBrien 2, the expectation was that the OBrien and Miller appeals would stand or fall together. However, that view was no longer tenable in the light of the reasoning of the court. He starts from the key issue in Miller as identified in the Statement of Facts and Issues, agreed by the parties in October 2016 (at para 22): The answer to the question whether [the Miller appellants] claims are in time depends on the point in time at which pension rights are definitively acquired and time for bringing a claim starts to run. In OBrien 2 (para 35) the CJEU confirmed that the right to a pension is definitively acquired at the end of the corresponding period of service. That would appear to give a clear answer to the issue identified in the Miller appeals, which is unaffected by the CJEUs disposal of OBrien itself by reference to its application of the future effects principle. He notes that, following the first judgment of this court in OBrien [2013] 1 WLR 522, para 42, it is clear that the claims are domestic claims, arising under the PTWR, but subject to the disapplication of regulation 17 so as to bring the meaning of worker in the PTWR in line with its meaning in the PTWD. The procedural rules and limitations applicable to such claims are matters for domestic law (subject to the requirements of effectiveness and equivalence, which are not in issue). Applying regulation 8, the question for the purpose of the primary time limit is when the less favourable treatment took place. Under domestic legal principles, pensions are treated as deferred pay (Parry v Cleaver [1970] AC 1 at 16C D), the entitlement to which accrues at the time of service. The fact that the pay is received some time after employment has ended, so that the consequences may not be felt for some time afterwards, does not detract from the position that the less favourable treatment or detriment took place during the service. A distinction is to be drawn between the less favourable treatment or detriment and its consequences (Barclays Bank plc v Kapur [1989] ICR 753, 770 per Mann LJ). This is illustrated by Sougrin v Haringey Health Authority [1992] ICR 650, in which it was held that time ran from the alleged act of discrimination (the refusal to promote the claimant), not from the subsequent period during which she received a lower salary in consequence. This approach is, he submits, consistent with the decision of the House of Lords in Barclays Bank plc v Kapur [1991] 2 AC 355. This was a claim under the Race Relations Act 1976, brought by Asian Barclays employees whose service in Kenya (before their expulsion and further employment by Barclays in the UK) had not been treated as counting towards their pension entitlement with Barclays Bank Ltd. The time limit for bringing a claim was set by section 68, which provided: (1) An industrial tribunal shall not consider a complaint [of race discrimination] unless it is presented to the tribunal before the end of the period of three months beginning when the act complained of was done. (7) For the purposes of this section (a) when the inclusion of any term in a contract renders the making of the contract an unlawful act, that act shall be treated as extending throughout the duration of the contract; and (b) as done at the end of that period; and (c) when the person in question decided upon it a deliberate omission shall be treated as done any act extending over a period shall be treated Under section 68 the House of Lords held that the less favourable treatment took place throughout the period of employment, so that the three month primary limitation period commenced at the end of the employment. Lord Griffiths, with whom the other members of the House agreed, said (at p 369): In the present case the Court of Appeal were in my view right to approve these two decisions and to classify the pension provisions as a continuing act lasting throughout the period of employment and so governed by subsection (7)(b). A man works not only for his current wage but also for his pension and to require him to work on less favourable terms as to pension is as much a continuing act as to require him to work for lower current wages. As Mr Cavanagh submits, it is clear from this that less favourable treatment or detriment in relation to pensions takes place at the same time as in relation to any other aspect of a workers terms and conditions, that is during service. Lord Griffiths did not say that it occurred at the time the claimants took their pensions. He submits further that to hold that the relevant date does not arise until the pension is taken would lead to absurd consequences: It would mean that a claimant in a pensions case would have no right to take proceedings under the PTWR until they had reached pension age which may be very many years after the period of service and which may well be too late to obtain a genuine remedy. It would also mean that the very many claims that have been brought by claimants in the judicial pensions litigation who are below retirement age would have to be struck out on the basis that there has been as yet no breach of the PTWR. The appellants Mr Allen for the appellants reads regulation 8 as posing the question: when did the less favourable treatment allegedly unlawful contrary to regulation 5 finally occur? (his emphasis). The Ministrys arguments fail to give weight to the true nature of their claims. The treatment which is less favourable, compared to that afforded to a full time judge, is the non payment of a pension pro rata temporis on retirement at or above 65. The detriment finally occurs at the point at which, had they only ever worked full time in qualifying judicial office, they would have been actually entitled to a pension: Until then the pension entitlement of the comparator is, prospective, contingent and inchoate in the sense of not being fully formed. Until then their right to equal treatment is similarly prospective, contingent and inchoate. This approach is, he submits, entirely consistent with para 35 of the CJEUs judgment in OBrien 2 (see above). Although the court spoke of the right being definitively acquired at the end of a period of service, it recognised that this was not definitive of the workers legal situation, since it was only subsequently and by taking into account relevant periods of service that he could effectively avail himself of that right with a view to payment of his retirement pension. The passage of Lord Griffiths speech in Kapur does not assist Mr Cavanagh, both because the wording of the relevant provision was different, but also because the House was not asked to consider whether or not there was relevant unfavourable treatment also at the time of retirement. Conversely, his argument disregards the clear and specific treatment of this issue by Lord Kerr in Walker. Nor is there any basis for the suggested absurdity arising from the appellants argument. The fact that there is relevant detriment at the time of retirement does not mean that there is no detriment at an earlier period, nor that there is anything to prevent proceedings in that respect at an earlier stage. Discussion As I understand it, it is now common ground that the issue in this appeal is one of domestic law, turning on the construction and application of regulation 8 of the PTWR, and that the determinative question is: when did the less favourable treatment occur, or (in Mr Allens words) when did it finally occur? Although perhaps understandable at the time, the former assumption (apparent in the judgment of the Court of Appeal) that the issue was one of European Law, and that the present claims would stand or fall with OBrien, seems to have proved something of an impediment to a clear analysis of the relevant issues of domestic law. At the same time it must be borne in mind that that the regulations have to be construed in a highly artificial context. That results not only from the need to conform to the requirements of European law, but also from the special characteristics of judicial appointments and judicial pensions under domestic law. In the first place, while the regulations assume the existence of a contract of employment (see regulation 5, 8(4)), a judicial officer is not employed under a contract (see Gilham v Ministry of Justice (Protect intervening) [2019] UKSC 44; [2019] 1 WLR 5905), so that references to the terms of a contract can at best be applied by analogy. Secondly, as has been seen, the judicial pension scheme is not based on individual appointments, but on qualifying judicial office, which may include a number of different appointments within those specified in Schedule 1 of the 1993 Act. That special feature of the scheme needs to be taken into account in making a comparison for the purposes of the regulations. It may be misleading and unfair to direct attention to the nature and timing of individual part time appointments, without regard to the broader concept of qualifying judicial office, which would have applied had they been brought within the statutory scheme. This as I understand it was a point made by Mr Allen in the Employment Tribunal, as recorded by Judge Macmillan (ET para 12): The Judicial Pensions and Retirement Act 1993 permits the payment of pension only on retirement from judicial office, not from a judicial office and requires the judges pension to be calculated on their aggregated service in judicial office, meaning that the judge who changes roles has her total service counted for pension purposes, not just her service in the latest role. The European cases relied upon by Mr Cavanagh are simply not in point as they do not deal with time limit issues at all. As has been seen (para 19 above), the judge took a narrower view. He proceeded on the basis that, in what he called a simple transfer case time therefore runs from the date on which the fee paid office about which complaint is made, ended. He applied the same approach to more complex portfolio cases where a fee paid judge has held other fee paid offices, or has moved between salaried and fee paid offices: time runs from the date on which each office was relinquished. I understand the logic of that approach. But, as Mr Allen submitted, it does not fit well with the aggregate approach required by the 1993 Act. The varied combinations of fee paid or salaried offices undertaken by different individuals were a desirable feature of a flexible judicial system, but there is no reason why they should govern the entitlement to pension, under the PTWR any more than under the 1993 Act itself. I also agree with Mr Allen that the speech of Lord Griffiths in Kapur is not determinative. The issue was whether the unfavourable treatment continued throughout the period of employment. The House was not required to consider whether there was an unfavourable treatment also at the point when the pension was or would be taken. For the same reason, I would reject Mr Cavanaghs submission as to the absurd consequences which would follow from denying complainants a remedy at an earlier stage. As regulation 5 makes clear, the unfavourable treatment may relate to the terms of the contract, or any other detriment resulting from an act or failure to act by the employer. By analogy, in the context of judicial pensions, the part time judge may properly complain both during his period of service, that his terms of office did not include provision for a future pension; and, at the point of retirement, that there has been a failure at that point to make a pension available. The former does not exclude the latter. Finally, I agree with Mr Allen that Lord Kerrs judgment in Walker is helpful in that respect. Although he was not concerned with the application of a comparable time limit, that does not detract from the generality of his statement that the point of unequal treatment occurs at the time that the pension falls to be paid. It is consistent also with Lord Reeds statement in OBrien that it is unlawful to discriminate against part time workers when a retirement pension falls due for payment. In my view, that also accords with the common sense of the matter. It may be that the appellants could have complained of less favourable treatment, as compared to their full time colleagues, by reference to the lack of any equivalent provision for a pension in their terms of office. But that does not detract in any way from the less favourable treatment they undoubtedly suffered, or would suffer, at the point of retirement. Conclusion For these reasons I would allow the appeals, and make declarations accordingly.

UK-Abs

This issue in this appeal is when time starts to run for a claim by a part time judge to a pension under the Part time Workers Directive (Directive 97/81), as applied by the Part time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551) (PTWR). Regulation 5 of the PTWR provides that a part time worker is entitled not to be treated by their employer less favourably than the employer treats a comparable full time worker, either with regard to the terms of their contract or by being subject to any other detriment. Regulation 8 of the PTWR provides insofar as is relevant: (2) Subject to paragraph (3), an employment tribunal shall not consider a complaint under this regulation unless it is presented before the end of the period of three months beginning with the date of the less favourable treatment or detriment to which the complaint relates or, where an act or failure to act is part of a series of similar acts or failures comprising the less favourable treatment or detriment the last of them For the purposes of calculating the date of the less favourable treatment or detriment under paragraph (4) (2) (a) where a term in a contract is less favourable, that treatment shall be treated, , as taking place on each day of the period during which the term is less favourable; The Appellants are four judges, each of whom has held one or more appointments as fee paid part time judges, in some cases moving between such part time and full time salaried appointments. Judicial pensions, for those who are appointed on or after 31 March 1995, are provided for under the Judicial Pensions and Retirement Act 1993 (the 1993 Act). The basic concept in that Act is qualifying judicial office (s.1). The Appellants, so long as not being paid on a salaried basis, were excluded from the definition of qualifying judicial office, and therefore were excluded from rights to a pension. The Appellants brought claims on the basis that they had been the subject of less favourable treatment in the provision to them of a judicial pension. Each lodged a claim with the Employment Tribunal more than three months after the end of a part time appointment, and therefore out of time if that is the relevant date for regulation 8 of the PTWR, but within time if the relevant date is the date of retirement. At first instance EJ Macmillan held that the three months started to run from the end of any part time appointment, and thereby held that the claims were brought out of time. There has been no substantive judicial consideration of this issue before the Upper Tribunal and Court of Appeal, as the issue has been treated as subject to the appeal in Ministry of Justice v OBrien. However, before the Supreme Court the issue is now understood as one of domestic law, and has been argued fully. The determinative question is: when did the less favourable treatment occur? The Supreme Court unanimously allows the appeals. Lord Carnwath gives the sole judgments, with which the other Justices agree. As judicial officers are not employed under a contract of employment, the PTWR must be construed in an artificial context. determining this case, it must be borne in mind that the judicial pension scheme is not based upon individual appointments. Instead, regard must be had to the composite term qualifying judicial office, which may include a number of different appointments [31]. That special feature of the scheme must be taken into account when making the comparison between part time and full time judges called for by the PTWR, as it may be misleading or unfair to direct attention to the nature and timing of individual part time appointments [32]. There is no reason why entitlement to pension should be governed by the varied combinations of fee paid or salaried offices undertaken by different individual judges. This does not sit well with the aggregate approach provided for by the 1993 Act [33]. Regulation 5 of the PTWR makes clear that unfavourable treatment may relate to the terms of a contract or any other detriment resulting from an act or failure to act by the employer. By analogy, in the context of judicial pensions, a part time judge may properly complain: (1) during their period of service that their terms of office do not include proper provision for a future pension; and, (2) at the point of retirement, that there has been a failure to make a proper pension available. The former does not exclude the latter [34]. This accords with case law, which indicates that the point of unequal treatment occurs at the time the pension falls to be paid, and accords with the common sense of the matter [35].

This appeal is about whether the appellant, Nigerian National Petroleum Corporation (NNPC), should have to put up a further USD 100m security (in addition to USD 80m already provided) in respect of a Nigerian arbitration award which the respondent, IPCO (Nigeria) Ltd (IPCO), has been seeking since November 2004 to enforce in this jurisdiction. The enforcement proceedings have, therefore, a long history and it is necessary to set some of it out, to understand the context. The arbitration award has an even longer history. It is dated 28 October 2004 and is for USD152,195,971 plus Naira 5m plus interest at 14% per annum. The arbitration took place under a contract dated 14 March 1994 whereby IPCO undertook to design and construct a petroleum export terminal for NNPC. The contract was subject to Nigerian law and contained an agreement to arbitrate disputes in accordance with the Nigerian Arbitration and Conciliation Act 1988. The award once made was challenged by NNPC before the Nigerian Federal High Court. Initially, the challenge was for what have been called non-fraud reasons. As from 27 March 2009, NNPC, relying on evidence supplied by a former IPCO employee, Mr Wogu, has also challenged the whole award on the basis that IPCO procured it in substantial part by fraudulent inflation of the quantum of its claim using fraudulently created documentation. Both Field J [2014] EWHC 576 (Comm) and the Court of Appeal (Christopher Clarke, Burnett and Sales LJJ) [2015] EWCA Civ 1144 concluded that the fraud challenge was made bona fide, that NNPC has a good prima facie case that IPCO practised a fraud on the tribunal and that NNPC has a realistic prospect on that basis of proving that the whole award should be set aside. It is unnecessary to describe the vicissitudes which befell the challenges before the Nigerian courts. Suffice it to say that they have been closely examined in the English courts on more than one occasion; and that the Court of Appeal has concluded (para 164, per Christopher Clarke LJ) that it would not be profitable to seek to determine which party (if either) is more to blame for the delay, which appears, to me in large measure, to result from the workings of the Nigerian legal system. At the outset of the English proceedings, Steel J made an ex parte order for enforcement dated 29 November 2004. This led in turn to an application by NNPC for the ex parte order to be set aside under sections 103(2)(f) and 103(3) of the Arbitration Act 1996 (the 1996 Act), or alternatively for its enforcement to be adjourned under section 103(5), pending the resolution of the non-fraud challenges in the Nigerian courts. After an inter partes hearing, Gross J held on 27 April 2005 [2005] EWHC 726 (Comm) that NNPC should pay IPCO a sum of just over USD 13m (which, at that stage, when only the non-fraud challenge had been raised, appeared indisputably due), and that NNPC should provide security in the sum of USD 50m in respect of the adjournment. The USD 13m ordered was duly paid, and the security was also provided. At that stage, it was envisaged that the non-fraud challenge in Nigeria might be resolved with relative despatch. This was not to be, and on 17 July 2007 IPCO applied to have Gross Js order reconsidered on the basis that the Nigerian challenge appeared now to be unlikely to be determined for several years. Tomlinson J in a judgment dated 17 April 2008 concluded that the change of circumstances, catastrophic though it is did not justify a complete re-opening of the exercise undertaken by Gross J. Nevertheless, he ordered NNPC to pay a further net sum of around USD 52m (after taking account of USD 7.7m already paid), plus USD 26m by way of interest. He gave permission to appeal and ordered a stay pending appeal, conditional upon NNPC providing additional security to the value of USD 30m. This additional security was also provided. Tomlinson J adjourned any decision regarding enforcement of the balance of the award under section 103(5). The Court of Appeal upheld Tomlinson Js order, but it was further stayed pending the outcome of a petition to appeal to the House of Lords. Before this petition was determined (by refusal of leave), NNPC on 2 December 2008 moved to stay Tomlinson Js order on the ground that it had now obtained evidence of fraud. Flaux J on 16 December 2008 stayed Tomlinson Js order to enable NNPC to make an application under section 103(3) based on this new evidence and/or under section 103(5) for a further adjournment of enforcement. He ordered that NNPC maintain the security totalling USD 80m which had been ordered by Gross J and Tomlinson J. By application dated 18 December 2008 NNPC applied to vary Tomlinson Js order so as to provide that recognition or enforcement of the Award dated 28 October 2004 be refused pursuant to section 103(3) of the Arbitration Act 1996 because it would be contrary to public policy to do so; alternatively, the decision on whether to enforce the Award be adjourned pursuant to section 103(5) of the Arbitration Act 1996 with liberty to apply. The grounds given for refusal of recognition or enforcement were that there had been a material change of circumstances and/or Tomlinson J had been misled into believing that the Award had been properly obtained and/or public policy. The ground given for the alternative of adjournment was that the Nigerian courts would or might set aside the Award for fraud, false evidence or forgery. On 27 March 2009 NNPC applied to amend its pleadings in the Nigerian proceedings to raise the fraud challenge (an application adjourned by consent and never determined). In this light, a consent order dated 17 June 2009 was made in the English proceedings, whereby inter alia, upon NNPC undertaking to maintain the USD 80m security until further order of the court, those parts of Tomlinson Js order dated 17 April 2008 ordering payment of sums were set aside (para 1), and the decision on enforcement of the Award was adjourned pursuant to section 103(5) of the Arbitration Act 1996 (para 2). Delay continued to dog the Nigerian proceedings, and on 24 July 2012 IPCO renewed its application to enforce the Award in England, again on the ground that there had been a sufficient change of circumstances to justify this. By order dated 1 April 2014 made after a six day hearing in October 2013 Field J dismissed this application, but added that, even if it had been appropriate to reconsider enforcement in England afresh, he would have refused it, on the ground that NNPC had a good prima facie case of fraud, and that this case should continue to trial in Nigeria. The security, which NNPC had undertaken by the consent order to maintain, in these circumstances continued. The Court of Appeal took a different view. It held that there had been a material change of circumstances, and decided to cut the Gordian knot caused by the sclerotic process of the proceedings in Nigeria (paras 172-173). By order dated 10 November 2015 it therefore allowed IPCOs appeal, set aside Field Js order (by para 1) and ordered as follows (by paras 2 and 3): 2. Upon condition that the respondent provides security as set out at paragraph 5 below: (a) the proceedings shall be remitted to the Commercial Court for determination, pursuant to section 103(3) of the Act, as to whether the arbitral award dated 28 October 2004 (the Award) should not be enforced in whole or in part because it would be against English public policy so to do (the Section 103(3) Proceedings); (b) any further enforcement of the Award shall be adjourned, pursuant to section 103(5) of the Arbitration Act 1996, pending determination of the Section 103(3) Proceedings. 3. Upon any failure of the respondent to comply with the said condition the adjournment shall lapse and the appellant may enforce the Award in the same manner as a judgment or order of the court to the same effect and the appellant shall immediately be entitled to demand payment under the Guarantee and Further Guarantee (as defined in the Order of Mr Justice Tomlinson dated 17 April 2008) [ie the two existing guarantees totalling USD 80m]. 5. The security to be provided by the respondent must be provided by 4 pm on 4 December 2015 by way of first class bank guarantee issued in London in similar form to the Guarantee and the Further Guarantee in the sum of US$ 100,000,000. This security is to be in addition to that provided by those Guarantees. The parties have subsequently agreed that not only the fraud issue, but also the non- fraud issues should be decided should be decided in the English enforcement proceedings. The order dated 10 November 2015 did not reflect the Court of Appeals initial conclusions as to the appropriate disposition. They were set out in a draft, circulated on 4 September 2015 in the usual way, by para 175 of which the Court proposed to require NNPC to provide security for the whole of the principal and interest then claimed, around USD 300m. This led to a request by NNPC to the Court for it, exceptionally, to reconsider the position, on the ground that the order for security was made without jurisdiction or was alternatively wrong in principle and/or manifestly wrong. On the former point, NNPC referred to Soleh Boneh International Ltd v Government of the Republic of Uganda [1993] 2 Lloyds Rep 208 and Dardana Ltd v Yukos Oil Co (Dardana v Yukos) [2002] EWCA Civ 543; [2002] 2 Lloyds Rep 326. After receiving submissions from both parties, the Court of Appeal issued two judgments, neither in precisely the same terms as the original draft. It rejected the submission of lack of jurisdiction, but acceded to the request that it reconsider the quantum of security, which it reduced to a requirement for a further USD 100m. In the Courts first, main judgment, Christopher Clarke LJ, said: Decision 174. In my judgment the appropriate course to take is as follows. First, we should order that IPCOs application to enforce should be adjourned pending the determination by the Commercial Court pursuant to section 103(3) of the Act as to whether the Award should not be enforced in whole or in part because it would be against English public policy so to do. 175. Second, we should make that order conditional upon the provision by NNPC of further security in a form and within a time period to be agreed, or if not agreed, to be determined by this Court, in the sum of $ 100m. 176. Third, we should order that, if such security is not provided within a period which we shall specify from the time when the form of security is agreed or determined, IPCO shall have permission to enforce the Award. 177. Fourth, we should order that, if such security is provided, then, if and to the extent that it is determined by a final order of the courts of England and Wales that the enforcement of the Award is not contrary to the public policy of England & Wales, IPCO may enforce it. 178. Fifth, there shall be Permission to apply to the Commercial Court. In the Courts shorter supplementary judgment [2015] EWCA Civ 1145 dealing more extensively with the issue of jurisdiction, Christopher Clarke LJ said: Discussion 18. In the present case it seems to us that in reality it is NNPC, the Award debtor, which sought the continuance of the adjournment in the face of IPCOs attempt to enforce the Award and bring the adjournment to an end. In its respondents notice NNPC said that, if the judges contingent exercise of his discretion was in error, he was nevertheless correct to conclude that it was appropriate to adjourn under section 103(5) so that the challenge could proceed in Nigeria inter alia because, if the court were minded to enforce the Award, it would still have to decide whether the enforcement of the award was contrary to English public policy. In other words it was relying on the possibility of a later English public policy challenge as a reason to uphold the continuance of the adjournment, ordered by consent on 17 June 2009, pending resolution of the fraud challenge in Nigeria, rather than suggesting that enforcement should only abide a section 103(3) determination. 19. So far as the ability of IPCO to enforce any judgment is concerned, much will depend on whether NNPC has sufficient assets in this country, or any other country in which an English judgment may be enforced, to ensure that it can swiftly receive the fruits of any judgment in its favour. 20. Although NNPC is a large business we have no details of its assets within such countries, or the form in which they are held, how long they have been held there, or how readily any trading arrangements might be changed so as to render enforcement difficult or impossible. 21. where there is a very large award, delay without security is inherently likely to prejudice the award creditor and certainly risks doing so. We regard that as a factor which should incline us towards providing some security to ensure that if the fraud challenge fails, IPCO will not be faced with a further round of attempts to avoid payment of the Award or a situation in which its prospects of recovery have worsened. 22. Another material factor is the need in a case involving such extraordinary delay, extending over a decade, to provide a strong incentive to securing finality. NNPL [sic] says that, now that the fraud challenge is to be heard in London, the prospects of excessive delay are much reduced. Hopefully so. But the history of these proceedings, and their inordinate delay, persuades us of the need to provide an incentive, indeed something of a goad, to progress. 23. Lastly we bear in mind that the delay which has already taken place has meant that the ratio between the amount of security in place and the amount due has greatly decreased. Interest under the award is running at 14% per annum. Gross J ordered that security of $ 50m be provided 10 years ago. $ 50m x 14% x 10 = $ 70m. The same exercise applied to the $ 30m security provided in 2008 produces about another $ 31.5m ($ 30m x 14% x 7.5). NNPC now appeals, by permission of this Court, against the Court of Appeals order for security, in essence on the ground that the order was made without jurisdiction or wrong in principle and/or was illegitimate in circumstances where NNPC has a good prima facie case of fraud entitling it to resist enforcement of the whole award. Sections 100 to 104 of Part III of the 1996 Act address the recognition and enforcement of foreign awards. They give effect to the United Kingdoms obligations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. Section 103 is central to the resolution of this appeal. It reads: 103. Refusal of recognition or enforcement. (1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases. (2) Recognition or enforcement of the award may be refused if the person against whom it is invoked proves - (a) that a party to the arbitration agreement was (under the law applicable to him) under some incapacity; (b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made; (c) that he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; (d) that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (but see subsection (4)); (e) that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country in which the arbitration took place; (f) that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made. (3) Recognition or enforcement of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to recognise or enforce the award. (4) An award which contains decisions on matters not submitted to arbitration may be recognised or enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those on matters not so submitted. (5) Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in subsection (2)(f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award. It may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security. Section 103(2) and (3) give effect to article V, while section 103(5) gives effect to article VI, of the New York Convention. Articles V(1) specifies as a ground on which recognition and enforcement may be refused that: (e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. Article VI reads: If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V(1)(e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. In this light it was common ground, and it is in any event clear, that sections 103(2)(f) and (5) are both addressing a situation where an award sought to be recognised or enforced in this jurisdiction has been or is under challenge in an overseas jurisdiction where, or under the law of which, it was made. The issue on this appeal falls under two heads: first, whether the Court of Appeals order was justified by reference to section 103(5) of the 1996 Act; and, second, whether it was justified by reference to general English procedural rules. In the latter connection, reliance is placed on CPR 3.1(3) as well as, indirectly, on section 70(7) of the 1996 Act. CPR 3.1(3) provides that: Where the court makes an order, it may - a) make it subject to conditions, including a condition to pay a sum of money into court; and specify the consequences of failure to comply b) with the order or a condition. Section 70(7) is one of a group of sections appearing under the heading Powers of the court in relation to award in Part I of the 1996 Act. Part I concerns arbitrations that (unlike the present) have their seat in England, Wales or Northern Ireland: see section 2(1). The group starts with section 66, addressing enforcement generally: Enforcement of the award (1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect. (2) Where leave is so given, judgment may be entered in terms of the award. (3) Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the tribunal lacked substantive jurisdiction to make the award. The right to raise such an objection may have been lost (see section 73). (4) Nothing in this section affects the recognition or enforcement of an award under any other enactment or rule of law, in particular under Part II of the Arbitration Act 1950 (enforcement of awards under Geneva Convention) or the provisions of Part III of this Act relating to the recognition and enforcement of awards under the New York Convention or by an action on the award. Section 66 must be read with section 81(1), providing that: Saving for certain matters governed by common law. (1) Nothing in this Part shall be construed as excluding the operation of any rule of law consistent with the provisions of this Part, in particular, any rule of law as to - (a) matters which are not capable of settlement by arbitration; (b) (c) arbitral award on grounds of public policy. the effect of an oral arbitration agreement; or the refusal of recognition or enforcement of an Sections 67, 68 and 69 concern challenges to awards for lack of substantive jurisdiction (section 67), serious irregularity (section 68) or by way of appeal on a point of law (section 69), in each case in proceedings initiated before the court by the award debtor. They therefore contrast with section 66(3), which, read with section 81, enables an award debtor to challenge enforcement on grounds there indicated by resisting enforcement proceedings initiated by the award creditor. Section 70(1) provides that the following provisions, inter alia, apply to an application or appeal under sections 67, 68 or 69 of the Act: (6) The court may order the applicant or appellant to provide security for the costs of the application or appeal, and may direct that the application or appeal be dismissed if the order is not complied with. (7) The court may order that any money payable under the award shall be brought into court or otherwise secured pending the determination of the application or appeal, and may direct that the application or appeal be dismissed if the order is not complied with. CPR 62.18(9) provides that, within 14 days of service of an ex parte order giving permission to enforce under section 66, the defendant may apply to set aside the order and the award must not be enforced until after any application made by the defendant within that [14 day] period has been finally disposed of. I start with the relationship between the Court of Appeals order and the scheme of section 103 of the Act. The order was that the fraud issue, raised as an issue of public policy under section 103(3), should, for the purposes of determining whether enforcement should be ordered, be decided in the English, rather than Nigerian, proceedings. But the decision of the fraud issue was made conditional upon the provision by NNPC of a further USD 100m security, failing which the Court gave leave to enforce without any decision of the fraud issue. Upon provision of such security, on the other hand, the Courts order provided that any further enforcement of the award should be adjourned under section 103(5) pending decision of the fraud issue. The position is therefore that the Court held that an enforcing courts decision upon an issue, raised by an award debtor under section 103(3) or, as must follow, section 103(2) could (and in the instant case should) be made conditional upon the award debtors provision of security in respect of the award. Further, it regarded the delay which would follow while that decision was being reached by the enforcing court as involving an adjournment within the meaning of the words the court may adjourn the decision on the recognition or enforcement of the award in section 103(5). In both these respects, the Court of Appeal fell in my opinion into error. First, nothing in section 103(2) or (3) (or in the underlying provisions of article V of the New York Convention) provides that an enforcing court may make the decision of an issue raised under either subsection conditional upon the provision of security in respect of the award. In this respect, there is a marked contrast with section 103(5), which specifically provides that security may be ordered where there is an adjournment within its terms. Second, the Court erred in regarding its order that the English court should as the enforcing court decide the fraud issue as involving adjournment of the decision on that issue within the terms of section 103(5). This error has two aspects. First, as stated in para 15 above, section 103(5) concerns the situation where an enforcing court adjourns its decision on enforcement under section 103(2) or (3), while an application for setting aside or suspension of the award is pending before the court of the country in, or under the law of which, the award was made. This was the situation when orders were made by Gross J on 12 April 2005, by Flaux J on 16 December 2008 and by consent on 17 June 2009. But it ceased to be the situation for the future, once the Court of Appeal held that the issue whether fraud was an answer to enforcement should no longer await the outcome of the Nigerian proceedings, but should be decided by the English courts. Although the literal trigger to the application of section 103(5) is that an application has been made to the courts of the country where, or under the law of which, the award was made, the adjournment which it contemplates is pending the outcome of that application. Once it is held that there should be no such further adjournment, there is no basis for ordering further security under section 103(5). The Court of Appeal, in ordering that any further enforcement of the award should be adjourned under section 103(5) pending determination of the section 103(3) proceedings, was, therefore, misusing the word in the context of section 103(5). Of course, any decision of an issue raised under section 103(2) or (3) may take a court a little time, even if it is only while reading the papers, or adjourning overnight or for a number of weeks, in order to consider and take the decision. But that does not mean that the decision was being adjourned within section 103(5). On the contrary, delays of this nature are all part of the decision-making process. The second aspect is that section 103(5) contemplates an order for security being made on the application of the party claiming recognition or enforcement of the award. It is true that in Dardana v Yukos, when giving the reasons of all members of the court, I said, at para 31: I am fully prepared to proceed on the basis that section 103(5) provides the court with jurisdiction to make such an order, in a case where it, either of its own motion (cf Soleh Boneh) or at the instance of the party seeking [sic] recognition or enforcement, decides to adjourn, pending a foreign application to set aside by the party resisting recognition or enforcement. Christopher Clarke LJ in his supplementary judgment, para 6, questioned how section 103(5) was thought to provide jurisdiction to the court to act of its own motion. It is unnecessary to consider that question here, although I shall return to para 6. What is however important to note is an evident error in the passage cited, which no one appears to have spotted. The word seeking after which I have inserted sic should clearly have read resisting, to reflect the actual language of section 103(5). That is also evident from the actual decision in Dardana v Yukos and its supporting reasoning. In Dardana v Yukos, the award debtor (Yukos) was challenging a Swedish award in Stockholm, but its primary response to an application to enforce in England was that the English courts should themselves decide whether the award should be recognised or enforced under section 103(2)(b) and/or (d). (Only in the alternative, did Yukos apply for an adjournment under section 103(5).) For a considerable time, the award creditor (Dardana) shared the award debtors stance, that the issues should be decided under section 103(2)(b) and/or (d). But, during the hearing, Dardana appreciated that its case was less strong than it had thought. It then changed direction, and rather than risk losing in England, resisted determination of Yukoss case in England, and itself in reality sought an adjournment pending the outcome of the Swedish proceedings (see judgment, para 23). In these circumstances, the Court of Appeal held in Dardana v Yukos that the English courts had no power under section 103(5) to order Yukos to provide security on the tacit basis that, if Yukos did not do this, immediate enforcement would be ordered against it (paras 26-31). Security pending the outcome of foreign proceedings is, in effect, the price of an adjournment which an award debtor is seeking, not to be imposed on an award debtor who is resisting enforcement on properly arguable grounds. The reasoning in Dardana v Yukos underlines both these aspects. I have added italics for emphasis: 27. In most cases it would be the party resisting recognition or enforcement, who had already begun proceedings to set aside in the foreign state, who would be seeking an adjournment of the recognition or enforcement proceedings, pending resolution of the foreign application. An order for security, on the application of the party seeking recognition or enforcement, would be the price of the adjournment sought by the other party, and would protect the party seeking recognition or enforcement during the adjournment. There is no power under section 103(5) to order security except in connection with an adjournment. If no foreign application had been made to set aside, the domestic proceedings under section 103(2) would have had to be fought out to a conclusion; and there would be no power under section 103(5) to order security during the period which that took. There could of course, in an appropriate case be an application for freezing relief 28. In a case where a party resisting enforcement applies under section 103(2), but later seeks an adjournment of its application pending resolution of foreign proceedings in which it is also challenging the award, adjournment may as a matter of general principle be ordered on condition that security be provided (failing which the order for adjournment will be vacated and the issues under section 103(2) will be determined). 29. The reality in the present case is that the appellants were obliged to provide the security, on the tacit basis that, if they did not do so, then enforcement would be ordered unconditionally against them, despite their outstanding application under section 103(2). The provision for security was, in other words, made a condition not of any adjournment sought by the appellants, but of avoiding immediate and final enforcement; and, failing its provision, the appellants outstanding application under section 103(2) would have been liable to be struck out or dismissed, without determination of its merits. I do not consider that as a legitimate sanction to attach to any order made for the provision of security in the present circumstances. It would involve overriding or fettering an outstanding application under section 103(2), in a way for which sections 100-104 provide no warrant. It is inconsistent with paragraph 31.9 of the Arbitration Practice Direction, and the concluding words of Mr Justice Steels order, whereby the award was not to be enforced, if the appellants applied (as they did) to set aside his order, until the application was finally disposed of. Paragraph 31.9 of the Arbitration Practice Direction has now become CPR 62.18, set out in para 21 above. In the present case, the Court of Appeals order involves the same error as that identified in the first and third italicised passages. It required security, not as the price of a further adjournment falling within section 103(5), but as the price of the decision of an issue under section 103(3). The Court was lifting the adjournments previously ordered pending the outcome of the Nigerian proceedings, not ordering an adjournment. It had no power under section 103 to make a decision of the properly arguable case raised by NNPC under section 103(3) conditional on NNPC providing further security. The Court of Appeals reasoning at paras 174-177 of its main judgment and para 18 of its supplementary judgment demonstrates the same errors that are evident in its order. Para 18 by focusing on NNPCs (alternative) submission that, if Field Js contingent exercise of his discretion (to refuse enforcement) was wrong, there should be an adjournment under section 103(5) case misses the point. What is critical here is not what submissions were advanced (contingently), but whether there was in the event an adjournment (and, if there was, whether it was effectively at the award debtors instance as well as pending the outcome of the relevant challenge in the overseas court of the country in which, or under the law of which, the award was made). Here, no such adjournment was ordered by the Court of Appeal, which on the contrary decided that the fraud issue should be resolved in the English proceedings. There was therefore no adjournment under section 103(5) onto which to hang, as the price, a requirement of further security. The Court of Appeals further reasons at paras 19-23 in its supplementary judgment do not go to the jurisdiction or power to order security under section 103, though they might have gone to the exercise of any discretion, if (contrary to my conclusion) any such discretion had existed under section 103. The perceived inadequacy by the time of the Court of Appeals order of the security of USD 80m validly ordered as a condition of past adjournments under section 103(5) was no basis for ordering further security when further adjournment was being refused. Mr Michael Black QC suggested that, when the matter came before Field J and the Court of Appeal, there was no outstanding challenge by NNPC under section 103(3). If that were so, it is difficult to understand what either court was doing in considering and deciding, at some length, whether NNPC had shown a good prima facie case of fraud, and, in the case of the Court of Appeal, making an order for its decision by the English courts. Further, NNPC had made a formal challenge by its application dated 18 December 2008; the decision on that challenge was adjourned, pending the outcome of the Nigerian proceedings, by the consent order dated 17 June 2009; and the whole purpose and effect of the Court of Appeals decision that there had been a change of circumstances justifying the reopening of the consent order was to lift the adjournment and to order that the challenge be decided in the English proceedings. For these reasons, the Court of Appeals order for security was not within the scope of any jurisdiction or power conferred by section 103 of the 1996 Act. Mr Black has, however, submitted that the order can be and was justified on grounds not directly considered in Dardana v Yukos, and touched on, if at all, then only very tangentially by the Court of Appeal. At the basis of this submission is the proposition that the New York Convention, and sections 100-104 of the 1996 Act, leave untouched the ordinary procedural powers of the English courts in respect of proceedings before them. I have no difficulty accepting the general correctness of that in relation to the conduct of a challenge to recognition or enforcement being decided under section 103(2) and/or (3): see further para 45 below. But it provides no basis for making the raising for decision of a properly arguable challenge under these sections conditional upon the provision of security for the award. providing: In support of his submission, Mr Black points to article III of the Convention, Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards. Although article III is not itself part of English law, Mr Black submits that we can and should, on familiar principles, view sections 100-104 of the 1996 Act in its light. I also have little difficulty with that as a general proposition, although the possible differences between the meaning of the word conditions used twice in article III have given rise to much discussion. I am prepared for present purposes to proceed on the basis, without deciding, that the second reference to conditions refers in effect to principles or rules of procedure (as Mr Black submits with the weighty support of Professor Albert van den Bergs commentary on The New York Arbitration Convention of 1958 (1981), p 239). Mr Blacks submission is that sections 100-104 only occupy the field of procedural matters to a limited extent. The second paragraph of article VI (which led domestically to the second paragraph of section 103(5)) was, according to the Summary Record of the Seventeenth Meeting of the United Nations Conference on International Commercial Arbitration held on 3 June 1958, inserted to address the risk of abuse of what became article VI by proceedings started in the country where, or under whose law, the award was issued without a valid reason purely to delay or frustrate the enforcement of the award; it may, he submits, have been necessary to regulate this limited procedural aspect at an international level, because individual states might not have their own procedural mechanisms to do so; but it did not follow that states could not attach procedural conditions to challenges made under article V (ie domestically, under section 103(2) and (3)). The submission continues by pointing to the English courts general power to make conditional orders, including orders on its own motion under CPR 3.1(3)(a) and 3.3. In this connection, Mr Black is able to submit that this is in fact what the Court of Appeal must, or must also, have had in mind when it made its order. In para 6 of his supplementary judgment, commenting on the passage from Dardana v Yukos set out in para 27 above, Christopher Clarke LJ said this: It is not wholly clear to us how section 103(5) was thought to provide jurisdiction to the Court to act of its own motion but, in any event, a court which is asked to adjourn, or continue an adjournment of, enforcement is entitled to impose conditions on the exercise of its discretion to do so: CPR 3.1(3)(a); and may do so of its own initiative: CPR 3.3. Section 103(5) cannot be treated as precluding the exercise of that right. Finally, Mr Black argues that the English courts would, contrary to article III, be discriminating procedurally against foreign awards compared with awards in arbitrations where the seat is English, if they could not order security against a party who was merely mounting a challenge under section 103(2) or (3). It is in this connection that he deploys section 70(7) of the 1996 Act. He relies on reasoning of Rix LJ (supported to some extent by that of Moses LJ, but opposed by that of Buxton LJ) in Gater Assets Ltd v NAK Naftogaz Ukrainiy (Gater) [2007] EWCA Civ 988; [2007] 2 Lloyds Rep 588; [2008] Bus LR 388. Rix LJ considered that an award debtor resisting enforcement by destroying the formal validity of the award, either as a matter of substantive jurisdiction or serious irregularity or as a matter of public policy is in substance in a position of a claimant analogous to that of an award debtor under an English award seeking to challenge an award under sections 66 to 69 of the Act, and is liable accordingly to be made subject to an order for security for costs: see paras 77-80 (see also per Moses LJ para 93, and, to the contrary effect, per Buxton LJ paras 101-104). On Mr Blacks case, therefore, if English procedural law does not enable an award creditor under a Nigerian arbitration award to apply and, if the court thinks fit, to obtain security for the award from an award debtor who is challenging enforcement under section 103(2) or (3), then it is imposing on the award creditor substantially more onerous conditions, in the sense of procedural rules, than those applicable to English awards under section 70(7) of the Act. Mr Blacks case on these points fails, in my opinion, at a number of levels. First, the Court of Appeal in Gater was addressing an issue of security for the future costs of a challenge under section 103(3), which raises very different considerations to an issue of security for the past award itself. Even then, although Rix LJ did not make this the ground of decision because it had not been argued, he noted that the Convention might be regarded as a complete code, precluding the making of a decision under section 103(2) or (3) conditional upon the provision of security for costs: para 82. More importantly, in relation to the provision of security for the award itself, he said this, at para 81: Field J, however, was prepared to refuse enforcement, on the ground of failure to provide the security for costs ordered. That was the order that Field J made, setting aside the enforcement order if the security was not provided, and doing so on a ground not expressly within the Convention. There is no express basis in the New York Convention for that condition. Enforcement may be refused only if one of the exceptions within article V is made good. Security is discussed in the Convention, but only security for the award itself and only in the context of an adjournment of enforcement proceedings pending an application to set aside or suspend the award to the competent authority of the country in which, or under the law of which, that award was made: article VI, reproduced in section 103(5) of the 1996 Act. That is not just an example of a circumstance in which such security might be ordered, but is the only circumstance in which it might be: see the decision of this court in Dardana Ltd v Yukos Oil Co [2002] All ER (Comm) 819, para 27. In my opinion, the conditions for recognition and enforcement set out in articles V and VI of the Convention do constitute a code. Just as article V codifies the grounds of challenge (see Dicey, Morris & Collins on The Conflict of Laws, 15th ed (2012), para 16-137), so the combination of articles V and VI must have been intended to establish a common international approach, within the field which they cover. They contemplate that a challenge under article V may only be made conditional upon the provision of security in one situation falling within their scope. Had it been contemplated that the right to have a decision of a properly arguable challenge, on a ground mentioned in article V (domestically, section 103(2) and (3)), might be made conditional upon provision of security in the amount of the award, that could and would have been said. The Convention reflects a balancing of interests, with a prima facie right to enforce being countered by rights of challenge. Apart from the second paragraph of article VI, its provisions were not aimed at improving award creditors prospects of laying hands on assets to satisfy awards. Courts have, as noted in Dardana v Yukos, other means of assisting award creditors, which do not impinge on award debtors rights of challenge, eg disclosure and freezing orders. It is unnecessary in this context to address the issue which divided the Court of Appeal in Gater, whether or how far an award debtor challenging an award should or may be regarded as being in the position of a claimant, rather than a defendant. Suffice it to say that I would leave open the correctness of Rix LJs view (Gater, paras 77-79) that there is no material difference at a domestic level between challenges falling within the scope of section 66 of the Act, read with section 81(1), and challenges falling within sections 67, 68 or 69. The fact that section 70(6) and (7) only apply to the latter, and not to challenges under section 66, highlights this point. If it were appropriate or relevant to have regard to the position regarding an English award, the true domestic analogy with, at any rate, the present fraud challenge under section 103(3) would be a challenge under section 66 read with section 81(1)(c). On that section 70(7) cannot on any view offer any direct assistance to Mr Blacks submission. In fact, however, the challenges permissible under section 103(2) and (3) embrace, but do not distinguish between, matters which could in some cases be raised both under section 66 and under either section 67 or 68 and in other cases only under one of the latter two sections. Domestic analogies are in these circumstances unlikely to illuminate the operation of the internationally-based provisions of sections 100-104. In any event, I do not regard the argument based on article III and section 70(7) as having any force. First, article III may serve as a caution against interpreting or applying English procedural provisions in a sense which discriminates against Convention awards by imposing substantially more onerous rules of procedure. But this is only so long as the conditions laid down in the following articles of the Convention do not otherwise provide. As I have indicated, I consider that articles V and VI constitute a code relating to security for an award when the issue is enforcement or adjournment; and that the code excludes requiring security for an award in the face of a properly arguable challenge under article V, except in so far as article VI provides. Second, even if that were not so, I would have some doubt whether an inability to order security on a challenge to an overseas award could constitute a substantially more onerous rule of procedure in relation to recognition or enforcement than a rule allowing such security in the case of an English award. Third, be that as it may, the fact is that the 1996 Act contains in relation to Convention awards no equivalent to section 70(7) in relation to English awards. Whatever article III might require in that respect (if anything), it is not found in the 1996 Act, and no amount of consistent interpretation can alter the Act in that respect. Fourth, there is first instance authority, which in my opinion accurately reflects what would be expected as a matter of principle in relation to the provision of security for the amount of an award in issue, that the power under section 70(7) will only be exercised if the challenge appears flimsy or otherwise lacks substance: A v B (Arbitration: Security) [2010] EWHC 3302 (Comm); [2011] 1 Lloyds Rep 363; [2011] Bus LR 1020, para 32 per Flaux J; Y v S [2015] EWHC 612 (Comm); [2015] 1 Lloyds Rep 703, para 33 per Eder J. That cannot by any stretch be said of NNPCs fraud challenge in the light of the evidential material set out in the Court of Appeals judgment. Finally, I turn to CPR 3.1(3). In my opinion, this takes IPCO nowhere. It is a power, expressed in general terms, to impose conditions on orders. It cannot authorise the imposition, on a person exercising its right to raise a properly arguable challenge to recognition or enforcement, of a condition requiring security for all or any part of the amount of the award in issue. Its obvious subject matter is the imposition of a condition as the price of relief sought as a matter of discretion or concession, not the imposition of a fetter on a person exercising an entirely properly arguable right. The Court of Appeal was right to underline in Huscroft v P & O Ferries Ltd (Practice Note) [2010] EWCA Civ 1483; [2011] 1 WLR 939, paras 18- 19 that rule 3.1(3) does not give the court a general power to impose conditions on one or other party whenever it happens to be making an order, and that its purpose is to enable the court to grant relief on terms and that the court should focus attention on whether the condition (and any supporting sanction) is a proper price for the party to pay for the relief being granted, satisfying itself also that the condition it has in mind represents a proportionate and effective means of achieving that purpose. CPR 3.1(3) may be relevant where the court only permits the pursuit on terms of a claim or defence which in some respect is problematic: see Deutsche Bank AG v Unitech Global Ltd [2016] EWCA Civ 119, paras 72-81 (to which the appellants solicitors very properly drew the Supreme Courts attention after the handing down in draft of this judgment). But it is entirely clear that CPR 3.1(3) has no relevance on this appeal. That is not to say that CPR 3.1(3) or the courts other general procedural powers may never become relevant in the context of an issue being decided under section 103(2) or (3). I have noted that the courts power to make disclosure and freezing orders is one means by which an award may indirectly be secured, without impinging on a defendants right to raise challenges under section 103. The court may in the course of such a challenge make all sorts of other procedural orders, and back them where necessary with sanctions. But none of this has anything to do with this appeal. NNPC here had not misconducted themselves or given any sort of cause for the exercise of any procedural discretion to make an order against them or to condition it in any way. Some of the factors to which the Court of Appeal alluded in paras 19 to 23 of its supplementary judgment might have had some possible relevance had NNPC in some way defaulted in the pursuit of a challenge under section 103. As it is, paras 19-21 amount to no more than concern that the award might be difficult to enforce in practice, while para 23 links this to a perception that the previously ordered security now appears insufficient. These were not admissible bases for attaching a condition to the future exercise in this jurisdiction of a right of challenge under section 103(3). The wish in para 22 to provide a goad to progress was also an inadmissible basis for securing the award, particularly in the absence of any finding of any relevant prior default by NNPC from which it needed relief, and is (one might add, if it had had any potential relevance) difficult to understand as a matter of fact in circumstances where the fraud issue will from now be case- managed by the Commercial Court. I should not finish without addressing a point made by NNPC in a footnote - doubtless to avoid too obvious a hostage to fortune on the main issue - on the last page of its written case. The footnote records that NNPC also considers that it follows that NNPC can allow the guarantees given previously (in a total sum of US$ 80m) to lapse without affecting its right to have its defence under section 103(3) of the 1996 Act determined prior to IPCO being permitted to enforce the Award. I do not accept that. The security of USD 80m was the agreed price of adjournments in 2005 and 2008-2009 which have lasted in total nearly 12 years. NNPC undertook by the consent order dated 17 June 2009 to maintain the guarantees until further order of the Court. That the adjournment will now lapse is no reason for the Court to permit the existing security to lapse, still less for any argument that NNPC is entitled to allow it to lapse. The guarantees should continue in place until further order, pursuant to NNPCs undertaking. For the reasons I have given, the appeal must in my opinion be allowed, the Court of Appeals order attaching conditions (in particular, the requirement to provide further security of USD 100m) in relation to the challenges raised by NNPC must be set aside and NNPCs fraud and non-fraud challenges must be remitted to the Commercial Court for decision free of any such further conditions. The parties will have 21 days to make submissions as to the precise form of order and as to costs. For the reasons I have given, the appeal must in my opinion be allowed, the Court of Appeals order attaching conditions (in particular, the requirement to provide further security of USD 100m) in relation to the challenges raised by NNPC must be set aside and NNPCs fraud and non-fraud challenges must be remitted to the Commercial Court for decision free of any such further conditions. The parties will have 21 days to make submissions as to the precise form of order and as to costs.

UK-Abs

This appeal concerns the enforcement in England of a Nigerian arbitration award dated 28 October 2004 for USD 152,195,971 plus 5m Nigerian Naira in respect of a contract by which IPCO (Nigeria) Limited (IPCO) undertook to design and construct a petroleum export terminal for Nigerian National Petroleum Corporation (NNPC). The award is subject to still outstanding challenges by NNPC in Nigeria, initially for what have been called non fraud reasons and, from 27 March 2009, for alleged fraud in relation to IPCOs presentation of its claim. The issue before the Court is whether the appellant, NNPC, should have to put up a further USD 100m security in the English enforcement proceedings. An ex parte order for enforcement made by Steel J on 29 November 2004 led to an application by NNPC to set aside under ss.103(2)(f) and 103(3) or, alternatively, for enforcement to be adjourned under s.103(5), of the Arbitration Act 1996 (the 1996 Act). On 27 April 2005, Gross J ordered that enforcement be adjourned pending resolution in Nigeria of the non fraud challenges, conditional on NNPC (i) paying IPCO USD 13.1m and (ii) putting up security of USD 50m under s.103(5). Following a further application for enforcement based on the delay in the Nigerian proceedings, and further orders including one under which a further USD 30m was provided by way of security, NNPC applied in Nigeria to raise the fraud challenge. A consent order dated 17 June 2009 was then made in the English proceedings whereby the decision on enforcement was further adjourned under s.103(5), upon NNPC undertaking to maintain the security of USD 80m thus far provided until further order. On 24 July 2012, IPCO renewed its application to enforce on the ground of the further delay in the Nigerian proceedings. This application was dismissed by Field J but allowed on appeal by the Court of Appeal, which decided to cut the Gordian knot caused by the sclerotic process of the Nigerian proceedings. The Court of Appeal ordered that (i) the proceedings be remitted to the Commercial Court for it to determine pursuant to s.103(3) whether the award should be enforced in light of the alleged fraud and (ii) any further enforcement of the award be adjourned in the meanwhile under s.103(5), such order being made conditional on NNPC providing a further USD 100m security (in addition to the USD 80m already provided). NNPC appeals against the order for security on the basis that it was made without jurisdiction or wrong in principle and/or was illegitimate in circumstances where both Field J and the Court of Appeal had concluded that NNPC had a good prima facie case of fraud entitling it to resist enforcement of the whole award. The Supreme Court unanimously allows NNPCs appeal. Lord Mance gives the lead judgment, with which all the Justices agree. Section 103(5) of the 1996 Act The Court of Appeals order was not justified by reference to s.103(5). Nothing in s.103(2) or (3) (or in the underlying provisions of article V of the New York Convention) provides a power to make an enforcing courts decision on an issue raised under these provisions conditional on an award debtor providing security in respect of the award. This is in marked contrast to s.103(5), which specifically provides that security may be ordered where there is an adjournment within its terms [24]. The Court also erred in treating its order that the English Commercial Court should decide the fraud issue as involving an adjournment of the decision on that issue within the terms of s.103(5). Section 103(5) concerns the situation where an enforcing court adjourns its decision on enforcement under s.103(2) or (3) while an application for setting aside or suspension of the award is pending before the court of the country in, or under the law of which, the award was made. It does not extend to delays in the decision making process occurring while a decision of an issue under s.103(2) or (3) is made [25 26]. Further, s.103(5) contemplates an order for security being made on the application of the party claiming recognition or enforcement of the award. The reasoning in Dardana v Yukos [2002] confirms that security pending the outcome of foreign proceedings is, in effect, the price of an adjournment which an award debtor is seeking; it is not to be imposed on an award debtor who is resisting adjournment on properly arguable grounds [27 29]. In the present case, there was no adjournment under s.103(5) onto which to hang, as the price, a requirement of further security [30 32]. The Court of Appeals further reasons for imposing the security, including as an incentive to securing finality in the context of lengthy delays, do not go to the jurisdiction or power to order security under s.103 [32]. General English procedural rules The requirement to provide security could not be justified by reference to general English procedural rules. Reliance was placed on CPR 3.1(3) and, indirectly, s.70(7) of the 1996 Act [16 21]. However, the conditions for recognition and enforcement set out in articles V and VI of the New York Convention (to which s.103(2), (3) and (5) give effect) constitute a complete code intended to establish a common international approach. Had it been contemplated that the right to have a decision of a properly arguable challenge, on a ground mentioned in article V (i.e. s.103(2) and (3)), might also be made conditional on provision of security in the amount of the award, that could and would have been said. The Convention reflects a balancing of interests. Its provisions were not aimed at improving award creditors prospects of laying hands on assets to satisfy awards. Courts have other means of assisting award creditors which do not impinge on award debtors rights of challenge, such as disclosure and freezing orders [41]. Section 70(7) provides that the court may order that any money payable under the award shall be brought into court or otherwise secured pending the determination of the application or appeal. It only applies, however, to arbitrations that (unlike the present) have their seat in England, Wales or Northern Ireland. The 1996 Act contains no equivalent in relation to Convention awards. Further, the power will only be exercised if the challenge appears flimsy or otherwise lacks substance, which cannot be said of NNPCs fraud challenge [43]. Finally, CPR 3.1(3) has no relevance on this appeal. It is a power, expressed in general terms, to impose conditions on orders. Its focus is the imposition of a condition as the price of relief sought as a matter of discretion or concession, and not the imposition of a fetter on a person exercising its right to raise a properly arguable challenge to recognition or enforcement [44].

This appeal raises a question relating to the temporal scope of Council Directive 97/81/EC of 15 December 1997, 1998 OJ L14/9, concerning the Framework Agreement on part time work (the directive) as extended to the United Kingdom by Council Directive 98/23/EC of 7 April 1998, 1998 OJ L131/10, and the general principles of EU law governing the non retroactivity of legislation. The question arises in the context of proceedings between Mr Dermod OBrien QC and the Ministry of Justice concerning the pension to which Mr OBrien is entitled by reason of his part time service in a judicial office. In essence, the question is whether, where a part time worker retires after the entry into force of the directive and is entitled under the directive, taken together with national law, to an occupational pension based on his length of service, periods of service which were completed before the directive entered into force should be taken into account. The facts The material facts are as follows. Mr OBrien is a retired self employed barrister who also held part time judicial office as a recorder (a part time judge of the Crown Court) between 1 March 1978 and 31 March 2005, when he retired at the age of 65. Recorders were not salaried but were paid fees on a per diem basis. There was no provision for the payment of a judicial pension on retirement. In June 2005 Mr OBrien wrote to the Ministry, requiring that he be paid a retirement pension on the same basis, adjusted pro rata temporis, as that paid to former full time judges who had been engaged on the same or similar work. He was informed by the Ministry that he fell outside the categories of judicial office holder to whom a judicial pension was payable. In September 2005 he began proceedings in the Employment Tribunal, in which he claimed that he was entitled to a judicial pension by virtue of the directive and the regulations transposing it into domestic law. On 28 July 2010 the Supreme Court referred two questions to the Court of Justice for a preliminary ruling under article 267 TFEU: (1) Is it for national law to determine whether or not judges as a whole are workers who have an employment contract or employment relationship within the meaning of clause 2.1 of the Framework Agreement, or is there a Community norm by which this matter must be determined? (2) If judges as a whole are workers who have an employment contract or employment relationship within the meaning of clause 2.1 of the Framework Agreement, is it permissible for national law to discriminate (a) between full time and part time judges, or (b) between different kinds of part time judges in the provision of pensions? On 1 March 2012 the Second Chamber of the Court of Justice, having received the opinion of the Advocate General (Kokott) on 17 November 2011, gave judgment: OBrien (Case C 393/10) [2012] 2 CMLR 25. It answered the questions as follows: (1) European Union law must be interpreted as meaning that it is for the member states to define the concept of workers who have an employment contract or an employment relationship in clause 2.1 of the Framework Agreement and in particular, to determine whether judges fall within that concept, subject to the condition that that does not lead to the arbitrary exclusion of that category of persons from the protection offered by Directive 97/81, as amended by Directive 98/23, and that agreement. An exclusion from that protection may be allowed only if the relationship between judges and the Ministry of Justice is, by its nature, substantially different from that between employers and their employees falling, according to national law, under the category of workers. (2) The Framework Agreement . must be interpreted as meaning that it precludes, for the purpose of access to the retirement pension scheme, national law from establishing a distinction between full time judges and part time judges remunerated on a daily fee paid basis, unless such a difference in treatment is justified by objective reasons, which is a matter for the referring court to determine. Following that ruling, the Supreme Court held that Mr OBrien was at the material time a part time worker within the meaning of clause 2.1 of the Framework Agreement, and that no objective justification had been shown for departing from the principle of remunerating fee paid part time judges on the same basis as full time judges, subject to adjustment pro rata temporis. Mr OBrien was therefore entitled to a pension on terms equivalent to a circuit judge (a comparable full time judge): [2013] UKSC 6; [2013] 1 WLR 522. The case was remitted to the Employment Tribunal for determination of the amount of the pension to which Mr OBrien was entitled. The question which then arose was whether, in calculating the amount of his pension, account should be taken of the whole of his service since the beginning of his appointment on 1 March 1978 (a period of 27 years), or only his service since the deadline for transposing the directive expired (a period of less than five years). The Employment Tribunal held that the calculation should take into account the whole of his service, but the Employment Appeal Tribunal held the contrary: [2014] ICR 773. The Court of Appeal upheld the decision of the Employment Appeal Tribunal: [2015] EWCA Civ 1000; [2016] 1 CMLR 28. Mr OBrien now appeals to the Supreme Court. The legal context (a) National law Domestic legislation provides for the payment of judicial pensions under two statutes, the Judicial Pensions Act 1981 and the Judicial Pensions and Retirement Act 1993. The 1981 Act applies to persons appointed prior to 31 March 1995, unless they elect to have their pension paid under the 1993 Act. The 1993 Act applies to persons appointed on or after 31 March 1995. Under the Acts, a pension is payable to any person retiring from qualifying judicial office, subject to their having attained the age of 65 and, under the 1993 Act, subject also to their having completed at least five years service in such office. At the material time, full time judges and salaried part time judges held a qualifying judicial office, but fee paid part time judges, such as recorders, did not. Under both schemes, the amount of pension payable to a full time judge is based on his or her final years salary and on his or her number of years service in a qualifying judicial office by the date of retirement. Under the 1981 Act, circuit judges must have served for 15 years in order to qualify for a full pension of one half of their last annual salary. The corresponding period under the 1993 Act is 20 years. Under both schemes, judges who have served for shorter periods receive a proportion of the full pension corresponding to the length of their service. There is also a lump sum payable on retirement, the sum being based on the amount of the annual pension. Judicial pensions were at the material time non contributory. Since 2012, judges have had to pay a contribution. The United Kingdom gave effect to the directive by the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551), which came into force on 1 July 2000. The Regulations provide that a part time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full time worker. In determining whether a part time worker has been treated less favourably than a comparable full time worker, the pro rata principle is to be applied unless it is inappropriate. The Regulations expressly do not apply to fee paid part time judges. (b) Relevant EU law In European Commission v Moravia Gas Storage AS (Case C 596/13 P) [2015] 3 CMLR 17, para 32, the Court of Justice stated: A new rule of law applies from the entry into force of the act introducing it, and, while it does not apply to legal situations that have arisen and become definitive under the old law, it does apply to their future effects, and to new legal situations. It is otherwise, subject to the principle of the non retroactivity of legal acts, only if the new rule is accompanied by special provisions which specifically lay down its conditions of temporal application. The Court applied that principle in the context of the directive in Istituto Nazionale della Previdenza Sociale (INPS) v Bruno (Joined Cases C 395/08 and C 396/08) [2010] ECR I 5119, where the question arose whether service prior to the entry into force of the directive counted towards the service required to qualify for a retirement pension. The Court cited the principle that new rules apply, unless otherwise specifically provided, immediately to the future effects of a situation which arose under the old rule (para 53), and concluded: Accordingly, the calculation of the period of service required to qualify for a retirement pension such as the pensions at issue in the main proceedings is governed by Directive 97/81, including periods of employment before the directive entered into force. (para 55) The Court cited that judgment when rejecting an objection to the admissibility of the first preliminary reference in the present proceedings. In OBrien (Case C 393/10) [2012] ICR 955, the Court stated: 24. The Latvian Government doubts whether the reference for a preliminary ruling is admissible. It is contrary to the principle of the protection of legitimate expectations and the principle of legal certainty to hold that Directive 97/81 may apply to facts which took place before the entry into force of that directive in the United Kingdom and which continued for a short time after its entry into force, even if the right to a retirement pension claimed by Mr OBrien arose after the expiry of the time limit for transposing Directive 97/81. 25. The Court has already declared, as regards the applicability ratione temporis of that directive that new rules apply, unless otherwise specifically provided, immediately to the future effects of a situation which arose under the old rule. Thus the Court concluded that the calculation of the period of service required to qualify for a retirement pension is governed by Directive 97/81, including periods of employment before the directive entered into force (Joined Cases C 395/08 and C 396/08 Bruno [2010] ECR I 5119, paras 53 to 55). 26. Consequently, the reference for a preliminary ruling must be declared admissible. The Court has treated occupational pensions as a form of pay, the entitlement to which accrues over the length of the employees service. In Ten Oever v Stichting Bedrijfspensionenfonds voor her Glazenwassers en Schoonmaakbedrijf (Case C 109/91) [1993] ECR I 4879, the Court stated, in relation to its Barber v Guardian Royal Exchange Assurance Group judgment (Case C 262/88) [1990] ECR I 1889: 17. The Courts ruling took account of the fact that it is a characteristic of this form of pay [scil, benefits provided for by private occupational pension schemes] that there is a time lag between the accrual of entitlement to the pension, which occurs gradually throughout the employees working life, and its actual payment, which is deferred until a particular age. 19. Given the reasons explained in para 44 of the Barber judgment for limiting its effects in time, it must be made clear that equality of treatment in the matter of occupational pensions may be claimed only in relation to benefits payable in respect of periods of employment subsequent to 17 May 1990, the date of the Barber judgment . (c) Summary of arguments of parties The fundamental difference between the parties is as to whether Mr OBriens entitlement to a pension in respect of his service prior to 7 April 2000 (the final date for transposition of the directive) should be regarded as a legal situation which arose and became definitive under the law then in force, or should be regarded as one of the future effects of a legal situation which arose under the old law, to which the directive therefore applies. Mr OBrien argues that the reasoning in the Bruno and OBrien judgments implies that periods of employment before the directive entered into force are to be taken into account when applying the directive in situations which arise after it should have been transposed. In particular, they are relevant not only to qualification for a retirement pension (which the Ministry does not dispute), but also to the quantification of that pension, where its quantification is based on the employees length of service. The Ministry argue that since, following Ten Oever, a pension payable under an occupational pension scheme constitutes deferred pay for past work, and the workers entitlement to pension accrues at the time of the work for which it constitutes pay, it follows from the non retroactivity principle that the accrued right cannot be affected retrospectively by a change in the law. The entitlement is permanently fixed at the time when the right accrues, rather than being determined when the person retires and the pension becomes payable. On that basis, it is argued that Mr OBriens non entitlement to pension in respect of his first 22 years of service was definitively established before the directive entered into force. (d) The view of the national court The majority of the court are inclined to think that the effect of Directive 97/81 is that it is unlawful to discriminate against part time workers when a retirement pension falls due for payment. The directive applies ratione temporis where the pension falls due for payment after the directive has entered into force. In so far as part of the period of service took place prior to the directives entry into force, the directive applies to the future effects of that situation. However, the Court of Justice has not as yet considered the argument that if, following the Ten Oever line of authority, an occupational pension is treated as deferred pay, the right to which is acquired at the time of the work to which the pay relates, then it follows from the general principle of non retroactivity that the directive does not alter or affect rights acquired (or, in Mr OBriens case, not acquired) before it was brought into force, there being no provision in the directive which overrides that general principle. Although the majority of the court are inclined to think that Ten Oever was concerned with the exceptional Barber limitation, which does not arise in the present context, the correct approach does not appear to the Supreme Court to be acte clair. The question referred Does Directive 97/81, and in particular clause 4 of the Framework Agreement annexed thereto concerning the principle of non discrimination, require that periods of service prior to the deadline for transposing the Directive should be taken into account when calculating the amount of the retirement pension of a part time worker, if they would be taken into account when calculating the pension of a comparable full time worker? The Supreme Court has therefore concluded that it is necessary to refer the following question to the Court of Justice:

UK-Abs

The Appellant, Mr OBrien, is a retired self employed barrister who also worked on a daily fee paid basis as a part time judge of the Crown Court between 1978 and 2005. At the material time domestic law entitled salaried judges (including part time judges) to a pension based on their final years salary and number of years service, but made no pension provision for fee paid part time judges. Although employers were prevented from treating part time workers less favourably than full time workers under Council Directive 97/81/EC (the directive), the Regulations which gave effect to the directive (the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551) which came into force on 1 July 2000) expressly did not apply to fee paid part time judges. Mr OBrien brought proceedings against the Ministry of Justice claiming an entitlement to a judicial pension. The case reached the Supreme Court, which referred to the Court of Justice of the European Union (CJEU) the question of whether it was permissible for national law to draw a distinction between salaried and daily fee paid judges for the purposes of pension provision. The CJEU held that it was not permissible, and the Supreme Court found that Mr OBrien was therefore entitled under the directive and national law to a pension on terms equivalent to a comparable full time judge. The Supreme Court then remitted the case to the Employment Tribunal to determine the amount of the pension to which Mr OBrien was entitled. There the question arose whether, in calculating the amount of his pension, account should be taken of the whole of his service since the beginning of his appointment in 1978 (a period of 27 years), or only his service since 7 April 2000, the deadline for transposing the directive (a period of less than five years). The Employment Tribunal held that the calculation should take into account the whole of his service, but the Employment Appeal Tribunal held the contrary. The Court of Appeal upheld the decision of the Employment Appeal Tribunal. Mr OBrien now appeals to the Supreme Court. The Supreme Court unanimously decides to refer a question to the CJEU. The terms of the reference are set out by Lord Reed. The Supreme Court is not persuaded that the case of either appellant or respondent is clearly right and is therefore under a duty to refer the questions in issue to the CJEU. As a matter of EU law when a new rule of law comes into force, it cannot apply to legal situations which have arisen and become definitive prior to that date, but can apply to the future effects of a situation which arose under the old law (European Commission v Moravia Gas Storage AS (Case C 596/13 P). This principle was applied in Istituto Nazionale della Previdenza Sociale (INPS) v Bruno (Joined Cases C 395/08 and C 396/08), where it was held that periods of employment completed before the directive came into force should be taken into account in calculating whether an employees length of service qualified for a pension. The entitlement to a pension (or lack thereof) based on periods of employment under the old law was not a situation which arose and became definitive at the time of the employment, but was a future effect of that employment. Mr OBrien argues that under this line of reasoning, periods of employment before the directive entered into force are to be taken into account when applying the directive in situations which arise after it should have been transposed, not only in relation to qualification for a retirement pension (which the Ministry does not dispute), but also in relation to the quantification of that pension, where its quantification is based on the employees length of service. However, the CJEU has also treated occupational pensions as a deferred form of pay, the entitlement to which accrues continuously over the employees service (Ten Oever v Stichting Bedrijfspensionenfonds voor her Glazenwassers en Schoonmaakbedrijf (Case C 109/91). In Ten Oever the Court referred to its judgment in Barber v Guardian Royal Exchange Assurance Group judgment (Case C 262/88) on the requirement for equal treatment of men and women in occupational pensions (pursuant to a different EU law provision), and held that such equal treatment could be claimed only in relation to benefits in respect of periods of employment subsequent to the date of the Barber judgment. The Ministry argued that following Ten Oever an occupational pension constitutes deferred pay for past work, and the workers entitlement to that pension accrues and is fixed at the time of the work for which it constitutes pay; the entitlement is not determined when the person retires and the pension becomes payable. The EU law principle of non retroactivity therefore prevents the right which accrued (or did not accrue) at the time of service from being affected retrospectively by a change in the law. On that basis, it is argued that Mr OBriens non entitlement to a pension in respect of his first 22 years of service was definitively established before the directive entered into force. In the context of these two approaches, the Supreme Court is inclined to think that the effect of the directive is that it is unlawful to discriminate against part time workers when a retirement pension falls due for payment. The directive applies where the pension falls due for payment after the directive has entered into force. In so far as part of the period of service took place prior to the directives entry into force, the directive applies to the future effects of that situation. However, the CJEU has not yet considered the argument that if, following the Ten Oever line of authority, an occupational pension is treated as deferred pay, the right to which is acquired at the time of the work to which the pay relates, then it follows from the general principle of non retroactivity that the directive does not alter or affect rights acquired (or, in Mr OBriens case, not acquired) before it was brought into force, there being no provision in the directive which overrides that general principle. Although the majority of the court are inclined to think that Ten Oever was concerned with the exceptional Barber limitation, which does not arise in the present context, the correct approach does not appear to the Supreme Court to be sufficiently clear. The following question is therefore referred to the CJEU: Does Directive 97/81, and in particular clause 4 of the Framework Agreement annexed thereto concerning the principle of non discrimination, require that periods of service prior to the deadline for transposing the Directive should be taken into account when calculating the amount of the retirement pension of a part time worker, if they would be taken into account when calculating the pension of a comparable full time worker?

English private international law distinguishes between matters of substance which are governed by the proper law of the relevant issue (lex causae), and matters of procedure which are for the law of the forum. The distinction was preserved when the English principles relating to the choice of law were amended and partly codified by the Private International Law (Miscellaneous Provisions) Act 1995: see section 14(3)(b). Limitation, which deprives the litigant of a forensic remedy but does not extinguish his right, is for that reason classified by the English courts as procedural. The result was that until the position was altered by statute in 1984, the English courts disregarded foreign limitation law and applied the English statutes of limitation irrespective of the lex causae. This was widely regarded as unsatisfactory, mainly because of the rather technical character of the distinction on which it was based between barring the remedy and extinguishing the right. The Foreign Limitation Periods Act 1984 provided for the English courts, with limited exceptions, to apply the limitation rules of the lex causae. Section 1 provides: 1. Application of foreign limitation law (1) Subject to the following provisions of this Act, where in any action or proceedings in a court in England and Wales the law of any other country falls (in accordance with rules of private international law applicable by any such court) to be taken into account in the determination of any matter (a) the law of that other country relating to limitation shall apply in respect of that matter for the purposes of the action or proceedings; . and (b) the law of England and Wales relating to limitation shall not so apply. (4) A court in England and Wales, in exercising in pursuance of subsection (1)(a) above any discretion conferred by the law of any other country, shall so far as practicable exercise that discretion in the manner in which it is exercised in comparable cases by the courts of that other country. The law of a country relating to limitation is defined by section 4. It means so much of the relevant law of that country as (in any manner) makes provision with respect to a limitation period applicable to the bringing of proceedings in respect of that matter in the courts of that country and shall include references to so much of that law as relates to, and to the effect of, the application, extension, reduction or interruption of that period. For this purpose, the relevant law means the procedural and substantive law applicable, apart from any rules of private international law, by the courts of that country. The question which arises on this appeal is how the Act is to be applied in a case where the foreign limitation law depends for its operation on facts which are not germane to litigation in England. The claimants are 14 lead claimants, representative of more than 600 clients of solicitors Leigh Day. They claim to have suffered unlawful detention and/or physical maltreatment at the hands of British armed forces in Iraq between 2003 and 2009, for which the Ministry of Defence is liable in tort. It is agreed between the parties that any liability of the Ministry in tort is governed by Iraqi law. Under article 232 of the Civil Code of Iraq, the standard limitation period applicable to claims of this kind in Iraqi law is three years from the day on which the claimant became aware of the injury and of the person who caused it. This action was begun more than three years after most of the claimants must have been aware of these matters. As far as those claimants are concerned, the fate of their claims may depend on the operation of article 435 of the Civil Code, which is one of a number of provisions suspending the running of time in particular cases. It provides: Article 435 (1) The time limit barring the hearing of the case is suspended by a lawful excuse such as where the plaintiff is a minor or interdicted and has no guardian or is absent in a remote foreign country, or where the case is between spouses or ascendants and descendants, or if there is another impediment rendering it impossible for the plaintiff to claim his right. (2) The period which lapses while the excuse still exists (lasts) shall not be taken into account (for the running of the time limitation). The circumstance on which the claimants rely as engaging this provision is that Coalition Provisional Authority Order 17, which had and still has the force of law in Iraq, made it impossible for them to sue the British government in Iraq. Section 2(1) of the Order provides that coalition forces in Iraq (including British forces) are immune from Iraqi legal process. Section 2(3) provides that coalition personnel are to be subject to the exclusive jurisdiction of their parent states, and immune from local criminal, civil and administrative jurisdiction other than by persons acting on behalf of their parent states. Section 2(5) provides that parent states may waive the immunity in respect of criminal liability at the request of the Coalition Provisional Authority if there are no relevant criminal sanctions in the parent state. It is agreed between the parties that CPA Order 17 made it impossible for the claimants to sue the British government in Iraq throughout the relevant period. Broadly stated, the question is whether the suspensory proviso in article 435(1) applies to the current proceedings in England. It is not suggested on this appeal that there has ever been any impediment preventing them from suing the British government in England. The judge, Leggatt J, directed the hearing of a preliminary issue on this point, among others, and subsequently decided it in favour of the claimants. He regarded the question whether the relevant impediment had to affect Iraqi or English proceedings as turning on the territorial scope of article 435 as a matter of Iraqi law. He accepted the evidence of the claimants expert that an Iraqi court would construe article 435 of the Civil Code as referring to impediments making it impossible for the claimant to assert his claim in Iraq. He therefore concluded that because CPA Order 17 deprived and still deprives the Iraqi courts of jurisdiction to entertain proceedings against the British government, the limitation period was suspended indefinitely, subject only to section 2(1) of the Foreign Limitation Periods Act, which disapplies section 1(1) in a case where its application would cause undue hardship. The judge described this as a very unattractive result. However, he thought that the alternative was at least as irrational. This was because if there was an impediment to English proceedings which lasted until after the expiry of the Iraqi limitation period, but no such impediment in Iraq, the running of time would be suspended in England and the action could subsequently proceed there notwithstanding that it would have been time barred in Iraq. Leggatt J did not decide whether section 2(1) affected the position in this case, because it was not part of the preliminary issue which he had directed. The Court of Appeal allowed the appeal. The leading judgment was given by Tomlinson LJ, with whom Lord Dyson MR and Vos LJ agreed. He rejected the judges view that the answer turned on the territorial scope of article 435. In his view, an English court was bound to disregard any impediment arising from CPA Order 17. This was because that order was not a law with respect to limitation which the English courts were bound to apply by sections 1(1) and 4 of the 1984 Act. Nor was it a substantive rule of Iraqi law which applied by virtue of the ordinary principles of English private international law. It was a mere procedural bar to proceedings in Iraq which had no relevance in an English court. The Court of Appeal was of course right to say that CPA Order 17 had no legal effect in an English court. It expressly confers immunity only in respect of Iraqi legal process. It is not a rule of limitation, but a particular form of state immunity, which serves as a limitation on the jurisdiction of the courts. It is therefore necessarily procedural and local in nature. It is inherent in the whole concept of state immunity that it does not confer immunity on a state in its own courts. However, although CPA Order 17 is devoid of legal effect outside Iraq its consequences may nonetheless be relevant as fact. It is as fact that those consequences affect the operation of article 435 of the Civil Code. The question posed by that article is whether CPA Order 17 was as a matter of fact an impediment rendering it impossible for the plaintiff to claim his right. Impediment and impossibility are questions of fact. This is no less true because the impediment is the consequence of a rule of Iraqi law. Left to my own devices, I might have doubted whether article 435 was concerned with problems of this kind. On the face of it, an impediment is something that prevents the litigant from asserting some right that he has or from invoking some jurisdiction that the court has, and not the absence of a relevant right to assert or a jurisdiction to invoke. But these are questions of Iraqi law on which the parties are agreed. It is common ground that CPA Order 17 was an impediment and that it did render it impossible for the claimants to sue in Iraq. Their agreement on this point is an agreement about the practical consequences of the Order. However, it does not follow from the fact that an English court recognises the consequences of a rule of Iraqi law that it is giving effect to the rule in question. The real question is whether it is legally relevant when the claimants have brought proceedings in England what impediments might have prevented similar proceedings in Iraq. The judge, as I have observed, regarded that as depending on the territorial ambit of article 435 as a matter of Iraqi law. On that footing it is obvious that a procedural time bar arising under Iraqi law applied only in Iraq. But in my opinion, this was not a question of Iraqi law but of English law. In English proceedings, the relevant law is the Foreign Limitation Periods Act. Where the cause of action is governed by a foreign law, the Act requires an English court to ascertain the relevant rules of the foreign law of limitation and then to apply it to proceedings in England. Because the foreign law of limitation will have been designed for foreign proceedings, that necessarily involves a process of transposition. There may be facts which the foreign law of limitation would treat as relevant to foreign proceedings but which are irrelevant to proceedings in England. It is sometimes said that the ascertainment of foreign law involves asking what the foreign court would decide. That is of course true, but the English court is concerned only with what the foreign court would decide to be the relevant foreign law. It is the function of the English court to apply that law to the relevant facts. In just the same way, where the foreign law confers a discretion on the foreign court, an English court exercising that discretion under section 1(4) of the 1984 Act would do so in the manner in which it is exercised in comparable cases by the foreign court, but taking account of those respects in which because the proceedings are being brought in England the facts are not comparable. It follows that where the Iraqi law of limitation depends for its operation on some fact about the proceedings, the relevant fact is that applicable to the actual proceedings, viz those brought in England, and not some hypothetical proceedings that the claimants have not brought in Iraq, and in this case could not have brought in Iraq. We are concerned with impediment and impossibility affecting the bringing of legal proceedings. That depends on the personal situation of the claimants in relation the relevant proceedings, namely those brought in England. The claimants submission, if accepted, would mean that there was no limitation period at all affecting the present proceedings in England, by reason of a consideration (CPA Order 17) which had no relevance to English proceedings because it has no application outside Iraq and has never impeded resort to the English court. The main argument advanced in support of it was that an English court applying the Act of 1984 must give effect to the whole of the relevant Iraqi law of limitation, and not just to part of it. This point was reinforced by reference to section 2 of the Act of 1984. Section 2(1) disapplies the relevant foreign law of limitation so far as its application would conflict with English public policy, and section 2(3) disapplies it so far as it suspends the running of time on account of the absence of a party to the action or proceedings from any specified jurisdiction or country. The point made is that where the Act disapplies some part of the foreign law of limitation, it does so expressly, thereby impliedly excluding its disapplication in any other circumstances. I reject the submission because it assumes that because the Iraqi law of limitation would treat certain facts as relevant to Iraqi proceedings, to treat those facts as irrelevant to English proceedings involves disapplying part of Iraqi law. It does not. It simply involves applying the same principles of Iraqi law to different facts. The facts relevant to proceedings in England are not necessarily the same as those which would be relevant to proceedings in Iraq. I should, finally, return to Leggatt Js view that it would be irrational for an English court to concern itself with impediments to English proceedings because if there was a temporary impediment in England but none in Iraq, a court applying the Iraqi law of limitation to an action in England might be bound to allow the action to proceed here when it was time barred in Iraq. I have to say that I cannot see why this should be thought strange, let alone irrational. It simply reflects the fact that the Iraqi law of limitation is qualified by reference to practical impediments to the making of a claim, and those impediments may be greater in some jurisdictions than in others. On the judges hypothesis, the reason why Iraqi proceedings would have been time barred before corresponding proceedings in England, is that if the claimants had proceeded in Iraq, they would not have been impeded. These reasons differ from those of the Court of Appeal, but the result is the same. In my opinion, the appeal must be dismissed and the order of the Court of Appeal affirmed.

UK-Abs

The appellants are 14 lead claimants in claims by over 600 Iraqi citizens who claim to have suffered unlawful detention and/or physical maltreatment at the hands of British armed forces in Iraq between 2003 and 2009. The claims are brought in tort in England against the Ministry of Defence. The torts are governed by Iraqi law. The Foreign Limitation Periods Act 1984 provides that where a claim is brought in England which is governed by a foreign law, the English courts are to apply the foreign law of limitation. In a substantial number of these cases the action was begun more than three years after the relevant claimant became aware of the injury and the person who caused it, and was therefore time barred under article 232 of the Iraqi Civil Code. The appellants argued that time had been suspended for limitation purposes under article 435(1) of the Civil Code, which suspends the time limit during any period when there is [an] impediment rendering it impossible for the plaintiff to claim his right. They said that Coalition Provisional Authority Order 17 (CPA Order 17), which gave coalition forces immunity from Iraqi legal process and jurisdiction and still has force of law in Iraq, was such an impediment. The first instance judge directed the hearing of a preliminary issue, namely whether the suspensory proviso in article 435(1) applied to the claimants proceedings in England. He held that the limitation period was suspended under article 435(1). The Court of Appeal allowed the Ministry of Defences appeal, holding that article 435(1) was not engaged, because the English courts are not bound to apply CPA Order 17, which is a mere procedural bar that is irrelevant to proceedings in England. The Supreme Court unanimously dismisses the appeal by the Iraqi civilians, and affirms the Court of Appeals conclusion that the limitation period was not suspended under article 435(1) of the Iraqi Civil Code. Lord Sumption gives the only judgment, with which the other Justices agree. The Foreign Limitation Periods Act 1984 requires an English court to apply to English proceedings a foreign law of limitation which will have been designed for proceedings in the foreign country. This requires a process of transposition. Facts that the foreign law would have treated as relevant to the foreign proceedings might be irrelevant to the proceedings in England [13]. Where the Iraqi law of limitation depends on some fact about the proceedings, the English court must ask whether that fact is applicable to proceedings brought in England, and not to hypothetical proceedings that might have been brought in Iraq [15]. CPA Order 17 applies only in Iraq. It is not an impediment to the only relevant proceedings, which are in England. It does not therefore suspend the running of the Iraqi law limitation period [16].

This is an appeal on preliminary points of European Union and domestic law regarding the circumstances in which damages may be recoverable for failure to comply with the requirements of the Public Procurement Directive (Parliament and Council Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L134, p114) (the PP Directive)), as given effect in the United Kingdom by the Public Contracts Regulations 2006 (SI 2006/5) (the 2006 Regulations). As recited in the Statement of Facts and Issues, the appellant, the Nuclear Decommissioning Authority (the NDA) is a non departmental public body established under the Energy Act 2004 (the EA 2004), and is responsible for 17 nuclear sites and the associated civil nuclear assets and liabilities formerly owned by the UK Atomic Energy Authority and British Nuclear Fuels Ltd. Pursuant to its duties under the EA 2004, the appellant is responsible for ensuring that, once decommissioned, sites previously used for nuclear generation are made suitable to be used for other purposes. The respondent, ATK Energy EU Ltd (ATK), provides integrated waste management and decommissioning services for the nuclear industry. ATK has pursued against the NDA a claim for damages for breaches of the NDAs obligations under the PP Directive and the 2006 Regulations in respect of the award of a contract for the decommissioning of 12 Magnox power stations, at Berkeley, Bradwell, Chapelcross, Dungeness A, Hinkley Point A, Hunterston A, Oldbury, Sizewell A, Trawsfynydd, Wylfa and two others. An agreement of compromise has been reached in respect of the claim, but the parties wish this judgment to be issued nonetheless. In short, Fraser J held, and it is for the purposes of the present appeal to be assumed, that the NDA failed to award the contract to the tenderer which submitted the most economically advantageous offer determined in accordance with the criteria which the NDA had itself specified, in breach of obligations under regulations 18(27) and 30(1) to (4) of the 2006 Regulations read against the background of the articles 29.1, 29.7 and 53 of the PP Directive. The NDA erroneously concluded that a consortium, known as CFP, had provided the most economically advantageous offer, awarding it a score of 86.48%. It awarded a consortium known as Reactor Site Solutions (RSS), of which ATK and another company, Bechtel, were members, a score of 85.42%. Fraser J [2016] EWHC 1988 (TCC) found (i) that CFP should have been disqualified from the competition for failing two threshold requirements, and (ii) that, in any event, RSS would have won the competition had the NDA not made many manifest errors (para 944) in its assessment of the tenders, but for which the NDA would have awarded RSS a score of 91.48% and CFP a score of only 85.56%. The public procurement directives in effect prior to 2004, concerning works (Council Directive 71/305/EEC (OJ 1971 L185, p5)) and supplies (Council Directive 77/62/EEC (OJ 1977 L13, p1)), contained no enforcement provisions. Following the decision of the Court of Justice in Gebroeders Beentjes BV v State of the Netherlands (Case C 31/87) [1988] ECR I 4635, paras 38 44, that the provisions of these Directives were unconditional and sufficiently precise to be relied upon by persons before national courts, a further Directive was introduced, Council Directive 89/665/EEC (OJ 1989 L395, p33) later amended by Council Directive 2007/66/EC (OJ 2007 L335, p31) (the 2007 Directive), to provide effective remedies for economic operators, including the setting aside of awards and compensation. I will refer to Council Directive No 89/665/EEC, as so amended, as the Remedies Directive. Domestic effect was given to the Remedies Directive by amendment of the 2006 Regulations by the Public Contracts (Amendment) Regulations 2009 (SI 2009/2992) (the 2009 Amendment Regulations). The 2006 Regulations have since been superseded by the Public Contracts Regulations 2015 (SI 2015/102). Under regulation 118 thereof, the 2006 Regulations remain, however, applicable for the purposes of this case. The scheme of the Remedies Directive, as implemented and as applicable on the facts of this case, was, in outline, as follows: (a) Under article 2a(2) of the Remedies Directive, a standstill period of at least ten days was required, from the date of receipt of a telephone or letter communication to an economic operator (such as ATK) that it had not been awarded the contract; during the standstill period the relevant contracting authority (here the NDA) could not enter into the contract; as implemented domestically by regulations 32(1) and 32A(5) of the 2006 Regulations, the standstill period was fixed as exactly ten days from the date of such receipt. (b) Under article 2c of the Remedies Directive, the United Kingdom was required to allow a period of at least ten days from any such communication for the economic operator to issue proceedings seeking a review of the authoritys decision; it implemented this requirement under regulation 47D(2) by allowing 30 days beginning with the date on which the economic operator first knew or ought to have known that grounds for starting proceedings had arisen; this was coupled with a proviso under regulation 47D(3) that it did not require proceedings to be started before the end of a defined period, corresponding with that stated in article 2c. (Article 2f in fact required that domestic law allow a period of at least 30 days, from publication of a contract award notice or information given by the contracting authority about the conclusion of the contract, for challenges based on limited grounds of ineffectiveness identified in article 2d; this may, perhaps, have been an inspiration for the more general 30 day period in regulation 47D(2).) (c) Under article 2(3) of the Remedies Directive, as implemented by regulation 47G, the authority, on becoming aware of the issue of a claim form relating to its decision to award the contract to CFP, was required to refrain from entering into the contract, if not already entered into, until court order or disposal of the proceedings. In the present case, the NDA informed RSS by telephone and letter delivered on 31 March 2014 that RSS had been unsuccessful. It also informed all bidders that it would voluntarily observe an extended standstill period until 14 April 2014. RSS wrote letters on 6, 8 and 10 April 2014, by which it requested various information and ultimately asked for a further extended standstill period until 23 April 2014, saying that it might otherwise be forced to issue a claim by 14 April to protect its position. On 11 April 2014, the NDA refused to extend the standstill period, and on the same day RSS replied that this was regrettable and that it was actively considering commencing a claim, and urged the NDA not to enter into the contract. On 15 April the NDA repeated that it was unable to agree to refrain from taking steps to enter into the contract, explaining that delay would cause it to suffer significant additional cost. Later that day, the NDA entered into the contract with CFP and informed RSS accordingly. On 28 April 2014, and so within the 30 days referred to in para 5(b) above, ATK, though not Bechtel, issued the claim form beginning the present proceedings. Preliminary issues ordered by Akenhead J on 10 October 2014 were decided by Edwards Stuart J on 23 January 2015 ([2015] PTSR 1106), leading to an appeal determined by the Court of Appeal (Lord Dyson MR, Tomlinson and Vos LJJ) by judgment dated 15 December 2015: [2016] PTSR 689. The shape of the arguments has changed, leading to a position where three main issues are now presented in the Statement of Facts and Issues as arising on this appeal. Slightly reformulated to reflect the submissions before the Supreme Court, they are: (i)(a) whether the Remedies Directive only requires an award of damages to be made when any breach of the PP Directive is sufficiently serious and (b) whether the answer to this question is acte clair, so that it need not be referred to the Court of Justice? (ii) whether regulation 47J(2)(c) of the 2006 Regulations confers a power to award damages in respect of any loss or damage suffered by an economic operator (a) in the case of any breach, or (b) only in the case of a sufficiently serious breach, of the Regulations? (iii) whether (and, if so, when) an award of damages under regulation 47J(2)(c) of the 2006 Regulations may be refused on the ground that an economic operator, who issued a claim form in respect of a contract award decision within the 30 day time limit prescribed by regulation 47D of the 2006 Regulations, did not do so and inform the contracting authority that it had done so before the contracting authority entered into the contract? Before Edwards Stuart J issue (i) only appears to have arisen tangentially to an argument, which no longer directly arises, that damages were discretionary. So far as he addressed it, his answer appears to have been negative (para 86). Issue (ii), he answered: (a) Yes; (b) No (para 71). Issue (iii), he held, involved a question of fact, not suitable for resolution as a preliminary issue in this case, though his views were generally discouraging of the idea that damages would be refused on any such basis (paras 42 54). In the Court of Appeal, Vos LJ, in a judgment with which the other members concurred, determined these issues to the following effect: (i)(a) Yes. (b) Yes (para 55). (ii)(a) Yes. (b) No (paras 66 70). (iii) No (paras 71 77). In relation to the first issue, Vos LJ, after analysing Court of Justice case law, concluded (paras 62 65) that breaches of the PP Directive must, in the light of the Remedies Directive, be actionable under the following three minimum conditions (the Francovich conditions): (1) the rule of law infringed must be intended to confer rights on individuals, (2) the breach must be sufficiently serious, and (3) there must be a direct causal link between the breach of the obligation and the damage sustained by the injured party. National law must also respect the principle of equivalence of EU with domestic rights (para 62). For present purposes, it is Francovich condition (2) which matters. As to the second issue, Vos LJ held, and this is not contentious, that it is open to national law to lay down criteria that provide a less restrictive remedy in damages than would be provided by the Francovich conditions (para 66). He went on to hold (and this is contentious) that the 2006 Regulations had this effect; whether ATKs claim was viewed as being for breach of directly enforceable EU law or for breach of domestic law enacted to give effect to the EU obligation contained in the Remedies Directive, it constituted a private law claim for breach of statutory duty, which, under English law, was not subject to any restrictive condition limiting its availability to cases of sufficiently serious breach (paras 66 67). As to the third issue, Vos LJ held that this involved an issue of determination or estimation of damages, which was for domestic law to determine (paras 55 and 71). He went on to hold that there was nothing in the 2006 Regulations or in general domestic law to oblige an economic operator to issue its claim form before the contracting authority entered into the contract, or to deprive it of a claim to damages on the ground that it had failed to invoke any other remedy (paras 72 76). The NDA now appeals by permission of the Supreme Court. Issue (i) Francovich condition (2) in EU law Articles 1 to 3 of the Remedies Directive read: 1(1). Member states shall take the measures necessary to ensure that, as regards contracts falling within the scope of Directive 2004/18/EC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in articles 2 to 2f of this Directive on the grounds that such decisions have infringed Community law in the field of public procurement or national rules transposing that law. 2(1) Member states shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for powers to: (a) take, at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority; (b) either set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the invitation to tender, the contract documents or in any other document relating to the contract award procedure; (c) infringement. award damages to persons harmed by an (7) except where a decision must be set aside prior to the award of damages, a member state may provide that, after the conclusion of a contract , the powers of the body responsible for review procedures shall be limited to awarding damages to any person harmed by an infringement. 3(1) The Commission may invoke the procedure provided for in paras 2 to 5 when, prior to a contract being concluded, it considers that a serious infringement of Community law in the field of public procurement has been committed during a contract award procedure falling within the scope of Directive 2004/18/EC. The Francovich conditions derive from the Court of Justices decisions in Francovich v Italian Republic (Joined Cases C 6/90 and C 9/90) [1995] ICR 722; [1991] ECR I 5357 and Brasserie du Pcheur SA v Federal Republic of Germany, R v Secretary of State for Transport, Ex p Factortame Ltd (No 4) (Joined Cases C 46/93 and C 48/93) [1996] QB 404 (Brasserie du Pcheur). These were decisions on state liability, in Francovich itself for failure to transpose a directive and in Brasserie du Pcheur for domestic laws which violated European law. In the latter case, the Court of Justice set out the three Francovich conditions at para 51, remarking in this respect that Community law confers a right to reparation where three conditions are met, and went on: 55. As to the second condition, as regards both Community liability under article 215 and member state liability for breaches of Community law, the decisive test for finding that a breach of Community law is sufficiently serious is whether the member state or the Community institution concerned manifestly and gravely disregarded the limits on its discretion. 56. The factors which the competent court may take into consideration include the clarity and precision of the rule breached; the measure of discretion left by that rule to the national or Community authorities; whether the infringement and the damage caused was intentional or involuntary; whether any error of law was excusable or inexcusable; the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law. 57. On any view, a breach of Community law will clearly be sufficiently serious if it has persisted despite a judgment finding the infringement in question to be established, or a preliminary ruling or settled case law of the court on the matter from which it is clear that the conduct in question constituted an infringement. 66. The aforementioned three conditions are necessary and sufficient to found a right in individuals to obtain redress, although this does not mean that the state cannot incur liability under less strict conditions on the basis of national law. In Brasserie du Pcheur one issue before the Court of Justice was whether a national court was entitled to make reparation conditional on the existence of fault, whether intentional or negligent. Referring to the second Francovich condition, the Court said: 78. So, certain objective and subjective factors connected with the concept of fault under a national legal system may well be relevant for the purpose of determining whether or not a given breach of Community law is serious: see the factors mentioned in paras 56 and 57 above. 79. The obligation to make reparation for loss or damage caused to individuals cannot, however, depend on a condition based on any concept of fault going beyond that of a sufficiently serious breach of Community law. 80. Accordingly, reparation of loss or damage cannot be made conditional on fault (intentional or negligent) on the part of the organ of the state responsible for the breach, going beyond that of a sufficiently serious breach of Community law. The three Francovich conditions were in Kbler v Republik sterreich (Case C 224/01) [2004] QB 848, para 51, deployed in the context of state liability for failure by a final state court to apply European Union law, with the gloss (para 53) that, having regard to the specific nature of the judicial function and the legitimate requirements of legal certainty, the second condition could only be met in the exceptional case where the court has manifestly infringed the applicable law. The question on this appeal is whether, as the Court of Appeal considered, the three Francovich conditions apply to a claim against a contracting authority under the PP and Remedies Directives (and whether the answer to this question is acte clair). In submitting that the Court of Appeal was wrong, ATK makes a number of points. It points to the purposes of the Remedies Directive generally, and to the terms of articles 1(1) and 2(1) in particular, as showing an intention to address and provide a remedy in damages for harm caused by infringements generally. It points to the wording of article 3 as indicating that, where there is an intention to limit provisions of the Directive to cases of serious infringement, the intention is made express. It points to the fact that, if the Francovich conditions apply, then no remedy at all would potentially be available in cases falling within the last words of article 2(7). ATK also submits that the Court of Appeals approach is inconsistent with the European Unions international obligations under the Government Procurement Agreement (GPA 1994), a plurilateral agreement contained in Annex 4 to the Agreement in 1994 establishing the World Trade Organisation and approved on behalf of the Union by article 2 of Council Decision 94/800/EC (OJ 1994 L336, p144). Article XX(2) of the GPA 1994 provided for each party to provide effective procedures enabling suppliers to challenge alleged breaches of the Agreement arising in the context of procurements in which they have, or have had, an interest, while article XX(7) provided that: Challenge procedures shall provide for: an assessment and a possibility for a decision on rapid interim measures to correct breaches of the (a) Agreement . ; (b) the justification of the challenge; correction of the breach of the Agreement or (c) compensation for the loss or damages suffered, which may be limited to costs for tender preparation or protest. A similar provision appears in the more recent revised GPA to which the EU became party on 6 April 2014: Council Decision 2014/115/EU (OJ 2014 L68, p1). ATK submits that article XX(7) contemplates that damages must always be recoverable for a breach (and cannot be restricted to cases of serious breach), even if they may be limited to costs for tender preparation or protest. It points to the principle, endorsed in zen Letovho Provozu R, sp v Bundesamt fr Finanzen (Case C 335/05) [2007] STC 1509, para 16, and Association Justice & Environment zs v Commission of the European Communities (Case T 727/15) 23 January 2017, para 77, that secondary EU legislation should, so far as possible, be interpreted consistently with international agreements concluded by the European Union. Finally, but most importantly, ATK submits that Court of Justice case law supports its position. The debate in this area turns on two principal authorities: Stadt Graz v Strabag AG (Case C 314/09) [2010] ECR I 8769 (decided 30 September 2010 by the Third Chamber, without an Advocate Generals opinion) and Combinatie Spijker Infrabouw De Jonge Konstruktie v Provincie Drenthe (Case C 568/08) [2010] ECR I 12655 (Advocate Generals opinion delivered 14 September 2010; Judgment of the Second Chamber 9 December 2010). In Stadt Graz the basic question referred was whether the Remedies Directive precluded national legislation which made the right to damages for an infringement of public procurement law by a contracting authority conditional upon the infringement being culpable. The legislation in question included a presumption that the contracting authority was at fault, and a provision that the authority could not rely on a lack of individual abilities. The court, in holding that such legislation was impermissible, said this: 33. Directive 89/665 lays down only the minimum conditions to be satisfied by the review procedures established in domestic law to ensure compliance with the requirements of EU law concerning public procurement If there is no specific provision governing the matter, it is therefore for the domestic law of each member state to determine the measures necessary to ensure that the review procedures effectively award damages to persons harmed by an infringement of the law on public contracts 34. Although, therefore, the implementation of article 2(1)(c) of Directive 89/665 in principle comes under the procedural autonomy of the member states, limited by the principles of equivalence and effectiveness, it is necessary to examine whether that provision, interpreted in the light of the general context and aim of the judicial remedy of damages, precludes a national provision such as that at issue in the main proceedings from making the award of damages conditional, in the circumstances , on a finding that the contracting authoritys infringement of the law on public contracts is culpable. 35. In that regard, it should first be noted that the wording of article 1(1), article 2(1), (5) and (6), and the sixth recital in the preamble to Directive 89/665 in no way indicates that the infringement of the public procurement legislation liable to give rise to a right to damages in favour of the person harmed should have specific features, such as being connected to fault proved or presumed on the part of the contracting authority, or not being covered by any ground for exemption from liability. 36. That assessment is supported by the general context and aim of the judicial remedy of damages, as provided for in Directive 89/665 37. According to settled case law, while the member states are required to provide legal remedies enabling the annulment of a decision of a contracting authority which infringes the law relating to public contracts, they are entitled in the light of the objective of rapidity pursued by Directive 89/665 to couple that type of review with reasonable limitation periods for bringing proceedings, so as to prevent the candidates and tenderers from being able, at any moment, to invoke infringements of that legislation, thus obliging the contracting authority to restart the entire procedure in order to correct such infringements 38. Furthermore, the second subparagraph of article 2(6) of Directive 89/665 reserves to the member states the right to limit the powers of the body responsible for the review procedures, after the conclusion of a contract following its award, to the award of damages. 39. Against that background, the remedy of damages provided for in article 2(1)(c) of Directive 89/665 can constitute, where appropriate, a procedural alternative which is compatible with the principle of effectiveness underlying the objective pursued by that directive of ensuring effective review procedures only where the possibility of damages being awarded in the event of infringement of the public procurement rules is no more dependent than the other legal remedies provided for in article 2(1) of Directive 89/665 on a finding that the contracting authority is at fault. 40. it makes little difference in that regard that, by contrast with the national legislation referred to in Commission of the European Communities v Portugal (Case C 275/03), the legislation at issue in the main proceedings does not impose on the person harmed the burden of proving that the contracting authority is at fault, but requires the latter to rebut the presumption that it is at fault, while limiting the grounds on which it can rely for that purpose. 41. The reason is that that legislation, too, creates the risk that the tenderer who has been harmed by an unlawful decision of a contracting authority is nevertheless deprived of the right to damages in respect of the damage caused by that decision, where the contracting authority is able to rebut the presumption that it is at fault. 42. At the very least, that tenderer runs the risk, under that legislation, of only belatedly being able to obtain damages, in view of the possible duration of civil proceedings seeking a finding that the alleged infringement is culpable. ATK submits that, although the immediate focus of Stadt Graz was on the impermissibility of any limitation of liability by reference to a requirement of fault, its whole tenor was that the Remedies Directive contemplates a general right to damages for any infringement of the public procurement legislation, neither subject, nor capable of being made subject, to any specific features. A requirement that the breach should be sufficiently serious would, it submits, be an example of a special feature. Spijker concerned a situation not dissimilar to the present. The claimants tender had come second in circumstances which the claimant (Combinatie) alleged breached the PP Directive. The defendant Provincie, following an interim administrative court order that the contract should be awarded to no one else but Machinefabriek Emmen BV (MFE), awarded it to MFE. The claimant sued the Provincie for damages in the civil courts. One issue which the civil court, the Rechtbank Assen, identified was whether any unlawful act fell to be attributed to the Provincie. The court, taking the view that the Provincie might have acted unlawfully, asked the Court of Justice by questions 4(c) and (d): (c) If [the] authority is required to pay damages, does Community law set criteria for determining and estimating those damages, and if so, what are they? (d) If the contracting public authority cannot be deemed liable, is it possible, under Community law, for some other person to be shown to be liable, and on what basis? Advocate General Cruz Villaln said (para 5), in connection with question 4(c) that: the present case offers the opportunity to clarify certain points of Directive 89/665 which are of great significance for the purpose of upholding the legality which European Union law requires in the context of public procurement. In the course of his opinion, he said (para 77) that: In my view, it is solely for the Rechtbank to assess(40) points such as whether there was any liability and whether, where appropriate, it must be attributed to the Provincie, to the State on account of the actions of the judge dealing with interim relief proceedings or to any other person taking into consideration the evidence which has been shown to be relevant: the fact that the Provincie did not wait before making the award or appeal against the interim measures; the possible alternatives (if any) to making the award to MFE; the circumstances surrounding the provisional enforcement of the order of the judge dealing with interim relief proceedings, and the Combinaties voluntary withdrawal of the appeal lodged against that order. Footnote 40 to this passage read: 40. In order to do so, it must take into account all the factors which characterise the situation which has been brought before it, in particular, the degree of clarity and precision of the rule infringed, whether the infringement was intentional, whether the error of law was excusable or inexcusable, the position taken, where applicable, by a Community institution and non compliance by the court in question with its obligation to make a reference for a preliminary ruling under article [267 TFEU] (Case C 224/01 Kbler [2003] ECR I10239, para 55), a sufficiently serious infringement of European Union law occurring where the decision concerned was made in manifest breach of the case law of the court in the matter. (Joined Cases C46/93 and C48/93 Brasserie du pcheur and Factortame [1996] ECR I1029, para 57, and Kbler, para 56.) The Court addressed question 4(c) as follows: 85. By its fourth question, part (c), the referring court asks, in essence, whether, if the awarding authority has to make good the damage arising from an infringement of EU law on the award of public contracts, EU law provides criteria on the basis of which the damage may be determined and estimated and, if so, what those criteria are. 86. Article 2(1)(c) of [the Remedies Directive] clearly indicates that member states must make provision for the possibility of awarding damages in the case of infringement of EU law on the award of public contracts, but contains no detailed statement either as to the conditions under which an awarding authority may be held liable or as to the determination of the amount of the damages which it may be ordered to pay. 87. That provision gives concrete expression to the principle of State liability for loss and damage caused to individuals as a result of breaches of EU law for which the State can be held responsible. According to case law developed since the adoption of the [Remedies Directive], but which is now consistent, that principle is inherent in the legal order of the Union. The Court has held that individuals harmed have a right to reparation where three conditions are met: the rule of EU law infringed must be intended to confer rights on them; the breach of that rule must be sufficiently serious; and there must be a direct causal link between the breach and the loss or damage sustained by the individuals ([the Francovich case] para 35, the Brasserie du Pcheur case] paras 31 and 51; and [the Danske Slagterier case] paras 19 and 20). 88. As matters stand at present, the case law of the Court of Justice has not yet set out, as regards review of the award of public contracts, more detailed criteria on the basis of which damage must be determined and estimated. 89. As regards EU legislation, it should be noted that Directive 89/665 has been largely amended by Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC (OJ 2007 L 335, p 31), adopted after the date of the facts which gave rise to the dispute in the main proceedings. However, on that occasion, the EU legislature refrained from adopting any provisions on that point. 90. In the absence of EU provisions in that area, it is for the legal order of each member state to determine the criteria on the basis of which damage arising from an infringement of EU law on the award of public contracts must be determined and estimated (see, by analogy, Case C 315/01 GAT [2003] ECR I 6351, para 46; and Case C 314/09 [the Stadt Graz case [2010] ECR I 8769], para 33) provided the principles of equivalence and effectiveness are complied with (see, to that effect, Joined Cases C 295/04 to C 298/04 Manfredi and others [2006] ECR I 6619, para 98). It is apparent from well established case law that the 91. detailed procedural rules governing actions for safeguarding an individuals rights under EU law must be no less favourable than those governing similar domestic actions (principle of equivalence) and must not render practically impossible or excessively difficult the exercise of rights conferred by EU law (principle of effectiveness) . 92. Therefore, the answer to the fourth question, part (c) is that, as regards state liability for damage caused to individuals by infringements of EU law for which the state may be held responsible, the individuals harmed have a right to redress where the rule of EU law which has been infringed is intended to confer rights on them, the breach of that rule is sufficiently serious, and there is a direct causal link between the breach and the loss or damage sustained by the individuals. In the absence of any provision of EU law in that area, it is for the internal legal order of each member state, once those conditions have been complied with, to determine the criteria on the basis of which the damage arising from an infringement of EU law on the award of public contracts must be determined and estimated, provided the principles of equivalence and effectiveness are complied with. In view of that answer, there is no need to reply to part 93. (d) of the fourth question. ATK argues that, in the light of para 93, these paragraphs must be taken to contain answers to both questions 4(c) and (d), that paras 89 and 90 indicate that no EU law conditions attach to liability of a contracting authority of the sort covered by question 4(c), whereas para 92 (and presumably para 87 on which para 92 is evidently based), which refer to the Francovich conditions, cover question 4(d) and are confined to the liability of the state and those for whom the state may be liable who are not contracting authorities. I am unable to accept this interpretation of the Court of Justices judgment. It converts an apparently clear exposition of the position regarding question 4(c) into an incoherent mixture of two differing schemes between which the text, on ATKs interpretation, jumps back and forwards. In my view, the text is clear. Paras 85 and 86 set the scene, viz that what is about to be discussed is the liability of an awarding authority for damage arising from an infringement of the PP Directive, and para 87 proceeds by making clear that the liability of an awarding authority is to be assessed by reference to the Francovich conditions. Subject to those conditions being met, paras 88 to 90 go on to make clear that the criteria for damages are to be determined and estimated by national law, with the further caveat that the general principles of equivalence and effectiveness must also be met (para 91). Finally, para 92 summarises what has gone before, repeating the need to satisfy the Francovich conditions. This is also exactly what the Advocate General had indicated in footnote 40 of his opinion. As to para 93, the inference is that the Court considered that the same principles must govern any claim against the State itself or a body for which the State is answerable (such as perhaps the administrative court which issued the interim order in Spijker). That is of course logical. The Court of Justice in Spijker was aware of the recent decision in Stadt Graz, cited it in para 90, and clearly did not consider it in any way inconsistent with what the Court of Justice said about the general applicability of the Francovich conditions. Nor was it inconsistent. Whether an error is excusable or inexcusable is a matter that a court may take into account when considering whether a breach is sufficiently serious to justify an award of damages under the second condition: see Brasserie du Pcheur, para 57, quoted in para 11 above. But the introduction of a fixed requirement of fault as a condition of State liability, on whichever party the burden of proving or disproving fault is placed, is well established as illegitimate on a line of authority which goes back to Brasserie du Pcheur itself (see para 12 above), and to Commission of the European Communities v Portugal (Case C 275/03) EU:C:2004:632 and which was merely reflected in the decision in Stadt Graz. The clarity of EU law in this respect was, no doubt, why the decision was taken that no Advocate Generals opinion was required in Stadt Graz. In these circumstances, there is in my view very clear authority of the Court of Justice confirming that the liability of a contracting authority under the Remedies Directive for breach of the PP Directive is assimilated to that of the state or of a public body for which the state is responsible. It is in particular only required to exist where the minimum Francovich conditions are met, although it is open to States in their domestic law to introduce wider liability free of those conditions. In the light of Spijker, ATKs submissions based on the general wording of articles 1 and 2 of the Remedies Directive cannot lead to a contrary conclusion. Article 3 is dealing with a different subject matter, which, even by way of contrast, could not throw much light on the scope of articles 1 and 2, and certainly cannot in the light of Spijker. Nor is ATKs argument by reference to the EUs international obligations under the GPA 1994 capable of leading to a contrary decision on any points. Any impetus which article XX(7) can give to ATKs argument is very weak at best. That article requires no more than either correction of the breach or compensation, and the compensation required may fall far short of covering the actual loss or damage suffered (since it may be limited to costs for tender preparation or protest). There is, apparently, no WTO authority on the interpretation of article XX(7) (or as to whether it might not itself be read subject to a condition such as the second Francovich condition). The argument based on GPA 1994 cannot in any event withstand the clear impact of the Courts judgment in Spijker. Finally, the Supreme Court, during the course of submissions, asked about academic authority, and was shown a further article additional to any in the agreed bundles. That was Professor Steen Treumers article Basis and Conditions for a Damages Claim for Breach of the EU Public Procurement Rules in Fairgrieve and Lichre, Public Procurement Law (2011). Professor Treumer wrote then of a lack of clarity in cases such as Commission v Portugal, of confusion arising from, and fundamentally different approaches taken in, the cases of Stadt Graz and Spijker and of differing approaches taken in national law, presumably before those cases. For the reasons I have already given, I do not see any such lack of clarity or confusion. Further, the Supreme Court was shown in the agreed bundles a more recent article, by a serving judge of the General Court, Judge Anthony M Collins, Damages in Public Procurement An Illusory Remedy? in Chapter 21 (p 339) in Of Courts and Constitutions Liber Amicorum in honour of Nial Fennelly (ed Bradley, Travers and Whelan) (2014). Setting out the criteria for the recovery of damages for breaches of the procurement rules, Judge Collins explains Spijker precisely in the sense which I consider that it obviously bears. It harmonises liability for such breaches irrespective of the identity of the author of the alleged illegality, with the minimum Francovich conditions applying to all such breaches (p 340), and with the result (p 341) that: the requirements that the rule breached must be intended to confer rights on individuals and that the breach of such a rule must be sufficiently serious, means that not every legal error in the course of an award procedure can ground an action in damages. This article reinforces my view that there is no uncertainty or confusion in the Court of Justices case law, and that the Supreme Court can be safe in relying on the clear language and ruling in Spijker as settling the position, whatever may have been previous doubts or differences of view at national level. For these reasons, I consider that the Court of Appeal answered the first question correctly, and in a manner which does not call for any reference by the Supreme Court, as the final court of appeal, to the Court of Justice. Issue (ii) Francovich condition (ii) at domestic law level This is a domestic law issue. The question is whether the UK legislator has, by the 2006 Regulations, gone further than European law requires, by making any contracting authority breaching the Regulations liable for any damages thereby caused, irrespective of whether the breach would under the second Francovich principle be sufficiently serious to require domestic law to make available a remedy in damages. The relevant Regulations read as follows: 32. Information about contract award procedures [Award decision notice] (1) Subject to paragraph (13), a contracting authority shall, as soon as possible after the decision has been made, inform the tenderers and candidates of its decision to (a) (b) award the contract; or conclude the framework agreement, and shall do so by notice in writing by the most rapid means of communication practicable. (2) Where it is to be sent to a tenderer, the notice referred to in paragraph (1) shall include (a) the criteria for the award of the contract; (b) the reasons for the decision, including the characteristics and relative advantages of the successful tender, the score (if any) obtained by the economic operator which is to receive (i) the notice; and (ii) the economic operator (aa) (bb) agreement, to be awarded the contract; or to become party to the framework and anything required by paragraph (10); (c) (d) the name of the economic operator to be awarded the contract; or (i) (ii) to become a party to the framework agreement; and a precise statement of either (i) when, in accordance with regulation 32A, the standstill period is expected to end and, if relevant, how the timing of its ending might be affected by any and, if so what, contingencies; or (ii) the date before which the contracting authority will not, in conformity with regulation 32A, enter into the contract or conclude the framework agreement. (2A) Where it is to be sent to a candidate, the notice referred to in paragraph (1) shall include the reasons why the candidate was unsuccessful; (a) and (b) the information mentioned in paragraph (2), but as if the words and relative advantages were omitted from sub paragraph (b). (a) 47A. Duty owed to economic operators (1) This regulation applies to the obligation on a contracting authority to comply with the provisions of these Regulations, other i. than regulations 14(2), 30(9), 32(14),40 and 41(1); and ii. any enforceable [EU] obligation in respect of a contract or design contest (other than one excluded from the application of these Regulations by regulation 6, 8 or 33); and a concessionaire to comply with the provisions of (b) regulation 37(3). 47C. Enforcement of duties through the Court (1) A breach of the duty owed in accordance with regulation 47A or 47B is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage. (2) Proceedings for that purpose must be started in the High Court, and regulations 47D to 47P apply to such proceedings. 47I. Remedies where the contract has not been entered into (1) Paragraph (2) applies where (a) the Court is satisfied that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with regulation 47A or 47B; and (b) In those circumstances, the Court may do one or more the contract has not yet been entered into. (2) of the following (a) order the setting aside of the decision or action concerned; (b) order the contracting authority to amend any document; award damages to an economic operator which (c) has suffered loss or damage as a consequence of the breach. (3) This regulation does not prejudice any other powers of the Court. 47J. Remedies where the contract has been entered into (1) Paragraph (2) applies if the contract has already been entered into. (a) the Court is satisfied that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with regulation 47A or 47B; and (b) In those circumstances, the Court (a) must, if it is satisfied that any of the grounds for ineffectiveness applies, make a declaration of ineffectiveness in respect of the contract unless regulation 47L requires the Court not to do so; (b) must, where required by regulation 47N, impose penalties in accordance with that regulation; (c) may award damages to an economic operator which has suffered loss or damage as a consequence of the breach, regardless of whether the Court also acts as described in sub paragraphs (a) and (b); (d) must not order any other remedies. (2) These Regulations were all introduced by the 2009 Amendment Regulations, to implement the 2007 Directive. The 2006 Regulations and 2009 Amendment Regulations were made under the power contained in section 2(2) of the European Communities Act 1972, to make provision for the purpose of implementing EU obligations of the United Kingdom and/or dealing with matters arising out of or related to any such obligation. The Francovich conditions are no more than minimum conditions, which domestic law is free to relax or ignore. There is therefore no Marleasing presumption that the United Kingdom legislator intended to reflect the Francovich conditions (Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106/89) [1990] ECR I 4135). Further, it is not suggested that it would be outside the scope of section 2(2) for the United Kingdom legislator to provide for the recovery of damages in respect of breaches which were not sufficiently serious to meet the EU law minimum requirement that a damages remedy be available: see United States v Nolan [2015] UKSC 63; [2016] AC 463, para 63. ATK relies on the wording of the 2006 Regulations as introducing unconditional actionability of breaches, coupled with unconditional domestic liability for breaches of any domestically based statutory duty. It points to the obligation contained in regulation 47A(2) and the duty, breach of which is by regulation 47C(1) prescribed as actionable by any economic operator who in consequence suffers loss or damage. ATK submits that there is no warrant for reading into these Regulations any condition that the breach must be sufficiently serious before it is actionable in damages. Although there was no requirement to do so, or presumption that this would be done, the NDA invites the Supreme Court to conclude that it was the intention of the UK legislator simply to give effect to the minimum EU requirements regarding damages. It points to the uses of the word may in regulations 47I(2) and 47J(2)(c). It does not suggest that this gives rise to any general discretion. But it suggests that it is consistent with a limitation of damages by reference to the Francovich conditions. It picks up, in domestic law, the requirement under article 2(1) of the Remedies Directive that domestic law shall include a power to award damages to an economic operator harmed by an infringement, a requirement which, as I have held, is limited by the Francovich conditions. ATK in response submits the word may can be explained as a reference to the possibility that the contracting authority might have a defence, for example due to failure by the economic operator to mitigate its loss. That to my mind is a somewhat slender explanation for the introduction of the word may, especially as loss arising from a failure to mitigate is commonly regarded as not having been caused by the breach: see eg Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyds Rep 605. The Court of Appeal dealt with this issue quite shortly. It noted that the 2009 Amendment Regulations had been preceded by an Explanatory Memorandum and a Transposition Note as well as a Consultation Document of April 2009, all of which [it said] make it reasonably clear that the Governments intention was to do only what was necessary to implement the Remedies Directive without any gold plating save where such was expressly identified (para 17). But it viewed the claim provided by the 2006 Regulations, as amended in 2009, as an ordinary private law claim for breach of statutory duty, to which no restrictive condition applies under English law, and saw it as irrelevant in this context whether or not the legislator intended to gold plate the EU law on public procurement when introducing the Regulations (para 67). The Court of Appeal was right in para 17 to identify the legislators intention in 2009 as having been not to gold plate. The Explanatory Note to the 2009 Amendment Regulations said that except where otherwise stated (none of the respects so stated being presently relevant) the Regulations implemented the Directive. The Explanatory Memorandum laid before Parliament referred to the Regulations as implementing articles in the Directive that need to be transposed and to the amendments to the 2006 Regulations as needed to implement the Directive. The Impact Assessment, prepared by the Office of Government Commerce (the OGC) and attached to the Explanatory Memorandum, concluded by saying that the OGC had adhered to guidance including avoidance of gold plating and taking a minimalist approach to implementation insofar as is possible within the context of this implementation and that the impact assessment had examined, article by article, the choices available for the UK and identified a range of options, invariably selecting those which represent the least cost and greatest benefit within the confines of the mandate laid down in the Directive (para 72). The Impact Assessment contained a detailed account of the choices available and made. None relates to or suggests a choice in 2009 to implement the Directive by introducing domestic liability for damages in circumstances not required under EU law. The Explanatory Note, the Explanatory Memorandum and the Impact Assessment are all potentially admissible as aids to the understanding of the legislators intentions in 2009, on the principle identified by the House of Lords in R v Montila [2004] UKHL 50; [2004] 1 WLR 3141, para 35. However, ATK submits that 2009 is not the relevant date. It points out that, although regulations 47A through to 47P (Part 9) of the 2006 Regulations as amended by the 2009 Amendment Regulations were introduced as a complete substitute for the previous section 47 (Part 9) and were the product of extensive re writing of previous text with many new elements, the bare outline of regulations 47A to 47C, 47I and 47J can still be detected in the much more limited language of regulation 47(1), (6), (8) and (9) of the earlier 2006 Regulations, which can in turn be traced back to the Public Services Contracts Regulations 1993 (SI 1993/3228), regulation 32(1), (2), (4) and (5). ATK submits that there is no reason to suggest that the legislator in 2009 intended any different approach to the damages recoverable under the earlier 1993 and 2006 Regulations, and that there is no material to show that avoidance of gold plating had the same weight at those earlier dates. As to this, it is true that there is no material bearing directly on the legislators intentions at those earlier dates (though there is equally nothing to show that it was necessarily any different). But in my view it is unrealistic, when construing regulations 47A through to 47P, to ignore the legislators intention in 2009 to introduce a whole new package of substituted provisions which should, save where a deliberate choice to the contrary appeared, have no greater force than EU law requires. What happened in 2009 was effectively a new start, based on the Remedies Directive. ATK also points to Matra Communications SAS v Home Office [1999] 1 WLR 1646. There the Court of Appeal specifically expressed the view (p 1655B) that damages under the Remedies Directive 89/665/EEC were not subject to the Francovich conditions (described by the Court of Appeal as Norbrook conditions, after Norbrook Laboratories Ltd v Ministry of Agriculture, Fisheries and Food (Case C 127/95) [1998] ECR I 1531). The Court of Appeal went on (para 1655D G) to express the view that the damages provided by domestic law remain damages on the basis envisaged by Directive (89/665/EEC); but regulation 32(5)(b)(ii) none the less thereby creates a private law, non discretionary, remedy, because within the national legal order any remedy in damages necessarily has those qualities. The Court of Appeal in Matra can now be seen to have been wrong in treating the Francovich conditions as irrelevant. Its further view that domestic law damages remain damages on the basis envisaged by [the] Directive might however be read as consistent with the NDAs case on the present issue. Where the Court of Appeal in the present case went in my opinion clearly wrong was in its assumption that any claim for damages under the 2006 Regulations was no more than a private law claim for breach of a domestically based statutory duty, and for that reason subject to ordinary English law rules which include no requirement that a breach must be shown to be sufficiently serious before damages are awarded (para 67). The Court of Appeal appears to have assumed that the categorisation in domestic law of a claim based on EU law as being for breach of statutory duty freed it automatically from any conditions which would otherwise apply under EU law. That this is not so is clear if one takes the simple case of a domestic claim against the State for failure correctly to transpose EU law. Such a claim is subject to the Francovich and Brasserie du Pcheur principles and conditions. Sir Andrew Morritt put the matter correctly, with references to past authority, when he said in Phonographic Performance Ltd v Department of Trade and Industry [2004] 1 WLR 2893, paras 11 to 12: 11. At the outset it is necessary to consider the nature of PPLs claim. The decisions of the European Court of Justice in Francovich v Italian Republic (Joined Cases C 6/90 and C 9/90) [1995] ICR 722 and Brasserie du Pcheur SA v Federal Republic of Germany (Joined Cases C 46 and C 48/93) [1996] QB 404 have established, and it is not disputed, that a member state may incur liability to a person under Community law where three conditions are satisfied. They are that (1) the rule of Community law infringed is intended to confer rights on individuals; (2) the breach is sufficiently serious, and in particular that there was a manifest and grave disregard by the member state of its discretion; and (3) there is a direct causal link between the breach of the obligation resting on the member state and the damage sustained by the injured party. As I have already pointed out for the purposes of these preliminary issues I have to assume that all those conditions will be established. 12. The nature of such a claim in English law was considered by Hobhouse LJ in R v Secretary of State for Transport, Ex p Factortame Ltd (No 5) [1998] 1 CMLR 1353. In that case the Divisional Court concluded that liability had been established and went on to consider whether exemplary damages could and should be awarded. It was in that context that Hobhouse LJ considered (para 173) that the liability was best understood as a breach of statutory duty. In so doing he relied on the dictum to the same effect of Lord Diplock in Garden Cottage Foods v Milk Marketing Board [1984] AC 130, 141 and the conclusion of Mann J in Bourgoin v Ministry of Agriculture, Fisheries and Food [1986] QB 716, 733 that the duty was imposed by the relevant article and section 2(1) European Communities Act 1972. Transposed to the facts of this case the duty for the breach of which the Crown is sued is that imposed by article 8.2 of the Rental Directive and section 2(1) [of the] European Communities Act 1972. The scheme of the Remedies Directive is a balanced one. The Francovich conditions represent the Court of Justices conclusion as to the appropriate minimum protection by way of damages which an economic operator can expect. Although there is no Marleasing imperative to construe the scheme so far as possible consistently with the Francovich conditions, it is I think a natural assumption that the UK legislator will not go further than required by EU law when implementing such a scheme, without considering this and making it clear. That is fortified by the legislators clear intention not to gold plate when substituting the new Part 9 scheme for the old in 2009. In these circumstances, I consider that the 2006 Regulations as amended in 2009 should be read as providing for damages only upon satisfaction of the Francovich conditions. That is also consistent with the use of the word may which otherwise seems to me to have no real significance. Issue (iii) failure to claim before the contract was made Issue (iii) is whether, if proceedings have been started within the 30 day time limit prescribed by regulation 47D of the 2006 Regulations, an award of damages under regulation 47J(2)(c) of the 2006 Regulations may nonetheless be refused on the ground that the economic operator did not issue its claim form in respect of a contract award decision and inform the contracting authority that it had done so before the contracting authority entered into the contract? Issue (iii) arises from the difference between the periods set by the domestic legislator for a standstill and for the commencement of proceedings by a person aggrieved by the decision to award a public procurement contract. The UK legislator could have implemented articles 2a(2) and 2c of the Remedies Directive by assimilating the standstill period and the period for applying for a review. The former had under article 2a(2) to be at least ten days from sending by fax or electronically or from receipt of the contract award decision. The latter could under article 2c have been at least ten days from the same moment. While regulation 32A(2) reflected the period identified in article 2a(2), regulation 47D(2) gave a period for proceedings for review (not involving a claim of ineffectiveness) 20 days longer than the minimum required by article 2c. Thus, in the present case, the NDA was free after ten days (extended voluntarily for four further days) to enter into the contract, but ATK had another 20 (or, after the voluntary extension) 16 days within which to issue its claim form for damages. The significance of this issue is that, if ATK had issued its claim form before the NDA entered into the contract, then the NDA would have been required under regulation 47G(1) to refrain (a) from entering into the contract; (b) If this requirement to refrain continued, and ATKs challenge succeeded, ATK would in due course be awarded the contract and avoid the GBP 100m loss claimed. However, it should be noted that: the NDA could have applied under regulation 47H(1) to bring the (c) requirement to an end; (d) the court would then under regulation 47H(2) have been obliged to consider whether, apart from regulation 47G(1) it would be appropriate to make an interim order requiring the NDA to refrain from entering into the contract; (e) assuming that the court concluded that ATKs challenge had some merit (which it would in this case presumably have been seen as having, since it ultimately succeeded), the court would have considered whether it would not be appropriate to make an interim order in the absence of undertakings or conditions (regulation 47H(3)), and would have had the power to require or impose undertakings or conditions in relation to the requirement that the NDA refrain from entering into the contract; (f) the NDA would in this way, assuming that it was ordered to continue to refrain from entering into the contract while ATKs challenge was resolved, have had the benefit of a cross undertaking and/or security, which would, if the NDA defeated ATKs challenge, cover loss or damage which the NDA suffered through not being able to enter into the contract. The NDA contends in these circumstances that ATK failed to mitigate (or avoid) its loss by deliberately deciding not to issue a claim form until after the NDA had entered into the contract. ATKs response is that the NDAs case conflicts with the scheme of the 2006 Regulations, as well as with a general principle that it is open to a party to elect as it chooses between remedies, particularly between seeking interim relief and relying on a claim for damages. ATK also submits that the NDAs case amounts to imposing a time limit which would be shorter than that required by EU law or stipulated by domestic law and/or incompatible with EU principles of legal certainty and effectiveness. There is Court of Justice authority that national law may recognise a general principle of mitigation along the lines for which the NDA contends in respect of breaches by the State of EU law. The Court of Justice said this in Brasserie du Pcheur, paras 83 85: 83. In the absence of relevant Community provisions, it is for the domestic legal system of each member state to set the criteria for determining the extent of reparation. However, those criteria must not be less favourable than those applying to similar claims based on domestic law and must not be such as in practice to make it impossible or excessively difficult to obtain reparation. 84. In particular, in order to determine the loss or damage for which reparation may be granted, the national court may inquire whether the injured person showed reasonable diligence in order to avoid the loss or damage or limit its extent and whether, in particular, he availed himself in time of all the legal remedies available to him. Indeed, it is a general principle common to the legal 85. systems of the member states that the injured party must show reasonable diligence in limiting the extent of the loss or damage, or risk having to bear the damage himself Mulder v Council and Commission of the European Communities (Joined Cases C 104/89 and C 37/90) [1992] ECR I 3061, 3136 3137, para 33. The court reiterated the substance of these paragraphs in Danske Slagterier v Bundesrepublik Deutschland (Case C 445/06) [2010] All ER (EC) 74, paras 59 61. It is, in my opinion, clear that the Court of Justice was here leaving it to domestic law to determine whether and how far to apply any such principle, even though it expressed the view that it was a general principle common to the legal systems of the member states that the injured party must show reasonable diligence in limiting the extent of the loss or damage, or risk having to bear the damage himself. The general legislative schemes, constituting the background to this issue under EU and domestic law, have been summarised in paras 5 and 42 above. In the context of an argument about mitigation, it is worth underlining one feature. Both the Remedies Directive and the 2006 Regulations treat a contracting authoritys decision to award a contract in circumstances where the substantive requirements of the PP Directive or the 2006 Regulations have not been observed as an actionable infringement or breach of duty to any economic operator thereby disadvantaged. This is so, although no contract will at that point have been entered into. Proceedings may be begun, within the relevant time limit, before or after the entry into the contract, but in either case they involve the same complaint, viz failings in the prescribed procurement process, leading to the decision to award the contract to the wrong person. In this context, the actual entry into any contract appears in effect to be treated not as the relevant breach, but as the consequence of the prior breach consisting in the prior wrongful decision to award the contract. This is also consistent with the way in which ATKs present claim was formulated and litigated before Fraser J who gave judgment on 29 July 2016, holding that the NDA had failed properly to conduct the procurement process and ought to have awarded the contract to ATK. If that proves to be the right analysis, it at least opens the way to a submission under domestic law that the duty to mitigate arose as from the date of ATKs receipt of the decision to award the contract to CFP. I do not understand ATK to have contested that in their submissions. Accordingly, since the appeal is concerned with what the Remedies Directive and the 2006 Regulations treat as an existing infringement, an argument that ATK failed to mitigate is in principle open to the NDA. But issue (iii) as formulated before the Supreme Court (para 7(iii)), falls to be answered with reference to the circumstances of this appeal. We are not concerned with a familiar form of mitigation, such as a failure to take steps to seek alternative business to replace the contract wrongly awarded to a competitor. We are concerned with a very unusual form of mitigation, whereby, it is suggested, ATK should have taken steps to prevent the NDA giving effect to the NDAs infringement, even if ATK thereby had to expose themselves to the risks associated with the possibility of their challenge to the contract award decision failing. That the so called duty to mitigate may in some circumstances require the victim of a breach to take steps by way of legal action is, in my opinion, clear. Lord Pannick QC, representing the NDA, was able to refer to cases in which English courts have held that the victim of a breach of duty should, by way of mitigation, pursue available legal remedies, before, for example, suing his professional advisers for negligence: Western Trust & Savings Ltd v Travers & Co (1998) 75 P & CR 200; Walker v Geo H Medlicott & Son [1999] 1 WLR 727. See also the discussion of these and other cases in Jackson & Powell on Professional Liability 8th ed (2017), paras 11.336 11.339. The principle that a breach may call for mitigation, by third party action of this sort, is therefore uncontroversial. If my builder leaves my front door open and squatters enter, I cannot say that I have lost my house. I must take steps, legal steps if necessary, to recover possession. Lord Pannick also referred to cases on the exercise of a discretion, where the failure to seek interim relief as against the person or body alleged to have been in breach of duty was regarded as a relevant factor. In one, Evans LJ expressed a view that a failure to seek interim relief was relevant to the exercise of discretion to give leave for judicial review of a local authority decision to award a waste disposal contract to a competitor of the claimant: Mass Energy Ltd v Birmingham City Council [1994] Env LR 298. In another, R (Gavin) v Haringey Borough Council [2004] 1 PLR 61 David Richards J took into account an objectors failure to apply for interim relief reasonable though it was since such an application would have involved giving an undertaking in damages as relevant to an issue whether planning permission should be quashed; the developer had a reasonable case for considering that the planning permission was valid, and the objectors failure had enabled the developer, reasonably, to continue to incur costs on the development. The factors relevant to an exercise of discretion can be very wide. But the awarding of damages for a breach, or their refusal on account of a failure to mitigate, is not discretionary. No authority was cited to us on a situation directly comparable to the present, where it is submitted that the victim of a breach may be regarded as acting unreasonably, by not taking steps to stop the perpetrator of the breach from carrying it into effect. The NDA does not suggest that ATKs conduct, in delaying the issue of a claim form, would necessarily or always fall to be regarded as unreasonable. The NDAs proposition is that, on a full examination at a trial of all the circumstances in the light of evidence, including in particular examination of the reasons for ATKs conduct, ATK may be held to have acted unreasonably and thereby to have failed to avoid the loss of the contract, so disabling itself from claiming damages for any loss arising from the NDAs entry into the contract with CFP, rather than with RSS. In this connection, the NDA surmises, plausibly, that the reason why ATK did not issue its claim form at a time when this would have put an automatic stop on the NDA entering into the contract is that it appreciated that this would lead to the NDA seeking to lift the stop. In that case, it would very probably only have been possible to maintain the stop if ATK was ready and able to put up security for any loss which the NDA would suffer through the continuation of the stop. This, ATK may well not have been. But another possible reason why ATK might not have been able to maintain the stop (or not have thought it sensible to bring about a stop in the first place, by issuing a claim form before the contract was entered into) was that it could not show that damages would not constitute an adequate remedy if the NDA proved to have failed wrongly to award the contract to the RSS consortium to which ATK belonged. The question therefore arises whether and on what basis it could be said to be unreasonable for ATK to delay commencing proceedings until after the entry into the contract. If ATK regarded damages as an adequate remedy, there would be no point in bringing about a stop in the first place. Even if it did not regard damages as an adequate remedy and confident though it may have been in the prospects of success of its (ultimately successful) challenge to the NDAs contract award decision it may in its own interests have preferred to rest on a claim for damages if its challenge to the contract award decision succeeded, rather than give a cross undertaking and expose itself to an indeterminate liability thereunder if its challenge failed. It is true, as Lord Pannick submits, that the scheme of the Remedies Directive and the 2006 Regulations aims specifically at giving an economic operator the opportunity to stop the wrongful award of a procurement contract to a competitor. But that does not mean that the economic operator is obliged to take advantage of the opportunity. The scheme gives both parties choices as to how to proceed and how to protect themselves. It assimilates the position, after a stop has been placed on the entry into a contract by the issue of a claim, with that which exists when a party is seeking an interim injunction: see para 42(d) above. An economic operator is, under the scheme as enacted in the United Kingdom, thus left free to issue a claim for damages after awaiting the entry into the contract. If, on the other hand, it issues a claim before entry into the contract, it is, on the face of it, also entitled to consider in its own interests whether or not to give an undertaking or put up security, if that is later required as the price of continuing the stop on entry into the contract. The provision of an undertaking or security as a condition of the continuation of a stop order or stay is a matter of free choice for a party. There is no basis for regarding the victim of an alleged breach seeking interim relief as obliged to exercise that choice in the interests of the other party, or indeed of anyone save itself. I am unable to accept the NDAs proposition that, because the court could reasonably demand a cross undertaking or security as a condition of a continuation of the stop order, it would or could be regarded as unreasonable for ATK to refuse to put this up. For the court to impose a condition as the price of continued relief which a party is seeking is quite different from treating the victim of a breach as acting unreasonably if it fails to seek a particular form of relief or to back it with an undertaking or security. The present issue only arises, by definition, in a context where the contracting authority proves to have infringed procurement rules by its contract award decision. Under the scheme, the contracting authority also has a choice as to whether and how to act and to protect itself in a context where this is alleged or is a possibility. If it wishes to avoid the exposure resulting from having entered into the contract in circumstances where there is still time for an aggrieved economic operator to issue a claim form, it can delay entering into the contract until after the expiry of the 30 day period allowed to the economic operator for issue of a claim form. The delayed entry into the contract could involve the contracting authority in some loss, over and above that due to the minimum ten day standstill anyway required under the Remedies Directive and the 2006 Regulations. In the event that the contract award decision proved not to have involved any infringement, the contracting authority would have to bear that loss, without any recourse. But some loss of this sort could anyway result under the scheme from the ten day standstill period (and from the period which might elapse between the imposition of any stop and its discharge, in a case where the Court did not see fit to continue the stop by requiring an undertaking or security). The loss would on any view be unlikely to be anything approaching that which would arise from entering into the contract with one economic operator and being held liable to another for having wrongly done so. In summary, an economic operator is entitled, in the face of what it views as (and later proves to have been) a breach of duty by the contracting authority, to leave it to the authority to take the risk of implementing its wrongful award decision. The economic operator cannot be said to be acting unreasonably if it fails to stop the authority from perpetrating a breach of duty which the authority could itself stop perpetrating. It cannot be said to be acting unreasonably if it refuses to give an undertaking or put up security in order to maintain a stop which it has in the first instance obtained by issuing a claim form before the authority has entered into the contract to give effect to its wrongful contract award decision. I add that it has not been and could not be suggested that the NDA entered into the contract only because it thought that it was not exposed to a subsequent claim by ATK. Indeed, NDAs submissions before the Court of Appeal said this (para 51): The [NDA] makes no bones about the fact that, because of the financial implications of delay, it would have applied to lift the suspension and (if successful) signed the contract, had [ATK] sought to trigger and maintain the suspension without offering a cross undertaking in damages. The [NDA] does not know what it would have done if a cross undertaking had been offered it would have depended upon advice that was not in fact sought, and factors such as the likely date of an expedited trial that did not become known, because of the way that [ATK] in fact acted. The second sentence indicates that the NDA might have sought to remove any stop on its entry into of the contract, even if ATK had offered a suitable cross undertaking in order to achieve its continuation. In other words, the NDA may, even in that context, have preferred to run the same risk that it did by entering into the contract in this case. For the reasons I have given, I do not consider that there are any circumstances in which ATK could be regarded as having failed unreasonably to mitigate its loss arising from the NDAs wrongful contract award decision, by failing to initiate or pursue steps to prevent the NDA from implementing that decision by entering into the contract with ATKs competitor, CFP. Under the scheme of the Remedies Directive and 2006 Regulations, each side had choices which it was entitled to, and no doubt did, exercise in its own interests. In these circumstances, the answer to issue (iii) is in the negative as the Court of Appeal held. Conclusion Under issue (i), ATKs case in this Court was that European Union law requires a remedy in damages for any breach, whether serious or not, or that this issue should at least be referred to the Court of Justice. This case would, if accepted, have constituted a reason for reaching the same result as the Court of Appeal did by reference to domestic law. The Supreme Court does not however accept ATKs case on this issue. Under issue (ii), the NDAs case has been the Court of Appeal was wrong to hold that, even though European Union law only requires a remedy in damages for a serious breach, domestic law goes further by requiring a remedy in damages for any breach, whether serious or not. The NDA has succeeded, and its appeal should be allowed, on this issue. Under issue (iii), the NDA also sought to establish that there should be a trial as to whether an award of damages may in the circumstances of this case be refused to an economic operator. The NDA has failed, and its appeal should be dismissed, on this issue.

UK-Abs

The respondent (ATK) brought a public procurement claim against the appellant, a non departmental public body (the NDA), in connection with ATKs unsuccessful bid for a contract for services to decommission sites previously used for nuclear generation. The parties have agreed to compromise the claim, but have requested the Court to issue its judgment nonetheless. For this purpose, the NDA is to be taken, as the judge held, to have failed wrongly to award the contract to the consortium to which ATK belonged, in breach of its obligations under the Public Procurement Regulations 2006 (the 2006 Regulations), which give effect in the UK to the Public Procurement Directive No 2004/18/EC (the PP Directive). Directive No 89/665/EEC, as amended (the Remedies Directive), requires effective remedies for economic operators to be made in such cases, including compensation and the setting aside of awards. It was given domestic effect by amendment of the 2006 Regulations. Regulation 47G of the 2006 Regulations thus requires a contracting authority, on becoming aware of the issue of a claim form relating to its procurement decision, to refrain from entering into the contract with the successful tenderer, if not already entered into, until court order or disposal of the proceedings. Although the NDA observed an extended standstill period during which, pursuant to regs.32(1) and 32A(5), it could not enter into a contract with the successful tenderer, it refused ATKs request for a further extension and proceeded to enter into the contract. ATK subsequently issued the present proceedings, within the 30 day time limit provided by reg.47D. The following preliminary issues regarding the circumstances in which damages may be recoverable for breaches of the 2006 Regulations arose for consideration: (i) whether the Remedies Directive only requires a damages award to be made when any breach of the PP Directive is sufficiently serious; (ii) whether reg.47J(2)(c) of the 2006 Regulations confers a power to award damages in respect of any loss or damage suffered by an economic operator in the case of any breach (not merely a sufficiently serious breach) of the Regulations; and (iii) whether (and, if so, when) a damages award under reg.47J(2)(c) of the 2006 Regulations may be refused on the basis that an economic operator issued proceedings within the 30 day period provided by reg.47D, but not before the contracting authority entered into the contract. The Court of Appeal determined these issues to the following effect: (i) Yes; (ii) Yes; and (iii) no. The NDA appeals to the Supreme Court on issues (ii) and (iii). The Supreme Court allows the NDAs appeal on issue (ii) but dismisses it on issue (iii). Lord Mance gives the judgment, with which the rest of the Court agrees. Issue (i) The sufficiently serious condition in EU law ATKs case in the Supreme Court was that EU law requires a remedy in damages for any breach, whether serious or not, or that this issue should at least be referred to the Court of Justice. This case would, if accepted, have constituted a reason for reaching the same result as the Court of Appeal did by reference to domestic law. ATKs case is not, however, accepted on this issue. The decision of the Court of Justice in Spijker (Case C 568/98) provides clear authority that the liability of a contracting authority under the Remedies Directive for breach of the PP Directive is assimilated to that of the state or of a public body for which the state is responsible [19 25]. Such liability is only required to exist where the minimum Francovich conditions are met, the second of which is that the breach must be sufficiently serious [9]. Articles 1 to 3 of the Remedies Directive do not evince an intention to provide a remedy in damages for harm caused by infringements generally [14; 25]. Any further international obligation (if any) to which the EU may have committed itself under the Government Procurement Agreement (GPA 1994), including under article XX(7), provides only weak support for ATKs argument to the contrary and cannot in any event withstand the clear impact of the Courts judgment in Spijker [15; 25]. Issue (ii) The second Francovich condition at domestic law level The UK legislator has not, by the 2006 Regulations, gone further than EU law requires by conferring a power to award damages in respect of loss or damage suffered by an economic operator in the case of any breach, as opposed to only a sufficiently serious breach, of the Regulations. The Court of Appeal was correct to consider that the explanatory materials preceding the amendments to the 2006 Regulations indicate the legislators intention to do only what was necessary to implement the Remedies Directive without any gold plating [33 35]. However, the Court of Appeal erred in its assumption that any claim for damages under the 2006 Regulations was no more than a private law claim for breach of a domestically based statutory duty, and that this categorisation automatically freed the claim from any conditions which would otherwise apply under EU law [37 39]. The scheme of the Remedies Directive is a balanced one, with the Francovich conditions representing the Court of Justices conclusion as to the appropriate level of minimum protection by way of damages which an economic operator can expect. The UK legislator would not have gone further than required by EU law when implementing this scheme without considering this and making it clear [39]. This conclusion is also consistent with the use of the word may in regs.47I(2) and 47J(2)(c) which would otherwise have no real significance [32; 39]. Issue (iii) Failure to claim before the contract is made ATK cannot be said to have failed to mitigate (or avoid) its loss by not having taken steps to prevent the NDA from carrying its breach of duty into effect. The remedies scheme aims specifically at giving an economic operator the opportunity to stop the wrongful award of a procurement contract to a competitor. But an operator will not act unreasonably in not taking advantage of that opportunity. The scheme gives both parties choices as to how to proceed and how to protect themselves [53 55]. The NDA could have delayed entry into the contract under after the 30 day period which ATK had to commence proceedings. ATK may not have issued its claim form at a time when this would have put an automatic stop on the NDA entering into the contract because it appreciated that this would lead to the NDA seeking to lift the stop, and ATK in turn having to put up security for any loss the NDA would suffer through the continuation of the stop [51 52]. An economic operator cannot be said to have acted unreasonably in deciding not to pursue a course which exposes it to the risks associated with the possibility of its challenge to the contract award decision failing [54].

The issue in this case is whether Lloyds Banking Group (LBG) is entitled to redeem 3.3 billion of loan notes which would otherwise carry a relatively high rate of interest, namely over 10% per annum. The loan notes are contingent convertible securities (perhaps inevitably known as Cocos), and are formally described as enhanced capital notes, or the ECNs. The ECNs are potentially convertible into fully paid up shares in LBG, and they were issued in November 2009, at a time when LBG, like many other banks, was in dire need of recapitalisation in order to protect its capital position and to comply with regulatory requirements. Before turning to the terms on which the ECNs were issued, it is necessary to understand a little about the Regulations as at that time, and, in order to understand the issues on this appeal, it is necessary to set out some of those terms and then explain a few of the changes effected to the Regulations in 2013 and the way in which they were applied. The regulatory position when the ECNs were issued As at the time that the ECNs were issued, the capital requirements of financial institutions in the EU were governed by a 2006 Directive known as CRD I. This Directive was inevitably based on the current international banking accord, at that time the so called Basel II. The relevant regulatory authority in the United Kingdom at the time was the Financial Services Authority, the FSA. Under CRD I, the capital of financial institutions was arranged in tiers. The highest tier of capital was Core Tier 1, known as CT1; the next tier was divided into Upper Tier 2 Capital and Lower Tier 2 Capital. CT1 included, inter alia, paid up shares and retained earnings. Lower Tier 2 Capital included dated subordinated debt. The FSAs practice was to require a financial institution to maintain a minimum ratio of CT1 assets and in addition to pass certain stress tests, which involved subjecting the banks balance sheet to hypothetical challenging market situations. In November 2008, the FSA issued a Statement which described a Capital Framework which it intended to apply to all financial institutions. The November 2008 Statement explained that the FSA used as common benchmarks within this framework ratios of capital to risk weighted assets of total Tier 1 Capital of at least 8% and Core Tier 1 Capital, as defined by the FSA, of at least 4% after the stressed scenario. The November 2008 Statement also stated that the FSA will be addressing the longer term capital regime for deposit takers in a discussion paper in the first quarter of 2009, the expectation being that this document will form part of the wider review of the global regulatory environment, which the FSA along with the other regulatory authorities, will be participating in. From time to time, the FSA issued further Statements and Guidance. Thus, in May 2009, it issued a Statement indicating that it had [g]reatly increased the use of stress tests as an integral element of our ongoing supervisory approach. The May 2009 Statement also stated that the FSA expected UK banks to maintain Core Tier 1 Capital, as defined by the FSA, of at least 4% of Risk Weighted Assets after applying an FSA defined stress test. The Statement added that [t]his current framework will remain in place until the Basel accord, which is implemented through EU capital requirement directives, has been modified to reflect the lessons learned from recent events. The May 2009 Statement also explained that the stress tests look forward over five years but with greater detail over the first three and that the tests are used to identify if at any time in the next five years there is a danger that under the stress scenario the level of capital will fall below the 4% Core Tier 1 minimum. In September 2009, in response to transitional legislation issued by the EU to control the use by financial institutions of hybrid securities as capital, the FSA issued another Statement making it clear that the FSA will work to ensure the timing of the introduction of a new long term capital regime . The September 2009 Statement also stated that hybrid capital instruments must be capable of supporting Core Tier 1 by means of a conversion or write down mechanism at an appropriate trigger. Instruments with these characteristics could be seen as a form of contingent Core Tier 1 Capital. The issue of the ECNs Meanwhile, in March 2009, the FSA had stress tested LBG, and had found that it had a shortfall in its CT1 Capital, in the light of the 4% minimum requirement referred to in the November 2008 Statement. As a result, the FSA required LBG to demonstrate that it had raised at least 21 billion which could qualify as CT1 Capital. After considering alternative options, LBG decided to raise 13.5 billion by issuing new fully paid up shares through a rights issue, and 8.3 billion through the medium of the ECNs, to be issued in exchange for existing securities. These ECNs were intended to be Cocos which would satisfy what was said in the passage in the September 2009 Statement quoted at the end of para 7 above. This decision was duly implemented. The terms of the 8.3 billion ECNs were described in a so called Exchange Offer Memorandum. The exchange invited in that Memorandum was taken up, and the ECNs were issued and subscribed in a number of different series in December 2009. The ECNs were loan notes whose terms were contained in a Trust Deed, which included in Schedule 4 detailed Terms and Conditions (T&Cs). In very broad terms, the ECNs (i) carried interest at varying rates depending on the series, but averaging about 10.33% per annum, (ii) subject to points (iii) and (iv), were redeemable only at certain specified dates under clause 8(a) of the T&Cs, which, depending on the series, varied between 2019 and 2032, but (iii) could be redeemed early by LBG, albeit only on a so called Capital Disqualification Event under clauses 8(e) and 19 of the T&Cs, and (iv) were in the meantime potentially convertible into paid up shares in certain specified circumstances described in clause 7(a) of the T&Cs. Clause 7 of the T&Cs was concerned with Conversion of the ECNs. Clause 7(a) was headed Conversion upon Conversion Trigger, and clause 7(a)(i) provided that [i]f the Conversion Trigger occurs at any time, each ECN shall be converted into Ordinary Shares credited as fully paid. The Conversion Trigger was defined as occurring at any time when LBGs Consolidated [CT1] Ratio is less than 5 per cent. The 5% figure was 1% above the minimum 4% ratio required at the time by the FSA, as explained in the Statements cited in paras 5 and 6 above. The remainder of clause 7 was concerned with consequential machinery. Clause 8 of the T&Cs was headed Redemption and Purchase. Clause 8(a) provided for the ECNs to be redeemed on the relevant Maturity Date (which was a date which varied between 2019 and 2032 depending on the particular series of the ECN) [u]nless previously converted, redeemed or purchased and cancelled as provided in these Conditions. Clause 8(e) provided that [i]f a Capital Disqualification Event has occurred and is continuing, then [LBG] may redeem all, but not some only, of the ECNs at [a specified price]. Clause 19 of the T&Cs was headed Definitions. It provided that a Capital Disqualification Event is deemed to have occurred: (1) if at any time LBG is required under Regulatory Capital Requirements to have regulatory capital, the ECNs would no longer be eligible to qualify in whole or in part (save where such non qualification is only as a result of any applicable limitation on the amount of such capital) for inclusion in the Lower Tier 2 Capital of LBG on a consolidated basis; or (2) if as a result of any changes to the Regulatory Capital Requirements or any change in the interpretation or application thereof by the FSA, the ECNs shall cease to be taken into account in whole or in part (save where this is only as a result of any applicable limitation on the amount that may be so taken into account) for the purposes of any stress test applied by the FSA in respect of the Consolidated Core Tier 1 Ratio. Certain other definitions in clause 19 of the T&Cs are also of some relevance. Core Tier 1 Capital was defined as core tier one capital as defined by the FSA as in effect and applied (as supplemented by any published statement or guidance given by the FSA) as at 1 May 2009. Tier 1 Capital and Lower Tier 2 Capital were each defined as having the meaning given to it by the FSA from time to time. Regulatory Capital Requirements was defined as meaning any applicable requirement specified by the FSA in relation to minimum margin of solvency or minimum capital resources or capital. The FSA was defined elsewhere in the Trust Deed as including any governmental authority in the United Kingdom having primary supervisory authority with respect to LBG. The effect of this arrangement was that (a) the ECNs counted as Lower Tier 2 Capital so long as they were neither redeemed under clause 8 nor converted under clause 7, and (b) if the ECNs were converted under clause 7 they would count towards the CT1 Capital. That is because, as explained in para 4 above, CT1 Capital included paid up shares and Lower Tier 2 Capital included dated subordinated debt. If conversion was avoided, the current shareholders did not have their shareholdings diluted, but the ECN holders received a good rate of interest. And the conversion under clause 7 would only occur when LBGs CT1 Capital fell below 5% of risk weighted assets ie when it was getting near the minimum 4% set by the FSA. Subsequent relevant regulatory developments With effect from 1 April 2013, the FSA was replaced as the body responsible for the regulation and supervision of UK financial institutions by the Prudential Regulation Authority, the PRA (which is wholly owned by the Bank of England). So far as EU regulatory requirements are concerned, CRD I was succeeded in 2010 and 2011 respectively by CRD II and CRD III, but neither of them made any changes relevant for present purposes. However, CRD IV, which was published in June 2013, and followed the so called Basel III, made substantial changes. First, it replaced CT1 Capital with Common Equity Tier 1 capital (CET1 Capital), which is a significantly more restrictive category than was CT1 Capital. Secondly, it set the minimum core capital ratio at 4% CET1 from 1 January 2014, increasing to 4.5% CET1 from 1 January 2015. Thirdly, it introduced a new concept, Additional Tier 1 Capital, (AT1 Capital), which included contingently convertible loan stock, such as the ECNs. It provided that such stock would only qualify as AT1 Capital if the trigger for conversion was set at a CET1 ratio of at least 5.125%. In March 2013, the Financial Policy Committee of the Bank of England, the FPC, issued a news release recommending that the PRA should assess the current capital adequacy of financial institutions in accordance with the CRD IV and Basel III criteria, albeit subject to adjustments. In particular, it said that by the end of 2013, banks should hold capital falling within CET1 (as adjusted) equivalent to at least 7% of their risk weighted assets (a 7% adjusted CET1 ratio standard), which was, according to the evidence, equivalent to requiring LBG to have an unadjusted CET1 Capital ratio of 10%. In June 2013, the PRA announced that LBG needed to raise a total of 8.6 billion further capital in order to meet the new 7% adjusted CET1 ratio standard. In August 2013, the PRA published a consultation paper, which dealt with the eligibility of Cocos and other convertible instruments to count as core capital. It stated that if financial institutions issue AT1 instruments, the PRA expects them to set AT1 triggers at a level higher than 5.125% CET1. By contrast, and crucially for present purposes, the evidence in this case establishes that the effect of the terms of the ECNs is that conversion of the ECNs into fully paid up LBG shares would only be triggered if LBGs CET1 ratio fell to 1%, which is, of course, far below the minimum required by the PRA under its 2013 Regulatory regime. In December 2013, the PRA published a Supervisory Statement effectively confirming as requirements what had been trailed by the FPC and the PRA earlier that year. In anticipation of the requirements in the December 2013 Supervisory Statement, LBG had substantially strengthened its capital position by the end of 2013. This involved a number of steps, including offering to exchange up to a maximum of 5 billion of the ECNs for new Cocos which would qualify as AT1 Capital, on the basis that they would convert to paid up shares if LBGs adjusted CET1 Capital ratio fell to 7% or lower. As explained in the supporting memorandum issued by LBG, the 7% conversion trigger was selected because of statements by the PRA that a conversion trigger of 5.125% may not convert in time to prevent the failure of a firm and that it expects major UK firms to meet a 7% CET1 ratio determined in accordance with CRD IV. 5 billion of the ECNs were duly exchanged for these new Cocos in March and April 2014. In April 2014, the Bank of England announced that, in relation to stress testing, the previous CT1 4% capital ratio would be replaced by a hurdle rate of a ratio of 4.5% of CET1 to risk weighted assets, although a stress test outcome was not dependent on a simple pass/fail exercise. In December 2014, the PRA reported that LBGs CET1 ratio at the end of 2013 was 10.1% and that its minimum stressed ratio in the stress test was 5%. The ECNs were not taken into account in either assessment. That was inevitable, as Gloster LJ pointed out in her judgment in the Court of Appeal, because LBG remained above the minimum capital threshold in that stress test in that its CET1 ratio did not fall below 4.5% by reason of the strength of its capital position without any need to take into account the ECNs, the conversion trigger point for which was well below the new CET1 capital pass ratio. These proceedings On 16 December 2014, LBG announced that the ECNs had not been taken into account in the December 2014 stress test and accordingly a Capital Disqualification Event (hereafter a CDE) had occurred under para (2) of the definition in clause 19 of the T&Cs, and accordingly LBG was entitled to redeem the outstanding 3.3 billion ECNs in accordance with clause 8(e) of the T&Cs. The consent of the PRA to the redemption was required and was duly obtained. However, BNY Mellon Corporate Trustee Services Ltd (the Trustee), as trustee for the holders of the ECNs under the Trust Deed mentioned in para 10 above, challenged LBGs claim to be entitled to redeem the outstanding ECNs. Hence these proceedings, in which LBG contends that a CDE has occurred, so that it can redeem the outstanding ECNs, and the Trustee denies that a CDE has occurred. LBG argues that a CDE has occurred because para (2) of the definition of a CDE in clause 19 of the T&Cs (the Definition) is satisfied. LBGs case is that as a result of [a change] to the Regulatory Capital Requirements or any change in the interpretation or application thereof by the FSA, namely the implementation of CRD IV through the 2013 Supervisory Statement, the ECNs [have ceased] to be taken into account for the purposes of any stress test applied by the [PRA] in respect of the Consolidated Core Tier 1 Ratio, as is evidenced by the stress tests carried out in 2014 in respect of LBGs financial position as at December 2013. The Trustee raises two arguments why this contention is wrong. First the Trustee contends that the December 2014 stress test was not in respect of the Consolidated Core Tier 1 Ratio, as specified in para (2) of the Definition; rather, it was a stress test in respect of a CET1 ratio. Secondly and alternatively, the Trustee contends that the fact that the ECNs were not taken into account in the December 2014 stress test when assessing the Tier 1 Ratio is not enough to trigger a CDE; in order for para (2) of the Definition to apply, the ECNs must be disallowed in principle from being taken into account for the purposes of the Tier 1 Ratio before para (2) of the Definition can be invoked by LBG. At first instance, Sir Terence Etherton C, in a clear and careful judgment, rejected the Trustees first argument, but accepted the Trustees second argument [2015] EWHC 1560 (Ch). Accordingly, he found in favour of the Trustee and held that the ECNs were not redeemable under clause 8(e) of the T&Cs. For reasons given in a very full judgment in the Court of Appeal, Gloster LJ agreed with Sir Terence on the first argument but disagreed with him on the second argument; Briggs LJ agreed with Gloster LJ for reasons given in a short judgment, and Sales LJ agreed with Gloster LJ. Accordingly, LBG won in the Court of Appeal, who concluded that the ECNs were redeemable under clause 8(e) of the T&Cs [2015] EWCA Civ 1257. The Trustee now appeals to the Supreme Court. The proper approach to interpretation Much of the argument before us was given over to the question whether, when construing the Trust Deed, and in particular the T&Cs, the Court of Appeal had been entitled to take into account statements in the substantial Exchange Offer Memorandum and in the lengthy letter from the chairman of LBG which accompanied it, and indeed the details of the statements and other documents issued by the FSA in 2008 and 2009. Over the past 20 years or so, the House of Lords and Supreme Court have given considerable (some may think too much) general guidance as to the proper approach to interpreting contracts and indeed other commercial documents, such as the Trust Deed in this case. What, if any, weight is to be given to what was said in other documents, which were available at the time when the contract concerned was made or when the Trust Deed in question took effect, must be highly dependent on the facts of the particular case. However, when construing a contract or Trust Deed which governs the terms upon which a negotiable instrument is held, as in the present case, very considerable circumspection is appropriate before the contents of such other documents are taken into account. In this connection, it is worth repeating the remarks of Lord Collins (with whom Lord Hope and Lord Mance agreed) in In re Sigma Finance Corp (in administrative receivership) [2010] 1 All ER 571, paras 36 and 37. Having pointed out that the trust deed in that case concerned debt securities issued to a variety of creditors, who hold different instruments, issued at different times, and in different circumstances, Lord Collins, at para 37, said [c]onsequently this is not the type of case where the background or matrix of fact is or ought to be relevant, except in the most generalised way. More generally, he said: Where a security document secures a number of creditors who have advanced funds over a long period it would be quite wrong to take account of circumstances which are not known to all of them. In this type of case it is the wording of the instrument which is paramount. The instrument must be interpreted as a whole in the light of the commercial intention which may be inferred from the face of the instrument and from the nature of the debtors business. As Mr Dicker QC points out on behalf of the Trustee, the same point was made by Lord Macmillan when giving the decision of the Privy Council in Egyptian Salt and Soda Co Ltd v Port Said Salt Association Ltd [1931] AC 677, 682. Disapproving the trial judges reliance on surrounding circumstances at the time when the memorandum was framed, Lord Macmillan said that the purpose of the memorandum is to enable shareholders, creditors and those who deal with the company to know what is its permitted range of enterprise, and for this information they are entitled to rely on the constituent documents of the company and that the intention of the framers of the memorandum must be gathered from the language in which they have chosen to express it. (See also the observations of Lord Hoffmann to much the same effect in Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, para 36, Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715, para 74, and Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, para 40). In the present case, the Trust Deed, and in particular those parts of clauses 7, 8 and 19 of the T&Cs which fall to be construed, cannot be understood unless one has some appreciation of the regulatory policy of the FSA at and before the time that the ECNs were issued. That is self evident from the provisions of clause 19 which are set out in paras 13 and 14 above. Accordingly, I consider that at least the general thrust and effect of the FSA regulatory material published in 2008 and 2009 can be taken into account when interpreting the T&Cs. That would also accord with good sense: while the individual purchasers of the ECNs may not by any means all have been sophisticated investors, it is appropriate to assume that most of them would have had advice from reasonably sophisticated and informed advisers before they purchased such moderately complex financial products. The Exchange Offer Memorandum and the letter from the LBG chairman present more difficulties, and the answer may depend on whether such documents would have been known about or in the minds of subsequent purchasers of the ECNs, a point on which there was no evidence, so far as I am aware. As it is, I do not consider that the terms of the Exchange Offer Memorandum or the letter from the LBG chairman take matters any further in this case. In my view, once one has in mind the general thrust and effect of the FSA regulatory approach in 2009, as summarised in paras 4 to 7 above, coupled with the commercial purpose of the ECNs as summarised in para 15 above, it is simply unhelpful on the facts of this case to cast ones eyes further than the T&Cs when resolving the issues on this appeal. I now turn to those two issues. The first issue: did the possibility of a CDE fall away following CRD IV? I have no hesitation in agreeing with Sir Terence Etherton and the Court of Appeal in their conclusion that the reference to the Consolidated Core Tier 1 in para (2) of the Definition should, in the events which have happened, be treated as a reference to its then regulatory equivalent ie in the current context the Common Equity Tier 1 Capital. Etherton C and the Court of Appeal considered that this conclusion involves a departure from the strictly literal meaning of the definition of Core Tier 1 Capital in clause 19, but they concluded that such a departure was justified because it was clear that something has gone wrong with the language and [it was] clear what a reasonable person would have understood the parties to have meant, applying the test laid down by Lord Hoffmann in Chartbrook, para 25. The reasons given by Gloster LJ in para 85 of her judgment for departing from what she considered was the literal meaning of the closing words of para (2) of the Definition were based on the arguments of Mr Miles QC. They were, in summary, that (i) it was notorious at the time of the issue of the ECNs that the regulatory requirements as to financial institutions capital would be strengthened and changed, (ii) it was envisaged in the T&Cs, in particular in clause 19, that expressions such as Regulatory Capital Requirements and Core Tier 1 Capital could change their meaning; (iii) indeed, it was inherent in the terms of the Definition that this was so; (iv) it was obvious that changes of substance might lead to changes of nomenclature; and (v) one of the essential features of the ECNs was that, if necessary, they could be converted into LBG core capital, whatever expression was used to define it. Gloster LJ concluded that, given these points, coupled with the existence of the ECN maturity dates, it made no commercial sense to limit the reference to Core Tier 1 Capital in para (2) of the Definition to CT1 Capital, as opposed to holding that it could, in the events which had happened (as summarised in paras 16 to 20 above), apply to CET1 Capital. She also considered that the error would have been obvious to a reasonable addressee of the Exchange Offer Memorandum. She referred in this connection to another observation of Lord Collins in Sigma, where, in para 35, he said that in complex documents such as the Exchange Offer Memorandum, there are bound to be ambiguities, infelicities and inconsistencies and had gone on to warn against an over literal interpretation of one provision without regard to the whole, which may distort or frustrate the commercial purpose. Subject to one point, I have no hesitation in agreeing with the analysis as summarised in paras 35 to 37 above. My only doubt is as to whether this conclusion really does involve a departure from the literal meaning of the closing words of para (2) of the Definition, not least in the light of the definitions of Core Tier 1 Capital and Tier 1 Capital in clause 19. It may involve a departure from the literal meaning, but, if it does, it is on the basis of a rather pedantic approach to interpretation. I do not, however, propose to discuss the point further: it is completely arid. I would add, however, that if the Trustees argument was correct, it seems to me that LBG would have had a powerful basis for saying that this appeal should be dismissed rather than allowed. That is because, as a matter of language at least, LBG could say that para (2) of the Definition applied on the grounds that the ECNs had, on any view cease[d] to be taken into account for the purposes of any stress test applied by the FSA in respect of the Consolidated Core Tier 1 Ratio, because that ratio was no longer being used by the FSA. The second issue: have the ECNs ceased to be taken into account? The critical question raised by the second issue is whether, as LBG contends, in the light of the regulatory changes and events as described in paras 17 24 above, the ECNs [have] cease[d] to be taken into account in whole or in part for the purposes of any stress test applied by the [PRA] in respect of [what I will call the Tier 1] ratio. To put the point slightly differently, the question is whether the implementation of CRD IV by the PRA through the new Capital Requirements summarised in paras 17 to 21 above, and applied as described in paras 23 and 24 above, entitle LBG to say that a CDE has occurred because para (2) of the Definition has been satisfied. The nature of the dispute on this second issue was very well expressed by Briggs LJ in para 114 in the Court of Appeal, in these terms: In order to resist early redemption of the ECNs is it sufficient that they continue to be taken into account for some purpose or purposes in the stress test now applied by the [PRA], which in my view they do, or must they play a part in enabling LBG to pass that test, which they clearly no longer do, because of the change in the Regulatory Capital Requirements which had the effect of elevating the pass ratio to a level above the Conversion Trigger. I also agree with what Briggs LJ said in the next paragraph of his judgment, namely that this is a difficult question to resolve, and I find it unsurprising that Sir Terence and the Court of Appeal took different views, and indeed that there is a difference of view in this court. LBG argues that the essential point is that the Regulatory Capital Requirements changed in 2013 with the consequence that the ECNs could no longer be taken into account in assisting LBG in passing the stress test, because the conversion trigger under the terms of the ECNs was at a level lower than the minimum required by the PRA, as explained in para 20 above, and, in any event, the PRA did not in any way rely on the ECNs when conducting its stress tests on LBG in 2014. By contrast, the Trustees argument is that, notwithstanding the regulatory changes in 2013, the ECNs can continue to be taken into account as part of the Tier 1 Capital by automatically converting into paid up shares in LBG, albeit that this would only occur when the CET1 Capital ratio fell to 1%. I prefer LBGs argument, as advanced by Mr Howard QC, for the following reasons. First, it appears to me that the Trustees argument does not give full weight to the phrase any stress test in respect of the [Tier 1] Ratio. I accept that, under the new Regulations introduced in 2013, the ECNs could be taken into account in a stress test, and I accept that there could be circumstances in which the ECNs could convert into ordinary shares so as to become part of Tier 1 capital. However, if and when a stress test is applied to see if LBG satisfies the Tier 1 Ratio, it appears to me that the vital point is that, under the Regulations introduced in 2013, the ECNs cannot be taken into account so as to do the very job for which their convertibility was plainly designed, namely to enable them to be converted before the regulatory minimum Tier 1 Ratio is reached. That, to my mind, is what the expression taken into account for the purposes of any stress test in respect of the [Tier 1] Ratio is concerned with. Secondly, the question which has to be asked under para (2) of the Definition is whether the ECNs have cease[d] to be taken into account for the specified purpose. This is in marked contrast with the wording of para (1) of the Definition, where the question is whether the ECNs are no longer eligible to qualify for the purpose specified in that paragraph. It seems to me that eligibility to qualify depends on what the Regulations say, whereas being taken into account depends more on what happens in practice no doubt pursuant to the Regulations. That view is reinforced by the fact that para (1) is based simply on the requirements of Regulatory Capital Requirements, whereas para (2) is also based on any changes to the Regulatory Capital Requirements or any change in the interpretation or application thereof. It seems to me that the way on which the Trustee puts its case, as summarised in para 44 above, is ultimately concerned with the eligibility of the ECNs for the purpose described in para (2) of the Definition, whereas LBG can fairly rely on the fact that the ECNs were not, as a matter of fact (and it does not signify whether it was due to the terms of the 2013 Regulations, or the PRAs application of those Regulations) invoked for the purpose described in para (2) see para 24 above. Thirdly, if the Trustees interpretation is correct, it is very difficult to envisage circumstances in which it could have been thought that para (2) of the Definition could ever be invoked. The notion that fully paid up share capital could ever be excluded from the definition of Tier 1 Capital (whether CT1, CET1, adjusted CET1 or any other possible definition) seems fanciful. Accordingly, it is hard to see how the parties could have envisaged that a Coco, ie a loan note which automatically converted into paid up share capital, could be excluded, in the sense that the Trustees case requires, from being taken into account for the purposes of any stress test in respect of the [Tier 1] Ratio. While some of them are not without force, the arguments which have been raised against LBGs case do not persuade me the other way. There is, I accept, some force in the point that, if LBGs reading of para (2) of the Definition is correct, it must have been foreseeable when the ECNs were issued that a CDE would be likely to occur in the not too distant future. That is because it was well known that the capital requirements of financial institutions were to be strengthened (see paras 5 to 7 above), and so, runs the argument, it must have been appreciated that the minimum permitted Tier 1 Ratio was likely to go above the equivalent of a CT1 ratio of 5%. There are, however, two answers to this point. First, it was by no means certain that the increased capital requirements would involve increasing the minimum Tier 1 Ratio above the equivalent of a CT1 ratio of 5%. Apart from anything else, the new requirements could have retained or only slightly increased this minimum, while introducing a new intermediate tier between what was CT1 and Upper Tier 2: that that is not a fanciful possibility is demonstrated by the actual introduction of the new concept of AT1 Capital (see para 17 above). Quite apart from this, the notion that it must have been perceived as likely that the ECNs would be redeemable well before their respective maturity dates is not a particularly surprising proposition, especially as clause 8(e) operated not as an automatic redemption, but merely gave rise to an option in LBG to redeem. The expression Capital Disqualification Event does not strike me as an inapt description of what has happened on LBGs case. Thus, the effect of the change in the Regulations in 2013 and the application of those changed Regulations in 2014 can fairly be said to have disqualified the ECNs from having the potentially saving effect on the Tier 1 Ratio which they were intended to have, and could properly have had under the Regulations as they stood in 2009. The argument that the 2013 Regulations have not made any difference because the ECNs might not have ensured that LBG had a sufficiently high Tier 1 Ratio even under the 2009 Regulations appears to me to involve a mischaracterisation of LBGs case. That case is not that the convertibility of the ECNs could be guaranteed to save the day under the 2009 Regulations. It is that their convertibility could be invoked to increase the Tier 1 Ratio before that ratio had fallen below the minimum under the 2009 Regulations of a CT1 Capital ratio of 4%. Thus, in 2009, the convertibility of the ECNs had the ability to enable LBG to keep above the minimum Tier 1 Ratio, whereas that was no longer possible under the 2013 Regulations. The force of the point is underlined by the PRAs requirement in 2013 that the Tier 1 Ratio conversion trigger for any qualifying Cocos should be at least 5.125% (see paras 17 and 19 above). I am also unimpressed with the point that, on LBGs argument, the ECNs may be redeemed under clause 8(e) because they have cease[d] to be taken into account on one stress test (as in 2014), notwithstanding that they might have been taken into account on a subsequent stress test. Such a possibility is inherent in para (2) of the Definition, whatever meaning one gives it. Thus, if para (2) is simply concerned with the ECNs eligibility to convert into Tier 1 Capital, as the Trustee contends, and the Regulations were changed to provide that they could no longer do so (highly improbable to say the least, as already pointed out), it could always be said that the Regulations might change back. It is said that LBGs case leads to arbitrary results, as it may depend on the practices and assumptions of the PRA when applying a particular stress test or set of stress tests. There are two answers to that. The first is that, on the facts of this case, that is not a fair charge: given that the minimum Tier 1 Ratio has changed so that the ECNs cannot convert to Tier 1 capital until that capital has fallen below, indeed substantially below, the permissible minimum as a result of the changes effected by the 2013 Regulations, para (2) of the Definition applies. Quite apart from that, given the reference to the application of the Regulations by the FSA for the purposes of any stress test applied by the FSA, it is inherent in para (2) that the PRAs practices could determine whether the paragraph is satisfied. Finally, there is also some force in the argument that the wording of para (2) of the Definition is not wholly clear and that, in the event of doubt, it should be construed against LBG, as the person responsible for drafting the Trust Deed, the proferens. The closing words in respect of the Tier 1 Ratio are inherently imprecise: identifying the precise ambit of the expression in respect of frequently leads to arguments. However, the contra proferentem rule is very much a last refuge, almost an admission of defeat, when it comes to construing a document, and, in this case, for the reasons which I have attempted to give in paras 45 52 above, I do not think that it is necessary, or indeed appropriate, to resort to it in this case. Conclusion Accordingly, I would dismiss the Trustees appeal, on the basis that I consider that a Capital Disqualification Event has arisen under para (2) of the Definition of that expression in clause 19 of the T&Cs. LORD SUMPTION: (dissenting) (with whom Lord Clarke agrees) This case is of considerable financial importance to the parties but raises no questions of wider legal significance. There is therefore no point in dissenting at any length. But since I would have held that that these securities are not redeemable, I should, however briefly, explain why. The notes are contingent share capital. Their immediate purpose as far as Lloyds Banking Group was concerned was to enable it to satisfy the FSA at the time of their issue that it would have a ratio of Consolidated Core Tier 1 Capital to risk weighted assets of at least 4% in a hypothetical stressed scenario. Consolidated Core Tier 1 Capital included ordinary shares but not loan notes. The issue of these notes did not therefore actually strengthen the Banks Tier 1 Capital. But because they would automatically convert to ordinary shares if in the hypothetical stress scenario the ratio fell to within one percentage point above the then minimum, they assisted the Bank to satisfy its regulators. The effect of the subsequent regulatory changes was that the definition of top tier capital was tightened up and the required ratio of adjusted top tier capital (Common Equity Tier 1) to risk weighted assets was increased to 7%. This meant that the notes were no longer as useful to the Bank, because if its affairs deteriorated it would fail a stress test long before the trigger for conversion was reached. From the investors point of view, however, that did not matter, provided that the Bank remained solvent. The attraction of the notes for them lay in their long maturity date and high coupon, both features that were critical to their market value. The notes are redeemable if as a result of regulatory changes they cease to be taken into account for the purposes of any stress test in respect of the Consolidated Core Tier 1 Ratio (for which, now read the Common Equity Tier 1 Capital ratio). The question is whether being taken into account means (i) that in the hypothetical stress scenario they would convert and play a part in enabling the Bank to pass the stress test; or (ii) that they must be eligible, in the sense that notwithstanding their status as Lower Tier 2 Capital the regulator would treat them as top tier capital in the hypothetical event of the Banks affairs deteriorating to the point where the conversion trigger was attained, so that the stress scenario can be modelled on that basis. The difference is that (i) depends on how the Bank fared in an actual stress test, whereas (ii) turns on the regulators rules and practices for conducting such tests. Sir Terence Etherton concluded that (ii) was correct, because the definition is not looking at the happenstance of the particular strength of LBGs capital and the particular composition of its capital at any one particular moment of time in the context of a particular stress test imposed by the regulator at that time, but at the position as a matter of principle (para 46). I think that he was right. In the first place, it was always implicit in the terms that the notes might be irrelevant to the Banks ability to pass a stress test. Whether or not there were changes to the regulatory capital requirements, the Banks capital position might be strong enough to meet the minimum top tier capital ratio even if the notes did not convert. Or it might be so weak that the notes would not save the situation even if they did convert. If the notes would not necessarily play a part in enabling the Bank to pass a stress test in the situation obtaining when they were issued, I cannot see why it should be supposed that the parties intended to allow early redemption if the same situation obtained as a result of a change in regulatory capital requirements. The situation introduced by such a change is no different in principle from the situation that existed before. The change might make it more or less likely that the notes would be critical to the outcome of a stress test, but there is no change in the way that the scheme works. Secondly, a test dependent on how the notes affected the outcome of an actual stress test would be wholly uncertain. Stress testing is not a fixed or ascertainable concept. Its outcome will depend not just on the rules and practises of the regulator, but on what the hypothetical conditions assumed in a particular stress test are, on where the regulator pitches the stress test hurdle (not necessarily the same as the minimum regulatory top tier capital ratio), and what is the value and composition of the Banks assets at the time of the test. Moreover the hypothetical stress scenario will test the strength of the Banks capital over a substantial period of time, during which it may fail the test throughout or for a day or two. The significance of that will be a question of regulatory judgment. It is not just a simple question of pass or fail. Of course, the regulatory changes which actually occurred mean that the notes will in practice make little difference to the outcome on any reasonably foreseeable view about these matters. But although it was anticipated that there would be a tightening of the capital adequacy requirements, the details were not known at the time that the securities were issued, and the terms cannot be construed in the light of the subsequent changes. Thirdly, nothing in the definition of a Capital Disqualification Event supports the suggestion that it was intended to depend on the part played by the notes in enabling the Bank to pass an actual stress. The clauses title is concerned with disqualification, ie with a state of affairs in which the notes are no longer eligible in principle to perform their function as contingent capital. As regards Lower Tier 2 Capital, dealt with in sub clause (1), this is clear from the reference to capital being eligible to qualify. The only reason why the word eligible is not used in sub clause (2) of the definition, dealing with top tier capital, is that whereas the status of Lower Tier 2 Capital depends simply on whether it satisfies the relevant regulations, the status of top tier capital depends on the practices and judgments of regulators as well, a context in which it was appropriate to speak of the securities being taken into account, rather than being eligible. These were long dated securities, which cannot have been intended to be redeemed early except in some extreme event undermining their intended function and requiring their replacement with some other form of capital. The function of the notes was to be available to boost the Banks top tier capital in the hypothetical event that the ratio of top tier capital to risk weighted assets fell below the conversion trigger. They have always served that function and still do. Whether that function remains as important to the Bank as it was in 2009 is irrelevant.

UK-Abs

The issue in this appeal is whether Lloyds Banking Group (LBG) is entitled to redeem 3.3 billion of enhanced capital notes (ECNs) which carry an interest rate of over 10% per annum. The capital requirements for financial institutions were, at the time of the issue of the ECNs, set out in the CRD I Directive, which arranged the capital of financial institutions in tiers, the highest of which was Core Tier 1 (CT1). In March 2009, the Financial Services Authority (the FSA), having stress tested LBG and found a shortfall, required it to raise 21 billion which could qualify as CT1 Capital. LBG raised some of this amount by issuing 8.3 billion of ECNs in December 2009. The ECNs were intended to satisfy criteria set out by the FSA in a statement issued in September 2009, which provided that hybrid capital instruments capable of supporting CT1 Capital by means of a conversion or write down mechanism at an appropriate trigger could qualify as CT1 Capital. The terms of the ECNs were contained in a Trust Deed (the Trust Deed), which included detailed terms and conditions (T&Cs). The ECNs were not redeemable until specified maturity dates, unless (i) converted into shares on the occurrence of a conversion trigger, being any time when LBGs CT1 ratio fell below 5%; or (ii) redeemed early by LBG on the occurrence of a Capital Disqualification Event (CDE). One of the two circumstances in which a CDE occurs is stated in clause 19(2) to be where, as a result of any changes to regulatory capital requirements, the ECNs cease to be taken into account in whole or in part for the purposes of any stress test in respect of the Consolidated CT1 ratio. In June 2013, a new directive, CRD IV, replaced CT1 Capital with a more restrictive category, Common Equity Tier 1 Capital (CET1 Capital) and effected other changes to capital requirements. In accordance with these changes, the successor to the FSA, the Prudential Regulation Authority (the PRA), confirmed that LBG was subject to a new 7% CET1 ratio standard and that the ECNs would need to have a trigger for conversion higher than 5.125% CET1 in order to count as core capital. In March April 2014, LBG exchanged 5 billion of ECNs for instruments which satisfied the new requirements. In December 2014, the PRA reported that LBGs CET1 ratio was 10.1% and its minimum stressed ratio was 5%. The ECNs were not taken into account in either assessment. On 16 December 2014, LBG announced that a CDE had occurred under clause 19(2) and that it was entitled to redeem the outstanding 3.3 billion ECNs. BNY Mellon Corporate Trustee Services Ltd (BNY Mellon), as trustee for the holders of the ECNs, issued proceedings challenging LBGs claim and denying that a CDE had occurred. At first instance, Sir Terence Etherton found for BNY Mellon. The Court of Appeal allowed LBGs appeal. BNY Mellon now appeals to the Supreme Court. The Supreme Court dismisses BNY Mellons appeal by a 3:2 majority. Lord Neuberger gives the leading judgment, with which Lord Mance and Lord Toulson agree. Lord Sumption gives a short dissenting judgment, with which Lord Clarke agrees. The Trust Deed cannot be understood unless one has some appreciation of the regulatory policy of the FSA at and before the time that the ECNs were issued [33]. Thus, the general thrust and effect of the FSA regulatory material published in 2008 and 2009 can be taken into account when interpreting the T&Cs [33]. BNY Mellon argued that the December 2014 stress test was not in respect of Consolidated Core Tier 1 ratio as specified in clause 19(2) of the T&Cs as CT1 had by this point been replaced by CET1 Capital [27]. This argument is rejected [35]. The reference to the Consolidated Core Tier 1 Ratio should, in the events which have happened, be treated as a reference to its then regulatory equivalent, being Common Equity Tier 1 Capital [35]. BNY Mellons second argument is that, in order for it to be said that the ECNs had not been taken into account, they must be disallowed in principle from being taken into account for the purposes of the Tier 1 ratio [27, 40]. The question is whether it is sufficient that the ECNs continue to be taken into account for some purpose in the stress test, or whether they must play a part in enabling LBG to pass that test, which they no longer do [40 42]. The preferable view is that the ECNs must play a part in enabling LBG to pass the stress test [45]. Under the Regulations passed in 2013, the ECNs cannot be taken into account so as to do the very job for which their convertibility was designed, namely to enable them to be converted before the regulatory minimum Tier 1 ratio is reached [45]. This conclusion is also supported by the contrast between ceased to be taken into account, the expression in clause 19(2), and a different expression, no longer eligible to qualify, which is in clause 19(1) [46]. Further, if the contrary view were correct, it is very difficult to envisage circumstances in which it could have been thought that clause 19(2) could have been invoked [47]. Accordingly, the Trustees appeal should be dismissed, on the basis that a CDE has arisen under clause 19(2) [54]. Lord Sumption, with whom Lord Clarke agrees, dissents on this point and considers that the ECNs are not redeemable because, notwithstanding their status as lower tier capital, they would be treated by the regulator as top tier capital in the hypothetical event that LBGs affairs deteriorated to the point where the conversion trigger was attained [55 62].

The issue surrounds out of country appeals. These are appeals against immigration decisions made by the Home Secretary which immigrants are entitled to bring before the First tier Tribunal (Immigration and Asylum Chamber) (the tribunal) but only if they bring them when they are outside the UK. Mr Kiarie, the first appellant, has Kenyan nationality. He is aged 23 and has lived in the UK with his parents and siblings since 1997, when he was aged three. In 2004 he was granted indefinite leave to remain in the UK. He has been convicted of serious offences in relation to drugs. Sent to him under cover of a notice dated 10 October 2014 was an order made by the Home Secretary for his deportation to Kenya. Mr Byndloss, the second appellant, has Jamaican nationality. He is aged 36 and has lived in the UK since the age of 21. In 2006 he was granted indefinite leave to remain in the UK. He has a wife and their four children living here; and he has three or four other children also living here. He has been convicted of a serious offence in relation to drugs. Sent to him under cover of a notice dated 6 October 2014 was an order made by the Home Secretary for his deportation to Jamaica. In deciding to make deportation orders against them, the Home Secretary rejected the claims of Mr Kiarie and Mr Byndloss that deportation would breach their right to respect for their private and family life under article 8 of the European Convention on Human Rights (the Convention). Mr Kiarie and Mr Byndloss have a right of appeal to the tribunal against her rejection of their claims and they propose to exercise it. But, when making the deportation orders, the Home Secretary issued certificates, the effect of which is that they can bring their appeals only after they have returned to Kenya and Jamaica. As I will explain in paras 33 and 55, it may well, for obvious reasons, be difficult for Mr Kiarie and Mr Byndloss to achieve success in their proposed appeals. But the question in these proceedings is not whether their appeals should succeed. It is: are the two certificates lawful? Yes, said the Court of Appeal (Richards LJ, who gave the substantive judgment, and Elias and McCombe LJJ, who agreed with it) on 13 October 2015, [2015] EWCA Civ 1020, [2016] 1 WLR 1961, when dismissing the applications of Mr Kiarie and Mr Byndloss for judicial review of the certificates. B: CERTIFICATION A requirement that some appeals against immigration decisions be brought out of country has been a feature of the legal system referable to immigration ever since the Immigration Act 1971 (the 1971 Act) came into force. An obvious example is when people abroad apply unsuccessfully to entry clearance officers in British embassies and High Commissions for entry clearance, ie permission to be admitted to the UK. They often have a right of appeal to the tribunal against the refusal of entry clearance and they are required to bring their appeals from abroad. But such appellants are already abroad; indeed their appeals are often in a narrow compass which surrounds their ability to satisfy the evidential (in particular the documentary) requirements of the Immigration Rules; their appeals do not usually include human rights claims and it is the oral evidence of their sponsors in the UK, rather than of themselves, which is often the more important. The situation is different when the proposed appeal is based on human rights and when the requirement to bring it from abroad is imposed on an appellant who is in the UK and who must therefore leave before he can bring it. The Home Secretary issued the two certificates which precipitated the present proceedings pursuant to a power conferred on her on 28 July 2014, when section 94B of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act), which had been inserted into it by section 17(3) of the Immigration Act 2014 (the 2014 Act), came into force. Until 30 November 2016, section 94B provided: (1) This section applies where a human rights claim has been made by a person (P) who is liable to deportation under (a) section 3(5)(a) of the Immigration Act 1971 (Secretary of State deeming deportation conducive to public good), or (b) (2) The Secretary of State may certify the claim if the Secretary of State considers that, despite the appeals process not having been begun or not having been exhausted, removal of P to the country or territory to which P is proposed to be removed, pending the outcome of an appeal in relation to Ps claim, would not be unlawful under section 6 of the Human Rights Act 1998 (public authority not to act contrary to Human Rights Convention). (3) The grounds upon which the Secretary of State may certify a claim under subsection (2) include (in particular) that P would not, before the appeals process is exhausted, face a real risk of serious irreversible harm if removed to the country or territory to which P is proposed to be removed. With effect from 1 December 2016, section 94B of the 2002 Act (to which I will refer simply as section 94B) has been amended by section 63 of the Immigration Act 2016 so as to extend the Home Secretarys power to certify under the section. Since then she has had power to certify any human rights claim irrespective of whether the claimant is liable to deportation. The extended power does not fall to be considered in these appeals but our decision today will surely impact on the extent of its lawful exercise. C: THE STATUTORY CONTEXT OF SECTION 94B Section 3(5)(a) of the 1971 Act provides that a person who is not a British citizen is liable to deportation from the UK if the Home Secretary deems his deportation to be conducive to the public good. Section 32(4) of the UK Borders Act 2007 (the 2007 Act) provides that, for the purpose of section 3(5)(a) of the 1971 Act, the deportation of a foreign criminal is conducive to the public good. Section 32(1) and (2) defines a foreign criminal as a person who is not a British citizen and who is convicted in the UK of an offence for which he is sentenced to a period of imprisonment of at least 12 months. My future references to a foreign criminal will be to a person as thus defined. Section 32(5) of the 2007 Act provides that, unless an exception specified in section 33 applies and therefore, in particular, unless his removal would breach his rights under the Convention, the Home Secretary must make a deportation order in respect of a foreign criminal. At the material times, section 82(1) and (3A) of the 2002 Act provided that, where a deportation order in respect of a person was stated to have been made in accordance with section 32(5) of the 2007 Act, he might appeal to the tribunal. By section 82(4), however, the right of appeal was subject to limitations. One limitation, relevant to the present appeals, arose in the conjunction of section 92(1) and (4)(a) of the 2002 Act with section 94(1) and (2) of it. Section 92(1) provided that an appeal under section 82 could not be brought while the appellant was in the UK unless it fell within one of the exceptions specified in later subsections. Subsection (4)(a) specified one exception, namely where the appellant had made a human rights claim while in the UK. Section 94(1) and (2), however, provided that an appellant could not rely on section 92(4)(a), ie in order to be entitled to bring his appeal from within the UK, if the Home Secretary certified that his human rights claim was clearly unfounded. But another limitation is of even greater relevance to the present appeals. This was the provision which accompanied the coming into force of section 94B on 28 July 2014. The provision was that, where under that section the Home Secretary certified a human rights claim made by a person liable to deportation, his appeal could be brought only from outside the UK. In relation to the deportation orders made in relation to Mr Kiarie on 10 October 2014 and to Mr Byndloss on 6 October 2014, such was the effect of article 4 of the Immigration Act 2014 (Commencement No 1, Transitory and Saving Provisions) Order 2014 (SI 2014/1820), continued by article 15 of a third commencement order (SI 2014/2771). In relation to deportation orders made on or after 20 October 2014, such was the effect of section 92(3)(a) of the 2002 Act. There is no right of appeal to the tribunal against a certification under section 94B. As these proceedings show, the challenge is by way of judicial review. D: MR KIARIE In January 2014, when aged 20, Mr Kiarie received a suspended sentence of imprisonment for two years for the offence of possessing Class A drugs with intent to supply. In May 2014 the suspended sentence was activated following further convictions for possession of Class A and Class B drugs. By letter dated 22 July 2014, the Home Secretary informed Mr Kiarie, who was detained in a Young Offender Institution, that his deportation to Kenya would be conducive to the public good, that he was therefore liable to deportation and that she was required to make a deportation order against him unless one of the exceptions in section 33 of the 2007 Act applied. She enclosed a questionnaire and invited him to complete and return it. Mr Kiarie did so: he claimed that his deportation would breach his human rights because it would separate him from his family and remove him to a place where he had no family, no place of residence and no means of fending for himself. By the notice to Mr Kiarie dated 10 October 2014, the Home Secretary rejected his claim that deportation would breach his human rights, in particular under article 8 of the Convention. She said that she accepted neither that he was socially and culturally integrated into the UK nor that there would be significant obstacles to his reintegration into Kenya nor that there were any very compelling circumstances which outweighed the public interest in his deportation. Nevertheless she did not certify that Mr Kiaries claim was clearly unfounded; the length of his life in the UK was probably thought to preclude her doing so. Prior to 10 October 2014 the Home Secretary had not invited Mr Kiarie to address whether she should exercise her new power under section 94B. In the notice of that date, however, she said as follows: 45. Consideration has been given to whether your article 8 claim should be certified under section 94B The Secretary of State has considered whether there would be a real risk of serious irreversible harm if you were to be removed pending the outcome of any appeal you may bring It is acknowledged that your parents and siblings are in 46. the United Kingdom. However, any relationships you may have with family members can be continued through modern means of communication upon your return to Kenya. There is nothing to suggest that you would be unable to obtain employment in Kenya. You are 20 years old and have no serious medical conditions. Furthermore, any skills/qualifications you have gained in the United Kingdom can only serve to assist you in finding employment in Kenya. It is noted that English is one of the official languages of Kenya and therefore it is considered that there would be no communication barriers upon your return. 47. For all the above reasons, it is not accepted that you face a real risk of serious irreversible harm if removed to Kenya while you pursue your appeal against deportation, should you choose to exercise that right. Therefore, it has been decided to certify your article 8 claim under section 94B and any appeal you may bring can only be heard once you have left the United Kingdom. E: MR BYNDLOSS In May 2013, when aged 32, Mr Byndloss was sentenced to imprisonment for three years for the offence of possessing Class A drugs with intent to supply. By letter dated 21 June 2013, the Home Secretary informed Mr Byndloss, who was in prison, that he was liable to deportation and that she was required to make a deportation order against him unless one of the exceptions in section 33 of the 2007 Act applied. She enclosed the same questionnaire later sent to Mr Kiarie. Under cover of a letter to the Home Office dated 4 October 2013, solicitors for Mr Byndloss returned the questionnaire which he had partially completed. He said little more than that in 2004 he had married a British woman living in England, by whom he had sons then aged eight, six and two and a daughter whose age he did not identify; that, by a second partner living here, he had sons then aged three and eight months and a daughter then aged two; and that, by a third partner living here, he had a daughter whose age he did not identify. The solicitors also enclosed letters from Mr Byndloss and from two of the mothers of his children and other witnesses, and birth certificates relating to six of the children; and the solicitors explained that they had had only a limited opportunity to assist Mr Byndloss and that he was claiming that deportation would breach his rights under article 8 of the Convention. It was more than a year later, namely on 6 October 2014, that the Home Secretary sent notice of her decision to Mr Byndloss, who remained in prison and who in the interim had sent further information to her. By the notice, she rejected his claim that deportation would breach his rights under article 8; and she enclosed the deportation order. She acknowledged that he was the father of the seven children by his wife and by his second partner but did not accept that he had a genuine and subsisting relationship with any of them. She said that, pursuant to section 55(1) and (2) of the Borders, Citizenship and Immigration Act 2009 (the 2009 Act), she had, in making her decision, had regard to the need to safeguard and promote the welfare of the children, including also that of the eighth child in case, which had not been demonstrated, she was indeed his daughter. Nevertheless the Home Secretary did not certify that Mr Byndloss claim was clearly unfounded; the existence of his children in the UK was probably thought to preclude her doing so. One of the consequences of the long unexplained delay in the Home Secretarys determination of Mr Byndloss claim was that in the interim section 94B had come into force. Although she had not at any time invited him to address whether she should exercise the new power, she explained in the notice dated 6 October 2014 that she had decided to do so. She concluded her reference to the section as follows: Consideration has been given to whether your article 8 claim should be certified under section 94B The Secretary of State has considered whether there would be a real risk of serious irreversible harm if you were to be removed pending the outcome of any appeal you may bring. The Secretary of State does not consider that such a risk exists. Therefore, it has been decided to certify your article 8 claim under section 94B and any appeal you may bring can only be heard once you have left the United Kingdom. In November 2014 Mr Byndloss issued an application for judicial review of the certificate under section 94B. He filed witness statements which gave further details about his relationship with the eight children; but at that time he was still detained, albeit in an immigration removal centre following completion of his sentence. Permission to apply for judicial review was refused in the High Court but he secured permission to appeal against the refusal; and the hearing of his appeal, together with that of Mr Kiarie who had also been refused permission to apply for judicial review of the certificate referable to him, was fixed to take place in the Court of Appeal on 23 September 2015. Less than three weeks before that hearing, namely on 3 September 2015, the Home Secretary sent to Mr Byndloss a 21 page letter which she described as supplementary to the decision dated 6 October 2014 but which she claimed to incorporate her entire reasoning. In effect it replaced the earlier notice and amounted to a fresh, up to date, decision to reject Mr Byndloss claim. She noted that in April 2015 he had been released from immigration detention and that he had therefore been incarcerated, in all, for 705 days. She maintained, contrary to prison records by then already provided to her, that there was no evidence that the four children of the marriage had visited him in prison. Following a detailed analysis she maintained her refusal to accept that he had a genuine or subsisting relationship with any of the eight children or that he played any meaningful parental role in their lives. In the letter dated 3 September 2015 the Home Secretary also reiterated her decision to certify Mr Byndloss claim under section 94B. But she expressed her reasons for doing so differently. She expanded her explanation in order to address the alleged difficulties in bringing an appeal from Jamaica to which Mr Byndloss had referred in the proceedings. She said that if necessary he could give evidence from there by video link; that the proposed evidence about his relationship with the children could be given orally by their mothers and in a written statement by himself; and that his concern to be able to react to whatever might be said against him at the hearing could be met by his study of her skeleton argument, by which he could in advance discern what would be said. She referred, as before, to her duty under section 55 of the 2009 Act; but she now placed her reference to it in the specific context of her function under section 94B. Her central conclusion was as follows: The Secretary of State does not consider that your removal pending the outcome of any appeal would be unlawful under section 6 of the Human Rights Act 1998 and considers that there is no real risk of serious irreversible harm in your case. It is considered that your removal pending your appeal would be proportionate in all the circumstances. In the days between receipt of the letter dated 3 September 2015 and the hearing in the Court of Appeal Mr Byndloss, by his solicitors, filed a mass of evidence intended to contradict some of what the Home Secretary had said in the course of it. In particular he filed a lengthy report by an independent social worker to the effect that following his release Mr Byndloss had had frequent contact with all eight children; had resumed a loving and committed relationship with each of them; and had maintained a good relationship with their mothers. In the event the Court of Appeal resolved to treat the Home Secretarys letter dated 3 September 2015 as the decision under challenge in Mr Byndloss appeal but not to consider the evidence filed subsequently on his behalf. In this connection it accepted an offer by the Home Secretary that, were his appeal dismissed, she would consider the new evidence when making yet a further determination whether to certify the claim under section 94B. On any view, however, the courts treatment of the letter dated 3 September 2015 as the decision under challenge cut away aspects of the argument proposed to be advanced on behalf of Mr Byndloss, including in particular an argument that the certification dated 6 October 2014 had run counter to published policy which had governed the use of section 94B during the initial 11 weeks for which it had been in force. Following delivery of the judgments of the Court of Appeal in the present case, a different constitution of that court has delivered valuable judgments relating to the difficulty which confronts courts and tribunals when deciding how to treat supplementary decision letters sent by the Home Secretary, often shortly before a hearing: R (Caroopen) v Secretary of State for the Home Department [2016] EWCA Civ 1307. Mr Byndloss does not suggest, and has never suggested, that it was wrong for the Court of Appeal to treat the letter dated 3 September 2015 as the more material decision by then under challenge; but, had the guidance in the Caroopen case been available to it, the court might have been more concerned to address the disadvantage which he had suffered as a result of the Secretary of States last minute reconstitution of the issues. F: OBJECTIVES OF SECTION 94B On 30 September 2013, at the Conservative Party Conference, the Home Secretary said: Where there is no risk of serious and irreversible harm, we should deport foreign criminals first and hear their appeals later. An Immigration Bill was swiftly laid before Parliament and clause 12 of it provided for the insertion of section 94B into the 2002 Act. The Bill had not been preceded by a green paper or other form of consultation. An Impact Assessment of the Bill, dated 14 October 2013, described the objective of the proposed insertion as the removal of unnecessary delay in the determination of appeals. On 22 October 2013, in proposing the second reading of the Bill, the Home Secretary said (HC Deb, vol 569, col 161): Foreign criminals will not be able to prevent deportation simply by dragging out the appeals process, as many such appeals will be heard only once the criminal is back in their home country. It cannot be right that criminals who should be deported can remain here and build up a further claim to a settled life in the United Kingdom. On 5 November 2013, when attending on the Public Bill Committee, the Minister for Immigration said (Immigration Bill Deb 5, cols 205, 206): The new power is to help to speed up the deportation of harmful individuals, including foreign criminals many people use the appeal mechanism not because they have a case but to delay their removal from the United Kingdom. In some cases, they attempt to build up a human rights based claim under article 8, which they subsequently use, sometimes successfully, to prevent their departure. Thus the specific, linked objectives of section 94B were alleged to have been to reduce delay in the determination by the tribunal of human rights appeals and to prevent an appellants abuse of the system by seeking to strengthen his claim during the pendency of his appeal. But, as the Secretary of State no doubt correctly submits, there was also a more fundamental objective, arising from the very fact that the potential subjects of certification were very largely, like the two appellants, foreign criminals. The deportation of a foreign criminal is conducive to the public good. So said Parliament in enacting section 32(4) of the 2007 Act: see para 11 above. Parliaments unusual statement of fact was expressed to be for the purpose of section 3(5)(a) of the 1971 Act so its consequence was that every foreign criminal became automatically liable to deportation. Parliaments statement exemplifies the strong public interest in the deportation of foreign nationals who have committed serious offences: Ali v Secretary of State for the Home Department [2016] UKSC 60, [2016] 1 WLR 4799, para 14, Lord Reed. In the Ali case the court was required to identify the criterion by reference to which the tribunal should determine an appeal of a foreign criminal on human rights grounds against a deportation order. The decision was that the public interest in his deportation was of such weight that only very compelling reasons would outweigh it: see paras 37 and 38, Lord Reed. The Home Secretary submits that the strong public interest in the deportation of foreign criminals extends to their deportation in advance of their appeals. Her submission found favour in the Court of Appeal. In para 44 of his judgment Richards LJ observed that the very fact of Parliaments enactment of section 94B exemplified the public interest in deportation even in that situation; that therefore substantial weight must be attached to that public interest in that context too; and that, in assessing the proportionality of a certificate, the public interest is not a trump card but it is an important consideration in favour of removal. Notwithstanding the respect which over many years this court has developed for the opinions of Richards LJ, particularly in this field, I disagree with his observations. I have explained in para 31 above that one aspect of this public interest is said to be a concern that, if permitted to remain in the UK pending his appeal, a foreign criminal might seek to delay its determination in order to strengthen his personal and family connections here. But the tribunal will be alert not to allow objectively unwarranted delay. A somewhat stronger aspect of the public interest is the risk that, if permitted to remain pending his appeal, the foreign criminal would, however prejudicially to its success, take that opportunity to re offend. To that extent there is a public interest in his removal in advance of the appeal. But in my view that public interest may be outweighed by a wider public interest which runs the other way. I refer to the public interest that, when we are afforded a right of appeal, our appeal should be effective. To be set alongside Parliaments enactment of section 94B was its enactment of section 82(1) and (3A) of the 2002 Act, by which it gave a foreign criminal a right of appeal against the deportation order: see para 13 above. In published guidance to her case workers the Home Secretary has made clear that there is no need to consider certification of a claim under section 94B if it can be certified under section 94, as to which see para 14 above. So, as exemplified in the cases of Mr Kiarie and Mr Byndloss, a certificate under section 94B is of a human rights claim which is not clearly unfounded, which in other words is arguable. In my view therefore the public interest in a foreign criminals removal in advance of an arguable appeal is outweighed unless it can be said that, if brought from abroad, the appeal would remain effective: as to which, see section I below. G: ANALYSIS OF SECTION 94B It is clear, for example from the Home Secretarys announcement to her partys conference set out at para 31 above, that the initial conception was of a power to require a foreign criminal to bring his appeal from abroad in all cases in which his removal created no risk that he would suffer serious irreversible harm. The criterion of serious irreversible harm was drawn from the practice of the European Court of Human Rights (the ECtHR) when it considers whether to indicate an interim measure under rule 39 of its Rules of Court: if, for, example, an applicant who is challenging a decision to deport or extradite him would face an imminent risk of irreparable damage if removed in advance of determination of the application, the ECtHR may indicate that it should not take place: Mamatkulov v Turkey (2005) 41 EHRR 494, para 104. There is clearly a parallel between the power of the ECtHR under rule 39 and the Home Secretarys power of certification under section 94B; but the parallel is not exact, if only because the demands made of an appellant in adducing evidence to a UK tribunal in an appeal against a deportation order, to which I will refer in para 55 below, have no parallel in those made of an applicant in pursuing an application before the ECtHR. For whatever reason, Parliament wisely decided that the overarching criterion for certification under section 94B should be that removal pending appeal would not breach the claimants human rights and that the real risk of serious irreversible harm should be only an example of when such a breach would occur. Subsections (2) and (3) might be thought to have made this clear but unfortunately it was made far from clear to case workers. Guidance issued by the Home Office entitled Section 94B certification guidance for Non European Economic Area deportation cases, in both its first version dated July 2014 and its second version dated 20 October 2014, stated: Section 94B allows a human rights claim to be certified where the appeal process has not yet begun or is not yet exhausted where it is considered that the person liable to deportation would not, before the appeal process is exhausted, face a real risk of serious irreversible harm if removed to the country of return. So it is easy to understand why the certification of Mr Kiaries claim on 10 October 2014 and the first certification of Mr Byndloss claim on 6 October 2014 were both expressly based on a conclusion that they would not face a real risk of serious irreversible harm if removed to Kenya and Jamaica in advance of any appeal: see paras 20 and 25 above. In the Court of Appeal Richards LJ inevitably held that those two certifications were based on a legal misdirection. He proceeded to hold, however, that the misdirection in Mr Kiaries case had not been material because, even had she applied the overarching criterion, the Home Secretary would still have certified his claim; and that the misdirection in the first certification of Mr Byndloss claim had been cured by a correct direction in the second certification of it. Earlier Richards LJ had observed: There may in practice be relatively few cases where removal for an interim period pending an appeal would be in breach of Convention rights in the absence of a risk of serious irreversible harm, but it is a possibility which must be focused on as a necessary part of the decision making process. With respect, I would not associate myself with this observation of Richards LJ. It would lull case workers into thinking that they would be safe to concentrate on weighing a real risk of serious irreversible harm to the prospective appellant himself. But, as I will explain, a specific focus on the risk of serious harm to the prospects of his appeal might very well ground a conclusion that his removal in advance of it would breach his Convention rights. Any analysis of section 94B must also include reference to the discretion which it confers on the Home Secretary not to certify the claim even when she concludes that to do so would not breach Convention rights. No doubt its exercise will be rare. H: JUDICIAL REVIEW OF CERTIFICATION In their proposed appeals to the tribunal Mr Kiarie and Mr Byndloss will argue that their deportation would breach their rights under article 8. In the present proceedings for judicial review they argue analogously that their deportation in advance of their proposed appeals would breach their rights under article 8. Although the focus of the two inquiries is different, should the judicial approach to the Home Secretarys respective decisions be different? After all, both the tribunal when it hears the appeals and the court or tribunal when it hears the applications for judicial review are public authorities, which act unlawfully if they act in a way which is incompatible with a Convention right: section 6(1) of the Human Rights Act 1998 (the 1998 Act). When on an appeal the tribunal considers an argument that deportation would breach the appellants Convention rights, for example under article 8, its approach to the Home Secretarys decision is not in doubt. It was recently explained by Lord Reed in the Ali case, cited at para 33 above, in paras 39 to 50. In summary, the tribunal must decide for itself whether deportation would breach the appellants Convention rights; in making that decision, it can depart from findings of fact made by the Home Secretary and indeed can hear evidence and make findings even about matters arising after her decision was made (section 85(4) of the 2002 Act); and, in making that same decision, it must assess for itself the proportionality of deportation, albeit attaching considerable weight to the considerations of public policy upon which the Home Secretary has relied and to any other part of her reasoning which, by virtue of her position and her special access to information, should carry particular authority. There is no doubt that, in proceedings for judicial review of a certificate under section 94B, the court or tribunal must also decide for itself whether deportation in advance of the appeal would breach the applicants Convention rights. There is no doubt that, in making that decision, it must assess for itself the proportionality of deportation at that stage. As Lord Neuberger of Abbotsbury said in the proceedings for judicial review in R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2014] UKSC 60, [2015] AC 945, at para 67: where human rights are adversely affected by an executive decision, the court must form its own view on the proportionality of the decision, or what is sometimes referred to as the balancing exercise involved in the decision. Lord Neuberger proceeded, however, to add a qualification referable to the degree of respect to be afforded to the judgment in that regard of the primary decision maker; and he did so along the lines of the last part of my summary in para 42 above. The issue which arises relates to the courts treatment of the Home Secretarys findings of fact when it comes to decide for itself whether deportation in advance of the appeal would breach the applicants human rights. To what extent should it inherit and adopt them? In the Court of Appeal Richards LJ said of the Home Secretary: In my judgment, her findings of fact are open to review on normal Wednesbury principles, applied with the anxious scrutiny appropriate to the context: R (Giri) v Secretary of State for the Home Department [2015] EWCA Civ 784 In the Giri case, now reported at [2016] 1 WLR 4418, the issue was whether the Home Secretary had been entitled to refuse to grant the applicant leave to remain in the UK. She had been entitled to do so if, in making his application for leave, he had failed to disclose a material fact. She found as a fact that he had failed to do so. The Court of Appeal applied the Wednesbury criterion in holding that her finding of fact had not been unreasonable. The difficulty is that the Giri case did not engage the courts duty under section 6 of the 1998 Act. In Manchester City Council v Pinnock (Nos 1 and 2) [2010] UKSC 45, [2011] UKSC 6, [2011] 2 AC 104, a tenant of a house owned by a local authority argued that possession of the house pursuant to the order which it sought against him would breach his rights under article 8. This court held at para 74 that: where it is required in order to give effect to an occupiers article 8 Convention rights, the courts powers of review can, in an appropriate case, extend to reconsidering for itself the facts found by a local authority, or indeed to considering facts which have arisen since the issue of proceedings, by hearing evidence and forming its own view. In the Lord Carlile case, cited at para 43 above, Lord Sumption said, more broadly, at para 30: when it comes to reviewing the compatibility of executive decisions with the Convention, there can be no absolute constitutional bar to any inquiry which is both relevant and necessary to enable the court to adjudicate. Even when elevated by the protean concept of anxious scrutiny, application of the Wednesbury criterion to the right to depart from the Home Secretarys findings of fact (including any refusal to make such findings) in the course of a judicial review of her certificate under section 94B is in my opinion inapt. If it is to discharge its duty under section 6 of the 1998 Act, the court may need to be more proactive than application of the criterion would permit. In many cases the court is likely to conclude that its determination will not depend on the Home Secretarys findings of fact or that, if it does, her findings are demonstrably correct and should not be revisited. Take the case of Mr Byndloss. He contends that, even by reference only to the evidence before her on 3 September 2015, she was wrong, by her letter of that date, to refuse to accept his contention that he had a genuine or subsisting relationship with any of his children. I will explain why, in my view, his application for judicial review can be determined without the need for a court to inquire into the correctness of her refusal to accept his contention. But, even in the course of a judicial review, the residual power of the court to determine facts, and to that end to receive evidence including oral evidence, needs to be recognised. I: THE REQUIREMENTS OF ARTICLE 8 At last I can begin to address the central issue. But, in answering the question did the certificates breach the rights of the appellants under article 8?, the first task is to identify what, in this context of proposed deportation in advance of an appeal, article 8 requires. In Al Nashif v Bulgaria (2003) 36 EHRR 655 the Bulgarian authorities had deported the first applicant to Syria on grounds of national security. When prior to his deportation he had sought to appeal against the deportation order, the court had ruled that, inasmuch as it was on grounds of national security, the order was not open to appeal. The ECtHR held that the deportation had interfered with the first applicants right to respect for his family life and that it followed from the absence of any facility to appeal against the order that the interference was not in accordance with the law within the meaning of article 8(2). It held: 123. Even where national security is at stake, the concepts of lawfulness and the rule of law in a democratic society require that measures affecting fundamental human rights must be subject to some form of adversarial proceedings before an independent body competent to review the reasons for the decision and relevant evidence, if need be with appropriate procedural limitations on the use of classified information. So the court held that Bulgaria had breached the first applicants rights under article 8. It proceeded to hold, separately, that it had breached his rights under article 13 of the Convention in conjunction with article 8. Article 13 provides: Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity. When domestic UK courts are asked to determine allegations of breach of Convention rights, it is of no consequence to them that article 13 was omitted from the articles included in Schedule 1 to the 1998 Act. The right to an effective remedy for breaches of the substantive Convention rights is generally recognised elsewhere in the 1998 Act (Brown v Stott (Procurator Fiscal, Dunfermline) [2003] 1 AC 681, 715, Lord Hope of Craighead) and indeed, in the case of the present appellants, has been specifically recognised by the grant of a right of appeal under section 82 of the 2002 Act. In subsequent decisions the ECtHR seems to have preferred to locate the right to an effective remedy for breach of article 8 within article 13 rather than within the phrase in accordance with the law in article 8(2). The leading authority, recently indorsed in Khlaifia v Italy, Application No 16483/12, is De Souza Ribeiro v France (2014) 59 EHRR 454. A Brazilian man was arrested in French Guiana and ordered to be removed on the basis that his presence there was illegal. On the day following his arrest he filed an application for judicial review of the order but, later on that very day, he was removed to Brazil. The Grand Chamber of the ECtHR held that France had breached his right under article 13 in conjunction with article 8. He had argued that, whenever an order for removal was challenged by reference to article 8, article 13 required an automatic suspension of the removal pending determination of the challenge, just as when the challenge was by reference to articles 2 or 3. But the Grand Chamber declined to go so far. It held: 83. By contrast [to challenges under articles 2 or 3], where expulsions are challenged on the basis of alleged interference with private and family life, it is not imperative, in order for a remedy to be effective, that it should have automatic suspensive effect. Nevertheless, in immigration matters, where there is an arguable claim that expulsion threatens to interfere with the aliens right to respect for his private and family life, article 13 in conjunction with article 8 of the Convention requires that states must make available to the individual concerned the effective possibility of challenging the deportation or refusal of residence order and of having the relevant issues examined with sufficient procedural safeguards and thoroughness by an appropriate domestic forum offering adequate guarantees of independence and impartiality. There was a powerful concurring opinion to the effect that article 13 did require automatic suspension of the order when removal would allegedly put migrants in danger of irreversible damage to their family lives (para OII 21). But the jurisprudence of the ECtHR seems to be clear that the facility for challenge has to be effective; an effective facility for challenge will not automatically require (a) (b) suspension of the removal order; and (c) whether its suspension is required in order to make the facility effective will depend on the circumstances. In R (Gudanaviciene) v Director of Legal Aid Casework [2014] EWCA Civ 1622, [2015] 1 WLR 2247, the Court of Appeal, by a judgment delivered by Lord Dyson MR, also, albeit by a different route, reached the conclusion that article 8 required that an appeal against a deportation order by reference to it should be effective. The court (a) cited at para 65 the decision of the ECtHR in W v United Kingdom (1987) 10 EHRR 29, para 64, to the effect that article 8 required that parents who had sought contact with a child in care should have been involved in the decision making process to a degree sufficient to provide the requisite protection of their interests; (b) held at para 69 that the same requirement applied to article 8 claims by immigrants; and (c) to the tribunal should be effective. concluded at para 70 that it amounted to a requirement that their access J: BACKGROUND TO THE CIRCUMSTANCES The relevant circumstances must be considered against four features of the background. The first is that the proposed deportations would be events of profound significance for the future lives of Mr Kiarie, his parents and siblings; and of Mr Byndloss and, to the extent that he has or might otherwise develop a genuine relationship with them, also of his children. In the absence of exceptional circumstances the Home Secretary would not even consider whether to readmit either of the appellants to the UK within ten years of the date of the deportation orders: para 391(a) of the Immigration Rules, HC 395 (as amended). The second is that, in the absence of certificates that they are clearly unfounded, the proposed appeals of these appellants must be taken to be arguable: see para 35 above. The third is that, particularly in the light of this courts decision in the Ali case, every foreign criminal who appeals against a deportation order by reference to his human rights must negotiate a formidable hurdle before his appeal will succeed: see para 33 above. He needs to be in a position to assemble and present powerful evidence. I must not be taken to be prescriptive in suggesting that the very compelling reasons which the tribunal must find before it allows an appeal are likely to relate in particular to some or all of the following matters: the quality of his relationship with any child, partner or other family the depth of the appellants integration in UK society in terms of (a) family, employment and otherwise; (b) member in the UK; the extent to which any relationship with family members might (c) reasonably be sustained even after deportation, whether by their joining him abroad or otherwise; (d) welfare of any child in the UK; (e) the country of his nationality; and, surely in every case, (f) any significant risk of his re offending in the UK, judged, no doubt with difficulty, in the light of his criminal record set against the credibility of his probable assertions of remorse and reform. the impact of his deportation on the need to safeguard and promote the the likely strength of the obstacles to his integration in the society of The fourth is that the authority responsible for having directed the dramatic alteration in the circumstances of the appellant even in advance of his appeal is the respondent to the appeal herself. In R (Detention Action) v First tier Tribunal (Immigration and Asylum Chamber) [2015] EWCA Civ 840, [2015] 1 WLR 5341, the Court of Appeal upheld the quashing of Fast Track Rules which, in particular, required asylum seekers, if detained by the Home Secretary at specified locations, to present any appeal against the refusal of asylum within seven days of the refusal. Having referred in para 27 of his judgment to the principle that only the highest standards of fairness will suffice in the context of asylum appeals, Lord Dyson explained at para 38 that the timetable for the conduct of the appeals was so tight that a significant number of appellants would be denied a fair opportunity to present them. He explained at paras 46 to 48 that in those circumstances the court had no need to address a further argument that it had been in breach of natural justice for the Home Secretary, as the respondent to any appeal, to have been able, by detaining the asylum seeker at a specified location, to cause him to be placed into the fast track. Lord Dyson suggested, however, that, had the rules for the fast track been fair, it would have been irrelevant that it was the Home Secretary who had caused them to be engaged. I respectfully agree. But the role of the respondent to the proposed appeals in seeking to achieve the removal of the appellants in advance of their determination, taken in conjunction with the first three of the background features set out above, requires this court to survey punctiliously, and above all realistically, whether, if brought from abroad, their appeals would remain effective. For that is what their human rights require. K: WEAKENING THE ARGUMENTS ON THE APPEAL On an appeal against a deportation order the overarching issue for the tribunal will be whether the deportation would be lawful. But, if the certificate under section 94B is lawful, the appellant will already have been deported. In determining the overarching issue the tribunal will be likely to address in particular the depth of his integration in UK society and the quality of his relationships with any child, partner or other family member: see para 55 (a) and (b) above. But, were the certificate under section 94B lawful, his integration in UK society would already have been cut away; and his relationships with them ruptured. Statistics now produced by the Home Secretary, which the appellants consider to be surprisingly optimistic, suggest that an appeal brought from abroad is likely to be determined within about five months of the filing of the notice. So, by the time of the hearing, an appellant, if deported pursuant to a certificate, will probably have been absent from the UK for a minimum of five months. No doubt the tribunal will be alert to remind itself of its duty to set aside the deportation order and thus to enable an appellant to re enter the UK if his human rights were so to require. But, by reason of his deportation pursuant to a certificate, his human rights are less likely so to require! It is one thing further to weaken an appeal which can already be seen to be clearly unfounded. It is quite another significantly to weaken an arguable appeal: such is a step which calls for considerable justification. The Home Secretary argues that, by definition, the foreign criminal will have been in prison, perhaps also later in immigration detention, in the UK and so he will already have suffered both a loosening of his integration, if any, in UK society and, irrespective of any prison visits, an interruption of his relationship with family members. I agree; but in my view the effect of his immediate removal from the UK on these two likely aspects of his case would probably be significantly more damaging than that of his prior incarceration here. For present purposes, however, I put these substantial concerns aside. In my view what is crucial to the disposal of these appeals is the effect of a certificate under section 94B in obstructing an appellants ability to present his appeal. L: OBSTRUCTING PRESENTATION OF THE APPEAL The first question is whether an appellant is likely to be legally represented before the tribunal at the hearing of an appeal brought from abroad. Legal aid is not generally available to an appellant who contends that his right to remain in the UK arises out of article 8: para 30, Schedule 1 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012. So, in order to obtain legal aid, he must secure an exceptional case determination under section 10 of that Act. Although an appeal brought from abroad is in principle as eligible for such a determination as an appeal brought from within the UK, the determination cannot be made unless either the absence of legal aid would breach his rights under article 8 or it might breach them and provision of it is appropriate in all the circumstances: section 10(3). It suffices to say for present purposes that it is far from clear that an appellant relying on article 8 would be granted legal aid. One can say only that, were he required to bring his appeal from abroad, he might conceivably be represented on legal aid; that alternatively he might conceivably have the funds to secure private legal representation; that alternatively he might conceivably be able to secure representation from one of the specialist bodies who are committed to providing free legal assistance to immigrants (such as Bail for Immigration Detainees: see para 70 below); but that possibly, or, as many might consider, probably, he would need to represent himself in the appeal. Even if an appellant abroad secured legal representation from one source or another, he and his lawyer would face formidable difficulties in giving and receiving instructions both prior to the hearing and in particular (as I will explain) during the hearing. The issue for this court is not whether article 8 requires a lawyer to be made available to represent an appellant who has been removed abroad in advance of his appeal but whether, irrespective of whether a lawyer would be available to represent him, article 8 requires that he be not removed abroad in advance of it. The next question is whether, if he is to stand any worthwhile chance of winning his appeal, an appellant needs to give oral evidence to the tribunal and to respond to whatever is there said on behalf of the Home Secretary and by the tribunal itself. By definition, he has a bad criminal record. One of his contentions will surely have to be that he is a reformed character. To that contention the tribunal will bring a healthy scepticism to bear. He needs to surmount it. I have grave doubts as to whether he can ordinarily do so without giving oral evidence to the tribunal. In a witness statement he may or may not be able to express to best advantage his resolution to forsake his criminal past. In any event, however, I cannot imagine that, on its own, the statement will generally cut much ice with the tribunal. Apart from the assistance that it might gain from expert evidence on that point (see para 74 below), the tribunal will want to hear how he explains himself orally and, in particular, will want to assess whether he can survive cross examination in relation to it. Another strand of his case is likely to be the quality of his relationship with others living in the UK, in particular with any child, partner or other family member. The Home Secretary contends that, at least in this respect, it is the evidence of the adult family members which will most assist the tribunal. But I am unpersuaded that the tribunal will usually be able properly to conduct the assessment without oral evidence from the appellant whose relationships are under scrutiny; and the evidence of the adult family members may either leave gaps which he would need to fill or betray perceived errors which he would seek to correct. When the power to certify under section 94B was inserted into the 2002 Act, an analogous power was inserted into the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the 2006 Regulations), now recently replaced. Regulation 24AA(2) enabled the Home Secretary to add to an order that an EEA national be deported from the UK a certificate that his removal pending any appeal on his part would not be unlawful under section 6 of the 1998 Act. But regulation 24AA(4) enabled him to apply to the appropriate court or tribunal (whether by means of judicial review or otherwise) for an interim order to suspend enforcement of the removal decision. In Secretary of State for the Home Department v Gheorghiu [2016] UKUT 24 (IAC), the Upper Tribunal (Blake J and UTJ Goldstein) observed at para 22 that, on an application for an order to suspend enforcement, the court or tribunal would take due account of four factors. The fourth was that in cases where the central issue is whether the offender has sufficiently been rehabilitated to diminish the risk to the public from his behaviour, the experience of immigration judges has been that hearing and seeing the offender give live evidence and the enhanced ability to assess the sincerity of that evidence is an important part of the fact finding process It is also worthwhile to note that, even if an EEA national was removed from the UK in advance of his appeal, he had, save in exceptional circumstances, a right under regulation 29AA of the 2006 Regulations (reflective of article 31(4) of Directive 2004/58/EC) to require the Home Secretary to enable him to return temporarily to the UK in order to give evidence in person to the tribunal. The Home Secretary submits to this court that the fairness of the hearing of an appeal against deportation brought by a foreign criminal is highly unlikely to turn on the ability of the appellant to give oral evidence; and that therefore the determination of the issues raised in such an appeal is likely to require his live evidence only exceptionally. No doubt this submission reflects much of the thinking which led the Home Secretary to propose the insertion of section 94B into the 2002 Act. I am, however, driven to conclude that the submission is unsound and that the suggested unlikelihood runs in the opposite direction, namely that in many cases an arguable appeal against deportation is unlikely to be effective unless there is a facility for the appellant to give live evidence to the tribunal. But in any event, suggests the Home Secretary, there is, in each of two respects, a facility for an appellant in an appeal brought from abroad to give live evidence. The first suggested respect was the subject of a curious submission on the part of the Home Secretary to the Court of Appeal. It was that from abroad the appellant could apply for, or that the tribunal could on its own initiative issue, a summons requiring his attendance as a witness at the hearing pursuant to rule 15(1) of the Tribunal Procedure (First tier Tribunal) (Immigration and Asylum Chamber) Rules 2014 (SI 2014/2604) (the 2014 Rules). The curiosity of the submission is that such a summons is not enforceable in respect of a person outside the UK. Nevertheless the Court of Appeal held that the issue of a summons would be a legitimate way of putting pressure on the Home Secretary to allow the appellant to return to the UK to give oral evidence. Before this court the Home Secretary does not continue to contend for the suitability of a summons under rule 15(1). She nevertheless suggests that the tribunal could, by direction, stress the desirability of the appellants attendance before it and that, were she thereupon to fail to facilitate his attendance, the appellant could seek judicial review of the certificate under section 94B and, if successful, a consequential order for his return at least pending the appeal. But whether the tribunal could, or if so would, give such a direction in the teeth of a subsisting certificate is doubtful; and in any event it seems entirely impractical for an appellant abroad to apply first for the unenforceable direction and then for judicial review of any failure to comply with it. The second suggested respect has been the subject of lengthy and lively argument. The suggestion is that the appellant can seek to persuade the tribunal to permit him to give live evidence from abroad by video link or, in particular nowadays, by Skype. There is no doubt that, in the context of many appeals against immigration decisions, live evidence on screen is not as satisfactory as live evidence given in person from the witness box. The recent decision of the Upper Tribunal (McCloskey P and UTJ Rintoul) in R (Mohibullah) v Secretary of State for the Home Department [2016] UKUT 561 (IAC) concerned a claim for judicial review of the Home Secretarys decision to curtail a students leave to remain in the UK on the grounds that he had obtained it by deception. The Upper Tribunal quashed the decision but, in a footnote, suggested that the facility for a statutory appeal would have been preferable to the mechanism of judicial review and that it would be preferable for any statutory appeal to be able to be brought from within the UK. It said: (90) Experience has demonstrated that in such cases detailed scrutiny of the demeanour and general presentation of parties and witnesses is a highly important factor. So too is close quarters assessment of how the proceedings are being conducted for example, unscheduled requests for the production of further documents, the response thereto, the conduct of all present in the courtroom, the taking of further instructions in the heat of battle and related matters. These examples could be multiplied. I have found the mechanism of evidence by video link to be quite unsatisfactory in other contexts, both civil and criminal. It is not clear whether the aforementioned essential judicial exercises could be conducted satisfactorily in an out of country appeal. Furthermore, there would be a loss of judicial control and supervision of events in the distant, remote location, with associated potential for misuse of the judicial process. Although the Home Secretary stresses that the Upper Tribunal was addressing the determination of issues relating to deception, its reservations about the giving of evidence by electronic link seem equally apt to appeals under article 8 against deportation orders. Indeed one might add that the ability of a witness on screen to navigate his way around bundles is also often problematic, as is his ability to address cross examination delivered to him remotely, perhaps by someone whom he cannot properly see. But, although the giving of evidence on screen is not optimum, it might well be enough to render the appeal effective for the purposes of article 8, provided only that the appellants opportunity to give evidence in that way was realistically available to him. Inquiry into the realistic availability of giving evidence on screen to the tribunal gets off to a questionable start: for in her report entitled 2016 UK Judicial Attitude Survey, Professor Thomas, UCL Judicial Institute, records that 98% of the judges of the First tier Tribunal throughout the UK responded to her survey and that, of them, 66% rated as poor the standard of IT equipment used in the tribunal. In Secretary of State for the Home Department v Nare [2011] UKUT 443 (IAC) the Upper Tribunal (Mr CMG Ockelton VP, UTJ Grubb and IJ Holmes), in the course of considering an allegation that a judge of the First tier Tribunal had too readily allowed a witness to give evidence by telephone, gave guidance as to how the tribunal should approach any application for a direction that evidence be given by electronic link. At that time the rules specifically provided for such a direction to be given; now, by rules 1(4) and 14(1)(e) of the 2014 Rules, provision for it is encompassed in the definition of a hearing, together with the power to direct the manner in which any evidence or submissions are to be provided [including] orally at a hearing. The Upper Tribunal prefaced its guidance by observing at para 17 that departure from the usual model of oral evidence given directly in the courtroom was likely to reduce the quality of evidence and the ability both of the parties to test it and of the judge to assess it. Its guidance, given in para 21, included: that the application should be made and determined well before the (a) substantive hearing; (b) that the application should not only explain the reason for evidence to be given on screen and indicate the arrangements provisionally made at the distant site but also include an undertaking to be responsible for any expenses incurred; (c) that, were the evidence to be given from abroad, the applicant should be able to inform the tribunal that the foreign state raised no objection to the giving of evidence to a UK tribunal from within its jurisdiction; (d) that the applicant should satisfy the tribunal that events at the distant site were, so far as practicable, within its observation and control, that the evidence would be given there in formal surroundings and be subject to control by appropriate officials and that nothing could happen off camera which might cast doubt on the integrity of the evidence; and (e) suitable facilities. that a British Embassy or High Commission might be able to provide Bail for Immigration Detainees (BID), a charity which provides a small minority of those facing deportation with free legal advice and even representation and which intervenes in the appeals before the court, provides a helpful example of how the tribunal seeks to implement the guidance given in the Nare case. In 2016 BID represented a Nigerian citizen in his appeal against a deportation order by reference to his rights under article 8. His claim had been certified under section 94B so he had been removed to Nigeria in advance of the appeal. On his application, through BID, to give evidence on the appeal from Nigeria by Skype, the tribunal sought to implement the guidance summarised at para 69(d) above by the following direction: The tribunal must be advised in advance of the hearing of the arrangements made to enable the appellant to give evidence in a secure location, attended by a local agent or representative instructed by the appellants solicitors and whose identity has at the time of such advice been provided to the tribunal. In the same order the tribunal also sought to implement the guidance summarised at para 69(b) above by the following direction: All necessary equipment and Skype link must be provided and paid for by the appellant but must include: (i) Projection equipment (ii) Audio equipment (iii) Wi fi link to enable all present to see and hear the appellant give evidence. As is apparent from this direction, the tribunal requires an applicant to pay for provision of the necessary equipment not only at the distant end but also at the hearing centre itself. When, in a letter written in response to the direction, BID requested the tribunal to buy, install and maintain its own equipment for the purpose of hearing evidence from abroad, one of its judges replied: Unfortunately, the Tribunal has no funds to provide equipment or technical ability, hence the onus in that regard we have to place upon appellants and their representatives. In the event the appellant represented by BID was furnished by a friend with the equipment necessary for his use in Nigeria in giving evidence by Skype; and, since the friend was a lawyer, he was able and willing also to exercise free of charge the degree of control required by the tribunal. But the appellant could not afford to purchase the equipment for use at the hearing centre; and so it was BID which bought a laptop computer (240), a projector (252) and a 3G mobile telephone contract (33.97 per month), for use there at the hearing of his appeal. The researches of the solicitors for Mr Kiarie indicate that it would cost the equivalent of 240 per hour to rent a video conference room for his use in Nairobi and that therefore a rental for say seven hours, so as to enable counsel to conduct a pre hearing conference with him as well as to cover the probable length of the hearing, would cost 1,680. The researches of the solicitors for Mr Byndloss indicate that the hourly cost of renting a video conference room for his use in Kingston would be marginally less but they estimate that it would be necessary to rent it for 11 hours in order to cover the probably lengthier hearing of his appeal. It is already clear however that the cost of hiring the necessary equipment for use at the distant end of any evidence given by video link or Skype is only part of the cost which an appellant must bear. He must also bear the cost of providing the equipment for use at the hearing centre and he may well have to pay for the attendance beside him of someone able and willing to exercise the degree of control required by the tribunal. Apart, however, from having to meet the overall costs of giving evidence in that way, an appellant has to confront formidable technical and logistical difficulties. Powerful evidence is given by the appellants solicitors and other legal specialists in the field to the effect that: it can be a slow and tortuous process to obtain the consent of the (a) foreign state for evidence to be given from within its jurisdiction; (b) it can be difficult to achieve compatibility between the system adopted at the distant end and the system installed at the hearing centre, with the result that a bridging service sometimes needs to be engaged and funded; it can be difficult to alight upon a time for the link to begin and end (c) which is both acceptable to the tribunal and practicable at the distant end in the light of the time difference; and (d) if, as is not uncommon, the link fails during the hearing and cannot then and there be restored, the tribunal can prove reluctant to grant an adjournment to another date. Apart from the difficulty surrounding his giving live evidence to the tribunal, an appellant deported in advance of the appeal will probably face insurmountable difficulties in obtaining the supporting professional evidence which, so this court is told, can prove crucial in achieving its success. In support of his claim to present no significant risk of re offending, an appellant is likely to wish to submit evidence from his probation officer; but, upon his deportation, his probation officer will have closed his file and will apparently regard himself as no longer obliged to write a report about him. An appellant may also wish to submit evidence from a consultant forensic psychiatrist about that level of risk. But the evidence in these proceedings of Dr Basu MRC Psych, Clinical Director at Broadmoor Hospital, is that he has never sought to assess the risk posed by a person visible to him only on screen and that any such assessment would have to be treated with considerable caution. In support of an appellants likely claim to have a close and active relationship with a child, partner or other family member in the UK, an appellant will not uncommonly adduce, as in these preliminary proceedings Mr Byndloss has already sought to do, a report by an independent social worker who, so he hopes, will speak of the quality, and in particular for the family the importance, of the relationship. But a report compiled in the absence of the social workers direct observation of the appellant and the family together is likely to be of negligible value. It was more than 30 years ago that, in the appellate committee which preceded the creation of this court, concern was first expressed about the value of an appeal which was required to be brought from abroad. In R (Khawaja) v Secretary of State for the Home Department [1984] AC 74 Lord Fraser of Tullybelton observed at pp 97 98: in spite of [a] decision that the illegal immigrant be removed from this country, it will still be open to him to appeal under section 16 of [the 1971 Act] to an adjudicator against the decision to remove him. The fact that he is not entitled to appeal so long as he is in this country section 16(2) puts him at a serious disadvantage, but I do not think it is proper to regard the right of appeal as worthless. At least the possibility remains that there may be cases, rare perhaps, where an appeal to the adjudicator might still succeed. Today, however, this court is invested with responsibility for deciding whether two foreign criminals who, by reference to article 8, each have arguable appeals against the deportation orders made against them and who have rights thereunder for their appeals to be effective, would suffer a breach of those rights if they were to be deported in advance of the hearing of the appeals. I conclude that, for their appeals to be effective, they would need at least to be afforded the opportunity to give live evidence. They would almost certainly not be able to do so in person. The question is: as a second best, would they be able to do so on screen? The evidence of the Home Secretary is that in such appeals applications to give evidence from abroad are very rare. Why? Is it because an appellant has no interest in giving oral evidence in support of his appeal? I think not. It is because the financial and logistical barriers to his giving evidence on screen are almost insurmountable. In this case the Court of Appeal has indorsed a practice in which, so it seems, the Home Secretary has, not always but routinely, exercised her power under section 94B to certify claims of foreign criminals under article 8. But she has done so in the absence of a Convention compliant system for the conduct of an appeal from abroad and, in particular, in the absence of any provision by the Ministry of Justice of such facilities at the hearing centre, and of some means by which an appellant could have access to such facilities abroad, as would together enable him to give live evidence to the tribunal and otherwise to participate in the hearing. Between 28 July 2014 and 31 December 2016 the Home Secretary issued 1,175 certificates pursuant to section 94B in relation to foreign criminals, all, therefore, with arguable appeals. Of those 1,175 persons, the vast majority were no doubt duly deported in advance of their appeals. But by 31 December 2016 only 72 of them had filed notice of appeal with the tribunal from abroad. It may well be that on 13 February 2017 a few of those appeals remained undetermined. The fact remains, however, that, as of that date, not one of the 72 appeals had succeeded. It remains only to re cast the reasoning expressed in this judgment within its proper context of a claim that deportation pursuant to the two certificates under section 94B would breach the procedural requirements of article 8. The appellants undoubtedly establish that the certificates represent a potential interference with their rights under article 8. Deportation pursuant to them would interfere with their rights to respect for their private or family lives established in the UK and, in particular, with the aspect of their rights which requires that their challenge to a threatened breach of them should be effective. The burden then falls on the Home Secretary to establish that the interference is justified and, in particular, that it is proportionate: specifically, that deportation in advance of an appeal has a sufficiently important objective; that it is rationally connected to that objective; that nothing less intrusive than deportation at that stage could accomplish it; and that such deportation strikes a fair balance between the rights of the appellants and the interests of the community: see R (Aguilar Quila) v Secretary of State for the Home Department [2011] UKSC 45, [2012] 1 AC 621, para 45. The alleged objectives behind the power to certify a claim under section 94B have been set out in section F above. I will not prolong this judgment by addressing whether the power is rationally connected to them and as to whether nothing less intrusive could accomplish them. I therefore turn straight to address the fair balance required by article 8 and I conclude for the reasons given above that, while the appellants have in fact established that the requisite balance is unfair, the proper analysis is that the Home Secretary has failed to establish that it is fair. I agree with Lord Wilson that these two appeals should be allowed, but my M: CONCLUSION So I would allow the appeals and quash the certificates. LORD CARNWATH: emphasis is rather different. The starting point is section 94B(2) of the 2002 Act, under which it is a precondition of certification that the Secretary of State considers that removal of P to the relevant country in advance of the hearing of the appeal would not be unlawful under section 6 of the Human Rights Act 1998 Given the important consequences of certification, I would read the section 6 precondition as implying a requirement for the Secretary of State to satisfy herself, on adequate information, that there will be no breach of section 6. In this case the alleged breaches relate to the appellants respective rights under article 8 of the Convention. If the section 6 precondition is satisfied, then (under subs (3)) the Secretary of State may certify, on grounds which include (in particular) that P would not, before the appeals process is exhausted, face a real risk of serious irreversible harm if removed to the (relevant) country The drafting is awkward. Although the power is discretionary, and the grounds are stated to include absence of risk of irreversible harm, there is no indication what other grounds there might be for exercise of the power, or indeed for declining to exercise it. Indeed, absence of such risk might be more readily understood as a pre condition to certification (under subs (2)) rather than as a positive ground for exercising the power. It is not clear why in this respect a distinction is drawn between the pre condition and the grounds. In any event, the policy of the Secretary of State at the relevant time, as stated in the then current guidance (dated 29 May 2015), and as confirmed by the evidence of Mr Kenneth Welsh (the Departmental witness), was that the power to certify should normally be exercised whenever the statutory criteria were satisfied: The Governments policy is that the deportation process should be as efficient and effective as possible. Case owners should therefore seek to apply section 94B certification in all applicable cases where doing so would not result in serious irreversible harm. (Guidance para 3.2) Mr Welsh tells us that applicable cases were intended to be confined to those which would satisfy the precondition of compliance with section 6 of the Human Rights Act 1998, although he accepts that the clarity of the guidance could be improved. It is unfortunate that, whether because of the awkward drafting of the section or lack of clarity in the guidance, the existence of the section 6 precondition was wholly overlooked at the time of the original decisions in both cases (made in October 2014). There was no express consideration whether removal pending any appeal would be consistent with the appellants rights under article 8. Nor had the appellants been given any notice of, or chance to comment on, the proposed certification. For those reasons, as the Court of Appeal correctly held, the decisions were legally flawed. They accordingly fell to be quashed, unless (in the case of Mr Byndloss) the error was remedied in the supplementary letter of 3 September 2015; or (in Mr Kiaries case, where there was no such supplementary letter) it was clear that the errors were immaterial, in the sense that proper consideration would have yielded the same result. The Court of Appeal so concluded in each case. In considering the reasoning of Richards LJ, it is necessary to distinguish as he did (para 39) between the substantive and the procedural aspects of rights afforded by article 8; or as Lord Wilson puts it (para 39) between harm to the prospective appellant himself, and harm to the prospects of his appeal. As to the former I see no reason to disagree with Richards LJs conclusion that the appellants substantive rights would not be disproportionately infringed by temporary removal pending a decision on their appeals, and that the Secretary of State was entitled so to find. On that aspect, I do not understand Lord Wilson ultimately to take a different view. His conclusions (para 78) focus on the procedural requirements of article 8. In fairness to Richards LJ, however, (and in respectful disagreement with Lord Wilson at para 35) I should add that, in the context of substantive rights, I would not criticise him for according weight to the public interest attached by Parliament to the removal of a foreign criminal, even in the interim period pending an appeal. Lord Wilson observes that the limited risk of reoffending in the period before appeal is not outweighed by the public interest in ensuring that any appeal is effective. However, that was not the issue. No one disputed that the appeal mechanism needed to be effective. On the other hand, the objectives of the new provision, indicated by the Ministerial statements quoted by Lord Wilson (para 31), were directed, not specifically to the risk of offending in the interim period, but rather to speeding up the process of deportation both as an end in itself, and for the purpose of reducing what was seen as abuse by building up further claims to a settled life. The emphasis given by Richards LJ to the public interest in deportation can be seen as a natural extension of this courts reasoning in Ali v Secretary of State for the Home Department [2016] UKSC 60, [2016] 1 WLR 4799 (see para 38) recognising the great weight attached to the public interest in the deportation of foreign offenders. That is now given statutory form in section 117C of the 2002 Act, introduced at the same time as section 94B by the Immigration Act 2014. I turn to the more difficult issue concerning the procedural aspects of article 8: whether (as Richards LJ put it para 40) the Secretary of State took the necessary steps to satisfy herself that the procedural guarantees of article 8 would be met by an out of country appeal before certifying under section 94B. He was right in my view to emphasise the duty of the Secretary of State in this respect. Under section 94B the responsibility for certification entrusted by Parliament to the Secretary of State carries with it the responsibility to satisfy herself (if necessary with the co operation of the Secretary of State for Justice, as the minister responsible for supporting the tribunal system) that the procedural mechanisms to ensure an effective appeal will (not may) be in place. Lord Wilson (para 50) has summarised the relevant Strasbourg jurisprudence. He refers in particular to the Grand Chamber decision in De Souza Ribeiro v France (2014) 59 EHRR 454, as establishing that, while suspension of removal is not a necessary requirement, the opportunity to challenge the removal decision must be effective, that is, at para 83 the effective possibility of challenging the deportation or refusal of residence order and of having the relevant issues examined with sufficient procedural safeguards and thoroughness by an appropriate domestic forum offering adequate guarantees of independence and impartiality. I note that the Chamber in IR v United Kingdom [2014] ECHR 340; [2014] 58 EHRR SE14 cited De Souza as illustrating the proposition that an effective remedy in this context is to be read as meaning a remedy that is as effective as can be having regard to the restricted scope for recourse inherent in the particular context (para 62). I agree with Richards LJ (para 64) that it is not enough that the out of country appeal may be less advantageous in some respects than an in country appeal; article 8 does not require access to the best possible procedure, but access to one which meets, as he puts it, the essential requirements of effectiveness and fairness. The relevant issues for this purpose will depend on the circumstances of each case. They will have to be considered within the framework explained by Lord Reed in Ali (paras 26, 38) (based on the so called Boultif v Switzerland (2001) 33 EHRR 50 criteria, as developed in later Strasbourg cases), and having regard to the need to show a very compelling case to outweigh the presumption in favour of deportation. It is not in dispute that judged by those criteria each of the appellants has at least an arguable case: for Mr Kiarie based on his relative youth, his dependence on his family in this country, and his lack of any significant connection with Kenya; for Mr Byndloss based principally on his ties with his various children and the need to safeguard their interests. I agree with Lord Wilson (para 7) that the issues in such cases, depending as they do primarily on evidence of the life, conduct and relationships of the appellants in this country, are quite different in kind from other more established forms of out of country appeal. As already noted, the need to consider this issue was overlooked at the time of the original decisions. By the time the appeals came before the Court of Appeal (23 September 2015) the issue had been given some consideration, albeit only very recently. The material available to the Secretary of State, and her consideration of this issue, are apparent from the witness statement of Mr Welsh (sworn on 14 September 2015), and in the case of Mr Byndloss, the supplementary letter sent (under Mr Welshs signature) a few days before. It is convenient to start with the latter. The letter, extending to 21 pages, contained a very detailed consideration of Mr Byndloss substantive case under article 8, but the procedural arguments were dealt with relatively shortly. The writer noted Mr Byndloss stated wish to participate in the hearing: by giving evidence of his remorse for his crimes and his reasons for committing them, and to show that he was a good father and was trying to maintain contact with his children; by listening to the Home Offices evidence and submissions; and by assisting his representatives with preparation for the hearing and reading. The response was that he would be able to submit a written statement of his own evidence, supported by evidence from the mothers of the children; and that he would be able to read the Home Offices statements and give instructions to his legal advisers by email. Further: It is open to you to apply to the Tribunal to give evidence by video link if you and your legal representatives consider that this is essential to the fair determination of the appeal. Alternatively, if the Tribunal considers that oral evidence from you on this point is essential to the fair determination of the appeal, it can order that you give evidence by video link. There appears to have been no equivalent letter in relation to Mr Kiaries procedural rights. However, Mr Welshs witness statement was addressed to both appeals. It was designed to provide evidence about the practice and procedure followed by the Secretary of State and the tribunals when dealing with out of country appeals. In respect of the latter he drew on statements said to have been obtained from resident judges of the FTT and UT on an informal basis, based on their vast experience of out of country appeals. Before the Court of Appeal it was accepted for the Secretary of State that such statements could not properly be relied on. But in any event both the statements, and Mr Welshs reliance on them, are open to the criticism that they did not adequately address the distinctive features of an article 8 appeal in a deportation case. On the other hand, Mr Welsh fairly noted the practical limitations of use of video link particularly in the First tier Tribunal, including the lack of facilities in some centres and competing demands from other priorities (such as bail hearings), the need for compatibility with overseas equipment, the need for the appellant to bear the costs, and the need to co ordinate timings with appeal hearings. As Richards LJ explained (para 56), in addition to evidence on this aspect for the appellants, the Court of Appeal received a joint note agreed by counsel providing an outline of out of country appellate procedures, including guidance from the Upper Tribunal on the use of video facilities. At the heart of the Court of Appeals reasoning, in line with the submissions of the Secretary of State, was the proposition that the tribunal, whose independence and impartiality were not in doubt, could be relied on to provide the necessary procedural safeguards to ensure a fair process. As Richards LJ said, at para 65: They will be alert to the fact that out of country appeals are a new departure in deportation cases, and they will be aware of the particular seriousness of deportation for an appellant and his family. All this can be taken into account in the conduct of an appeal. If particular procedures are needed in order to enable an appellant to present his case properly or for his credibility to be properly assessed, there is sufficient flexibility within the system to ensure that those procedures are put in place. That applies most obviously to the provision of facilities for video conferencing or other forms of two way electronic communication or, if truly necessary, the issue of a witness summons so as to put pressure on the Secretary of State to allow the appellants attendance to give oral evidence in person. He acknowledged the difficulties for any appellant, particularly when unrepresented, in preparing evidence for an appeal and presenting it to the tribunal. But he did not regard these as sufficient to amount to a denial of effective participation in the decision making process: In these days of electronic communications, an out of country appellant does not face serious obstacles to the preparation or submission of witness statements or the obtaining of relevant documents for the purposes of an appeal. He can instruct a lawyer in the UK if he has the funds to do so. If he does not have the funds to instruct a lawyer but the case is so complex that an appeal cannot properly be presented without the assistance of a lawyer, he will be entitled to legal aid under the exceptional funding provisions considered in R (Gudanaviciene) v Director of Legal Aid Casework (para 66) In considering that reasoning, in my view, it is necessary to distinguish between two separate elements: first, the ability of the appellant from abroad to assemble evidence and prepare and present his case; secondly, his ability to give oral evidence if required. In doing so we have the advantage of the new evidence (in the form of a witness statement by Mr Makhlouf, Assistant Director of BID), submitted by Mr Fordham without objection from the Secretary of State, as to the practical problems for appellants of conducting effective appeals from abroad. On the first element, as Lord Wilson explains (para 60), it is at best uncertain what assistance will be available to an appellant without resources of his own when conducting his appeal from abroad. Richards LJ, at para 66, referred to the potential availability of exceptional legal aid funding under the provisions considered in R (Gudanaviciene) v Director of Legal Aid Casework. However, Mr Makhlouf refers to the difficulties in practice for those in the position of the appellants to obtain legal aid under these provisions. Without such assistance, or assistance from a body such as BID, it is difficult to see how an appellant from abroad can realistically prepare and present an effective appeal. Even if such legal assistance were available (as it appears to be in the present cases), there are likely to be major logistical problems in ensuring that documents are made available and instructions obtained in the run up and during the course of the hearing. With regard to the second element, there is a dispute between the parties as to the likely importance of such direct oral evidence from the appellant in person. Mr Drabble submits that in deportation appeals, as contrasted with entry clearance appeals, such evidence is likely to be of central importance. He relies on comments of the Upper Tribunal (Blake J and Judge Goldstein) in Secretary of State for the Home Department v Gheorghiu [2016] UKUT 24 (IAC) para 22(iv): in cases where the central issue is whether the offender has sufficiently been rehabilitated to diminish the risk to the public from his behaviour, the experience of immigration judges has been that hearing and seeing the offender give live evidence and the enhanced ability to assess the sincerity of that evidence is an important part of the fact finding process (see for example the observations of this Tribunal as to the benefits of having heard the offender in Masih (Pakistan) [2012] UKUT 46 (IAC) at para 18; see also Lord Bingham in Huang [2007] 2 AC 167 at para 15). By contrast Lord Keen for the Secretary of State, at para 90 of his case, submits that the issues raised in a deportation appeal brought by a foreign criminal are unlikely to require live evidence from the appellant: The nature and extent of the foreign criminals ties to the UK, including his length of residence and relationship with family members, is rarely in dispute. In those rare cases in which there is a dispute concerning, for example, the extent of a foreign criminals relationship with a partner and/or her children, it is usually the evidence of the partner that is of most significance in resolving that dispute. The critical and determinative question is whether the interests of the foreign criminal and/or any affected family members are sufficient to outweigh the public interest in deportation. That resolves to a matter of judgment for the Tribunal, and very rarely turns on issues of disputed fact. He points out correctly that Gheorghiu was concerned with different legislation (Immigration (EEA) Regulations 2006, regulation 21(5)(c)) under which the issue was whether the applicant represented a present and sufficiently serious threat (judgment para 9), thus raising directly the issue of his propensity to reoffend. There is no equivalent in the Ali criteria. Indeed, the Upper Tribunal in Gheorghiu had expressly distinguished the decision of the Court of Appeal in the present case. Lord Wilson attaches weight in particular to the need, as he sees it, for the appellant to demonstrate by direct evidence (subject to cross examination) his remorse and that he is a reformed character (paras 55(f), 61). For my part I have considerable doubts whether an effective appeal is likely to turn on such subjective issues. I see force in Lord Keens submission that in general application of the Ali criteria is likely to turn on the evaluation of factual matters which are either not in dispute, or capable of proof by evidence other than of the appellant in person. It is true that one of the Boultif criteria concerns the time elapsed since the commission of the offences and the applicants conduct in during that period. As the Grand Chamber explained in Maslov v Austria [2008] ECHR 546, [2009] INLR 47, para 90, a significant period of good conduct since the offence has a certain impact on the assessment of the risk which that person poses to society. However, there is no suggestion in the courts own consideration of that issue in Maslov (paras 91 95) that it was seen as depending on subjective evidence as to the state of mind of the appellant, as opposed to objective evidence as to his actual conduct in the relevant period. So far as I am aware, there is nothing in the Strasbourg case law to support a general view that oral evidence by the appellant is a necessary part of an effective appeal in the sense explained in De Souza Ribeiro. However, I would be cautious about reaching a firm view on that issue, given my very limited practical experience of dealing with such issues at first hand, and I do not think it is necessary to do so. The problem for the Secretary of State seems to me more fundamental. As Lord Keen I think would accept, it would be wrong in principle for the Secretary of State, as the opposing party to the appeal, to be allowed to dictate the conduct of the appellants case or the evidence on which he chooses to rely. There may, as Mr Welsh acknowledges, be cases where the appellant fairly believes that direct oral evidence is necessary, and in any event he may reasonably wish to participate actively in the appeal by hearing and responding to the evidence as it emerges. Lord Keen relies on the appellants ability to apply to the tribunal to give evidence by video link, and on the tribunals power, if it considers the request well founded, to give effect to it by use of its extensive case management powers. That response only works if the Secretary of State is able, at the time of certification, to satisfy herself that the necessary facilities can and will be provided. She cannot afford to wait until the case comes before the tribunal, since by then it may be too late. I see no reason in principle why use of modern video facilities should not provide an effective means of providing oral evidence and participation from abroad, so long as the necessary facilities and resources are available. (Things have moved a long way since the comments of Lord Fraser in R (Khawaja) v Secretary of State for the Home Department [1984] AC 74, to which Lord Wilson refers: para 75.) However, the evidence of Mr Welsh shows how far the material before the Secretary of State at the time of the relevant decisions fell short of demonstrating how that objective was to be achieved. The agreed note before the Court of Appeal (para 56) did not take things much further. That put the burden on the applicant to make all the necessary arrangements at his own cost, as was arguably appropriate for a party seeking an indulgence to depart from the norm. It did not address the problem of a party who, due to his forced removal the country, and with limited resources, is unable to present his evidence or participate in the hearing in any other way. The problems are underlined by the unchallenged evidence of BID described by Lord Wilson (paras 70 73). There is no evidence that any serious consideration had been given by the Secretary of State, at the time of certification or later, to how those problems were to be overcome in practice. Without such consideration I do not see how she could satisfy herself that the appeal would be effective. Conclusion It is unfortunate that these appeals have come to us by a less than ideal route. They started with decisions by the Secretary of State on a flawed basis and without regard to what has become the critical issue. They proceeded to the Court of Appeal without any detailed consideration of this issue by the Upper Tribunal. Finally, some of the most compelling evidence (now available from BID) has come in very late in the day, and without time for evaluation by the tribunal or the Court of Appeal. With hindsight, it might have been better if the Court of Appeal, having decided to grant permission, had remitted the substantive application to be dealt with by a specially convened panel of the Upper Tribunal. That would have enabled it to look in detail at what is required to ensure an effective appeal in cases such as this. We are therefore lacking assistance from the body which is best equipped, and will ultimately be responsible, for determining what a fair and effective procedure requires. Neither the Court of Appeal, nor still less this court, has equivalent expertise or experience. It may be that the best way to clarify these issues would be some form of a test case before the Upper Tribunal, at which the practicalities can be looked at in more detail, and guidance developed for the future. For the moment, we have to deal with the appeals as best we can on the available material. As I have said, having made the initial decisions on a flawed basis it was for the Secretary of State to satisfy us that the error was immaterial. Her problem is that there is no real evidence of consideration of the practical problems involved in cases such as these in preparing and presenting a case from abroad. I am far from saying that those problems cannot be overcome. However, the evidence before us does not show that the Secretary of State had the material necessary to satisfy herself, before certification, that the procedural rights of these appellants under article 8 would be protected. On that limited basis I would allow the appeal.

UK-Abs

Mr Kiarie has Kenyan nationality. He came to the UK in 1997 with his family at the age of three. Mr Byndloss has Jamaican nationality. He has lived in the UK since the age of 21 and has a wife and children living in the UK. Following their separate convictions for serious drug related offences, in October 2014 the respondent made orders for their deportation to Kenya and Jamaica respectively and rejected the appellants claims that deportation would breach their right to respect for their private and family life under article 8 of the European Convention on Human Rights (ECHR). When making the deportation orders, the Home Secretary issued certificates under section 94B of the Nationality, Immigration and Asylum Act 2002. In certifying the appellants claims under section 94B, the respondent chose not to instead certify their human rights claims as clearly unfounded under section 94, indicating that their appeals were arguable. The effect of section 94B certification is that the appellants can bring their appeals against the respondents immigration decisions only after they have returned to Kenya and Jamaica. Until 30 November 2016, section 94B provided that where a human rights claim had been made by a person liable to deportation, the Secretary of State may certify the claim if she considers that the removal of the person pending the outcome of their appeal would not be unlawful under section 6 of the Human Rights Act 1998 and that the person would not face a real risk of serious irreversible harm if removed to that country. The court stresses that this appeal is not about the circumstances in which a person can successfully resist deportation by reference to his private or family life. It recently addressed that question in the case of Ali and ruled that he can do so only if the circumstances are very compelling. The question in this appeal is: where the law gives such a person a right to appeal to a tribunal against a deportation order, then, however difficult it may be for him to succeed, does the Home Secretary breach his human rights by deporting him before he can bring the appeal and without making proper provision for him to participate in the hearing of it? The Court of Appeals answer was no. The Supreme Court unanimously allows the appeal of Mr Kiarie and Mr Byndloss and quashes the certificates. Lord Wilson gives the lead judgment, with which Lady Hale, Lord Hodge and Lord Toulson agree. Lord Carnwath gives a concurring judgment. The fundamental objective of section 94B arises from the fact that the appellants are foreign criminals and, by virtue of section 32(4) of the UK Borders Act 2007, the deportation of a foreign criminal is conducive to the public good [32 33]. However, Parliament gave foreign criminals a right of appeal against a deportation order by enacting section 82(1) and (3A) of the Nationality, Immigration and Asylum Act 2002. The public interest in the removal of an appellant in advance of his appeal is outweighed by the public interest that a right of appeal should be effective [35]. In proceedings for judicial review of a section 94B certificate, the tribunal must decide for itself whether deportation in advance of appeal would breach the appellants ECHR rights. It must assess for itself the proportionality of deportation at that stage, albeit attaching considerable weight to public policy considerations relied on by the respondent [42 43]. The application of the Wednesbury criterion to the right to depart from the Home Offices findings of fact, even when heightened to anxious scrutiny, is inapt. Under section 6 of the Human Rights Act 1998, the court may require to be more proactive than application of that criterion would permit. The residual power of the court to determine facts, and to receive evidence including oral evidence, needs to be recognised [47]. Article 8 requires that an appeal against a deportation order by reference to a claim in respect of private and family life should be effective [51 52]. While the effect of an appellants immediate removal from the UK is likely to significantly weaken his arguable appeal [58], what is determinative of these appeals is whether the issue of a section 94B certificate obstructs an appellants ability to effectively present his appeal against the deportation order [59]. In an appeal brought from abroad, the appellants ability to present his case is likely to be obstructed in a number of ways. Even if he is able to secure legal representation, the appellant and his lawyer would face formidable difficulties in giving and receiving instructions prior to and during the hearing [60]. Further, the effectiveness of an arguable appeal is likely to turn on the ability of the appellant to give live evidence to assist the tribunal in its assessment of whether he is a reformed character and the quality of his relationships with others in the UK, in particular with any child, partner or other family member [61, 63]. An effective appeal requires that the appellants are afforded the opportunity to give live evidence [76]. While the giving of evidence on screen is not optimum, it might be enough to render the appeal effective for the purposes of article 8, provided that the opportunity to give evidence in that way is realistically available to them [67]. However, the financial and logistical barriers to their giving evidence on screen from abroad are almost insurmountable. The respondent has therefore certified article 8 claims of foreign criminals under section 94B in the absence of a ECHR compliant system for the conduct of an appeal from abroad. The Ministry of Justice has failed to make provision for facilities at the hearing centre, or for access to such facilities abroad, as would allow the appellants to give live evidence and participate in the hearing [76]. Deportation pursuant to the certificates would therefore interfere with the appellants rights to respect for their private and family life in the UK pursuant to article 8 and, in particular, with the aspect of their rights which requires that their challenge to a threatened breach of them should be effective. The respondent has failed to establish that deportation in advance of appeal strikes a fair balance between the rights of the appellants and the interests of the community and therefore the decisions to issue the certificates were unlawful [78]. In a concurring judgment, Lord Carnwath concludes that an effective appeal for the purposes of article 8 is unlikely to turn on subjective issues requiring the appellant to give direct evidence, such as whether the appellant is a reformed character [100]. However, it is wrong in principle for the respondent, as the opposing party to the appeal, to be allowed to dictate the conduct of the appellants case or the evidence on which he chooses to rely. The respondent must be able, at the time of certification, to satisfy herself that the necessary facilities can and will be provided [102].

This appeal tests the limits, in a modern context, of the long-established remedy known as the solicitors equitable lien. In its traditional form it is the means whereby equity provides a form of security for the recovery by solicitors of their agreed charges for the successful conduct of litigation, out of the fruits of that litigation. It is a judge-made remedy, motivated not by any fondness for solicitors as fellow lawyers or even as officers of the court, but rather because it promotes access to justice. Specifically it enables solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack the financial resources to pay up front for its pursuit. It is called a solicitors lien because solicitors used to have a virtual monopoly on the pursuit of litigation in the higher courts. Nothing in this judgment should be read as deciding whether the relaxation of that monopoly means that the lien is still limited only to solicitors. Solicitors have, since time immemorial, been entitled to a common law retaining lien for payment of their costs and disbursements. That is an essentially defensive remedy, which merely enables them to hold on to their clients papers and other property in their actual possession, pending payment. It affords no assistance where there is nothing of value in the solicitors possession, and is powerless where, in a litigation context, the defendant to the claim pays the judgment debt or agreed settlement amount direct to the solicitors client, the claimant. But equity deals with that deficiency in the common law by first recognising, and then enforcing, an equitable interest of the solicitor in the fruits of the litigation, against anyone who, with notice of it, deals with the fruits in a manner which would otherwise defeat that interest. Originally the fruits of the litigation were first identified in the judgment debt. Later this was extended to the debt due under an arbitration award and, later still, to the debt due to the claimant under an agreement to settle the claim. Each of those types of debt was identified as a form of property, a chose in action, in which equity could recognise and enforce an equitable interest in favour of the solicitor. It was called a lien because the chose in action represented the fruits of the solicitors work. But it is better analysed as a form of equitable charge. Traditionally, the solicitors interest could not be identified as a beneficial share in the chose, because that would have offended the laws against maintenance and champerty. Rather it was, from the earliest times, recognised as a security interest, enforceable against the fruits of the litigation up to the amount contractually due to the solicitor, in priority to the interest of the successful client, or anyone claiming through him. It did not depend upon the fruits of the litigation including a specific amount for party and party costs, such as a judgment for costs, or an element in a settlement sum on account of costs. In the ordinary course of traditional litigation, with solicitors acting on both sides, the amount due under a judgment, award or settlement agreement would be paid by the defendants solicitor to the claimants solicitor. Or the claimants solicitor might recover the sum due to his client by processes of execution. In either case the equitable lien would entitle the solicitor not merely to hold on to the money received, but to deduct his charges from it before accounting to his client for the balance. But equity would also enforce the security where the defendant (or his agent or insurer) paid the debt direct to the claimant, if the payer had either colluded with the claimant to cheat the solicitor out of his charges, or dealt with the debt inconsistently with the solicitors equitable interest in it, after having notice of that interest. In an appropriate case the court would require the payer to pay the solicitors charges again, direct to the solicitor, leaving the payer to such remedy as he might have against the claimant. This form of remedy, or intervention as it is sometimes called, arose naturally from the application of equitable principles, in which equitable interests may be enforced in personam against anyone whose conscience is affected by having notice of them, either to prevent him dealing inconsistently with them, or by holding him to account if he does. The modern context in which the extent of this remedy comes to be reviewed is that of the pursuit of modest claims for personal injuries arising out of road traffic accidents, by solicitors retained under a Conditional Fee Agreement (CFA) using the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the RTA Protocol). In bare outline this highly effective scheme, hammered out by stakeholders under the auspices of the Civil Justice Council and approved by the Civil Procedure Rule Committee, enables modest claims for personal injuries to be notified by the claimants solicitors to the defendants insurer using a bespoke online platform (The RTA Portal) and, where liability is admitted, for a settlement to be negotiated, or quantum to be determined by the court, at a fraction of the cost and effort which would have to be deployed if the matter were to become the subject of ordinary proceedings in the County Court, and on terms which reward the claimants solicitors with modest fixed costs for their work on the process. It is an express objective of the RTA Protocol, and its provisions are designed so to ensure, that the solicitors are paid their fixed costs and charges at each stage of the process, direct by the defendants insurer. The casus belli for this litigation was a decision by the appellant insurer (Haven) to respond to the notification of claims on the RTA Portal by offering to settle direct with claimants, on terms which included no amount for their solicitors costs or disbursements (fixed or otherwise), with the twin inducements to claimants of a speedier and more generous payment than would be likely to be available from a settlement using the RTA Protocol and Portal. The motivation of the insurer was the opportunity to avoid having to add, to the settlement amount for the injury, the fixed costs and disbursements payable under the terms of the RTA Protocol to the claimants solicitors. Settlements thereby achieved included claims by clients of the respondent solicitors (Edmondson) arising from three motor accidents, all of whom retained the respondent firm on a particular type of identically worded CFA retainer, known in the trade as a CFA Lite, designed to ensure that in no circumstances would the client have to put his hands in his own pocket for payment of the firms charges. Edmondson responded by a claim against Haven for wrongful inducement to the clients to breach their retainer contract, intentional causing of loss by unlawful means and, by amendment, seeking equitable enforcement of its solicitors lien. Although the sums involved are individually modest, we were told that this practice by Haven had been repeated on a sufficiently large scale for the determination of the dispute to have financial consequences running to many millions of pounds. The trial judge (HHJ Jarman QC) rejected the claims in tort and refused to grant permission to appeal in respect of those claims. An application for permission was made to the Court of Appeal, but not dealt with because of its disposal of the claim to enforce the solicitors lien. That claim was rejected by the trial judge because, in his view, there had been no collusion between Haven and the claimants to cheat the solicitors, and because Haven was not on notice of the terms of the retainers. In the Court of Appeal [2015] EWCA Civ 1230; [2016] 1 WLR 1385 the main submission of Haven was that the particular terms of the CFA Lite retainers created no contractual liability of the claimants for Edmondsons charges, so that there was nothing upon which an equitable security could be founded. The Court of Appeal agreed that there was no such contractual liability upon the true construction of the retainers. Nonetheless it decided that the equitable jurisdiction to intervene could be extended far enough to enable the court to recognise and then enforce an interest of Edmondson under the RTA Protocol in receiving its fixed costs and charges as therein provided or, alternatively, an interest under an express provision in the retainers to sue in its clients names for recovery of those charges from Haven, and that Haven knew of those interests. Accordingly the Court of Appeal ordered Haven to pay the charges allowable under the RTA Protocol to Edmondson, in addition to the settlement sums already paid to the claimants. In this court Haven repeated its main submission that the retainers created no contractual liability to pay the charges upon which an equitable lien or charge could be founded, and submitted that the Court of Appeal had been wrong to extend the equity of intervention as it did, the extension being contrary to settled principle. Edmondson countered first by asserting that the retainers did contain a sufficient contractual liability of the clients for their charges to support their equitable lien on conventional grounds. Secondly, and in the alternative, Edmondson vigorously supported the extended power of equitable intervention in the absence of such a contractual liability, as devised by the Court of Appeal. This court permitted The Law Society of England and Wales to intervene in writing, broadly in support of the solution devised by the Court of Appeal, and to submit written evidence about the widespread use of the CFA Lite, and the use of the RTA Protocol. The court is grateful for the submissions both of the parties and of the Law Society. This is, according to the researches of counsel, the first occasion for this court (or its predecessor) to consider the nature and effect of the solicitors equitable lien. It is therefore appropriate to describe its evolution in a little more detail than might otherwise have been necessary. Before doing so, I must first summarise the facts, set out the relevant terms of the CFA Lite retainer, and describe the terms and modus operandi of the RTA Protocol. The Facts I must first describe the particular facts about each accident, and the steps taken to settle the claims arising from them. I do so, with gratitude, from the summary given in the judgment of Lloyd Jones LJ in the Court of Appeal. Ainsley Tonkin Mr Ainsley Tonkin was involved in a road traffic collision on 10 April 2012. Havens insured was also involved in the collision and on the 12 April 2012. Haven, having obtained Mr Tonkins contact details from its insureds accident report form, contacted Mr Tonkin concerning a hire vehicle. On 16 April 2012 Mr Tonkin entered into a CFA with Edmondson and on 17 April 2012 the case entered the Portal. On 20 April 2012 Mr Tonkin telephoned Haven asking where they go from here. He was told by Louise Richardson of Haven: ... What we can do is offer you a scheme to compensate you for your injury. We can work out a sum of money and you can put it into your account as soon as you agree on that figure. Mr Tonkin told Ms Richardson that he had his insurance solicitor and volunteered the information that there was a 14-day cooling off period. They then negotiated on the telephone and Ms Richardson offered 2,200. She said: So the offer stands at the moment at two thousand two hundred pounds and obviously [indecipherable] think about it but if you do ask your solicitors they will tell you that they can get you more ... but at the end of the day that offer will come from myself and we through solicitors we have to pay solicitor costs as well. Mr Tonkin replied that he fully understood that and went on to raise other matters. They eventually negotiated a settlement at 2,350. Mr Tonkin asked what he should do about the solicitors he had instructed. Ms Richardson said he should just call them and tell them that he did not want to deal with them any more and they could just close the claim. On 23 April 2012 Haven sent a written offer of settlement to Mr Tonkin who on 24 April 2012 completed and signed the mandate of acceptance which was returned to Haven on 26 April. The mandate of acceptance confirmed that the offer was accepted: in full and final settlement of my claim for Pain, Suffering & Loss of Amenity in respect of injuries sustained and any financial losses incurred in relation to the road traffic accident. Michael Wheater, Dale Makey, Saul Mohsin and Rose Lunt On 23 June 2012, Mr Michael Wheater, Mr Dale Makey, Mr Saul Mohsin and Ms Rose Lunt were all travelling in the same vehicle when it was involved in a road traffic accident. On 20 July 2012 all four entered into CFAs with Edmondson and on 23 July 2012 their cases entered the Portal. On 24 July 2012 Haven sent to each of them a letter containing an offer of settlement. On 7 August 2012 Mr Mohsin telephoned Mr OConnell of Haven who told him that we offer services if you want to come to us to avoid going to the solicitors. Mr Mohsin explained that he had actually gone to some solicitors but he was concerned that it was going to take a long time to get everything settled. Later that day Mr Mohsin telephoned Haven again with the news that he had spoken to Mr Wheater, Mr Makey and Ms Lunt and that they were all going to accept the offer. On the same day Mr Mohsin sent an email enclosing mandates of acceptance completed by all four claimants. Daniel Grannell Mr Daniel Grannell was involved in a road traffic accident on 30 August 2012. On the following day he entered into a CFA with Edmondson and his case entered the Portal that day. On 10 September 2012 Haven sent Mr Grannell a letter offering to settle the claim for 1,900. On 14 September 2012 Haven received a completed mandate of acceptance signed by Mr Grannell on 13 September 2012. Thereafter an impostor claiming to be Mr Grannell spoke by telephone with Haven and the compensation was paid to an account on his directions. When Mr Grannell subsequently contacted Haven, Haven became aware that it had been defrauded. In a telephone conversation on 6 November 2012 Mr Grannell stated that the mandate of acceptance dated 13 September 2012 was genuine. Mr Ralph McClaren of Haven told him that the offer of 1,900 was still on the table and that he could arrange for that to be paid at once. Mr Grannell replied that he would love that. Mr McClaren then said that he would contact Edmondson and tell Edmondson what they had done. He then added: As I say theyll probably when you speak to them theyll probably will tell you not to ya know or you shouldnt do that but for the to be honest with you if when they call you probably a bit less the reason we offer you a bit more is because of the fact the solicitors get kept out of it so we don't have to pay their fees thats basically it. Mr Grannell said he was absolutely happy with that. The facts relevant to the issue about notice were the same in all three cases. As will shortly appear, the RTA Protocol prescribes a simple online form of notification of a claim (a Claim Notification Form or CNF) which contains a tick box opposite a statement that the solicitors had been retained under a CFA which provided for a success fee. In each case Edmondson ticked the box and filled in the date of the retainer. Thus Haven knew that information via the Portal before it began negotiating with the claimants. Haven did not know the detailed terms of the retainers, which I shall now describe. The CFA Lite Retainers Each of the claimants retained Edmondson on identical terms. They were each sent, on the same day, the following documents. First, a document headed (under the firms logo) CFA, containing these relevant provisions: This agreement is a binding legal contract between you and your solicitor/s. Before you sign, please read everything carefully. This agreement must be read in conjunction with the Law Society document What you need to know about a CFA. Paying us If you win your claim, you pay our basic charges, our disbursements and a success fee. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium as set out in the document What you need to know about a CFA. The Success Fee The success fee is set at 100% of basic charges, where the claim concludes at trial; or 12.5% where the claim concludes before a trial has commenced. In addition 5% relates to the postponement of payment of our fees and expenses and cannot be recovered from your opponent. The Success fee inclusive of any additional percentage relating to postponement cannot be more than 100% of the basic charges in total. Secondly, they were sent the Law Society document referred to in the above quotation. It is a standard form document published in 2005. It contained the following relevant provisions. What do I pay if I win? If you win your claim, you pay our basic charges, our disbursements and a success fee. The amount of these is not based on or limited by the damages. You can claim from your opponent part or all of our basic charges, our disbursements, a success fee and insurance premium. Basic charges These are for work done from now until this agreement ends. These are subject to review. Under the heading How we calculate our basic charges the document sets out a table of hourly rates. Road Traffic Accidents If your claim is settled before proceedings are issued, for less than 10,000, our basic costs will be 800; plus 20% of the damages agreed up to 5,000; and 15% of the damages agreed between 5,000 and 10,000. [If you live in London, these costs will be increased by 12.5%]. These costs are fixed by the Civil Procedure Rules. Provision is then made for charging VAT. Dealing with costs if you win You are liable to pay all our basic charges, our disbursements and success fee. Normally, you can claim part or all of our basic charges, our disbursements success fee and insurance premium from your opponent. If we and your opponent cannot agree the amount, the court will decide how much you can recover. If the amount agreed or allowed by the court does not cover all our basic charges and our disbursements, then you pay the difference. You will not be entitled to recover from your opponent the part of the success fee that relates to the cost to us of postponing receipt of our charges and our disbursements. This remains payable by you. As with the costs in general, you remain ultimately responsible for paying our success fee. You agree to pay into a designated account any cheque received by you or by us from your opponent and made payable to you. Out of the money, you agree to let us take the balance of the basic charges; success fee; insurance premium; our remaining disbursements; and VAT. You take the rest. We are allowed to keep any interest your opponent pays on the charges. If your opponent fails to pay If your opponent does not pay any damages or charges owed to you, we have the right to take recovery action in your name to enforce a judgment, order or agreement. The charges of this action become part of the basic charges. In a lengthy definitions section there is this definition of win: Win Your claim for damages is finally decided in your favour, whether by a court decision or an agreement to pay you damages or in any way that you derive benefit from pursuing the claim. The third document is the Client Care Letter. It deals with a number of miscellaneous aspects of the solicitor client relationship and is not primarily drafted as a contractual document. But it contains the following relevant provisions: Costs: In this case we have advised and you have elected to enter into a conditional fee agreement. Full details of the terms of the agreement and our charging rates are set out within the conditional fee agreement and the accompanying schedules. For the avoidance of any doubt if you win your case I will be able to recover our disbursements, basic costs and the success fee from your opponent. You are responsible for our fees and expenses only to the extent that these are recovered from the losing side. This means that if you win, you pay nothing. It is this last quoted passage that is said to make the retainer a CFA Lite, because of its evident intent to assure the client that he will not in any circumstances have to put his hand in his own pocket to pay his solicitors. The RTA Protocol This voluntary pre-action protocol came into force in 2010. At the relevant time for present purposes it applied to claims for RTA personal injuries between 1,000 (which was the dividing line between the Fast Track and the Small Claims Track) and 10,000. It has since been extended to higher value claims, up to 25,000, which corresponds with the boundary between the Fast Track and the Multi Track. Current Government proposals to raise the Small Claims Track boundary to 5,000 for RTA cases may greatly affect its scope, since more that 90% by number of RTA cases are for damages below that level. I can again take the summary of the relevant provisions of the RTA Protocol from the judgment of Lloyd Jones LJ in the Court of Appeal. The Protocol describes in great detail the behaviour the court will normally expect of parties, of their legal representatives and of the parties insurers, involved in such claims. Under the Protocol scheme parties, lawyers and insurers, when required to send information to one another, are expected to do so electronically through a website (the Portal) established by road accident insurers. While notice of claims falling within the Protocol is expected to be given in accordance with the procedures set out in the Protocol, they are not mandatory. However, there are possible costs consequences if qualifying claims are not processed in accordance with the Protocol. The preamble to the RTA Protocol states: 2.1 This Protocol describes the behaviour the court will normally expect of the parties prior to the start of proceedings where a claimant claims damages valued at no more than 10,000 as a result of a personal injury sustained by that person in a road traffic accident. The aims of the Protocol are set out in paragraph 3.1. 3.1 The aim of this Protocol is to ensure that (1) the defendant pays damages and costs using the process set out in the Protocol without the need for the claimant to start proceedings; (2) damages are paid within a reasonable time; and (3) the claimants legal representative receives the fixed costs at the end of each stage in this Protocol. Claims which no longer continue under the Protocol cannot subsequently re-enter the process. (Paragraph 5.11) The process is initiated by the completion of the Claim Notification Form (CNF). Paragraph 6.1 provides: 6.1 The claimant must complete and send - (1) the CNF to the defendants insurers; ... The RTA Protocol makes provision for response by the insurer as follows: 6.10 The defendant must send to the claimant an electronic acknowledgment the next day after receipt of the CNF; 6.11 The defendant must complete the Insurer Response section of the CNF (the CNF response) and send it to the claimant within 15 days; 6.15 The claim will no longer continue under this Protocol where the defendant, within the period in paragraph 6.11 or 6.13 - (1) makes an admission of liability but alleges contributory negligence (other than in relation to the claimants admitted failure to wear a seat belt); (2) does not complete and send the CNF response; (3) does not admit liability; or (4) notifies the claimant that the defendant considers that (a) there is inadequate mandatory information in the CNF; or (b) if proceedings were issued, the small claims track would be the normal track for that claim. The Protocol makes provision for fixed costs to be paid at specified points. Paragraph 6.18 makes provision for Stage 1 fixed costs. 6.18 Except where the claimant is a child, the defendant must pay the Stage 1 fixed costs in rule 45.29 where liability is admitted; or (1) liability is admitted and contributory negligence (2) is alleged only in relation to the claimants admitted failure to wear a seat belt, within ten days after sending the CNF response to the claimant as provided in paragraph 6.11 or 6.13. If the claim proceeds to Stage 2, the Protocol requires a Stage 2 Settlement Pack including a medical report to be sent to the defendant within 15 days of the claimant approving a final medical report and agreeing to rely on it. (Paragraph 7.26). There is a 35 day period for consideration of the Stage 2 Settlement Pack by the defendant (Paragraph 7.28). Paragraph 7.37 provides: 7.37 Any offer to settle made at any stage by either party will automatically include, and cannot exclude - (1) (2) (3) the Stage 2 fixed costs in rule 45.29; an agreement in principle to pay disbursements; a success fee in accordance with rule 45.31(1). Paragraph 7.40 provides in respect of Settlement: (1) 7.40 Except where the claimant is a child or paragraphs 7.41 and 7.42 apply, the defendant must pay - the agreed damages less any (a) deductible amount which is payable to the CRU; and (b) previous interim payment; any unpaid Stage 1 fixed costs in rule 45.29; the Stage 2 fixed costs in rule 45.29; the (2) (3) (4) accordance with rule 45.30; and (5) a success fee in accordance with rule 45.31 for Stage 1 and Stage 2 fixed costs, within ten days of the end of the relevant period in paragraphs 7.28 to 7.30 during which the parties agreed a settlement. relevant disbursements allowed in Part 36 CPR - Offers to Settle, has been amended to take account of the Protocol. Part 45 CPR, Fixed Costs, makes specific provision for costs under the Protocol scheme. The Solicitors Equitable Lien: the Existing Law The earliest decision to recognise the equitable lien is Welsh v Hole (1779) 1 Dougl KB 238. The plaintiff obtained judgment for 20 and costs in a civil claim for assault, but then compromised the claim for a direct payment by the defendant of 10. There was no collusion to defeat the solicitors right to payment of his bill. Lord Mansfield said this: An attorney has a lien on the money recovered by his client, for his bill of costs; if the money come to his hands, he may retain to the amount of his bill. He may stop it in transit if he can lay hold of it. If he apply to the Court, they will prevent its being paid over till his demand is satisfied. I am inclined to go still farther, and to hold that, if the attorney give notice to the defendant not to pay till his bill should be discharged, a payment by the defendant after such notice would be in his own wrong, and like paying a debt which has been assigned, after notice. But I think we cannot go beyond those limits. There having been no notice in that case, the solicitors claim against the defendant failed. It is implicit in Lord Mansfields reasoning that, if there had been notice to the defendant, he would have had to pay a second time, up to the amount of the solicitors bill. The typically terse judgment may be said to have dealt with legal and equitable lien without clearly distinguishing between the two, but the analogy of an assigned debt shows that Lord Mansfield recognised that the solicitor had an interest in the judgment debt which the court would protect, provided that notice of that interest had been given to the debtor before payment to the judgment creditor. An interest dependent upon notice is typical of an equitable interest. Confirmation that payment of the judgment debt to the claimant after notice of the solicitors interest exposed the payer to having to pay again was provided in Read v Dupper (1795) 6 Term Rep 361. In that case the defendants solicitor paid the plaintiff direct, after notice of the plaintiffs solicitors interest, and had to pay again. Lord Kenyon began: The principle by which this application is to be decided was settled long ago, namely that the party should not run away with the fruits of the cause without satisfying the legal demands of his attorney, by whose industry, and in many instances at whose expense, those fruits are obtained. Lord Kenyon explained Lord Mansfields reference to assignment in Welsh v Hole in terms of equitable principle. He said: according to the rules of equity and honest dealing if the assignee give notice to the debtor of such assignment, he shall not afterwards be suffered to avail himself of a payment to the principal in fraud of such notice. In Ormerod v Tate (1801) 1 East 464 the fruits consisted of the debt arising from an arbitration award. That appears to have been a case of collusion, because Lord Kenyon described the arrangement to pay the claimant direct as: no other than a mere shuffle between the plaintiff and defendant to cheat the attorney of his lien. He described the extension of the principle to accommodate arbitration awards as justified by convenience, good sense and justice and recognised a public interest in the extension, to encourage litigants to use arbitration. Two early cases demonstrate that access to justice lay behind the development of the principle. The first is Ex p Bryant (1815) 1 Madd 49. Vice Chancellor Plumer said: I do not wish to relax the doctrine as to lien, for it is to the advantage of clients, as well as solicitors; for business is often transacted by solicitors for needy clients, merely on the prospect of having their costs under the doctrine as to lien. The Vice Chancellor also said, obiter, that knowledge of the solicitors lien on the part of the payer would be as effective as notice. To the same effect is Gould v Davis (1831) 1 Cr & J 415. The second case is In re Moss (1866) LR 2 Eq 345, although it was about a legal rather than equitable lien. Lord Romilly MR said: I think it of great importance to preserve the lien of solicitors. That is the real security for solicitors engaged in business. It is also beneficial to the suitors. It would frequently happen, but for the lien which solicitors have upon papers and deeds, that a client who is not able to advance money to enable them to carry on business would be deprived of justice, through inability to prosecute his claims in the suit. Barker v St Quintin (1844) 12 M & W 441 shows, better than any other, that the equitable lien operates by way of security or charge. Baron Parke said: The lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the Court to have that judgment held as a security for his debt. A similar analysis is provided by Lord Hanworth MR in Mason v Mason and Cottrell [1933] P 199, at 214. The use of the concepts security and charge imply that there must be identified some fund over which it can operate. This was described as a necessary condition of equitable interference under this principle in In re Fuld decd (No 4) [1968] P 727, per Scarman J at 736. The requirement for a fund may be satisfied not just by a judgment debt or arbitration award, but also by a debt arising from a settlement agreement. Provided that the debt has arisen in part from the activities of the solicitor there is no reason in principle (and none has been suggested) why formal proceedings must first have been issued, all the more so in modern times when parties and their solicitors are encouraged as a matter of policy to attempt to resolve disputes by suitable forms of ADR, and when pre-action protocols of widely differing kinds have been developed precisely for that purpose. The authorities on the solicitors equitable lien (including many of those summarised above) were recently reviewed by the Court of Appeal in Khans Solicitors v Chifuntwe [2014] 1 WLR 1185. The fund in question consisted of a debt arising from the agreement of the Home Secretary to settle pending judicial review proceedings by a payment of a specific sum on account of the claimants costs. The payment was made direct by the Treasury Solicitor to the claimant (by then acting in person) after express notice from the claimants former solicitors that they claimed a lien. The Home Secretary was ordered to pay the settlement sum a second time to the solicitors, less an amount already paid by the client on account. Sir Stephen Sedley provided this summary, at para 33: In our judgment, the law is today (and, in our view, has been for fully two centuries) that the court will intervene to protect a solicitors claim on funds recovered or due to be recovered by a client or former client if (a) the paying party is colluding with the client to cheat the solicitor of his fees, or (b) the paying party is on notice that the other partys solicitor has a claim on the funds for outstanding fees. The form of protection ought to be preventative but may in a proper case take the form of dual payment. I consider that to be a correct statement of the law. It recognises that the equity depends upon the solicitor having a claim for his charges against the client, that there must be something in the nature of a fund against which equity can recognise that his claim extends (which is usually a debt owed by the defendant to the solicitors client which owes its existence, at least in part, to the solicitors services to the client) and that for equity to intervene there must be something sufficiently affecting the conscience of the payer, either in the form of collusion to cheat the solicitor or notice (or, I would add knowledge) of the solicitors claim against, or interest in, the fund. The outcome of the case also recognised that the solicitors claim is limited to the unpaid amount of his charges. Implicit in that is the recognition that the solicitors interest in the fund is a security interest, in the nature of an equitable charge. It remains to consider whether the decision of the Court of Appeal in the present case is either an application of that settled principle, or a legitimate extension of it, in the context of its finding that Edmondson had no contractual entitlement to its charges from any of the claimants, but only the expectation of receiving fixed costs, disbursements and a success fee under the terms of the RTA Protocol. But it is first necessary to determine whether or not Edmondson did have a contractual entitlement to its charges under the CFA. Construction of the CFA - Does the client have any contractual liability to pay the solicitors charges? At the heart of the Court of Appeals analysis lay a negative answer to that question. Like the trial judge, Lloyd Jones LJ identified a tension between the terms of the CFA itself (incorporating the Law Societys standard 2005 terms) and the last quoted passage in the Client Care Letter which, being labelled for the avoidance of any doubt, was held to prevail. At para 18 he said: The solicitor has no recourse against his client for the fees and is limited to what he can recover from the losing side. Later, at para 30, he continued: I consider that the effect of the client care letter is to override the general provisions in each CFA with the result that the underlying claimants were not under any personal liability to pay the fees of Edmondson. Rather, Edmondson has limited its fees to what may be recovered from the defendants in the underlying proceedings. In these circumstances, Edmondson would not have a lien over assets received on its clients account because there is no underlying liability of the clients to Edmondson for the lien to protect. I respectfully disagree. In my judgment, for the reasons which follow, the Client Care Letter did not destroy the basic liability of the client for Edmondsons charges expressly declared in the CFA and Law Societys standard terms. It merely limited the recourse from which Edmondson could satisfy that liability to the amount of its recoveries from the defendant. It both preserved and in my view affirmed that basic contractual liability, to the full extent necessary to form the basis of a claim to an equitable charge as security. The first question is whether the Client Care Letter had contractual effect at all. Both it and the two other documents sought to make it clear that the full terms of the retainer were to be found in the CFA document and in the incorporated Law Society terms. Nonetheless I am prepared to assume, in favour of the client, that the last quoted passage in the Client Care Letter was either part of the contract of retainer, or a collateral contract. I consider that the language of that passage does three things. First, it asserts a right for Edmondson to recover its fees and charges from the defendant. That affirms the equitable lien, since there would otherwise be no basis upon which Edmondson could do so. Secondly it states in clear terms that such a recovery is the means by which Edmondson can give effect to a continuing responsibility of the client for those fees. Thirdly it limits Edmondsons recourse for the fees to the amount recovered from the defendant. There is in my view a compelling parallel in a limited recourse secured loan agreement. A lender may lend a million pounds to a borrower, take valuable security, and then agree to limit his recourse to the amount recovered by enforcing that security. It would be absurd to say that the lender thereby deprived the security of all effect because the borrower would not have to put his hand in his pocket to pay anything in addition. The Client Care Letter was plainly intended to be read, so far as possible, in accordance with, rather than in opposition to, the CFA and Law Societys terms. Those two documents are, in the passages from them quoted above, shot through with clear assertions of the clients responsibility for the firms charges in the event of a win in the litigation, which is defined to include a settlement of the claim under which there is an agreement to pay the claimant damages. Full effect can be given to the objective stated in the Client Care Letter, that the client should not have to put his hand in his own pocket to pay the solicitors charges, without destroying the basic contractual responsibility of the client for their payment, if it is construed as I have described. Did Haven have Notice of Edmondsons Lien? The result of the above analysis is that there did exist, in each of the six cases, a sufficient contractual entitlement of Edmondson against its claimant clients to form the basis of a claim to an equitable lien over the agreed settlement debts payable by Haven on behalf of its insured drivers. The conventional analysis therefore requires the following questions to be answered: (1) did those settlement debts owe their creation, to a significant extent, to Edmondsons services provided to the claimants under the CFAs? and (2) in the absence of collusion did Haven have notice (or knowledge) of Edmondsons interest in the settlement debts? There has been no challenge to an affirmative answer to the first question, save in the case of Mr Tonkin, to which I shall return below. Edmondson completed and lodged the CNFs onto the RTA Portal as the first step in its discharge of its duties under its retainers. Each CNF contained a sufficient description of the clients claims and an indication that, unless settled, they would in due course lead to litigation. Even though it did not involve Edmondson in much work, it was enough to trigger Edmondsons entitlement to its basic charge, disbursements and success fee under the CFA terms if there ensued a successful outcome to the claim, and enough to galvanise Haven into making a direct settlement offer to each of the claimants. The question of knowledge or notice is in dispute. Absence of notice was the main reason why the claims failed before the judge. In his view it was a fatal objection that Haven did not know the detailed terms of the CFAs. In the Court of Appeal it was held that Haven had both express notice, implied notice and the requisite knowledge in any event. The claim under the traditional principles of equitable lien failed, not because of absence of notice, but because there was no underlying responsibility of the clients to pay Edmondsons charges. It is common ground that, by the time that Haven paid the settlement sums direct to the claimants, it knew that each of them had retained Edmondson under a CFA, but not its detailed terms. This much was apparent from the CNFs which Edmondson placed on the Portal. Haven also knew, from the fact that Edmondson chose to initiate each claim by using the RTA Portal, that Edmondson was most unlikely to have been paid its charges up front, but rather that it expected, if successful, to obtain payment of its charges from monies paid by Haven under the terms of the RTA Protocol, if the case settled while in the Portal, or by way of a costs order if it went to court. Either way, Haven knew that Edmondson was looking to the fruits of the claim for recovery of its charges. Havens knowledge that, if the claim could not be settled direct, it would have to fund Edmondsons recoverable charges is also apparent from the recorded telephone conversations with Mr Tonkin and Mr Grannell set out above. The judge found that Haven had this knowledge, and intended by settling direct to avoid having to pay Edmondsons charges. The claim of collusion failed, not because Haven lacked the requisite intent, but because each of the claimants did. In my judgment the Court of Appeals approach to the question of notice is to be preferred to that of the judge. Once a defendant or his insurer is notified that a claimant in an RTA case has retained solicitors under a CFA, and that the solicitors are proceeding under the RTA Protocol, they have the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable, as an interference with the solicitors interest in the fruits of the litigation. The very essence of a CFA is that the solicitor and client have agreed that the solicitor will be entitled to charges if the case is won. Recovery of those charges from the fruits of the litigation is a central feature of the RTA Protocol. The re-formulation of the Equitable Lien by the Court of Appeal This courts conclusion that the CFAs made between Edmondson and its clients did contain a sufficient contractual entitlement to charges to support the equitable lien on traditional grounds makes it strictly unnecessary to address this further question, because the sub-stratum upon which it is based is missing. There is simply no need, on these facts, to do more than apply the principles summarised in the Khans case, to reach the conclusion that Edmondson are entitled to have Haven pay them the charges identified in the CFAs as recoverable in the event of a win, to the extent that those charges did not exceed the settlement sums actually agreed to be paid to the claimants. But the correctness or otherwise of the Court of Appeals reformulation of the principle has been extensively argued, and supported by the Law Society as intervener. The Court of Appeal rested its conclusion on two alternative grounds, both of which assumed that Edmondsons clients had no contractual responsibility of any kind for its charges. The first was that Edmondson had its own entitlement to recover its charges from Haven under the RTA Protocol. The second was that the clients had such an entitlement, and Edmondson had a right to sue Haven for its enforcement using the clients name for that purpose. There are in my judgment insuperable obstacles in the way of each of those alternatives. They stem mainly from the voluntary nature of the RTA Protocol. It is not contractual in nature (although participants do undertake certain irrelevant contractual obligations to PortalCo, which operates the RTA Portal). A failure to comply with some provisions, such as the requirement to lodge a CNF response within 15 days, automatically leads to the case leaving the scheme. Other breaches of its terms entitle, but do not oblige, the other party to take the case out of the scheme. True it is that, in a case where liability is not in issue, the solicitor participant has an expectation that it will receive its charges stage by stage under the scheme from the defendants insurer, but that is not a contractual or other legal right. Generally, breach of protocol terms may lead to adverse costs orders if the matter then becomes the subject of proceedings in court, but this lies in the discretion of the court. For this purpose I am prepared to assume that an offer of a settlement payment, made direct by the insurer to the claimant, which makes no provision for payment of Stage 2 fixed costs, disbursements and a success fee to the solicitor, at a time when a case has entered and not yet left the scheme, is a breach of paragraph 7.37 of the RTA Protocol. But it creates no legal or equitable rights of any kind, if the client has no responsibility to the solicitor sufficient to support the solicitors lien. There is no legal entitlement of the solicitor direct against the insurer which the lien can support by way of security. As for suing in the name of the client, this is (as counsel agreed) a form of contractual subrogation. The solicitor can be in no better position than the client, as against the insurer. In the present case, all the clients contracted with Haven to receive settlement sums which did not include a costs element, and were paid in full. Any attempt by Edmondson to stand in their shoes by way of subrogation would be met by an unanswerable defence from Haven, based upon the settlement agreements. Counsel for Edmondson presented a detailed and vigorous submission to the effect that the flexibility of the equitable remedy for the protection of solicitors was apt to respond to any instance of unconscionable conduct by the insurer, including breach of the RTA Protocol, all the more so because of the strong public policy in enforcing the scheme, designed as it was to balance the competing interests of its stakeholders while ensuring access to justice for the victims of road accidents at proportionate cost. He sought to show, by reference to the cases which I have summarised, that this remedy had that flexibility from the outset. I acknowledge that equity operates with a flexibility not shared by the common law, and that it can and does adapt its remedies to changing times. But equity nonetheless operates in accordance with principles. While most equitable remedies are discretionary, those principles provide a framework which makes equity part of a system of English law which is renowned for its predictability. I have sought to identify from the cases the settled principles upon which this equitable remedy works. One of them is that the client has a responsibility for the solicitors charges. It is simply wrong in my view to seek to distil from those cases a general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges. Furthermore the careful balance of competing interests enshrined in the RTA Protocol assumes that a solicitors expectation of recovery of his charges from the defendants insurer is underpinned by the equitable lien, based as it is upon a sufficient responsibility of the client for those charges. Were there no such responsibility, it is hard to see how the payment of charges to the solicitor, rather than to the client, would be justified. Furthermore, part of the balance struck by the RTA Protocol is its voluntary nature. Its voluntary use stems from a perception by all stakeholders that its use is better for them than having every modest case go to court. If the court were to step in to grant coercive remedies to those affected by its misuse by others, that balance would in all probability be undermined. Mr Tonkin It was submitted for Haven that the particular facts about Mr Tonkins case did not entitle Edmondson to an equitable lien because, it was said, Edmondsons work pursuant to its retainer made no significant contribution to the settlement. The submission was that Haven offered Mr Tonkin a settlement before, and without regard to, Edmondson logging Mr Tonkins claim onto the Portal. I disagree. The relevant chronology is as follows. On 12 April 2012, shortly after the accident, Haven contacted Mr Tonkin to discuss the provision of a hire car for him. This had nothing to do with a personal injury claim, although of course it arose from the same accident. Mr Tonkin and Edmondson entered into a CFA for the purpose of pursuing his personal injury claim on 16 April and, on the following day, Edmondson logged the details of that claim onto the Portal. Three days later, on 20 April, and after Haven had acknowledged the claim on the Portal, Mr Tonkin telephoned Haven. The transcript of the conversation shows that he was ringing about the provision of a hire car. Haven took that opportunity to make him an oral settlement offer for his personal injuries, initially of 2,200, later revised after negotiation to 2,350. This was repeated in writing by Haven on 23 April, and accepted by Mr Tonkin on the following day. Solicitors for a claimant generally contribute to a settlement by logging an RTA claim onto the Portal in two ways. First, they thereby supply to the insurer the essential details of the claim necessary for the insurer to appraise it and decide whether, and if so in what amount, to make a settlement offer. These go well beyond the details the insurer is likely to receive from its insureds accident report, although that report will be likely to assist the insurer to decide whether liability should be put in issue. Secondly, they thereby demonstrate that the claimant intends seriously to pursue a claim for personal injuries, and has obtained, by the CFA, the services of solicitors for that purpose on terms which do not require the claimant to provide his own litigation funding up front. The incentive which that will usually supply to the insurer to settle a modest claim early, before costs increase, and where liability is not in issue, is obvious. In Mr Tonkins case the evidence does not show that Haven had, before Edmondson logged the claim onto the Portal, already obtained any, let alone any sufficient, information about the personal injuries claim. The earlier discussion with Mr Tonkin was about the provision of a hire car. Moreover the chronology shows that Haven had already received and acknowledged Mr Tonkins personal injury claim via the Portal before it made him a settlement offer. Nor did Mr Tonkin telephone Haven on 20 April to seek such a settlement. The inference is plain that Haven was encouraged by the logging of the claim onto the Portal to make an early offer of settlement, and nothing in the judges findings of fact displaces it. Mr Tonkins claim is not therefore an exception to the others, so far as concerns the application of the established principles about the solicitors equitable lien. Edmondson made a modest but still significant contribution to the obtaining of the settlement which ensued, and that was sufficient to trigger the lien. Conclusion For those reasons, which differ from those of the Court of Appeal, I would nonetheless dismiss this appeal, subject to one point of detail. The Court of Appeal proceeded upon the basis that the equitable remedy could be deployed to provide a means for Edmondson to recover from Haven precisely those fixed costs, disbursements and success fee provided for under the RTA Protocol, regardless of the amount agreed to be paid in settlement. By contrast the remedy exists to provide security for the solicitors charges under his retainer, limited to the amount of the debt created by the settlement agreement. In the present cases, one effect of the retainer was to limit those recoveries to the amount recoverable from the defendants or their insurers. To the extent that the fixed costs regime limits those recoveries below that recoverable under the tables in the CFAs, that limitation would have to be taken into account, as it has been by the Court of Appeals order. Calculations carried out at the courts request suggest that the Protocol based recovery was, in all cases other than Mr Tonkin, slightly greater than the amounts agreed to be paid in settlement of the respective claims. The Court of Appeals order for payment therefore needs to be reduced to the settlement amount in each case. The same calculations show that the Protocol-based recovery was, in the case of Mr Grannell, slightly higher than the corresponding entitlement under the relevant CFA: (2,070.50 as against 2,043.50). But since both amounts exceed the settlement figure of 1,900, no additional adjustment appears to be necessary. Counsel are asked to agree the precise form of the order which should now be made, in the light of this courts reasoning. Calculations carried out at the courts request suggest that the Protocol based recovery was, in all cases other than Mr Tonkin, slightly greater than the amounts agreed to be paid in settlement of the respective claims. The Court of Appeals order for payment therefore needs to be reduced to the settlement amount in each case. The same calculations show that the Protocol-based recovery was, in the case of Mr Grannell, slightly higher than the corresponding entitlement under the relevant CFA: (2,070.50 as against 2,043.50). But since both amounts exceed the settlement figure of 1,900, no additional adjustment appears to be necessary. Counsel are asked to agree the precise form of the order which should now be made, in the light of this courts reasoning.

UK-Abs

Six individuals were involved in road traffic accidents involving vehicles whose drivers were insured by the appellant insurance company, Haven Insurance Company Limited (Haven). They all entered into conditional fee agreements (CFAs) with the respondent solicitors firm, Gavin Edmondson Solicitors Limited (Edmondson). Edmondson notified the claims via the online Road Traffic Accident Portal (the Portal), in accordance with the Pre action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the Protocol). Under this scheme, the solicitors lodge the details of the claim on the Portal, the insurers respond by admitting or denying liability, and then, if liability is admitted, the amount of the damages are negotiated, with recourse to a court hearing if the amount cannot be agreed. Under the Protocol, the insurer is expected to pay the solicitors fixed costs and charges direct to the solicitors. In this case, however, shortly after the claims were logged on the Portal, Haven made settlement offers direct to the claimants, on terms which did not include any amount for the solicitors costs. Haven told the claimants that they could pay the claimants more, and more quickly, by that route, than by going through the Portal. All the individuals eventually accepted these offers, and cancelled their CFAs with Edmondson. This practice by Haven has been repeated in many other cases, which are not before the court. Edmondson claimed against Haven for the fixed costs which it should have been paid under the Protocol. Specifically, Edmondson sought enforcement of the solicitors equitable lien. This is a form of security for the payment of fees owed by the client for the successful conduct of litigation, paid out of the fruits of that litigation. Edmondsons claim was dismissed at first instance. The Court of Appeal allowed their appeal, holding that, even though the claimants did not have a contractual liability for the firms charges, which meant that the traditional equitable lien claim failed, the remedy could be modernised to allow the solicitors to recover from the insurers their fixed costs that should have been paid under the Protocol. The Supreme Court unanimously dismisses the appeal. Lord Briggs gives the lead judgment, with which the rest of the Court agrees. Edmondson are entitled to the enforcement of the traditional equitable lien against Haven, as the client owed a contractual duty to pay the solicitors charges. However, the equitable lien should not have been modernised in the manner undertaken by the Court of Appeal. The solicitors equitable lien: the existing law As the early cases demonstrate, the solicitors equitable lien was developed to promote access to justice. It enables solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack the financial resources to pay up front for its pursuit [1], [33 34]. The equitable lien depends upon (i) the client having a liability to the solicitor for his charges; (ii) there being something in the nature of a fund in which equity can recognise that the solicitor has a claim (usually a debt owed by the defendant to the solicitors client which owes its existence to the solicitors services to the client); and (iii) something sufficiently affecting the conscience of the payer at the time of payment, either in the form of collusion with the client to cheat the solicitor or notice or knowledge of the solicitors claim against or interest in the fund [35 37]. Construction of the CFA does the client have any contractual liability to pay the solicitors charges? The client care letter, which explained that the solicitor would be able to recover its costs from the losing side if the claimants won, so that the claimants would not need to put their hands in their own pockets, did not mean that the claimants were not contractually liable for the solicitors fees. It merely limited the recourse from which Edmondson could satisfy that liability to the amount of its recoveries from the defendant, and it both preserved and affirmed the clients basic contractual liability. This was a sufficient foundation for the lien to operate as a security for payment, on a limited recourse basis [40 44]. Did Haven have notice of Edmondsons lien? In all the cases before the court, the requirement that the settlement debts must owe their creation to Edmondsons services provided to the claimants under the CFAs was satisfied on the facts. Edmondsons actions in logging the claim on the portal contributed to the settlement in two ways. First, it supplied the details of the claim to the insurer, and second, it demonstrated the claimants serious intention to pursue the claim, and ability to do so with the benefit of a CFA [45 46], [59 63]. Once a defendant or his insurer is notified that a claimant in a road traffic accident case has retained solicitors under a CFA, and that the solicitors are proceeding under the Protocol, they have the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable, as an interference with the solicitors interest in the fruits of the litigation. In this case, Haven had notice of the lien because they knew that each of the claimants had retained Edmondson under a CFA, and also knew that Edmondson was looking to the fruits of the claim for recovery of its charges [48 50]. As such, the lien could be enforced against Haven by requiring it to pay the fee amounts in the CFAs direct to Edmondson, but only up to the amount of the agreed settlement payments [65]. To that limited extent the order made by the Court of Appeal needed to be varied. The re formulation of the equitable lien by the Court of Appeal It is not strictly necessary to address this issue in view of the decision on the traditional principle above, but the correctness or otherwise of the Court of Appeals reformulation of the principle has been extensively argued, and the Law Society has intervened to support it [51 52]. There are insuperable obstacles to extending the principle to cases where, although there is no contractual liability for the charges, the Protocol is breached. This includes the fact that the Protocol is purely voluntary and created no debt or other relevant legal rights at all. Whilst equitable remedies are flexible, they still operate according to principle. One of the principles of the equitable lien is that the client must have a responsibility for the solicitors charges. There is no general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges [53 58].

The issue in this case is whether the future of two little girls, one now aged four years and two months and the other now aged two years and 11 months, should be decided by the courts of this country or by the authorities in Hungary. Both children were born in England and have lived all their lives here. But their parents are Hungarian and the children are nationals of Hungary, not the United Kingdom. Under article 8.1 of Council Regulation (EC) No 2201/2003, concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, known as the Brussels II revised Regulation (the Regulation), the primary rule is that jurisdiction lies with the courts of the member state where the child is habitually resident. That would be England in this case. However, an exception is made by article 15, under which those courts can transfer the case to a court in another member state with which the child has a particular connection, if that court would be better placed to hear the case, or part of it, and the transfer is in the best interests of the child. These children have a particular connection with Hungary, as it is the place of their nationality. The issue, therefore, is the proper approach to deciding whether a Hungarian court would be better placed to hear the case and to whether transferring it would be in the best interests of the children. The context in which these questions arise is important. Free movement of workers and their families within the European Union has led to many children living, permanently or temporarily, in countries of which they are not nationals. Inevitably, some of them will come to the attention of the child protection authorities, because of ill treatment or neglect or the risk of it. In the past, the courts in this country might assume that they had jurisdiction simply because of the childs presence here. It is now clear, however, that public law proceedings fall within the scope of the Regulation (see In re C (Case C 435/06) [2008] Fam 27), so that in every case with a European dimension (more properly, a Regulation dimension) the courts of this country have to ask themselves whether they have jurisdiction. Even if they do have jurisdiction, Sir James Munby P has said that in every case they will need to consider whether the case should be transferred to another member state: see In re E (A Child) (Care Proceedings: European Dimension): Practice Note [2014] EWHC 6 (Fam); [2014] 1 WLR 2670, para 31; also Merton London Borough Council v B (Central Authority of the Republic of Latvia intervening) [2015] EWCA Civ 888; [2016] 2 WLR 410, para 84(ii). As the Family Rights Group observe in their helpful intervention, this has led to a remarkable proliferation of case law over the last three years. Hitherto, courts would manage cases with a foreign element by evaluating foreign placement options and deciding upon the best outcome for the child themselves. Now, they may be more inclined to transfer the decision making abroad. One reason for this change in approach may be the concerns voiced in many parts of Europe about the law and practice in England and Wales in relation to what is sometimes referred to as forced adoption (referred to by the President in his judgment in this case: [2015] EWCA Civ 1112; [2016] 2 WLR 713, para 8). Research compiled by the Council of Europe (O Borzova, Social services in Europe: legislation and practice of the removal of children from their families in Council of Europe member states, Report to the Parliamentary Assembly, 2015, Doc 13730) and commissioned by the European Union (C Fenton Glynn, Adoption without Consent, Directorate General for Internal Policies of the EU Parliament, Policy Department C: Citizens Rights and Constitutional Affairs, 2015) shows that other member states do permit adoption without parental consent. However, England and Wales is unusual in permitting parental consent to be dispensed with where the welfare of the child requires this (Adoption and Children Act 2002, section 52(1)(b)) rather than on more precise grounds of parental absence or misconduct. This country is also unusual in the speed and frequency with which it resorts to adoption as the way to provide a permanent home for children who for one reason or another cannot live with their families. The European Court of Human Rights has, however, held our law to be compatible with the right to respect for private and family life, protected by article 8 of the European Convention on Human Rights: YC v United Kingdom (2012) 55 EHRR 967. It goes without saying that the provisions of the Regulation are based upon mutual respect and trust between the member states. It is not for the courts of this or any other country to question the competence, diligence, resources or efficacy of either the child protection services or the courts of another state (see In re M (Brussels II Revised: Article 15) [2014] EWCA Civ 152; [2014] 2 FLR 1372, para 54(v), per Munby P). As the Practice Guide for the application of the Brussels IIa Regulation puts it, the assessment of whether a transfer would be in the best interests of the child should be based on the principle of mutual trust and on the assumption that the courts of all member states are in principle competent to deal with a case (p 35, para 3.3.3). This principle goes both ways. Just as we must respect and trust the competence of other member states, so must they respect and trust ours. Article 15 So far as relevant, article 15 of the Regulation reads as follows: 1. By way of exception, the courts of a member state having jurisdiction as to the substance of the matter may, if they consider that a court of another member state, with which the child has a particular connection, would be better placed to hear the case, or a specific part thereof, and where this is in the best interests of the child: (a) stay the case or the part thereof in question and invite the parties to introduce a request before the court of that other member state in accordance with paragraph 4; or (b) request a court of another member state to assume jurisdiction in accordance with paragraph 5. Paragraph 1 shall apply: (a) upon application from a party; or (b) of the courts own motion; or (c) upon application from a court of another member state with which the child has a particular connection, in accordance with paragraph 3. 2. A transfer made of the courts own motion or by application of a court of another member state must be accepted by at least one of the parties. 3. The child shall be considered to have a particular connection to a member state as mentioned in paragraph 1, if that member state: (c) is the place of the childs nationality; 4. The court of the member state having jurisdiction as to the substance of the matter shall set a time limit by which the courts of that other member state shall be seised in accordance with paragraph 1. If the courts are not seised by that time, the court which has been seised shall continue to exercise jurisdiction in accordance with articles 8 to 14. 5. The courts of that other member state may, where due to the specific circumstances of the case, this is in the best interests of the child, accept jurisdiction within six weeks of their seisure in accordance with paragraph 1(a) or 1(b). In this case, the court first seised shall decline jurisdiction. Otherwise, the court first seised shall continue to exercise jurisdiction in accordance with articles 8 to 14. The courts shall cooperate for the purposes of this article, either directly or through the central authorities designated pursuant to article 53. This case 6. The parents are in their 20s. The father is of Hungarian Roma descent, the mother of mixed Hungarian and Roma descent. The father has two older children, a girl now aged seven and a boy now aged five, half siblings of the children with whom we are concerned. These parents met and began their relationship in 2010. In July 2011, when the mother was pregnant with the older of the two children in this case, whom I shall call Janetta, they travelled to this country. Janetta was born here in January 2012. The family had some contact with the local authority in April and May 2012, because of their accommodation problems, and both the local authority and the Hungarian embassy offered to support their return to Hungary, but in fact they stayed here. Their second child, whom I shall call Ella, was born here in May 2013. The mother had had no ante natal care. The baby was born in the room in which the family were living without any medical assistance. The London Ambulance Service arrived after the baby was born but before the placenta was delivered. They called the police, as the father was reported to be resisting the mother and baby receiving medical attention or being taken to hospital. The family were living in circumstances of extreme squalor, with no food, clothing or bedding seen for either child. Janetta was removed from her parents that same day. Ella was discharged from hospital into foster care when she was eight days old. They were initially placed separately but since 28 May 2013 they have both been living with the same foster carers. The local authority originally applied for an emergency protection order, but this was not pursued because the parents agreed to the children being accommodated by the local authority under section 20 of the Children Act 1989 while an assessment was carried out. The local authority originally arranged for the children to have contact with their parents three times a week; this was reduced to twice a week because the parents often failed to attend or left early; and in February 2014, it was reduced to once a week. Care proceedings were not issued until January 2014 and the first interim care order was made in February. Before beginning the proceedings, the local authority had commissioned assessments of the childrens maternal grandmother and great grandmother in Hungary from Children and Families Across Borders (CFAB). The maternal grandmother was unable to offer a home but the great grandmother had suitable accommodation and was willing to offer the mother and children a home, provided that the father played no part in their lives. At that stage the father did not want his own mother to be assessed as a possible carer. The local authority had also been in touch with the Hungarian Central Authority (HCA), which had, in January 2014, suggested that the solution was for the Hungarian authorities to bring the children back to Hungary, as they were Hungarian citizens and their relatives could keep in contact with them there. Also, if they were to be adopted, only the Hungarian authorities have the right to adopt Hungarian citizen minors. That has been the consistent position of the HCA throughout. At the first hearing in the High Court, the mother, then pregnant with the couples third child, indicated her intention to return to Hungary to have the baby and also to apply for the transfer of the proceedings under article 15. This she duly did and gave birth to a baby boy in March 2014 (she later accepted that her return was in order to avoid care proceedings here in respect of him). At a hearing on 18 March 2014, Holman J declared that the girls were habitually resident here and that is not now in dispute. He adjourned the article 15 application so that there could be some clearer understanding of what arrangements might exist for the transfer of the children themselves to live, whether long term or even during the course of the proceedings, under suitable arrangements in Hungary ([2014] EWHC 999 (Fam), para 12). Accordingly, the allocated social worker visited Hungary in April 2014. She met the mother and the new baby, who were then living with the maternal great grandmother. The great grandmother was adamant that the father would not be allowed near her home, whereas the mother intended to reunite with the father as soon as they could find accommodation in Hungary. The social worker also met with representatives of the HCA and with social care professionals. The mothers application under article 15 came before Sir Peter Singer, sitting as a Deputy Judge of the High Court, on 9 May 2014. At that stage, both the local authority and the childrens guardian were supporting a transfer to Hungary, but only once the requisite assessments had been completed there and a clear recommendation made about the appropriate placement for the girls. By a judgment delivered on 12 May 2014, Sir Peter Singer refused the transfer application, but provided that a further application could be considered after the fact finding hearing listed for 25 June 2014. The purpose of that hearing was to establish whether the facts were such as to meet the threshold for compulsory state intervention in family life, set out in section 31(2) of the Children Act 1989: A court may only make a care order if it is satisfied (a) that the child concerned is suffering, or is likely to suffer, significant harm; and (b) that the harm, or likelihood of harm, is attributable to (i) the care given to the child, or likely to be given to him if the order were not made, not being what it would be reasonable to expect a parent to give to him; or (ii) the childs being beyond parental control. Only if that threshold is crossed can the court go on to consider whether making the order that the local authority seek will best promote the welfare of the child, which is the courts paramount consideration (1989 Act, section 1(1)). Neither parent attended the hearing on 25 June 2014, although both were legally represented. The fathers whereabouts were unknown but the mother had been in touch with her solicitor by telephone. At that stage she accepted 11 of the findings sought by the local authority. Five of these related to the circumstances in which the family were living and the lack of medical attention when Ella was born. Two related to the risk of harm stemming from domestic abuse in the parents relationship and the fathers aggressive and volatile personality. Two related to the parents inconsistent and unsatisfactory contact with, and effective abandonment of, the girls: by the time of the hearing, the mother had not seen them since February and the father had not seen them since March 2014. The last finding was the parents lack of insight into the local authoritys concerns and failure to co operate with attempts to assess them. Hogg J made findings accordingly, which all agreed were sufficient to satisfy the threshold in section 31(2). The hearing to decide what orders to make was planned for September 2014. In August, the social worker discovered that the mother, father and the new baby were all living with the paternal grandmother. The social workers assessment of the paternal grandmother (over the telephone) was negative. There being no viable family placement in Hungary, the local authoritys final care plan, supported by the Childrens Guardian, was that the girls should be adopted. Their current foster parents were being given active consideration as their adopters (and have since been approved as such). Accordingly the local authority issued a further application for a placement order under section 21 of the Adoption and Children Act 2002. This authorises the authority to place a child for adoption without parental consent (it is a separate question whether parental consent to the actual adoption order should be dispensed with). Under section 21(2), a court may not make a placement order unless: the child is subject to a care order, (a) the court is satisfied that the conditions in section 31(2) (b) of the 1989 Act (conditions for making a care order) are met, or the child has no parent or guardian. (c) Thus, unless the child has no parent or guardian, the threshold conditions for state intervention must be met, but they can be met either by the prior making of a care order, or by making the requisite findings in the placement order proceedings, which may (but need not) be contemporaneous with the care proceedings. The hearing listed for September could not proceed because interpreters failed to attend. It was relisted for November 2014. The mothers position was that she wanted to look after the children in Hungary; failing that, she wanted them to live with the paternal grandmother in Hungary; failing that, she wanted them to live with the maternal great grandmother in Hungary; and failing that, for them to be placed in a childrens home in Hungary. The father wanted to look after them with the mother in the paternal grandmothers home; if the parents cohabitation was not acceptable, the children should live with the mother in the maternal great grandmothers home and he would stay in England; in his oral evidence he said that he would stay and work in England, but spend holidays living with the mother and children at the maternal great grandmothers home. The HCA now took the view, apparently based on the CFAB and English social workers assessments, that there was no suitable family member in Hungary; so the children should be placed with a foster parent there, so that they could keep the connection with their parents. The local competent authority would make a decree appointing a guardian and foster parent for them. Two professional colleagues would come to England to escort the children to their foster placement in Hungary. Only the Hungarian authorities had the right to adopt them. The High Court decision The case was tried over five days, from 3 to 7 November 2014, by His Honour Judge Bellamy, sitting as a Deputy High Court Judge. The mother renewed her application for an article 15 transfer on the first day, but the judge postponed deciding this until the end of the hearing, because the fathers counsel was unprepared for it and further submissions were expected from the HCA. He proceeded to hear evidence and submissions on all aspects of the case. On 11 November 2014 he delivered judgment only on the article 15 application, which he granted: In re J (Children: Brussels II Revised: Article 15) [2014] EWFC 45. The judge directed himself (at para 70) in accordance with the guidance given by Sir James Munby P, in In re M (Brussels II Revised: Article 15) [2014] EWCA Civ 152; [2014] 2 FLR 1372, at para 54: The language of article 15 is clear and simple. It requires no gloss. The court had to ask itself the three questions set out in article 15.1. Unless they were answered in the affirmative there was no power to seek a transfer. If they were, there was still a discretion, but it is not easy to envisage circumstances in where, those conditions having been met, it would nonetheless be appropriate not to transfer the case. In answering those questions, it is not permissible for the court to enter into a comparison of such matters as the competence, diligence, resources or efficacy of either the child protection services or the courts of the other state. The judge cited two further important passages from Sir James judgment: I wish to emphasise that the question of whether the other court will have available to it the full list of options available to the English court for example, the ability to order a non consensual adoption is simply not relevant to either the second or the third question. As Ryder LJ has explained, by reference to the decisions of the Supreme Court in In re I (A Child) (Contact Application: Jurisdiction) [2009] UKSC 10; [2010] 1 AC 319 and of this court in In re T (A Child) (Care Proceedings: Request to Assume Jurisdiction) [2013] EWCA Civ 895, [2014] Fam 130, the question asked by article 15 is whether it is in the childs best interests for the case to be determined in another jurisdiction, and that is quite different from the substantive question in the proceedings, what outcome to these proceedings will be in the best interests of the child?. Article 15 contemplated a relatively simple and straightforward process: As Lady Hale observed in Re I, para 36, the task for the judge under article 15, will not depend upon a profound investigation of the childs situation and upbringing but upon the sort of considerations which come into play when deciding upon the most appropriate forum. So the judge proceeded to ask himself the three questions. It was common ground that, because of their nationality, the children had a particular connection with Hungary (para 80). In considering whether a Hungarian court was better placed to hear the case, he set out the following factors in favour (para 82): (i) the mothers only language is Hungarian; the father speaks only a little English; in England they require the support of an interpreter; (ii) one full sibling and two half siblings are habitually resident in Hungary; the Hungarian court could promote contact between them in ways not open to an English court and is likely to be better placed to assess whether the girls should establish a relationship with their baby brother; (iii) any further assessment required (given that he had already expressed concern about the brevity of the CFAB assessment of the maternal great grandmother and the social workers telephone assessment of the paternal grandmother) would be better undertaken in Hungary than in England; (iv) the Hungarian authorities would have access to background information about the family (the mothers step fathers conviction for physically abusing her; the fathers time in foster care; the removal of the two half siblings from their mother and placement in foster care); (v) the limits to what the English court could do to ensure that the childrens cultural and linguistic needs are met (the final care plan being silent about what the authority intended to do to promote this); (vi) a change of placement might be necessary, should the current foster carers not be approved as adopters for them and not be willing to become their special guardians; and (vii) there was good reason to believe that force of circumstances might compel both parents to return to Hungary. He then turned to the factors pointing the other way (para 83): (i) the English court had heard all the evidence and it was possible that a final determination could be made immediately; further delay would be avoided; (ii) social work assessments had been completed of the parents, the maternal grandmother and great grandmother, and the paternal grandmother, and of the childrens best interests by a very experienced Childrens Guardian; no detailed assessments had been undertaken by the Hungarian authorities although they had had time to do so; (iii) the parents had had full legal representation and interpretation before the English court; (iv) the allocated social worker had a relationship with the children and a thorough knowledge of the case and had travelled to Hungary to make her own inquiries; (v) retaining the proceedings in England would retain judicial continuity in the sense of having access to all the case papers and a picture of the development of the case over time (including the frequent changes in the parents positions); and (vi) the children had lived here all their short lives; their ethnic, cultural and linguistic needs must be weighed against the importance of growing up in a safe, stable, secure and risk free environment. He discussed the issue of delay (paras 84 to 92). He concluded that, although it was inevitable that there would be some further delay in settling the childrens future if the case were transferred, and he did not know what the extent of that would be, it had to been seen in the context of the significant delay so far, much of which was attributable to the local authority. He was not therefore persuaded that significant weight should be attached to it. He concluded (para 93) that the Hungarian court was better placed to hear the case. He attached particular weight to the point made at para 20(ii) above (the potential for contact with siblings), a factor which had tipped the balance for Pauffley J in In re J (A Child: Brussels II revised: Article 15: Practice and Procedure) [2014] EWFC 41. The judge then turned to consider whether transfer of the proceedings to Hungary would be in the childrens best interests. The local authority argued that the stark choice now facing the court on the article 15 application is for the children to keep their long term carers and preserve the status quo or be removed to foster care in Hungary. The judge however did not accept that this is a point which the court may take into account in determining best interests in this context. It is relevant to the determination of the question what outcome to these proceedings will be in the best interests of these children?; it is not relevant to the determination of the question is transfer of these proceedings to the Hungarian court in these childrens best interests?. (para 94) Having found that the Hungarian court was better placed to hear the case, it followed that it would be in their best interests to transfer it (para 95). Finally, he considered the exercise of his discretion under article 15. Having answered all three of the questions in article 15.1 in the affirmative, there were no features which would properly entitle him to exercise his discretion against requesting the Hungarian court to assume jurisdiction (para 98). Accordingly, his order asked the courts of Hungary to accept the request for a transfer of the case; the request would be transmitted by the local authority to the HCA for onward transmission to the Hungarian court; in the event that the Hungarian courts accepted the request within the six week time limit laid down in article 15, the case would be urgently re listed before him for consequential orders, including the transfer of the children to Hungary; in the event that the request was not accepted within that time, it would be relisted for further directions. It would appear that by the case he had in mind, not only the care proceedings, but also the placement order proceedings. The Court of Appeal decision The local authority and the Childrens Guardian appealed to the Court of Appeal with the permission of Black LJ. The hearing took place in March 2015, before Sir James Munby P, Black LJ and Sir Richard Aikens, but judgment was not delivered until November (this time adopting the initial of the childrens surname): In re N (Children) (Adoption: Jurisdiction) [2015] EWCA Civ 1112; [2016] 2 WLR 713. A great deal of the Presidents leading judgment is devoted to some very important questions relating to jurisdiction in adoption generally, which are not before this court on this appeal. In summary, these are (para 63): (i) Does an English court have jurisdiction (a) to make an adoption order in relation to a child who is a foreign national, and (b) to dispense with the consent of a parent who is a foreign national? This was a difficult question, given that the Brussels II revised Regulation does not cover adoption or measures preparatory to adoption, nor is there any other international instrument covering the matter. The Court of Appeal answered both (a) and (b) in the affirmative and this issue is not before this court. (ii) If the English court does have such jurisdiction, how should that be exercised? The President gave guidance on this issue (paras 104 to 111). Once again, this guidance is not before this Court on this appeal, but it does have some relevance to the issue which is before us, as we shall see. (iii) What is the scope of the Brussels II revised Regulation? It is well established that the Regulation applies to care proceedings, as well as to proceedings between private parties: see In re C (Case C 435/06) [2008] Fam 27. However, by excluding decisions on adoption, measures preparatory to adoption, or the annulment or revocation of adoption from the scope of the Regulation, does article 1.3.b also exclude (a) care proceedings where the care plan is adoption, or (b) placement order proceedings? The court concluded that (a) was within the scope of the Regulation, but (b) was not. This is not under appeal to this court. That leaves the remaining three issues, which related to article 15 (para 63): (iv) What, upon the true construction of article 15 of the Regulation, are the requirements before the English court can make a request for a transfer to another member state? The President observed that there is much English learning on the meaning and application of article 15.1 (para 113). He repeated the guidance he had given in In re M (Brussels II Revised: Article 15) [2014] EWCA Civ 152; [2014] 2 FLR 1372, para 54 (see para 18 above), on which the judge had also relied. He went on to emphasise how important it is that article 15 is considered at the earliest possible opportunity (para 114), although it could be considered at any stage of the proceedings (para 117); that repeat applications were to be deprecated and would usually fail unless there had been a change of circumstances, although they might sometimes be appropriate (para 118); that a transfer could be considered after a fact finding hearing, but only in exceptional circumstances (para 120); and that the process should be summary, measured in hours not days and not dependent on a profound investigation of the evidence (para 122). (v) Leaving on one side any question arising in relation to article 1.3.b, was the judge justified in deciding as he did? Could it be said that he was wrong to do so? The court concluded that he was justified in deciding to exercise jurisdiction to request transfer under article 15; he undertook a careful examination of all the relevant factors; he did not consider any irrelevant factors; he did not err in the weight he attached to the relevant factors, or misdirect himself in law (para 64(v)). (vi) Was the judges decision vitiated by his failure to address article 1.3.b? What were the consequences of his omission to do so? The court held that the fact that he did not appreciate the effect of article 1.3.b did not vitiate his decision. His decision in relation to the care proceedings could and should stand and they should be stayed. His decision in relation to the placement order proceedings could not stand, but as they were of their nature consequential on the care proceedings, they too were stayed (para 64(vi)). Black LJ and Sir Richard Aikens delivered short concurring judgments. The appeal was therefore dismissed. The issues in this appeal The Childrens Guardian, on behalf of the children, and with the support of the local authority, now appeals to this court. The mother and the father resist that appeal. Although not formally represented before this Court, the HCA also supports the decision. Their letter of 3 February 2016 informs the court that the HCA accepted jurisdiction under article 15.5 on 15 January 2015 following the High Courts request; they were notified of the Court of Appeal decision on 2 December 2015; while waiting for the childrens social worker to contact them about the details of bringing the children to Hungary, their competent local authority Guardianship Office had ascertained that the parents living circumstances were not convenient to take care of the children; however they wished to keep the connection with them; and the girls had two half sister/brother who are living in the mothers care (sic?). An English speaking foster parent had been identified for the girls, as had a child protection guardian. The HCA reiterated their consistent view that only the Hungarian authorities have the right to adopt Hungarian citizens and that the children have the possibility of keeping connection with their parents and family members if they live in Hungary. In addition, this court has received valuable written submissions from three interveners: the AIRE Centre, the Family Rights Group and the International Centre for Family Law, Policy and Practice. The principal issue before this Court is the proper approach to the assessment of the childs best interests in the context of an application for transfer under article 15. In particular, is it limited to questions of forum, and if so, how does it differ from the question of whether the foreign court is better placed to hear the case? Is the court entitled to take into account the consequences for the child of transferring the proceedings where, as here, the transfer will also result in the childs removal from her current placement to a placement in another country? A further issue is whether the judge was correct to find that the Hungarian court was better placed when he had heard all the evidence and was in a position to give a final judgment upon it. The local authority has raised additional issues relating to the placement order proceedings. As the Regulation does not apply to these, was the Court of Appeal correct to impose a stay upon them in consequence of staying the care proceedings? As this is the United Kingdoms court of final instance, the further issue arises as to whether we are obliged to make a reference to the Court of Justice of the European Union on the ground that the interpretation of article 15 is not acte clair. Between the hearing in the Court of Appeal and the handing down of judgment, the CJEU accepted a reference from the Supreme Court of Ireland in the case of Child and Family Agency (CAFA) v JD (Case C 428/15). Four of the six questions referred are relevant to this case: (1) Does article 15 of Regulation 2201/2003 apply to public law care applications by a local authority in a member state, when if the court of another member state assumes jurisdiction, it will necessitate the commencement of separate proceedings by a different body pursuant to a different legal code and possibly, if not probably, relating to different factual circumstances? If the best interests of the child in article 15.1 of (3) Regulation 2201/2003 refers only to the decision as to forum, what factors may a court consider under this heading, which have not already been considered in determining whether another court is better placed? (4) May a court for the purposes of article 15 of Regulation 2201/2003 have regard to the substantive law, procedural provisions, or practice of the courts of the relevant member state? (6) Precisely what matters are to be considered by a national court in determining which court is best placed to determine the matter? At the time of writing, the CJEU has not given judgment. The Guardian sought permission to appeal to this court on question (1) above. It is certainly arguable, for the reasons sketched in the question from the Irish court, that article 15 is not applicable to care proceedings. The case cannot be transferred in the same way that a case between parents or other private parties can be transferred. The proceedings in the other member state will inevitably be different proceedings, with different parties, different procedures, and possibly different substantive law. Indeed, there may not be proceedings in a court at all, but only within administrative authorities, as in this case. As Black LJ elegantly put it, what is being transferred is not the case but the problem (para 189(i)). However, given that the Regulation clearly does apply to public law proceedings, the question whether article 15 does not apply in public law proceedings is obviously not acte clair. It must await the determination of the Irish reference. For that reason, it seemed to this court more convenient to refuse permission to appeal on that ground and proceed on the basis that article 15 can apply to public law proceedings. Whether it is necessary to await the decision of the CJEU on questions (3), (4) and (6) before deciding this case is another matter, to which I shall return. The proper approach to article 15.1 The argument before us has principally focussed on the nature of the best interests evaluation required by article 15.1 and in particular whether it is limited to questions relevant to the choice of forum. This has been described as the attenuated welfare test (see In re T (A child: Article 15, Brussels II Revised) [2013] EWHC 521 (Fam); [2013] 2 FLR 909, para 21). Its source appears to be my own observation in In re I, quoted in In re M (see above at para 18). Contrary to the impression given there, In re I was not a case about article 15, but a case about article 12 of the Regulation, which relates to Prorogation of Jurisdiction. Article 12.1 allows a court dealing with divorce, separation or nullity proceedings also to deal with connected parental responsibility matters if the spouses and holders of parental responsibility agree. Article 12.3 gives the courts of a member state jurisdiction in relation to parental responsibility, even though the child is not habitually resident there, where: the child has a substantial connection with that member a. state, in particular by virtue of the fact that one of the holders of parental responsibility is habitually resident in that member state or that the child is a national of that member state; and b. the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by all the parties to the proceedings at the time the court is seised and is in the best interests of the child. It was in that context that I observed (at para 36): The final requirement in article 12(3) is that the jurisdiction of the English courts should be in the best interests of the child. Nothing turns, in my view, on the difference between the best interests of the child in article 12(3), the superior interests of the child in article 12(1) and the childs interest in article 12(4). They must mean the same thing, which is that it is in the childs interests for the case to be determined in the courts of this country rather than elsewhere. This question is quite different from the substantive question in the proceedings, which is what outcome to these proceedings will be in the best interests of the child? It will not depend upon a profound investigation of the childs situation and upbringing but upon the sort of considerations which come into play when deciding upon the most appropriate forum. The fact that the parties have submitted to the jurisdiction and are both habitually resident within it is clearly relevant though by no means the only factor. It appears to have been the Court of Appeals endorsement of this approach to the best interests test in article 15.1 which led the judge to hold (see para 24 above) that the consequences for these children of being removed from their long term carers and taken to new foster carers in Hungary was completely irrelevant to whether transferring the case would be in their best interests. The first point made by the appellants is that the requirement in article 12.3 is quite different from the requirement in article 15.1. In article 12.3 (as also in article 12.1) it is the court which is deciding whether to accept jurisdiction, which it would not otherwise have, that has to decide whether to do so is in the best interests of the child. This is roughly equivalent to the requirement in article 15.5 that the court which is requested to take the case (here the Hungarian court) must consider that it is the best interests of the child to accept jurisdiction. Article 15.1 is directed towards the court which already has jurisdiction in an existing case. It imposes an additional requirement that the transferring court considers this to be in the best interests of the child. Obviously, the considerations applicable when deciding whether to relinquish jurisdiction may be somewhat different from the considerations applicable when deciding whether to accept it. Secondly, article 12.3 contains no requirement that the court accepting jurisdiction be better placed to hear the case than the court which would otherwise have it. Interestingly, the draft of article 15.1 proposed by the EU Commission did not contain this requirement, although the Explanatory Memorandum referred to situations (albeit exceptional) where the courts of another member state would be better placed to hear the case. The requirement does, however, appear in article 8 of the 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co operation in respect of Parental Responsibility and Measures for the Protection of Children, which the Commission described as a similar mechanism in their Explanatory Memorandum. That may be why it found its way into the eventual Regulation. The European legislator must have considered that the better placed requirement was something different from the best interests requirement, otherwise they would not both be there. Thirdly, as originally drafted, article 15.1 limited transfer to exceptional circumstances. As finally adopted, it no longer does so, merely introducing the power with the words by way of exception. An exception does not necessarily require that the circumstances be exceptional. Nevertheless, it is an exception to the general rule, that the future of children should be decided in the courts of the member state where they are habitually resident. In general, it is expected that exceptions will be narrowly construed and applied (see, for example, Somafer SA v Saar Ferngas AG (Case C 33/78) [1978] ECR 2183; [1979] 1 CMLR 490, para 7), although the text which was eventually adopted is more open ended than that originally proposed. Fourthly, however, it is clear that the Commission regarded the requirement that the court proposing the transfer, as well as the court accepting it, should evaluate whether the transfer would be in the best interests of the child as an additional safeguard. By this they must have meant an additional safeguard for the child. In this connection, recital 12 to the Regulation is relevant: The grounds of jurisdiction in matters of parental responsibility established in the present Regulation are shaped in the light of the best interests of the child, in particular on the criterion of proximity. This means that jurisdiction should lie in the first place with the member state of the childs habitual residence, except for certain cases of a change in the childs residence or pursuant to an agreement between the holders of parental responsibility. Recital 33 is also relevant: This Regulation recognises the fundamental rights and observes the principles of the Charter of Fundamental Rights of the European Union. In particular, it seeks to ensure respect for the fundamental rights of the child as set out in article 24 of the Charter of Fundamental Rights of the European Union. Article 24 of the Charter of Fundamental Rights is headed The rights of the child: 1. Children shall have the right to such protection and care as is necessary for their well being. They may express their views freely. Such views shall be taken into consideration on matters which concern them in accordance with their age and maturity. 2. In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration. 3. Every child shall have the right to maintain on a regular basis a personal relationship and direct contact with both his or her parents, unless that is contrary to his or her interests. As the AIRE Centre point out in their helpful intervention, article 24.2 is clearly modelled on article 3.1 of the United National Convention on the Rights of the Child. They further point out that secondary EU legislation, such as the Regulation, must be interpreted consistently with the Treaties, including the Charter of Fundamental Rights: Criminal proceedings against Lindqvist (Case C 101/01) [2003] ECR I 12971, Ordre des barreaux francophones et germanophone v Conseil des ministres (Case C 305/05) [2007] ECR I 5395. The provisions of the Charter only apply when member states are implementing EU law, but we are clearly doing so in this case. If there were any doubt about the need to interpret and apply the Regulation consistently with article 24 of the Charter, recital 33 puts that beyond doubt. This is a case about childrens rights, and in particular, the right to have their best interests regarded as a primary consideration in all actions relating to them. As the AIRE Centre also point out, the line of case law leading to the attenuated welfare test does not appear to have had any explicit regard to the best interests obligation. The test might have looked very different if it had done. It is the case, as argued on behalf of the mother, that the better placed and best interests questions are inter related. Some of the same factors may be relevant to both. But it is clear that they are separate questions and must be addressed separately. The second one does not inexorably follow from the first. The question remains, what is encompassed in the best interests requirement? The distinction drawn in In re I remains valid. The court is deciding whether to request a transfer of the case. The question is whether the transfer is in the childs best interests. This is a different question from what eventual outcome to the case will be in the childs best interests. The focus of the inquiry is different, but it is wrong to call it attenuated. The factors relevant to deciding the question will vary according to the circumstances. It is impossible to be definitive. But there is no reason at all to exclude the impact upon the childs welfare, in the short or the longer term, of the transfer itself. What will be its immediate consequences? What impact will it have on the choices available to the court deciding upon the eventual outcome? This is not the same as deciding what outcome will be in the childs best interests. It is deciding whether it is in the childs best interests for the court currently seised of the case to retain it or whether it is in the childs best interests for the case to be transferred to the requested court. Application in this case It follows that the judge was wrong to accept that it followed from his decision that the Hungarian court was better placed to hear the case that it would be in the best interests of the children to transfer it. He ought to have addressed his mind to the short and long term consequences for them of doing so and also of not doing so. The short term consequence was that these little girls would be removed from the home where Ella had lived for virtually all her life and Janetta had lived for most of hers, where they were happy and settled, and doing well (Janettas behaviour having been seriously disturbed when they first arrived). They would be transferred to a foster placement about which the court knew nothing other than that the foster carer spoke English. The country, the language and the surroundings would be completely unfamiliar to them. The long term consequence would be to rule out one possible option for their future care and upbringing, that is, remaining in their present home on a long term legally sanctioned basis, whether through adoption, or through a special guardianship order, or through an ordinary residence order. It would not be in the best interests of these children to transfer a dispute about their future to a court which would be unable to consider one of the possible outcomes, indeed the outcome which those professionals with the closest knowledge of the case and the children now consider would be best for them. That is not, of course, to say that that is the outcome which the court should eventually decide. There is a very live issue as to whether in the long run these little girls of Hungarian nationality and descent, with mixed Hungarian and Roma ethnicity, and many family members in Hungary, including their parents, grandparents, a sibling and half siblings, would be better living in Hungary. The judge took into account the importance of their siblings and their background when addressing the question of which court was better placed. But in addressing that question, he did not take into account what the real issues in the case were. The real issues were that the parents wanted the girls to come to Hungary, preferably to live with them or with members of the extended family. The advantages and disadvantages of this had been explored by the girls social worker. The underlying problem was that the mothers family would have nothing to do with the father, whom they saw as abusive, while the fathers family supported him, and the mother wished to stay with him. The HCA, therefore, apparently relying largely on the assessments carried out by or for the local authority, did not see family placement as viable, and so proposed foster care, but preserving the possibility of some sort of relationship with the parents and siblings. The local authority, with the support of the Childrens Guardian, now proposed placement for adoption, preferably with the existing foster carers. The judge considered the Hungarian authorities better placed to achieve the first two of these outcomes. He did not consider how far it would be open to him to achieve the same outcomes without transferring the case. Yet there clearly would have been ways of securing that the children were placed under the aegis of the relevant Guardianship Office in Hungary. As the Family Rights Group observe, the courts have been arranging foreign placements for years. The mother is right to say that the court cannot dictate the content of a local authoritys care plan when it makes a final care order in care proceedings. On the other hand, the local authority may be willing to change its care plan in the light of clear findings as to the childrens best interests. In any event, a placement abroad can be achieved without making a care order. If the child is not subject to a care order, the inherent jurisdiction of the High Court may be used in a flexible way to secure the desired outcome. The prohibitions on its use in section 100(2) of the Children Act 1989 would not preclude the court from making orders in favour of the relevant Hungarian authority. A similar result might be achieved through orders under section 8 of the Children Act 1989, which again would not be precluded by section 9(5) (sections 100(2) and 9(5) preclude the use of such orders in effect to place children in the care of a local authority). Nor did the judge consider which court would be better placed to achieve the third outcome. There could only be one answer to this. But there would be a variety of ways of achieving that outcome. The local authority did propose a closed adoption, but there are other ways of achieving permanence and stability in this country without cutting off all links with the childrens family and background. There are orders in favour of foster parents which fall short of adoption. Whether the children remain in foster care under a care order or under some order in favour of the foster carers, the court is in charge of contact. It could make contact orders which would be recognisable and enforceable in Hungary. Alternatively, it could transfer the contact part of the proceedings to Hungary under article 15. All of these things should have been taken into account in deciding which court was better placed. Above all, in this particular case, the judge had heard and read all the evidence that anyone involved wished to put before him. He was in a position to decide the outcome. Although a transfer request can be made and determined at any time, it would be rare indeed that, the case having reached such a point, another court would be better placed to hear it. Thus, in my view, not only did the judge take the wrong approach to the best interests question, he also left out of account some crucial factors in deciding upon the better placed question. I shall return to the consequences of that after considering the other issues in the case. The placement order proceedings The local authority argue that, as the placement order proceedings are not within the scope of the Regulation, there was no power to stay them with a view to transfer under article 15. The Court of Appeal was correct to recognise that, but wrong to stay them as consequential on the care proceedings. Section 21(2) of the Adoption and Children Act 2002 (para 15 above) makes it clear that the threshold may be determined either in care proceedings or in separate placement order proceedings. Thus they argue that the placement order proceedings should have been left to take their course. It is, of course, correct that article 15 does not apply to placement order proceedings. The judge was wrong to think that it did. But that, in itself, did not invalidate his decision to transfer the care proceedings. If it was right to transfer the care proceedings, then it made no sense to leave the placement order proceedings to continue as if nothing had happened. The object of the transfer was that the childrens future should be decided in Hungary and not in England. As the mother points out, under the Family Procedure Rules 2010, the court has wide case management powers, including, under rule 4.1(3)(g), the power to stay the whole or part of any proceedings either generally or until a specified later date. The Court of Appeal has the same powers as the trial judge. It clearly had the power to do this. If it had been right to uphold the transfer, it would clearly have been right to stay the placement order proceedings. Reference to the CJEU? As already noted, there is a live question before the CJEU as to whether article 15 is capable of applying to public law proceedings such as these. This cannot be regarded as acte clair. This court has to decide whether to make its own reference of essentially the same question that the Supreme Court of Ireland has already referred; whether to delay its decision until the outcome of that reference is known; or whether to proceed on the assumption that article 15 is capable of applying to public law proceedings and review the decisions of the courts below on their merits. In my view, the third course is infinitely preferable to the other two. These proceedings have already taken far too long. Some of the delay is attributable to the local authority, which should have brought proceedings long before they did, rather than relying upon the parents agreement for the children to be accommodated; some of the delay is attributable to the vacillations of the parents and their failure to co operate with the authority over assessments and contact with their children; some of it is attributable to the courts. There may be good, or at least understandable, reasons for much of this. But the children are the last people who should be made to suffer for the actions or inaction of others. Janetta is now aged four years and two months. Ella is now aged two years and 11 months. For almost all of Ellas life the girls have lived with their present foster parents. One way or another, their best interests demand that their future should be decided as soon as possible. But does that leave this court free to decide upon the correct approach to an article 15 application? The Supreme Court of Ireland has referred questions which are essentially the same as the principal issue in this case. However, it has done so in a very different context a pregnant woman who had deliberately left England and moved to have her baby in Ireland in order to avoid care proceedings here. The transfer question therefore also raised issues about the free movement of workers within the European Union which do not arise in this case. I share the Presidents view that the language of article 15.1 is simple and clear. It requires no gloss or explanation. The court has three questions to answer: does the child have a particular connection (as defined in article 15.3) with another member state; would a court in that member state be better placed to hear the case, or a specified part of it; and would this be in the best interests of the child? The better placed and best interests questions are separate questions and the best interests question is intended to be an additional safeguard for the child. The question is not what eventual outcome to the case will be in the best interests of the child but whether the transfer will be in her best interests. Subject to that, the scope of the inquiry will depend upon all the circumstances of the case. I would therefore proceed on the basis that the meaning of article 15.1 is acte clair, albeit not yet clair, and we are merely applying it to the facts of the case, which is the task of the national courts. Furthermore, for the reasons already explained, the judge was, in my view, plainly wrong to conclude that the Hungarian authorities were, on the particular facts of this case, better placed to hear the case. He left out of account the vital factor that to transfer the case would preclude one possible outcome which might be in the best interests of the children concerned, whereas retaining jurisdiction would allow all the possible outcomes to be considered. Transfer would also precipitate their removal from their long standing home without any evaluation of the impact of this upon their psychological well being. In my view, therefore, it is not necessary for this court to make a reference to the CJEU or to await the outcome of the reference made by the Supreme Court of Ireland. We should proceed to decide the case. Conclusion It follows that the appeal must be allowed and the transfer request set aside. After this period of time, there can be no question of re opening the transfer application. It is in the best interests of these children for their future to be decided as soon as possible. Unfortunately, it will be necessary for the evidence to be updated. The case should therefore be returned to the Family Division of the High Court, to be heard by a judge of that division, as soon as possible. As has already been made clear, the range of possible outcomes for these two children is not limited to the primary case presented to the judge: closed adoption here as against foster placement in Hungary. There are several other options in between. The guidance given by the President in this case (paras 104 to 111) is relevant. He emphasised the importance in the checklist of factors to be considered when deciding whether to make an adoption order in section 1(4) of the 2002 Act, (c) the likely effect on the child (throughout his life) of having ceased to be a member of the original family and become an adopted person and (d) the childs background (para 104). The court and the professionals must give the most careful consideration to those parts of the checklist which focus attention, explicitly or implicitly, on the childs national, cultural, linguistic, ethnic and religious background. The court is directed to consider the likely effect, throughout her life, of having ceased to be a member of her original family (para 105). As he had said in Merton London Borough Council v B [2015] EWCA Civ 888; [2016] 2 WLR 410, para 84, We must be understanding of the concerns about our processes voiced by European colleagues; and the court must rigorously apply the principle that [non consensual] adoption is the last resort and only permissible if nothing else will do (para 106). On the other hand, as he had said in In re J (Care Proceeding: Appeal) [2014] EWFC 4; [2015] 1 FLR 850, para 36, at the end of the day matters had to be judged according to the law of England and by reference to the standards of reasonable men and women in contemporary English society. The parents views, whether religious, cultural, secular or social, are entitled to respect but cannot be determinative (para 108). One important factor, in considering the childs welfare, is whether an adoption order would be recognised in the country where the child is domiciled, or a national, or has been habitually resident. If it would not be, the court will have to consider the disadvantages of a limping adoption order (see In re B(S) (An Infant) [1968] Ch 204), which might make it difficult for them ever to visit Hungary. This might tell in favour of finding other ways of giving the children the security and stability they need. Much will, of course, depend upon the evidence before the judge at the rehearing. It will be for him or her to decide upon the outcome which will be in the best interests of these little girls.

UK-Abs

This question in this appeal is whether the courts of England or Hungary should have jurisdiction to determine proceedings concerning the future welfare of two young girls. They are Hungarian nationals but were born and have been resident in England all their lives. Under article 8(1) of Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility (known as Brussels II Revised) the primary rule is that jurisdiction lies with the courts of the member state where the child is habitually resident. The issue is whether the exception to this rule, found in article 15, permitting the transfer of certain proceedings to a court in another member state if it is better placed to hear the case and this would be in the best interests of the child, should apply in this case. The parents of the girls are Hungarian nationals, who moved to England in 2011. The older girl (Janetta) was born in January 2012. She came to the attention of the UK authorities when the mother gave birth to the younger girl (Ella) in May 2013. Due to the conditions of extreme squalor in which Janetta was found to be living, and the absence of medical attention for Ellas birth, both girls were removed from their parents that day and have been living with foster carers ever since. Care proceedings were issued in January 2014 and the local authority made enquiries regarding the availability and suitability of family members in Hungary to care for the girls. It was in touch with the Hungarian Central Authority (HCA) which proposed the transfer of the girls to Hungary and maintained that only the Hungarian authorities had the right to adopt Hungarian citizen minors. The mother returned to Hungary in 2014 and has since given birth to a third child. She applied for the care proceedings in respect of the girls to be transferred to Hungary pursuant to article 15 of Brussels II Revised. The local authority concluded that there was no viable family placement in Hungary and applied for a placement order for the adoption of the girls, possibly by their foster parents in England, without parental consent. The High Court granted the mothers application (supported by the HCA) to request the transfer of the proceedings under article 15. The Court of Appeal dismissed the appeal brought by the Childrens Guardian and local authority. The Childrens Guardian appeals to the Supreme Court. The issues were the proper approach to the assessment of the childs best interests for the purposes of article 15 and the correctness of the decision to transfer in this case. The Supreme Court unanimously allows the appeal, setting aside the request for a transfer of the proceedings to Hungary and returning the case to the High Court. Lady Hale gives the only judgment. The context in which the question of jurisdiction arises is important. Free movement of workers and their families within the EU has led to many children residing in states of which they are not nationals. Inevitably some of them require protection from ill treatment or neglect, or the risk of it. In every case it is necessary for the court to consider whether the case should be transferred to another state [2]. It is particularly important where the English court might exercise its power to place children for adoption without parental consent, on the basis that the welfare of the child requires this, as this power is unavailable in many other member states [3]. Although the question of the applicability of article 15 to public law care proceedings is currently the subject of a pending reference to the Court of Justice of the European Union in a case from Ireland, the Supreme Court proceeds on the assumption that article 15 is capable of applying and reviews the decisions of the courts below on their merits, rather than making a further reference. The best interests of the girls requires a decision on their future without yet further delay [35, 54]. As for the correct approach to article 15, the language is simple and clear and the court can apply it to the facts of this case without awaiting the outcome of the reference [57]. The principal issue is the nature of the best interests assessment in article 15 and whether it is limited to questions relevant to the choice of forum, as the judge had found. The addition of the best interests test is intended to be an additional safeguard for the child, consistent with the rights of children found in article 24 of the Charter of Fundamental Rights of the European Union [41 42]. While a number of factors will be relevant both to the question of whether a court is better placed to hear the proceedings and of whether transfer is in the best interests of the child, these are separate questions and must be addressed separately. The answer to the second does not inexorably follow from the first [43]. The question is whether the transfer (rather than the eventual outcome) is in the childs best interests but the impact of the transfer on the welfare of the child and on the choices available to the court deciding the eventual outcome must be considered [44]. In the present case, the short term effect of the transfer would be to remove the girls from the home where Ella had lived for virtually her whole life and Janetta for most of hers, where they were happy and settled, to an unfamiliar foster placement in Hungary; and the long term effect would be to rule out one possible option for their future care and upbringing, which was to remain in their present home either through adoption, or a special guardianship order or ordinary residence order. This is not necessarily the outcome which the court should eventually decide, as questions of maintaining links with the girls extended family in Hungary and ethnic background will also be important factors [45 46]. But the judge failed to consider whether the English court could achieve the same outcomes in Hungary as the Hungarian courts, without the need to transfer the case, which would also preserve the options to keep the girls in their present home [48 49]. The English court was also better placed to decide the outcome as it had already heard all the evidence that those involved wished to put before it [50]. These were crucial factors which had been left out of account [51]. The judge had been wrong to apply article 15 to the placement order proceedings but this did not in itself vitiate his decision to transfer the care proceedings. He had the power to stay the placement order proceedings under the wide case management powers of the court and, if it had been right to uphold the transfer, then it would clearly have been right to stay the placement order proceedings [53]. The case is therefore returned to the High Court to determine the future arrangements for the girls, with updated evidence. The full range of outcomes will be open to the court, not simply the stark choice between closed adoption and a foster placement in Hungary, and the judge will apply the extended guidance given by the Court of Appeal in this case [61].

The Family Law (Scotland) Act 1985 (the 1985 Act) brought about a radical reform of financial provision on divorce in Scotland. This appeal raises questions of statutory interpretation in relation to both the 1985 Act and subordinate legislation made under that Act. The appellant (Mrs McDonald) seeks a pensions sharing order under section 8(1)(baa) of the 1985 Act on her divorce from her husband (Mr McDonald) on the basis that his pension forms part of the matrimonial property which is taken into account in fixing financial provision. It is a central principle in the 1985 Act relating to such financial provision that the net value of the matrimonial property should be shared fairly between the parties to the marriage. This appeal raises the question as to what proportion of a persons pension rights falls within the definition of matrimonial property. In particular, is it necessary that the holder of the pension rights contributed to his or her pension during the marriage in order for any part of his or her interest in the pension to be matrimonial property? The facts can be stated briefly. Mr McDonald worked as a miner for British Coal. He joined the British Coal Staff Superannuation Scheme (the scheme) on 11 December 1978 when he was aged 25 and began contributing to it. He married Mrs McDonald on 22 March 1985. Shortly afterwards, as a result of a leg injury, he was found to be unfit to continue working as a miner. His disability entitled him to retire from employment early on grounds of ill health and to receive a pension income before his normal retiring age. When he decided to exercise that right, he was only 32 years old and had completed only six years and 243 days of pensionable service. He stopped contributing to the scheme on 10 August 1985 and has received a pension since then. As a result, between 11 December 1978 and 10 August 1985 Mr McDonald was a member of and contributor to the scheme; since then he has been a member in receipt of income benefits under the scheme. Mr and Mrs McDonald ceased to cohabit on 25 September 2010. As I explain below, the date of final separation is an important date for ascertaining matrimonial property under the 1985 Act and is one of the dates referred to in that Act as the relevant date. It is in this case the relevant date. Further, as I explain below, section 10(5) of the 1985 Act treats as matrimonial property the proportion of any rights or interests of either person in any benefits under a pension arrangement which is referable to the period [during the marriage but before the relevant date] (emphasis added). Subordinate legislation, which I discuss in paras 20 31 below, has provided for the valuation of a persons rights or interests in a pension arrangement by reference to what is known as the cash equivalent transfer value (CETV). British Coal has provided a figure for the CETV of Mr McDonalds pension rights which had accrued in the scheme on the relevant date. That value is 172,748.38. This figure reflects not only the capitalised value of the pension then in payment but also a spouses pension payable to a surviving spouse on Mr McDonalds death. As discussed below, the subordinate legislation also provides a formula for apportioning the CETV to ascertain what part of it is matrimonial property. The dispute between the parties relates to that formula. The dispute is as to whether in ascertaining the matrimonial property under the 1985 Act the court should apportion the value of Mr McDonalds pension rights (a) by reference only to the period in which he was an active member of the scheme (ie from 11 December 1978 to 10 August 1985) (an active member being a person who is in pensionable service under an occupational pension scheme: Pensions Act 1995, section 124(1)) or (b) by reference to the period in which he was a member of the scheme, both when in pensionable employment and when in receipt of income benefits until the relevant date (ie from 11 December 1978 to 25 September 2010). The parties helpfully agreed in a joint minute that if the CETV is to be apportioned by reference to the period in which Mr McDonald was an active member of the scheme, the value of his interest in the pension benefits which was matrimonial property is 10,002. They also agreed that if the apportionment is by reference to the period of his membership of the scheme, both when in pensionable employment and also when drawing a pension, that value is 138,534. Sheriff Holligan in a judgment dated 12 December 2013 concluded that the first method was the correct one: only the period of active membership was relevant. In reaching that view, he relied on the wording of a formula in the relevant subordinate legislation, the Divorce etc (Pensions) (Scotland) Regulations 2000 (SSI 2000/112) (the 2000 Regulations), which I discuss below. Secondly, he saw that method as being consistent with what he saw as the general principles of the 1985 Act which sought to share wealth accumulated by a spouse over the period of the marriage by treating as matrimonial property only those assets which a spouse acquired during the marriage and before the relevant date. Mrs McDonald appealed to the Inner House of the Court of Session. An Extra Division of the Inner House (Lady Smith, Lord Malcolm and Sheriff Principal Abercrombie) heard the appeal and on 11 August 2015 by majority (Lady Smith dissenting) dismissed the appeal. The majority adopted a purposive approach to the interpretation of the relevant provisions of the 1985 Act and the 2000 Regulations and in substance agreed with the sheriffs reasoning. The majority emphasised the idea that matrimonial property was, as a general rule, confined to assets acquired during the marriage and before the relevant date. They also relied on the formula in the 2000 Regulations. Mrs McDonald appeals to this court. Counsel for Mr McDonald advanced arguments on similar lines to those which the Sheriff and the majority of the Inner House upheld. This appeal raises questions of statutory interpretation both in relation to the 1985 Act and also the 2000 Regulations. I set out below the reasons why I would allow this appeal. The aims of the Family Law (Scotland) Act 1985 The 1985 Act was enacted by the United Kingdom Parliament in response to recommendations of the Scottish Law Commission (the Commission) in its report Family Law: Report on Aliment and Financial Provision (1981) (Scot Law Com No 67). The principal defects of the prior law in relation to financial provision on divorce, which the Commission identified (paras 1.5 and 1.6), were that it identified no objectives or governing principles and that the court had an inadequate range of powers. The Act seeks to remedy those problems. It deals with the first problem by setting out in section 9 the principles which the court would apply in deciding what order for financial provision it would make. Section 8(2) requires the court to make orders which are justified by the section 9 principles and which are reasonable having regard to the resources of the parties. The principle relevant to this appeal is the first which is set out in section 9(1)(a), namely that the net value of the matrimonial property should be shared fairly between the parties to the marriage. Section 10 addresses the concept of matrimonial property. Section 10(1) establishes a presumption that the fair sharing of such property under section 9(1)(a) is equal sharing unless other proportions are justified by special circumstances. Although not directly relevant to this appeal, it is important to observe that the presumption of equal sharing of matrimonial property applies only to the section 9(1)(a) principle; the 1985 Act in the other sub paragraphs of section 9(1) contains other principles which inform the courts decision making and introduce flexibility into the award of financial provision. These principles include (i) that fair account be taken of any economic advantage derived by either party from both financial and non financial contributions by the other and of economic disadvantage suffered in the interests of the family (section 9(1)(b)), (ii) the fair sharing of the economic burden of caring for a child of the marriage after divorce (section 9(1)(c)), (iii) financial provision for up to three years for a person who has been dependent on the financial support of the other person (section 9(1)(d)), and (iv) the need for an award of financial provision for a reasonable period to relieve a person of serious financial hardship as a result of the divorce (section 9(1)(e)). Further flexibility is introduced by the recognition in section 10(1) that there may be special circumstances for departing from the equal sharing of matrimonial property in applying the section 9(1)(a) principle. Those circumstances include but are not confined to the circumstances which are specified in section 10(6). Section 10(2) provides that the net value of matrimonial property is the value at the relevant date after deduction of debts then outstanding. Section 10(3) defines the relevant date as including the date when the parties ceased to cohabit, which is the date applicable in this case (para 3 above). Section 10(4) is an important provision because it establishes a norm that matrimonial property is property acquired by either or both of the parties during the marriage but before the relevant date. Section 10(4) provides: Subject to subsection (5) below, in this section and section 11 of this Act the matrimonial property means all the property belonging to the parties or either of them at the relevant date which was acquired by them or him (otherwise than by way of gift or succession from a third party) before the marriage for use by them as a family home or as furniture or plenishings for such home; or during the marriage but before the relevant date. The requirement in this sub section that the property is acquired during the marriage but before the relevant date has influenced the courts below in their assessment of statutory purpose when adopting a purposive approach to the following sub section, which establishes what part of a persons interest in a pension arrangement falls within matrimonial property. But I observe that the opening words of subsection (4) above carve out subsection (5) from that requirement. Section 10(5), which is the provision in issue in this appeal, provides: The proportion of any rights or interests of either person under a life policy or similar arrangement; and in any benefits under a pension arrangement which either person has or may have (including benefits payable in respect of the death of either person) which is referable to the period to which subsection (4)(b) above refers shall be taken to form part of the matrimonial property Section 27(1) was amended in 2000 to add a definition of a pension arrangement as meaning any occupational pension scheme, a personal pension scheme, a retirement annuity contract and specified annuities and insurance policies. The precursor of section 10(5), as originally framed by the Commission as clause 10(4) of the draft Bill attached to its report, referred to rights or interests under a life policy or occupational pension scheme or similar arrangement but otherwise was to the same effect as the current section 10(5). In its commentary on the draft subsection the Commission explained the recommended provision in these terms: Rights under life policies, pension funds and similar arrangements are often built up over many years. This subsection makes it clear that the proportion referable to the period from the marriage to the final separation is to be regarded as matrimonial property and subject to the same rules as any other item of matrimonial property. (see paragraph 3.73) Paragraph 3.73 of the report stated: Life insurance policies and pension schemes are important ways of saving for the future. In most marriages at least one of the spouses has rights under one or other of them. Where such rights have been acquired wholly during the period from marriage to final separation the value of these rights would constitute matrimonial property. In many cases, however, rights under life policies or pension schemes or similar arrangements will have been built up partly before and partly after the marriage. In such cases we think that only the proportion which is attributable to the period between the marriage and the final separation should be treated as matrimonial property. Paragraph 3.77 spoke of the sharing of savings made during the marriage, including savings made by means of life policies or retirement pension schemes. But it is not clear from those paragraphs whether the Commission sought to confine the scope of such sharing to active saving or included savings created by the passive growth of the relevant fund or the passive accrual of pension rights by survival over time. The answer must be found in the wording of the enacted legislation. The focus in section 10(5) is on the proportion of rights or interests under a pension arrangement referable to the specified period and not on the acquisition of the rights by a party to the marriage during that period. Prima facie the proportion of rights under a pension arrangement referable to a specified period would reflect the enhancement in value of the pension arrangement during that period both by the plan holders investment of further funds in the arrangement and by the passive growth in the value of the already acquired fund. Similarly, where there is no fund, the enhancement in the value of pension rights by survival during the specified period is referable to that period. If Parliament had intended that the proportion of the rights or interests be determined by the ratio of the part of the fund created by contributions to the arrangement during the marriage until the relevant date to the value of the total fund at that date, it could have said so. Section 10(5) could nonetheless achieve a close approximation of such a result in relation to some policies and pension schemes which involve the regular payment of the similar sums year on year. But other arrangements, including personal pension schemes, may involve the payment of differing sums at irregular intervals. Thus, suppose Mr A has a personal pension scheme in which he invested 2,500 each year for ten years before his marriage. On marrying, he encountered other demands on his income and was able to pay into his pension scheme only 1,500 in year four and 1,000 in year eight of his marriage. Mr and Mrs A separated finally at the end of the tenth year of their marriage. In such a case there will have been contributions both before and after the marriage, but a time related ratio would not remotely approximate to the ratio of pre marriage and post marriage contributions. As Lady Smith has recorded in her opinion (para 20), uncertainty about how to value a persons interest in a pension arrangement under section 10(5), and the delay and expense incurred in litigation as a result, including the obtaining of competing actuarial valuations using differing methods, led to the passing of subordinate legislation. The Divorce etc (Pensions) (Scotland) Regulations 1996 (SI 1996/1901), which were made under section 10(8) of the 1985 Act as amended, introduced the CETV, which I mentioned in para 5 above, as the means of valuing the benefits under a pension arrangement. The current regulations are the 2000 Regulations as amended. Before examining the disputed provisions of the 2000 Regulations it is important to note the scope of those regulations. The 2000 Regulations apply to occupational pension schemes and also to personal pension schemes of all kinds. The 2000 Regulations have also been extended to cover certain state scheme rights. Occupational pension schemes may often involve regular contributions from an employee and some, at least in the past, may have provided for such contributions only from the employer. Personal pension schemes include schemes which permit the member to make contributions when he or she chooses giving rise to the result which I have discussed in para 19 above. Regulation 3 of the 2000 Regulations sets out mandatory rules for the calculation and verification of the value of any benefits under a pension arrangement for the purposes of the 1985 Act. Regulation 3 provides different rules for the calculation depending on whether, for example, the party with pension rights is a deferred member or an active member of an occupational pension scheme or a member of a personal pension scheme. There are also different rules if the pension of the party with pension rights is in payment. Beyond observing that regulation 3 provides for different classes of membership of an occupational pension scheme and also for membership of a personal pension scheme, we are not concerned with the details of the methods by which the cash equivalent of the benefits is calculated in that regulation. Mr McDonalds interest in a pension in payment has been valued in accordance with regulation 3(2)(d)(i). Regulation 4 of the 2000 Regulations identifies what proportion of a persons rights and interests in such benefits forms part of the matrimonial property. It provides: The value of the proportion of any rights or interests which a party has or may have in any benefits under a pension arrangement or in relevant state scheme rights as at the relevant date and which forms part of the matrimonial property by virtue of section 10(5) shall be calculated in accordance with the following formula A x B/C where A is the value of these rights or interests in any benefits under the pension arrangement which is calculated, as at the relevant date, in accordance with paragraph (2) of regulation 3 above; and B is the period of C which falls within the period of the marriage of the parties before the relevant date and, if there is no such period, the amount shall be a zero; and C is the period of the membership of that party in the pension arrangement before the relevant date. This formula, as I have said, informed the view of the sheriff and the majority of the Inner House. The words which fall to be interpreted are the words in the definition of factor C above, namely the period of the membership of that party in the pension arrangement. It is striking that factor C in the formula in regulation 4, by which the regulation 3 value is apportioned so as to identify what is matrimonial property, (i) refers to the period of membership of the party in the pension arrangement without further specification and (ii) must apply to membership of both occupational pension schemes and personal pension schemes. Both Sheriff Holligan and the majority of the Extra Division treated membership as confined to active membership of an occupational pension scheme or membership of another scheme while the member was contributing to it. I do not agree for four reasons. First, that interpretation involves adding words to regulation 4 which are not there. The person who drafted the 2000 Regulations was clearly aware of the different categories of membership which were set out in regulation 3. Regulations 3 and 4 must be read together. Regulation 4, in contrast to regulation 3, refers to membership without differentiation between classes of membership. Secondly, it is clear, and is not disputed, that the 2000 Regulations apply not only to occupational pension schemes but also to personal pension schemes. The definition of active membership in section 124(1) of the Pensions Act 1995 (para 6 above) applies only to an occupational pension scheme and makes no sense in relation to personal pension schemes. It also, as Mr Mitchell, who appeared for Mrs McDonald, pointed out, makes no sense in relation to relevant state scheme rights to which regulation 4 also applies. It would, as Mrs Scott argued on behalf of Mr McDonald, be possible to circumvent the problem in relation to personal pension schemes by reading the definition of factor C as if it stated the period of membership of that party in the pension arrangement when contributions are being made by or on behalf of that party. But how does one ascertain at what point before the relevant date a party who has made occasional contributions to a personal pension scheme had chosen to cease to make such contributions? It is to be assumed that Parliament intended the provisions of the Regulations to operate sensibly in relation to the differing pension schemes and state pension rights. Thirdly, I do not think that one can support the reading of the word active or contributing into the phrase in question by referring to the focus in section 10(4) of the 1985 Act on the acquisition by the parties of assets during the marriage but before the relevant date. As I have said (para 14 above), the opening words of section 10(4) carve subsection (5) out of the section 10(4) definition of matrimonial property. Parliament chose to deal with pension rights differently by making discrete provision for them. It is important in that regard to recall that in section 10(4)(a) of the 1985 Act there is included in matrimonial property all property acquired before the marriage for use as a family home or as furniture or plenishings for such a home. Thus even within section 10(4) there is no unqualified principle that property must have been acquired during the marriage and before the relevant date. Indeed, the asset which will often be the most valuable asset within the matrimonial property is excluded from the section 10(4)(b) regime. Further, assets acquired during the marriage by way of gift or inheritance from third parties are excluded from the matrimonial property. It is thus difficult to detect a general principle confining matrimonial property to assets acquired during the marriage to support the purposive interpretation which the majority of the Extra Division has favoured. Fourthly, I am not persuaded by the argument that membership in regulation 4 must mean active membership of an occupational pension scheme (or contributing membership of other schemes) and cannot extend to all types of membership in order to give meaning to the statement in the statutory formula that factor B can be zero. This argument has featured at every stage of this case and was accepted by the sheriff and the majority of the Extra Division. Suggestions have been made as to how factor B (the period of C which falls within the period of the marriage before the relevant date) could be zero when factor C is a positive number. Mr Mitchell suggested that where parties separated on the day of their marriage, there would be no period of marriage before the relevant date; if a spouse had a pre existing pension arrangement factor C would be a positive figure and factor B would be zero. Lady Smith gave the circumstance of a pension arrangement entered into on the date of separation as an example of when B would be zero. But in her example both B and C would be zero; there would be no interest in the benefits of a pension arrangement to value. It is not possible to tell precisely which circumstance was in the mind of the person who drafted regulation 4 when he or she provided for the possibility that factor B could be zero. But that does not matter. If the person drafting the wording of factors B and C intended it to confine membership to active membership that would involve egregious circumlocution. There is no hint of such an intention in the words of the Regulations. If it were necessary to go further, I observe that there is no such hint in the explanatory note to the 2000 Regulations, to which the court can have regard to ascertain the context of the provision and the mischief which it addresses as aids to purposive interpretation: R v Environment Secretary, Ex p Spath Holme Ltd [2001] 2 AC 349, 397 398 per Lord Nicholls of Birkenhead; Comhairle nan Eilean Siar v Scottish Ministers 2013 SC 548, para 47 per Lady Smith, para 62 per Lord Brodie. The explanatory note states: Regulation 4 provides for the apportionment of the value of such benefits. Provision is made apportioning the value of the benefits in accordance with the period of time the party in the pension arrangement has been in both the pension arrangement and in the marriage as a proportion of the period of time that person has been in the pension arrangement. (regulation 4) If regulation 4 were circumlocution for the period of active membership of an occupational pension scheme or, more generally, the period when contributions were being made towards a pension, I would have expected that to be flagged up in the explanatory note. In any event, as I have said (para 19 above), confining the period of the membership to the period when contributions were made and apportioning the value of the rights or interests in the benefits by reference to time, as section 10(5) requires, may often create an apportionment of the rights or interests in benefits in personal pension schemes which bears no relationship to the relative value of the rights acquired before and during the marriage. I am therefore persuaded that period of the membership in regulation 4 of the 2000 Regulations refers to the period of the persons membership of the pension arrangement, whether or not contributions are being made to that arrangement in that period. That does not mean, of course, that the value of an interest in a pension arrangement must be shared equally. As I said in para 13 above, there are safeguards within the 1985 Act which temper its prescriptiveness. Conclusion I would allow the appeal and remit the case to the sheriff at Edinburgh to proceed accordingly.

UK-Abs

Mr McDonald (the respondent) worked as a miner for British Coal. He joined the British Coal Staff Superannuation Scheme on 11 December 1978 and began contributing to it. He married Mrs McDonald (the appellant) on 22 March 1985. Shortly afterwards, he retired early on grounds of ill health and exercised his right to receive a pension income before his normal retiring age. As a result, between 11 December 1978 and 10 August 1985 Mr McDonald was a member of and contributor to the scheme; since then he has been a member in receipt of income benefits under the scheme. Mrs McDonald seeks a pensions sharing order under section 8(1)(baa) of the Family Law (Scotland) Act 1985 (the 1985 Act) on her divorce from Mr McDonald on the basis that his pension forms part of the matrimonial property which is taken into account in fixing financial provision. This appeal raises questions of statutory interpretation both in relation to the 1985 Act and The Divorce etc. (Pensions) (Scotland) Regulations 2000 (the 2000 Regulations), which were made under section 10(8) of the 1985 Act as amended. Section 10(5) of the 1985 Act treats as matrimonial property the proportion of any rights or interests of either personin any benefits under a pension arrangement which is referable to the period [during the marriage but before the relevant date]. The relevant date is the final date of separation, 25 September 2010 being the relevant date in the present case when the parties ceased to cohabit. The 2000 Regulations, which apply to occupational pension schemes and personal pension schemes of all kinds, provide for the valuation of a persons rights or interests in a pension arrangement for the purposes of section 10(5) by reference to what is known as the cash equivalent transfer value. Regulation 4 of the 2000 Regulations contains the relevant formula: A x B/C where A is the value of these rights or interests in any benefits under the pension arrangement which is calculated, as at the relevant date, in accordance with paragraph (2) of regulation 3 above; and B is the period of C which falls within the period of the marriage of the parties before the relevant date and, if there is no such period, the amount shall be zero; and C is the period of the membership of that party in the pension arrangement before the relevant date The dispute between the parties relates to that formula. The words which fall to be interpreted are the words in the definition of factor C, namely the period of membership of that party in the pension arrangement. Mr McDonald argues that the court should apportion the value of his pension rights by reference only to the period in which he was an active member of the scheme, that is the period during which he was making contributions to the scheme. On that basis, the value of his interest in the pension benefits which is matrimonial property would be 10,002. Mrs McDonald argues that the cash equivalent transfer value should be apportioned by reference to the period of Mr Macdonalds membership of the scheme, both when in pensionable employment and also when drawing a pension, that value being 138,534. An Extra Division of the Inner House dismissed Mrs McDonalds appeal. The majority based their reasoning on the general rule found in section 10(4) of the 1985 Act, which states matrimonial property is confined to assets acquired during the marriage but before the relevant date. They also relied on the formula in the 2000 Regulations. The Supreme Court unanimously allows Mrs McDonalds appeal. Lord Hodge gives the judgment, with which the other Justices agree. The period of membership in regulation 4 of the 2000 Regulations refers to the period of the persons membership of the pension arrangement, whether or not contributions are being made in that period [31]. There are four reasons why membership should not be confined to active membership of pension scheme while the member was contributing to it [25]. First, interpreting regulation 4 as confined in such a way involves adding words which are not there. The person who drafted the 2000 Regulations was clearly aware of the different categories of membership, as can be observed from the differentiation between categories of membership in regulation 3, and chose not to differentiate in regulation 4 between classes of membership [26]. Secondly, the 2000 Regulations apply to both occupational pension schemes and personal pension schemes. The definition of active membership in section 124(1) of the Pensions Act 1995 makes no sense in relation to personal pension schemes. It must be assumed that Parliament intended the Regulations to operate sensibly in respect of differing pension schemes. Further, it would prove difficult to ascertain the point at which a party who has made occasional contributions to a personal pension scheme had chosen to cease to make contributions [27]. Thirdly, the reading of the word active or contributing into regulation 4 cannot be supported by referring to the focus in section 10(4) of the 1985 Act to the acquisition by the parties of assets during the marriage but before the relevant date. Section 10(5) of the 1985 Act deals specifically with pensions, and the opening words of section 10(4), which defines matrimonial property, state that the definition provided in section 10(4) is subject to subsection (5) below. Parliament chose to deal with pensions differently by making a separate provision for them in section 10(5). It follows from the creation of that separate provision that the definition in section 10(4) should not be considered to apply to pensions and, therefore, the majority of the Extra Division of the Inner House erred in its reliance on it. Fourthly, it is not persuasive that membership in regulation 4 must mean active membership in order to give meaning to the statement that factor B can be zero. If the person drafting the wording of factors B and C in regulation 4 intended to confine membership in such a way that would be remarkably indirect. There is no hint of such an intention in the words of the Regulations. Further, confining the period of membership to the period when contributions were made and apportioning the value of the rights or interests in the benefits by reference to time, as section 10(5) requires, may often create an apportionment of the rights of interests in benefits in personal pension schemes which bears no relationship to the relative value of the rights acquired before and during the marriage [30]. This interpretation does not mean that the value of an interest in a pension must be shared equally. Section 9(1) of the 1985 Act contains other principles which inform the courts decision making and introduces flexibility into the award of financial provision. Further flexibility is introduced by the recognition in section 10(1) that there may be special circumstances for departing from the equal sharing of matrimonial property [13, 32].

Ms Reyes, a Philippine national, was employed by Mr and Mrs Al Malki as a domestic servant in their residence in London between 19 January and 14 March 2011. Her duties were to clean, to help in the kitchen at mealtimes and to look after the children. At the time, Mr Al Malki was a member of the diplomatic staff of the embassy of Saudi Arabia in London. Ms Reyes alleges that she entered the United Kingdom on a Tier 5 visa which she obtained at the British embassy in Manila by producing documents supplied by Mr Al Malki, including a contract showing that she would be paid 500 per month. She alleges that during her employment the Al Malkis maltreated her by requiring her to work excessive hours, failing to give her proper accommodation, confiscating her passport and preventing her from leaving the house or communicating with others; and that they paid her nothing until after her employment terminated upon her escape on 14 March. The proceedings have been conducted to date on the assumption, which has been neither proved nor challenged, that these allegations are true. I shall also make that assumption. In addition, I shall assume that these allegations amount to trafficking in persons within the meaning of the International Protocol to Prevent, Supress and Punish Trafficking in Persons, Especially Women and Children (Palermo, 2000), although that is very much in dispute. In June 2011, Ms Reyes began the present proceedings in the Employment Tribunal alleging direct and indirect race discrimination, unlawful deduction from wages and failure to pay her the national minimum wage. The Court of Appeal has held that the Employment Tribunal has no jurisdiction because Mr Al Malki was entitled to diplomatic immunity under article 31 of the Vienna Convention on Diplomatic Relations, and Mrs Al Malki was entitled to a derivative immunity under article 37(1) as a member of his family. The main issues on the appeal concern the effect of article 31(1)(c) of the Convention, which contains an exception to the immunity of a diplomat from civil jurisdiction where the proceedings relate to any professional or commercial activity exercised by the diplomatic agent in the receiving state outside his official functions. This raises, among other issues, the question how, if at all, that exception applies to a case of human trafficking. Since there is some evidence that human trafficking under cover of diplomatic status is a recurrent problem, this is a question of some general importance. Its broader significance explains the intervention, by leave of this court, of the Secretary of State for Foreign and Commonwealth Affairs and of Kalayaan, a charity that supports migrant domestic workers, some of whom have been trafficked. For the same reason, I shall deal fully with the issues that were argued in the Court of Appeal and before us, although not all of them arise on the conclusions that I have reached. In my opinion, the employment of a domestic servant to provide purely personal services is not a professional or commercial activity exercised by the diplomatic agent. It is therefore not within the only relevant exception to the immunities. The fact that the employment of Ms Reyes may have come about as a result of human trafficking makes no difference to this. But the appeal should be allowed on a different and narrower ground. On 29 August 2014, Mr Al Malkis posting in London came to an end and he left the United Kingdom. Article 31 confers immunity only while he is in post. A diplomatic agent who is no longer in post and who has left the country is entitled to immunity only on the narrower basis authorised by article 39(2). That immunity applies only so far as the relevant acts were performed while he was in post in the exercise of his diplomatic functions. The employment and maltreatment of Ms Reyes were not acts performed by Mr Al Malki in the exercise of his diplomatic functions. The legal framework The legal immunity of diplomatic agents is one of the oldest principles of customary international law. Its history can be traced back to the practices of the ancient world and to Roman writers of the second century. The rule has been accepted by the nations, wrote Grotius in the 17th century, that the common custom which makes a person who lives in foreign territory subject to that country, admits of an exception in the case of ambassadors: De Jure Belli ac Pacis, ii.18. But, although recognition of diplomatic immunity is all but universal in principle, until relatively recently both states and writers differed on the categories of people to which the immunity applied and its precise ambit in each category. In particular, they differed on the existence and extent of any exceptions. In Britain, the matter was dealt with by the Diplomatic Privileges Act 1708, which conferred absolute immunity on ambassadors and their staff from civil jurisdiction, in accordance with what British authorities regarded as the rule of international law. In Triquet v Bath (1764) 3 Burrow 1478, 1480, Lord Mansfield described the Act as declaratory of the law of nations, and it remained in force until 1964. The United States adopted the British Act in 1790, and France adopted a corresponding rule by legislation in 1794. In other countries, however, exceptions of greater or lesser breadth were recognised, among others for private transactions relating to title to real property, certain employment disputes and liabilities arising out of business activities in the receiving state. There were also differences about the application of the immunity to diplomatic agents of a sending state who were nationals of the receiving state. These differences gave rise to a number of attempts during the 19th and 20th centuries to codify the law of diplomatic relations with a view to achieving a common set of rules and enabling them to operate on a reciprocal basis. The Havana Convention among the states of the Pan American Union (1928) and the influential draft convention drawn up by the Harvard Law School (1932) were notable examples. But there was no universally accepted code before 1961. The Vienna Convention on Diplomatic Relations, which was adopted in that year, has been described by Professor Denza, the leading academic authority on the law of diplomatic relations, as a cornerstone of the modern international order: Diplomatic Law, 4th ed (2016), 1. It has been perhaps the most notable single achievement of the International Law Commission of the United Nations. The text was the result of an intensive process of research, consultation and deliberation extending from 1954 to 1961. Draft articles were submitted to the governments of every member state of the United Nations, and were subject to detailed review and comment. Eighty one states participated in the final conference at Vienna in March and April 1961 which preceded the adoption of the final text. Since its adoption, it has been ratified by 191 states, being every state in the world bar four (Palau, the Solomon Islands, South Sudan and Vanuatu). A number of states ratified subject to declarations or reservations, but none of these related to the articles which are primarily relevant on this appeal. As it stands, the Convention provides a complete framework for the establishment, maintenance and termination of diplomatic relations. It not only codifies pre existing principles of customary international law relating to diplomatic immunity, but resolves points on which differences among states had previously meant that there was no sufficient consensus to found any rule of customary international law. As the International Court of Justice has pointed out (Democratic Republic of the Congo v Belgium (Arrest Warrant of 11 April 2000) [2002] ICJ Rep 3, at paras 59 61), diplomatic immunity is not an immunity from liability. It is a procedural immunity from the jurisdiction of the courts of the receiving state. The receiving state cannot at one and the same time receive a diplomatic agent of a foreign state and subject him to the authority of its own courts in the same way as other persons within its territorial jurisdiction. But the diplomatic agent remains amenable to the jurisdiction of his own countrys courts, and in important respects to the jurisdiction of the courts of the receiving state after his posting has ended. I do not under estimate the practical problems of litigating in a foreign jurisdiction, especially for someone in Ms Reyes position. Nor do I doubt that diplomatic immunity can be abused and may have been abused in this case. A judge can properly regret that it has the effect of putting severe practical obstacles in the way of a claimants pursuit of justice, for what may be truly wicked conduct. But he cannot allow his regret to whittle away an immunity sanctioned by a fundamental principle of national and international law. As the fourth recital of the Vienna Convention points out, the purpose of such privileges and immunities is not to benefit individuals but to ensure the efficient performance of diplomatic missions as representing states. Diplomatic immunity is dealt with at articles 22 and 29 to 40 of the Convention. These provisions confer different degrees of immunity on persons connected with a diplomatic mission, according to their status and function. For present purposes, the provisions primarily relevant are as follows: Article 22 1. The premises of the mission shall be inviolable. The agents of the receiving state may not enter them, except with the consent of the head of the mission. 2. The receiving state is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity. The person of a diplomatic agent shall be inviolable. He shall not be liable to any form of arrest or detention. The receiving state shall treat him with due respect and shall take all appropriate steps to prevent any attack on his person, freedom or dignity. 1. The private residence of a diplomatic agent shall enjoy the same inviolability and protection as the premises of the mission. Article 29 Article 30 Article 31 1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving state. He shall also enjoy immunity from its civil and administrative jurisdiction, except in the case of: (a) a real action relating to private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission; (b) an action relating to succession in which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person and not on behalf of the sending state; (c) an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions. 2. A diplomatic agent is not obliged to give evidence as a witness. 3. No measures of execution may be taken in respect of a diplomatic agent except in the cases coming under sub paragraphs (a), (b) and (c) of paragraph 1 of this article, and provided that the measures concerned can be taken without infringing the inviolability of his person or of his residence. 4. The immunity of a diplomatic agent from the jurisdiction of the receiving state does not exempt him from the jurisdiction of the sending state. Article 32 1. The immunity from jurisdiction of diplomatic agents may be waived by the sending state. Article 37 1. The members of the family of a diplomatic agent forming part of his household shall, if they are not nationals of the receiving state, enjoy the privileges and immunities specified in articles 29 to 36. 1. Except insofar as additional privileges and immunities may be granted by the receiving state, a diplomatic agent who is a national of or permanently resident in that state shall enjoy only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions. 2. When the functions of a person enjoying privileges and immunities have come to an end, such privileges and immunities shall normally cease at the moment when he leaves the country, or on expiry of a reasonable period in which to do so, but shall subsist until that time, even in case of armed conflict. However, with respect to acts performed by such a person in the exercise of his functions as a member of the mission, immunity shall continue to subsist. 1. Without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving state. Article 38 Article 39 Article 41 Article 42 A diplomatic agent shall not in the receiving state practise for personal profit any professional or commercial activity. Section 2(1) of the Diplomatic Privileges Act 1964 provides that the articles of the Vienna Convention annexed in Schedule 1 shall have the force of law in the United Kingdom. Schedule 1 contains articles 1, 22 to 40 and 45 of the Convention. They include all the articles dealing with diplomatic immunities. Principles of interpretation It is not in dispute that so far as an English statute gives effect to an international treaty, it falls to be interpreted by an English court in accordance with the principles of interpretation applicable to treaties as a matter of international law. That is especially the case where the statute gives effect not just to the substance of the treaty but to the text: Fothergill v Monarch Airlines Ltd [1981] AC 251, esp at pp 272E, 276 278 (Lord Wilberforce), 281 282 (Lord Diplock), 290B D (Lord Scarman). The primary rule of interpretation is laid down in article 31(1) of the Vienna Convention on the Law of Treaties (1969): A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. The principle of construction according to the ordinary meaning of terms is mandatory (shall), but that is not to say that a treaty is to be interpreted in a spirit of pedantic literalism. The language must, as the rule itself insists, be read in its context and in the light of its object and purpose. However, the function of context and purpose in the process of interpretation is to enable the instrument to be read as the parties would have read it. It is not an alternative to the text as a source for determining the parties intentions. reasons for adhering to these principles: In the case of the Convention on Diplomatic Relations, there are particular (1) Like other multilateral treaties, the text was the result of an intensely deliberative process in which the language of successive drafts was minutely reviewed and debated, and if necessary amended. The text is the only thing that all of the many states party to the Convention can be said to have agreed. The scope for inexactness of language is limited. (2) The Convention must, in order to work, be capable of applying uniformly to all states. The more loosely a multilateral treaty is interpreted, the greater the scope for damaging divergences between different states in its application. A domestic court should not therefore depart from the natural meaning of the Convention unless the departure plainly reflects the intentions of the other participating states, so that it can be assumed to be equally acceptable to them. As Lord Slynn observed in R v Secretary of State for the Home Department, Ex p Adan [2001] 2 AC 477, 509, an international treaty has only one meaning. The courts cannot simply adopt a list of permissible or legitimate or possible or reasonable meanings and accept that any one of those when applied would be in compliance with the Convention. (3) Although the purpose of stating uniform rules governing diplomatic relations was to ensure the efficient performance of the functions of diplomatic missions as representing states, this is relevant only to explain why the rules laid down in the Convention are as they are. The ambit of each immunity is defined by reference to criteria stated in the articles, which apply generally and to all state parties. The recital does not justify looking at each application of the rules to see whether on the facts of the particular case the recognition of the defendants immunity would or would not impede the efficient performance of the diplomatic functions of the mission. Nor can the requirements of functional efficiency be considered simply in the light of conditions in the United Kingdom. The courts of the United Kingdom are independent and their procedures fair. It is difficult to envisage that exposure to civil claims would materially interfere with the efficient performance of diplomatic missions. But as the Secretary of State for Foreign and Commonwealth Affairs pointed out, the same cannot be assumed of every legal system in every state. The threat to the efficient performance of diplomatic functions arises at least as much from the risk of trumped up or baseless allegations and unsatisfactory tribunals as from justified ones subject to objective forensic appraisal. It may fairly be said that from the United Kingdoms point of view, a significant purpose of conferring diplomatic immunity of foreign diplomatic personnel in Britain is to ensure that British diplomatic personnel enjoy corresponding immunities elsewhere. (4) Every state party to the Convention is both a sending and receiving state. The efficacy of the Convention depends, even more than most treaties do, on its reciprocal operation. Article 47.2 of the Convention authorises any receiving state to restrict the application of a provision to the diplomatic agents of a sending state if that state gives a restrictive application of that provision as applied to the receiving states own mission. In some jurisdictions, such as the United States, the recognition of diplomatic immunities is dependent as a matter of national law on their reciprocity. As Professor Denza observes, op cit, 2 For the most part, failure to accord privileges or immunities to diplomatic missions or their members is immediately apparent and is likely to be met by appropriate countermeasures In the graphic words of her introduction to the Vienna Convention on the United Nations law website, a states own representatives abroad are in a sense hostages who may on a basis of reciprocity suffer if it violates the rules of diplomatic immunity: http://legal.un.org/avl/ha/vcdr/vcdr.html. Service of process A preliminary question arises on this appeal as to whether the claim form was validly served on the Al Malkis. A number of modes of service were attempted, but the only one which is now relied on is service by post to their private residence in accordance with Rule 61(1)(a) of the Employment Tribunal Rules of Procedure. It is said on the Al Malkis behalf that the rule cannot authorise service on a diplomatic agent because this would violate his person contrary to article 29 of the Convention and his residence contrary to article 30. I can deal shortly with this point, because it has failed at every stage below and has been dealt with by the Court of Appeal in terms with which I am in substantial agreement. The starting point is that we are not at this point concerned with the question whether the diplomatic agent is immune from jurisdiction in respect of the particular proceedings. Other articles of the Convention deal with that. Those articles recognise that the jurisdictional immunity of a diplomatic agent will not apply to all proceedings: they may relate to a matter within an exception, or the immunity may have been waived. The present question is whether there is an immunity from service, or from certain modes of service, implicit in the inviolability of a diplomats person and private residence. This immunity is distinct from and additional to his immunity from jurisdiction. If it applies, then articles 29 and 30 of the Convention, being unqualified, must prevent service by post in all proceedings whether or not there is any jurisdictional immunity in respect of them. Indeed, it would also apply to other communications by the state which have nothing to do with legal proceedings, such as demands for rates or tax assessments on a diplomats private income, notwithstanding that these may be properly demanded under article 34 of the Convention. In the case of states, the mode of service is prescribed by section 12 of the State Immunity Act 1978. Service must be effected on a state by the transmission of the document through the Foreign and Commonwealth Office. Article 22 of the United Nations Convention on the Jurisdictional Immunities of States, when it is in force, will require service of process on states to be effected on states through diplomatic channels in the absence of agreement on any other mode of service. There is, however, no corresponding provision relating to service on diplomatic agents either in the Diplomatic Privileges Act 1964 or in the Vienna Convention on Diplomatic Relations. According to the Secretary of State, a practice has become established of serving process on diplomatic agents through diplomatic channels on the foreign state or its mission in the United Kingdom. But there is no statutory basis for this practice. Nor, now that the law on diplomatic immunity has been codified, is there any basis for it in international law, unless service violates the diplomatic agents person or residence. Moreover, in the absence of some basis in domestic law, it is not even a legally effective mode of service, since there is no way that the foreign state can be required to accept service on behalf of the diplomatic agent, if it chooses not to do so. The person of a diplomatic agent is violated if an agent of the receiving state or acting on the authority of the receiving state detains him, impedes his movement or subjects him to any personal restriction or indignity. It is arguable that personal service on a diplomatic agent would do that, although it is not an argument that needs to be considered here. Premises are violated if an agent of the state enters them without consent or impedes access to or from the premises or normal use of them: see article 22 relating to the premises of a mission, which is applied by analogy to a diplomatic agents private residence under article 30(1). The delivery by post of a claim form does not do any of these things. It simply serves to give notice to the defendant that proceedings have been brought against him, so that he can defend his interests, for example by raising his immunity if he has any. The mere conveying of information, however unwelcome, by post to the defendant, is not a violation of the premises to which the letter is delivered. It is not a trespass. It does not affront his dignity or affect his right to enter or leave or use his home. It does of course start time running for subsequent procedural steps and may lead to a default if no action is taken. But so far as this is objectionable, it can only be because there is a relevant immunity from jurisdiction. It is not because the proceedings were brought to the diplomatic agents attention by post. Otherwise the same objection would apply to any mode of service which starts time running, including service through diplomatic channels as proposed by the Secretary of State. Jurisdictional immunity: article 31(1)(c) Articles 31 to 40 of the Convention represent an elaborate scheme which must be examined as a whole. Fundamental to its operation is the distinction, which runs through the whole instrument, between those immunities which are limited to acts performed in the course of a protected persons functions as a member or employee of the mission, and those which are not. The distinction is fundamental because what an agent of a diplomatic mission does in the course of his official functions is done on behalf of the sending state. It is an act of the sending state, even though it may give rise to personal liability on the part of the individual agent. In such a case, the individual agent is entitled to both diplomatic and state immunity, and the two concepts are practically indistinguishable: see Jones v Ministry of Interior for the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs intervening) [2007] 1 AC 270, at paras 10 (Lord Bingham), 66 78 (Lord Hoffmann). By comparison, the acts which an agent of a diplomatic mission does in a personal or non official capacity are not acts of the state which employs him. They are acts in respect of which any immunity conferred on him can be justified only on the practical ground that his exposure to civil or criminal proceedings in the receiving state, irrespective of the justice of the underlying allegation, is liable to impede the functions of the mission to which he is attached. The degree of impediment may vary from state to state and from case to case. But the potential problem for the conduct of international relations has been recognised from the earliest days of diplomatic intercourse, and in the United Kingdom ever since the arrest of the Russian ambassador for debt as he returned from an audience with Queen Anne led to the passing of the Diplomatic Privileges Act 1708. The Vienna Convention distinguishes between diplomatic agents (ie ambassadors and members of their diplomatic staff), the administrative and technical staff of the mission, their respective families, and service staff of the mission. The highest degree of protection is conferred on diplomatic agents. In their case, the Convention substantially reproduces the previous rules of customary international law, by which a diplomatic agent was immune from the jurisdiction of the receiving state (i) in respect of things done in the course of his official functions for an unlimited period, and (ii) in respect of things done outside his official functions for the duration of his mission only: see Zoernsch v Waldock [1964] 1 WLR 675, 684 (Willmer LJ), 688 (Danckwerts LJ), 691 692 (Diplock LJ). Thus article 31(1) confers immunity on diplomatic agents currently in post in respect of both private and official acts, subject to specific exceptions for the three designated categories of private act. Under article 39(2), once a diplomatic agents functions have come to an end, his immunities under article 31 will normally cease from the moment when he leaves the territory of the receiving state. Thereafter, he remains immune in the receiving state only with respect to acts performed in the exercise of his functions as a member of the mission. This is commonly known as the residual immunity. It is one of four cases in which, in contrast to the immunity under article 31, a protected persons immunity is limited to official acts, the others being (i) the immunity conferred on a diplomatic agent who is a national of or permanently resident in the receiving state, which is limited to official acts performed in the exercise of his functions (article 38(1)); (ii) the immunity conferred on administrative and technical staff of a mission, which shall not extend to acts performed outside the course of their duties (article 37(2)); and (iii) domestic staff of the mission, whose immunity is confined to acts performed in the course of their duties (article 37(3)). The same distinction applies to consular officers and employees under article 43 of the parallel Vienna Convention on Consular Relations (1963). Their immunity is limited to acts performed in the exercise of consular functions. Article 31(1)(c) is one of three carefully framed exceptions to the general immunity from civil jurisdiction conferred on diplomatic agents in post. The exception applies if both of two conditions are satisfied: (i) that the action relates to a professional or commercial activity exercised by the diplomatic agent, and (ii) that the exercise of that activity was outside his official functions. These are distinct requirements. If the relevant acts were within the scope of the diplomats official functions, the enquiry ends there. He is immune. Moreover, he will retain the residual immunity in respect of them even after his posting comes to an end. But if he is still in post and the relevant activity is outside his official functions, the operation of the exception will depend on whether it amounts to a professional or commercial activity exercised by him. Accordingly, the first question is what are a diplomatic agents official functions. The starting point is the functions of the mission to which he is attached. They are defined in article 3 of the Convention, and comprise all the classic representational and reporting functions of a diplomatic mission. It is, however, clear that the official functions of an individual diplomatic agent are not necessarily limited to participating in the activities defined by article 3. They must in the nature of things extend to a wide variety of incidental functions which are necessary for the performance of the general functions of the mission. But whether incidental or direct, a diplomatic agents official functions are those which he performs for or on behalf of the sending state. The test is whether the relevant activity was part of those functions. That is the basis on which the courts in both England and the United States have approached the residual immunity in article 39(2): see, as to England, Wokuri v Kassam [2012] ICR 1283, at paras 23 26 (Newey J) and Abusabib v Taddese [2013] ICR 603, at paras 29 34 (Employment Appeal Tribunal); and as to the United States, Baoanan v Baja 627 F Supp 2d 155 (2009) at paras 3 5; Swarna v Al Awadi 622 F 3d 123 (2010) (2nd Circuit Court of Appeals) at paras 4 10. I think that it is correct, and equally applicable to the corresponding expression in article 31(1). If the relevant activity was outside the diplomatic agents official functions, the next question is whether it amounts to a professional or commercial activity exercised by him. The following points should be made about this: (1) An activity is not the same as an act. Article 31(1)(c) is concerned with the carrying on of a professional or commercial activity having some continuity and duration, ie with a course of business. (2) But it is not only a question of continuity or duration. It is also a question of status. In the ordinary meaning of the words, the exercise of a professional or commercial activity means practising the profession or carrying on the business. The diplomatic agent must be a person practising the profession or carrying on (or participating in carrying on) the business. He must, so to speak, set up shop. The position is even clearer in the equally authentic French text, where the word exercer means to practise, follow, pursue, carry on (profession, business): J E Mansion, Harraps Standard French and English Dictionary, ed Ledsert, (rev 1980). (3) This is confirmed by article 42, which provides that a diplomatic agent shall not in the receiving state practise for personal profit any professional or commercial activity. Article 42 uses the same phrase, professional or commercial activity, as article 31(1)(c). The difference between the language of the exception in article 31(1)(c) and that of the prohibition in article 42 is simply the use in the latter of the expression for personal profit in place of outside his official functions. The essential point, however, is that in both articles, the reference is to the diplomat carrying on or participating in a professional or commercial business. This is what Laws J decided in the only English case on article 31(1) until this one: Propend Finance Pty Ltd v Sing (1997) 111 ILR 611, 635 636 (the point did not arise in the Court of Appeal). I think that he was right. (4) As I shall demonstrate below, this is precisely what the draftsmen of the Convention and the states who agreed it intended to achieve. (5) There are obvious reasons why an exception such as that in article 31(1)(c) should have been limited to someone participating in a professional or commercial business. It is inherent in the concept of jurisdictional immunity that it will shelter a serving diplomat (and in some circumstances a former diplomat) against legal proceedings in the receiving state. It is not inherent in that concept that the immunity will enable him to exercise a distinct business activity in competition with others while sheltering him from the modes of enforcing the corresponding liabilities which are an ordinary incident of such an activity. (6) A wider scope for exception (c) would expose diplomatic agents in post in the United Kingdom (and potentially British diplomatic agents abroad) to local proceedings not only in respect of their employment of domestic servants but in respect of any transaction in the receiving state for money or moneys worth, save perhaps for those which were isolated or uncharacteristic. The substantial effect would be to limit the immunity to acts done in the exercise of the diplomats official functions, even in the case of a diplomat in post. The immunity in respect of non official acts would mean very little, for every purchase that a diplomat might make in the course of his daily life from a business carried on by someone else would be a commercial activity exercised by the diplomat for the purposes of article 31(1)(c). This would be contrary to the carefully constructed scheme of the Convention for different categories of protected person. The authorities Apart from the decision of Laws J in Propend Finance Pty Ltd v Sing, to which I have just referred, the authorities most directly in point are decisions of the federal courts of the United States. These are a valuable source of law in this area, because of the long standing engagement of the US courts with international law and the existence of a highly developed body of domestic foreign relations law belonging to the same tradition as our own. The statutory background is substantially the same as it is in the United Kingdom. Section 5 of the US Diplomatic Relations Act 1978 provides that any action or proceeding brought against an individual entitled to immunity from such action or proceeding under the Vienna Convention on Diplomatic Relations shall be dismissed. During the passage of the Act, the State Department advised Congress that the exception in article 31(1)(c) merely exposed diplomats to litigation based upon activity expressly prohibited in article 42: Diplomatic Immunity: Hearings on S 476, S 477, S 478, S 1256 S 1257 and HR 7819 (Senate Committee on the Judiciary, Subcommittee on Citizens and Shareholders Rights and Remedies, 95th Cong, 2d Sess 32 (1978). This advice, as I have pointed out above, was in accordance with both the language and purpose of the Convention. It is also endorsed by the American Law Institutes authoritative Restatement (3rd) of the Foreign Relations Law of the United States (1986), para 464, where it is observed (Note 9) that The denial of immunity in cases arising out of private commercial or professional activities has little significance for the United States since the United States forbids its diplomatic officers to engage in commercial or professional activities unrelated to their official functions, and in general does not permit such activities by foreign diplomats in the United States. The leading case is Tabion v Mufti (1996) 107 ILR 452, a decision of the Fourth Circuit Court of Appeals. The plaintiff was employed for two years as a domestic servant in the private residence of a Jordanian diplomat. Her allegations were broadly similar to those of Ms Reyes. They included deception, false imprisonment and persistent underpayment. In response to a claim for diplomatic immunity, her argument was that because commerce is simply the exchange of goods and services, commercial activity necessarily encompasses contracts for goods and services, including employment contracts. The court examined the terms of the Convention and its background and negotiating history, and upheld the claim for immunity on the principal ground that the expression commercial activity relates only to trade or business activity engaged in for personal profit (p 454). In reaching this conclusion, they took account of a statement of interest submitted by the State Department, which asserted that the exception focuses on the pursuit of trade or business activity; it does not encompass contractual relationships for goods and services incidental to the daily life of the diplomat and family in the receiving State (p 455). But they appear to have gone rather further than the State Department in suggesting (pp 455 456) that day to day living services incidental to daily life were also within a diplomatic agents official functions. Since a diplomats acts in obtaining day to day living services are remote from the performance of his official functions and are not done on behalf of the sending state, for my part, I do not find it possible to accept this last point. Even in the United States it appears to have been rejected in cases on the residual immunities conferred by article 39(2) of the Convention, to which I have already referred (para 20). But on their principal ground, I think that the Court was correct. The decision in Tabion v Mufti has consistently been followed in other circuits on materially similar facts: Gonzales Paredes v Vila and Nielsen, 479 F Supp 2d 187 (2007), Sabbithi v Al Saleh, 605 F Supp 2d 122 (2009), vacated in part on other grounds, no 07 Civ 115 (DDC Mar S 2011); Montuya v Chedid, 779 F Supp 2d 60 (2011); Fun v Pulgar, 993 F Supp 2d 470 (2014). It is also endorsed by Professor Denza: Diplomatic Law, 4th ed (2016), at pp 251 253. It is true that the Appeals Courts conclusion on the principal point was influenced by the State Departments statement of interest and that the constitutional division of powers in the United States requires the courts to show substantial deference to the executives views on such matters. But, like Lord Dyson MR in the Court of Appeal, I do not regard this as undermining the authority of the decision. In the first place it is clearly established doctrine in the United States that the views of the executive, although commanding respect, are not determinative: see Sumitomo Shoji America Inc v Avagliano 457 US 176, 184 185 (1982), United States v Stuart 489 US 353, 369 (1989). Secondly, the US Court of Appeals plainly formed its own view on the questions at issue. Thirdly, the Departments statement of interest, a copy of which has been put before us, is concerned mainly to put the negotiating history before the court. Otherwise it simply analyses the relevant legal principles, very much as the submissions of the Secretary of State as intervener have done on this appeal. Diplomatic and state immunity Mr Otty QC, who appeared for Ms Reyes, sought to reinforce his case on article 31(1)(c) by pointing out that under the restrictive theory of state immunity, the immunity of states is limited to acts which they perform as states. He argues that the functional analogies between state immunity and diplomatic immunity mean that a corresponding rule should apply to the latter, ie that any act done in a purely private capacity must be regarded as commercial, or at any rate as lying outside the permissible scope of the immunity. This argument in effect treats the words outside his official functions in article 31(1)(c) of the Convention on Diplomatic Relations as explanatory of the expression professional or commercial activities and deprives the latter of any independent effect. Manifestly, diplomatic and state immunity have a number of points in common. Both are immunities of the state, which can be waived only by the state. Both may extend to individual agents of the state, acting as such. Both are creatures of international law. And, although only diplomatic immunity has been codified by treaty, the embryonic United Nations Convention on Jurisdictional Immunities of States is generally regarded as an authoritative statement of customary international law on the major points which it covers. These factors led Laws J, in Propend Finance Pty Ltd v Sing (1997) 1 ILR 611, 633 634 to suggest that the law relating to diplomatic immunity is not free standing from the law of sovereign or state immunity, but is an aspect of it, and to cite with apparent approval a dictum of Jenkins LJ in Baccus SRL v Servicio National Del Trigo [1957] 1 QB 438, 470 to the effect that the protection accorded to a diplomat under the Diplomatic Privileges Act 1708 (then in force) could not be greater than that accorded to a foreign sovereign. However, the analogy should not be pressed too far. In some significant respects, the immunities of diplomatic agents are wider than those of the state. This is because their purpose is to remove from the jurisdiction of the receiving state persons who are within its territory and under its physical power. Human agents have a corporeal vulnerability not shared by the incorporeal state which sent them. Section 16 of the State Immunity Act 1978, which defines the ambit of state immunity in the United Kingdom, and article 3 of the UN Convention on the Jurisdictional Immunities of States, both provide that the rules relating to state immunity are not to affect diplomatic immunity. These provisions are necessary because, as Professor Denza points out in Diplomatic Law, 4th ed (2016), 1. As international rules on state immunity have developed on more restrictive lines, there has always been a saving for the rules of diplomatic and consular law and an increasing understanding that although these sets of rules overlap they serve different purposes and cannot in any sense be unified. For present purposes, the most significant difference in the ambit of the two categories of immunity concerns the treatment of acts of a private law character. Section 3(1)(a) of the State Immunity Act 1978, which defines the ambit of state immunity in the United Kingdom, provides that a state is not immune in respect of proceedings relating to a commercial transaction entered into by the state. For this purpose, a commercial transaction is a transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a state enters or in which it engages otherwise than in the exercise of sovereign authority: section 3(3)(c). The corresponding provisions of the United Nations Convention on Jurisdictional Immunities of States are in almost identical terms: see articles 2(1)(c) and 10. In Playa Larga (Owners of Cargo lately laden on board) v I Congreso del Partido (Owners) [1983] AC 244, 267, Lord Wilberforce, after reviewing the national and international authorities, held that the section gave statutory effect to the distinction in international law between acts jure imperii and acts jure gestionis. Its application depended on whether the relevant act(s) upon which the claim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity. The difficulty about the appellants proposed analogy between state and diplomatic immunity is that the immunity of a diplomat in post, unlike that of a state, unquestionably extends to some transactions which are outside his official functions, and therefore almost inevitably of a private law character. I have drawn attention above (paras 17 18) to the distinction which runs through the Convention on Diplomatic Relations and the parallel Convention on Consular Relations, between those immunities which are limited to acts performed in the course of a protected persons official functions and those enjoyed by diplomatic agents in post, which are not so limited. It is plain from this scheme that the exception for commercial activities exercised by a diplomatic agent is not simply another way of excepting acts in the performance of the diplomats official functions. Moreover, the immunities of a diplomatic agent in post are extended by article 37(1) of the Convention to his family, who will generally have no official functions. It is right to add that contracts of employment are not treated as a commercial transaction for the purposes of the State Immunity Act 1978: see section 3(c). They are subject to a distinct code under section 4, which provides that subject to specified exceptions a state is not immune as respects proceedings relating to a contract of employment made in or to be performed in the United Kingdom. There are broadly corresponding provisions in article 11 of the United Nations Convention. However, although the status of private servants is the subject of a number of provisions of the Convention on Diplomatic Relations, there is no provision in it corresponding to section 4 of the United Kingdom State Immunity Act or article 11 of the United Nations Convention. These differences explain why the authorities on which Mr Otty principally relied for this point are not of much assistance. With one exception (to which I shall return), they were cases about state immunity, in which the court applied the classic distinction between acts jure gestionis and jure imperii to the employment of non diplomatic staff. Thus in In re Canada Labour Code [1992] 2 SCR 50 the question at issue was whether the United States was entitled to state immunity under the Canadian State Immunity Act in proceedings relating to the terms on which it employed Canadian citizens at a US naval base in Canada. In particular, objection was taken to the inclusion of a no strike term. The case had nothing to do with diplomatic immunity. The issue had a superficial resemblance to the present one only because the Canadian State Immunity Act excepted any commercial activity from the scope of the immunity. It is, however, clear from the reasoning of the majority of the Supreme Court of Canada that in the context of a statute designed to give effect to the restrictive doctrine of state immunity in customary international law, a commercial activity meant an act done otherwise than in the exercise by the state of sovereign authority: see pp 71 73 (La Forest J). The Court ultimately held that while some obligations of an employer (for example, to pay wages) were enforceable in the Canadian courts as being of a private law character, a state employers imposition of terms judged appropriate to the military function of the base was an exercise of sovereign authority and as such immune. In the United States, where the Foreign State Immunity Act has an exception in the same terms as the Canadian Act, the same approach has been adopted: see El Hadad v United Arab Emirates and the Embassy of the United Arab Emirates 216 F 3d 29; Park v Shin 313 F 3d 1138 (9th Cir 2002), at paras 27 36. The exception is Fonseca v Larren (30 January 1991), a decision of the Supreme Court of Portugal, reported in State Practice regarding State Immunities (Council of Europe, 2006). This was a true case of diplomatic immunity, in which the Court held that article 31 of the Convention on Diplomatic Relations did not apply to the employment of a domestic servant in the private residence of a French diplomatic agent. The Court did not claim to be applying the exception in article 31(1)(c). Instead they applied to the Convention a principle sanctioned by the Portuguese Civil Code in the case of domestic legislation, which called for what the court regarded as an extensive interpretation of this precept [jurisdictional immunity] in keeping with its spirit, going beyond its letter and the ratio legis that determined it. On that basis, they appear to have recognised an implied additional exception to the immunity for matters within the jurisdiction of the Portuguese Labour Courts, on the ground that such acts would not constitute exercises of sovereign authority under the restrictive doctrine of state immunity. It is apparent that the Portuguese court proceeded on domestic law principles of construction which would not be applied to a treaty in England (or internationally), and on the basis of an analogy with state immunity which is difficult to support on any generally accepted principles of international law. The travaux These conclusions are confirmed by an examination of the travaux prparatoires. Of the three exceptions in article 31(1), only (a), relating to private dealings with immovable property in the receiving state, had been recognised by customary international law before the Convention. Exceptions (b) and (c) were matters on which states had not previously been agreed, and exception (c) was particularly controversial. It had not been included in the draft articles submitted by the Special Rapporteur (Mr Sandstrm) at the outset of the process. It was introduced by amendment by the Austrian Commissioner on 22 May 1957 in the course of the Ninth Session: see Yearbook of the International Law Commission 1957, i, 97, at paras 70 81. As originally introduced, it was confined to professional activities. This was said to be akin to article 24 of the Harvard draft articles of 1932, which referred to a person who engages in a business or who practises a profession. The proposer considered that cases to which the amendment would apply would be comparatively rare, and even those who opposed it agreed with this. They opposed it on the ground that diplomatic agents practically never engaged in such activities, which would be inconsistent with the dignity of their diplomatic status. The Egyptian Commissioner supported the amendment and proposed to add the reference to a commercial activity: If a diplomatic agent engaged in a professional or commercial activity the word commercial should undoubtedly be inserted in the amendment he should enjoy no immunity, but be treated on precisely the same footing as other persons who practised the same profession or engaged in the same commercial activities The dignity itself of a diplomatic agent required that he should not engage in activities outside his official duties. He then proposed the text of what became article 31(1)(c), which was adopted. In May 1958, the Special Rapporteur reported to the Commission on observations received from governments. He reported that the United States had opposed the inclusion of exception (c). But the Special Rapporteur proposed that it should be retained, observing: It would be quite improper if a diplomatic agent, ignoring the restraints which his status ought to have imposed upon him, could, by claiming immunity, force the client to go abroad in order to have the case settled by a foreign court. Commenting on the suggestion of the Australian government that commercial activity appears to require some definition, he observed: the use of the words commercial activity as part of the phrase a professional or commercial activity indicates that it is not a single act of commerce which is meant [but] a continuous activity. The Special Rapporteurs comment was reviewed in the course of the Tenth Session in 1958: Yearbook of the International Law Commission, 1958, i, 244 (paras 26 34). It was suggested by the Czechoslovakian commissioner in response to the commentary on exception (c) that the text might in fact cover an isolated commercial transaction. Sir Gerald Fitzmaurice (Rapporteur for the Session) questioned this: Paragraph 1(c) of the article applied to cases where a diplomatic agent conducted a regular course of business on the side. Such isolated transactions as, for instance, buying or selling a picture, were precisely typical of the transactions not subject to the civil jurisdiction of the receiving State. Annoying as it might be for the other parties to such transactions in the event of a dispute, it was essential not to except such transactions from the general rule for, once any breach was made in the principle, the door would be open to a gradual whittling away of the diplomatic agents immunities from jurisdiction. In the result, the observation in the commentary was deleted, the consensus being that the text was clear and the observation unnecessary. The report on the session to the General Assembly (ibid, ii, 98) commented on exception (c) in the following terms: The third exception arises in the case of proceedings relating to a professional or commercial activity exercised by the diplomatic agent outside his official functions. It was urged that activities of these kinds are normally wholly inconsistent with the position of a diplomatic agent, and that one possible consequence of his engaging in them might be that he would be declared persona non grata. Nevertheless, such cases may occur and should be provided for, and if they do occur the persons with whom the diplomatic agent has had commercial or professional relations cannot be deprived of their ordinary remedies. Article 42 was inserted at a very late stage, by an amendment proposed by the Colombian delegation at the international conference of March and April 1961 which immediately preceded the adoption of the final text: United Nations Conference on Diplomatic Intercourse and Immunities, Official Records, i, 172 (paras 24 27), 211 213 (paras 1 37). The reason advanced by the proposer of the amendment was that otherwise what became article 31(1)(c) might be read as implicitly authorising the exercise of professional or commercial activities, albeit on the basis that it was not immune. Everyone agreed that that would be incompatible with diplomatic status. It was therefore proposed that the Convention should affirm in a separate article the existing understanding that the carrying on of a business or profession by a diplomatic agent in the territory of the receiving state was incompatible with diplomatic status. The proposer considered that it was desirable to limit the occasions on which exception (c) would arise by avoiding a situation in which the diplomatic agent would be acting simultaneously in two different capacities, only one of which was covered by diplomatic privileges and immunities. The discussion which followed showed that the principle was generally accepted, on the footing that the prohibited activities covered what the Ecuadorian delegate called the exercise of an outside gainful activity, and the delegate of Ceylon a regular professional activity from which a permanent income was derived, and not an occasional activity, particularly of a cultural character. There was general agreement that it would not extend to occasional activities such as lecturing, even if paid. All the participants took it for granted that the activity which gave rise to the exception in article 31(1)(c) was the same as the activity which was treated as incompatible with the status of a diplomatic agent in article 42. From this history, three points can be extracted: (1) The activities covered by articles 31(1)(c) and 42 were intended to be the same. (2) They were activities involving the assumption by a diplomatic agent of a dual status, by which incompatible occupations were being pursued by the same person. (3) Occasions for the operation of either provision were expected to be very rare. The trafficking dimension The Protocol to Prevent, Supress and Punish Trafficking in Persons, Especially Women and Children (Palermo, 2000) supplements the United Nations Convention against Transnational Organised Crime. Article 3 defines trafficking in persons as the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs. Article 5 requires state parties to establish trafficking as a criminal offence and to ensure that their legal systems afford victims the possibility of obtaining compensation. The Protocol has been ratified by 168 states, including the United Kingdom and Saudi Arabia, and by the European Union. It is in principle possible for a rule of customary international law to be displaced by another rule of a higher order, or for a treaty obligation to be displaced by a peremptory norm (jus cogens) of international law, ie by a conflicting rule of international law permitting no derogation: see, as to treaty obligations, article 53 of the Vienna Convention on the Law of Treaties. But Mr Otty QC expressly disclaimed reliance on any such principle. He was in my view right to do so, for reasons which should be mentioned since they have a bearing on his other arguments. Diplomatic immunity, like state immunity, is an immunity from jurisdiction and not from liability. Its practical effect is to require the diplomatic agent to be sued in his own country, or in respect of non official acts in the receiving state, once his posting has ended. There is therefore no conflict between a rule categorising specified conduct as wrongful, and a rule controlling the jurisdictions in which or the time at which it may properly be enforced. It was for this reason that in Jones v Saudi Arabia [2007] 1 AC 270, Lord Bingham (para 24) and Lord Hoffmann (para 44) both adopted the observation of Hazel Fox in the then current edition of The Law of State Immunity (2002), at p 525, that state immunity does not contradict a prohibition contained in a jus cogens norm but merely diverts any breach of it to a different method of settlement. In Germany v Italy: Greece Intervening (Jurisdictional Immunities of the State) [2012] ICJ Rep 99, the International Court of Justice endorsed the Appellate Committees reasoning on this point, and gave it what is perhaps its clearest expression at paras 92 97. Rejecting an argument based on the peremptory character of the prohibition of war crimes and crimes against humanity, the court put the matter in this way: This argument therefore depends upon the existence of a conflict between a rule, or rules, of jus cogens, and the rule of customary law which requires one State to accord immunity to another. In the opinion of the Court, however, no such conflict exists. Assuming for this purpose that the rules of the law of armed conflict which prohibit the murder of civilians in occupied territory, the deportation of civilian inhabitants to slave labour and the deportation of prisoners of war to slave labour are rules of jus cogens, there is no conflict between those rules and the rules on state immunity. The two sets of rules address different matters. The rules of state immunity are procedural in character and are confined to determining whether or not the courts of one state may exercise jurisdiction in respect of another state. They do not bear upon the question whether or not the conduct in respect of which the proceedings are brought was lawful or unlawful The application of rules of state immunity to determine whether or not the Italian courts have jurisdiction to hear claims arising out of those violations cannot involve any conflict with the rules which were violated. The Court went on to point out that the existence of an international law obligation to provide for the recovery of compensation made no difference to this analysis: Nor is the argument strengthened by focusing upon the duty of the wrongdoing state to make reparation, rather than upon the original wrongful act. The duty to make reparation is a rule which exists independently of those rules which concern the means by which it is to be effected. The law of state immunity concerns only the latter; a decision that a foreign state is immune no more conflicts with the duty to make reparation than it does with the rule prohibiting the original wrongful act To the extent that it is argued that no rule which is not of the status of jus cogens may be applied if to do so would hinder the enforcement of a jus cogens rule, even in the absence of a direct conflict, the Court sees no basis for such a proposition. A jus cogens rule is one from which no derogation is permitted but the rules which determine the scope and extent of jurisdiction and when that jurisdiction may be exercised do not derogate from those substantive rules which possess jus cogens status, nor is there anything inherent in the concept of jus cogens which would require their modification or would displace their application. In these circumstances, Mr Otty wisely confined his case on this aspect of the appeal to the proposition that the international obligation to recognise a crime and a tort of human trafficking affected the scope of the exception for professional or commercial activities in article 31(1)(c) of the Convention on Diplomatic Relations. The argument is (i) that trafficking is treated by the Palermo Protocol as an inherently commercial activity, in which an employer participates by employing the victim; and (ii) that the profit element, if it is required, is established by the financial benefit which the employer generally obtains by paying less than the going rate or the legal minimum or nothing at all. The fundamental difficulty about this argument is that it involves modifying the concept of a professional or commercial activity in the light of the growing concern of international law with human trafficking subsequent to the Convention on Diplomatic Immunity. There are limited circumstances in which this is a legitimate technique of interpretation, but it is subject to principled limits. Article 31(2) and (3)(a) and (b) of the Vienna Convention on the Law of Treaties envisage that a treaty may in appropriate cases be interpreted in the light of a linked treaty, whether made at the same time or subsequently. Linked treaties are generally interpretative or explanatory of the principal treaty. It is not suggested that the principle applies here. But a broader principle is applied by article 31(3)(c) of the Vienna Convention on the Law of Treaties, which requires account to be taken of any relevant rules of international law applicable in the relations between the parties. The effect is to make limited provision for the interpretation of treaties in the light of subsequent developments of international law. The circumstances in which it applies are that the relevant provision of the principal treaty was ambulatory, in the sense that it envisaged that future changes occurring after it was made would affect its application. The example commonly cited is the International Court of Justices advisory opinion on Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) [1971] ICJ Rep 16. Article 22(1) of the Covenant of the League of Nations provided for the grant of mandates for the administration of former colonies and territories which are inhabited by peoples not yet able to stand by themselves under the strenuous conditions of the modern world. The mandate territory was to be administered on the principle that the wellbeing and development of such peoples form a sacred trust of civilisation. The Court interpreted article 22 in the light of the subsequent development in international law of the concept of self determination: Mindful as it is of the primary necessity of interpreting an instrument in accordance with the intentions of the parties at the time of its conclusion, the court is bound to take into account the fact that the concepts embodied in article 22 of the Covenant the strenuous conditions of the modern world and the wellbeing and development of the peoples concerned were not static, but were by definition evolutionary, as also, therefore, was the concept of the sacred trust. The parties to the Covenant must consequently be deemed to have accepted them as such. (para 53) The intention that the principal treaty should accommodate future change must therefore be found within the treaty itself. This is fundamental, for article 31(3)(c) of the Vienna Convention on the Law of Treaties is a principle of interpretation. It is not a principle of revision. With respect, I cannot accept that Oil Platforms (Islamic Republic of Iran v United States of America) [2003] ICJ 161, which Lord Wilson cites as illustrative of a wider principle, has any bearing on the point. The International Court of Justice did not in that case interpret the 1955 Treaty of Amity between Iran and the United States in the light of a subsequent and unrelated treaty or any other subsequent developments in international law. It interpreted an exception in the treaty for measures necessary to protect [the] essential security interests of the parties in the light of customary international law relating to the use of force and the right of self defence: see paras 41, 44, 73. The two concepts were clearly closely related and the relevant principles of customary international law were of very long standing. The first objection to the argument in this case is that no such intention can be discerned in article 31(1)(c) of the Convention on Diplomatic Relations. The concept of a professional or commercial activity exercised by a diplomatic agent is not ambulatory. The expression does not express a general value whose content may vary over time. It is a fixed criterion for categorising the facts, whose meaning and effect was extensively discussed during the drafting and negotiation of the text. There is no reason to suppose that it refers today to anything other than what it referred to in 1961. Secondly, the international obligations of states in relation to human trafficking are embodied in treaties, primarily in the Palermo Protocol, which is the only relevant treaty to which both the United Kingdom and Saudi Arabia are parties. The Protocol is not in any way concerned with jurisdictional immunity. Its sole relevance is as a source of international policy against human trafficking. But it does not follow from that policy that diplomatic immunity cannot be available in cases of trafficking. The intention of the parties to the Protocol that trafficking should be unlawful is entirely consistent with the subsistence of rules determining where and when civil claims or criminal charges may properly be determined. For the same reason, international law immunities have been held to be available in cases involving torture (Jones v Saudi Arabia), breach of the laws of armed conflict (Jurisdictional Immunities of the State) or crimes against humanity (Democratic Republic of the Congo v Belgium (Arrest Warrant of 11 April 2000)). Third, nothing in the Palermo Protocol requires that human trafficking must be classified as a commercial activity when it would not otherwise be, whether for the purpose of diplomatic immunity or for any other purpose. The commerciality or otherwise of the activities defined as trafficking are irrelevant to the definition. As defined in article 3 of the Protocol, trafficking may consist in a number of different operations, including the recruitment, transportation, transfer, harbouring and receipt of persons. It may also consist in fraud, deception or the abuse of power or vulnerability. Commonly, a chain of intermediaries will be involved, each participant doing some of these things but not necessarily all of them. It is not inherent in any of these acts that they will necessarily be done in the exercise of a commercial activity. That will depend on the precise circumstances. In particular, it will depend on the nature of each participants involvement. Thus one would expect an intermediary who recruits or transports a trafficked person for money to be exercising a commercial activity. The same is likely to be true of someone who receives a trafficked person for, say, prostitution. These are business operations. But the mere employment of a domestic servant on exploitative terms is not a commercial activity, and the fact that it is unlawful, contrary to international policy and morally repugnant cannot make it into one. One can readily imagine circumstances in which someone who employed a trafficked person as a domestic servant had obtained her through a chain of intermediaries engaged in human trafficking as a business, although that does not appear to have happened in Ms Reyes case. In such a case, the employer may incur criminal or civil liability along with the other participants who brought the victim to his door. But his liability would be for the trafficking. It would not without more make him a joint participant in the intermediaries business. Doubtless, without customers professional traffickers would have no business, but that does not make the customers into practitioners of a commercial activity. By way of analogy, if I knowingly buy stolen property from a professional fence for my personal use, both of us will incur criminal liability for receiving stolen goods and civil liability to the true owner for conversion. The fence will also be engaging in a commercial activity. But it does not follow that the same is true of me. For the same reason, it cannot matter that the trafficking may enable the ultimate employer to pay the victim less than the proper rate or nothing at all. To pursue the analogy, I will no doubt pay the fence less for the stolen goods than I would have had to pay for the same goods to an honest shopkeeper. But that does not alter the characterisation of my purchase, which is no more the exercise by me of a commercial activity in the one case than it is in the other. Likewise, the employment of a domestic servant to provide purely personal services cannot rationally be characterised as the exercise of a commercial activity if she is paid less than the going rate or the national minimum wage, but not if she is paid more. One might perhaps loosely say that the victim is being treated as a commodity. But a figure of speech should not be confused with a legal concept. Finally, the implications of human trafficking for the scope of diplomatic immunity have been considered on a number of occasions by the federal courts of the United States. On its facts, Tabion v Mufti may well have been a case of trafficking, and Gonzales Paredes v Vila and Nielsen, 479 F Supp 2d 187 (2007) almost certainly was. But the point appears to have been raised overtly for the first time in Sabithi v Al Saleh 605 F Supp 2d 122, a decision of the District Court for the District of Columbia. The court rejected the argument that the employers participation in trafficking constituted a commercial activity within article 31(1)(c), essentially because it made no difference to the characterisation of the act of employing or maltreating a domestic servant, even on exploitative terms and at marginal wages. The same view was taken in Montuya v Chedid, 779 F Supp 2d 60 (2011) and Fun v Pulgar, 993 F Supp 2d 470 (2014) where the facts were similar. The rare cases from European jurisdictions point to the same answer. In Pfarr v Anonymous 17 SA 1468/11 (ILDC 1903) (2011), which concerned the exploitation of a domestic servant in circumstances very like those of the present case, the Berlin Brandenburg Court of Appeal declined to recognise an exception for grave violations of human rights. (The appeal was allowed by the Federal Employment Court, NZA 2013, 343, only because by the time that the appeal was heard, the diplomat was no longer in post). The possibility that the commercial activities exception might apply does not seem to have occurred to the court. In Mohamed X v Fettouma Z (17 October 2012), 11/01255 Legifrance, it was considered by the Court of Appeal of Montpellier in a case where the employer had made considerable financial savings by his exploitation of a Moroccan housemaid. The argument was rejected on the ground that the arrangements for the management of a diplomats private residence and family life could not be regarded as a professional or commercial activity outside his official functions. Application to Ms Reyes case The first question is whether the employment or treatment of Ms Reyes by the Al Malkis were acts performed in the course of Mr Al Malkis official functions. In my judgment, it is clear that they were not. Difficult questions of fact may arise when a private servant is employed in a diplomats residence for purposes connected with the work of the mission. But on any view Mr Al Malkis official functions cannot have extended to the employment of domestic staff to do the cleaning, help in the kitchen and look after his children. These things were not done for or on behalf of Saudi Arabia. The Court of Appeal (para 19) thought that such activities were conducive to the performance of his official functions. No doubt they were. But that could be said of almost anything that made the personal life of a diplomatic agent easier. It does not make the employment of Ms Reyes part of Mr Al Malkis official functions as a diplomatic agent. Since Mr Al Malkis functions as a diplomatic agent have now come to an end, he is no longer entitled to any immunity under article 31. The only immunity available to him is the residual immunity under article 39(2). It follows from the fact that the relevant acts were not done in the course of his official functions that that immunity cannot apply. Likewise, Mrs Al Malki is no longer entitled to any immunity at all. Does it matter that Mr and Mrs Al Malki were entitled to immunity under article 31(1) and 37(1) respectively at the time when the present proceedings were commenced? In my opinion it does not. An action brought against persons entitled to diplomatic immunity is not a nullity. It is merely liable to be dismissed. There are therefore valid proceedings currently on foot. Diplomatic immunity is a procedural immunity. The procedural incidents of litigation normally fall to be determined by a court as at the time of the hearing. Thus a waiver of immunity after the commencement of proceedings would dispose of any diplomatic immunity which previously existed. The result of a change in the defendants status is not materially different. A striking illustration is supplied by the decision of the Court of Appeal in Empson v Smith [1966] 1 QB 426. Proceedings were begun against Mr Smith, a member of the administrative staff of the Canadian High Commission in London, claiming damages under a private tenancy agreement. At the time when the proceedings were commenced he enjoyed the same immunity under the Diplomatic Immunities (Commonwealth Countries and Republic of Ireland) Act 1952 as the diplomatic staff of an ambassador. Under the Act of 1708, that immunity was absolute. By the time of the hearing, however, the Acts of 1708 and 1952 had been replaced by the Diplomatic Privileges Act 1964, which conferred immunity on administrative and technical staff only in respect of acts done in the course of their duties. Mr Smith was held to be entitled only to the limited immunity under the Act of 1964. As Diplock LJ point out by way of analogy, at p 439, if the defendant had ceased to be en poste while the plaint was still outstanding the action could then have proceeded against him. Indeed, that was the position in Shaw v Shaw [1979] F 62. The wife filed a petition for a dissolution of her marriage to a diplomat attached to the United States embassy. At the time, he was immune, but the petition was allowed to proceed once the husbands posting came to an end and he left the United Kingdom. The same view has been taken in other jurisdictions where similar issues have arisen: see Denza, op cit, 257 258. The respondents main answer to these points is that Mr Al Malkis official functions extended to the employment of his domestic staff. I have rejected that submission. But they also submit that even on the footing that his official functions did not extend to the acts relied on by Ms Reyes, she did not take the point in the Court of Appeal and should not be allowed to take it here. I reject that submission also. If I thought that any injustice would be done by allowing the point to be taken in this court, I would be in favour of remitting the matter to the courts below. But I do not think so. The point was reserved shortly after judgment in the Court of Appeal and was fairly taken in the appellants printed case in this court. The relationship between articles 31 and 39(2) always was relevant, since it is a fundamental part of the scheme of the Convention. It is not suggested that the answer can turn on any disputed point of fact. There may in due course be implications for costs, but that is another matter. In those circumstances, the question whether the exception in article 31(1)(c) would have applied to Mr Al Malki had he still been in post does not strictly speaking arise. If he had still been in post, I would have held that he was immune, because the employment and treatment of Ms Reyes did not amount to carrying on or participating in carrying on a professional or commercial activity. Her employment, although it continued for about two months, was plainly not an alternative occupation of Mr Al Malkis. Nothing that was done by him or his wife was done by way of business. A person who supplies goods or services by way of business might be said to exercise a commercial activity. But Mr and Mrs Al Malki are not said to have done that. They are merely said to have used Ms Reyes services in a harsh and in some respects unlawful way. There is no sense which can reasonably be given to article 31(1)(c) which would make the consumption of goods and services the exercise a commercial activity. The European Convention on Human Rights It follows from the view that I take of the immunity claim that it is unnecessary to deal with Ms Reyes alternative argument based on the European Convention on Human Rights. Disposal I would allow the appeal. It remains to deal with the consequential orders. The present appeal has been decided on the assumption that the facts stated in Ms Reyes evidence are true. There has been no evidence from Mr and Mrs Al Malki, and no statement of their case on the facts. In those circumstances, the relief sought by Mr Otty is an order remitting the matter to the Employment Tribunal to determine whether on the facts Mr Al Malkis employment and treatment of Ms Reyes were acts done in the exercise of his functions as a member of the mission. However, before inflicting on the parties a further round of argument on the claim to immunity, I would wish to be satisfied that there is a real issue on that point in the light of this Courts judgment. As at present advised, it appears to me that there could be such an issue only if there were a dispute about the nature of the functions which Ms Reyes was employed to perform or, possibly, about the circumstances in which her employment came to an end. Accordingly, unless within 21 days written submissions are received from the parties justifying some other course, I would declare that Mr and Mrs Al Malki are not entitled to diplomatic immunity in respect of the claims made by Ms Reyes in these proceedings and remit the case to the Employment Tribunal to determine those claims on their merits. In the case of Mr and Mrs Al Malki, those submissions would have to identify any subsisting issue of fact going to their claim for immunity. LORD WILSON: (who agrees with Lord Sumption, save that he expresses doubts on one point, and with whom Lady Hale and Lord Clarke agree) I agree that the appeal should be allowed by reference to the apparent loss of immunity on the part of Mr Al Malki (and therefore of Mrs Al Malki) when in August 2014 he ceased to be a member of the Saudi mission in London and when therefore they left the UK. The loss of immunity is no more than apparent because the appeal proceeds only on assumed facts. By reference to the facts alleged by Ms Reyes, one can conclude that none of the actions taken by Mr Al Malki in relation to Ms Reyes were acts performed by [him] in the exercise of his functions as a member of the mission within the meaning of article 39(2) of the 1961 Convention. But, although the court has done no more than to assume these alleged facts to be correct, it may be that Mr and Mrs Al Malki take no real issue with this part of her allegations; and in those circumstances I subscribe to the disposal proposed by Lord Sumption in para 54 above. It follows that this court will not answer in any binding form the central question presented to it in such detail and with such conspicuous ability: does an action instituted in the tribunal against a foreign diplomat in the UK by his former domestic servant brought to the UK to work in his home in (assumed) conditions of modern slavery relate to any commercial activity exercised by [him here] outside his official functions within the meaning of article 31(1)(c) of the 1961 Convention? I am pleased that the court will not answer that question in any binding form. Lord Sumptions emphatic answer to the question is no. His answer is (if he will forgive my saying so) the obvious answer. It may be correct. But my personal experience has been that, the more one thinks about the question, the less obviously correct does his answer become. By reference to five aspects of the background, let me explain myself. First, the UK confronts a significant problem in relation to the exploitation of migrant domestic workers by foreign diplomats. Kalayaan, the Intervener, which is the principal UK charity devoted to advising and supporting migrant domestic workers, gives the following evidence: (1) Between about 200 and 250 domestic workers enter the UK each year under a diplomatic overseas domestic workers visa. (2) The proportion of domestic workers who are the victims of trafficking is considerably higher in diplomatic households than in other households. (3) Thus in one representative period 17 out of 55 referrals to the government agency set up to identify the trafficking of domestic workers related to diplomatic households whereas, had such referrals been in proportion to the number of workers in other households, there would have just been one. (4) The explanation for the high ratio of trafficked workers in diplomatic households is largely because perceived immunity from claims for compensation leads diplomats to consider that they can exploit them with impunity. (5) The perceived immunity makes trafficking with a view to domestic servitude a low risk, high reward activity for diplomats. It was these concerns which led Mr Ewins QC, in his Independent Review of the Overseas Domestic Workers Visa dated 16 December 2015, to recommend at para 165(1) that overseas domestic workers in diplomatic households should be employed by the foreign state, which (see para 63 below) he reasonably understood to have no civil immunity, rather than by the individual diplomats; but the government appears to have rejected the recommendation. Second is the universality of the international communitys determination to combat human trafficking. In para 39 above Lord Sumption refers to the Palermo Protocol 2000 which was the product of a resolution of the UN General Assembly to promote the evolution of an international instrument which addressed the trafficking of women and children. The protocol, ratified both by Saudi Arabia and the UK, contains elaborate commitments by each state party to criminalise trafficking; to make material provision for victims in aid of their physical, psychological and social recovery; by article 6(6), to ensure that its domestic legal system contains measures that offer victims of trafficking in persons the possibility of obtaining compensation for damage suffered; to strengthen border controls; and so on. Then came the Council of Europe Convention on Action against Trafficking in Human Beings, adopted in Warsaw on 16 May 2005. As was noted in the explanatory report which accompanied it, trafficking in human beings was a world wide phenomenon and had become a major scourge in Europe. The preamble to this 2005 Convention described its purpose as being to improve the protections afforded by the Palermo Protocol. Its detailed provisions for strong national mechanisms to identify trafficking and for international cooperation are irrelevant. But it is noteworthy that, by way of expansion of the requirement in article 6(6) of the Palermo Protocol that victims should obtain compensation, the 2005 Convention made clear, in article 15(3) and (4), that the obligation was to provide for victims to obtain compensation from the perpetrators as well as from the state; and also noteworthy that the UK claims to have discharged this obligation by, among other things, providing the facility for application to the tribunal. In my view it is irrelevant that, for obvious reasons, Saudi Arabia was unable to accede (as did the UK) to the 2005 Convention. It is equally irrelevant that, for obvious reasons, the UK was unable to ratify (as did Saudi Arabia) the Arab Charter on Human Rights adopted by the League of Arab States on 22 May 2004, which, by article 10(1) and (2), declared that no one should be held in servitude under any circumstances and that trafficking in human beings for the purposes of any form of exploitation was prohibited. The relevance of these instruments is that they underscore the equal level of determination of the UK, of Saudi Arabia and in effect of every state in the world to stamp out trafficking. Third: what is trafficking and, in particular, who is guilty of it? In para 39 above Lord Sumption quotes the definition of it in article 3 of the Palermo Protocol, repeated in article 4 of the 2005 Convention. It is the definition in accepted use. For present purposes most of the definition can be omitted and what remains is: the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the abuse of power or of a position of vulnerability for the purposes of exploitation. As was said in para 78 of the explanatory report which accompanied the 2005 Convention, the definition endeavours to encompass the whole sequence of actions that leads to the exploitation of the victim. As was observed by the European Court of Human Rights in Rantsev v Cyprus and Russia (2010) 51 EHRR 1 at para 281, the vice of trafficking is that it treats human beings as commodities to be bought and sold and put to forced labour, often for little or no payment How apt (one therefore asks) is the analogy offered by Lord Sumption in paras 45 and 46 above between a purchaser of stolen goods at a cheap price and an employer, such as Mr Al Malki, of a trafficked migrant? Neither, suggests Lord Sumption, engages in the commercial activity of the thief or handler of the goods and of the recruiter or transporter of the migrant. But another rational view is that the relevant activity is not just the so called employment but the trafficking; that the employer of the migrant is an integral part of the chain, who knowingly effects the receipt of the migrant and supplies the specified purpose, namely that of exploiting her, which drives the entire exercise from her recruitment onwards; that the employers exploitation of the migrant has no parallel in the purchasers treatment of the stolen goods; and that, in addition to the physical and emotional cruelty inherent in it, the employers conduct contains a substantial commercial element of obtaining domestic assistance without paying for it properly or at all. Fourth is the fact that, in the words of Laws J at p 633 in the Propend case, cited above at para 27, diplomatic immunity is an aspect of state immunity. The parties to the 1961 Convention therefore recorded in their second recital to it that, in agreeing its terms, they had in mind the sovereign equality of states. So it must be at least relevant to notice that, in accordance with the movement in the doctrine of sovereign immunity in customary international law from being absolute to being restrictive, Parliament enacted sections 3 and 4 of the State Immunity Act 1978. Section 3(1) excludes immunity in respect of a states entry into a commercial transaction, defined in subsection (3) as, among other things, any contract for the supply of goods or services. At the end of that subsection Parliament provided that the section did not apply to a contract of employment between a state and an individual. In the absence of that provision the section clearly would have applied to such a contract. The purpose of excluding a contract of employment from the ambit of section 3 was, so I infer, only that it required fuller treatment in a section of its own. This is section 4, which, by subsection (1), excludes immunity in respect of such a contract where made in the UK or where the work is to be performed here, albeit subject to exceptions provided in later subsections. It is true that subsection (1)(a) of section 16 of the 1978 Act purports to exclude the application of section 4 to proceedings concerning the employment of the members of a mission, including staff in its domestic service. But for present purposes the subsection can be put to one side because today, in Secretary of State for Foreign and Commonwealth Affairs v Benkharbouche, Libya v Janah, UKSC 0062 of 2017, this court dismisses appeals against declarations that, insofar as it bars employment related claims against a foreign state derived from EU law, the subsection should be disapplied and that, insofar as it bars other such claims, it is incompatible with article 6 of the European Convention on Human Rights. Section 5 of the Canadian State Immunity Act analogously excludes immunity from proceedings relating to a foreign states commercial activity; and in the Canada Labour Code case, cited at para 33 above, the Canadian Supreme Court accepted at p 79 that a contract of employment was generally a commercial activity, while holding that the proceedings for recognition of a unions right to represent Canadian employees at the US naval base had a sovereign element sufficient to preserve the immunity. I cannot readily explain why proceedings relating to a contract of employment entered into by a foreign state, for performance in the UK, will not in principle attract immunity in circumstances in which, if the contract is entered into by a diplomat, it will in principle attract immunity. Fifth is the purpose of diplomatic immunity, helpfully defined in the fourth recital to the 1961 Convention as being not to benefit individuals but to ensure the efficient performance of the functions of diplomatic missions as representing States. If a persons duties under a contract of employment made between her and a foreign diplomat relate to the latters official functions, the immunity is appropriately provided, in accordance with its purpose, by the last four words of article 31(1)(c). But in the present case, for reasons explained by Lord Sumption, there is no apparent link between the duties of Ms Reyes and the official functions of Mr Al Malki. And so if, even in that situation, diplomatic immunity were to arise, the question would become: how does that accord with its purpose? The major perceived problem lies, of course, in the words of article 31(1)(c), in particular of three words commercial activity exercised . The interpretation of the article is required by article 31(1) of the Vienna Convention on the Law of Treaties 1969 Cmnd 4140 (the Vienna Convention) to be undertaken in accordance with the ordinary meaning to be given to [its] terms in their context and in the light of its object and purpose. So the focus is on the ordinary meaning of the words; and the purpose of the 1961 Convention is relevant only to the extent that it throws light upon their ordinary meaning. I am persuaded that, when agreeing to the terms of the 1961 Convention, the parties would have rejected any suggestion that the proceedings brought by Ms Reyes related to any commercial activity exercised by Mr Al Malki. I am, with respect to Lord Sumptions contrary opinion expressed in para 42 above, less persuaded that, even if (which is debatable) article 31 of the 1961 Convention does not by its terms contemplate any future development of its meaning, the latter would have been unable to develop over 56 years. Article 31(3)(c) of the Vienna Convention requires the interpretation of an article to take account of any relevant rules of international law applicable in the relations between the parties; and the requirement is not further qualified. The fact that in the Namibia case, which Lord Sumption there cites, the international court discerned the contemplation of development within the terms of the article under scrutiny does not exclude in other circumstances the natural development of the meaning of an article in accordance with the development of international law, in particular the emergence of an international prohibition against trafficking; nor does the absence of an ability to discern it within a term mean that the parties who agreed it intended otherwise. In Oil Platforms (Islamic Republic of Iran v United States of America) [2003] ICJ 161 the International Court of Justice was required to determine whether, in destroying oil platforms belonging to Iran, the US had breached an article of the Treaty of Amity which it had made with Iran in 1955. In interpreting the article the court, at para 41, turned to current rules of international law on the use of force without considering whether the article had expressly contemplated future development of its meaning. It was enough that the parties could not have intended that the article be interpreted without reference to them. The other perceived problem is that an international treaty calls for international interpretation by reference to broad principles of general acceptation (Stag Line, Ltd v Foscolo, Mango and Co, Ltd [1932] AC 328 at 350); and never more obviously than when every state despatches its diplomats abroad in expectation of their protection under it. So it would be a strong thing for this court to diverge from the US jurisprudence set out in the Tabion case, cited in para 23 above, and to adopt the robust interpretation of article 31(1) for which Ms Reyes contends. On the other hand it is difficult for this court to forsake what it perceives to be a legally respectable solution and instead to favour a conclusion that its system cannot provide redress for an apparently serious case of domestic servitude here in our capital city. In the event my colleagues and I are not put to that test today. Far preferable would it be for the International Law Commission, mid wife to the 1961 Convention, to be invited, through the mechanism of article 17 of the statute which created it, to consider, and to consult and to report upon, the international acceptability of an amendment of article 31 which would put beyond doubt the exclusion of immunity in a case such as that of Ms Reyes. LADY HALE AND LORD CLARKE: (who agree with Lord Wilson) We agree, for the reasons given by Lord Sumption in that connection, that if article 39 applies, then Mr and Mrs Al Malki are not entitled to immunity. We also agree with his proposed disposal of the case. It follows that the proper construction of article 31(1)(c) does not arise. However, had it arisen, we would associate ourselves with the doubts expressed by Lord Wilson as to whether the construction adopted by Lord Sumption in this particular context is correct especially in the light of what we would regard as desirable developments in this area of the law.

UK-Abs

Between January and March 2011 the respondents, Mr and Mrs Al Malki, employed Ms Reyes as a domestic servant at their London residence. Mr Al Malki was a member of the diplomatic staff of the Saudi Arabian embassy in London. In June 2011, Ms Reyes began proceedings in the Employment Tribunal. She alleges that Mr and Mrs Al Malki mistreated her in the course of her employment and that she is a victim of trafficking. Those allegations are yet to be determined at trial. The Court of Appeal held that the Employment Tribunal lacked jurisdiction because Mr Al Malki was entitled to diplomatic immunity under article 31 of the Vienna Convention on Diplomatic Relations 1961 (the Convention), which is incorporated into the law of the United Kingdom by section 2(1) of the Diplomatic Privileges Act 1964. Under article 37(1) of the Convention, Mrs Al Malki therefore benefited from immunity as his family member. Mr and Mrs Al Malki then left the United Kingdom when Mr Al Malkis posting came to an end. Ms Reyes appealed to the Supreme Court, contending that the Employment Tribunal has jurisdiction to hear her claims under the exception, contained in article 31(1)(c) of the Convention, to the general rule of diplomatic immunity. Mr and Mrs Al Malki cross appealed, contending that they were never validly served with the claim form. Two parties intervened: the Secretary of State for Foreign and Commonwealth Affairs and Kalayaan, a charity which supports migrant domestic workers including victims of trafficking. The Supreme Court unanimously allows the appeal and dismisses the cross appeal. Lord Sumption gives the lead judgment, with which Lord Neuberger agrees. Lord Wilson gives a separate judgment in which he concurs with that of Lord Sumption, save in respect of one point. Lady Hale and Lord Clarke agree with the judgment of Lord Wilson. Diplomatic immunity is not an immunity from liability. It is immunity from the jurisdiction of the courts of the state which hosts the diplomat (the receiving state) [7 9]. The claim form was served validly, without violating the protections conferred on diplomats and their residences respectively by articles 29 and 30 of the Convention: the service of a claim form by post does not involve any trespass against the diplomats person or residence; it merely conveys information [13 16]. The Convention draws a fundamental distinction between the acts of a diplomat which are performed in the exercise of an official function and those which are not. The former are immune because they are committed on behalf of a state. The immunity of the latter is justified on the pragmatic basis that it facilitates diplomatic relations. Article 31(1) confers diplomatic immunity on both types of acts, subject to specified exceptions. Once a diplomats posting has come to an end, his or her immunity after leaving the receiving state is ordinarily limited to a residual immunity under article 39(2). That residual immunity applies only to acts performed the exercise of official functions [17 18]. Acts performed in the exercise of a diplomats official functions are limited to acts which are part of the diplomatic functions of the diplomatic mission, performed on behalf of the state which that diplomat represents [20]. Mr and Mrs Al Malki left the United Kingdom at the end of Mr Al Malkis posting, so the only potentially relevant immunity is the residual immunity in respect of official acts. The employment of Ms Reyes to carry out domestic tasks in the residence of Mr and Mrs Al Malki was not an act in the exercise of the diplomatic functions of the mission. Nor was it done on behalf of Saudi Arabia, even though it assisted Mr Al Malki in the performance of his official functions. It was not there the exercise of an official function. Consequently, neither Mr Al Malki nor Mrs Al Malki may rely on that residual immunity [48]. The appeal is therefore allowed. Unless within 21 days the parties in writing justify an alternative, the case will be remitted to the Employment Tribunal to be determined at trial [54 55]. Lord Sumption, with whom Lord Neuberger agrees, expresses the view (obiter) that Mr Al Malki would have been entitled to immunity under article 31(1) if he had still been in post. Ms Reyes sought to rely on an exception to article 31(1), set out in article 31(1)(c). That exception applies in civil claims relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions. Lord Sumption would have concluded that the acts alleged do not constitute the exercise of a professional or commercial activity [51]. Lord Sumption reasons that: (i) the wording of the exception envisages a diplomat who also conducts a business, practises a profession, or similar [21(1) (3)]; (ii) the drafting history of the Convention confirms that this was the drafters intention [21(4), 34 38]; (iii) the reasoning in case law from the United States supports that interpretation [22 25]; (iv) the reasons for the exception are obvious: nothing in the concept of diplomatic immunity requires it to protect a diplomats private business activities, in competition with others, from business related claims [21(5)]; (v) a wide interpretation of the exception risks exposing diplomats to liability in respect of everyday transactions, undermining the carefully constructed scheme of immunities under the Convention [21(6)]; (vi) nothing in the Convention nor in wider international law justifies interpretation of the Convention with reference to the International Protocol to Prevent, Suppress and Punish Trafficking in Persons (Palermo, 2000) (the Palermo Protocol) and nothing in the Palermo Protocol would require a different interpretation of article 31(1)(c) [41 47]. Lord Wilson, with whom Lady Hale and Lord Clarke agree, welcomes the lack of any binding decision as to whether Mr Al Malki would have been immune, had he remained in his post. In his view the answer is not obvious [57]. This is because: (i) the exploitation of migrant domestic workers by diplomats is a significant problem [59]; (ii) there is a global determination to combat human trafficking [60]; (iii) the employment of trafficked persons may form part of the wider commercial activity of trafficking [61 62]; (iv) the absence of state immunity in similar cases is difficult to reconcile with recognition of diplomatic immunity in this case [63] [64]; (v) it is not clear how recognition of Mr Al Malkis immunity would further the stated purpose of the Convention [66]. Lord Wilson disagrees with Lord Sumptions opinion that it was inappropriate to construe article 31(1)(c) in the light of the more recent international condemnation of human trafficking [67]. He invites the International Law Commission to consider amendment of the Convention [68].

This appeal concerns the assessment of damages arising out of the repudiation of a charterparty by charterers of a cruise ship called New Flamenco (the vessel). I can take the facts from the judgment of Longmore LJ (with whom Christopher Clarke and Sales LJJ agreed) in the Court of Appeal. He had in turn taken the facts from the judgment of Popplewell J (the judge) on appeal from the First Final Arbitration Award, dated 3 June 2013, (the award) made by Mark Hamsher as sole arbitrator. The arbitrator gave detailed reasons which formed part of the award. By a time charterparty on the NYPE 93 form dated 13 February 2004 (the charterparty) the vessel was chartered by her then owners, Cruise Elysia Inc to the defendants (the charterers) for a period of one year. At that time the vessel was managed by the claimants (the owners), who bought the vessel on 4 March 2005 and entered into a novation agreement dated 23 March 2005 under which they assumed the rights and liabilities of the owners under the charterparty effective as from 7 March 2005. In August 2005 the owners and the charterers concluded an agreement extending the charter for two years expiring on 28 October 2007, with an option for a third year. The option was never exercised. The extension was recorded in addendum A. At a meeting on 8 June 2007, the owners and charterers reached an oral agreement in terms subsequently recorded in addendum B. The agreed terms extended the charterparty for a further two years expiring on 2 November 2009. The charterers disputed having made the agreement recorded by addendum B and refused to sign it. They maintained an entitlement to redeliver the vessel on 28 October 2007 in accordance with addendum A. The owners treated the charterers as in anticipatory repudiatory breach and on 17 August 2007 accepted the breach as terminating the charterparty. The vessel was redelivered on 28 October 2007. Shortly before redelivery the owners entered into a memorandum of agreement for sale of the vessel for US$23,765,000. The charterparty was governed by English law and provided for London arbitration. The owners commenced arbitration on 11 September 2007 and Mr Hamsher was appointed sole arbitrator on 4 March 2008. The charterers denied liability, claim submissions were served only on 23 November 2011 and the hearing took place in May 2013. By the time of the hearing it was apparent that there was a significant difference between the value of the vessel in October 2007, when the owners sold her, and in November 2009, when the vessel would have been redelivered to the owners had the charterers not been in breach of the charterparty. The collapse of Lehman Brothers in September 2008 and the financial crisis had occurred in the meantime. The value of the vessel when she would have been redelivered in accordance with addendum B in November 2009 was, as the arbitrator subsequently found, US$7,000,000. That finding was based on expert evidence of valuers as between a willing seller and a willing buyer. The owners advanced their claim for damages calculated by reference to the net loss of profits which they alleged that they would have earned during the additional two year extension. Such profits were set out in a detailed schedule identifying the revenue which would have been earned under the charterparty, and giving credit for the costs and expenses which would have been incurred in operating the vessel in providing the charterparty service for the two years, but which had been saved as a result of the sale of the vessel. The amount claimed was 7,558,375. As Longmore LJ put it, ironically the owners were, at this stage, prepared to give credit for what they called the reduction in the re sale value of the vessel (said to be for depreciation) between October 2007 and November 2009 of US$5,145,000. The charterers argued that the owners were bound to bring into account and give credit for the whole difference between the amount for which the vessel had been sold in October 2007 (US$23,765,000) and her value in November 2009 (subsequently found by the arbitrator to be US$7,000,000). The owners wished, however, to argue that the difference in value was legally irrelevant and did not fall to be taken into account. Because there was no agreement between the parties on the accounting figures in relation to the net profits which would have been earned for the two year period under the charter, the arbitrator made no findings on the quantum of the owners claim and left the figures to be agreed by the parties or referred back to him in the absence of agreement. But he declared that the charterers were entitled to a credit of 11,251,677 (being the equivalent of US$16,765,000) in respect of the benefit that accrued to the owners by selling the vessel when worth more in October 2007 than it was at the end of the charter period in November 2009. This was more than the owners loss of profit claim and would result in the owners recovering no damages for the charterers repudiation. As Longmore LJ observed in para 10, towards the end of the arbitration hearing the owners had made an application to amend their submissions by deleting the conceded credit. That application was refused by the arbitrator but he allowed the point of principle (that no credit needed to be given) to be argued holding that, if the owners were successful on the point, the amount of the conceded credit would have, nevertheless, to be brought into account. That remained the position before the judge. The award and the judgment There were two issues before the arbitrator: (1) whether the owners had been entitled to terminate the charterparty; and (2) if so, whether they had to give credit for any benefit that they had received by selling the vessel. On the first issue, the arbitrator found that the parties had concluded an oral agreement on the terms of addendum B and that the charterparty had been terminated by the owners in response to the charterers repudiatory breach. There has been no challenge to that finding. The second issue was the only issue of quantum which was argued before the arbitrator (apart from the valuation issue referred to in para 4 above). As I understand it, the parties agreed that, depending upon the circumstances, subject to the way in which the specific issue was decided, any other quantum issues would be the subject of directions and a further hearing. The issue for determination by the arbitrator was recorded in para 3 of his reasons in this way: there was a fundamental difference between [the parties] as to whether any difference between the October 2007 sale and the putative November 2009 sale price had to be taken into account as a benefit that had accrued to the Owners. The Owners argued that it was totally irrelevant in considering their claim for loss of profit. The Charterers argued that it was a benefit that could and should be taken into account to establish the true net damages suffered by the Owners. This was far from being an arid, legal dispute of little practical importance. If the Charterers were correct both as to the extent of the alleged benefit that had accrued to the Owners and the fact that it had to be taken into account, then even if the Owners succeeded on liability, they could recover nothing because the benefit could exceed by a considerable margin the claim for loss of profits. On this second issue, the arbitrator made a declaration in his award that, when damages fell to be assessed, the charterers were entitled to a credit of 11,251,677 in respect of the benefit that accrued to the owners when they sold the vessel in October 2007 as opposed to November 2009, which was the earliest time when they could have sold the vessel if addendum B had been performed. The arbitrator added, consistently with the above, that since the parties had not agreed the other accounting figures between them, it was appropriate for him merely to declare the credit to which the charterers were entitled, leaving it to the parties either to refer the balance of their disputes to him or to resolve matters amicably. Finally he reserved the right to make such further award or awards as might be appropriate including on costs. The owners sought permission to appeal to the High Court pursuant to section 69 of the Arbitration Act 1996 on a question of law which was formulated in this way: When assessing shipowners damages for loss of profits on earnings of hire under a time charterparty which has been repudiated by the charterers and the repudiation accepted by the owners as terminating the contract, are the charterers entitled to have taken into account as diminishing the loss of earnings/hire sustained by the owner as a result of the accepted repudiation a benefit said to consist of avoidance of a drop in the capital value of the vessel because the vessel has been sold shortly after acceptance of the repudiation whereas, if the vessel had been retained until after performance of the charterparty, it would have had a lower capital value by reason of decline in the capital value of the vessel through market decline in ship sale values in that period? Permission to appeal was granted by Teare J on 17 September 2013. He considered the question to be one of general public importance and that the arbitrators decision was at least open to serious doubt. The appeal was argued before Popplewell J on 30 April and 1 May 2014 and judgment was given by the judge, allowing the appeal, on 21 May 2014. In a judgment reported in [2014] 2 Lloyds Rep 230 he held in para 65 that, on the facts found by the arbitrator, the application of the principles of law which he had identified did not require the owners to give credit for any benefit in realising the capital value of the vessel in October 2007, by reference to its capital value in November 2009, because it was not a benefit which was legally caused by the breach. The charterers appealed to the Court of Appeal, which allowed the appeal. Before considering the reasoning of the Court of Appeal, it is appropriate to consider the reasoning of the judge. Having set out the submissions of counsel in some detail between paras 13 and 62, he summarised his conclusions on legal principle in paras 63 and 64 as follows1: 63. The search for a single general rule which determines when a wrongdoer obtains credit for a benefit received following his breach of contract or duty is elusive. In Parry v Cleaver Lord Wilberforce said at [1970] AC 1, at pp 41H to 42B: As the learned justices in the High Court are careful to state, it is impossible to devise a principle so general as to be capable of covering the great variety of benefits from one source or another which may come to an injured man after, or because, he has met with an accident. Nor, as was said by Dixon CJ in Espagnes case (1961) 105 CLR 569, is much assistance to be drawn from intuitive feelings as to what it is just that the wrongdoer should pay. Moreover, I regret that I cannot agree that it is easy to reason from one type of benefit to another. 64. Nevertheless a number of principles emerge from the authorities considered above which I would endeavour to summarise as follows: (1) In order for a benefit to be taken into account in reducing the loss recoverable by the innocent party for a breach of contract, it is generally speaking a necessary condition that the benefit is caused by the breach: Bradburn, British Westinghouse, The Elena DAmico, and other authorities considered above. 1 Case references as previously inserted in the judgment: Parry v Cleaver [1970] AC 1, Bradburn v Great Western Railway (1874) LR 10 Exch 1, British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railway Co of London Ltd [1912] AC 673, The Elena DAmico [1980] 1 Lloyds Rep 75, Coles v Hetherton [2015] 1 WLR 160, The Fanis [1994] 1 Lloyds Rep 633, Lavarack v Woods of Colchester Ltd [1967] 1 QB 278, Needler Financial Services Ltd v Taber [2002] 3 All ER 501, Hussey v Eels [1990] 2 QB 227, Palatine Graphic Arts Co Ltd v Liverpool City Council [1986] QB 335, Bellingham v Dhillon [1973] QB 304, Nadreph Ltd v Willmett & Co [1978] 1 WLR 1537, The Elbrus [2010] 2 Lloyds Rep 315, The Yasin [1979] 2 Lloyds Rep 45, Shearman v Folland [1950] 2 KB 43 and Smoker v London Fire and Civil Defence Authority [1991] AC 502. (2) The causation test involves taking into account all the circumstances, including the nature and effects of the breach and the nature of the benefit and loss, the manner in which they occurred and any pre existing, intervening or collateral factors which played a part in their occurrence: The Fanis. (3) The test is whether the breach has caused the benefit; it is not sufficient if the breach has merely provided the occasion or context for the innocent party to obtain the benefit, or merely triggered his doing so: The Elena DAmico. Nor is it sufficient merely that the benefit would not have been obtained but for the breach: Bradburn, Lavarack v Woods, Needler v Taber. (4) In this respect it should make no difference whether the question is approached as one of mitigation of loss, or measure of damage; although they are logically distinct approaches, the factual and legal inquiry and conclusion should be the same: Hussey v Eels. (5) The fact that a mitigating step, by way of action or inaction, may be a reasonable and sensible business decision with a view to reducing the impact of the breach, does not of itself render it one which is sufficiently caused by the breach. A step taken by the innocent party which is a reasonable response to the breach and designed to reduce losses caused thereby may be triggered by a breach but not legally caused by the breach: The Elena DAmico. (6) Whilst a mitigation analysis requires a sufficient causal connection between the breach and the mitigating step, it is not sufficient merely to show in two stages that there is: (a) a causative nexus between breach and mitigating step; and (b) a causative nexus between mitigating step and benefit. The inquiry is also for a direct causative connection between breach and benefit (Palatine), in cases approached by a mitigation analysis no less than in cases adopting a measure of loss approach: Hussey v Eels, The Fanis. Accordingly, benefits flowing from a step taken in reasonable mitigation of loss are to be taken into account only if and to the extent that they are caused by the breach. (7) Where, and to the extent that, the benefit arises from a transaction of a kind which the innocent party would have been able to undertake for his own account irrespective of the breach, that is suggestive that the breach is not sufficiently causative of the benefit: Lavarack v Woods, The Elena DAmico. (8) There is no requirement that the benefit must be of the same kind as the loss being claimed or mitigated: Bellingham v Dhillon, Nadreph v Willmett, Hussey v Eels, The Elbrus, cf The Yasin; but such a difference in kind may be indicative that the benefit is not legally caused by the breach: Palatine. (9) Subject to these principles, whether a benefit is caused by a breach is a question of fact and degree which must be answered by considering all the relevant circumstances in order to form a commonsense overall judgment on the sufficiency of the causal nexus between breach and benefit: Hussey v Eels, Needler v Taber, The Fanis. (10) Although causation between breach and benefit is generally a necessary requirement, it is not always sufficient. Considerations of justice, fairness and public policy have a role to play and may preclude a defendant from reducing his liability by reference to some types of benefits or in some circumstances even where the causation test is satisfied: Palatine, Parry v Cleaver. (11) In particular, benefits do not fall to be taken into account, even where caused by the breach, where it would be contrary to fairness and justice for the defendant wrongdoer to be allowed to appropriate them for his benefit because they are the fruits of something the innocent party has done or acquired for his own benefit: Shearman v Folland, Parry v Cleaver and Smoker. As stated above, the judge held in para 65 that, on the facts found by the arbitrator, the application of those principles did not require the owners to give credit for any benefit in realising the capital value of the vessel in October 2007, by reference to its capital value in November 2009, because it was not a benefit which was legally caused by the breach. The judge gave his reasons for reaching those conclusions in his paras 66 to 72. Whether his reasoning is correct is critical to the resolution in this appeal. It may be summarised as follows. He noted in para 66 that the vessel was an asset purchased by the owners in 2005 which the owners could have sold at any time thereafter at the prevailing market rate. When they sold it in October 2007 it was worth US$23,765,000. The judge held that the fact that it would have been worth only US$7m two years later was a result of the fall in the market flowing from the financial crisis. The difference in the value of the vessel was not, he said, caused by the charterers breach of the charter; it was caused by the fall in the market which occurred irrespective of such breach. He added that the effect of the fall in the market was also not caused by the charterers breach. It was caused by the owners decision to sell the vessel. He added in para 66 that it was caused thus. At the moment of the breach, the owners had a choice whether or not to sell the vessel, as they had at any stage over the unexpired period of the charterparty. If and when they chose to sell, market fluctuations in the vessels value thereafter would no longer affect them, for good or ill. If the market subsequently rose, the decision to sell might with hindsight seem a poor one; if the market fell it would prove to be a wise one. That was a matter for the owners commercial judgment and involved a commercial risk taken for their own account. That is none the less so because it was reasonable for them to sell when faced with the charterers breach. The decision to sell was legally independent of the breach, so far as concerns movements in the capital value of the vessel, just as was the decision of charterers not to charter in substitute tonnage in The Elena DAmico. The breach merely provided the context or occasion for the owners to realise the capital value of the vessel. It was the trigger not the cause. The judge made a similar point in para 67. The owners, he said, were not obliged to sell the vessel, as a matter of fact or law. The arbitrator did not find that a failure to do so would have been a failure reasonably to mitigate loss. There can be no question of the owners being obliged to realise the capital value of the vessel by selling it on breach, however reasonable such a course was from a business point of view. Then in para 68 the judge concluded that the issue of causation was not concluded by the arbitrators finding that the sale was in reasonable mitigation of loss. The true question was whether the owners suffered a net loss in income from the charterparty. The judge added: The sale of the vessel mitigated this loss because it reduced the continuing costs of operating or laying up the vessel. To the extent that the benefits flowing from the sale comprised such cost savings, there is no difficulty in treating the causal nexus between breach and benefit as established through the mitigating step of selling the vessel. But insofar as the sale gave rise to a capital benefit, it was not caused by the breach, but by the independent decision of the owners to realise the capital value of their asset. Although that was a benefit which flowed from the mitigating step of selling the vessel, it does not satisfy the principle that benefits are only to be taken into account to the extent that they are caused by the breach. In short, the judge concluded in para 69 that a capital loss of this kind is different from the only relevant loss, which was a loss of income, not a loss of capital. The judge further observed in para 70 that a further indication that the capital benefit to the owners derived from selling the vessel in 2007 rather than 2009 was not legally caused by the breach is to be found in the fact that a sale of the vessel was the kind of transaction which it was open to the owners to enter into irrespective of the charterers breach of charterparty. Whilst the charter was on foot, the owners might have sold the vessel subject to charter, provided that they did so on terms which required the new owner to perform the charterparty so that they were not putting it out of their power to perform. The judge considered this aspect of the case further in the remainder of para 70 and in para 71. In para 72 the judge explained that the same result is reached if the issue is approached as one of the measure of damage rather than mitigation; the application of the causation test leads to the same conclusion. In summary, he concluded that the change in capital value of the vessel consequent upon the drop in the market over the two years between the vessel being sold in November 2009 for immediate delivery and the vessel being sold in October 2007 had nothing to do with the contractual rights which the owners lost as a result of the charterers repudiation. In his para 73 the judge added that the same result was dictated by the policy grounds which inform Bradburn and its extension in Parry v Cleaver and Smoker. His reasoning was similar to that under the heading of causation. He said this in para 73 after referring to those cases: The capital value of the vessel was a benefit which the owners had obtained for their own account prior to the breach when they bought the vessel in 2005. They invested their money (or that which they borrowed) in an asset, taking upon themselves the risk of fluctuations in its capital value which would inevitably be affected by the sale and purchase market. They took the risk of having invested in the vessel, and of the financial consequences of a decision of whether and when to sell her. To allow the charterers to take the benefit of their decision to sell at what turned out to be an opportune moment in market conditions would be to allow the charterers to appropriate the fruits of the owners investment in a way that would be unfair and unjust. In this respect the position is properly analogous to the position of a person who receives the proceeds of insurance or a pension following breach, and the policy rationale for ignoring such benefits articulated in Shearman v Folland, Parry v Cleaver and Smoker applies. In paras 74 and 75 the judge considered a submission made to him on behalf of the charterers that questions of causation raised issues of fact which were matters for the arbitrator and not matters for the court on an appeal limited to issues of law. The judge correctly accepted that his jurisdiction was limited to issues of law. However, while recognising the deference and respect due to the very experienced arbitrator, there is considerable force in the points made at the end of para 74 as follows: I have nevertheless reached the conclusion that had the arbitrator applied the correct principles he could not have reached the conclusion to which he came, which is indicative of an error of law either in failing to identify the correct principles of law or in failing to apply them. The arbitrator appears to have treated the issue as determined by: (a) the compensatory principle (award, paras 63 and 67); (b) his rejection of owners argument that the benefit had to be of the same kind as the loss mitigated (paras 67 and 68); and (c) his finding that the sale of the vessel was caused by the charterers breach and in reasonable mitigation of loss (para 73). The finding that the sale of the vessel was caused by the charterers breach and in reasonable mitigation of loss was not legally sufficient to establish the necessary causative link between breach and benefit. The Court of Appeal The Court of Appeal took a different view from the judge. Giving the leading judgment, Longmore LJ set out the conclusions of the judge as I have sought to do. Having referred to the authorities in some detail, he said this in para 23: The important principle which emerges from these citations is that, if a claimant adopts by way of mitigation a measure which arises out of the consequences of the breach and is in the ordinary course of business and such measure benefits the claimant, that benefit is normally to be brought into account in assessing the claimants loss unless the measure is wholly independent of the relationship of the claimant and the defendant. That should be a principle sufficient to guide the decision of the fact finder in any particular case. In para 24 Longmore LJ said that an important question is whether there is an available market. He referred in detail to the judgment of Robert Goff J in The Elena dAmico, where he asked himself why the normal rules of mitigation did not apply in available market cases. The reason was that, by analogy with sale of goods cases, even if a reasonable buyer would wait before buying in other goods on the available market, the resulting loss or gain was not caused by the defendants breach of contract but by the independent decision of the innocent party not to take advantage of the available market. If the innocent party chooses to speculate as to the way in which the market is going to go, the result of such speculation is for his account not the account of the guilty party. Longmore LJ added that in this connection Robert Goff J cited the statement of Viscount Haldane LC in British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd (No 2) [1912] AC 673 at 689, where Robert Goff J noted that he emphasised that, for the benefit of mitigation to be taken into account, the action taken to acquire that benefit must be one arising out of the transaction. Longmore LJ concluded thus at the end of para 24, in reliance upon the statement of Robert Goff J at p 89: A decision to speculate on the market rather than buying in (or selling) at the date of the breach did not arise from the contract but from the innocent partys decision not to avail himself of the available market. He added in para 25 that that reasoning all depends on there being an available market which the innocent party decides for reasons of his own to ignore. That thinking cannot be automatically transposed to cases where there is no available market. In such cases the prima facie measure of loss in hire contracts is the difference between the contractual hire and the cost of earning that hire (crew wages, cost of fuel, etc). But it will not usually be reasonable for the owners to claim that prima facie measure if they are able to mitigate that loss by trading their vessel if opportunities to trade that vessel arise. If they do so trade the vessel they may make additional losses or additional profits but, in either event, they should be taken into account. Longmore LJ further noted that in such a case the owners are not speculating on the market as they would be if there was an available market of which they choose not to avail themselves; they are just bringing into account the consequences of their decision to mitigate their loss and those consequences will arise, generally speaking, from the consequences of the breach of contract. Then, between paras 26 and 29, Longmore LJ referred to a number of cases which made that proposition good. As I see it, the critical para of Longmore LJs judgment is para 30, which is in these terms: The unusual facts of this case show, however, that as well as spot chartering the vessel an owner may equally decide to mitigate its loss by selling the vessel. If so, it is not easy to see why the benefit (if any) which an owner secures by selling the vessel should not be brought into account just as much as benefits secured by spot chartering the vessel during the unexpired term of the time charterparty are, according to the decisions in The Kildare and The Wren, to be brought into account. Nor is there any reason why the value of that benefit should not be calculated by reference to the difference between the value of the vessel at the time of sale and its value at the time when (in a falling market) the charterparty was due to expire. Mr Croall [counsel for the charterers] accepted that, if the sale market had risen substantially during that time, the charterers would be liable for the owners inability to take advantage of that rise in the market, if the sale had arisen from the consequences of the breach of contract and been undertaken by way of mitigating the loss caused by that breach. Christopher Clarke LJ said much the same in his judgment agreeing with Longmore LJ. Sales LJ agreed with both judgments. I have reached a different conclusion and prefer the reasoning of the judge. Conclusions Viewed as a question of principle, most damages issues arise from the default rules which the law devises to give effect to the principle of compensation, while recognising that there may be special facts which show that the default rules will not have that effect in particular cases. On the facts here the fall in value of the vessel was in my opinion irrelevant because the owners interest in the capital value of the vessel had nothing to do with the interest injured by the charterers repudiation of the charterparty. This was not because the benefit must be of the same kind as the loss caused by the wrongdoer. In this regard I agree in particular with the eighth proposition identified by the judge in his para 63 and quoted in para 16 above. As I see it, difference in kind is too vague and potentially too arbitrary a test. The essential question is whether there is a sufficiently close link between the two and not whether they are similar in nature. The relevant link is causation. The benefit to be brought into account must have been caused either by the breach of the charterparty or by a successful act of mitigation. On the facts found by the arbitrator, the benefit that the charterers are seeking to have brought into account is the benefit of having avoided a loss of just under about US$17m by selling the vessel in October 2007 for US$23,765,000 by comparison with the value of the vessel in November 2009, namely (as the arbitrator found) US$7m. That difference or loss was, in my opinion, not on the face of it caused by the repudiation of the charterparty. The repudiation resulted in a prospective loss of income for a period of about two years. Yet, there was nothing about the premature termination of the charterparty which made it necessary to sell the vessel, either at all or at any particular time. Indeed, it could have been sold during the term of the charterparty. If the owners decide to sell the vessel, whether before or after termination of the charterparty, they are making a commercial decision at their own risk about the disposal of an interest in the vessel which was no part of the subject matter of the charterparty and had nothing to do with the charterers. As I see it, the absence of a relevant causal link is the reason why they could not have claimed the difference in the market value of the vessel if the market value would have risen between the time of the sale in 2007 and the time when the charterparty would have terminated in November 2009. For the same reason, the owners cannot be required to bring into account the benefit gained by the fall in value. The analysis is the same even if the owners commercial reason for selling is that there is no work for the vessel. At the most, that means that the premature termination is the occasion for selling the vessel. It is not the legal cause of it. There is equally no reason to assume that the relevant comparator is a sale in November 2009. A sale would not have followed from the lawful redelivery at the end of the charterparty term, any more than it followed from the premature termination in 2007. The causal link fails at both ends of the transaction. For the same reasons the sale of the ship was not on the face of it an act of successful mitigation. If there had been an available charter market, the loss would have been the difference between the actual charterparty rate and the assumed substitute contract rate. The sale of the vessel would have been irrelevant. In the absence of an available market, the measure of the loss is the difference between the contract rate and what was or ought reasonably to have been earned from employment of the vessel under shorter charterparties, as for example on the spot market. The relevant mitigation in that context is the acquisition of an income stream alternative to the income stream under the original charterparty. The sale of the vessel was not itself an act of mitigation because it was incapable of mitigating the loss of the income stream. If the vessel were sold, say, a year into the two year period when it would have been employed under the repudiated charterparty, the sale of the vessel would or might be relevant for some purposes as follows. It would shorten the period during which the owners could claim to have lost the income stream under the old charterparty and therefore the period during which there was a lost income stream to mitigate. If it could be shown that the owners received less for the vessel than they could have done by selling it with the benefit of what remained of the old charterparty, the difference might also be recoverable on the basis that the effect of the sale would be to capitalise the value of a years hire payments. But none of those considerations would make the sale of the vessel itself an act of mitigation. It would simply be the exercise of the owners proprietary right which they enjoy independent of the charterparty and independent of its termination. Disposal For these reasons I would hold that the judge was correct to hold that the arbitrator erred in principle. I would therefore answer the question formulated for the purposes of section 69 of the Arbitration Act 1996 (and set out in para 14 above) in the negative. I would accordingly allow the appeal and restore the order of the judge, dated 21 May 2014, in which, inter alia, he allowed the appeal and set aside paragraph 7A of the award, in which the arbitrator declared that the charterers were entitled to a credit of 11,251,677 in respect of the benefit that accrued to the owners when they sold the vessel in October 2007 as opposed to November 2009, the earliest time they could have sold the vessel if Addendum B had been performed. The arbitrator reserved such other issues to himself as may be necessary. There remain a number of issues between the parties which fall for decision by the arbitrator, arising at least in part by reasons of concessions made before the arbitrator. It appears to me that the most sensible course is for the remaining issues to be identified and formulated in the order of this Court and then remitted for determination by the arbitrator in the light of the answers set out above. The parties should try to agree the remaining issues to be remitted and submit them to the Court. In the absence of agreement, the parties should exchange submissions on the form of the order and costs and submit them to the Court within 28 days of the judgment being handed down.

UK-Abs

On 4 March 2005, the appellant (the owners) bought a cruise ship called the New Flamenco (the vessel). The vessel had been chartered to the respondent (the charterers) by its previous owners by way of a time charterparty (the charterparty). By a novation agreement the appellant assumed the rights and liabilities of the previous owner under the charterparty effective as from 7 March 2005. In August 2005, the owners and the charterers concluded an agreement extending the charterparty for two years so that it was due to expire on 28 October 2007. At a meeting on 8 June 2007, the owners and charterers reached an oral agreement extending the charterparty for a further two years, expiring on 2 November 2009. The charterers disputed having made the agreement and maintained they were entitled to redeliver the vessel on 28 October 2007. The owners treated the charterers as in anticipatory repudiatory beach and accepted the breach as terminating the charterparty. The vessel was redelivered on 28 October 2007. Shortly before the delivery the owners agreed to sell the vessel to a third party for US$23,765,000. The owners commenced arbitration in London, as provided for by the charterparty, seeking damages for the charterers repudiatory breach [4]. The arbitrator found that an oral contract to extend the charterparty had been made, the charterers were in repudiatory breach of that contract and therefore the owners were entitled to terminate the charterparty. This finding is unchallenged [9 10]. However, there was a significant difference between the value of the vessel when the owners sold it, and its value in November 2009 (found by arbitrator to be US$7,000,000), when the vessel would have been redelivered to the owners had the charterers not been in breach [6]. The arbitrator declared that the charterers were entitled to a credit for this difference in value, amounting to 11,251,677 (the equivalent of US$16,765,000), which could be discounted from any damages payable by the charterer to the owners from the loss of profit claim. The credit was more than the owners loss of profit claim and would result in the owners recovering no damages [7, 12]. The owners appealed to the High Court pursuant to section 69 of the Arbitration Act 1996 on a question of law, namely whether when assessing the owners damages for loss of profits the charterers were entitled to take into account as diminishing the loss the drop in the capital value of the vessel [14]. Popplewell J held that they were not because the benefit accruing to the owners from the sale of the vessel in October 2007, instead of in November 2009, was not legally caused by the breach [15]. The charterers appealed to the Court of Appeal. The appeal was allowed on the basis that the owners took a decision to mitigate their loss by selling the vessel in October 2007 and there was no reason why the benefit secured by doing this should not be brought into account, in the same way that benefits secured by spot chartering a vessel during an unexpired term of charterparty would be [28]. The owners now appeal that judgment to the Supreme Court. The Supreme Court allows the owners appeal. The charterers are not entitled to a credit for the difference in the value of the vessel when sold in 2007, in comparison to its diminished value in 2009. Lord Clarke, with whom the other justices agree, gives the lead judgment. The fall in the value of the vessel is irrelevant because the owners interest in the capital value of the vessel had nothing to do with the interest injured by the charterers repudiation of the charterparty [29]. This is not because the benefit must be the same kind as the loss caused by the wrongdoer, but because the benefit was not caused either by the breach of the charterparty or by a successful act of mitigation [30]. The repudiation resulted in a prospective loss of income for a period of about two years. However, there was nothing about the premature termination of the charterparty which made it necessary to sell the vessel, at all or at any particular time. It could also have been sold during the term of the charterparty. When to sell the vessel was a commercial decision made at the owners own risk [32]. The owners would not have been able to claim the difference in the market value of the vessel if the market value had risen between the sale in 2007 and the time the charterparty would have terminated in 2009. The premature termination of the charterparty was at most the occasion for selling the vessel, but it was not the legal cause of it. There is equally no reason to assume that the relevant comparator is a sale in November 2009; there is no reason that a sale would necessarily have followed the lawful redelivery at the end of the charterparty term [33]. For the same reasons, the sale of the ship was not on the face of it an act of successful mitigation. If there had been an available charter market, the loss would have been the difference between the actual charterparty rate and the assumed substitute contract rate. Sale of the vessel would have been irrelevant. In the absence of an available market, the measure of the loss is the difference between the contract rate and what was or ought reasonably to have been earned from employment of the vessel under shorter charterparties. The relevant mitigation in that context is the acquisition of an alternative income stream to the income stream under the original charterparty. The sale of the vessel was not itself an act of mitigation because it was incapable of mitigating the loss of the income stream [34]. Popplewell J was therefore correct to hold that the arbitrator erred in principle. The Supreme Court prefers his conclusion to that of the Court of Appeals. His order, setting aside the part of the arbitral award that declared that the charterers were entitled to a credit of 11,251,677 in respect of the benefit that accrued to the owners when they sold the vessel in October 2007 as opposed to November 2009, is therefore restored [36].

The appellant (Onur), a Turkish corporation, appeals against orders made by Patten LJ in the Court of Appeal on 21 January 2016. An understanding of the nature of his orders requires reference to the following summary of the background. (a) On 22 May 2014 Rose J, [2015] 1 BCLC 89, gave judgment against Onur in favour of the respondent (Goldtrail), a UK company in liquidation, in the sum of 3.64m plus interest. (b) On 15 December 2014 Floyd LJ granted permission to Onur to appeal to the Court of Appeal against the order of Rose J on the basis that the appeal had a real prospect of success. (c) On 11 June 2015 Floyd LJ, by way of variation of an earlier order for the imposition of conditions upon the continuation of Onurs appeal, made it conditional, among other things, upon Onurs payment into court (or provision of other security for it) of 3.64m by 9 July 2015. (d) On 29 October 2015, in the absence of any payment into court (or provision of other security), Goldtrail applied for an order dismissing Onurs appeal and on 7 December 2015 Onur cross-applied for an order that the condition for payment into court be discharged on the ground that it could not comply with it and that the effect of dismissing the appeal by reference to it would be to stifle the appeal. (e) At the hearing before Patten LJ on 14 January 2016 of the application and cross-application referred to at (d), Goldtrail, in disputing that the condition for payment was such as to stifle Onurs appeal, relied in particular on the financial relationship between Onur and its wealthy owner, Mr Bagana. As explained by Patten LJ in his reserved judgment dated 21 January 2016, his orders were first to dismiss Onurs cross-application and thereupon to grant Goldtrails application for an order that, by reason of Onurs failure to comply with the condition imposed on 11 June 2015, its appeal should be dismissed. In the above circumstances this court is asked to address the principles by reference to which the Court of Appeal should determine an application by a respondent/claimant that, as a condition of any appeal to it, the appellant/defendant should pay into court (or otherwise secure payment of) part or all of the judgment sum awarded against it in the court below; and in particular to identify the principles by reference to which it should appraise a respondents contention that an appellants financial relationship with a wealthy third party is such as to defeat its complaint that such a condition would stifle its appeal. In the event there has been little dispute between the parties as to the principles which the Court of Appeal should apply. The more lively issue has been whether Patten LJ can be seen to have applied those principles in reaching his conclusions first that Onurs relationship with Mr Bagana was such as to defeat its complaint that the condition for payment would stifle the appeal; second that the condition should therefore remain in being; and third that, in the absence of compliance (or proposed compliance) with it, Onurs appeal should therefore be dismissed. THE SUBSTANTIVE DISPUTE Prior to its liquidation, Goldtrail was a holiday tour company which had been wholly owned by Mr Aydin. Onur is a Turkish airline, largely owned by Mr Bagana. In the proceedings before Rose J Goldtrail, by its liquidator, sued Onur in relation to two agreements and, irrelevantly for present purposes, sued other defendants in relation to other agreements. The claim against Onur arose out of the latters aspiration to cause Goldtrail to buy seats for its tourists on Onurs flights between the UK and Turkey. Such was the context of agreements that Mr Bagana would buy 50% of Mr Aydins shares in Goldtrail for 1m (which he paid) and that Onur would pay 3.64m (which it paid) to another company owned by Mr Aydin for its purported brokerage of an agreement by Goldtrail with Onur to buy a specified number of seats on its flights. Rose J found that, properly analysed, the payment of 3.64m represented consideration for Goldtrails agreement to buy the seats; that, in breach of his fiduciary duty to Goldtrail, Mr Aydin had diverted receipt of Onurs payment away from Goldtrail to his other company; that Onur had dishonestly assisted Mr Aydin in thus defrauding Goldtrail; and that it should pay damages to it in that sum. ONURS APPEAL In January 2015, following the grant on paper of permission to Onur to appeal against the order of Rose J, Goldtrail applied for the imposition of conditions. It was too late for it to apply under Rule 52.3(7)(b) (now Rule 52.6(2)(b)) of the Civil Procedure Rules for the actual permission to be made subject to conditions. It therefore applied under Rule 52.9(1)(c) (now Rule 52.18(1)(c)) for the court to exercise its discretion to impose conditions upon which an appeal may be brought. Paragraph (2) of Rule 52.9 (now Rule 52.18(2)) provided that the court should exercise its powers under para (1) only where there was a compelling reason for doing so. By its application, Goldtrail requested conditions that Onur should pay or secure 600k under interim orders for costs made by Rose J; should provide security for Goldtrails costs of the appeal in the sum of 150k; and in particular should pay into court the sum of 3.64m which Rose J had awarded to it by way of damages. In response Onur entered no substantive challenge to the request for the first two conditions. The dispute related to the requested payment into court of the judgment sum. Goldtrail relied on the agreed fact that in October 2014, after 22 years of flying its aircraft to the UK, Onur had ceased to do so; and Goldtrail submitted that, since Onur was likely to have no other assets even temporarily in England and Wales, there was a compelling reason for the judgment sum to be secured. Onurs response was that its decision to cease flights to the UK had been taken for operational reasons and that there was no evidence that it had taken steps or would take steps to obstruct enforcement of the judgment in the event of the dismissal of its appeal. What at that time Onur did not allege was that the disputed condition would stifle its appeal. By an order on paper dated 7 April 2015 Floyd LJ imposed the disputed condition. Onur exercised its right to cause him to reconsider his decision at the hearing which took place on 11 June 2015. Although in his judgment Floyd LJ expressed a willingness to assume that there was a respectable commercial explanation for the cessation of Onurs flights to the UK, he maintained his earlier conclusion that there was a compelling reason for imposing the condition. Upon Onurs continuation of the appeal, he therefore imposed the condition that it should pay into court (or otherwise secure payment of) 3.64m by 9 July 2015. On 14 July 2015, by then in breach of the condition, Onur applied for variation of it so as to permit it to make the payment into court by seven monthly instalments. On 27 July 2015 Floyd LJ on paper refused the application but shortly before 21 October 2015, when pursuant to Onurs request he was due to reconsider it at a hearing, Onur changed its stance. Its new contention was that the condition for payment of the judgment sum into court was a breach of its rights under the European Convention on Human Rights and was unlawful and that therefore the payment would not be made. So Floyd LJ dismissed the application for variation and directed that Goldtrails oral request for the consequential dismissal of Onurs appeal be made by formal application. Thus it was that on 14 January 2016 Patten LJ heard not only the anticipated application by Goldtrail for dismissal of the appeal but also a cross-application by Onur dated 7 December 2015 for discharge of the condition for payment into court of the judgment sum on the ground - asserted for the first time - that its continuation in force would stifle the appeal. The relevant findings, observations and conclusions of Patten LJ in his judgment dated 21 January 2016 were as follows: In 2013 he lent US $28m to Onur. (a) Mr Bagana was extremely wealthy and had, for example, given evidence to Rose J that 5m was not a significant outlay for himself personally. (b) He directly held 3.67% of the shares in Onur and held 81.19% of the shares in a company which held a further 92% of the shares in Onur. (c) Between 2008 and 2011 Onur had paid substantial dividends to him, which he had lent back to it, secured against its assets. (d) (e) By 2014 his loan account with Onur had increased to $68m. (f) For some reason Onur had guaranteed debts owed to him by another shareholder. (g) As Onurs largest secured creditor, Mr Bagana was in a position to decide which of Onurs unsecured debts should be paid and at what time. (h) He had a more than usually close relationship with Onur and effectively controlled its financial affairs. (i) According to Onurs Chief Financial Officer, Mr Bagana had said that he would contemplate making further loans to Onur only in exceptional circumstances to enable it to make commercial payments necessary to keep it in business. (j) With Mr Baganas support Onur was able to continue to trade. (k) Even had it been difficult for Onur to make the payment into court out of cash generated from its trading activities, it could have done so with his support. (l) Mr Bagana had decided not to fund the payment by Onur. (m) Were the court able to take his financial position into account in assessing Onurs ability to make the payment into court, its application to discharge the condition could not succeed. (n) In exceptional circumstances the ability of a company to have access to funds from a third party could be taken into account in assessing the likelihood that it could make a payment into court. (o) To take it into account would not be the same as to oblige that third party to comply with a condition imposed on a company. (p) exceptional. (q) Onur had failed to establish that the condition for payment into court would stifle its appeal. (r) So Onurs cross-application failed and, in that it had resolved not to satisfy the condition, its appeal should be dismissed. In the light of all the above features the circumstances were PRINCIPLES To stifle an appeal is to prevent an appellant from bringing it or continuing it. If an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it. It is as if, on an application of summary judgment, the court were to grant leave to the defendant to defend the claim and then to attach a condition for payment which he could not satisfy. In the words of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449B: that would be a wrongful exercise of discretion, because it would be tantamount to giving judgment for the plaintiff notwithstanding the courts opinion that there was an issue or question in dispute which ought to be tried. Application of article 6 of the European Convention on Human Rights (being an article which confers its rights on companies as well as on human beings) yields the same conclusion. The article does not require a member state to institute a court of appeal but, if it does so, it must ensure that litigants in that court enjoy its fundamental guarantees: Delcourt v Belgium (1970) 1 EHRR 355. There will seldom be a fair hearing within article 6 if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it. There is a variety of situations in which a party submits that the effect of granting or refusing an application would be to stifle his continued participation in the proceedings. He may do so, for example, as a claimant of a specified character, in response to an application by (a) a defendant for him to provide security for costs; or (b) as a defendant, in response to an application by the claimant for summary judgment in which the latter contends, as a fall-back, that, were leave to be given to defend the claim, it should be subject to a condition that the sum claimed be paid into court; or (c) as a party who has without good reason failed to comply with an order, in response to an application by the other for an order for him to make a payment into court; or (d) as an appellant, in response to an application by the respondent (as in the present case) that, as a condition of the appeal, he should provide security for the costs of it; or (e) as a former defendant now an appellant, in support of his application (as in the present case) that orders against him for payment of the judgment debt or costs be stayed pending his appeal; or (f) as a former defendant now an appellant, in response to an application by the respondent (as in the present case) that he should, as a condition of the appeal, pay the judgment debt into court. There is a qualitative difference between imposing a condition which requires a defendant/appellant to provide security for the future costs of the claimant/respondent and one which requires him to pay into court the sum awarded against him. The effect of the former is that, were his appeal to be dismissed, the burden of expenditure to be incurred by the claimant/respondent in resisting the appeal would not be borne by him. The effect of the latter is, by contrast, even more beneficial for the claimant/respondent. It is that, in the event (again) of the dismissal of the defendants appeal, the judgment sum would be there, as it were upon a tray, for the claimant to sweep into his pocket without his needing to undertake any attempt to enforce the courts order for payment of it. No doubt a court asked to impose a condition for the payment into court of the sum awarded will have well in mind that extra advantage for the claimant and corresponding disadvantage for the defendant. But a partys participation in proceedings can be as much stifled by an order for security for costs as by an order for payment into court of the sum claimed or awarded. So it is without further reference to that distinction that one may proceed to address the circumstances in which an order can be said to stifle the continuation by an appellant of an appeal. There is no doubt - indeed it is agreed - that, if the proposed condition is otherwise appropriate, the objection that it would stifle the continuation of the appeal represents a contention which needs to be established by the appellant and indeed, although it is hypothetical, to be established on the balance of probabilities: for the respondent to the appeal can hardly be expected to establish matters relating to the reality of the appellants financial situation of which he probably knows little. But, for all practical purposes, courts can proceed on the basis that, were it to be established that it would probably stifle the appeal, the condition should not be imposed. It is clear that, even when the appellant appears to have no realisable assets of its own with which to satisfy it, a condition for payment will not stifle its appeal if it can raise the required sum. As Brandon LJ said in the Court of Appeal in the Yorke Motors case, cited with approval by Lord Diplock at 449H: The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need. It seems that, in particular and as exemplified by the present case, difficult issues have surrounded the ability of a corporate appellant, without apparent assets of its own, to raise money from its controlling shareholder (or some other person closely associated with it); and this is the context of what follows. When, in response to the claim of a corporate appellant that a condition would stifle its appeal, the respondent suggests that the appellant can raise money from its controlling shareholder, the court needs to be cautious. The shareholders distinct legal personality (which has always to be respected save where he has sought to abuse the distinction: Prest v Prest [2013] UKSC 34, [2013] 2 AC 415, 487, para 34) must remain in the forefront of its analysis. The question should never be: can the shareholder raise the money? The question should always be: can the company raise the money? So one turns to the leading authority of the Court of Appeal in this area, namely Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, [2002] CP Rep 21, which Onur contends to be, in part, erroneous in principle. In the Hammond Suddard case the respondent solicitors sued the appellant company for unpaid fees and it counterclaimed for damages for negligence. The claim succeeded and in effect the counterclaim failed. The appellant obtained permission to appeal. It unsuccessfully sought a stay of execution of the orders made by the judge on the basis that, were they to be enforced, its appeal would be stifled. The respondents sought the imposition of conditions upon the permission to appeal. They sought a condition for provision of security for the costs of the appeal, which the appellant conceded to be appropriate. But they also sought a condition of payment into court of the judgment debt and of the sums awarded under interim orders for costs, to which, analogously, the appellant objected that its consequence would be to stifle its appeal. The appellant had been incorporated in the British Virgin Islands and was owned by trustees on discretionary trusts for an unidentified but apparently wealthy family. The appellant had, so it said, no assets. But could it raise from its beneficial owners a sum equal to the judgment debt and costs in order to enable it to make the payment into court? If so, there was a compelling reason within the meaning of Rule 52.9(2) for imposing the condition sought by the respondents. In the Hammond Suddard case the judgment of the court was delivered by my Lord, Lord Clarke (Clarke LJ, as he then was), on behalf of himself and Wall J (as he then was). Having observed, at (1) of para 41, that it would be difficult for the respondents to exercise the normal mechanisms of enforcement against the appellant and, at (2), that the appellant had had access to resources which had enabled it to secure representation of the highest quality in the proceedings to date, the court concluded, at (3): There is no convincing evidence that the appellant does not either have the resources or have access to resources which would enable it to pay the judgment debt and costs as ordered. No criticism has been directed at the above conclusion. It was an impeccable summary of the courts reason for acceding to the respondents application. The court proceeded, at para 41(4), to find that the appellants disclosure of its financial affairs had been inadequate. But then, at the end of the subparagraph, it added an observation in relation to the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt including the outstanding orders for costs. Indeed, in para 43, the court added a second observation to the same effect: Thus we see nothing unjust in providing the trust which owns the appellant with a choice. If it is in the interests of the appellant for the appeal to continue, the trust must procure payment of the current orders. I am driven to the view that Onur is right to criticise the phraseology of the courts two additional observations. Their intended meaning may well have been, as Goldtrail suggests, that the appellant had failed to establish that funds with which the company could make the payment into court would not be made available to it by its beneficial owners. But, strictly speaking, it was wrong for the court to express its reasoning in terms of whether they could themselves make that payment. In Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695 the Court of Appeal was required to determine applications by Socit Gnrale SA (the bank), which was the respondent to appeals which the two appellants had been permitted to bring against orders made against each of them for payment to the bank of US$49m. The first appellant (Saad) was a limited Saudi Arabian partnership and the second appellant (Mr Al- Sanea) was a general partner of Saad and owned 90% of its share capital. One of the banks applications was for a condition to be imposed upon the continuation of each of the appeals that the appellants should pay the award of US$49m into court; to which the appellants each responded that any order for payment into court would stifle their appeals. The courts conclusion, explained in the judgment of Aikens LJ with which Rimer LJ agreed, was that a condition, which it proceeded to impose, for their joint and several payment into court of (only) $5m would not stifle their appeals. In reaching this conclusion Aikens LJ punctiliously addressed the factors identified by the court as relevant in the Hammond Suddard case. Nothing turns on his analysis of why Mr Al-Sanea had failed to make good his contention that his appeal would be stifled. In relation, however, to the analogous contention of Saad, Aikens LJ addressed the additional observation which that court had made in para 41(4). At paras 54 and 55 of his judgment Aikens LJ said that it was difficult to judge the legitimacy of imposing upon a company a the question was whether Saad had a wealthy owner who could not, if i) minded to do so, make the payment into court on its behalf; ii) condition which would effectively require an owner to fund it; iii) but the courts additional observation in the Hammond Suddard case had been clear; iv) exceptional circumstances; and v) the answer had to be that such a condition should be imposed only in the circumstances of the present case were exceptional. Possibly ham-strung by the doctrine of precedent, the court in the Socit Gnrale case evidently considered it best to treat the first additional observation in the Hammond Suddard case by consigning it to that over-used store-room in the mansion of the law which is designated as exceptional circumstances. Such a criterion is on any view dangerous because it is not, on the face of it, linked to its context: see Norris v Government of United States of America (No 2) [2010] UKSC 9, [2010] 2 AC 487, para 56. It sets a snare for it may lead to the wrongful downgrading of the significance of circumstances just because they happen not to be exceptional or to their wrongful upgrading just because they happen to be exceptional: H (H) v Deputy Prosecutor of the Italian Republic, Genoa (Official Solicitor intervening) [2012] UKSC 25, [2013] 1 AC 338, para 161. Having, however, an unconstrained ability to reject the phraseology of the additional observations, we in this court have no need to approve the superimposition upon the relevant criterion of a test of exceptional circumstances which neither party before the court seeks to defend. In this context the criterion is: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition? The criterion is simple. Its application is likely to be far from simple. The considerable forensic disadvantage suffered by an appellant which is required, as a condition of the appeal, to pay the judgment sum (or even just part of it) into court is likely to lead the company to dispute its imposition tooth and nail. The company may even have resolved that, were the condition to be imposed, it would, even if able to satisfy it, prefer to breach it and to suffer the dismissal of the appeal than to satisfy it and to continue the appeal. In cases, therefore, in which the respondent to the appeal suggests that the necessary funds would be made available to the company by, say, its owner, the court can expect to receive an emphatic refutation of the suggestion both by the company and, perhaps in particular, by the owner. The court should therefore not take the refutation at face value. It should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which he is directing (and has directed) its affairs and is supporting (and has supported) it in financial terms. APPLICATION TO THE PRESENT CASE There has been lively argument before the court as to whether, in making the orders under appeal, Patten LJ must be taken to have concluded, in accordance with the correct criterion, that Onur had failed to establish that Mr Bagana would not make 3.64m available to it in order to enable it to comply with any order for its payment into court. There are grounds for thinking that such a conclusion might have been open to him. Mr Bagana signed a statement admitted by Rose J into evidence, in which, so Onur tells this court, he admitted that he was responsible for its overall operation and made the ultimate decisions referable to it; and Patten LJ made findings accordingly. Moreover Mr Baganas massive recent loans to Onur to enable it to continue to trade were on any view of substantial relevance to the probability of a further, modest advance. Oddly no statement was filed on behalf of Onur by Mr Bagana himself but the Chief Financial Officers evidence was that he would contemplate making further advances only to enable Onur to make commercial payments necessary in order to keep itself in business. This second- hand assertion called for careful scrutiny. But, in circumstances in which Patten LJ concluded that it seems clear to me that Mr Bagana has decided not to fund the payment by the company, I am driven to the view that this court cannot proceed on the basis that Onurs application for discharge of the condition was refused by reference to the correct criterion. Goldtrail submits with force that Patten LJ meant to conclude only that, up until that point, Mr Bagana had declined to fund the payment and that the evidence in support of any wider conclusion was far too thin. It further submits that for Patten LJ to have found that Mr Bagana had made a final decision never to fund it would be inconsistent with his refusal of Onurs application. Unfortunately, however, I cannot accept the further submission. The key to the proper construction of his judgment is that, following a lengthy quotation from the judgment of Aikens LJ in the Socit Gnrale case, Patten LJ concluded that the circumstances of the present case were exceptional. In other words he was proceeding by reference to the Court of Appeals misconception, born of the additional observations in the Hammond Suddard case and developed in the Socit Gnrale case, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds to it irrespective of whether he probably would do so. So I would allow Onurs appeal and remit both applications to Patten LJ for him to determine Onurs application for discharge of the condition by reference to the correct criterion. I should record that Goldtrail put forward to him an alternative argument against discharge; of course he had no need to address it but he may now need to do so. I have reached a different conclusion from that arrived at by Lord Wilson. I am not persuaded that Patten LJ materially misstated the relevant principles or arrived at the wrong conclusion. It is important to put his decision in context. The issue throughout has been whether there was a compelling reason for imposing a condition upon which an appeal may be brought under what were then CPR 52.9(1)(c) and (2). Before the case came before Patten LJ it had a long history, largely before Floyd LJ. As Lord Wilson explains, at no stage when the issues were before Floyd LJ did Onur contend that payment of the judgment sum of 3.4m (or the provision of security in lieu) would or might stifle the appeal. Instead it advanced a whole series of mutually inconsistent explanations, in response to which Floyd LJ made a series of orders and gave a number of judgments, notably on 11 June, 27 July and 21 October 2015. Onurs applications included an application for permission to pay the judgment sum in monthly instalments of 500,000. Floyd LJ rejected that application on the papers, giving clear reasons, on 27 July 2015. His reasons included this passage, quoted in para 14 of his judgment given on 21 October 2015: There is no explanation of how these sums will be funded. If [the appellants] are now contending that the imposition of the order would stifle the appeal, the evidence falls far short of showing that to be the case. It is well settled that a party who wishes so to contend must show that he has explored all means of providing the necessary security. Floyd LJ added that the appellants had a right to renew the application orally and that he would consider any further evidence that became available. Floyd LJ added in para 15 of his judgment on 21 October that he had hoped to make it clear by that set of reasons that the appellants appeared to be what he called shuffling around to a position where they were saying that the payment of the sums of money placed unacceptable strains on their ability to conduct business, so much so that it was an interference with their right to appeal that the order should be enforced in its full amount. They did not however take that step. In para 17 Floyd LJ said that on 19 October, which was two days earlier, the appellants did not deal with the previous history but served a witness statement with only one paragraph as follows: Board of Onur Air is of the opinion that this decision, [which Floyd LJ assumed was a reference to his order that the judgment sum be paid into court] is unlawful and against the principles laid down by the European Court of Human Rights. Therefore, the foresaid sum will not be paid. The striking feature of that statement is that Onur was not even then saying that payment of 3.4m (or the provision of security in lieu) would or might stifle the appeal. Reliance upon Onurs human rights was a wholly new point on the part of Onur. For various reasons which are not material to this appeal Floyd LJ said in para 20 that the whole history of the appeal was very unsatisfactory but that he was very reluctant to strike out an appeal for which permission has been given without giving the appellants one final chance of explaining the position. He added: If it is now their position that they are so inhibited by the order for payment of the judgment sum that it is stifling their ability to appeal, then they should say so. I appreciate that is not something which they have so far said. They have had ample opportunity, it might be said, to put forward every argument, but stifling of the appeal is one matter which they have thus far declined to put forward. It may be that they are embarrassed by what was apparently said to Rose J about the fact, as Mr Gurbuz said in evidence, that the company was of such a size that 5m was not a large sum of money. Whatever the reason for their silence, it seems to me that they ought to come forward with their evidence now. In order to give Onur one last chance Floyd LJ directed that any application for a final order on the appeal should be made on notice to the appellants and that appropriate opportunity should be given to both sides to file evidence in relation to it. He added that it may be that not much further evidence was required from the respondents but that he was very anxious that the appeal should not be disposed of without a proper application on notice for the precise order which Goldtrail now sought. The matter then came before Patten LJ, who gave judgment on 21 January 2016. There were before Patten LJ an application on the part of Goldtrail for an order dismissing the appeal and for orders for payment of the judgment sum and interest. That would of course involve a removal of the stay. Onur opposed those applications and issued a new application under CPR 3.1(7) for the variation of the 11 June order by removal of the condition requiring payment into court of the judgment sum. It did so, as Patten LJ put it in para 15, for the first time on the ground that the payment of that sum was now beyond the means of the company and its payment would stifle the appeal. Patten LJ considered first the application under CPR 3.1(7). I will do the same. Patten LJ considered the position in some detail between paras 16 et seq and concludes in para 21 that Onurs Chief Financial Officer said in a statement dated 8 January 2016 that there had been a net increase in current liabilities of US$10m and that the net forecast for 2015 was between US$15 and US$16.5 m, that Onurs shortfall remained serious and that this was being managed by postponing current debt. Patten LJ summarised the position thus in para 22: Ms Erguven says that Onur has been unable to negotiate extended finance from banks and that existing lenders have either frozen or closed existing facilities. In these circumstances, the company has no means to pay the judgment debt. One would expect that, in these circumstances, Onur would have been forced to cease trading but this is obviously not the case and the evidence indicates that the airline continues to operate in Europe and has entered into new contracts, for example, with Bulgarian Air. An analysis of the financial information carried out by the liquidators of Goldtrail and set out in the witness statement of Mr Oakley-Smith recognises the difficulties faced by Onurs business in the present climate but identifies a continuing source of funding from Mr Hamit Cankut Bagana who is the Chairman of Onur and its controlling shareholder. According to Ms Erguvens most recent witness statement, Mr Bagana has a direct shareholding of 3.67% of Onur but owns 81.19% of a company called Ten Tour Turizm Endustri ve Ticaret Anonim Sirket which in turn owns 92% of the shares in Onur. Patten LJ continued as follows: 23. The analysis carried out by Mr Oakley-Smith of the 2013 and 2014 accounts suggests that Mr Bagana is the primary source of funding for the company. His evidence at the trial before Rose J was that he paid 1m to Mr Aydin as part of the agreement with Onur. He lent the company $28m in 2013. In the 2014 accounts this is shown as having increased to $68m. As part of these arrangements, it appears that Onur has given guarantees to Mr Bagana in respect of debts due to him from one of the other shareholders although the reasons for this are not explained. Of more significance is that in the period from 2008 to 2011 substantial dividends were paid by Onur to Mr Bagana and then loaned back to the company and secured against its assets in subsequent years. Mr Bagana therefore appears to have removed equity from the company and to have used the money to establish himself as a secured creditor. His position as the companys largest single (and secured) creditor has put him into the position where he can effectively decide which of the unsecured debts should be paid and when. This is confirmed by Ms Erguven in her second witness statement where she says that: I can confirm that Mr Bagana is fully aware of the position that Onur Air finds itself in in relation to the payment of the Judgment Sum into court as a condition of the continuation of the Appeal. He has made it clear that he would only contemplate considering the possibility of advancing further amounts to Onur Air in the most exceptional circumstances if they were commercial payments strictly and immediately necessary in order to keep Onur Air in business due to the already significant indebtedness of the company to him and the deteriorating financial condition of the company. Mr Bagana has made it clear to the management of Onur Air that he believes that if the court were to strike out the appeal on the grounds that he, as a shareholder, had failed to lend money to Onur Air to enable it to pay the Judgment Sum into court, that would be a breach of his and Onur Airs rights under the European Convention of Human Rights. 24. The liquidators evidence is that Mr Bagana is an extremely wealthy man who said to Rose J in his evidence that he did not regard 5m as a significant outlay for himself personally. Ms Erguvens response to this is that she is unable to comment on his alleged wealth and business activities. 25. Some of the argument has centred on whether the financial information produced by Onur justifies its alleged belief that it is unable to pay the 3.64m and that, to be made to do so, would lead to the stifling of the appeal. Mr Gibbon cautioned me against attempting to second guess the assessment of the financial state and prospects of the company made by its own directors and officers and I am obviously alive to those difficulties. But even taking Ms Erguvens assessment at face value, it is apparent that a decision has been taken that Onur is able to continue to trade with the support of Mr Bagana and that it could, with that financial support, have made the 3.64m payment even if it would have been in difficulties in generating sufficient cash for that purpose from its trading activities. It seems clear to me that Mr Bagana has decided not to fund the payment by the company and if I can take his financial position into account in assessing Onurs ability to satisfy the condition either prior to 9 July 2015 or thereafter then the CPR 3.1 (7) application to vary cannot succeed. There is no evidential basis for concluding that the condition could not have been complied with or that, if complied with, it would stifle the appeal. 26. Mr Gibbon submitted that it could only be in exceptional circumstances that the court would take into account on this kind of application the financial position of a third party such as Mr Bagana. To do so risks blurring the distinction between a company and its shareholders or other funders which the law habitually respects. But it is clear as a matter of authority that the ability of third parties to fund the company may be relevant in appropriate cases and that there is no jurisdictional bar to the court taking their position into account in determining whether an allegation of stifling has been made out. There is, I think, an obvious distinction between whether such a third party can be said to be under any sort of obligation as a result of an order made against the company and whether, in considering the likelihood of the company being able to make a potential payment, its access to third party funding should be taken into account. Patten LJ then referred to Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2011] EWCA Civ 695 and to a decision of the Court of Appeal in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065; [2002] CP Rep 21, where I gave the judgment of the court, which comprised myself and Wall J. In the light of the submissions in this case, I recognise that my formulation of the principles is not entirely accurate. The basic principle is that stated by Brandon LJ with the approval of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449H (as quoted by Lord Wilson): The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need. The cases show that in a case such as this the burden is on the person (or entity concerned) to show that he cannot find relevant capital to support him. Wilson in his para 21: In Hammond Suddard I tried to make that clear in para 41(3) quoted by Lord There is no convincing evidence that the appellant does not either have the resources or have access to resources which would enable it to pay the judgment debt and costs as ordered. I adhere to that principle. So the question here is whether Onur either has the resources or access to resources to pay the sum of 3.64m. The statements of principle which I recognise went too far are those referred to in my paras 41(4) and 43 as identified by Lord Wilson in his para 22 above. In para 41(4) I added, of the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt, including the outstanding orders for costs. In similar vein I said this in para 43: Thus we see nothing unjust in providing the trust which owns the appellant with a choice. If it is in the interests of the appellant for the appeal to continue, the trust must procure the payment of the current orders. I am also of the view that, in so far as the Court of Appeal went further in Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695, it went too far. In short, where the relevant company does not have appropriate resources of its own and the question is whether it has access to the resources of others, the question is whether the company would (not could) have had access to the resources. The onus that it would not is on the company concerned. On the facts of this case, the question is whether Onur has shown on the balance of probabilities that it did not have access to the relevant resources. On the basis that the only resources available to Onur were through Mr Bagana, the question is whether, on the balance of probabilities he would have provided the funds. As I see it, the strength of Goldtrails case is this. Onur at no stage focused on this precise point. As Lord Carnwath puts it in para 48, there was no direct evidence from Mr Bagana on the point. In short, he does not address the question whether he would have declined to provide funds to Onur. Again, as Lord Carnwath puts it, the only relevant evidence on the point was that of Onurs Chief Financial Officer that Mr Bagana would contemplate making further loans to Onur but only in exceptional circumstances [to enable it to make] commercial payments necessary to keep [it] in business. I agree with Lord Carnwath that the evidence falls far short of establishing that the condition would in fact stifle the appeal. I would only add that there has been no suggestion until very recently that the condition would stifle the appeal and that the new aspect of Onurs case is not so I would dismiss the appeal. much that the appeal would be stifled as reliance on its human rights, which is not explained and is far-fetched in the extreme. I gratefully adopt Lord Wilsons exposition of the facts and of the law, which was in effect common ground by the end of the hearing. Although Patten LJ (faithfully applying the authorities binding on him) may have misstated the law in some respects, I agree with Lord Clarke that these were not ultimately material to his determination. In any event, where an error such as this may have occurred, particularly one resulting from previous case law binding on the lower courts, the interests of justice require us in my view to avoid adding unnecessarily to the delay and expense borne by the parties. Our rules do not require us to remit the case to the lower court if we are in as good a position to decide it ourselves. This in my view is such a case. All the evidence is before us. I strongly agree with Lord Wilson that the court should not take even an emphatic refutation by the company or the owner at face value. As he says: it should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner. Applying that approach to the present case, particularly against the background described by Lord Clarke, I have no doubt that Patten LJ would have arrived at the same conclusion, and I would do the same. There was no direct evidence from Mr Bagana himself. Although Patten LJ accepted that he had decided not to fund the payment by Onur, I take that to be no more than his inference from its opposition to the order. There is no direct evidence of such a decision. The only relevant evidence was that of Onurs Chief Financial Officer that Mr Bagana would contemplate making further loans to Onur, but only in exceptional circumstances [to enable it to make] commercial payments necessary to keep [it] in business, and that he regarded the courts requirement of such support as infringing his human rights. The latter suggestion is of course nonsense, since there is no doubt as to his ability to fund the company if he wishes. As to why he does not regard the present case as sufficiently exceptional, there is no explanation. This in my view falls far short of proving, on the balance of probabilities, that the condition would in fact stifle the appeal. Lord Wilson does not suggest otherwise. In these circumstances, no other reason having been given for remitting the case, I would uphold Patten LJs order and dismiss the appeal.

UK-Abs

The appellant is a Turkish airline, largely owned by Mr Bagana. Prior to its liquidation, the respondent was a holiday tour company which had been wholly owned by Mr Aydin. The respondent, by its liquidator, sued the appellant in relation to two agreements between the parties. Rose J held that the appellant had dishonestly assisted Mr Aydin in defrauding the respondent and that it should pay damages to it in the sum of 3.64 million. The appellant was granted permission to appeal to the Court of Appeal against the order of Rose J. By an application made under then Rule 52.9(1)(c) of the Civil Procedure Rules, the respondent requested that the court should impose on the appellant a number of conditions for the continuation of its appeal. One requested condition was that the appellant should pay into court the sum of 3.64 million which Rose J had awarded to the respondent, on the basis that the appellant was likely to have no other assets even temporarily in England and Wales. The appellant disputed the imposition of this condition, but it did not allege that the disputed condition would stifle its appeal. By order dated 11 June 2015, Floyd LJ concluded that there was a compelling reason for imposing a condition and required that the appellant, as a condition for the continuation of its appeal, pay into the court (or otherwise secure payment of) 3.64 million by 9 July 2015. The appellant did not pay the sum into court. On 14 January 2016 Patten LJ heard the anticipated application by the respondent for dismissal of the appeal, together with a cross application by the appellant for discharge of the condition on the ground that payment of that sum was now beyond its means and its continuation would stifle the appellants appeal. Patten LJ held that the appellants appeal should be dismissed on the grounds that in exceptional circumstances the ability of a third party to provide funds, in this case Mr Bagana, could be taken into account in assessing the likelihood that a company could make a payment into court. Patten LJ stated that Mr Bagana has decided not to fund the payment by the company and concluded that the appellant had not established that the condition for payment would stifle its appeal. The appellant alleges that Patten LJ erred in his application of the relevant principles and in concluding that its relationship with Mr Bagana was such as to defeat its complaint that the condition for payment would stifle the appeal. The Supreme Court by a majority of 3 to 2 allows Onur Air Taimacilik As appeal. It remits both applications to Patten LJ to determine the appellants application for discharge of the condition by reference to the correct criterion [26]. Lord Wilson gives the lead majority judgment, with which Lord Neuberger and Lord Hodge agree. Lord Clarke and Lord Carnwath give dissenting judgments. Principles To stifle an appeal is to impose a condition which prevents an appellant from bringing it or continuing it. If an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it. For the purposes of Article 6 of the European Convention on Human Rights, there will seldom be a fair hearing if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it [12]. The appellant must establish on the balance of probabilities that a proposed condition would stifle the continuation of its appeal [15]. The courts can proceed on the basis that, were it to be established that the condition would probably stifle the appeal, the condition should not be imposed [16]. Even if an appellant appears to have no realisable assets, a condition for payment will not stifle its appeal if it can raise the sum [17]. However, the court must be cautious in respect of a suggestion that a corporate appellant can raise money from its controlling shareholder. The shareholders distinct legal personality must remain in the forefront of its analysis. The question should always be whether the company can raise the money and never whether the shareholder can raise the money [18]. The criterion which should be applied is as follows: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition? [23]. Where a company and/or its owner denies that the necessary funds would be made available to the company, the court should not take that assertion at face value. It should judge the probable availability of the funds by reference to the underlying realities of the companys financial position and to its relationship with its owner, including the extent to which he is directing its affairs and is supporting it in financial terms [24]. Application of principles to the present case The appellants application for discharge of the condition was refused by reference to the incorrect criterion. Patten LJ proceeded by reference to the Court of Appeals misconception in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2011] EWCA Civ 2065 and Societe Generale SA v Saad Trading, Contracting and Financial Services Co and Al Sanea [2012] EWCA Civ 695, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds to it irrespective of whether he probably would do so [25]. Dissenting Judgments Lord Clarke and Lord Carnwath would have dismissed the appeal. Patten LJ did not materially misstate the relevant principles or arrive at the wrong conclusion [27, 46]. Where a company does not have resources of its own and the issue is whether it has access to the resources of others, the question is whether the company would (not could) have had access to the resources [42]. There was no direct evidence from Mr Bagana on the question of whether he would have declined to provide funds. The evidence falls far short of establishing that the condition would stifle the appeal [44, 48].

This appeal concerns the directly effective right of police officers under EU law to have the principle of equal treatment applied to them. The question raised is whether the enforcement of that right by means of proceedings in the Employment Tribunal is barred by the principle of judicial immunity, where the allegedly discriminatory conduct is that of persons conducting a misconduct hearing. The facts The material facts are in short compass. The appellant was assaulted in 2010, while serving as a police officer, and subsequently suffered post traumatic stress disorder (PTSD). In 2011, she was involved in an incident which led to her arrest. She asserted that her behaviour on that occasion was related to her PTSD. After investigation, she was made the subject of a disciplinary charge before a misconduct hearing constituted under the Police (Conduct) Regulations 2008 (SI 2008/2864) (the 2008 Regulations). There, apart from one issue of fact which was resolved in her favour, she accepted that she had been guilty of the misconduct alleged. She relied on her good record as a police officer and her PTSD in mitigation. On 12 November 2012, the persons conducting the hearing (the panel) imposed the sanction of dismissal without notice. The proceedings below The appellant appealed against her dismissal to the Police Appeals Tribunal, which could allow her appeal if it considered the disciplinary action taken to be unreasonable. She also instituted proceedings against the Commissioner of Police of the Metropolis (the Commissioner) in an Employment Tribunal under the Equality Act 2010 (the 2010 Act), in which she claimed that the decision to dismiss her constituted discrimination arising from disability and disability related harassment, and was consequential upon a failure to make reasonable adjustments. In response, the Commissioner contended that the decision, and acts done by the panel in the course of the proceedings, were protected from challenge by the principle of judicial immunity. The appellant indicated her intention to seek a stay of her claim before the Employment Tribunal, pending the outcome of her appeal to the Police Appeals Tribunal, subject to the outcome of a pre hearing review. In the event, a final determination was made by the Police Appeals Tribunal on 11 June 2013 that the appeal would not proceed. Following a pre hearing review, the Employment Tribunal struck out the appellants claim on the basis that the panel was a judicial body, and that since the appellants claim was to the effect that its decision and the process by which it was reached were unlawfully discriminatory, the claim was barred by judicial immunity. An appeal against that decision was dismissed by the Employment Appeal Tribunal, applying the decision of the Court of Appeal in Heath v Commissioner of Police of the Metropolis [2004] EWCA Civ 943; [2005] ICR 329. A further appeal was dismissed by the Court of Appeal on the basis that the present case was indistinguishable from Heath: [2016] EWCA Civ 2; [2016] IRLR 301. Laws LJ, giving a judgment with which the other members of the court agreed, remarked: However I have been troubled by a particular feature of the case. If I am right, it would appear that claims of discriminatory dismissal brought by police officers, where the effective dismissing agent is a disciplinary panel such as was convened here, will not be viable in the Employment Tribunals; yet Parliament has legislated to allow such claims to be made. (para 24) The EU dimension The rights on which the appellant relies are directly effective rights under EU law. Council Directive 2000/78/EC (the Framework Directive) provides in article 1 that its purpose is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the member states the principle of equal treatment. That principle is defined in article 2(1) as meaning that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. Article 2(2) defines direct and indirect discrimination. Article 2(3) provides that harassment shall be deemed to be a form of discrimination. Article 2(5) provides that the Directive shall be without prejudice to measures laid down by national law which, in a democratic society, are necessary for public security, for the maintenance of public order and the prevention of criminal offences, for the protection of health and for the protection of the rights and freedoms of others. It has not been suggested that article 2(5) has any relevance in the present context. Article 5 provides that compliance with the principle of equal treatment also requires reasonable accommodation to be provided in relation to persons with disabilities. In relation to the scope of the Directive, article 3(1) provides that, within the limits of the areas of competence conferred on the Community, the Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to a variety of matters relating to employment and occupations, including employment and working conditions, including dismissals. Article 3(4) permits member states to exclude their armed forces from the application of the Directive, in so far as it relates to discrimination on the grounds of disability and age. There is no corresponding provision in relation to police forces. In relation to remedies and enforcement, article 9(1) requires member states to ensure that judicial and/or administrative procedures . for the enforcement of obligations under this Directive are available to all persons who consider themselves wronged by failure to apply the principle of equal treatment to them. Article 17 requires member states to lay down the rules on sanctions applicable to infringements of the national provisions adopted pursuant to the Directive, and to take all measures necessary to ensure that they are applied. The sanctions may comprise the payment of compensation to the victim, and must be effective, proportionate and dissuasive. The Equality Act 2010 The Framework Directive is currently implemented in domestic law by the 2010 Act. In Part 2 of the Act, section 4 identifies protected characteristics, including disability as defined by section 6. Section 13 defines discrimination as including the less favourable treatment of a person because of a protected characteristic. Sections 15 and 19 make further provision in relation to discrimination against disabled persons. Sections 20 to 22 make provision in relation to the duty to make reasonable adjustments for disabled persons. Section 26 makes provision in relation to harassment related to a protected characteristic. In Part 5 of the Act, section 39 provides that an employer (A) must not discriminate against a person (B) in a variety of ways, including by dismissing B. It also provides that a duty to make reasonable adjustments applies to an employer. Section 40 provides that an employer (A) must not, in relation to employment by A, harass a person (B) who is an employee of As. Special provision is made in relation to police officers by sections 42 and 43. In particular, section 42(1) provides that, for the purposes of Part 5 of the Act, holding the office of constable is to be treated as employment by the chief officer in respect of any act done by the chief officer in relation to a constable, and as employment by the responsible authority in respect of any act done by the authority in relation to a constable. That provision is necessary because, at common law, a police officer is not an employee but the holder of an office. The expressions chief officer and responsible authority are defined by section 43(2) and (3) respectively. In relation to officers in the Metropolitan Police, the former expression refers to the Commissioner, and the latter expression refers to the Mayors Office for Policing and Crime. It is relevant to note that section 42(1) is in substance a re enactment of section 64A of the Disability Discrimination Act 1995, which was introduced by regulation 25 of the Disability Discrimination Act 1995 (Amendment) Regulations 2003 (SI 2003/1673). Those Regulations were made under the European Communities Act 1972 (the 1972 Act), in order to implement the Framework Directive. Ancillary provisions are set out in Part 8 of the 2010 Act. Section 109 is concerned with the liability of employers and principals. Subsection (1) provides that anything done by a person (A) in the course of As employment must be treated as also done by the employer. Subsection (2) provides that anything done by an agent for a principal, with the authority of the principal, must be treated as also done by the principal. Section 120 confers jurisdiction on an Employment Tribunal to determine complaints relating to contraventions of Part 5. Where a tribunal finds a contravention, it can make a declaration, order the payment of compensation, or make appropriate recommendations: section 124(2). It can thus provide a remedy, in cases of dismissal or other disciplinary action, without necessarily affecting the dismissal or other action itself. Police misconduct panels Police misconduct panels are established under regulations made by the Secretary of State in the exercise of powers conferred by the Police Act 1996. The Regulations which were in force at the time when section 64A of the Disability Discrimination Act 1995 was introduced left the final decision in cases of dismissal to the chief officer or the police authority. That position was altered by the 2008 Regulations, which were in force at the time of the appellants dismissal. Those Regulations were themselves revoked and replaced by the Police (Conduct) Regulations 2012 (SI 2012/2632) (the 2012 Regulations). The latter Regulations, as amended by the Police (Conduct) (Amendment) Regulations 2015 (SI 2015/626), are broadly (but not entirely) in similar terms. The Schedule to the 2008 Regulations sets out the standards of professional behaviour expected of police officers. Regulation 3(1) defines misconduct as a breach of the standards set out in Schedule 1, and gross misconduct as a breach so serious that dismissal would be justified. By regulation 5, the Regulations apply where an allegation comes to the attention of an appropriate authority which indicates that the conduct of a police officer may amount to misconduct or gross misconduct. In terms of regulation 3(1), the appropriate authority, where the officer concerned is a senior officer (defined as meaning an officer holding a rank above that of chief superintendent) is the police authority, and in any other case is the chief officer. In the present case, the appropriate authority was the chief officer. Ignoring immaterial details, the procedure after an allegation comes to the attention of the appropriate authority can be summarised as follows. The appropriate authority is required by regulation 12(1) to assess whether the conduct alleged, if proved, would amount to misconduct or gross misconduct. If, as in the present case, the appropriate authority determines that it would amount to gross misconduct, the matter then has to be investigated: regulation 12(4). The next stage is for the appropriate authority to appoint an investigator in accordance with regulation 13, and for an investigation to be carried out in accordance with regulations 14 to 18. The next stage is for the appropriate authority, on receipt of the investigators report, to determine whether the officer concerned has a case to answer in respect of misconduct or gross misconduct, in accordance with regulation 19. Where, as in the present case, the appropriate authority determines that there is a case to answer in respect of gross misconduct, it is required under regulation 19(4) to refer the case to a misconduct hearing, defined by regulation 3(1) as a hearing at which the officer may be dealt with by disciplinary action up to and including dismissal. Under regulation 21, the officer is then entitled to be provided by the appropriate authority with written notice of the conduct that is the subject matter of the case, and how that conduct is alleged to amount to gross misconduct. Subject to the harm test explained in regulation 4, the officer is also entitled to a copy of the investigators report, or such parts of it as refer to him, together with any document referred to in the report which relates to him. Under regulation 22, the officer is required to provide to the appropriate authority written notice of any allegations which he disputes and any arguments on points of law which he wishes to be considered by the persons conducting the misconduct hearing, together with a copy of any document relied on. Lists of proposed witnesses also have to be exchanged: regulation 22(4). The form of the misconduct hearing depends on the rank of the officer concerned. Where, as in the present case, the officer is not a senior officer, regulation 25(4) requires the hearing to be conducted by a panel of three persons appointed by the appropriate authority, one of whom is to be a police officer, another of whom is to be a human resources professional, and the third of whom is to be selected from a list of candidates maintained by the authority. One of the three (either a senior police officer or a senior human resources professional) is to chair the hearing. Both the officer concerned and the appropriate authority have the right to be legally represented at the hearing: regulation 7(1) and (4). The person chairing the hearing has to determine which, if any, of the proposed witnesses should attend the hearing and should give evidence at it: regulation 23(2) and (3). He or she has no power to compel the attendance of witnesses, although he or she can cause a witness who is a police officer to be ordered to attend: regulation 23(3). Nor can he or she administer an oath. Under regulation 28, the members of the panel are to be provided with copies of the documents provided to or by the officer under regulations 21 and 22 respectively, and also, where the officer disputes any part of the case against him, any other documents which, in the opinion of the appropriate authority, should be considered. Copies of documents in the latter category have also to be provided to the officer. Subject to specified exceptions, the hearing is to be in private: regulation 32(1). Subject to specified requirements, the procedure at the hearing is to be determined by the person chairing it: regulation 34(1). The person representing the officer is entitled to address the hearing and to put questions to witnesses, subject to the right of the person chairing the hearing to determine whether any question should or should not be put. At the conclusion of the hearing, the persons conducting the hearing have to decide whether the officers conduct amounts to misconduct, gross misconduct or neither: regulation 34(13). Where, as in the present case, they find that the conduct amounts to gross misconduct, they may impose any of the disciplinary actions specified in regulation 35(2)(b), ranging from management advice to dismissal without notice. Where, as in the present case, there is a finding of gross misconduct and the persons conducting the hearing decide that the officer should be dismissed, regulation 35(9) directs that the dismissal shall be without notice. An officer other than a senior officer has a right of appeal to the Police Appeals Tribunal against the panels finding of misconduct or gross misconduct, or against the disciplinary action taken by the panel: regulation 36(2) of the 2008 Regulations, read together with regulation 4 of the Police Appeals Tribunals Rules 2008 (SI 2008/2863) (the 2008 Rules), subsequently replaced by the broadly similar Police Appeals Tribunals Rules 2012 (SI 2012/2630). The grounds of appeal were specified at the material time in regulation 4(4) of the 2008 Rules. Put shortly, they are unreasonableness, fresh evidence, and breach of the statutory procedures or other unfairness. Although it is conceded that it might be possible to bring a complaint of discriminatory behaviour under the last of these headings, the tribunal does not possess either the same expertise in relation to equal treatment, or the same powers, as an Employment Tribunal. In particular, it has no power to make declarations, order the payment of compensation, or make appropriate recommendations. Its only power is either to allow or dismiss the appeal against the panels finding or the disciplinary action taken. Neither of those forms of relief will necessarily be an appropriate remedy in all cases of discrimination. Heath v Commissioner of Police of the Metropolis The case of Heath concerned events pre dating the Framework Directive. A civilian employee of a police force brought a claim in an Employment Tribunal under the Sex Discrimination Act 1975 in relation to the conduct of members of a disciplinary board constituted under the Police (Discipline) Regulations 1985 (SI 1985/518). She complained that, as a witness in proceedings before the board, she had been treated by its members in a manner which amounted to sex discrimination. The tribunal held that it had no jurisdiction, on the basis that the members of the board enjoyed judicial immunity. The proceedings before the tribunal and the Employment Appeal Tribunal appear to have been conducted without any reference to EU law, but before the Court of Appeal reliance was placed on article 6 of the Equal Treatment Directive, Council Directive 76/207/EEC. The Court of Appeal accepted that the members of the disciplinary board enjoyed judicial immunity at common law. It is unnecessary for this court to consider the correctness or otherwise of that conclusion, or to consider the issue which divided the Court of Appeal, namely whether the immunity extended to the Commissioners selection of the membership of the board. The issues arising in relation to EU law were considered by Auld LJ in a judgment with which, in relation to this issue, the other members of the court agreed. He noted that article 1 of the Equal Treatment Directive required member states to take measures to implement the principle of equal treatment for men and women in relation to various stages of employment, including working conditions. Article 5 provided that application of the principle of equal treatment with regard to working conditions meant that men and women should be guaranteed the same conditions. Article 5 also required member states to take the measures necessary to ensure that any laws, regulations and administrative provisions contrary to the principle of equal treatment should be abolished. Article 6 required member states to introduce measures enabling the principle of equal treatment to be relied on before national courts. Auld LJ did not address the question whether the discrimination alleged fell within the scope of the Directive, but identified the first matter as being whether and to what extent the common law rule of judicial immunity should be governed by the Directive in respect of claims made under the 1975 Act. In that regard, Auld LJ considered it important not to confuse procedural or jurisdictional qualifications, such as judicial immunity, with domestic provisions which operated to deprive a successful claimant in respect of an EU right of his or her full and appropriate remedy, such as the cap on compensation considered in Marshall v Southampton and South West Hampshire Health Authority (Teaching) (No 2) (Case C 271/91) [1994] QB 126. If the Directive were to displace judicial immunity, it would follow, so it was said, that it should operate so as to disapply other similar rules, such as sovereign immunity, res judicata, abuse of process, compromise of claims and estoppels. This was regarded as an extravagant proposition. In Auld LJs view, the terms of the Directive allowed of qualification where member states, within the margin of their appreciation, considered it necessary. The eradication of unlawful discrimination was not of such overriding importance that it should hold sway over other fundamental norms of our law. Analysis In a case where directly effective EU rights are in issue, EU law must be the starting point of the analysis. It may also be the finishing point, since it takes priority over domestic law in accordance with the provisions of the European Communities Act 1972. The Framework Directive confers on all persons, including police officers, a directly effective right to be treated in accordance with the principle of equal treatment in relation to employment and working conditions, including dismissals: article 3(1)(c). That right is subject to specified exceptions and qualifications, none of which is applicable to the present case. The United Kingdom is obliged, under article 9(1), to ensure that judicial and/or administrative procedures are available to all persons who consider themselves wronged by failure to apply the principle of equal treatment to them. Under article 17, sanctions which are effective, proportionate and dissuasive must be applied. The procedures under national law must also comply with the general principles of effectiveness and equivalence, and with the right to an effective remedy under article 47 of the Charter of Fundamental Rights of the European Union. The principle of equivalence entails that police officers must have the right to bring claims of treatment contrary to the Directive before Employment Tribunals, since those tribunals are the specialist forum for analogous claims of discriminatory treatment under our domestic law. They are expert in the assessment of claims of discriminatory treatment, and have the power to award a range of remedies including the payment of compensation, even in cases where the dismissal or other disciplinary action itself stands. They therefore fulfil the requirements of the principle of effectiveness. To leave police officers with only a right of appeal to the Police Appeals Tribunal would not comply either with the principle of equivalence, since analogous complaints under domestic law can be made to an Employment Tribunal, nor with the principle of effectiveness, since (for example) the Police Appeals Tribunal cannot grant any remedy in cases where the discriminatory conduct is not such as to vitiate the decision of the misconduct panel. There can be no question of the United Kingdom being entitled to deny police officers an effective and equivalent remedy, where their rights under the Directive have been infringed, as a matter falling within a national margin of appreciation. Nor, indeed, is it suggested that there could be. On the contrary, the right not to be discriminated against on grounds including disability is a fundamental right in EU law, protected by article 21(1) of the Charter. It follows that, even if it is designed to protect the officer under investigation, the creation of a statutory process which entrusts disciplinary functions in relation to police officers to persons whose conduct might arguably attract judicial immunity under domestic law cannot have the effect of barring complaints by the officers to an Employment Tribunal that they have been treated by those persons in a manner which is contrary to the Directive. National rules in relation to judicial immunity, like other national rules, can be applied in accordance with EU law only in so far as they are consistent with EU law: see, for example, Kbler v Austria (Case C 224/01) [2004] QB 848; [2003] ECR I 10239, and Commission v Italy (Case C 379/10) [2011] ECR I 180. The reasoning of the Court of Appeal in Heath, in relation to EU law, cannot therefore be regarded as correct. In the 2010 Act, Parliament sought to implement the Directive specifically in relation to police officers, as Laws LJ noted in the Court of Appeal. As explained earlier, section 42(1) deems a constable to be the employee of the chief officer for the purposes of Part 5 of the Act, in relation to any act done by the chief officer, and the employee of the responsible authority, in relation to any act done by that authority. Section 120 confers jurisdiction on an Employment Tribunal to determine any complaints relating to contraventions of Part 5. Those provisions plainly confer on police constables the right to bring proceedings before employment tribunals in order to challenge discrimination by chief officers and responsible authorities in relation to employment and working conditions, including dismissals. It was presumably envisaged by Parliament that the exercise of disciplinary functions in relation to police officers would fall within the scope of those provisions. That is indeed the case in relation to senior officers, under regulation 34(1) of the 2012 Regulations, and probationary constables, under regulation 13 of the Police Regulations 2003 (SI 2003/527). The problem is that the disciplinary functions in relation to police officers who have completed their period of probation, other than senior officers, are entrusted under secondary legislation to panels; and the exercise of those functions by a panel is not an act done by either the chief officer or the responsible authority. Nor can the exercise of those functions generally be regarded as something done by an employee of the chief officer or of the responsible authority in the course of his employment, within the meaning of section 109(1), bearing in mind that the panel exercises its most significant functions collectively, and that, at least, those of its members who are police officers will not be employees. Nor can the panel be regarded as exercising its disciplinary functions as the agent of the chief officer or the responsible authority, within the meaning of section 109(2): under the 2008 Regulations, the relevant powers are conferred directly on the panel in its own right. The consequence is that, if section 42(1) is read literally, it is deprived of much of its practical utility, and it fails fully to implement the Directive, contrary to its purpose. The way to resolve the problem is to interpret section 42(1) of the 2010 Act as applying to the exercise of disciplinary functions by misconduct panels in relation to police constables. This runs with the grain of the legislation, and is warranted under EU law, as given domestic effect by the 1972 Act, in accordance with such cases as Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C 106/89) [1990] ECR I 4135. In particular, section 42(1) can be interpreted conformably with the Directive if it is read as if certain additional words (italicised in the following version) were present: (1) For the purposes of this Part, holding the office of constable is to be treated as employment (a) by the chief officer, in respect of any act done by the chief officer or (so far as such acts fall within the scope of the Framework Directive) by persons conducting a misconduct meeting or misconduct hearing in relation to a constable or appointment to the office of constable; (b) by the responsible authority, in respect of any act done by the authority in relation to a constable or appointment to the office of constable. So interpreted, the Act overrides, by force of statute, any bar to the bringing of complaints under the Directive against the chief officer which might otherwise arise by reason of any judicial immunity attaching to the panel under the common law. It should be emphasised that this conforming interpretation has to be understood broadly: the court is not amending the legislation, and the italicised words are not to be treated as though they had been enacted. The expressions misconduct meeting and misconduct hearing, for example, have not been defined by reference to the relevant regulations. Nor is the use of those expressions intended to exclude the adoption of a similar approach in relation to other types of panel if that is necessary in order to comply with the Directive. The italicised words are merely intended to indicate how section 42(1) should be interpreted in a case such as the present, in order to avoid a violation of EU law. Conclusion For these reasons, I would hold that the reasoning in Heath v Commissioner of Police of the Metropolis in relation to EU law was unsound, allow the appeal, and remit the appellants case to the Employment Tribunal. LORD HUGHES: For my part I agree with the judgment of Lord Reed. I add only that the principle of judicial immunity serves a legitimate end and generally achieves a proportionate and useful purpose. It exists for the protection not only of tribunal members, but also of witnesses, against further litigation inspired by what may well be deep disappointment on the part of those who have not been successful in contested proceedings before the tribunal. It also prevents most collateral challenges to the decisions of tribunals which have been set up, usually by legislation, with the task of making a final decision. The proliferation of litigation is not generally in the public interest, which is best served by a single, final, decision after due process, appealable in the event of demonstrated error of law or principle. For the reasons so clearly explained by Lord Reed, section 42 of the Equality Act (like its predecessor), conformably with the Framework Directive, is plainly meant to provide police constables with the right to complain to an Employment Tribunal of discrimination, and must be construed in the manner which he has set out. It remains the consequence that in relation to discrimination there exists considerable potential for parallel or collateral proceedings in an Employment Tribunal and the statutory Police Appeals Tribunal. The former can grant relief relating to discrimination, but cannot direct an alteration to the outcome of the disciplinary proceedings. The latter cannot grant discrimination related relief, and does not have the expertise of an Employment Tribunal in that area, although it can and should consider any suggested discrimination when hearing an appeal against that outcome. The inconvenience is well illustrated by the present case, in which Ps complaint of discrimination was explicitly limited by her to the outcome of the disciplinary proceedings. Her case, as set out in her witness statement supporting her Employment Tribunal application, was expressly that her mitigation had not, in breach of the duty to avoid discrimination, been accepted when it should have been. She said this: I am not complaining about anything which was said or done during the course of the disciplinary hearing in November 2012; I am simply complaining that the wrong decision was reached by the MPS at the end of that hearing. For the reasons which Lord Reed explains, this division of justiciability is, in the present state of the legislation, unavoidable. It might, however, usefully be considered in the event of any review of the overall structure.

UK-Abs

The appellant was assaulted in 2010, while serving as a police officer, and subsequently suffered post traumatic stress disorder (PTSD). In 2011, she was involved in an incident which led to her arrest. She asserted that her behaviour on that occasion was related to her PTSD. After investigation, she was made the subject of a disciplinary charge before a police misconduct panel (the panel). She accepted that she had been guilty of the alleged misconduct. In mitigation, she relied on her good record as a police officer and her PTSD. On 12 November 2012, the panel conducting the hearing decided that she should be dismissed without notice. The appellant appealed against her dismissal to the Employment Tribunal, where she claimed that the dismissal decision constituted disability discrimination and disability related harassment, and was consequent on a failure to make reasonable adjustments. She brought a separate appeal against her dismissal to the Police Appeals Tribunal under the separate statutory scheme. In June 2013, the Employment Tribunal struck out her claim and, in March 2014, the Employment Appeal Tribunal dismissed her appeal. The basis of both decisions was that the panel was a judicial body, and so the claim was barred by the principle of judicial immunity. The Court of Appeal dismissed the further appeal. The appellant appealed to the Supreme Court. The Supreme Court unanimously allows the appeal, finding that EU law requires police officers to be able to bring claims in the Employment Tribunal in respect of dismissals following proceedings before a police misconduct panel. Such claims cannot be barred by judicial immunity. Lord Reed, with whom the other Justices agree, gives the lead judgment. Lord Hughes gives a concurring judgment. Directly effective EU rights: where directly effective EU rights are in issue, EU law must be both the starting point and the finishing point of the analysis, since EU law takes priority over domestic law. EU Council Directive 2000/78/EC (the directive) confers on all persons, including police officers, a directly effective right to be treated in accordance with the principle of equal treatment in relation to employment and working conditions, including dismissals. The UK is obliged to ensure that appropriate judicial and/or administrative procedures are available, and that effective, proportionate and dissuasive sanctions are applied. The procedures under national law must comply with the general principles of effectiveness and equivalence, and with the right to an effective remedy under article 47 of the Charter of Fundamental Rights of the European Union [27 28]. Principles of equivalence and effectiveness: The principle of equivalence requires that police officers must have the right to bring claims of treatment contrary to the directive before Employment Tribunals. This is because comparable discrimination claims can be brought before those tribunals in domestic law. On that basis, leaving police officers with a claim only to the Police Appeals Tribunal would not comply with the principle of equivalence [29]. Allowing police officers to bring claims to Employment Tribunals also fulfils the principle of effectiveness, because Employment Tribunals have the power to award a range of remedies, including compensation. The remedies available before the Police Appeal Tribunal are more limited than those available before the Employment Tribunals [29]. The UK is not entitled to deny police officers an effective and equivalent remedy. The right not to be discriminated against is a fundamental right in EU law. The creation of a statutory process, which entrusts disciplinary functions to persons who might benefit from judicial immunity, cannot bar complaints to an Employment Tribunal by police officers who claim that they have been treated contrary to the directive. National rules in relation to judicial immunity can be applied in accordance with EU law only in so far as they are consistent with EU law [30]. Interpretation of the legislation: The Equality Act 2010 plainly confers on police constables the right to bring proceedings before Employment Tribunals in order to challenge discrimination by chief officers and responsible officers. This is plain from section 42(1), which provides that a police constable is deemed to be the employee of the chief officer or of the responsible authority in relation to acts done by those persons in relation to the constable. It was presumably envisaged by Parliament that the exercise of disciplinary functions in relation to police officers would fall under those provisions [31]. Read literally, however, the Act does not cover the exercise of disciplinary functions in relation to police officers who have completed their period of probation, other than senior officers, when those disciplinary functions are entrusted to a misconduct panel. This is because the exercise of disciplinary functions by a panel is not an act done by either the chief officer or the responsible authority within the meaning of section 42(1). This reading fails to fully implement the directive [32]. The problem can be resolved by interpreting section 42(1) of the 2010 Act as applying to the exercise of disciplinary functions by misconduct panels in relation to police constables, by reading words into section 42(1)(a) to that effect. Such an interpretation runs with the grain of the legislation and is warranted under the EU principle of conforming interpretation. This does not mean the court is amending the legislation and is merely a way of interpreting the legislation to conform with EU law in a case such as the present [33 34]. Conclusion: The appeal is allowed. The reasoning of the Court of Appeal in the case of Heath v Commissioner of Police of the Metropolis [2004] EWCA Civ 943 (which held that EU law could not displace the common law rule of judicial immunity), was unsound. The present case should be remitted to the Employment Tribunal [35]. Lord Hughes gives a judgment, agreeing with the judgment of Lord Reed, and adding that the principle of judicial immunity generally serves a legitimate, proportionate and useful role. He considers that the scope for parallel or collateral proceedings in both the Employment Tribunals and the Police Appeals Tribunal, which exists under the present legislation, might be considered in any future review of the legislation [37 39].

The fundamental issue in this case is a simple one. Is it compatible with the European Convention on Human Rights to deny British citizenship to the child of a British father and a non British mother simply because they were not married to one another at the time of his birth or at any time thereafter? If the parents had been married to one another, their child would have been a British citizen. If the mother had been British and the father non British, their child would have been a British citizen. If the child had been born after 1 July 2006 he would have been a British citizen. The child is not responsible for the marital status of his parents or the date of his birth, yet it is he who suffers the consequences. There are many benefits to being a British citizen, among them the right to vote, the right to live and to work here without needing permission to do so, and everything that comes along with those rights. This case is about the right not to be deported on the ground that one is a foreign criminal whose presence here is not conducive to the public good. But the unsympathetic context in which the issue arises should not distract us from the importance of the issue to anyone who was born to unmarried parents at the relevant time. The facts The appellant was born on 18 March 1985 in Jamaica. His mother was Jamaican and his father British. His paternity is not in doubt. His parents were not married to one another. Under the law then in force the appellant became a citizen of Jamaica but not a British citizen. His father brought him to the United Kingdom in 1989, when he was aged four, and he has lived here ever since. He or his father might have made an application for him to be registered as a British citizen while he was still a child and it would have been the policy of the UK government to grant such an application provided that, if the child was 16 or over, he was of good character. But no such application was made. He was, however, granted indefinite leave to remain here in 1992, just before his seventh birthday. Neither has the appellant since applied to be registered as a British citizen. It is accepted that such an application would not succeed, because the appellant cannot demonstrate that he is of good character. He has a very serious criminal record and has been convicted of offences from 2003, the year in which he reached the age of 18, until 2008, when he was convicted of manslaughter and sentenced to nine years imprisonment. In March 2011, the Secretary of State served notice upon him that he was liable to automatic deportation as a foreign criminal under section 32(5) of the UK Borders Act 2007. A deportation order was made in August that same year. On appeal, the First tier Tribunal held that he had both a private and a family life in this country but that his deportation was a proportionate and lawful interference with them. The tribunal remitted to the Secretary of State the question whether his deportation was unlawfully discriminatory, given that he would not have been liable to deportation had his parents been married to one another. One year later, in August 2012, the Secretary of State set removal directions for his removal on 16 September 2012 and these judicial review proceedings were launched to challenge them, principally on the ground that he still had an extant appeal. The removal directions were stayed by the court and on 19 November 2012 the Secretary of State accepted that they should not have been issued given the tribunals decision to remit. On 23 November 2012, she reconsidered her deportation decision but decided that it was not unlawfully discriminatory and refused to revoke it. She also certified that the appellants claim was clearly unfounded and thus that he had no right of appeal within this country against the decision. These proceedings were amended to challenge that decision and its certification. In July 2014, Dingemans J held that the discrimination against a child of unmarried parents was not justified at the time of his birth and continued to be unjustified; that there had been a violation of article 14 of the Convention read with article 8; and that the certification of the claim as clearly unfounded was unlawful. He quashed the certificate, but declined either to read the relevant legislative provisions so as to entitle the appellant to British citizenship under section 3(1) of the Human Rights Act 1998 or to make a declaration of incompatibility under section 4: [2014] EWHC 2386 (Admin). In January 2016, the Court of Appeal allowed the Secretary of States appeal, finding that there had been no violation of the Convention rights at the time of the appellants birth in 1985 and no wrong for which the UK courts could have given a remedy then. The matter had to be judged at that time rather than as a continuing act. Any violation had taken effect before the Human Rights Act came into force. Hence there was no violation of the Convention rights and thus the claim could be certified as clearly unfounded: [2016] EWCA Civ 22. The appellant now appeals to this court. British Nationality Law At all material times, section 2(1)(a) of the British Nationality Act 1981 provided (and still provides): A person born outside the United Kingdom shall be a British citizen if at the time of the birth his father or mother is a British citizen otherwise than by descent . (a) However, until amended by the Nationality, Immigration and Asylum Act 2002, section 50(9) of the 1981 Act provided the following definition of a persons mother and father: For the purposes of this Act (a) the relationship of mother and child shall be taken to exist between a woman and any child (legitimate or illegitimate) born to her; but (b) the relationship of father and child shall be taken to exist only between a man and any legitimate child born to him; and the expressions mother, father, parent, child and descended shall be construed accordingly. Nevertheless, section 47 of the 1981 Act, until its repeal by section 9(4) of the 2002 Act, provided that a person born out of wedlock but legitimated by the subsequent marriage of his parents (if their marriage operated to legitimate him by the law of the place where the father was domiciled when the marriage took place) was to be treated as from the date of the marriage as if he had been born legitimate. Section 50(9) of the 1981 Act was amended, and a new section 50(9A) added, by section 9(1) of the 2002 Act, with effect from 1 July 2006, as follows: (9) For the purposes of this Act a childs mother is the woman who gives birth to the child. (9A) For the purposes of this Act a childs father is (c) a person who satisfies prescribed requirements as to proof of paternity. Section 162(5) of the 2002 Act made it clear that section 9 would have effect only in relation to a child born on or after the date appointed by the Secretary of State, which was 1 July 2006. Thus persons born before that date can still take advantage of the legitimation provision in section 47. These provisions define people who are automatically entitled to British citizenship, whether they want it or not. Other people can apply to be registered as British citizens. Section 3(1) of the 1981 Act provides that applications may be made while a person is a minor for him to be registered as a British citizen; and from 1987 onwards it was the policy of the Secretary of State to grant, on satisfactory proof of paternity, applications made by or on behalf of minors whose unmarried fathers were British citizens, who were living in the United Kingdom, and who, if aged 16 or over, were of good character. Section 65 of the Immigration Act 2014 has now introduced sections 4E to 4I into the 1981 Act, giving a specific right to be registered to people who were unable to acquire citizenship automatically because their father was not married to their mother. But this is subject to the general provision governing applications for registration, under section 41A of the 1981 Act, that such an application must not be granted unless the Secretary of State is satisfied that the adult or young person is of good character. The progressive removal of discrimination against children of unmarried parents At common law, a child of parents who were not married to one another at the time of his birth was filius nullius or nobodys child. The law scarcely recognised his relationship with his mother, let alone with his father. Relationships traced otherwise than through marriage were ignored for the purpose of succession and other dispositions of property. References to children or other relationships in legislation or other legal instruments were presumed to refer only to those born within or traced through marriage. Case law and statute gradually accorded limited recognition to the relationship between mother and child but scarcely any to the relationship between father and child. The first major reform came with the Family Law Reform Act 1969, which implemented the recommendations of the Report of the Russell Committee on The Law of Succession in relation to Illegitimate Persons (1966, Cmnd 3051). As the Committee observed, in the archaic language of the time (pp 4 5): At the root of any suggestion for the improvement of the lot of bastards in relation to the law of succession to property is, of course, that in one sense they start level with legitimate children, in that no child is created of its own volition. Whatever may be said of the parents, the bastard is innocent of any wrongdoing. To allot him an inferior, or indeed an unrecognised, status in succession is to punish him for a wrong of which he is not guilty. Accordingly, the 1969 Act gave children of unmarried parents rights of intestate succession from both their parents, and vice versa, and enacted a presumption that references to children and other relatives in dispositions of property included references to, and to persons related through, illegitimate children. The next major reform came with the Family Law Reform Act 1987, which implemented the Law Commissions Report on Illegitimacy (1982, Law Com No 118) with modifications recommended in its Illegitimacy: Second Report (1986, Law Com No 157). The object was to remove all discrimination in family law against children whose parents were not married to one another and against relationships traced otherwise than through marriage (while preserving some distinction between the parents in relation to their upbringing). The drafting technique, borrowed from the Law Reform (Parent and Child) (Scotland) Act 1986, was to avoid using adjectives such as legitimate and illegitimate to describe the child and to refer instead to the relationship between the parents. Section 1(1) of the 1987 Act provides: In this Act and enactments passed and instruments made after the coming into force of this section, references (however expressed) to any relationship between two persons shall, unless the contrary intention appears, be construed without regard to whether or not the father and mother of either of them, or the father and mother of any person through whom the relationship is deduced, have or had been married to each other at any time. But that, of course, does not apply to the 1981 Act, which was passed before the 1987 Act came into force. The Law Commission had considered the law of citizenship in its first Report and concluded that, as a matter of policy, a non marital child should be entitled to British citizenship on the same terms as a marital child (Law Com No 118, para 11.20). But no clauses relating to this were included in the draft Bill annexed to that Report, or in the draft Bill annexed to the second Report, because citizenship is a United Kingdom matter affecting each part of the United Kingdom as well as England and Wales. It may well be as a result of the enactment of the 1987 Act that the Secretary of State adopted the policy in relation to the registration of minor children of unmarried parents referred to above (para 13). But the law itself was not changed until the 2002 Act came into force. Deportation law British citizens cannot be deported. Non citizens may be deported if the Secretary of State deems this conducive to the public good (Immigration Act 1971, section 3(5)(a)). Section 32(4) of the UK Borders Act 2007 provides that, for this purpose, the deportation of a foreign criminal is conducive to the public good. Under section 32(1) a non citizen convicted in the United Kingdom of an offence for which he was sentenced to at least 12 months imprisonment is a foreign criminal. Section 32(5) provides that the Secretary of State must make a deportation order in respect of a foreign criminal, but this is subject to section 33. Section 33(1) provides that section 32(4) and (5) do not apply where an exception applies. By section 33(2), Exception 1 is where removal of the foreign criminal in pursuance of the deportation order would breach (a) a persons Convention rights By section 33(7) the application of an exception does not prevent the making of a deportation order and section 32(4) applies despite the application of Exception 1. The net effect is that if Exception 1 applies, section 32(5) does not, and the person is not liable to automatic deportation. Deportation is nevertheless still deemed conducive to the public good and the Secretary of State may still make a deportation order, but it would be contrary to the persons Convention rights actually to deport him. Immigration appeals At the relevant time, in 2012, immigration appeals were governed by sections 82 and 84 of the Nationality, Immigration and Asylum Act 2002 as they then stood. Section 82(1) gave a right of appeal to the First tier Tribunal against an immigration decision, an expression which included a decision that section 32(5) of the 2007 Act applied to a person, but did not include the making of a deportation order which stated that it was made in accordance with section 32(5). Under section 84 of the 2002 Act, the grounds of appeal included, at (a), that the decision was not in accordance with the Immigration Rules; at (c), that the decision was unlawful under section 6 of the Human Rights Act 1998 as being incompatible with the appellants Convention rights; and at (e), that the decision was not otherwise in accordance with the law. Under section 92, only certain appeals might be brought within the United Kingdom. These included human rights claims. But section 94 gave the Secretary of State power to prevent an in country appeal by certifying that the claim was clearly unfounded. The issues Much of the argument in the courts below focussed upon (1) whether the denial of automatic citizenship at birth was a one off act, which took place before the Human Rights Act came into force, or whether it had continuing consequences which could amount to a violation of the Convention rights; and (2) even if it were not a one off act, whether the appellants liability to deportation was caused by the initial discrimination or whether that was only one of a number of contributory factors, not least his failure to apply for citizenship when he could have done and his commission of serious crimes. However, the subject matter of these proceedings is the Secretary of States certificate that an appeal under section 82 of the 2002 Act is clearly unfounded. It is argued that the Secretary of State has no alternative but to treat the appellant as a foreign criminal to whom section 32(5) of the 2007 Act applies and is therefore required to make a deportation order. This is because, by virtue of the statutory provisions described above, he is not a British citizen. Thus, it is argued, her action is not unlawful within the meaning of section 6(1) of the Human Rights Act 1998, even if it is incompatible with his Convention rights, because section 6(2)(a) provides that it is not unlawful to act incompatibly with the Convention rights if, as a result of one or more provisions of primary legislation, she could not have acted differently. However, as we have already seen (para 18 above), Exception 1 does not require that there be a breach of section 6 of the 1998 Act, merely that the deportation be a breach of the Convention rights. If Exception 1 applies, then section 32(5) of the 2007 Act does not apply and a deportation order cannot lawfully be made under that provision. To similar effect is rule 397 of the Immigration Rules, which provides that A deportation order will not be made if the persons removal pursuant to the order would be contrary to the UKs obligations under the Human Rights Convention. The grounds of appeal under section 84(1), as it stood at the relevant time, included, not only, at (a), that the decision was not in accordance with the Immigration Rules, but also, at (e), that it was not in accordance with the law. Thus it matters not that ground (c) is limited to decisions that are contrary to section 6 of the 1998 Act, provided that there is a breach of the Convention rights. Section 6(2)(a) of that Act is a red herring. The issue, therefore, is whether an appeal against the decision that section 32(5) of the 2007 Act applies to the appellant, on the basis that to deport the appellant now would be a breach of the UKs obligations under the Human Rights Convention, is clearly unfounded. That depends upon (1) whether it is sufficiently within the ambit of article 8 of the Convention to bring into play the prohibition of discrimination in the enjoyment of the Convention rights in article 14; (2) whether the discrimination had a one off effect at birth or whether it has continuing consequences which may amount to a present violation of the Convention rights; and (3) whether such discriminatory effect can be justified. The discrimination complained of in this case is that he is liable to deportation whereas he would not be if (a) his mother and father had been married to one another at the time of his birth; (b) his mother and father had been married to one another at any time after his birth; (c) his mother had been British and his father Jamaican; or (d) an application had been made to register him as a citizen before he was 18. Article 8 Although article 15.1 of the Universal Declaration of Human Rights says that Everyone has the right to a nationality, the European Convention says nothing about the right to a nationality. In K and W v The Netherlands (1985) 43 D & R 216, the European Commission on Human Rights declared inadmissible a complaint about Dutch citizenship law: a woman married to a Dutch man could obtain citizenship simply by writing to the local mayor; a man married to a Dutch woman could not. The Commission found that the right to acquire a particular nationality was not covered by, or sufficiently related to, article 8 or any other provision of the Convention, for article 14 to come into play. In Karassev v Finland (1999) 28 EHRR CD132, the Commission repeated that the Convention did not guarantee the right to acquire a particular nationality. Nevertheless, it did not exclude that an arbitrary denial of citizenship might in certain circumstances raise an issue under article 8 of the Convention because of the impact of such a denial on the private life of the individual. In Genovese v Malta (2011) 58 EHRR 25, the complaint was that the denial of Maltese citizenship to the son of a British mother and a Maltese father who were not married to one another was in breach of article 14 read with article 8. The Court held (para 33) that While the right to citizenship is not as such a Convention right and while its denial in the present case was not such as to give rise to a violation of article 8, the Court considers that its impact on the applicants social identity was such as to bring it within the general scope and ambit of that article. Malta was not obliged to recognise the right to citizenship by descent, but as it did so, it had to ensure that the right was secured without discrimination. The discrimination could not be justified by the argument that motherhood is certain, whereas fatherhood is not: in that case, paternity had been established scientifically and in legal proceedings. To similar effect is Kuric v Slovenia (2013) 56 EHRR 688, where the discriminatory erasure of the applicants residence rights was held to be a breach of article 14 read with article 8 even though their residence had not in fact been affected. It is well established that a persons social identity is an important component of his private life, which is entitled to respect under article 8. This includes the recognition of his biological relationships, even if the refusal of recognition has no noticeable impact upon his family life. Thus, for example, in Menneson v France, Labassee v France, App Nos 65192/11 and 65941/11, Judgment of 26 June 2014, it was a violation of the right to respect for private life for French law to deny the existence of the relationship between the biological father and the children born as a result of surrogacy arrangements in the United States. It is clear, therefore, that the denial of citizenship, having such an important effect upon a persons social identity, is sufficiently within the ambit of article 8 to trigger the application of the prohibition of discrimination in article 14. A continuing effect? The Court of Appeal held that the denial of automatic citizenship was a one off event that happened at birth and had no continuing effect capable of being a violation of the Convention rights. For example, in Posti and Rahko v Finland (2002) 37 EHRR 158, the restriction on the applicants right to fish in state owned waters, imposed by a decree in 1994, obviously continued to limit their fishing, but was a single event and their complaint was out of time. However, the court reiterated that the concept of a continuing situation refers to a state of affairs which operates by continuous activities by or on the part of the state to render the applicants victims (para 39). Thus, in Norris v Ireland (1988) 13 EHRR 186, it was held that the very existence of legislation penalising homosexual acts continuously and directly affected the applicants private life, despite the fact that he had neither been prosecuted nor threatened with prosecution. In this case, the denial of citizenship has a current and direct effect upon the appellant who is currently liable to action by the state, in the shape of deportation, as a result. Article 14 It is not in dispute that birth outside wedlock is a status for the purpose of article 14. It has been so regarded at the very least since the landmark case of Marckx v Belgium (1979) 2 EHRR 330. It is no co incidence that the laws of both Scotland and England and Wales were changed within a few years of that decision. Nor can it be seriously disputed that there is here a difference in treatment between people who are otherwise in an analogous situation on the ground of that birth status: had the appellants parents been married to one another he would automatically have become a British citizen and not been liable to deportation no matter how badly he had behaved. As has been said many times, For the purpose of article 14, a difference in treatment is discriminatory if it has no objective and reasonable justification, that is, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see, eg, Inze v Austria (1987) 10 EHRR 394, para 41; Genovese v Malta, para 43). It is also clear that birth outside wedlock falls within the class of suspect grounds, where very weighty reasons are required to justify discrimination. This was held as long ago as Inze v Austria, at para 41, where children born in wedlock were given priority over children born outside wedlock in the inheritance of a family farm: The question of equality between children born in and children born out of wedlock as regards their civil rights is today given importance in the member states of the Council of Europe. This is shown by the 1975 European Convention on the Legal Status of Children born out of Wedlock, which is presently in force in respect of nine member states of the Council of Europe [including Austria]. Very weighty reasons would accordingly have to be advanced before a difference in treatment on the ground of birth out of wedlock could be regarded as compatible with the Convention. The likelihood that a child born outside wedlock would have had less to do with the family farm, and the attitudes of the rural population, were not regarded as weighty reasons. The need for very weighty reasons has been repeated many times since, for example, in Fabris v France (2013) 57 EHRR 563, at paras 58 and 59, where reference was made to the principle of equality eliminating the very concepts of legitimate children and children born outside marriage, and in Genovese v Malta, at para 44, where it was noted that 22 member states were now parties to the 1975 Convention and it was irrelevant that Malta was not. The United Kingdom signed the Convention in 1975 and ratified it in 1981. This case has, however, been bedevilled by arguments about precisely what has to be justified. If it is the initial denial of automatic citizenship in 1985, the Secretary of State can argue that it was not even recognised as within the ambit of article 8 at the time and so does not need justification. If it is the continued denial of citizenship in 2012, the Secretary of State can argue that steps have now been taken to put right the historic injustice, but that it is justifiable for these steps only to operate prospectively: it is reasonable to have a citizenship law which assigns citizenship to certain people automatically at birth and grants it later only on application. Citizenship should not be imposed upon people unless they have asked for it: it may bring disadvantages if they are also citizens of a state which does not recognise dual nationality. The problem with that argument is that citizenship is imposed automatically at birth upon certain people, whether they want it or not and whether or not it gives rise to dual nationality problems. Furthermore it is also imposed automatically if a person is legitimated by the subsequent marriage of his parents. The appellants problems would be over if his mother could be found and his father persuaded to marry her. If what needs to be justified is the liability of non citizens to deportation while citizens cannot be deported, the Secretary of State would have a comparatively simple task. It has always been justifiable to distinguish between citizens and aliens in matters relating to entering, remaining in and removal from the country. The right to live in ones own country is the principal right of citizenship. Further, if what needs to be justified is the liability of foreign criminals to be deported when other foreigners are not similarly liable (although their presence here may be controlled in other ways), again the Secretary of State might have a comparatively easy task. But in this case what needs to be justified is the current liability of the appellant, and others whose parents were not married to one another when they were born or at any time thereafter, to be deported when they would not be so liable had their parents been married to one another at any time after their birth. That is a present distinction which is based solely on the accident of birth outside wedlock, for which the appellant is not responsible, and no justification has been suggested for it. It is impossible to say that his claim that Exception 1 applies, based on article 14 read with article 8, is clearly unfounded. Conclusion It follows that I would allow this appeal and quash the Secretary of States certificate. The consequence, as I understand it, is that his appeal against the Secretary of States decision of 23 November 2012 must be allowed to proceed and, for the reasons given earlier, is certain to succeed. Declaration of incompatibility? Allowing this appeal is the consequence of the particular provisions relating to deportation which are relevant here. However, there are bound to be other people in the appellants situation that is, who are denied the automatic right to citizenship by reason of the fact that their British father was not married to their non British mother at the time of their birth. There are all sorts of current consequences which might flow from that situation. An example is the right to vote, which is an aspect of citizenship and also a Convention right under article 3 of the First Protocol. People born before 1 July 2006 are denied that right unless they are first registered as citizens. In order to do this they must pass the good character test in section 41A of the 1981 Act. Had their parents been married to one another at or at any time after their birth they would not have to do this. While of course all babies arrive in the world with a good character the same cannot be said of those legitimated by the subsequent marriage of their parents. The distinction is based solely on birth status and for the reasons given earlier cannot be justified. Mr Hugh Southey QC, for the appellant, argued that it followed that the Nationality, Immigration and Asylum Act 2002 (Commencement No 11) Order 2006, SI 2006/1498, bringing into force the 2002 amendments to section 50(9) of the 1981 Act was incompatible with the Convention rights. It should have operated retrospectively so as to grant automatic citizenship to all people previously denied it because of their parents marital status. Mr Tim Eicke QC, for the Secretary of State, argues that it is contrary to principle for legislation to have retrospective effect, in particular where it effects an automatic change of status. Citizenship should not be imposed upon people unless they have asked for it. As already mentioned, Mr Eickes argument cannot be taken too far: there are many people who are entitled at birth to the citizenship of more than one country whether they like it or not: they may be born in a country, such as the United States of America, which still recognises the ius soli, the right to citizenship of all persons born within the territory; and they may be entitled to citizenship by descent from either or both of their parents, as is the case under the 1981 Act. But where a person has not automatically acquired citizenship at birth, it is reasonable to expect him to apply for it, even if he is entitled to be registered if he does so. This avoids the risk of inconvenient results and provides everyone with clarity and certainty. But it is not reasonable to impose the additional hurdle of a good character test upon persons who would, but for their parents marital status, have automatically acquired citizenship at birth, as this produces the discriminatory result that a person will be deprived of citizenship status because of an accident of birth which is no fault of his. The incompatible provision, therefore, is paragraph 70 of Schedule 9 to the Immigration Act 2014, which inserts into section 41A of the 1981 Act (the requirement to be of good character) a reference to sections 4F, 4G, 4H and 4I, which relate to various categories of people who would automatically have become UK citizens had their parents been married to one another at their birth. The court will make a declaration to that effect, although it is not necessary to do so in order to dispose of this case.

UK-Abs

The appellant, Mr Johnson, was born in Jamaica in 1985 to a Jamaican mother and British father who were not married to one another. His father moved to the United Kingdom with him when he was four, and he has lived here ever since. Under the law in force at his birth, Mr Johnson became a Jamaican citizen but not a British one. He would have been a British citizen had his mother and father been married to one another, or married subsequently, or had his mother had been the parent with British citizenship. He would also have been granted British citizenship had he or his father applied while he was still a child and, if over 16, of good character. But no application was made. Between 2003 and 2008 Mr Johnson was convicted of a series of serious criminal offences, culminating in a conviction for manslaughter for which he was sentenced to nine years imprisonment. In 2011 the Secretary of State made a deportation order against him on the ground that he was liable to automatic deportation as a foreign criminal under section 32(5) UK Borders Act 2007 (UKBA). Removal directions were set. Mr Johnson appealed, arguing that deportation would breach his right to family life protected by article 8 of the European Convention on Human Rights (the Convention) and be unlawfully discriminatory under article 14, given that he would not have been liable to deportation had his parents been married to one another. After reconsideration the Secretary of State confirmed her decision and also certified that Mr Johnsons claim was clearly unfounded, thereby removing his right of appeal against her decision in this country. Mr Johnsons claim was amended to challenge both the deportation decision and the issue of the certificate. The High Court held that discrimination against a child of unmarried parents at birth and thereafter violated Mr Johnsons Convention rights, and quashed the certificate. The Court of Appeal allowed the Secretary of States appeal, holding that there had been no violation of Mr Johnsons rights at the relevant time, namely his birth, which was long before the Human Rights Act 1998 (HRA) came into force. The Supreme Court unanimously allows the appeal, finding that Mr Johnsons liability to deportation by reason of the accident of his birth outside wedlock is unlawfully discriminatory, in breach of his Convention rights. The consequence is that the certificate granted by the Secretary of State will be quashed and Mr Johnsons appeal against the decision to deport him will be certain to succeed. The court also makes a declaration that the statutory requirement that a person in Mr Johnsons position must also be of good character in order to be granted British citizenship is incompatible with Convention rights, pursuant to section 4 HRA. Lady Hale gives the only substantive judgment, with which the other justices agree. Over the past fifty years there has been progressive reform of provisions discriminating against children of unmarried parents. Since 2006 a person in Mr Johnsons position has been entitled to automatic British citizenship at birth but this change was not retrospective [12, 14 17]. One of the benefits of British citizenship is the right not to be deported as a foreign criminal. The obligation on the Secretary of State to deport a foreign criminal does not, however, apply if removal will breach his Convention rights: s 33(1) UKBA [18]. The issue before the court was whether the basis for Mr Johnsons appeal, namely that to deport him would breach his Convention rights, was clearly unfounded so as to justify the grant of the certificate. This raised the questions of whether the rules denying him citizenship had a one off effect at his birth or had continuing consequences which were within the scope of the HRA, and whether this discriminatory effect could be justified [23]. The right to a nationality is not as such a Convention right but denial of citizenship when it has important effects on a persons identity falls within the ambit of article 8 and so triggers the application of the prohibition of discrimination in article 14 [27]. Birth outside wedlock is a status for the purpose of article 14 and falls within the class of suspect grounds where very weighty reasons are required to justify discrimination [29, 30]. In Mr Johnsons case, what needed to be justified was his current liability to deportation when he would not be so liable but for the accident of birth outside wedlock for which he was not responsible. No justification had been suggested for this and it cannot therefore be said that his claim that deportation would breach his Convention rights was clearly unfounded [34]. In these circumstances the certificate would be quashed and Mr Johnsons appeal allowed to proceed. His appeal is also, for the same reasons, certain to succeed [35]. The court went on to consider whether any of the statutory provisions affecting persons in Mr Johnsons position should be subject to a declaration that they are incompatible with Convention rights, pursuant to s 4 HRA. It was not necessary to do so in order to dispose of the case, but the court makes such a declaration in respect of paragraph 70 of Schedule 9 to the Immigration Act 2014, which imposes a requirement that an applicant for British citizenship who, but for their parents marital status would have automatically acquired citizenship at birth, be also of good character [36 39].

This appeal concerns the interpretation of provisions of the Taxes Management Act 1970 (the TMA). The principal issue is whether the Commissioners of HM Revenue and Customs (HMRC) were entitled to open an enquiry into the claims for relief from income tax, which the appellants (Mr De Silva and Mr Dokelman or collectively the taxpayers) had made in their tax return forms to carry back losses to earlier tax years, and, as a result, amend their tax returns to deny the taxpayers the full relief which they claimed or had been given. The taxpayers argue that HMRC were entitled to inquire into their claims only under Schedule 1A and that, because the statutory time limit for such an enquiry had expired, their claims had become unchallengeable. Factual background The taxpayers were limited partners in various limited partnerships established under the Limited Partnerships Act 1907. The general partner of the partnerships was Investing in Enterprise Ltd (IEL). The taxpayers became partners in these partnerships in implementation of marketed tax avoidance schemes which were aimed at accruing trading losses through investment in films in order to set off those losses against income of the same or earlier years. The taxpayers invested in the partnerships in part by using their own money but principally by taking out non recourse or limited recourse loans. The schemes aimed to take advantage of tax incentives under section 42 of the Finance (No 2) Act 1992 (as amended) (the 1992 Act) to encourage investment in the production and acquisition of qualifying films. It is not necessary to give details of the tax incentives. In the early years of trading a limited partner could use the provisions of sections 380 and 381 of the Income and Corporation Taxes Act 1988 (ICTA) to set off his allocated share of trading losses of a partnership in a particular year against his general income for that year of assessment or any of the previous three years of assessment. The ability to carry back the losses in this way allowed the partner to choose to set off the losses against his taxable income in one or more of those years in a way which gave him the greatest advantage. The relevant film partnerships lodged tax returns, which IEL completed, for the tax years 1998/99, 1999/2000, 2000/01 and 2001/02, in which the partnerships claimed that they had suffered substantial trading losses, in relation to which they claimed relief for film expenditure under section 42 of the 1992 Act. HMRC did not accept those claims, but initiated inquiries into the partnerships tax returns under section 12AC(1) of the TMA. After extensive investigations, HMRC determined that the claims for losses should not be accepted and issued closure notices on the inquiries in about July 2003. In substance, HMRC disallowed the partnerships claims for expenditure funded by the non recourse or limited recourse loans to individual partners and also the expenditure paid as fees to the promoters of the schemes. The partnerships appealed to the Special Commissioners of Income Tax (the predecessors of the First tier Tribunal (Tax Chamber)) in August 2003. Those appeals and the partnerships claims for losses and relief were compromised by an agreement dated 22 August 2011 under section 54 of the TMA (the partnership settlement agreement) under which the partnerships losses were stated at much reduced levels. Mr De Silva in his self assessment tax return form for 1998/99 included a claim to set off his share of trading losses of certain partnerships in other years, including 1999/2000, against his general income in several tax years, including 1998/99, with the intention of reducing his payment in respect of tax due for 1998/99 by 16,800. He included that figure in box 18.9 on the return form against an entry, 1999 2000 tax you are reclaiming now. Under the heading additional information in his return he explained the detail of the carry back claims which he was making to give rise to that figure. The losses which supported his claim to reduce his tax payment by 16,800 were his share of partnership trading losses in the year 1999/2000, which it had already been estimated that the relevant partnership would incur in that tax year. In his self assessment tax return form for 1999/2000, Mr De Silva made amended carry back claims to set off his share of partnership losses in 1999/2000 against his general income in previous years so as to claim a repayment of tax for those years. Mr Dokelman also claimed tax relief in a similar manner. In his self assessment tax return form for 2000/01 he made a claim for the losses which he had incurred as a partner in some of the partnerships in the tax year 2000/01 against his general income in 1999/2000 and 1997/98. In each case the taxpayer claimed relief for his share of the partnership losses as those losses had been stated in the partnership tax returns before they were substantially reduced when HMRC amended the partnership tax returns after entering into the partner settlement agreement. HMRC had initially accepted Mr De Silvas claims for relief and credited him with 22,400 and 42,000. After the partnership claims were determined in the partnership settlement agreement, HMRC wrote to the taxpayers to intimate that their carry back claims in their personal tax returns would be amended in line with the lower figures for the partnership losses which had been agreed in the partnership settlement agreement. HMRC informed Mr De Silva that he had to pay additional tax of 17,176.80 and 32,400. HMRC informed Mr Dokelman, who had not been given credit for the partnership losses, that those losses available for a claim for 2000/01 were reduced to the levels agreed in the partnership settlement agreement. HMRCs letters to Mr De Silva were dated 16 September 2011 and 17 November 2011. Their letter to Mr Dokelman was dated 28 October 2011. The legal proceedings The taxpayers have challenged HMRCs decisions which were set out in those letters by a claim for judicial review. They assert that HMRC are obliged to give effect in full to their claims to carry back the partnership losses because HMRC did not open an enquiry into the claims under Schedule 1A to the TMA in order to challenge them and are now barred by the passage of time from doing so. They submit that their case is supported by a judgment of this court in Revenue and Customs Comrs v Cotter [2013] UKSC 69; [2013] 1 WLR 3514; [2013] STC 2480 (Cotter). The Upper Tribunal (Sales J) in a decision dated 15 April 2014 ([2014] UKUT 170 (TCC); [2014] STC 2088) rejected their claim. The Court of Appeal (Arden, Gloster and Simon LJJ) in a judgment dated 2 February 2016, in which Gloster LJ gave the leading judgment, dismissed the taxpayers appeal ([2016] EWCA Civ 40; [2016] STC 1333). The taxpayers challenge The taxpayers now appeal to this court. Their submission in summary is that their claims for relief by carrying back losses are not claims made in their self assessment tax returns under section 8 of the TMA but are to be regarded as stand alone claims for relief which are not made in tax returns and which HMRC could challenge only under Schedule 1A to the TMA. They renew their submission that HMRC had failed to operate those procedures to challenge their claims and are now out of time to do so. They submit that their claim for relief is not affected by the power of HMRC to amend the partnerships tax returns or their individual tax return forms to give effect to the partnership settlement agreement. Discussion The answer to this appeal lies in the provisions of the TMA (i) which deal with the making and processing of claims for relief and (ii) which specify what a taxpayer must include in his tax return. I will look first at those provisions before summarising what HMRC have done in these cases. When I refer to sections or Schedules below without specifying the Act, I refer to sections of and Schedules to the TMA. The provisions of the TMA in so far as they concern income tax are dealing with an annual tax and this court has held in Cotter that a tax return in the context of sections 8(1), 9, 9A and 42(11)(a) refers to the information in the tax return form which is submitted for the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for the relevant year of assessment and the amount payable by him by way of income tax for that year (section 8(1) TMA). I will return to section 8(1) when I address the provisions mentioned in (ii) in para 11 above. The making and processing of claims The provisions which deal with the making and processing of claims for relief are section 42 and Schedules 1A and 1B. Section 42(1) provides that, unless otherwise provided, section 42 shall have effect in relation to a claim for relief to be given. Subsection (2) provides that where an officer of HMRC has given a notice to a person, whether an individual (section 8), a trustee (section 8A) or the partner of a partnership (section 12AA), requiring him to make and deliver a tax return, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included. This requirement that a claim be included in a tax return was an innovation in the Finance Act 1994, which amended the TMA extensively to provide for the introduction of self assessment. Section 42 as initially enacted had provided as a general rule that claims should be made to an inspector of taxes within time limits specified in section 43, also as initially enacted. Section 42(6) requires that in the case of a trade, profession or business carried on by persons in partnership a claim under the provisions specified in subsection (7), which include section 42 of the 1992 Act under which the claims have been made in this case, shall, where subsection (2) applies, be made by being included in a partnership return and in any other case, by such one of those persons as may be nominated by them for the purpose. Section 42(11) provides: Schedule 1A to this Act shall apply as respects any claim or election which (a) is made otherwise than by being included in a return under section 8, 8A or 12AA of this Act Section 42(11A) provides: Schedule 1B to this Act shall have effect as respects certain claims for relief involving two or more years of assessment. As a claim to carry back losses is a claim for relief involving two or more years of assessment and as the taxpayers claims are of that nature, I will examine Schedule 1B first. Schedule 1B is headed Claims for relief involving two or more years and paragraph 2 of the Schedule addresses loss relief, which is the subject of the claims in this case. Paragraph 2 provides so far as relevant: (1) This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (the later year) to be given in an earlier year of assessment (the earlier year). (2) Section 42(2) of this Act shall not apply in relation to the claim. (3) The claim shall relate to the later year. (4) the claim shall be for an amount equal to the difference between (a) the amount in which the person is chargeable to tax for the earlier year (amount A); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (amount B). (6) Effect shall be given to the claim in relation to the later year, whether by repayment or set off, or by an increase in the aggregate amount given by section 59B(1)(b) of this Act, or otherwise. (The aggregate amount given by section 59B(1)(b) is the aggregate of payments on account of income tax deducted at source in respect of that tax year.) Paragraph 2 of Schedule 1B thus is concerned with relief sought for a loss incurred in the later year (which I will call Year 2) by carrying it back to the earlier year (Year 1). Significantly, paragraph 2(3) makes it clear that the claim relates to Year 2. The quantification of the claim is governed by paragraph 2(4): the claim is the difference between amount A and amount B on the counterfactual assumption that effect could have been and was given to the claim in Year 1. That assumption is counterfactual because paragraph 2(3) and paragraph 2(6) relate the claim and the giving effect to the claim to Year 2. Paragraph 2(2) of Schedule 1B disapplies section 42(2) in relation to such a claim. That has the effect that a claim may be made under Schedule 1A, notwithstanding that an officer of HMRC has required the provision of a tax return, for example in Year 1 outside a tax return. But I agree with Sales J and the Court of Appeal that HMRC are correct in their submission that that disapplication does not mean that the taxpayer is released from making the claim in his tax return in Year 2. As I will seek to show (paras 23 29 below), section 8(1) imposes that requirement. Schedule 1A is headed Claims etc not included in returns. Paragraph 2 provides for a claim to be made to an officer of HMRC in such form as HMRC may determine, but HMRC have not specified any particular form of claim and accept claims made by letter. Paragraph 4(2) requires an officer of HMRC to give effect as soon as practicable after a partnership claim is made under section 42(6) by a nominated person to such a claim as respects each of the relevant partners by discharge or repayment of tax, unless HMRC inquire into the claim. Similar provision is made in paragraph 4(1) for the prompt processing of non partnership claims. Schedule 1A therefore requires HMRC to respond promptly to claims for relief and thus assist the cash flow of taxpayers who have relevant and valid claims. But HMRC are also empowered to challenge claims: paragraph 5 provides for inquiries into Schedule 1 claims and contains time limits for the opening of such inquiries. Such an enquiry postpones the obligation to give effect to the claim (paragraph 4(3)) and on completion of the inquiry HMRC may by closure notice amend the claim (paragraph 7(1)). It is, as I have said, the taxpayers assertion that their claims were stand alone claims which were governed only by Schedule 1A and that HMRC, by failing to open a paragraph 5 inquiry have allowed the claims to become unchallengeable. I am satisfied that that assertion is incorrect because of the provisions of the TMA which specify what a taxpayer must include in his return. The content of a tax return Section 8 sets out what a person must produce when given a notice to make and deliver a tax return. So far as relevant the section provides: (1) For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, and the amount payable by him by way of income tax for that year, he may be required by a notice given to him by an officer of the Board (a) to make and deliver to the officer a return containing such information as may reasonably be required in pursuance of the notice, and to deliver with the return such accounts, (b) statements and documents, relating to information contained in the return, as may reasonably be so required. (1AA) For the purposes of subsection (1) above (a) the amounts in which a person is chargeable to income tax and capital gains tax are net amounts, that is to say, amounts which take into account any relief or allowance a claim for which is included in the return; and (b) the amount payable by a person by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act [ie ICTA] applies. (The tax credits to which section 231 of ICTA referred were tax credits for advance corporation tax which the recipient of qualifying distributions from a UK resident company could claim.) It is noteworthy that under subsection (1)(a) the information which is required is not simply the amounts in which the person is chargeable to income tax and the amounts payable by him for the year of assessment but information for the purpose of establishing those amounts. That information includes the persons share of partnership income or losses for the period which falls within the year of assessment as section 8 provides: (1B) In the case of a person who carries on a trade, profession, or business in partnership with one or more other persons, a return under this section shall include each amount which, in any relevant statement, is stated to be equal to his share of any income, loss, tax, credit or charge for the period in respect of which the statement is made. (1C) In subsection (1B) above relevant statement means a statement which, as respects the partnership, falls to be made under section 12AB of this Act for a period which includes, or includes any part of, the year of assessment or its basis period. A person must therefore include in the return for Year 2 his share of the losses of a partnership, of which he was a partner, which have been stated in a relevant statement relating to Year 2. Section 9 provides for self assessment. Unless the taxpayer makes and delivers his tax return within time limits specified in section 9(2) and subject to an exception in section 9(1A) which is not relevant, section 9(1) provides: every return under section 8 or 8A of this Act shall include a self assessment, that is to say (a) an assessment of the amounts in which, on the basis of the information contained in the return and taking into account any relief or allowance a claim for which is included in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment Claims, reliefs and tax returns Whether a taxpayer submits his tax return for Year 2 within the time limits of section 9(2), so that HMRC assess the sums in which he is chargeable to income tax and the amount payable, or includes in the return the self assessment in terms of section 9(1)(a), he must provide information in his return for Year 2 to establish what proportion, if any, of his share of the partnership loss incurred in Year 2 is to be offset against his other income in Year 2. If a taxpayer wished to claim to offset all of his share of partnership losses in Year 2 against his other income in Year 2 by invoking section 380(1)(a) of ICTA, he would have to include that claim in his return for Year 2. Schedule 1B would not apply as the claim for relief would involve only one year of assessment. Section 8(1AA)(a) would allow him relief, for which he had included a claim in the return, giving rise to the net sum in which he would be chargeable to income tax for that year. If a taxpayer wished to carry back part of the losses incurred in Year 2 to set off against his income of Year 1 by invoking section 380(1)(b) of ICTA, he would also have to make the claim in his return for Year 2. This is the combined effect of section 8(1AA)(a) and Schedule 1B paragraphs 2(3) and (6). As shown in para 18 above, those paragraphs provide that the claim for relief relates to Year 2 and effect is to be given to that claim in relation to Year 2. If HMRC had already given effect to part of the claim under Schedule 1A in Year 1 by giving relief, for example by repayment, the return for Year 2 would still have to state the loss, the claim and the relief already given in order to establish the amounts in which the taxpayer is chargeable to income tax in Year 2. Similarly, if the taxpayer had already received full relief under Schedule 1A in Year 1, he would have to state the same information as to the loss, the claim and the relief already given. By so doing he enables the return to take into account, as section 8(1AA)(a) requires, both the relief which is claimed in the return and that which he has already received. In each case that information is a necessary part of his return for Year 2 as it is information required for the purpose of establishing the amounts in which the taxpayer is chargeable to income tax for that year of assessment: section 8(1). In summary, section 8(1AA)(a) defines the amounts in which a person is chargeable to income tax in a year of assessment as net amounts taking account of any relief, a claim for which has been included in the return. The claims to carry back losses relate to Year 2 and effect is given to them in relation to that year: Schedule 1B paragraph 2(3) and (6). It follows, therefore, that the taxpayer must make a claim in his tax return in respect of Year 2 and state the extent to which the relief claimed has already been given in order to establish the amounts in which he is chargeable to income tax for that year of assessment. If too much has already been given as relief, the self assessment can take that into account by adjusting the amount in which the taxpayer is chargeable to income tax for Year 2: section 9(1)(a). HMRC may inquire into a return under section 8 or 8A if an officer gives notice of his intention to do so (section 9A(1)) and that enquiry may extend to anything contained in the return, or required to be contained in the return, including any claim: section 9A(4). HMRC were therefore empowered under section 9A to inquire into the taxpayers carry back claims contained in their Year 2 tax returns. HMRC were not required to institute an enquiry under Schedule 1A in order to challenge the taxpayers claims. In a written intervention Cotter Solutions Ltd have argued that the interpretation of the relevant provisions of the TMA which Sales J and the Court of Appeal favoured, by contrast with the straightforward provisions of Schedule 1A, would not allow HMRC either to postpone giving effect to the claim or to recover any tax relief which was subsequently found, following enquiry, not to have been due. I do not agree for three reasons. First, in relation to a Schedule 1B claim, the obligation in paragraph 4 of Schedule 1A to give effect to the claim as soon as practicable after the claim is made applies to a claim to which effect is given in relation to Year 2 and in relation to which HMRC can institute an enquiry under section 9A. Schedules 1A and 1B operate in tandem in this context. A claim to carry back loss relief made early under Schedule 1A may need the Year 2 losses to be established before effect is given to the claim. The relevant time limit for enquiring into the claim in paragraph 5 of Schedule 1A operates from Year 2, to which the claim relates, and what is practicable in giving prompt effect to a claim must be assessed in that context. Secondly, the mechanisms in paragraph 2(6) of Schedule 1B for giving effect to a claim in Year 2 are not confined to repayment, set off and the increase in the aggregate of payments on account, none of which would alter the tax chargeable for Year 2. Paragraph 2(6) includes the words or otherwise, which open the door to an adjustment of the amount chargeable to income tax by virtue of both section 8(1AA)(a), which provides that the amounts in which a person is chargeable take into account any relief a claim for which is included in the return and section 9(1)(a) which makes similar provision for the self assessment. Where relief has already been given in error, it would in my view be open to HMRC, in completing an enquiry, to amend the return (for example, under section 28A(2) TMA) by altering the amount chargeable to income tax for Year 2 in order to recover the sums which were wrongly paid as relief. Thirdly, section 59B(5) provides for payment of income tax which is payable as a result of an amendment of a self assessment under section 28A on completion of an enquiry into a personal tax return. What HMRC did HMRC gave notice under section 12AC(1) of the opening of inquiries into the partnerships tax returns for the tax years 1998/99, 1999/2000, 2000/01 and 2001/02. By virtue of section 12AC(6)(a), the giving of notice opening an enquiry into a partnership return is deemed to include the giving of a notice of enquiry under section 9A(1) of this Act to each partner who at that time has made a return under section 8 or 8A of this Act or at any subsequent time makes such a return. There were therefore deemed inquiries into the partners personal tax returns in respect of what I have called Year 2. Following the closure of the inquiries under section 28B, the partnerships appealed under section 31 against the conclusions and amendments made by the closure notices. Their compromise of the appeals by agreements under section 54 had the same consequences as if the Special Commissioners (now the First tier Tribunal) had determined the appeal in the manner set out in the agreement: section 54(1). The agreement therefore operates as if it were a determination by the special commissioners under section 50(7). That deemed decision by the special commissioners empowered HMRC to alter the taxpayers personal tax returns because section 50(9) provides: Where any amounts contained in a partnership statement are reduced under subsection (6) above or increased under subsection (7) above, an officer of the Board shall by notice to each of the relevant partners amend the partners return under section 8 of this Act (a) or (b) the partners company tax return, so as to give effect to the reductions or increases of those amounts. HMRCs letters, to which I referred in para 8 above and which are the subject of this judicial review challenge, amended the taxpayers tax returns in this way. Section 59B(5)(b) provides for the payment by the taxpayer of sums payable as a result of the amendment of a partners tax return under section 50(9) and Schedule 3ZA paragraph 11 specifies the time limit for that payment. HMRCs amendment of the taxpayers individual tax returns and the decisions in the letters under challenge were therefore lawful and the judicial review challenge fails. Cotter Cotter was concerned with a claim made by an amendment of a tax return form relating to Year 1 which intimated a claim for a loss that would occur in Year 2. That claim had, and could have, no bearing on the amount of tax chargeable and payable by Mr Cotter in respect of Year 1: paras 16 and 17 of Cotter. At that stage it was a stand alone claim to which Schedule 1A applied. The case did not address the possibility of a section 9A enquiry into the tax return in Year 2. HMRC commenced their Schedule 1A enquiry into the claim before the end of Year 2, thereby precluding any enquiry into the claim under section 9A if it were (as it ought to have been) contained in the Year 2 tax return at a later date: Schedule 1A, paragraph 5(3)(b). By contrast, in this case the taxpayers claims were made in their tax returns for Year 2 (paras 5 and 6 above). Cotter gives no support to the taxpayers in this appeal. Conclusion I would dismiss this appeal.

UK-Abs

The appellants are two taxpayers who invested in and became limited partners of various partnerships in implementation of marketed tax avoidance schemes. The schemes were aimed at accruing substantial trading losses through investment in films. The partnerships claimed that they had suffered such losses in several tax years and claimed relief for film expenditure by taking advantage of tax incentives under section 42 of the Finance (No 2) Act 1992. In the early years of trading, a limited partner could use the provisions of sections 380 and 381 of the Income and Corporation Taxes Act 1998 (ICTA) to set off his allocated share of trading losses of a partnership against his general income for that year, or any of the previous three years of assessment. HMRC did not accept the partnerships claims for relief and initiated enquiries into their tax returns under section 12AC(1) of the Taxes Management Act 1970 (TMA). HMRC disallowed the partnerships claims for expenditure funded by non recourse or limited recourse loans to individual partners and also expenditure paid as fees to the promoters of the schemes. The partnerships appealed. Thereafter, on 22 August 2011, the partnership losses were stated at much reduced levels in a partnership settlement agreement. Between September and November 2011, HMRC wrote to the appellants to intimate that their carry back claims in their personal tax returns would be amended in line with the lower figures for the partnership losses stated in the partnership settlement agreement. The appellants raised judicial review proceedings against HMRCs decisions which were set out in the letters. They assert that HMRC was entitled to enquire into their claims only under Schedule 1A to the TMA and that, because the statutory time limit for such an enquiry had expired, the appellants claims to carry back the partnership losses in full had become unchallengeable. The Upper Tribunal rejected the appellants claim. The Court of Appeal dismissed their appeal. The appellants now appeal to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Hodge gives the lead judgment with which the other Justices agree. Section 42 TMA, unless otherwise provided, has effect in relation to a claim for relief. Section 42(2) provides that, where HMRC has given notice to a person requiring him to make and deliver a tax return, a claim for relief must be included in that tax return. In the case of a partnership, certain types of claim for relief (including the type of claim made in this case) shall be made, where section 42(2) applies, in a partnership return [14 15]. Schedule 1B to the TMA applies where (as in this case) relief is sought for a loss incurred in a later year (Year 2) by carrying it back to an earlier year (Year 1). According to paragraph 2(2) of Schedule 1B, section 42(2) is disapplied to such a claim. This disapplication means that a claim may be made under Schedule 1A notwithstanding that HMRC have required the provision of a tax return [17 20]. Enquiries into claims under Schedule 1A are subject to time limits [21]. The appellants asserted that their claims were governed only by Schedule 1A because they were stand alone and the fact that HMRC did not open an enquiry within the requisite time limit in Schedule 1A means that their claims became unchallengeable. This assertion was incorrect because of the provisions of the TMA which specify what a taxpayer must include in his return [22]. The disapplication of section 42(2) to claims falling within Schedule 1B does not mean that the taxpayer is released from the requirement to make the claim (i.e. a claim for relief involving two or more years) in his tax return in Year 2. Section 8(1) TMA imposes this requirement [20]. Section 8 sets out what a person must produce when given a notice to make and deliver a tax return. Under section 8(1)(a), the person is required to provide information needed for the purpose of establishing the amount to which that person is chargeable to income tax. This will include the persons share of partnership income or losses for the period which falls within the year of assessment [23]. A person must therefore include in the return for Year 2 his share of the losses of a partnership, of which he was a partner, which have been stated in a relevant statement relating to Year 2 [24]. If a taxpayer wished to claim to offset all of his share of partnership losses in Year 2 against his other income in Year 2 by invoking section 380(1)(a) of ICTA, he would have to include that claim in his return for Year 2 [27]. If a taxpayer wished to carry back part of the losses incurred in Year 2 to set off against his liability to income tax in respect of Year 1 by invoking section 380(1)(b) of ICTA, he would also have to make the claim in his return for Year 2. The information required as part of a taxpayers return for Year 2 will include both the relief which is claimed in the return and that which he has already received (for instance, any relief already received under Schedule 1A) as that information is necessary for the purpose of establishing the amounts in which the taxpayer is chargeable to income tax for that year of assessment (section 8(1)) [28 29]. HMRC is empowered to enquire into anything contained in the return, or required to be contained in the return, and was therefore empowered (under section 9A TMA) to enquire into the appellants carry back claims contained in their Year 2 tax returns. HMRC were not required to institute an enquiry under Schedule 1A in order to challenge the appellants claims [30]. HMRC by opening an enquiry into the partnership tax returns were deemed to have opened an enquiry into the partners personal tax returns in respect of Year 2 [32]. The partnerships appealed against the conclusions and amendments made by the closure notices following completion of HMRCs enquiries. The partnership settlement agreement made on 22 August 2011 had the same consequences as if the Special Commissioners (now the First Tier Tribunal) had determined the appeal in the manner set out in the agreement [33]. This deemed decision empowered HMRC to amend the appellants personal tax returns (section 50(9) TMA). Section 59B(5)(b) TMA provides for the payment by the taxpayer of sums payable as a result of such an amendment. Therefore, the amendment of the appellants returns (by letters dated September to November 2011) was lawful and the judicial review challenge fails [35 36]. The decision of the Supreme Court in Cotter v Commissioners for Her Majesty's Revenue & Customs [2013] UKSC 69 gives no support to the appellants in this appeal [37].

The interface between health and social care is a difficult and controversial policy area. In general, health care is provided or arranged by the National Health Service, and is free for all patients irrespective of means, while social care is provided or arranged by local authorities with means tested contributions from those clients who are deemed able to pay for some or all of it themselves. This case is not about the rights or wrongs of that general policy. This case is about who is legally responsible for paying for the work done by registered nurses in social rather than health care settings. Is the National Health Service responsible for all the work they do or are the social care funders responsible for at least some of it? The issue happens to arise in relation to Wales, where the legislation has since changed, as has the legislation in England, but very similar issues arise under the legislation now in force. The issue is the correct interpretation and application of section 49 of the Health and Social Care Act 2001, which is headed Exclusion of nursing care from community care services: (1) Nothing in the enactments relating to the provision of community care services shall authorise or require a local authority, in or in connection with the provision of any such services, to (a) provide for any person, or (b) arrange for any person to be provided with, nursing care by a registered nurse. (2) In this section nursing care by a registered nurse means any services provided by a registered nurse and involving (a) the provision of care, or the planning, supervision or delegation of the (b) provision of care, other than any services which, having regard to their nature and the circumstances in which they are provided, do not need to be provided by a registered nurse. (emphasis supplied) The social care funders contend that this means that the NHS, in the shape of the Local Health Boards, is required to fund the full cost of a registered nurses presence in a care home. This is in the context of regulation 18(3) of the Care Homes (Wales) Regulations 2002 (SI 2002/324), which requires that: Where the care home (a) provides nursing to service users; and (b) provides, whether or not in connection with nursing, medicines or medical treatment to service users, the registered person shall ensure that at all times a suitably qualified registered nurse is working at the care home. (emphasis supplied) The Local Health Boards, on the other hand, contend that the nurses time can be divided into a series of discrete tasks or functions, some of which do not need to be provided by a registered nurse, so that they are responsible for only a proportion of her time working in the home. How the dispute arose In practice, Local Health Boards pay for nurses time in social care homes by a weekly flat rate payment for each care home resident who qualifies for some nursing care. Between September and November 2013, every Local Health Board in Wales decided to set the rate at 128.61 per resident per week. This was an increase on what they had previously been paying. Their decisions took account of a report by healthcare consultants Laing & Buisson. Laing & Buisson conducted a survey which asked nurses to record and categorise the time they spent during a particular shift into: (a) direct nursing care time, (b) indirect nursing care time (eg management of medicines, overall care planning, and hygiene standards), (c) non nursing care time (eg social care including dressing and washing), and (d) other time (including stand by time, paid breaks and time spent receiving supervision). They commented that splitting nurses time and costs in such detail was always likely to prove challenging. If social care were excluded, homes might be inclined to minimise nurses participation in providing holistic and integrated nursing and social care support for residents. Would it not be a lot simpler, they asked, just for the NHS to pay for the full direct salary cost of registered nurses, rather than argue about the split between nursing and non nursing care? (NHS Wales Funded Nursing Care Review 2013, Laing & Buisson FNC Survey Report, pp 23, 26). The Health Boards decided that time in categories (c) and (d) did not fall within the definition of nursing care by a registered nurse in section 49(2) and therefore they would not fund it. This resulted in a weekly payment which was 27.33 lower than it would have been had that time been included. It has been estimated that the overall cost to the Health Boards in Wales if it were included would be between 7 and 13m a year. The decisions of the seven Local Health Boards, covering the whole of Wales, to set the flat rate at 128.61 (subsequently increased in accordance with an inflationary uplift mechanism which is not now disputed) were originally challenged by 11 owners and operators of care homes in Wales. All the local authorities in Wales were joined as interested parties. They (with the exception of the County Council of the City and County of Cardiff, which has taken no part in these proceedings) have effectively taken over the conduct of the case from the care home owners. The Welsh Ministers were also joined as interested parties but have taken no part in this appeal. The Secretary of State for Health, who is responsible for the NHS in England, has intervened in the appeal in support of the Local Health Boards. The care homes challenge, on the ground that too restrictive an interpretation of nursing care by a registered nurse had been adopted, succeeded before Hickinbottom J: [2015] EWHC 601 (Admin); [2015] PTSR 945. He rejected the Health Boards argument that it covered care which could only be provided by a registered nurse and accepted the challengers argument that it covered all the services in fact provided by a registered nurse. Hence he quashed the Health Boards decision. On appeal, the Health Boards conceded, as they had done below, that they had been wrong to exclude the nurses stand by time (part of (d) in para 6 above) from their calculations. Subject to that, the Court of Appeal, by a majority, allowed their appeal: [2016] EWCA Civ 26; [2016] PTSR 908. Laws LJ gave the leading judgment. He held that the Judges construction gave insufficient weight to the excepting words at the end of section 49(2). These clearly distinguished between different services provided by a nurse at a care home. It did not follow from the fact that a nurse needed to be on call at all times that everything she did while on duty was a service which needed to be provided by a registered nurse. Whether what she did fell within the definition was a factual rather than a legal question. Elias LJ agreed that section 49(2) envisaged that there would be some services provided by a registered nurse which would not fall within the concept of nursing care by a registered nurse. But it followed from the requirement to have a nurse or nurses in attendance at all times that the Health Boards had to pay for all the arrangements necessary to secure this, so not only stand by time, but also meal breaks, supervision and administrative tasks associated with it. But if the costs were increased because she also provided social care that was not a service for which the Health Boards should pay. Lloyd Jones LJ agreed with Laws LJ. Distinguishing between the services provided by the nurse inevitably involved what had been referred to as a task based approach apportioning her time according to how she spent it. He also agreed that it did not follow from the fact that a nurse had to be there at all times that everything she did while there was the responsibility of the Health Boards. The approach adopted by Elias LJ was inconsistent with the agreed requirement to distinguish between different categories of services. The local authorities now appeal to this Court. The statutory context The powers and duties of local authorities in relation to what is now called social care were contained in a series of enactments which have now been replaced, in Wales, by the Social Services and Well being (Wales) Act 2014 and, in England, by the Care Act 2014. At the relevant time, section 47 of the National Health Service and Community Care Act 1990 required a local authority, where it appeared that a person for whom they were responsible might be in need of community care services, to carry out an assessment of his need for those services and decide whether his needs called for them to provide such services. Community care services were defined in section 46 of the 1990 Act as services which a local authority might provide or arrange under a number of enactments, including Part III of the National Assistance Act 1948. Part III of the 1948 Act included section 21(1)(a), under which local authorities could provide or arrange residential accommodation for adults who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them, in other words care homes. This was a duty owed to people ordinarily resident in their area and other persons in urgent need (Local Authority Circular LAC (93)10). By section 21(5), accommodation included board and other services, amenities and requisites provided in connection with the accommodation. However, section 21(8) provided that: Nothing in this section shall authorise or require a local authority to make any provision authorised or required to be made (whether by that or by any other authority) by or under any enactment not contained in this Part of this Act or authorised or required to be provided under the National Health Service Act 2006 or the National Health Service (Wales) Act 2006. By section 3(1) of the National Health Service (Wales) 2006 Act (which is in substantially the same terms as its predecessors in the National Health Service Acts of 1946 and 1977): The Welsh Ministers must provide throughout Wales, to such extent as they consider necessary to meet all reasonable requirements (a) hospital accommodation, (b) other accommodation for the purpose of any service provided under this Act, (c) medical, dental, ophthalmic, nursing and ambulance services, such other services or facilities for the prevention (e) of illness, the care of persons suffering from illness and the after care of persons who have suffered from illness as they consider are appropriate as part of the health service, such other services or facilities as are required for (f) the diagnosis and treatment of illness. Under section 12, the Welsh Ministers may direct the Local Health Boards established under section 11 to exercise these functions. The effect of the directions current at the relevant time (the National Health Service (Nursing Care in Residential Accommodation) (Wales) Directions 2004) was that Local Health Boards were obliged to provide nursing care for those who required it, including those accommodated in care homes by local authorities. In practice, there are three categories of resident in care homes: (1) A resident who has a primary need for health care. Local Health Boards fund the whole of her care, both nursing and non nursing, and her accommodation. This is known as Continuing Health Care. (2) A resident who requires some health care but for whom this is not a primary need. Local Health Boards fund the nursing care which she needs, known as Funded Nursing Care, while the resident herself, or the local authority, or both, fund the rest of her care and accommodation. (3) A resident who requires no nursing care. The whole of her care and accommodation will be funded by the resident, or by the local authority, or by both. This case is concerned with the funding of nursing care for residents in category (2). The extent to which a local authority is neither allowed nor required to fund such care is governed by section 49 of the 2001 Act (subsequently replaced by section 47 of the 2014 Act, section 47(10) of which defines nursing care by a registered nurse in almost identical terms to section 49(2)). The case has been argued throughout on the basis that, if a local authority is not permitted to fund such care, then the Local Health Boards are required, under section 3(1) of the 2006 Act, to do so: there will be no funding gap. Part of the background to the enactment of section 49 is the decision of the Court of Appeal in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213 (upholding the decision of the first instance Judge). The claimant was severely disabled as a result of a road traffic accident. She and others were placed in an NHS home for long term disabled people and assured that this would be their home for life. Then the health authority decided that they were in need of only general rather than specialist nursing services and that these should be purchased by the local authority rather than provided by the NHS. So the health authority decided to close the home and transfer their long term care to the local authority. The case is generally known for holding that to close the home would be an unjustified breach of the legitimate expectations engendered by the health authoritys promise and thus an abuse of power. But it is also important for its discussion of when nursing care could, and could not, be provided by local authorities in residential accommodation which they provided or arranged under section 21 of the 1948 Act. On the one hand, section 21(5) included in the provision of accommodation board and other services, amenities and requisites provided in connection with the accommodation. This could obviously include nursing care for those residents who needed it. On the other hand, section 21(8) excluded anything authorised or required to be provided under the National Health Service Act 1977. The court held that this was limited to those health services which, in fact, have been authorised or required to be provided under the 1977 Act. It did not include services which the Secretary of State [had] legitimately decided under section 3(1) of the 1977 Act it was not necessary for the NHS to provide (per Lord Woolf MR, at para 29). There was no precise dividing line between those nursing services which are and those which are not capable of being treated as included in the package of care provided by the local authority (para 30(d)). But it could not be based solely on whether the nursing care was general or specialist. The distinction was one of degree which would depend upon the facts of the individual case: However, as a very general indication as to where the line is to be drawn, it can be said that if the nursing services are (i) merely incidental or ancillary to the provision of the accommodation which a local authority is under a duty to provide and (ii) of a nature which it can be expected that an authority whose primary responsibility is to provide social services can be expected to provide, then they can be provided under section 21. (para 30(e)) The court acknowledged Mr Gordons submission, on behalf of the claimant, that this was unfair: if a person received comparable nursing services in a hospital or at home, they would be free of charge. But that unfairness was part of the statutory scheme (para 30(c)). However, the NHS eligibility criteria could not place responsibility on a local authority which went beyond what section 21 permitted. These patients health care needs went far beyond that. Hence the closure decision was unlawful. But the matter did not rest there. The other part of the background to section 49 of the 2001 Act is the Report of the Royal Commission on Long Term Care (chaired by Sir Stewart Sutherland), With Respect to Old Age: Long Term Care Rights and Responsibilities (Cm 4192 I), published in March 1999 between the first instance and Court of Appeal judgments in the Coughlan case. This made two main recommendations. The first was that all nursing care, wherever it was delivered, should be free and funded by the NHS (recommendation 6.3 (para 6.26)). The current situation was not justified or defensible. By nursing care was meant care which involves the knowledge or skills of a qualified nurse (para 6.22). The second was that all personal care should also be free of charge and funded from general taxation (recommendation 6.4 (para 6.37)). By personal care was meant care which involves touching a persons body. It falls within the internationally recognised definition of nursing but may be delivered by many people who are not nurses (para 6.43). A long list of such tasks was provided (para 6.44). There was a Note of Dissent by Joel Joffe and David Lipsey. They agreed that the position on nursing care was a glaring anomaly and that it should be free and funded by the NHS wherever it was provided. But they defined it strictly as that care which requires the specific knowledge and skills which only a registered nurse can provide and then gave examples (para 65). Further, the dissenters could not go along with the central recommendation of the majority that personal care should be provided free of charge (para 1). This would cost a great deal of money while doing nothing to increase the funds actually devoted to personal care or to improve the quality of services provided. The Government published its response in July 2000, The NHS Plan: The Governments response to the Royal Commission on Long Term Care (Cm 4818 II). This rejected the recommendation on personal care, believing it not to be the best use of resources. But it accepted the recommendation on nursing care (para 2.5). This would require primary legislation, which would be introduced as soon as possible, with a view to introducing free NHS nursing care in all nursing homes by October 2001 (para 2.8). Crucially: 2.9 In the future, the NHS will meet the costs of registered nurse time spent on providing, delegating or supervising care in any setting. This is a wider definition of nursing care than proposed in the Note of Dissent to the Royal Commission report, which suggested it should include those tasks that only a registered nurse could undertake. 2.10 Therefore people identified as needing nursing home care will no longer have to meet any of the costs for the registered nurses involved in their care, or for the specialist equipment used by those nurses. Instead the NHS will meet these costs. (emphasis supplied). Section 49 was enacted as a result. The Explanatory Notes to the 2001 Act confirm this: 240. Section 49 removes local authorities functions to purchase nursing care by a registered nurse. 241. Subsection (1) removes the right of a local authority to provide or arrange nursing care by a registered nurse. It is intended that the NHS in pursuance of its powers and duties under the 1977 Act will provide or arrange nursing care by a registered nurse and such care will (in accordance with the 1977 Act) be free of charge. 242. Subsection (2) defines nursing care by a registered nurse as services provided by a registered nurse and involving either the provision of care or the planning, supervision or delegation of the provision of care, other than services which do not need to be provided by a registered nurse. In deciding whether services need to be provided by a registered nurse, it is necessary to have regard to the nature of those services and the circumstances in which they are provided. We have been referred to various ministerial statements made during the Parliamentary debates on the 2001 Bill, but I do not regard those statements as sufficiently clear and unequivocal to meet the stringent tests of admissibility laid down in Pepper v Hart [1993] AC 593 and R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349. It is one thing for the Minister to say that a nurse is not defined by the tasks that he or she performs (Hansard, Standing Committee E, 6 February 2001, col 442); it is quite another thing to say that there is no limit to the work done by a registered nurse in a care home for which the NHS must pay. We are, however, entitled to take into account the preceding reports and explanatory notes to identify the mischief at which the legislation was aimed and the proposed solution to it. The issue and the arguments There is no doubt that the mischief at which section 49 was aimed was the glaring anomaly that nursing care was either provided free by the NHS or bought in by the local authority or residents depending on where it was provided. It was clearly intended to shift the boundary established by the Coughlan decision further in the direction of NHS funding. But the question remains whether nursing care by a registered nurse covers everything that is done by a registered nurse in a care home, as it would in a hospital or other health service setting or (probably) in the patients own home, as the appellant local authorities contend, or whether it covers only some of what she does, as the Health Boards contend. This turns on the meaning and purpose of the concluding words in section 49(2): other than any services which, having regard to their nature and the circumstances in which they are provided, do not need to be provided by a registered nurse. Had those words not been there, there is no doubt that the local authorities interpretation would be correct and the NHS would have to pay for all the time spent by a registered nurse in a care home providing, planning, supervising or delegating care of any sort, at least for those residents whose needs were the reason for her presence. So the question is: why are those words there and what do they mean? There are no other decided cases which have discussed this question, perhaps surprisingly, given how important it is, not only to the Health Boards and local authorities in Wales, but also to thousands of care home residents who fund or contribute to the funding of their own care, as well as to those in England where the legislation is in similar terms. Section 49 is referred to in two cases, R (Grogan) v Bexley NHS Care Trust [2006] EWHC 44 (Admin); [2006] LGR 491) and R (St Helens Borough Council v Manchester Primary Care Trust [2008] EWCA Civ 931; [2009] PTSR 105, but in both cases the issue was the criteria for deciding whether an individual qualified for continuing NHS care (category (1) residents in para 17 earlier), with the consequence that the NHS was responsible for all their care costs, or whether they fell within the scheme under discussion here, in which case those costs might be shared. There was no detailed discussion of how those costs are to be shared, which is the issue in this case. Much of the oral argument in this court focussed upon the consequences of the requirement in regulation 18(3) of the Care Homes (Wales) Regulations 2002, that if a home (a) provides nursing to service users; and (b) provides whether or not in connection with nursing, medicines or medical treatment to service users a suitably qualified registered nurse must be working there at all times. This means that in such homes there must always be a registered nurse on duty, even if she is doing nothing. This would in practice be the case even without regulation 18(3), because, as was the evidence at first instance, if a home has residents who need nursing care they [will] need to be cared for in an environment where a registered nurse is available on a 24 hour basis. This will usually be because of the complexity, intensity or unpredictability of their needs (First Witness Statement of Victoria Warner, para 8). The Local Health Boards therefore accepted before the judge that time spent on stand by should have been included in the time for which they should pay. Mr Gordon, for the local authorities, argues that this means that they should pay for all the time that the nurse is there. She has to be there all the time and therefore all the services which she is providing while she is there need to be provided by her. Thus, the argument goes, even if the Health Boards are in principle correct to divide up the nurses time according to what she is doing, in practice whatever she is doing needs to be done by her because she has to be there. This approach, it is argued, does not ignore the closing words of section 49(2) for two reasons. First, the NHS does not have to pay for roles which happen to be done by a registered nurse but could just as well be done by someone else. In many homes, for example, the manager is a registered nurse, but the managers role does not need to be performed by a registered nurse. This argument does accept that nursing care by a registered nurse is defined by the sort of work the nurse is doing rather than by her formal qualifications. But defining her role is different from parcelling up her time in the manner put forward by the Health Boards. Against this, the Health Boards argue that the NHS is already protected by section 49 from having to pay for registered nurses doing something other than providing, arranging or supervising care. But it cannot have been intended that it should have to pay the full costs of employing a manager if she is also fulfilling the on call requirement. The second reason for suggesting that the local authorities approach does not ignore the closing words is that the NHS does not have to pay for over staffing. If the home only needs there to be one nurse on duty at all times, then the services provided by other nurses do not need to be provided by a registered nurse. Against this, the Health Boards argue that even if there are more nurses than required, the NHS still has to pay for that part of their work which does need to be done by a registered nurse. Overall, the Health Boards and the Secretary of State argue that the Governments policy decision was that personal care should be provided or arranged by local authorities and subject to means tested charges. It would be contrary to that policy to oblige the NHS to pay the costs of personal care which happened to be provided by a registered nurse and absurd to make it pay the cost of a registered nurse on stand by fulfilling some completely different role. Their interpretation encourages efficiency: homes should arrange their business so that nurses spend as much time as possible on nursing care, but when they are not, their time should be used productively on personal care rather than standing idle. Dividing up the nurses time between nursing and non nursing tasks is the only way to make sense of section 49 as a whole, including the closing words. Discussion The parties in this appeal have adopted diametrically opposed positions. The Health Boards and Secretary of State argue that the consistent view of the case law has been to respect the decisions of the NHS as to what services are necessary to meet all reasonable requirements, under section 3(1) of the 2006 Act, subject only to challenge on the usual judicial review grounds. Thus, it is said, there is nothing unusual in the NHS defining the limits of its responsibilities for itself. The proper construction of section 49(2) depends upon what the NHS decides is reasonably required. Against this, it is true that the courts have normally respected those decisions, subject only to challenges on conventional judicial review grounds; but in this case the NHS is arguing that it should be free to define the extent of the responsibilities of others, the local authorities or residents, by deciding for itself what is and what is not a nursing task, because all are agreed that there should be no funding gap between what is funded by the NHS and what is funded by local authorities with means tested contributions from the clients. The limits of the local authorities responsibilities are defined by Parliament in section 49. If Parliament had wanted to leave the division of responsibility in the hands of the NHS, it could and would have left the Coughlan decision undisturbed. On the other hand, the local authorities primary argument before this Court was that the court should focus on the application rather than the interpretation of section 49. If it is accepted that the NHS must fund the presence of a nurse who is there to fulfil the legal or practical requirement that a nurse must be on duty at all times, then it follows that the NHS must fund everything that that nurse does while on call in this way. This cannot be correct. The task of this court is to interpret the meaning of the words used by Parliament to impose a restriction on what local authorities may provide or arrange and thus indirectly to impose an obligation on the NHS to fund what the local authorities cannot provide or arrange. Interpretation must come before application. Once interpreted, it is for those on the ground to put that interpretation into practice. Before turning to that task, it is worth bearing in mind that the current practice does not in fact reflect the logic of the Health Boards interpretation. Their task based approach would logically require an individualised assessment of what is in fact done by each registered nurse working in a care home and dividing it into nursing and non nursing tasks. Instead, the Health Boards have relied on a survey to produce an average result and thus a flat rate contribution across the board. Furthermore, it appears that this is only done in relation to nurses time in care homes. Section 49 applies to all kinds of community care services, including services in the clients own homes, but we have no evidence of a similar apportionment being made in relation to home nursing services. Nor, of course, does it take place in hospital, where nurses may well spend time doing other tasks than those which the NHS argues are covered by section 49. The courts below accepted that this was the only practical solution to the problem but it is not necessarily logical. I start from the proposition that, in passing the 2001 Act, Parliament did not intend to leave the division of responsibility in the hands of the NHS. It clearly intended to provide a test, but a different test from that in section 21(8) of the 1948 Act (para 15 above). It must also have intended to depart from the position established in Coughlan, which depended upon the test in section 21(8). In construing the test in section 49(2), I bear in mind that, if Parliament had wanted to restrict the definition of nursing care by a registered nurse to tasks which can only be performed by a registered nurse, it both could and would have said so. It did not. The Governments response to the Royal Commission report clearly envisaged a wider test than that put forward by the dissenters to that report. On the other hand, if Parliament had wanted to prohibit local authorities from paying for anything done by a registered nurse in a care home, it both could and would have said so. It did not. It began with the broad concept of any services provided by a registered nurse but then limited those services in two ways. First, they must be services involving the provision, planning, supervision or delegation of care. So they are limited to services which have to do with the care of residents, that is, with looking after them. However, they are not limited to nursing services or nursing care. They could involve any form of care, nursing, personal or social. Secondly, however, services which having regard to their nature and the circumstances in which they are provided, do not need to be provided by a registered nurse are excluded. This clearly envisages that there will be circumstances in which some personal or non nursing care will need to be provided by a registered nurse. Care which is associated with or ancillary to the nursing care which she is providing obviously needs to be provided by her. When a registered nurse is engaged in providing nursing care, it makes no sense to say that she does not need to do the other things that the resident needs to have done while she is providing the nursing care. For example, there may be a reason why a nurse needs to take a patient to the lavatory. The tasks associated with taking a resident to the lavatory cannot be parcelled up between two carers in this way. Whoever is doing them needs to do them all. That applies to all sorts of caring tasks which a nurse needs to do for some reason and which cannot sensibly be parcelled up between nursing and non nursing tasks. One service which a nurse undoubtedly has to do is to provide, as the Laing and Buisson report puts it, an overall, holistic, person centred plan for each resident who needs some nursing care (p 6). In the course of doing this, she may very well have to engage in social and personal care tasks in order to understand the overall needs of the resident and provide an appropriate care plan to meet them. We are, by definition, looking at the funding of the care of residents who, although health care is not a primary need do have a need for some nursing care. That has to be provided by a registered nurse. Other kinds of care which are ancillary to or associated with the nursing care which these residents need does also have to be provided by a registered nurse. Any other approach is contrary to the holistic view which is now taken of looking after the whole person. It is a matter of fact what part of the care provided by registered nurses to residents who have a need for some nursing will fall within this definition; it may or may not be a substantial part of their care; but that is a matter for the decision makers and not for us. I would also accept the view that time spent on paid breaks falls within the definition of nursing care by a registered nurse. Part of providing their caring services is taking the breaks necessary to be able to provide those services properly. The same applies to time spent receiving supervision, which is also a necessary part of providing the caring services they are there to provide. This construction is close, but not identical, to the third argument put forward in the local authorities case. Their first and second arguments, as we have seen, were that the NHS should pay for everything done by a registered nurse whose presence was required in a care home and her time should not be atomised into different tasks. Their third argument was that time spent providing personal or social care, on paid breaks, or receiving supervision, should be included. The respondents argue that they should not be allowed to advance it. However, having rejected both parties primary arguments, it is our task to try to discern the true meaning of the legislation. As the legislation quite clearly envisages that there will be some circumstances in which care does need to be provided by a registered nurse, even though it is not care which only a registered nurse can provide, in my view it is our duty to say so. In my view, therefore, nursing care by a registered nurse covers (a) time spent on nursing care, in the sense of care which can only be provided by a registered nurse, including both direct and indirect nursing time as defined by the Laing and Buisson study; (b) paid breaks; (c) time receiving supervision; (d) stand by time; and (e) time spent on providing, planning, supervising or delegating the provision of other types of care which in all the circumstances ought to be provided by a registered nurse because they are ancillary to or closely connected with or part and parcel of the nursing care which she has to provide. In other words, the concentration in this case on the division between nursing and personal care has been a distraction. There is some personal care which, in all the circumstances, does need to be performed by a registered nurse, but there is some which does not. I agree with Laws LJ that this is a question of fact, although the only practical solution is to make a rough and ready calculation based on the generality of what takes place. Hence I also agree with Laws LJ and Lloyd Jones LJ that some differentiation between the care services provided is required. But I would draw the dividing line in a different place from them. It seems to me plain that Parliament envisaged that some care services would be included beyond those which could only be provided by a registered nurse: hence the addition of category (e) above to the list. Decision It follows from this, and from the earlier concession that stand by time should have been included, that the Health Boards decisions were based on a misinterpretation of section 49(2) and must be quashed and re taken in the light of the guidance given in para 44 of this judgment. Ideally, this should be a matter for negotiation between all the parties who are governed by the legislation and have an interest in the outcome.

UK-Abs

The issue in this appeal is whether the National Health Service or local authorities (with means tested contributions from clients) are responsible for paying for the work done by registered nurses in social rather than health care settings. Section 49 of the Health and Social Care Act 2001 provides that a local authority is not required to fund nursing care by a registered nurse, defined in subsection (2) as services involving (a) the provision of care, or (b) the planning, supervision or delegation of the provision of care, other than any services which having regard to their nature and the circumstances in which they are provided, do not need to be provided by a registered nurse. The owner of a care home providing nursing services to residents is obliged by regulation to ensure that a registered nurse is working at the care home at all times. This appeal concerns the funding of nursing care for residents who require some nursing care but for whom healthcare is not a primary need. Local Health Boards in Wales (the Boards) decided to pay a flat weekly rate, following a survey which asked nurses to record and categorise the time they spent of different tasks: direct and indirect nursing care time, non nursing care time and other time (which included stand by time, paid breaks and time receiving supervision). The weekly rate excluded payment for time in the last two categories on the basis that these services fell within the exception in s 49(2). The decision of the Boards to interpret s 49(2) in this way was challenged by eleven owners and operators of care homes in Wales, and all (save one) of the Welsh local authorities were joined as interested parties. The High Court quashed the decision, holding that the Boards should fund all the services in fact provided by a registered nurse. The Boards conceded that they should have covered nurses stand by time but appealed the finding in respect of services which need not have been performed by a registered nurse. The Court of Appeal by a majority allowed the Boards appeal. The local authorities appealed to the Supreme Court. The Supreme Court unanimously allows the local authorities appeal. It holds that the Boards have misinterpreted s 49(2) and that their decision must be quashed and re taken in the light of the guidance given in the judgment. Lady Hale gives the only substantive judgment. The background to the introduction of section 49 was the anomaly that nursing care was either provided free by the NHS or bought in by the local authority or residents depending on where it was provided. It was intended to shift the boundary further in the direction of NHS funding, but the words at the end of s 49(2) could not be ignored [26]. If Parliament had wanted to restrict the definition of nursing care by a registered nurse to tasks which could only be performed by a registered nurse then it could and would have said so [36]. Equally, if it had wanted to prohibit local authorities from paying for anything done by a registered nurse in a care home, it also could and would have said this [37]. Instead s 49 began with the broad concept of any services provided by a registered nurse and then limited those services in two ways. The first was to services which involve the care of residents ie looking after them, including personal and social care. The second was to exclude services which having regard to their nature and the circumstances in which they are provided do not need to be provided by a registered nurse. This latter category envisages that there will also be circumstances in which some personal or non nursing care will need to be provided by a registered nurse, care which is associated with or ancillary to the nursing care she is providing [38]. The provision of an overall, holistic, person centred plan for each resident who needs some nursing care requires the nurse to engage in social and personal tasks as part of that care. Some caring tasks cannot sensibly be parcelled up between nursing and non nursing care. It is a matter of fact, and one for the decision makers, what part of the care provided by registered nurses will fall within this definition [39 41]. Time spent on paid breaks and on receiving supervision is, however, a necessary part of providing the services registered nurses are there to provide [42]. Accordingly, the correct interpretation of s 49 is that nursing care by a registered nurse covers (a) time spent directly or indirectly on nursing care, in the sense of care which can only be provided by a registered nurse; (b) paid breaks; (c) time receiving supervision; (d) stand by time; and (e) time spent on providing, planning, supervising or delegating the provision of other types of care which in all the circumstances ought to be provided by a registered nurse because they are ancillary to or closely connected with or part and parcel of the nursing care which she has to provide [44]. The Boards decision was therefore based on a misinterpretation of s 49(2) and must be quashed and retaken in the light of this guidance, ideally after negotiation with all the parties governed by the legislation and with an interest in the outcome [46].

We lead womens lives: we have no choice. Thus has the Chief Justice of Canada, the Rt Hon Beverley McLachlin, summed up the basic truth that women and men do indeed lead different lives. How much of this is down to unquestionable biological differences, how much to social conditioning, and how much to other peoples views of what it means to be a woman or a man, is all debateable and the accepted wisdom is perpetually changing. But what does not change is the importance, even the centrality, of gender in any individuals sense of self. Over the centuries many people, but particularly women, have bitterly resented and fought against the roles which society has assigned to their gender. Genuine equality between the sexes is still a work in progress. But that does not mean that such women or men have not felt entirely confident that they are indeed a woman or a man. Gender dysphoria is something completely different the overwhelming sense that one has been born into the wrong body, with the wrong anatomy and the wrong physiology. Those of us who, whatever our occasional frustrations with the expectations of society or our own biology, are nevertheless quite secure in the gender identities with which we were born, can scarcely begin to understand how it must be to grow up in the wrong body and then to go through the long and complex process of adapting that body to match the real self. But it does not take much imagination to understand that this is a deeply personal and private matter; that a person who has undergone gender reassignment will need the whole world to recognise and relate to her or to him in the reassigned gender; and will want to keep to an absolute minimum any unwanted disclosure of the history. This is not only because other people can be insensitive and even cruel; the evidence is that transphobic incidents are increasing and that transgender people experience high levels of anxiety about this. It is also because of their deep need to live successfully and peacefully in their reassigned gender, something which non transgender people can take for granted. This case is about how the Department for Work and Pensions (the DWP), in administering our complex welfare benefits system, treats people with a reassigned gender, and specifically whether certain policies conflict (1) with the Gender Recognition Act 2004; (2) with the Human Rights Act 1998; or (3) with the Equality Act 2010. Those policies have undergone change in the course of these proceedings, as have the arguments presented, and so the issues before this Court are in some respects different from the issues before the High Court and the Court of Appeal. The facts The appellant has undergone gender reassignment from male to female. Her transition began in 2003 and she changed her name in 2004. She has undergone full gender reassignment treatment and surgery, which in her case included facial feminisation surgery, in her words because it was incredibly important to her easily to pass as a woman. Her gender recognition certificate (GRC) was one of the first to be issued under the Gender Recognition Act 2004. The Gender Recognition Panel notified both the Inland Revenue (now HMRC) and the DWP of the change. She was employed in a variety of roles, some managerial, until she became unemployed in June 2010. Since then, apart from a period of employment in 2015 2016, she has been in receipt of Jobseekers Allowance (JSA), a benefit which is administered by the DWP through Jobcentre Plus (JCP) offices. As a condition of receiving JSA, she has to attend a JCP office in person every two weeks. Her principal concern in these proceedings is with the way in which her history is recorded by the DWP and the effect that this can have on her interactions with its officials. She has had a number of distressing experiences which indicate that DWP policies do not effectively protect the privacy of her status but rather tend to draw attention to it. The DWP policies and practice The DWP uses a centralised database, the Customer Information System (CIS), to record information relating to each of its customers and everyone else who has a National Insurance number. The CIS interfaces or links to a number of other computer systems, including over 40 systems within government and quasi government departments, local authorities and HMRC, as well as to benefit specific computer systems, including the Jobseekers Allowance Payments system (JSAPS) which is used to administer JSA. About 140,000 persons are authorised to access the CIS. The information recorded on the CIS about a customer includes his or her current sex, the fact that he or she was previously recorded as having a different sex (if applicable), his or her current name and title, and his or her former names and titles (if applicable), the fact that a person has a GRC, its date of issue and date of notification to DWP, and (where this is the case) the reason for a change of recorded sex being gender reassignment. These data, including the data recording a change of gender, are held for the life of the individual concerned and for 50 years and one day thereafter. This has been referred to as the Retention policy in these proceedings. When these proceedings were begun, as long ago as 2012, the fact of a GRC and the reason for a change of sex being gender reassignment were noted in such a way as to be visible to front line users of the CIS, such as staff at the JCP offices. This has been referred to as the GRC Noting policy in these proceedings. As a result of these proceedings and changes to the DWPs IT supplier arrangements, those matters are no longer visible to front line staff and so the GRC Noting policy is no longer under challenge. However, any previous name, title or gender is visible and in the great majority of cases the reason for a change of name, title and gender will be gender reassignment. Hence, without an extra layer of protection, front line staff could readily infer that gender reassignment had taken place. That extra layer of protection is achieved through the DWPs Special Customer Records Policy (referred to in these proceedings as the SCR policy). This sets out special procedures for dealing with the records of certain categories of customer who require extra protection, for example because unauthorised disclosure of their records could result in substantial distress or physical harm. The categories of customer to which the policy may be applied include, for example, victims of domestic or honour based violence and people with witness protection orders. But it is not applied automatically to all such people, as we are told that the great majority of those to whom the policy is applied are transgender. It is, however, applied automatically to all those recorded on the CIS as having a GRC, unless and until the customer asks for it to be disapplied. The protection is therefore optional, but without it a persons gender history would be readily discernible by staff who needed to access the CIS. Under the SCR policy, an individuals CIS record receives a protected marking, ranging (at the material time) from private, restricted, confidential, secret to top secret. Transgender records were marked restricted. Persons wishing to access them must be specifically authorised and must have a legitimate business reason for doing so; access is limited to a specific purpose or purposes; and it is time limited for a period not exceeding four hours. Access to an individuals CIS record is not required for the routine issue of benefit payments, including JSA. However, an adviser will need to access the CIS in order to make routine changes to relevant information, such as a change of address or contact details. For an SCR customer, this will require the same authorisation process as described in para 12 below. Authorisations are monitored, so that inappropriate or unauthorised access can be discovered, and this may result in disciplinary action. Typically, the administration of claims for JSA requires a JCP adviser to access two systems, the JSAPS and the Labour Market System (LMS). These are both affected by the SCR policy. The LMS records information about the steps taken by the customer to obtain employment. But it does not do so for customers who are subject to the SCR Policy. Instead, their efforts to find work are recorded manually on paper. When the customers LMS record is accessed, a warning of additional protection facility from unauthorised viewing will pop up directing the adviser to the paper record, which will only be accessed once authorisation is given. The JSAPS records information which enables an adviser to assess entitlement to JSA and authorise payment. When an adviser accesses JSAPS to authorise payment to a customer subject to the SCR policy, an error message pops up warning Sensitive account You are not authorised to view it. Access is then gained through the authorisation process: this involves applying to the DWPs specialist IT team for temporary access to Special Customer Records. Access is usually available within an hour but it can take considerably longer. The adviser is warned again that the account is sensitive and no one else should view it. On access, the front screen does not display previous names, titles or gender or the issue of a GRC and normally there would be no need to search for historical claim data. If there is such a need, the historical gender identity data will only be available where a claim was made for JSA under a previous name, title or gender and this claim is still live. It will not be displayed where the claim was made after the change of gender (as in the case of this appellant). It follows that any JCP adviser processing a JSA claim is bound to learn that the customer is subject to the SCR policy. The adviser will not usually know why that is the case, but may well be able to put two and two together. The operation of the policy causes inconvenience and delay in accessing benefits: delays of an hour are usual and they can be as much as three days. Late payment is, to say the least, a serious inconvenience to anyone on the tight budget required of JSA claimants. Ringing up to find out why payment has been delayed can also be a serious inconvenience as the authorisation process has to be followed in order for the telephone advisers to access the account. The alternatives to physically attending at the JCP offices are very limited. The appellant has on at least three occasions asked to be allowed to sign on by post but been refused. The appellant also reports some very distressing incidents in JCP offices. On several occasions she has overheard references to her transgender status in conversations in open plan offices with other customers present. Once her status has become known within an office she has felt compelled to transfer to another office to protect her privacy and dignity and, indeed, her physical safety. She adds that she has had some very positive experiences with individual DWP staff members, but every interaction with them, good or bad, is against that background of insecurity and anxiety. The evidence she has placed before the courts in these proceedings, both from experts in the field of gender dysphoria and from other transgender customers, shows not only the depth of these concerns but also that she is not alone in having them. These proceedings After considerable correspondence exploring possible alterations to the DWPs policies, these proceedings were launched in April 2012. They were then stayed in order that the DWP could review its policies on data retention and implement any changes. This review concluded that the DWP needed to improve its treatment of transgender customers but did not propose any change to the Retention, GRC Noting or SCR policies in respect of them. The claim was heard by Simon J in May 2014: [2014] EWHC 2403 (Admin). All three policies were challenged as being (1) in breach of articles 8 and/or 14 of the European Convention on Human Rights; and (2) directly and indirectly discriminatory contrary to the Equality Act 2010. It was common ground that the Retention and Noting policies engaged the right to respect for private life protected by article 8(1). Simon J held that they were not sufficiently clear, precise and accessible to be in accordance with the law for the purpose of justifying them under article 8(2) and granted a declaration to that effect. However, he held that they pursued the legitimate aims of enabling accurate calculations of state pension entitlement and of reducing opportunities for identity theft and benefit fraud and were a proportionate means of doing so. He was more doubtful whether the SCR policy even engaged article 8(2), as it was designed to protect privacy, rather than to interfere with it, although it did tend to have the opposite effect of drawing attention to transgender customers; but he held that it was in any event justified by the need to protect DWP staff. He rejected the claim based on direct discrimination, because the appellant was not treated less favourably than other customers because of her gender reassignment. He was prepared to assume that the policies were indirectly discriminatory, in that they put transgender customers at a particular disadvantage when compared with others, but they were justified under the 2010 Act for the same reasons that they were justified under the Convention. Between the High Court judgment and the hearing of the appellants appeal to the Court of Appeal in December 2015, as already noted, the DWP altered its policy and systems so that the fact of a GRC was no longer visibly noted on the CIS (although other facts from which such an inference could be drawn remained). The challenge to the GRC Noting policy was therefore no longer a live issue before the Court of Appeal. Furthermore, the Retention policy had been clarified and was now accessible, so the issue of legality was no longer live. On 9 February 2016, the appeal was unanimously dismissed. The only judgment was given by Elias LJ, with whom Patten and Black LJJ agreed: [2016] EWCA Civ 47, [2016] PTSR 1344. He accepted that article 8 was engaged by both the Retention and the SCR policies, but agreed with Simon J that the interference was proportionate. He rejected the argument that article 14 required transgender customers to be treated differently from others. Any indirect discrimination entailed in the SCR policy was justified for the same reasons that the interference with article 8 rights was justified. A new argument, that the policies were contrary to the requirement in section 9 of the Gender Recognition Act 2004 that where a full gender recognition certificate is issued, the persons gender becomes for all purposes the acquired gender was rejected: this did not require history to be rewritten. Before this court, the appellant challenges the Retention and SCR policies on three grounds: (1) inconsistency with sections 9 and 22 of the Gender Recognition Act 2004; (2) incompatibility with the rights under articles 3, 8 and 14 of the European Convention on Human Rights (article 3 is raised for the first time in this court); and (3) infringement of section 13, 19 or 26 of the Equality Act 2010 (direct discrimination under section 13 was not pursued before the Court of Appeal but is raised again before this court; harassment under section 26 is an entirely new argument). The Gender Recognition Act 2004 This Act, as is well known, was passed in response to the judgments of the European Court of Human Rights in Goodwin v United Kingdom (2002) 35 EHRR 447 and the declaration of incompatibility made by the House of Lords in Bellinger v Bellinger [2003] UKHL 21; [2003] 2 AC 467. It lays down the criteria and the process by which a person born in one gender may be recognised as having acquired a different gender. Section 9 provides for the consequences: (1) Where a full gender recognition certificate is issued to a person, that persons gender becomes for all purposes the acquired gender (so that, if the acquired gender is the male gender, the persons sex becomes that of a man and, if it is the female gender, the persons sex becomes that of a women). (2) Subsection (1) does not affect things done, or events occurring, before the certificate is issued; but it does operate for the interpretation of enactments passed, and instruments and other documents made, before the certificate is issued (as well as those passed or made afterwards). (3) Subsection (1) is subject to provision made by this Act or any other enactment or subordinate legislation. Section 22 deals with the disclosure of protected information. Section 22(1) makes it a criminal offence for a person who has acquired protected information in an official capacity to disclose that information to any other person. Section 22(2) provides that, once a GRC is issued, protected information includes information which concerns the persons gender before it becomes the acquired gender. Section 22(3) defines the acquisition of such information in an official capacity in such a way as to cover officials in the DWP, and indeed elsewhere in the civil service and otherwise in connection with the functions of a public authority. Section 22(4) and the Gender Recognition (Disclosure of Information) (England, Wales and Northern Ireland) Order, SI 2005/635, provide for circumstances in which disclosure is not an offence. These include: 22(4)(h) the disclosure is made for the purposes of the social security system or a pension scheme. The appellant accepts that section 9 does not rewrite history. Thus, in J v C [2006] EWCA Civ 551; [2007] Fam 1, the issue of a full GRC in the male gender to a person who was previously female did not retrospectively validate his prior marriage to another female (at a time when the law did not provide for same sex marriages), with the result that he did not become the father of a child born to the other female as a result of artificial insemination by donor (as would otherwise have been the case under section 27 of the Family Law Reform Act 1987, which provided that the husband of a woman who gives birth as a result of AID was to be treated for all purposes as the father of the child). But she argues that section 9(1) does require her now to be treated for all purposes as a woman and this includes how she is treated by the DWP for the purpose of claiming and receiving JSA. Section 22(1) is not an exception to the general principle in section 9(1). Rather it is an additional protection. It does not follow from the fact that no offence is committed under section 22 that a policy which is in breach of section 9(1) is lawful. The problem with this argument is that section 9(1) clearly contemplates a change in the state of affairs: before the issue of the GRC a person was of one gender and after the issue of the GRC that person becomes a person of another gender. The sections which follow section 9 are designed, in their different ways, to cater for the effect of that change. Thus, for example, section 12 provides that the acquisition of a new gender does not affect that persons status as the father or mother of a child; section 15 provides that it does not affect the disposal or devolution of property under a will or other instrument made before the appointed day (thus section 9 will apply to dispositions made after that date); section 16 provides that the acquisition of a new gender does not affect the descent of any peerage or dignity or title of honour or property limited to descend with it (unless a contrary intention is expressed in the will or instrument). There is nothing in section 9 to require that the previous state of affairs be expunged from the records of officialdom. Nor could it eliminate it from the memories of family and friends who knew the person in another life. Rather, sections 10 and 22 provide additional protection against inappropriate official disclosure of that prior history. Section 10 and Schedule 3 deal with birth registration. In summary, if there is an entry in the UK birth register relating to a person to whom a full GRC has been issued, a copy of the GRC must be sent to the appropriate Registrar General. He or she must make an entry in the Gender Recognition Register (which is not open to public inspection) which makes traceable the connection between that entry and the entry in the birth register. The entry is used to create a new birth certificate which records the acquired name and gender. Anyone who may have a copy of the UK birth register entry of a person who has a full GRC may have a copy of the new birth certificate. This must not disclose the fact that the entry is contained in the Gender Recognition Register: see Schedule 3, paragraphs 5 and 6. Section 22, as we have seen, protects from disclosure by officials information concerning a persons gender before it became the acquired gender. It contains several exceptions, including one for disclosure for the purpose of the social security system or a pension scheme. Obviously, therefore, section 9 contemplates that the previous history may be kept on record, for otherwise there would be no need for the protection given by section 22. I conclude, therefore, that the Retention and SRC policies are not inconsistent with, or prohibited by, any provision of the Gender Recognition Act 2004. But that, of course, is not the end of the story. The Human Rights Act 1998 The appellant rightly emphasises that the 2004 Act was brought about by developments in the jurisprudence of the European Court of Human Rights. In Goodwin v United Kingdom (2002) 35 EHRR 447, the court held (i) that the failure of UK law to grant legal recognition, including a new birth certificate, to a post operative transsexual was a breach of her right to respect for her private life under article 8; and (ii) that the failure of UK law to permit her to marry in her acquired gender was a breach of her right to marry under article 12. I would emphasise two passages from the Courts judgment in relation to article 8: 77. The stress and alienation arising from a discordance between the position in society assumed by a post operative transsexual and the status imposed by law which refuses to recognise the change of gender cannot, in the Courts view, be regarded as a minor inconvenience arising from a formality. A conflict between social reality and law arises which places the transsexual in an anomalous position, in which he or she may experience feelings of vulnerability, humiliation and anxiety. The Court was, of course, speaking of the position before the Gender Recognition Act which sought, so far as possible, to align the legal position with social and psychological reality. But it makes the important point that this is no small matter. It is not a minor inconvenience. It goes to the heart of the persons sense of self. This is reinforced by a later passage at para 90: the very essence of the Convention is respect for human dignity and human freedom. Under article 8 of the Convention in particular, where the notion of personal autonomy is an important principle underlying the interpretation of its guarantees, protection is given to the personal sphere of each individual, including the right to establish details of their identity as individual human beings. In the 21st century, the right of transsexuals to personal development and to physical and moral security in the full sense enjoyed by others in society cannot be regarded as a matter of controversy In short, the unsatisfactory situation in which post operative transsexuals live in an intermediate zone [in] not quite one gender or the other is no longer sustainable. This puts it beyond doubt that the way in which the law and officialdom treat people who have undergone gender reassignment is no trivial matter. It has a serious impact upon their need, and their right, to live, not as a member of a third sex, but as the person they have become, as fully a man or fully a woman as the case may be. In the courts below, the appellant relied only on the right to respect for private life, protected by article 8, and the right to enjoy the Convention rights without discrimination, protected by article 14. In this court, the statement of facts and issues raises for the first time the question of a possible violation of article 3, the right not to be subjected to inhuman or degrading treatment. In her submissions, however, article 3 was deployed to make the point that there are positive obligations to protect individuals against such treatment, as indeed there are under article 8. In Identoba v Georgia (2015) 39 BHRC 510, for example, the Strasbourg court found a breach of article 3 where the authorities had failed to protect LGBTI demonstrators from attack by homophobic counter demonstrators. One aim of the SCR policy is to protect transsexuals against the risk of physical and verbal abuse. The complaint, as I understand it, is that it may not go far enough in doing so, whether under article 3 or article 8. In my view, the article 3 cases serve mainly to underline the importance of the interests at stake here, whether under article 3 or article 8. The real focus of the argument has been on article 8. In my view, both the Retention and the SCR policies are an interference with the right of the appellant, and all people who have undergone gender reassignment, to respect for their private lives. The SCR policy may be designed to protect the privacy of their deeply private information but it has the consequence of drawing the attention of front line staff, and maybe others in the office, to it. Opting out means that front line staff who need it will have unimpeded access to the CIS, in which the gender history is recorded. So the customer has the choice between unimpeded access on those occasions when front line staff need to consult the CIS and impeded access which in itself draws attention to the possibility, even the probability, that the claimant has undergone gender reassignment. This is not a minor interference. On the contrary, it is a very serious matter. It goes to the heart of how the appellant, and others in her situation, relate to the world and the world relates to them. So the real question is whether this interference can be justified by the operational needs of the benefits system. Two legitimate aims are put forward by the DWP for the Retention policy. The first is the need to retain the information for the purpose of calculating entitlement to state retirement pension. A transgender person has pension rights in his or her acquired gender from the date of the GRC: Gender Recognition Act 2004, Schedule 5, paragraphs 7 and 8. This means that the date of the GRC will be material to the calculation of the entitlement of certain customers (those born before 6 December 1953; female to male transsexuals whose change of gender occurs after they have reached statutory retirement age for women and before equalisation on 6 March 2019; and male to female transsexuals whose change of gender occurs before 6 March 2010 and before they have reached state pension age for a man but after they have reached it for a woman). The DWP will need to know the date for the purpose of checking entitlement at the time and also for checking and maintaining claims during the customers life expectancy thereafter. With the equalisation of the pension age, there will eventually come a time when this is no longer necessary, but that is some considerable time in the future. It is accepted that this does not apply to this particular appellant, but it does apply to approximately one third of transgender customers, whose state pension calculation will be directly affected by their birth gender. The second legitimate aim put forward is to identify and detect fraud. There is a particular risk of identity theft in the case of transgender customers. A fraudster may obtain a birth certificate in the customers original name and use this, along with other evidence, to obtain a national insurance number allocated to that name (two linked examples of this were detected in 2012). The DWP also argue that front line staff are at the forefront of detecting frauds they can sense when something is not right and need to have access to the information to investigate and detect this. The appellant accepted that these were legitimate aims in the courts below and the evidence in support of them was not challenged. In her written case before this court she argues that these objectives are not sufficiently important to justify the limitation of a protected right and that those limitations are not rationally connected to the objectives. She argues that, now that the fact and date of the GRC is masked on the CIS, it cannot be necessary to retain the visible gender (name and title) history in order to calculate state pension entitlement. As for fraud detention and prevention, there are other ways of verifying the claimants identity. Under the new system for Universal Credit, front line staff will no longer have access to this information. The DWP understandably objects to the introduction of new arguments on matters which were conceded in the courts below, and on which it has not been able to file evidence in rebuttal; but they can be addressed briefly. In my view, for as long as gender is in any way relevant to the entitlement to and calculation of state retirement pension, it is necessary for the data to be retained on the CIS system and the rational connection between the two is obvious. The question of whether it should remain visible to some front line staff or whether it is feasible to mask it in some way which nevertheless enables those who need to see it to be able to do so are questions which go to the overall balance between the aims pursued and the means used to pursue them, in other words to the proportionality calculation. As for fraud detection and prevention, the problem lies, not so much with verifying the identity of the genuine transgender claimant but with verifying the identity of the fraudulent claimant who has stolen that persons previous identity. The legitimacy of the objectives for which the current computer systems are designed cannot be affected by the development of wholly new computer systems to support a wholly new benefits system. Once again, the real issue is not the aim, but the overall balance between ends and means which is of the essence of the proportionality calculation. In addressing that balance, several points must be made: (1) While I would certainly not minimise the depth of the intrusion where it takes place, for the most part there is no need for front line JCP staff to consult the CIS. Whether or not the SCR policy applies, it is only rarely that they will need to access the CIS and thereby discover the historic information recorded there. (2) The DWP has been engaging with the appellant and those advising her over many years in an attempt to understand and cater for her concerns. Following the High Court decision, the GRC data were masked on the CIS. If nothing else, this litigation has taught the DWP the importance of doing what can be done within the existing systems to cater for those concerns. (3) We are here dealing with large computer systems, designed to cater for vast numbers of customers, which interact with one another in complex ways. It is no simple matter to modify existing systems in a way which will not compromise their efficiency and effectiveness. It is one thing to devise a completely new computer system, such as that now being developed for Universal Credit, and quite another to modify an old one which has been in operation for many years. (4) The DWPs evidence is that it is not possible to make further adjustments to the CIS system except at inordinate expense. This court is in no position to question that. (5) Most importantly, it is not for this or any other court to administer the benefits system. That is the business of the DWP. The courts can correct individual decisions or actions which violate an individuals human rights: if a DWP official gained unnecessary or unauthorised access to a customers records, or made improper use of the information obtained through authorised access, the customer would have a claim under section 6(1) of the Human Rights Act 1998 against a public authority which had acted incompatibly with her privacy rights. The courts can also correct legal provisions which violate human rights (unless contained in an Act of the United Kingdom Parliament). But the courts can only rarely correct the systems set up by the responsible government departments or public authorities to administer the law unless perhaps they systemically and inevitably result in violations of individuals rights. That is not this case. (6) The courts must inevitably place great weight on the judgment of those whose business it is to design and administer those systems. They are the experts in administration and we are not. In my judgment, therefore, the courts below were entitled to reach the conclusion that the CIS Retention policy was a proportionate means of achieving its legitimate aims and I share their view. In reaching this conclusion, I in no way seek to minimise the importance to the appellant and others in her situation of the intrusion into her privacy which is entailed by the policy. For her, and for others, it must be good news that the Department has taken their concerns seriously, and that they will be differently catered for when Universal Credit is rolled out throughout the country. The SCR policy and the Retention policy cannot be considered in isolation from one another. The SCR policy is designed to restrict access to the CIS to those who are authorised because they have a real need for that access. This of course has the legitimate aim of protecting the privacy of those SCR customers who need and want it. This brings with it the problems of delay, with its attendant inconvenience or even hardship, and it may well draw attention to the very matter which it is designed to protect. But such problems are inevitable if access to the CIS is to be restricted. They can be avoided if the customer does not want the policy to apply, but at the cost of less restricted access to the CIS. The real question, therefore, is whether the CIS Retention policy is justified and in my judgment, for the reasons given above, it is. Discrimination The appellant relies both on discrimination in the enjoyment of Convention rights, in violation of article 14 of the Convention, and on direct and indirect discrimination in breach of sections 13 or 19 of the Equality Act 2010 respectively. Gender reassignment is a protected characteristic by virtue of sections 4 and 7 of the Equality Act and is undoubtedly a status for the purpose of article 14. Her submission on direct discrimination, under both article 14 and section 13, is that the policies treat transgender customers in the same way as other customers when in fact their situations are different and they should be treated differently. As the Strasbourg court held in Thlimmenos v Greece (2000) 31 EHRR 411, just as like cases must be treated alike, unlike cases must be treated differently. The problem with this submission is that the DWP policies do treat transgender customers differently from others. For those who want it, the SCR policy applies. In this respect, transgender customers are in no different position from any of the other vulnerable groups to whom the policy is applied if wanted and needed. The admitted problems associated with the SCR policy are the inevitable concomitant of offering them this extra protection for their privacy. Once again, the real complaint is that, once accessed by those with a reason to do so, the CIS reveals the customers previous name and title, from which an inference of gender reassignment may, but need not, be drawn. However, it is not clear in what way transgender customers are treated less favourably than others on the CIS because of their transgender status. The current names and titles, and any previous names and titles, of all customers are recorded. Customers change their names and titles for a wide variety of reasons, not least because of marriage or divorce. All are treated in the same way. Of course, a change of sex may often be readily deduced from a change of name and title, whereas other changes may be more speculative. But all relate to the customers private (and sometimes family) life. There is no difference in treatment from others who change their name or title because of the customers transgender status. For these reasons, in my view, Simon J was right to reject the claim of direct discrimination under both article 14 and section 13 and it is not surprising that the direct discrimination claim under section 13 was not pursued, by counsel then appearing for the appellant, before the Court of Appeal. The indirect discrimination claim under both article 14 and section 19 of the Equality Act relies upon the particular disadvantage that transsexual customers suffer as a result of the Retention and SCR policies, either together or separately, when compared with other customers, whether in general or those to whom the SCR policy is also applied. I would be prepared to accept, for the reasons given earlier, that many, if not all, customers who have undergone gender assignment feel a greater need to protect that information from others than do customers who have changed their names or titles for other reasons. Gender reassignment changes ones identity at a much deeper level than does getting married, getting divorced, being bereaved, adopting a new name, or any of the other reasons why a change of name or title may be recorded. It may also be the case that justification for an interference with the article 8 right is not invariably justification for discrimination under article 14 or indirect justification under section 19. However, in this case, the provision, criterion or practice in question, the SCR policy, is a proportionate means of achieving a legitimate aim for the purpose of section 19(2)(d) and, for the same reasons, any discrimination involved in the policies is justified for the purpose of article 14. For the first time in this court, and somewhat faintly, the appellant argues that the DWPs policies, and specifically the implicit outing involved in the SCR, create a harassing environment contrary to section 26 of the Equality Act 2010. This allegation was not pleaded in the claim form or argued in the courts below and is not clearly spelled out in the appellants case. Under section 29(3) of the Equality Act, a service provider must not harass a person requiring the service or a person to whom the provider is providing the service. Under section 26(1), A person (A) harasses another (B) if (a) A engages in unwanted conduct related to a relevant protected characteristic, and (b) the conduct has the purpose or effect of (i) violating Bs dignity, or (ii) creating an intimidating, hostile, degrading, humiliating or offensive environment for B. This is not an allegation which can sensibly be made in a claim for judicial review of the DWPs policies in relation to transgender people. It might be made in a substantive claim under the Equality Act in relation to the sorts of incidents of which the appellant has complained (and on occasions received some compensation). Then there would have to be specific evidence directed towards such a claim and the DWP would have the opportunity of investigating the complaint and putting in evidence in rebuttal. None of that has happened in this case. But in any event it is quite clear from the DWPs efforts to understand and to meet the appellants concerns within the bounds of practicality that its policies aim to have the reverse effect: to respect the dignity of transgender customers and to avoid creating an intimidating, hostile, degrading, humiliating or offensive environment for them. There are disciplinary measures in place for staff who are guilty of such behaviour. In other words, if such behaviour takes place, it is not the system which is to blame. Conclusion In my view, the concerns which the appellant has raised before and during these proceedings are very real and important to her, and no doubt to other transgender customers of the DWP. The proceedings have already brought about some change in DWP policy and no doubt the DWP will continue to consider how the service it offers to transgender customers could be improved. The introduction of Universal Credit is an opportunity to do this. But for all the reasons given earlier the Retention and SCR policies are not unlawful under either the Human Rights Act 1998 or the Equality Act 2010 and this appeal must be dismissed.

UK-Abs

The issue in this appeal is whether certain policies adopted by the Department of Work and Pensions (DWP) in the administration of the welfare benefits system are, when applied to people with a reassigned gender, in breach of the Gender Recognition Act 2004 (the GRA), the Human Rights Act 1998 (the HRA) or the Equality Act 2010 (the EA). The appellant C has undergone gender reassignment from male to female. She was issued with a gender recognition certificate (GRC) in 2006. Since June 2010 she has been unemployed, apart from a period in 2015 16. In order to receive Jobseekers Allowance (JSA) she has to attend a Jobcentre Plus (JCP) office in person every two weeks. The DWP uses a centralised database, the Customer Information System (CIS), to record information about each of its customers, including his or her current sex, the fact that he or she was previously recorded as having a different sex (if applicable), his or her current name and title, and his or her former names and titles (if applicable), the fact that a person has a GRC and its date, and the reason for a change of recorded sex being gender reassignment (if this is the case). These data are held for the life of the individual concerned and for 50 years and a day thereafter (the Retention policy). This is because gender at birth at present remains relevant to the calculation of state pension entitlement, and in order to detect fraud. The fact of a GRC and the reason for a change of recorded sex being gender reassignment is no longer visible to front line staff, but any previous name, title or gender is visible. Access to an individuals CIS record is not required for the routine issue of benefit payments, but it will be required, for example, to make routine changes, such as a change of address. However, the DWP also has a Special Customer Records policy (the SCR policy) which applies to certain categories of customer who require extra protection for their privacy and is routinely applied to transgender customers unless they ask otherwise. This requires specific authorisation for access. This has the effect that there are delays in accessing the account to authorise payment and it alerts the front line staff to the probable reason for the restricted access. C has suffered distressing incidents at JCP offices when her transgender status has been openly referred to. After exploring possible alterations with the DWP, C issued proceedings in 2012. The High Court made a declaration that the Retention Policy was in breach of the right to respect for private life protected by article 8 of the European Convention on Human Rights (ECHR) as it was not sufficiently clear and accessible to be in accordance with the law. It has now been clarified. Her appeal to the Court of Appeal against the dismissal of her other claims was dismissed. The Supreme Court unanimously dismisses the appeal. The Retention and SCR policies are not unlawful under the GRA, the HRA or the EA. Lady Hale gives the only substantive judgment. Lawfulness under the GRA S 9 GRA provides that where a GRC is issued a persons gender becomes for all purposes the acquired gender. It does not rewrite history or require the previous state of affairs to be expunged from official records, but other sections offer additional protection against inappropriate official disclosure of that prior history [23 25]. The Retention and SCR policies are not therefore inconsistent with or prohibited by any provision of the GRA [26]. Lawfulness under the HRA The Retention and SCR policies do constitute a very serious interference with the rights of transgender people to respect for their private life protected by article 8 ECHR [31]. The justifications relied on by the DWP the need to retain information for the time being for the purposes of calculating state pension rights, and to identify and detect fraud are legitimate [34] and rationally connected with the policies [35]. The question is whether the policies are proportionate. In carrying out the balancing exercise it is relevant that front line staff will only rarely have to access the CIS, that the DWP has been engaging with C over many years to try to understand and cater for her concerns, that it is no simple matter to modify existing computer systems designed to cater for vast numbers of customers, which interact with one another in complex ways, and that it is not possible to make further adjustments to the CIS without inordinate expense. It is not for the courts to administer the benefits system [36]. The Retention policy is therefore a proportionate means of achieving its legitimate aims [37]. The SCR policy cannot be considered in isolation from it. It has the legitimate aim of protecting the privacy of those customers who need and want it. The problems associated with it are inevitable if access to the CIS is to be restricted. It too is justified [38]. Lawfulness under the EA There is no direct discrimination on the ground of gender reassignment [43]. The details of all customers who change their names and titles are recorded on the CIS [42]. Transgender customers who need and want it are treated differently under the SCR policy [41]. They are not treated less favourably as a result of their transgender status. The claim of indirect discrimination also fails. The court accepts that gender reassignment changes ones identity at a much deeper level than name changes for other reasons. However the SCR policy is a proportionate means of achieving a legitimate aim for the purposes of s 19(2)(d) EA and for the same reasons any discrimination is justified for the purposes of article 14 of the ECHR [44].

The issue ultimately to be determined on this appeal is whether the First tier Tribunal (Ft T) was entitled to make an order debarring the Commissioners for HM Revenue and Customs (HMRC) from defending an appeal concerning liability for VAT brought by three companies in the BPP Group of companies (to which, save where it is important to distinguish between those companies, I shall refer generically as BPP). The factual and procedural background Between 1999 and 2006, BPP Holdings Ltd supplied education and books to students. Following a corporate rearrangement in 2006, one company, BPP Learning Media Ltd, supplied books and another company, BPP University College of Professional Studies Ltd, supplied education. BPP took the view that there were now two separate supplies by separate companies, one of education (which is standard rated for VAT purposes), and the other of books (which is zero rated). Accordingly, BPP did not account for VAT on the supplies of books. However, HMRC did not agree with this and contended that BPPs analysis was flawed, or in the alternative that the changes made in 2006 represented an abuse. (The law has been changed by section 75 of the Finance Act 2011). In November 2012, HMRC issued two VAT assessments, prepared on the basis that BPP should have accounted for VAT at the standard rate on the supplies of books from 2006. Pursuant to a request from BPP, HMRC also issued a decision to that effect on this issue in December 2012, which related to the VAT treatment of BPPs supplies from 19 July 2011. In May 2013, BPP raised appeals to the Tax Chamber of the Ft T against the two assessments and the decision. Following directions from the Ft T, HMRC served its statement of case on 21 October 2013, which was 14 days late, and applied for an extension of time, which BPP did not oppose. Disclosure was ordered for 17 December and HMRC provided it a few days late. Meanwhile, BPP considered that HMRC should provide further information of their case, and made a request to that effect on 11 November 2013. After some written and telephone exchanges between the parties, BPP applied to the Ft T on 22 November for an order that HMRC supply the information in 14 days from the making of the order, failing which BPPs substantive appeals should be allowed. HMRC then offered to supply the information by 31 January 2014, but, because they would not agree to the sanction sought by BPP, there was a hearing of BPPs application (together with a directions hearing) on 9 January 2014. At that hearing Judge Hellier made an order which included the following directions in relation to BPPs application: UPON the respondents having agreed to provide by 31 January 2014 replies to each of the questions identified in the appellants request for further information dated 11 November 2013; AND UPON hearing Counsel for the parties, the following Directions are made: 1. If the respondents fail to provide replies to each of the questions identified in the appellants request for Further Information by 31 January 2014, the respondents may be barred from taking further part in the proceedings The order also included directions for the future conduct of the appeals including an order for the filing of disclosure statements and lists of documents by 30 April, and a provision for a seven day hearing. On 31 January 2014, HMRC served a response to BPPs request. On 14 March, the same day as it served its response to HMRCs statement of case, BPP issued an application for an order barring HMRC from taking further part in the proceedings (a debarring order) on the ground that the 31 January response did not in fact reply to each of the questions identified in [BPPs] request for further information. On 24 April 2014, HMRC informed BPP that they were withdrawing the two assessments and therefore conceding two of BPPs three appeals, but, as they were not withdrawing the decision, the third appeal proceeded. Meanwhile, HMRC supplied a defective disclosure statement and list of documents some eight days late on 8 May, and did not apply for an extension of time in that connection until four weeks later; they subsequently agreed to give a new list of documents. BPP maintained its claim for a debarring order in relation to the surviving appeal, and its application came before Judge Mosedale on 23 June 2014. In a reserved judgment given on 1 July 2014, Judge Mosedale granted BPPs application and made a debarring order [2014] UKFTT 644 (TC). Following a further hearing in July, in a judgment given on 25 September 2014, Judge Herrington refused HMRCs application to lift the debarring order, but gave HMRC permission to appeal against Judge Mosedales decision [2014] UKFTT 917 (TC). That appeal was heard by Judge Bishopp in the Tax and Chancery Chamber of the Upper Tribunal (UT) in October; after a two day hearing he allowed HMRCs appeal for reasons given in a judgment on 3 November 2014 [2015] STC 415. Following the grant to BPP of permission to appeal against his order, the Court of Appeal (Moore Bick V P, Richards and Ryder LJJ) allowed BPPs appeal and restored Judge Mosedales debarring order for reasons given by Ryder LJ, who is the Senior President of Tribunals [2016] 1 WLR 1915. The issue to be decided The case comes before this Court as an appeal from the Court of Appeal, but the ultimate issue for us is whether Judge Mosedales decision to make a debarring order can be justified. Accordingly, it is unnecessary to address all the criticisms of the reasoning of the UT and of the Court of Appeal, which have been raised by Ms Simor QC in her careful argument on behalf of HMRC. In those circumstances, it is right to record that, while, for the reasons given below, we agree with the conclusion reached by the Court of Appeal, we should not be taken as approving all its reasoning. The procedures of the various chambers of the Ft T are governed by rules, and it is common ground that the relevant rule for present purposes is rule 8 of the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273). This rule (which appears to be in the rules which apply to at least some of the other chambers of the Ft T) provides, so far as relevant: (1) The proceedings, or the appropriate part of them, will automatically be struck out if the appellant has failed to comply with a direction that stated that failure by a party to comply with the direction would lead to the striking out of the proceedings or that part of them. (3) The Tribunal may strike out the whole or a part of the proceedings if (a) the appellant has failed to comply with a direction which stated that failure by the appellant to comply with the direction could lead to the striking out of the proceedings or part of them; If the proceedings, or part of them, have been struck out (5) under paragraph (1) or (3)(a), the appellant may apply for the proceedings, or part of them, to be reinstated. (7) This rule applies to a respondent as it applies to an appellant except that (a) a reference to the striking out of the proceedings must be read as a reference to the barring of the respondent from taking further part in the proceedings; and (b) a reference to an application for the reinstatement of proceedings which have been struck out must be read as a reference to an application for the lifting of the bar on the respondent from taking further part in the proceedings. It will be noted that by its application of 22 November 2013 BPP sought an order which substantially reflected the terms of rule 8(1) read together with rule 8(7)(a), whereas the order made by Judge Hellier in the Ft T on 9 January 2014 reflected the terms of rule 8(3)(a) read together with rule 8(7)(a). The reasoning of Judge Mosedale The reasons for Judge Mosedales decision are self evidently best appreciated by reading her careful judgment, but it is right to summarise its contents in order to explain our decision on this appeal. In paras 2 to 36 of her judgment, Judge Mosedale set out the facts more fully than I have done. In the course of doing so, she said in para 22 that HMRCs statement of case made hardly any reference to facts, so far as the third appeal was concerned, so it followed that she concluded that BPPs request of 11 November 2013 was justified. In paras 33 to 36, she referred to the earlier failures of HMRC to comply with time limits. In paras 37 to 54 of the judgment she then addressed the question whether HMRC were in breach of their obligation to comply with the Unless order, ie to provide the further information which they were recorded as having agreed to provide in the Order of 9 January 2014. Judge Mosedale concluded that they were. In effect, she said, by the end of January 2014 hardly any further information had been supplied by HMRC. Judge Mosedale then turned to consider the appropriate sanction. She analysed the guidance given in the Court of Appeal case of Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795, which she said had been held to be applicable by analogy to the Tribunals in the UT decision, Revenue and Customs Comrs v McCarthy & Stone (Developments) Ltd [2014] UKUT 196 (TCC); [2015] STC 973 and in the Ft T decision, Compass Contract Services UK Ltd v Revenue and Customs Comrs [2014] UKFTT 403 (TC). However, in paras 59 to 60, she accepted the submission on behalf of HMRC that [s]trictly those cases were not in point as they concerned cases where, as in Mitchell, the order under consideration stated that the party concerned will be debarred if he did not comply. By contrast, as she said, the order in this case was that HMRC may be debarred if they did not comply (ie they were rule 8(1) cases or their equivalents in the court system rather than rule 8(3) cases, as in the instant case). In other words, she accepted that HMRC were not applying to be relieved from a debarring order which had automatically come into effect as a result of the earlier order: rather BPP was seeking to have a debarring order imposed, when such an order had been foreshadowed by the earlier order. Nonetheless, she concluded in para 61 that while Mitchell is not strictly relevant, nevertheless it contains some useful guidance that when considering the overriding objective of dealing with cases fairly and justly. She concluded that: [I]n considering whether to grant the appellants application to bar HMRC from further participation in this appeal I must consider all relevant factors. I will include in my consideration factors (a) and (b) from CPR 3.9 and accord them significant weight as part of my consideration of the overriding objective to deal with cases fairly and justly. CPR 3.9 is a rule which applies in the courts of England and Wales and it provides that, when considering an application for relief from sanctions (such as relief from a debarring order) the court would consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders. In paras 67 to 72, Judge Mosedale then concluded that HMRC had, at least arguably, finally provided the information required by the unless order in the skeleton argument prepared by counsel, Mr Singh, for HMRC, served shortly before this hearing, but the fact remained that, until that point, HMRC had not provided the information ordered. In para 73, she described the prejudice to the appellants as very clear, as BPP had the right to be put in the position so that it can properly prepare its case. In the following paragraph, she explained that the real prejudice to the appellant is in the delay in that HMRCs continued failure to make a proper statement of their case has delayed the progress of this appeal by about eight months. In paras 75 to 80, Judge Mosedale then turned to the reason for default and said that she had no clear understanding of why this default had occurred and added that it should have been obvious to a lawyer that the Reply delivered on the due date did not comply with Judge Helliers Order. She was unimpressed with HMRCs suggestion that it ought not to have been required to state every fact and matter on which it relied, not least because the Reply failed to state any fact or matter on which HMRC relied. In paras 81 and 82, she said that HMRC does not appear in this appeal to have appreciated the importance of adhering to directions. Judge Mosedale then turned to the proposed debarring order which she described in para 83 as a draconian remedy, but added that it was virtually the only sanction that the Tribunal has, because [n]o one suggests in this case that costs would be an adequate remedy. In para 85 she rejected Mr Singhs submission that debarring order should only be made where the breach was incapable of remedy or had not been remedied as the wrong test before or after Mitchell. In paras 88 to 90, Judge Mosedale rejected the contention that the importance of the case to HMRC was a relevant factor: if it was a test case, they could for instance, concede the appeal, and fight another case, and, even if it proceeded and HMRC lost, the authority of the decision would be weakened by the fact that it was unopposed. In paras 91 to 93, she rejected as irrelevant the contention that the case should be allowed to proceed as the unfairness of a wrongly adverse decision would mean that it could be relied on as res judicata by BPP in relation to every claim, while expressly leaving open the premise for that contention. In para 94, she rejected as irrelevant the fact that Judge Hellier had thought it right to make a rule 8(3) order rather than the rule 8(1) order sought by BPP. Judge Mosedale then reached her Conclusions. She started in para 95 by saying that she must simply weigh all the factors, and if in doubt should not make a debarring order, and added that the objective in exercising my discretion is the overriding objective of dealing with cases fairly and justly. In the following paragraph, she said that she had to give significant weight when considering the overriding objective to the importance of compliance with directions of the tribunal and avoiding unnecessary delays and expense. She then referred to the delay caused by HMRCs default, the absence of any reason for it, the existence of previous less serious breaches of the Tribunal rules in these proceedings, although this is not a case where HMRC have ignored the Tribunal entirely. At para 100, she said that she had come to the conclusion that HMRC should be barred, and explained: There has been unnecessary delay and expense. Tribunal directions have been breached. There is clear prejudice to the appellant in having to wait eight months for a proper statement of HMRCs case and not barring HMRC would leave the appellant without a remedy for this prejudice. There was no good reason for the delay in stating its case, the failure lasted for a significant period of time, and HMRC were clearly on notice from the first that the appellant did not consider their [statement of case] satisfactory, and clearly on notice from January that a failure to comply might lead to a barring order yet they did not correct the position for another five months. Barring is the appropriate sanction. Discussion This was a full and very carefully considered judgment. However, it would nonetheless be appropriate for an appellate court to interfere with it, if it could be shown that irrelevant material was taken into account, relevant material was ignored (unless the appellate court was quite satisfied that the error made no difference to the decision), there had been a failure to apply the right principles, or if the decision was one which no reasonable tribunal could have reached. Ms Simor has argued that there were a number of errors in the judgment, and also that the ultimate decision was outside the bounds of what a reasonable tribunal could have decided. First, it was said that the Judge approached the issue before her as if the order made by Judge Hellier was an order under rule 8(1) rather than under rule 8(3). I do not agree. As Ryder LJ said in para 29 of his judgment in the Court of Appeal, Judge Mosedale was careful to identify (at para 60) that she was making a decision about whether barring should be applied as a sanction rather than considering whether to grant relief from a sanction already applied. Furthermore, she did not equate a rule 8(3) conditional order with a rule 8(1) unless order. She was plainly aware of the rule which applied. And she was right when she said in para 94 that the fact that Judge Hellier had refused to make a rule 8(1) order took matters no further so far as the issue before her was concerned. Secondly, it is said that Judge Mosedales reliance on the Court of Appeals reasoning in Mitchell was unsound as the reasoning has subsequently been modified by the Court of Appeal in Denton v T H White Ltd [2014] 1 WLR 3926. This inferentially raises an important point in relation to the interpretation and application of the rules of the Ft T and the UT. The jurisdiction of many of these tribunals is not limited to England and Wales, but extends to the whole of the United Kingdom, and even where that is not so, the applicable rules may be the same in the different jurisdictions. In any event, it is highly desirable, particularly in a field where the law is the same throughout the United Kingdom (as in tax), that tribunals, or at any rate tribunals in the same field, apply the same, or (at least in some cases) even similar, rules in the same way throughout the UK. In these circumstances, all tribunals and appellate courts above the level of the UT should be wary of applying or relying on the procedural jurisprudence of the English and Welsh courts without also taking into account that of the Scottish and Northern Irish courts. As Lord Rodger memorably said in Mucelli v Government of Albania [2009] 1 WLR 276, para 11, in relation to the interpretation of a statute with UK wide application, In Scotland, the people still walk in darkness and upon them hath the light of the CPR not shined. So there can be no question of interpreting the terms of the statute in the light of the CPR or of the Scottish or Northern Irish rules, for that matter. Further, while it would be both unrealistic and undesirable for the tribunals to develop their procedural jurisprudence on any topic without paying close regard to the approach of the courts to that topic, the tribunals have different rules from the courts and sometimes require a slightly different approach to a particular procedural issue. In this case, when considering the proper approach to the making of a debarring order in the Ft T, the Ft T, and indeed the UT, the Court of Appeal, and counsel before us, concentrated on recent English cases, particularly Mitchell and Denton, but also Durrant v Chief Constable of Avon and Somerset Constabulary (Practice Note) [2014] 1 WLR 4313. These cases provide a salutary reminder as to the importance that is now attached in all courts and tribunals throughout the UK to observing rules in contentious proceedings generally, but they are directed to, and only strictly applicable to, the courts of England and Wales, save to the extent that the approach in those cases is adopted by the UT, or, even more, by the Court of Appeal when giving guidance to the Ft T. Such guidance to tribunals on tax cases was given by Judge Sinfield in the UT in McCarthy & Stone. In para 43, after referring to differences and similarities between the CPR and the tribunal rules, in that case the Tribunals Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698), he accepted that the CPR do not apply to tribunals but added that he did not accept that the UT should adopt a different, ie more relaxed, approach to compliance with rules, directions and orders than the courts that are subject to the CPR. The same view was expressed by Ryder LJ in paras 37 and 38 in the Court of Appeal in this case, including this: I can detect no justification for a more relaxed approach to compliance with rules and directions in the tribunals, and added that [i]t should not need to be said that a tribunals orders, rules and practice directions are to be complied with in like manner to a courts. It is not for this Court to interfere with the guidance given by the UT and the Court of Appeal as to the proper approach to be adopted by the Ft T in relation to the lifting or imposing of sanctions for failure to comply with time limits (save in the very unlikely event of such guidance being wrong in law). We have twice recently affirmed a similar proposition in relation to the Court of Appeals role in relation to the proper approach to be taken in such cases by first instance judges see Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] 1 WLR 4495 and Thevarajah v Riordan [2016] 1 WLR 76. The guidance given by Judge Sinfield in McCarthy & Stone was appropriate: as Mr Grodzinski QC, who appeared for BPP pointed out, it is an important function of the UT to develop guidance so as to achieve consistency in the Ft T: see R (Jones) v First tier Tribunal (Social Entitlement Chamber) [2013] 2 AC 48, para 41, per Lord Carnwath. And, by confirming that guidance in this case, the Senior President, with the support of Moore Bick V P and Richards LJ, has very substantially reinforced its authority. In a nutshell, the cases on time limits and sanctions in the CPR do not apply directly, but the Tribunals should generally follow a similar approach. Such an approach was adopted by Judge Mosedale, as demonstrated by the passages in her judgment cited in paras 15 and 20 above. As Ryder LJ rightly said at para 32 of his judgment: Judge Mosedale did not directly apply the CPR or the subsequent authorities that give guidance on CPR 3.9. She was careful to make it clear that her consideration of the same was limited to whether the guidance contained in them was relevant by analogy to the application of the overriding objective in the tax tribunal rules Most importantly, she distinguished the guidance before applying a nuanced version of it to the overriding objective in the tax tribunal rules. Turning to the specific points raised by Ms Simor, I would reject the argument that Judge Mosedales decision was vitiated because it relied on the reasoning in Mitchell, on the ground that the approach laid down in that case was significantly cut down in the subsequent case of Denton. In the first place, the approach adopted by Judge Mosedale did not rely on a detailed analysis of Mitchell. She ultimately approached the issue she had to decide on the basis which she explained in the passages quoted in paras 15 and 20 above, and that approach involved carrying out the unexceptionable balancing exercise which she described. Secondly, in Denton, para 24, the Court of Appeal described the guidance given in Mitchell as remain[ing] substantially sound and suggested an approach which involved three stages, which it then went on to expound. The refinements which the Court of Appeal then made to what had been said in Mitchell were largely clarifications (see paras 26 and 32). Unless it appears that Judge Mosedale misinterpreted the guidance given in Mitchell, the decision in Denton would not therefore represent a reason for upsetting her decision, and I can see no basis for saying that she did misunderstand the guidance given in Mitchell. Thirdly, it was contended that in her Conclusions in paras 95ff of her judgment, the Judge only considered the delay caused by HMRC, the lack of explanation or excuse, and the prejudice caused to BPP. There was no consideration, it is said, of the disadvantage to HMRC and the arguably disproportionate benefit to BPP. If one confines oneself to the contents of Judge Mosedales Conclusions in paras 95 to 101 of her judgment, that point has force. However, it seems to me that that involves an unrealistic approach to the judgment. In the preceding 28 paragraphs, Judge Mosedale considered all the relevant factors, and it appears to me to be fanciful to suggest that she did not take them into account when reaching her conclusion. The worst that can be said in this connection is that the Judge should have said in terms in her Conclusions that she had taken all the matters she had discussed in paras 67 to 94 into account, but in my view it is clear that she did so: otherwise, one may rhetorically ask, why did she bother to consider those other matters, and so carefully. Fourthly, Ms Simor argued that the Judge should have accepted the relevance of, and taken into account, the fact that the debarring order in this case prevents HMRC from discharging its public duty and could lead to the public interest being harmed in that VAT which should be paid may not be recovered. I consider that it would set a dangerous precedent if that point were accepted, as it would discourage public bodies from living up to the standards expected of individuals and private bodies in the conduct of litigation. It seems to me that there is at least as strong an argument for saying that the courts should expect higher standards from public bodies than from private bodies or individuals. In fairness, it should be said that this point was more attractively developed by Ms Simor when she said that it justified a more relaxed approach to all parties by tribunals than that adopted by the courts. Nonetheless, I find that unconvincing: there is no good reason to have different rules for public law cases. I consider that Moore Bick V P in R (Hysaj) v Secretary of State for the Home Department (Practice Note) [2015] 1 WLR 2472, paras 41 to 42 was right to reject a similar point in relation to public law cases in the courts. Fifthly, Ms Simor argued that it was disproportionate of BPP to have sought a debarring order in the present case rather than proceeding to a hearing in accordance with Judge Helliers directions. She pointed to the fact that, had BPP taken that course, the issue raised by its substantive appeal could well have been determined by the time the present appeal came on for hearing in the Supreme Court. That is true, but it is a point which can only be made because HMRC chose to challenge the decision of Judge Mosedale to make a debarring order that these proceedings have lasted beyond 1 July 2014. More importantly, the order made on 9 January 2014 specifically envisaged a debarring order being made unless HMRC complied with their disclosure obligation recited in the order by 31 January, and it is not suggested that it was somehow culpable or unfair for BPP to have allowed some six weeks to elapse after that date before applying for a debarring order. Sixthly, it was pointed out that a debarring order represents an unjustified windfall for BPP. It is true that the debarring order will either improve BPPs prospects of success in the substantive surviving appeal (if the appeal goes ahead unopposed) or result in BPP succeeding on the appeal when it might not otherwise have done so (if HMRC concede the appeal). However, that point can always be made by a party facing a debarring order, and to give the point any weight, save perhaps in exceptional circumstances, would appear to me to undermine the utility of the sanction of a debarring order. I can see no exceptional circumstances in the instant case. Finally, it was said that, bearing in mind all the circumstances, a debarring order was outside the scope of what a reasonable judge in the position of Judge Mosedale could have ordered, even if she made no specific errors. I accept that the decision to make a debarring order against HMRC was tough, and I also accept that some Ft T judges may not have made that decision. However, the issue whether to make a debarring order on certain facts is very much one for the tribunal making that decision, and an appellate judge should only interfere where the decision is not merely different from that which the appellate judge would have made, but is a decision which the appellate judge considers cannot be justified. In the words of Lawrence Collins LJ in Walbrook Trustee (Jersey) Ltd v Fattal [2008] EWCA Civ 427, para 33: [A]n appellate court should not interfere with case management decisions by a judge who has applied the correct principles and who has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge. In other words, before they can interfere, appellate judges must not merely disagree with the decision: they must consider that is unjustifiable. HMRC cannot in my view cross that high hurdle in this case. That is not to say that an appellate tribunal cannot interfere in a case where a debarring order has been imposed or confirmed. The decision to impose a debarring order (unlike case management decisions of a more routine nature) can often have the effect of determining the substantive case. Further, as already mentioned in para 27 above, an important function of the UT and the Court of Appeal is to ensure a degree of consistency of approach among Ft T judges. In the context of court decisions, this concern was plainly in the mind of the Court of Appeal in Mitchell and Denton. There must be a limit to the permissible harshness (or indeed the permissible generosity) of a decision relating to the imposition or confirmation (or discharge) of a debarring order. It may well be that this case is not far from that limit (a view which obviously draws support from Judge Bishopps careful judgment in the UT). However, I do not consider that it was on the wrong side of the line, given the combination of the nature and extent of HMRCs failure to reply to BPPs request, the length of the delay in rectifying the failure and the length of the consequential delay to the proceedings, the absence of any remedy to compensate BPP for the delay, and the absence of any explanation or excuse for the failure, coupled with the existence of other failures by HMRC to comply with directions. Conclusion Ms Simors fourth and fifth points prompt the thought that it may be worth considering whether tribunals should be accorded additional sanction powers to those which they currently have. As Judge Mosedale explained, she was faced with a binary question, involving two unpalatable choices. Making the debarring order, which she described as draconian, or not making the order, which, to use the vernacular, would have meant that HMRC effectively would have got away with it. There may be force in the notion that the tribunal rules should provide for the possibility of more nuanced sanctions, such as a fine or even the imposition of some procedural advantage. Experience suggests that such ideas, while attractive in theory, can often be difficult to formulate or to apply satisfactorily in practice, so I mention the point with some diffidence. However, for the reasons I have given, HMRCs appeal must be dismissed.

UK-Abs

This appeal concerns whether the First tier Tribunal (Ft T) was entitled to make an order debarring the Commissioners for HM Revenue and Customs (HMRC) from defending an appeal concerning liability for VAT brought by three companies in the BPP Group of companies (BPP). Between 1999 and 2006, BPP Holdings Ltd supplied education and books to students. Following a corporate rearrangement in 2006, one company, BPP Learning Media Ltd, supplied books and another, BPP University College of Professional Studies Ltd, supplied education. BPP considered that this involved separate supplies by separate companies, one of education (which is standard rated for VAT purposes) and the other of books (which is zero rated). Accordingly, BPP did not account for VAT on the supplies of books. In November 2012, HMRC issued two VAT assessments, prepared on the basis that BPP should have accounted for VAT at the standard rate on the supplies of books from 2006. HMRC also issued a decision to that effect in December 2012. In May 2013, BPP appealed against the two assessments and the decision to the Tax Chamber of the Ft T. HMRC served its statement of case on 21st October 2013, 14 days late, and subsequently provided disclosure, which was also late. On 11th November 2013, BPP requested that HMRC provide further information of their case, and subsequently applied to the Ft T for an order that HMRC supply the information within 14 days of making the order, failing which BPPs substantive appeals should be allowed. On 9th January 2014, Judge Hellier made an order in terms that: if the respondents fail to provide replies to each of the questions identified in the appellants request for Further Information by 31st January 2014, the respondents may be barred from taking further part in the proceedings. On 31st January 2014, HMRC served a response to BPPs request. On 14th March, BPP issued an application for an order barring HMRC from taking further part in the proceedings (a debarring order) as the response did not reply to each of the questions identified in [BPPs] request for further information. HMRC have since withdrawn the two assessments and conceded those appeals, but BPPs third appeal against HMRCs decision has proceeded. Meanwhile, HMRC supplied a defective disclosure statement and list of documents some eight days late on 8th May, and did not apply for an extension of time until four weeks later. BPP maintained its claim for a debarring order in the surviving appeal. On 23rd June 2014, Judge Mosedale granted BPPs application and made a debarring order. On 25 September 2014, Judge Herrington refused HMRCs application to lift the debarring order but gave HMRC permission to appeal against Judge Mosedales decision. Judge Bishopp in the Tax and Chancery Chamber of the Upper Tribunal (UT) allowed HMRCs appeal on 3rd October 2014. The Court of Appeal (Moore Bick V P, Richards and Ryder LJJ) allowed BPPs appeal and restored Judge Mosedales debarring order for reasons given by Ryder LJ. The Supreme Court unanimously dismisses the appeal, but does not approve all the reasoning of the Court of Appeal. It would be appropriate for an appellate court to interfere with Judge Mosedales full and carefully considered judgment if it could be shown that irrelevant material was taken in to account, relevant material was ignored (unless the appellate court was satisfied that this made no difference), or the decision was one which no reasonable tribunal court have reached [21]. The order made by Judge Hellier reflects the terms of rule 8(3)(a) of Rule 8 of the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), which provides that: the Tribunal may strike out the whole or a part of the proceedings if (a) the appellant has failed to comply with a direction which stated that a failure by the appellant to comply with the direction could lead to the striking out of the proceedings or part of them [10 11]. Judge Mosedale had correctly approached the issue on the basis that the order reflected rule 8(3), rather than rule 8(1) as HMRC had contended [22]. Case law concerning time limits and sanctions relevant to the Civil Procedure Rules does not apply directly to the tribunals: the jurisdiction of many of the tribunals extends to the whole of the United Kingdom rather than being limited to England and Wales, and they have different rules from the courts and sometimes require a different approach to a particular procedural issue. However, in general, a similar approach should be followed [23 26]. Judge Mosedale had made clear that her consideration of the Civil Procedure Rules and related authorities was limited to whether the guidance contained in them was relevant by analogy to the application of the overriding objective in the Tax Tribunal rules. She had distinguished the guidance before applying a nuanced version of it [26 27]. Further, in considering the reasoning in Mitchell v Newsgroup Limited [2014] 1 WLR 795, Judge Mosedale had correctly considered that whilst the case was not strictly relevant, it contained some useful guidance when considering the overriding objective of dealing with cases fairly and justly [28], [15]. There is no basis for concluding that she had misunderstood the guidance given in Mitchell, nor that any developments in the subsequent case of Denton v TH White Ltd [2014] 1 WLR 3926 justified upsetting her decision [28]. In reaching her conclusion, Judge Mosedale had carefully considered all the relevant factors, including the disadvantage to HMRC and the arguably disproportionate benefit to BPP [29], [12 20]. The fact that HMRC was discharging a public duty in this case did not justify the application of a special rule or approach [30]. It was not disproportionate for BPP to have sought a debarring order rather than proceeding to a hearing [31]. The argument that the result of the debarring order would result in an unjustified windfall for BPP by improving its prospects of success in the substantive appeal could be made by any party facing a debarring order, and would, if accepted, save in exceptional circumstances, undermine the utility of the sanction of a debarring order [32]. The decision to make a debarring order against HMRC was tough and some Ft T judges may not have made it. However, HMRC cannot cross the high hurdle of demonstrating that the decision was unjustifiable, given the combination of the nature and extent of HMRCs failure to reply to BPPs request, the length of the delay in rectifying the failure and the length of the consequential delay to the proceedings, the absence of any remedy to compensate BPP for the delay and the absence of any explanation or excuse for the failure, coupled with the existence of other failures by HMRC to comply with directions [33 34].

The issue in this case is whether the Crown is bound by the prohibition of smoking in most enclosed public places and workplaces, contained in Chapter 1 of Part 1 of the Health Act 2006 (for shorthand, I shall call its provisions the smoking ban). The issue comes before this Court because a prisoner, who is serving an indeterminate sentence at Her Majestys Prison Wymott and a non smoker with a number of health problems, complains that the ban is not being properly enforced in the common parts of the prison. But the same issue affects the myriad of premises which are occupied by central government departments, the civil servants and other people who work there, and the members of the public who visit the premises for business or pleasure. They need to know whether the smoking ban which applies to those premises is simply an instruction from the managers or whether it is backed up by criminal sanctions and other enforcement measures having the force of law. This case The appellant suffers from a number of health problems which are exacerbated by tobacco smoke, including hypertension and coronary heart disease. He has a history of myocardial infarction and required surgical coronary intervention in 2009. He complains about his exposure to second hand tobacco smoke in the common parts of the prison. He alleges that both staff and prisoners often smoke in areas of the prison where smoking is prohibited. The Secretary of State disputes this, but it is not the business of these proceedings to resolve that factual dispute. In September 2013, the appellant asked that the National Health Service Smoke free Compliance Line (SFCL) be put on the prison phone system for all prisoners. This would enable them to report breaches of the smoking ban to the local authorities charged with enforcing it. He followed this up with a pre action protocol letter as a prelude to issuing judicial review proceedings. At first, this brought him the result he was looking for on 13 January 2014, the prison issued instructions that arrangements be made for him to have access to the SFCL on his individual phone account. By itself, that might be thought to indicate that the prison thought that the smoking ban applied to them, for what would otherwise be the point of relaxing the general ban on adding Freephone numbers to prisoners mobile phones, if not to enable them to alert the enforcement authority of possible breaches of the ban? However, that is unlikely to be the case, because the very next day the Secretary of State stated in a letter, in answer to the pre action protocol letter, that Part 1 of the Health Act does not bind the Crown. Accordingly, the Secretary of State is of the view that Local Authorities (including on reference by the Compliance Line) have no statutory role in relation to the enforcement of smoke free provisions at HMP Wymott. The appellant therefore launched these proceedings in March 2014, seeking judicial review of the Secretary of States refusal to provide confidential and anonymous access to the SFCL to prisoners. He was successful before Singh J, who held that the Act did bind the Crown and quashed the Secretary of States decision: [2015] EWHC 528 (Admin); [2015] 1 WLR 3963. The Secretary of State appealed successfully to the Court of Appeal, which held that the Act did not bind the Crown: [2016] EWCA Civ 125; [2016] QB 1060. The appellant now appeals to this Court. The background to the smoking ban It has, of course, been known for a long time that smoking tobacco is hazardous to the health of the smoker. Recognition of the dangers of passive smoking is more recent. An account of the genesis of the smoking ban, in the context of hospitals, including mental health units, can be found in Appendix A to the judgment of the Court of Appeal in R (G) v Nottinghamshire Healthcare NHS Trust [2009] EWCA Civ 795; [2010] PTSR 674, an unsuccessful challenge to the smoking ban at Rampton Hospital on human rights grounds. Briefly, in 1998, Smoking kills: A White Paper on Tobacco (Cm 4177) estimated that smoking in the United Kingdom caused 46,500 deaths from cancer and 40,300 deaths from all circulatory diseases. Smokers who smoked regularly and then died of smoking related diseases lost on average 16 years from their life expectancy when compared with non smokers. However, at that time it was thought that the case for legal action to restrict smoking was not sufficiently strong. In reports of 1998 and 2004, the Scientific Committee on Tobacco and Health concluded that exposure to second hand smoking (SHS) was a cause of a range of serious medical conditions and recommended restrictions on smoking in public places and work places so as to protect non smokers from SHS. The overall increased risk of lung cancer for non smokers exposed to SHS was put at 24%. In December 2005, the House of Commons Health Committee reported that SHS caused at least 12,000 deaths a year in the United Kingdom of which a minimum of 500 were due to the presence of smoke in the workplace (First Report Session 2005 2006, Smoking in Public Places, HC 485 I, para 17). One year after the smoking ban came into force, the Department of Health published a report, Smoke free England one year on (2008), which stated: Medical and scientific evidence shows that exposure to second hand smoke increases the risk of serious medical conditions such as lung cancer, heart disease, asthma attacks, childhood respiratory disease, sudden infant death syndrome (SIDS) and reduced lung function. Scientific evidence also shows that ventilation does not eliminate the risks to health of second hand smoke in enclosed places. The only way to provide effective protection is to prevent people breathing in second hand smoke in the first place. In his foreword to that Report, Sir Liam Donaldson, Chief Medical Officer, recalled that he had first called for public places and workplaces to made smoke free in his 2002 Annual Report, which was met with considerable hostility as well as support. The following year, his 2003 Annual Report set out the economic case for smoke free legislation, and recommended that smoke free workplaces and smoke free enclosed public places should be created as a priority through legislation. This recommendation was reinforced by the international obligations undertaken by the United Kingdom. In 2003, the World Health Organisation published its Framework Convention on Tobacco Control. The United Kingdom ratified this in December 2004 and it came into force on 27 February 2005. Article 8, headed Protection from exposure to tobacco smoke, provides: 1. Parties recognize that scientific evidence has unequivocally established that exposure to tobacco smoke causes death, disease and disability. 2. Each Party shall adopt and implement in areas of existing national jurisdiction as determined by national law and actively promote at other jurisdictional levels the adoption and legislative, executive, implementation of effective administrative and/or other measures, providing for protection from exposure to tobacco smoke in indoor workplaces, public transport, indoor public places and, as appropriate, other public places. In 2004, after extensive public consultation, the Department of Health published a White Paper Choosing Health Making Healthy Choices Easier (Cm 6374), canvassing a number of health related initiatives. Among these, reducing the number of people who smoke was a priority: because it leads to heart disease, strokes, cancer and many other fatal diseases; because many people felt this was an area in which they needed more support in addressing the problem; because many people were concerned about the effects of second hand smoke; and because many parents were concerned about their children taking up smoking. (Executive Summary, para 10) Hence, in paragraph 76 of the paper, the Government explained its policy thus: Change has been slow and public demand for action has increased. It is one of the few instances in this White Paper where we believe the right response is Government action in the form of legislation. We therefore intend to shift the balance significantly in favour of smoke free environments. Subject to parliamentary timetables, we propose to regulate, with legislation where necessary, in order to ensure that: all enclosed public places and workplaces (other than licensed premises which are dealt with below) will be smoke free. The rest of paragraph 76 was devoted to restaurants, pubs, clubs and other licensed premises. Paragraph 77 continued: We intend to introduce smoke free places through a staged approach: by the end of 2006, all government departments and the NHS will be smoke free; by the end of 2007, all enclosed public places and workplaces, other than licensed premises (and those specifically exempted), will, subject to legislation, be smoke free; by the end of 2008 arrangements for licensed premises will be in place. We will use the intervening period of time to consult widely in the process of drawing up the detailed legislation, including on the special arrangements needed for regulating smoking in certain establishments such as hospices, prisons and long stay residential care. In implementing this policy there are also a range of practical issues that will need to be addressed we will need to consult, for example, with schools and other institutions on how best to give practical effect to this policy, as well as how best to enforce the policy and what penalties will be appropriate for people who do not follow the law. It is noteworthy that, although the government contemplated bringing in a smoking ban in government departments and the NHS before other premises, nowhere is it stated that any proposed legislation would not cover government departments. On the contrary, the reverse is suggested by including prisons, the overwhelming majority of which are Crown property, amongst the establishments for which special arrangements would be needed. The Queens Speech on 17 May 2005 announced that legislation to restrict smoking in enclosed public places and workplaces would be introduced in that session. In June 2005, the Government published its Consultation on the Smoke free Elements of the Health Improvement and Protection Bill, covering matters such as definitions, exceptions, signage, offences and enforcement. Paragraph 1 announced that the aim of the policy was to make almost all enclosed public places and workplaces smoke free. Only a limited number of exceptions would be permitted in regulations. Once again, there is no hint that the legislation would not bind the Crown or apply to central government departments. Exceptions were canvassed for establishments where people lived, and prisons and other places of detention were listed. The Bill was published in October 2005 and the House of Commons Health Committee conducted an extensive enquiry during October and November. Their Report, Smoking in Public Places (see above), was published in December. It commented, at para 62: Neither the Department of Health nor any other Government witnesses made reference to the issue of Crown immunity during our inquiry. It is not mentioned in the Explanatory Notes to the Bill nor was any reference made by Ministers at the Bills second reading. We find these omissions extraordinary especially as Crown Immunity removes the necessity for exempting many premises. The Governments response (Cmnd 6769, March 2006) was this, at para 7 of its conclusions and recommendations: Through convention, legislation is not usually binding on Crown land. The Health Bill is no exception. No specific reference was therefore made since this legislation followed this usual convention. While Crown Immunity does remove the requirement for specific premises to be exempted from smoke free legislation, it is important that plans are in place for such places to become smoke free, keeping in the spirit of the legislation. Strategies are in place which will see all central government and NHS buildings in England become totally smoke free by the end of 2006. The Bill was passed on 19 July 2006 and the smoking ban came into force on 1 July 2007. The smoking ban Section 2(1) of the 2006 Act defines smoke free premises: Smoke free premises (1) Premises are smoke free if they are open to the public. But unless the premises also fall within subsection (2), they are smoke free only when open to the public. (2) Premises are smoke free if they are used as a place of work (a) by more than one person (even if the persons who work there do so at different times, or only intermittently), or (b) where members of the public might attend for the purpose of seeking or receiving goods or services from the person or persons working there (even if members of the public are not always present). They are smoke free all the time. Section 3(1) provides that the appropriate national authority (the Secretary of State in England and, as originally enacted, the National Assembly in Wales) may make regulations exempting specified premises, or areas within them, from being smoke free. Section 3(2) provides that descriptions of premises which may be specified under section 3(1) include, in particular, any premises where a person has his home (including hotels, care homes, and prisons and other places where a person may be detained). Section 4 allows the appropriate national authorities to designate, as smoke free, premises which would not otherwise fall within section 2. Section 5 deals with vehicles. Section 6(1) imposes a duty on any person who occupies or is concerned in the management of smoke free premises to make sure that the required no smoking signs are displayed in compliance with the section. Failure to comply is an offence (section 6(5)), punishable with a fine on level 3, currently 1,000 (section 6(8); Smoke free (Penalties and Discounted Amounts Regulations (SI 2007/764), regulation 2(1)), although there are various defences (section 6(6)). The prescribed no smoking signs are required to state No smoking. It is against the law to smoke in these premises (The Smoke free (Signs) Regulations 2007 (SI 2007/923), regulation 2). Section 7(2) makes it an offence to smoke in a smoke free place, punishable with a fine on level 1, currently 200 (section 7(6) and SI 2007/764, regulation 2(2)). Section 8(4) makes it an offence, punishable by a fine on level 4, currently 2,500 (section 8(7) and SI 2007/764, regulation 2(3)), for any person who controls or is concerned in the management of smoke free premises to fail to comply with the duty (in section 8(1)) to cause a person smoking there to stop smoking. Once again there are various defences (section 8(5)). Section 10 deals with enforcement. The appropriate national authority designates the enforcement bodies; in England these are the local authorities with environmental health functions and their authorised officers are the local environmental health officers. The enforcement authority has a duty to enforce the ban (section 10(3)) and powers of entry to enable it to do so (Schedule 2). Obstructing its officers is an offence under section 11, carrying a maximum fine at level 3, currently 1,000 (section 11(1), (2), (3) and (4)). While the Bill was going through Parliament, the Department of Health consulted on the proposed regulations: Smoke free premises and vehicles: Consultation on proposed regulations to be made under powers in the Health Bill (July 2006). This made it clear that there is no intention through smoke free legislation to prevent individuals from smoking in areas of premises which are considered to be private residential space. Nevertheless, in certain types of residential accommodation, balance is needed between allowing people to smoke in their own residential spaces and protecting others from exposure to second hand smoke, including the other people who call the premises home and the people who work there. Among the premises listed where such a balance was needed were prisons (para 3.12). Once again, there was no suggestion in the Consultation that government premises would be exempt from the ban, and therefore that only private prisons would be included. Accordingly, the Smoke free (Exemptions and Vehicles) Regulations 2007 (SI 2007/765), regulation 5, provide that the person in charge of such premises, including prisons, may designate bedrooms or smoking rooms as not smoke free. Prisons are expressly exempt from the requirement that doors which open onto smoke free premises must be automatically self closing (regulation 5(3)(e)). Not surprisingly, perhaps, Her Majestys Prison Service took the view that the smoking ban did apply to them. A Prison Service Instruction, Smoke free Legislation: Prison Service Application (PSI 09/2007), dated 2 April 2007, was clearly drafted on the assumption that prisons were bound to comply with the legislation, as was the Foreword to a research study, Stop Smoking Support in Prisons (January 2007), signed by the Director of Prison Health at the Department of Health and the Deputy Director General of Her Majestys Prison Service. When do Statutes bind the Crown? The classic and conventional statement of principle is that a statutory provision does not bind the Crown save by express words or necessary implication. As authority for that proposition, it is not necessary to look further than two cases, one in the Judicial Committee of the Privy Council and one in the House of Lords. In Province of Bombay v Municipal Corporation of the City of Bombay [1947] AC 58, the issue was whether an Act giving the municipality power to lay water mains for the purpose of water supply through, across or under any street and into, through or under any land in the city allowed it to lay a water main in a private road belong to the government. Lord du Parcq, giving the judgment of the Board, said this (at 61): The general principle to be applied in considering whether or not the Crown is bound by general words in a statute is not in doubt. The maxim of the law in early times was that no statute bound the Crown unless the Crown was expressly named therein, Roy nest lie par ascun statute si il ne soit expressement nosme. But the rule so laid down is subject to at least one exception. The Crown may be bound, as has often been said, by necessary implication. If, that is to say, it is manifest from the very terms of the statute, that it was the intention of the legislature that the Crown should be bound, then the result is the same as if the Crown had been expressly named. It must then be inferred that the Crown, by assenting to the law, agreed to be bound by its provisions. There being no express provision, the Board was concerned with necessary implication. They rejected the view of the Chief Justice that the necessary implication could be found if the law could not operate efficiently and smoothly if the Crown were not bound. This seemed to ignore the possibility that the legislature may have expected that the Crown would co operate with the corporation so far as its own duty to safeguard a wider public interest made co operation possible and politic (p 62). The Board also rejected the view, albeit supported by much earlier authority, that the Crown must be held to be bound by any statute enacted for the public good, because every statute must be supposed to be for the public good (p 63). Nevertheless the purpose was relevant: Their Lordships prefer to say that the apparent purpose of the statute is one element, and may be an important element, to be considered when an intention to bind the Crown is alleged. If it can be affirmed that, at the time when the statute was passed and received the royal sanction, it was apparent from its terms that its beneficent purpose must be wholly frustrated unless the Crown were bound, then it may be inferred that the Crown has agreed to be bound. (emphasis supplied) The Board also declined to adopt a rather different approach which had found favour in Scotland (see further below) (p 64) and pointed out that express savings for the Crown might be inserted ex abundanti cautela without necessarily implying that the Crown was bound by other provisions in the Act (p 65). The second case is Lord Advocate v Dumbarton District Council [1990] 2 AC 580, where Lord Keith of Kinkel, with whom the other members of the appellate committee agreed, dealt rather more comprehensively with the modern cases. The issue was whether the Ministry of Defence was entitled to cone off a section of the A814 road without the permission of the roads authority under the Roads (Scotland) Act 1984 or the local planning authority under the Town and Country Planning (Scotland) Act 1972. The first question was whether the law of Scotland was the same as the law of England in this respect. Before the Acts of Union, Scots law did not have the same presumption as English law, and there were Scottish cases suggesting that the rule was rather different there. Lord Keith held that there were no rational grounds for adopting a different approach to the construction of statutes in Scotland and in England and that the modern English approach should prevail (p 591). He then reviewed most of the modern English authorities in detail, beginning with Gorton Local Board v Prison Comrs (Note), decided in 1887 but reported as a footnote to the report of Cooper v Hawkins [1904] 2 KB 164. In Gorton it was held that the Prison Commissioners were not bound by local by laws made under the Public Health Act 1875, requiring the local authority to certify that newly built houses were fit for human habitation. In Cooper, it was held that vehicles driven by Crown servants on Crown business were not subject to the speed limits laid down by the local authority under the Locomotives Act 1865. The next case was Attorney General v Hancock [1940] 1 KB 427, in which it was held that the Crown could enforce a debt for unpaid income tax without the leave of the court, not being bound by the provisions of the Courts (Emergency Powers) Act 1939, which prohibited enforcement without leave. (It is perhaps worth pointing out that a similar conclusion was reached in Attorney General v Edmunds (1870) 22 LTR 667 and Attorney General v Randall [1944] 1 KB 709, where it was held that the Debtors Act 1869 restriction on imprisonment for debt did not apply to debts owing to the Crown.) Lord Keith then quoted from the Province of Bombay case, including the passage cited at para 23 above, and from the case of Madras Electric Supply Corporation Ltd v Boarland [1955] AC 667. This was not directly concerned with whether the statute in question bound the Crown, but with whether the Crown was a person for a particular purpose. While holding that the Crown was such a person, their Lordships reiterated the classic doctrine, Lord MacDermott and Lord Reid locating this as a rule of statutory construction rather than an aspect of the royal prerogative. Similarly in Ministry of Agriculture, Fisheries and Food v Jenkins [1963] 2 QB 317, it was held that the Crown was not bound by the Town and Country Planning Act 1947 to get planning permission for the afforestation of its land. Finally, Lord Keith cited with approval the dictum of Diplock LJ in British Broadcasting Corpn v Johns [1965] Ch 32, at 78 79: The modern rule of construction of statutes is that the Crown, which today personifies the executive government of the country and is also a party to all legislation, is not bound by a statute which imposes obligations or restraints on persons or in respect of property unless the statute says so expressly or by necessary implication. Lord Keith went on to consider in detail the language of the two statutes with which the House was concerned, before concluding that they did not bind the Crown. He returned, at the end of his speech, to the distinction drawn by the Lord President in that case, between actions which would otherwise have been lawful (and thus presumed not to be prohibited by the statute) and actions such as this interference with the highway (which was unlawful and thus presumed to be prohibited). He rejected this distinction as undesirable, requiring as it would a minute inquiry into the powers of the Crown in the particular context and involving a different construction of the same statute depending upon the outcome of that inquiry. He concluded thus, at 604: Accordingly it is preferable, in my view, to stick to the simple rule that the Crown is not bound by any statutory provision unless there can somehow be gathered from the terms of the relevant Act an intention to that effect. The Crown can be bound only by express words or necessary implication. The modern authorities do not, in my opinion, require that any gloss should be placed upon that formulation of the principle. The only other case which it is necessary to consider is R (Revenue and Customs Comrs) v Liverpool Coroner [2014] EWHC 1586 (Admin); [2015] QB 481. The issue was whether or not the Coroners Act 2009, and specifically the investigatory powers contained in Schedule 5, was binding on the Crown, so that the Commissioners were entitled and obliged to provide the coroner with historical occupational information for the purpose of investigating whether the deceased had died of an industrial disease, overriding their statutory duty of confidentiality. The Court held that the Act did bind the Crown, as it was intended to strengthen the powers of coroners and to enable them to conduct an effective investigation into deaths for which the state might bear some responsibility, as required by article 2 of the European Convention on Human Rights. That legislative purpose would be frustrated if it was not binding on the Crown. Mr James Eadie QC, for the Secretary of State in this case, accepts that the Liverpool Coroners case was rightly decided. The solution in this case? Mr Phillip Havers QC, for the appellant, urges one of three courses upon us, each of which would have the result that the smoking ban is binding on the Crown. In reverse order, these are (1) to revisit the rule itself; (2) to modify the rule; or (3) to apply the existing rule in such a way that the smoking ban binds the Crown. (1) Revisit the rule Mr Havers points out that the rule has been subject to criticism from distinguished commentators, ranging from Glanville Williams, who called it a gap made in the rule of law (in Crown Proceedings, London, Stevens, 1948, at p 49); and Bennion on Statutory Interpretation, which describes insistence on necessary implication as typical of the unrealistic attitude displayed by some judges in resisting implied meaning in statutes (London, LexisNexis, 6th ed, Oliver Jones (ed), 2013, at p 181), to Paul Craig, who describes the present law as unsatisfactory, unclear and the product of a misinterpretation of earlier authority (in Administrative Law, London, Sweet & Maxwell, 8th ed (2016), at para 29.003). In his view, careful thought is not always given to whether the Crown should be bound, which may be overlooked or receive scant attention when legislation is drafted. Two solutions have been canvassed. One, favoured by Glanville Williams and Paul Craig, is to reverse the presumption, so that the Crown is bound unless expressly excluded from some or all of the Acts provisions. This would have the merit of clarity and certainty. It would force the Crown to think carefully about whether and to what extent it should be bound and to justify any exemption. The other, favoured by Bennion, is that there should be a single test: what did Parliament intend? In other words, there would be no presumption either way and no requirement that any implication be necessary. This would be to apply the general rule of statutory interpretation to the question, but it would not produce the clarity and certainty of the alternative suggestion. It is easy to see the merits of the solution put forward by Glanville Williams and Paul Craig. However, the problem for this Court in adopting either of the solutions proposed is that the presumption, as stated in the Bombay, Madras and above all the Dumbarton cases, is so well established in modern times that many, many statutes will have been drafted and passed on the basis that the Crown is not bound except by express words or necessary implication. Decisions of this Court, or indeed any court, generally operate retrospectively to alter the previous understanding of the law. It may be possible for the Court to declare that a new understanding of the law will operate only prospectively: the possibility was canvassed at length in In re Spectrum Plus Ltd [2005] UKHL 41; [2005] 2 AC 680. But such a course would be wholly exceptional and the case for doing so has certainly not been made before us. I would therefore decline to abolish the rule or reverse the presumption, although I would urge Parliament, perhaps with the assistance of the Law Commission, to give careful consideration to the merits of doing so. (2) Modify the test It is certainly open to this Court to clarify the test, even if such clarification has the effect of modifying the understanding which some, at least, may have had of it. We can begin with some simple propositions: (1) The Crown is not bound by a statutory provision except by express words or necessary implication. (2) This is not an immunity from liability, strictly so called, but a rule of statutory interpretation. (3) The goal of all statutory interpretation is to discover the intention of the legislation. (4) That intention is to be gathered from the words used by Parliament, considered in the light of their context and their purpose. In this context, it is clear that Lord Hobhouses dictum in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21; [2003] 1 AC 563, at para 45, that A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context must be modified to include the purpose, as well as the context, of the legislation. (5) In considering the intention of the legislation, it is not enough that it is intended for the public good or that it would be even more beneficial for the public if the Crown were bound. (6) However, it is not necessary that the purpose of the legislation would be wholly frustrated if the Crown were not bound. In the Bombay case, it is clear that the Board was only using this as one example of where the Crown would be bound by necessary implication. In this case, it is accepted that the Liverpool Coroners case was rightly decided. The purpose of the Coroners Act would not have been wholly frustrated had it not bound the Crown. But one very important purpose of the Act would have been frustrated: that was to render the inquest process compliant with the United Kingdoms obligations under the European Convention on Human Rights, so that deaths for which the state might bear some responsibility could be properly investigated. (7) In considering whether the purpose of the Act can be achieved without the Crown being bound, it is permissible to consider the extent to which the Crown is likely voluntarily to take action to achieve it. Inaction cannot be assumed. It may be that the Acts purpose can as well be achieved by the Crown exercising its powers properly and in the public interest. But if it cannot, that is a factor to be taken into account in determining the intention of the legislation. In my view, that is all that need be said. It is neither necessary nor desirable to add further glosses to the test, or to characterise it by adjectives such as strict. The question is whether, in the light of the words used, their context and the purpose of the legislation, Parliament must have meant the Crown to be bound. (3) Applying the test in this case Some strong points can be made in favour of the conclusion that Parliament did indeed mean the Crown to be bound by the smoking ban. Although the government announced an intention to bring in a ban before the legislation was passed, there is no hint in the government publications leading up to the adoption of the policy that the Crown would not be bound by the legislation when it came into force (other than the exchange with the Health Committee referred to at para 14 above). If this had been made clear, one might have expected the anti smoking campaigners and the trade unions and staff associations protecting the interests of civil servants and others working for the government to say something about it. The ban was intended to protect workers and visitors from the known dangers of being exposed to second hand smoke, when reliance on voluntary measures had not proved effective, and omitting Crown premises would deny statutory protection to large numbers of people. There are very significant differences between a smoking ban voluntarily imposed by an occupier or employer and the smoking ban imposed by the Act: (i) The signs displayed have to say that it is against the law to smoke in these premises. It is a criminal offence to smoke in smoke free premises. (ii) The occupier or manager is guilty of a criminal offence if such signs are not displayed. (iii) (iv) The manager has to take reasonable steps to stop people smoking and is guilty of a criminal offence if he or she does not. (v) Environmental health officers can be called in to enforce the ban, either against smokers, or against occupiers and managers, or both. (vi) Environmental health officers have powers of entry to enable them to do so. (vii) Individual non smokers who complain about breaches of the ban do not have to bear the expense and burden of bringing proceedings to enforce it. None of this applies to a ban voluntarily imposed in government premises. Any signs displayed cannot say that smoking is against the law. The ban is not backed up by criminal sanctions against smokers or managers. It is not backed up by the enforcement powers of environmental health officers. The only method of challenging a refusal to impose or to enforce a smoking ban would be to bring judicial review proceedings. It is unrealistic to expect workers and members of the public who are adversely affected by exposure to second hand smoke in government premises to bring judicial review proceedings. These are expensive, time consuming and inaccessible to most people, nor will they necessarily produce a remedy which is anything like as effective as the statutory enforcement process. In principle, it is not an objection to the Crown being bound that the Act imposes criminal liability. This was not mentioned as an objection in the leading English and Scottish cases. In practice, apart from the smokers themselves, it would be the individual managers of the premises in question who might be prosecuted, rather than the relevant Secretary of State. Nor, in principle, is it an objection that enforcement powers are given to local environmental health officers. The similar enforcement provisions in the Health and Safety at Work etc Act 1974 and in the Food Safety Act 1990 do apply to the Crown. There is nothing unconstitutional about local government officers, or officers of the Health and Safety Executive, enforcing obligations intended for the protection of workers or the public in government premises. The strongest indication in the language of the Act that the ban is intended to apply to government premises is the express mention of prisons in section 3(2). At the time of its enactment, there were only ten private prisons. All the rest were state run and the great majority still are. No sensible reason has ever been given for distinguishing between state and private prisons. Any practical problems of enforcement by environmental health officers are as great in private prisons as they are in public prisons. Prisoners in public prisons are in just as much need of protection from second hand smoke, and discouragement from smoking, as are prisoners in private prisons. Her Majestys Prison Service certainly thought that the ban would apply to them and that view must have been shared by the Department of Healths Director of Prison Health, who signed the Foreword to the research study, Stop Smoking Support in HM Prisons: the Impact of Nicotine Replacement Therapy (January, 2007). Against all that, there are powerful indicators in the language of the Act itself that the Crown was not to be bound by the smoking ban. First and foremost, it does not say so and it would have been easy enough so to do. Secondly, in Acts with comparable structures and enforcement powers, there are provisions dealing expressly with exactly how and to what extent the Act is to apply to the Crown. A good example is section 48 of the Health and Safety at Work etc Act 1974: 48. Application to Crown (1) Subject to the provisions of this section, the provisions of this Part, except sections 21 to 25 and 33 to 42, and of regulations made under this Part shall bind the Crown. (2) Although they do not bind the Crown, sections 33 to 42 shall apply to persons in the public service of the Crown as they apply to other persons. (3) For the purposes of this Part and regulations made thereunder persons in the service of the Crown shall be treated as employees of the Crown whether or not they would be so treated apart from this subsection. (4) Without prejudice to section 15(5), the Secretary of State may, to the extent that it appears to him requisite or expedient to do so in the interests of the safety of the State or the safe custody of persons lawfully detained, by order exempt the Crown either generally or in particular respects from all or any of the provisions of this Part which would, by virtue of subsection (1) above, bind the Crown. (5) The power to make orders under this section shall be exercisable by statutory instrument, and any such order may be varied or revoked by a subsequent order. (6) Nothing in this section shall authorise proceedings to be brought against Her Majesty in her private capacity, and this subsection shall be construed as if section 38(3) of the Crown Proceedings Act 1947 (interpretation of references in that Act to Her Majesty in her private capacity) were contained in this Act. To very similar effect is section 54 of the Food Safety Act 1990. Such provisions enable the offence creating and enforcement provisions of legislation intended for the benefit of all to be tailored to the special position of government departments and, indeed, of Her Majesty in her private capacity. Furthermore, the 2006 Act contains just such a provision in another Part of the Act. Section 23, which is contained in Chapter 1 of Part 3, dealing with the Supervision of Management and Use of Controlled Drugs, provides: 23. Crown application (1) This Chapter binds the Crown. (2) No contravention by the Crown of any provision of this Chapter shall make the Crown criminally liable; but the High Court (or, in Scotland, the Court of Session) may declare unlawful any act or omission of the Crown which constitutes such a contravention. (3) The provisions of this Chapter apply to persons in the public service of the Crown as they apply to other persons. Thus the Crown has to abide by the requirements of that Chapter but the serious criminal offences imposed in section 21 for obstructing the powers of entry and inspection conferred by section 20 cannot be committed by the Crown. They can however be committed by persons in the public service of the Crown. As it happens, virtually identical provision is made in the Scottish equivalent to the smoking ban contained in Chapter 1 of Part 1 of the 2006 Act, by section 10 of the Smoking, Health and Social Care (Scotland) Act 2005, which preceded the 2006 Act: 10. Crown application (1) This Part binds the Crown. (2) No contravention by the Crown of this Part or any regulations under it makes the Crown criminally liable; but the Court of Session may, on the application of a council in the area of which the contravention is alleged to have taken place, declare unlawful any act or omission of the Crown which would, but for this subsection, have been an offence. (3) Subsection (2) does not extend to persons in the public service of the Crown. Had Parliament intended Part 1 of Chapter 1 of the 2006 Act to bind the Crown, nothing would have been easier than to insert such a provision into that Part. It would have made clear who could be prosecuted for the offences created. Furthermore, the Report of the Health Committee does indicate that Parliament was alive to the question of whether the smoking ban would bind the Crown and aware of the case for further exemptions if the Act were to do so. It might also be taken to indicate that Parliament was aware that the mischief at which the Bill was aimed was smoking on private premises over which the Government had no control. It might well be thought desirable, especially by and for civil servants and others working in or visiting government departments, if the smoking ban did bind the Crown. But the legislation is quite workable without doing so. It cannot be suggested, in the way that it could be suggested in the Liverpool Coroners case, that a major plank of the Acts purpose would remain unfulfilled if the Act did not bind the Crown. The Crown can do a good deal by voluntary action to fill the gap. The Commissioners were not able to fill the gap unless their obligations under the Act overrode their duty of confidentiality. Thus, not without considerable reluctance, I am driven to the conclusion that this appeal must fail. There is a presumption that Acts of Parliament only bind the Crown by express words or necessary implication. Necessary implication entails that Parliament must have meant to bind the Crown. The fact that where Parliament did mean to do so in this Act, it said so, and made tailored provision accordingly, is to my mind conclusive of the question.

UK-Abs

The issue in this appeal is whether the Crown is bound by the prohibition of smoking in most enclosed public places and workplaces (the smoking ban), contained in Chapter 1 of Part 1 of the Health Act 2006 (the Act). The issue affects all those residing in, employed to work at or visiting any Crown premises, including prisons. Mr Black is serving an indeterminate sentence of imprisonment at HMP Wymott. He is a non smoker, with a number of health problems exacerbated by tobacco smoke, and he complains that the smoking ban is not being properly enforced in the common parts of the prison. He issued proceedings for judicial review of the Secretary of States refusal to provide confidential and anonymous access to the National Health Service Smoke free Compliance Line to prisoners. This would enable prisoners to report breaches of the smoking ban to the local authority charged with enforcing it, provided that the smoking ban applied to Crown premises. Mr Black succeeded in the High Court, which held that the smoking ban did bind the Crown. The Secretary of State appealed successfully to the Court of Appeal, which reversed the decision, holding that the Crown was not bound. The Supreme Court unanimously dismisses the appeal. It holds that Parliament must have intended that the Crown should not be bound by the smoking ban, since it would otherwise have made express provision for it in the Act. Lady Hale gives the only reasoned judgment, with which all the other justices agree. The classic rule is that a statutory provision does not bind the Crown save by express words or necessary implication [22]. This is so well established that many statutes will have been drafted and passed on this basis. Any decision of the Supreme Court to abolish this rule or reverse the presumption would operate retrospectively. It should not therefore do so, although Parliament, perhaps with the assistance of the Law Commission, is urged to give careful consideration to the merits of abolishing the rule [35]. The rule is not an immunity from liability, but a rule of statutory interpretation. The goal of all statutory interpretation is to discover the intention of the legislation, gathered from the words used in the statute in the light of their context and purpose. A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context, including its purpose. It is not enough that a statute is intended for the public good, or that it would be even more beneficial for the public if the Crown were bound. It is not, however, necessary that the purpose of the legislation would be wholly frustrated if the Crown were not bound; it is enough if an important purpose of the statute would have been frustrated. The court may take into account the extent to which the Crown is likely voluntarily to take action to achieve the purpose of the statute [36]. The test to be applied in this case is therefore whether, in the light of the words used, their context and the purpose of the legislation, Parliament must have meant the Crown to be bound by the smoking ban in the Act [37]. There is no hint in the government publications preceding the Act that the Crown would not be bound by the smoking ban. It is intended to protect workers and visitors from the dangers of exposure to second hand smoke when reliance on voluntary measures has not proved effective, and omitting Crown premises would deny statutory protection to many people [38]. There are significant differences between the enforcement of the smoking ban by environmental health officers under the Act and a voluntary ban on government premises, which can only be enforced through far less effective proceedings brought by individuals [39 40]. Notwithstanding these factors, however, there are powerful indicators in the language of the Act itself that the Crown is not to be bound by the smoking ban: The Act does not say the smoking ban binds the Crown, as it could easily have done [43]; This contrasts with similar statutes, such as the Health and Safety at Work Act 1974, which contain express provisions on how and to what extent they apply to the Crown [44 45]; The Act itself has just such a provision in another Part, relating to the supervision of management and use of controlled drugs [46]; Almost identical provision to that is also made in the statute enacting the Scottish equivalent to the smoking ban, which shortly preceded the Act [47]; and Even if it was desirable for the smoking ban to bind the Crown, the legislation is quite workable without this. The Crown could do a great deal by voluntary action to fill the gap [49]. Accordingly, the fact that where Parliament did mean to bind the Crown in the Act, it expressly said so and made tailored provision, is conclusive of the question of its lack of intention in relation to the smoking ban. With considerable reluctance, the Supreme Court therefore dismisses the appeal [50].

This appeal concerns a tax avoidance scheme by which employers paid remuneration to their employees through an employees remuneration trust in the hope that the scheme would avoid liability to income tax and Class 1 national insurance contributions (NICs). The appeal raises a fundamental question about the nature of the income tax charge on employment income. That question is whether an employees remuneration is taxable as his or her emoluments or earnings when it is paid to a third party in circumstances in which the employee had no prior entitlement to receive it himself or herself. HM Revenue and Customs Commissioners (HMRC) assessed the employing companies to income tax and NICs on the sums so paid as remuneration. The employing companies appealed those assessments to the First tier Tribunal (Tax Chamber) (the FTT), whose members were Kenneth Mure QC, Dr Heidi Poon and Scott Rae WS. The FTT, while recognising that the scheme was an aggressive tax avoidance scheme (para 193), held in a decision dated 29 October 2012 (by a majority, being Mr Mure and Mr Rae) that the scheme was effective in avoiding liability to income tax and NICs. This was because the FTT considered the steps in the scheme were not shams and that the employees had received only a loan of the moneys which the employing companies paid to the trusts. The Upper Tribunal (Tax and Chancery Chamber) (Lord Doherty), in a decision dated 8 July 2014, upheld the FTTs decision, because it detected no error of law in the majoritys reasoning. The Advocate General for Scotland on behalf of HMRC appealed to the Inner House of the Court of Session and advanced a legal argument which had not been presented to, or at least had not been developed before, the tribunals, namely that the payment of the sums to the remuneration trust involved a redirection of the employees earnings and accordingly did not exclude those earnings from the charge to income tax. The Inner House (the Lord Justice Clerk (Lord Carloway), Lord Menzies and Lord Drummond Young) upheld that argument and allowed the appeal on 4 November 2015: Advocate General for Scotland v Murray Group Holdings Ltd 2016 SC 201. Of the employing companies only RFC 2012 plc appeals to this court. I will refer to it, along with its previous incorporation which was the Rangers Football Club plc, as RFC. In this judgment I set out my reasons for concluding that this appeal should be dismissed. The tax legislation The employing companies, including RFC, operated the tax avoidance scheme in the tax years between 2001/02 and 2008/09. During that time the legislation for the taxation of emoluments from earnings was replaced by a new enactment. It is therefore necessary to describe the relevant provisions, which are essentially to the same effect, under each of the relevant Acts. In the tax years 2001/02 and 2002/03 the relevant legislation was contained in the Income and Corporation Taxes Act 1988 (as amended) (ICTA). Section 19 of that Act charged income tax under Schedule E on emoluments derived from any office or employment. So far as relevant section 19 provided: Schedule E Tax under this Schedule shall be charged in respect of any office or employment on emoluments therefrom which fall under one or more than one of the following Cases Case1: any emoluments for any year of assessment in which the person holding the office or employment is resident and ordinarily resident in the United Kingdom Emoluments were defined in very wide terms in section 131 of ICTA as including all salaries, fees, wages, perquisites and profits whatsoever. Since 1989, emoluments have been taxed on a receipts basis: section 202A of ICTA provided that income tax shall be charged under Schedule E on the full amount of the emoluments received in the year in respect of the office or employment concerned. Section 202B defined when emoluments were to be treated as received for the purposes of section 202A: so far as relevant it was the earlier of (a) the time when payment is made of or on account of the emoluments or (b) the time when a person becomes entitled to payment of or on account of the emoluments. This legislation was replaced by the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), which governs RFCs liability to income tax on employment income during the relevant tax years from 2003/04 to 2008/09. Section 6 of that Act imposes a tax on employment income, which so far as relevant is on general earnings. Section 7 defines general earnings by reference to section 62 which, so far as relevant, provides: (2) [E]arnings, in relation to an employment, means any salary, wages or fee, (a) any gratuity or other profit or incidental benefit (b) of any kind obtained by the employee if it is money or moneys worth, or (c) the employment. anything else that constitutes an emolument of (3) For the purposes of subsection (2) moneys worth means something that is (a) of direct monetary value to the employee, or (b) capable of being converted into money or something of direct monetary value to the employee. Section 9 of ITEPA, which defines the amount of employment income charged to tax, provides in subsection (2) that, in the case of general earnings, the amount charged is the net taxable earnings from an employment in the year. Employers, who pay emoluments (or earnings after 2003) which are assessable to tax, are required to deduct income tax from their payments to their employees under the pay as you earn (PAYE) regime. Before 2003, section 203 of ICTA provided for the deduction to be made in accordance with regulations, which were the Income Tax (Employments) Regulations 1993 (SI 1993/744) (the 1993 Regulations). Regulation 6 provided that an employer, on making any payment of emoluments to an employee, should deduct tax and regulations 40 to 42 provided that the employer should pay to HMRC the amount of tax which it was liable to deduct. Section 203A of ICTA provided, so far as relevant, that for the purposes of section 203 and the 1993 Regulations payment was treated as made at the earlier of (a) the time when the payment is actually made and (b) the time when a person becomes entitled to the payment. For the tax year 2003/04 and following tax years, section 683 of ITEPA defined PAYE income as any PAYE employment income for the year and section 684 provided for the making of regulations, which became the Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682) (the PAYE Regulations). Regulation 21 of the PAYE Regulations requires the employer to deduct income tax on making a relevant payment to an employee. I discuss the meaning of employee in both of these regulations in para 40 below. Regulation 80 of the PAYE Regulations provides that, if it appears to HMRC that there may be tax payable by an employer which has not been paid, HMRC may determine the amount of that tax and serve notice of their determination on the employer. HMRC made its determinations in relation to the employing companies under this regulation. Thus, as Lord Drummond Young stated in delivering the impressive judgment of the court, the central concept in the tax regime governing employment income is the payment of emoluments or earnings derived from employment; and an employer who pays emoluments or earnings to or on account of an employee is obliged to deduct tax in accordance with the PAYE Regulations. Liability to pay Class 1 NICs on earnings in respect of employment was and is governed by section 6 of the Social Security Contributions and Benefits Act 1992 (the 1992 Act). Schedule 1 to the 1992 Act required the employer, who paid earnings to an employed earner, to pay both the employers and the earners Class 1 contributions to HMRC. The parties to the appeal have agreed that the determination of the appeal in relation to income tax will govern liability to NICs. I therefore do not need to consider the legislation relating to NICs any further. The interpretation of tax legislation The legislative code for the taxation of income has developed over time to reflect changing governmental policies in relation to taxation, to remove loopholes in the tax regime and to respond to the behaviour of taxpayers. Such responses include the enactment of provisions to nullify the effects of otherwise successful tax avoidance schemes (or schemes which were apparently successful pending a definitive judicial determination). As a result, the legislative code is not a seamless garment but is in certain respects a patchwork of provisions. Over time, judicial decisions on the interpretation of sections of the tax legislation have assisted in clarifying the boundaries of those provisions. Such decisions have influenced Parliament in the re enactment of legislation. Some judicial decisions, for example, as I discuss in paras 42 44 below, the requirement that a perquisite in section 131 of ICTA be convertible into money, have been definitional. But the courts at the highest level have repeatedly warned of the need to focus on the words of the statute and not on judicial glosses, which may clarify or illustrate in a particular case but do not replace the statutory words. Thus in Hochstrasser v Mayes [1960] AC 376, in which the House of Lords was considering whether an emolument could be said to arise from a taxpayers employment or office, Lord Radcliffe cited various judicial statements and stated (391): These are all glosses, and they are all of value as illustrating the idea which is expressed by the words of the statute. But it is perhaps worth observing that they do not displace those words. Similar advice can be found in the speech of Lord Reid in Laidler v Perry [1966] AC 16, 30, in which he stated: There is a wealth of authority on this matter and various glosses on or paraphrases of the words in the Act appear in judicial opinions, including speeches in this House. No doubt they were helpful in the circumstances of the cases in which they were used, but in the end we must always return to the words in the statute See also the judgment of Lord Russell of Killowen in the Court of Appeal in Brumby v Milner [1976] 1 WLR 29, 34 35 and the speech of Lord Simon of Glaisdale in the House of Lords in that case [1976] 1 WLR 1096, 1099 1100. Another, more recent, judicial development in the interpretation of taxing statutes is the definitive move from a generally literalist interpretation to a more purposive approach. This can be traced to the speech which Lord Nicholls of Birkenhead delivered in the House of Lords in Barclays Mercantile Business Finance Ltd v Mawson [2005] 1 AC 684, in which he explained the true principle established in W T Ramsay Ltd v Inland Revenue Comrs [1982] AC 300 and the cases which followed it. As he explained (para 28), the modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose. In the past, the courts had interpreted taxing statutes in a literalist and formalistic way when applying the legislation to a composite scheme by treating every transaction which had an individual legal identity as having its own tax consequences. Lord Nicholls described this approach as blinkered (para 29). Instead, he removed the interpretation of taxing statutes from its literalist enclave and incorporated it into the modern approach to statutory interpretation which the court otherwise adopts. He stated (para 32): The essence of the new approach was to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description. [T]he question is always whether the relevant provision of the statute, upon its true construction, applies to the facts as found. As Lord Nicholls of Birkenhead said in MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311, 320, para 8: The paramount question always is one of interpretation of the particular statutory provision and its application to the facts of the case. Lord Nicholls (para 34) recognised two features which were characteristic of tax law. First, tax is generally imposed by reference to economic activities or transactions which exist, as Lord Wilberforce said (in W T Ramsay, 326) in the real world. In the Court of Appeal in Barclays Mercantile [2003] STC 66, para 66, Carnwath LJ made the same point: taxing statutes generally draw their life blood from real world transactions with real world economic effects. Secondly, the prodigious intellectual effort in support of tax avoidance results in transactions being structured in a form which will have the same or nearly the same economic effect as a taxable transaction but which it is hoped will fall outside the terms of the taxing statute. He continued: It is characteristic of these composite transactions that they will include elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge. The correct response of the courts was not to disregard elements of transactions which had no commercial value. That, he said, was going too far. Instead the court had, first, to decide, on a purposive construction, exactly what transaction would answer to the statutory description and secondly, to decide whether the transaction in question did so (para 36). Lord Reed in UBS AG v Revenue and Customs Comrs [2016] 1 WLR 1005, para 62, has helpfully summarised the significance of the new approach, which W T Ramsay, as explained in Barclays Mercantile, has brought about, in these terms: First, it extended to tax cases the purposive approach to statutory construction which was orthodox in other areas of the law. Secondly, and equally significantly, it established that the analysis of the facts depended on that purposive construction of the statute. In summary, three aspects of statutory interpretation are important in determining this appeal. First, the tax code is not a seamless garment. As a result provisions imposing specific tax charges do not necessarily militate against the existence of a more general charge to tax which may have priority over and supersede or qualify the specific charge. I return to this point towards the end of this judgment (paras 68 72 below). Secondly, it is necessary to pay close attention to the statutory wording and not be distracted by judicial glosses which have enabled the courts properly to apply the statutory words in other factual contexts. Thirdly, the courts must now adopt a purposive approach to the interpretation of the taxing provisions and identify and analyse the relevant facts accordingly. In this appeal, there is no suggestion that any part of the transaction, which comprised the tax avoidance scheme, was a sham. But that is not the point. The elements of the transaction, which I discuss below, were all genuine and had legal effect, as the majority of the FTT held. In answering the question whether the relevant statutory provisions were intended to apply to the transaction, the proper approach is, first, to interpret the relevant statutory provisions purposively and, secondly, to analyse the facts in the light of those statutory provisions so construed. I seek to do so in para 35 and following. But first I set out the facts. The facts As this is an appeal on a point of law and as the UT did not make separate findings of fact, I derive my summary of the facts from the judgment of the majority of the FTT. Some of those findings are terse and require explanation from the documents which were before the FTT and have been made available to this court. Dr Poon, who wrote the minority judgment, made additional findings of fact, which she derived principally from the documents before her. I do not have regard to her findings in so far as they are inconsistent with those of the majority. I refer to her findings on two occasions, first, where they explain findings by the majority which need clarification (para 29 below) and, secondly, as a check on a conclusion which I have reached based on the majoritys findings (para 27 below). I state below when I am drawing on her findings for these purposes. The employing companies were at all relevant times members of a group of companies whose ultimate parent company is Murray International Holdings Ltd. Since the period with which this appeal is concerned, RFC has been sold out of the Murray group. Other than RFC, the employing companies were Murray Group Holdings Ltd, which is a subsidiary holding company, Murray Group Management Ltd (MGML), which provided management services to the group, the Premier Property Group Ltd, and GM Mining Ltd. MGML by deed dated 20 April 2001 set up a trust known as the Remuneration Trust, which I will refer to as the Principal Trust. A company within the Murray group of companies which wished to benefit one of its employees made a cash payment to the Principal Trust in respect of that employee. When it did so, the employing company recommended the trustee of the Principal Trust to resettle the sum which it paid on to a sub trust and asked that the income and capital of the sub trust should be applied in accordance with the wishes of the employee. The trustee of the Principal Trust had a discretion whether to comply with those requests, but, when an employing company provided the funds, the trustee without exception created a sub trust for the favoured employee. 108 sub trusts were established in the name of individual employees, of which 81 were for RFC employees (footballers and executives) and 27 for other Murray group employees. The group companies also used the combination of the Principal Trust and a sub trust to pay discretionary annual bonuses to employees, other than the footballers whom RFC employed. Since 2005 only RFC used the Principal Trust to remunerate its employees. In this appeal we are concerned only with the sums which RFC paid to the Principal Trust and which were re settled on to a sub trust in accordance with the wishes of each of its employees who took part in the scheme. I discuss employees other than footballers in para 31 below, but first address the operation of the scheme by reference to the footballers. It is instructive to understand (a) how the trust mechanism was established when a footballer was recruited and how the mechanism was explained to the player, (b) the powers over the sub trust which were conferred on the footballer, and (c) how the trustee of the various sub trusts exercised its discretion in operating the arrangement which RFC (and the other Murray group companies) had initiated. The establishment of the trust mechanism: When RFC negotiated the engagement of a footballer with the prospective player or his agent, the discussions focused on the figure net of tax which the footballer would receive. A senior RFC executive would explain the mechanism of creating a sub trust in the name of the employee and the benefits which the trust mechanism would give. In particular, the prospective employee would be told that he could obtain a loan of the sum paid to the sub trust from its trustee which would be greater than a payment net of tax deducted under PAYE if he were to be paid through RFCs payroll. The loan was to be repayable on an extended term of ten years on a discounted basis, that is to say that the player would not pay annual interest on the loan but that the interest would be accrued and applied so that a grossed up sum would be repayable. Both RFC and the footballer expected that the loans would not be repaid at term but would be renewed, as RFCs executive explained to the footballer or his agent that the arrangement had the additional tax advantage that the loans would be repayable out of the footballers estate on death, thereby reducing its value for Inheritance Tax purposes. It was also explained that the player would be appointed as protector of the sub trust, with powers to change both the trustee and also the beneficiaries of the sub trust, as I discuss below. On recruitment of a footballer, the terms of his engagement were recorded in two separate contractual documents. The first was a contract of employment which set out the terms of employment and the footballers remuneration which would be paid subject to deduction of PAYE and NICs. The second was a side letter in which a senior executive of RFC undertook that RFC would (a) recommend to the trustee of the Principal Trust (i) to include the footballer as protector of a sub trust and (ii) to fund the sub trust with the sum or sums which had been agreed in the recruitment negotiation, and (b) fund the Principal Trust to enable the trustee to carry out those recommendations. It is clear from documents, which were before the FTT and were made available to this court as examples of the arrangements, that the sums paid to the Principal Trust and to the sub trusts represented remuneration for employment. In one case, RFC undertook in the side letter to an employee dated 17 June 2004 to pay him free of UK or other taxes the sum which it had undertaken to pay into the Principal Trust for funding the sub trust, if the trustee of the Principal Trust did not make him the protector of the sub trust or fund the sub trust. In another case, we were referred to documents in which a footballers remuneration had been agreed between RFC and his agent in July 2001. The footballers agent recorded his clients remuneration in these terms: Annual Salary 8,000 per week. Contribution to Remuneration trust 8,000 per week namely 416,000 per annum which equates to the sum of 250,000 per annum net. The player will accordingly receive 125,000 in October and February during each year of the Contract. Rangers will grant the appropriate indemnity that they will be responsible for payment of any tax should the revenue seek to recover any tax from the player on these amounts. Thereafter RFC and the footballer entered into a contract of employment which provided for the payment of an annual salary of 416,000 and RFCs finance director sent the footballer a side letter dated 13 July 2001 in which he confirmed that RFC would recommend to the trustee of the Principal Trust to include him as the protector of a sub trust and to fund the sub trust with 125,000 on each occasion in October and February during the period which matched the term of the contract of employment. The majority of the FTT recorded (para 207) that RFC offered the prospective employees this form of deal, combining a payroll payment and the transfer of funds through the trust mechanism on a take it or leave it basis. The Scottish Football Association (SFA) required football clubs to register players contracts with it. RFC registered the contracts of employment but did not disclose the side letters to the SFA. RFC initiated the creation of a sub trust by having the employee complete a letter of wishes, in which the employee, as protector of the sub trust, wrote to the trustee to express his wishes as to the exercise of the trustees discretionary powers. The court was shown examples of such letters, which were in a standardised form, in which the employee asked that the income and capital be held and applied according to his wishes, and that on his death, the trust fund be held for the benefit of a specified member or members of his family. In all but one case, RFC had the employee complete a loan application on his own behalf. The letter of wishes and the loan application were then submitted to the trustee. Messrs Baxendale Walker, the solicitors who devised and operated the scheme for the Murray group, then submitted a standard form of trust deed for the trustee company, in its capacity as trustee of the Principal Trust, to sign in order to create the sub trust. RFC paid its agreed contribution to the Principal Trust; and, on receipt of the funds, the trustee company invariably exercised its discretion to create a sub trust in the name of the employee. The trustee company, in its other capacity as trustee of the sub trusts, almost invariably exercised its discretion to grant a loan of the full amount in the sub trust in response to an employees request. The employees powers over the sub trust: The employee enjoyed extensive powers under the sub trust as its protector. In an example of a sub trust which was shown to the court, clause 7 gave the protector a power, which was stated to be a fiduciary power, to appoint and remove any trustee. Clause 9 gave the protector the power, which again was stated to be a fiduciary power, to alter the provisions of the sub trust. Significantly, that power included the power to change the beneficiaries of the sub trust. The power of alteration was subject to exclusions and required the written consent of the trustee if it was exercised in a manner which would adversely affect the trustee. The employee as protector was also empowered to appoint a protector in his place (clause 1.1.7). The FTT summarised the position (in para 103(v) of the majority decision) in these terms: the employee could also be appointed protector with extended powers in respects resembling trusteeship, but without title to the trust assets, and not enabling the conferring of any absolute beneficial right on the employee himself. This statement by the majority of the FTT is accurate in so far as it states what the employee could do while he was protector. But the employee had, as I have said, a power to appoint someone else as protector in his place and that person as protector had power to alter the beneficiaries of the sub trust. The majority of the FTT recorded (paras 23 and 227) that foreign players who left RFC and moved to reside overseas were able to unscramble the legal framework and receive an absolute right to the moneys which had been put in the sub trust. The majority of the FTT stated that this could be done only with the consents of those interested in the capital of the sub trust concerned. I am not persuaded that that is correct. In some cases, such as the one to which the majority expressly referred, the players wife cooperated with RFC, the trustee and the player to assign the receivables of the sub trust to the player and thus extinguish the loan. But the power of a replacement protector to alter the beneficiaries may have enabled the player to be nominated as the beneficiary and for him in cooperation with the trustee to extinguish the loan and bring the sub trust to an end. Dr Poons more detailed findings on the termination of sub trusts in paras 145 151 of her dissenting decision suggest that this device also was used. The exercise of discretion by the trustee: The initial trustee of the Principal Trust was Insinger Trust Company Ltd, which was resident in Jersey and which later changed its name to Equity Trust (Jersey) Ltd (Equity). Equity was also the trustee of the sub trusts. Both the Principal Trust and the sub trusts are governed by English law. In 2006 MGML replaced Equity with Trident Trust Company Ltd (Trident), another company resident in Jersey, as trustee of the Principal Trust, and transferred the trusteeship of certain sub trusts to it. As I have said, in every case in which an employing company paid money to the Principal Trust, the trustee, whether Equity or Trident, exercised its discretion to create a sub trust. When the employee applied for a loan of the sum paid into the sub trust, the trustee gave the employee a loan of that sum. In no case did the trustee take a security from the employee borrower to protect the repayment of the fund of the sub trust. The majority of the FTT recorded (paras 91, 103(x) and 225) that Equity was replaced as trustee by Trident after Equity had responded to some loan applications by requesting the provision of security and delayed the payment of the loans. It is clear from Dr Poons more detailed findings of fact (paras 50, 60, 166(xiii) and 201) that Equitys request for security was prompted by an investigation by its regulator, the Jersey Financial Services Commission, as to whether the loans were on commercial terms. Tridents managers proved to be more compliant with MGMLs wishes and the majority of the FTT (para 225) described the trustees attitude as lax. The majority recorded (para 225) that the trustee had the benefit of a broad indemnity from MGML; but the majority in its judgment treated the structure of the trust mechanism as important rather than the lax attitude of a particular trustee. RFC used the same trust mechanisms in making termination payments to players and in the payment of guaranteed bonuses. The majority of the FTT discussed these and also certain exceptional cases in paras 206 to 211 of its decision. The other companies in the Murray group, which were respondents before the Court of Session, used the same trust mechanisms and loans when paying discretionary annual bonuses to senior executives. The majority recorded (paras 103(xi) and 205) that these bonuses differed from the footballers bonuses, which were agreed on their engagement, as the senior executives had no contractual right to the bonuses before they were awarded. But the bonuses were paid as a reward for the work which the employees had carried out in their capacity as employees. RFC also used the same mechanisms in paying discretionary bonuses to its senior executives. One director, whose evidence the majority of the FTT accepted, described his understanding that the loan of the funds from the sub trust could be extended after ten years and would ultimately reduce the value of his estate for Inheritance Tax. He had received an indemnity from RFC against any personal tax liability from the arrangement (para 71). The basis of this appeal The majority of the FTT found that the trusts and the loans were valid and were not shams. It refused to hold that the trustee was a cipher and concluded that the trustee genuinely exercised discretion in its appointments upon the sub trusts and the making of the loans. HMRC does not challenge those findings in its defence of this appeal. HMRC succeeded in its appeal before the Inner House on the basis that income, which is derived from an employees work qua employee, is an emolument or earnings, and that it is assessable to income tax, even if the employee requests or agrees that it be redirected to a third party. The Inner House held that the scheme, which involved payments into the Principal Trust and the application of the funds through the sub trusts, amounted to a redirection of the employees earnings and did not remove the employers liability to pay income tax under the PAYE system. It held that the redirection occurred when the employing company paid the sums to the Principal Trust; the fact that the employee took the risk that the trustee would not apply the funds as he requested was irrelevant. The payments by the employing company into the Principal Trust were derived from the employees work as an employee and so were emoluments or earnings. RFC challenges this conclusion. Andrew Thornhill QC submits on its behalf that the Inner House erred in applying what it called the redirection principle in the circumstances of this case. In essence, he asserts that it is not sufficient that the payment of money arises from the performance of the duties of an employment. The payment of money so arising to a third party does not amount to the payment of earnings or emoluments unless the employee already has a legal right to receive the payment and it is paid at his direction to a third party. He submits that the employing companies did not incur liability to pay income tax or NICs because the employees of the Murray group companies never had a right to receive the sums which were paid into the trust mechanism. An employee received only a loan from the trustee of the relevant sub trust and that loan did not fall within the PAYE system. Interpreting the legislation Discussion (i) Income tax on emoluments or earnings is, principally but not exclusively, a tax on the payment of money by an employer to an employee as a reward for his or her work as an employee. As we have seen from the use of the word therefrom in section 19 of ICTA (para 5 above), income tax under Schedule E was charged on emoluments from employment. In other words, it was a tax on the remuneration which an employer pays to its employee in return for his or her services as an employee. This concept also underpins the concept of earnings in ITEPA (para 6 above) which in section 9(2) refers to taxable earnings from an employment and in section 62 defines earnings in relation to an employment. Included in that definition in section 62(2)(c) is the catch all phrase: anything else that constitutes an emolument of the employment. That which was an emolument under prior legislation remains an emolument under ITEPA. What is taxable is the remuneration or reward for services: Brumby v Milner [1976] 1 WLR 29, 35 per Lord Russell of Killowen in the Court of Appeal; [1976] 1 WLR 1096, 1098 1099 per Lord Wilberforce in the House of Lords. That is not in dispute. The central issue in this appeal is whether it is necessary that the employee himself or herself should receive, or at least be entitled to receive, the remuneration for his or her work in order for that reward to amount to taxable emoluments. A careful examination of the provisions of the primary legislation reveals no such requirement. First, section 13 of ITEPA defines the taxable person who is liable for any tax on employment income. Subsection (2) of that section provides: If the tax is on general earnings, the taxable person is the person to whose employment the earnings relate. The employee, whose work gives rise to the remuneration, is taxed, not the recipient of the earnings. This is consistent with the prior history of the tax charge under Schedule E which, as RFC acknowledged in its written case, made the employee the taxable person even if the emoluments were received by a third party. Secondly, the provisions of ICTA and ITEPA, to which I have referred in paras 5 and 6 above, with one exception, do not restrict the concept of emoluments by requiring their payment to a specific recipient. Section 131 of ICTA and section 62(2) of ITEPA define taxable emoluments, but, other than section 62(2)(b) which I discuss in para 45 below, do not specify the recipient. Section 202A of ICTA, which established the receipts basis of the tax charge, spoke of the emoluments received in the year without specifying the recipient and section 202B spoke of the time when a person becomes entitled to payment of or on account of the emoluments (emphasis added). Section 18 of ITEPA, which sets out rules as to when money earnings are received is similarly unspecific as to the identity of the recipient. It provides: (1) General earnings consisting of money are to be treated for the purposes of this Chapter as received at the earliest of the following times Rule 1 The time when payment is made of or on account of the earnings. Rule 2 The time when a person becomes entitled to payment of or on account of the earnings. (Emphasis added) Section 686 of ITEPA contains the same rules for the purposes of the PAYE Regulations. Section 203A of ICTA used a similar formulation in the context of the PAYE regime. Section 203 of ICTA, like the other provisions which I have mentioned, was silent as to the identity of the recipient. I see nothing in the wider purpose of the legislation, which taxes remuneration from employment, which excludes from the tax charge or the PAYE regime remuneration which the employee is entitled to have paid to a third party. Thus, if an employee enters into a contract or contracts with an employer which provide that he will receive a salary of X and that as part of his remuneration the employer will also pay Y to the employees spouse or aunt Agatha, I can ascertain no statutory purpose for taxing the former but not the latter. The breadth of the wording of the tax charge and the absence of any restrictive wording in the primary legislation, do not give any support for inferring an intention to exclude from the tax charge such a payment to a third party which the employer and employee have agreed as part of the employees entitlement. Both sums involve the payment of remuneration for the employees work as an employee. The relevant subordinate legislation points in the same direction. Regulation 21 of the PAYE Regulations speaks of making a relevant payment to an employee and regulation 6 of the 1993 Regulations used similar language (para 7 above). But those provisions in subordinate legislation do not mean that only the employee may receive it. Employee was defined in the 1993 Regulations (regulation 2) as meaning any person in receipt of emoluments. The PAYE Regulations defines employee more narrowly by reference to sections 4 and 5 of ITEPA but it allows for receipt by an other payee which it defines (regulation 2) as a person receiving relevant payments in a capacity other than employee and regulation 12 provides that for the purposes of the PAYE Regulations other payees are treated as employees. I therefore read payment to an employee or essentially similar phrases in the subordinate legislation as a reference to the payment of the employees emoluments whether to the employee or to another person. As a general rule, therefore, the charge to tax on employment income extends to money that the employee is entitled to have paid as his or her remuneration whether it is paid to the employee or a third party. The legislation does not require that the employee receive the money; a third party, including a trustee, may receive it. While that is a general rule, not every payment by an employer to a third party falls within the tax charge. It is necessary to consider other circumstances revealed in case law and in statutory provisions which fall outside the general rule. Those circumstances include: (i) the taxation of perquisites, at least since the enactment of ITEPA, (ii) where the employer uses the money to give a benefit in kind which is not earnings or emoluments, and (iii) an arrangement by which the employers payment does not give the intended recipient an immediate vested beneficial interest but only a contingent interest. As I shall seek to show, in the first circumstance, current legislation requires receipt by the employee; in the second circumstance, there are special rules for the taxation of such benefits; and, in the third circumstance, where on a proper analysis of the facts there is only a contingent right, the taxable earnings or emoluments are not paid by the employer as remuneration until the occurrence of the contingency. The first such circumstance is the taxation of perquisites and profits or, in the updated wording of ITEPA, any gratuity or other profit or incidental benefit. Section 131 of ICTA spoke of perquisites and profits. While in colloquial usage a perk may take many forms, judicial interpretation of tax legislation has long required that the perquisite be capable of being converted into money in order to fall within the tax net under this provision. Three cases in the House of Lords demonstrate this. First, in Tennant v Smith [1892] AC 150, the House of Lords held that a bank manager was not liable to income tax on the use of accommodation in bank premises in Montrose, which he was required to occupy as part of the duties of his employment, because he could not convert any benefit which he obtained from such occupation into money. The arrangement saved the bank manager from incurring expenditure on accommodation; but that was not enough to make the benefit taxable as an emolument. In Abbott v Philbin [1961] AC 352 a majority of the House of Lords held that an employee of a company was liable to income tax on the grant by his employer of an option to purchase shares in that company in the tax year in which the option was granted because the option itself had a monetary value which the employee could realise. Lord Radcliffe described the principle in Tennant v Smith thus (378): if [the benefits] are by their nature incapable of being turned into money by the recipient they are not taxable, even though they are in any ordinary sense of the word of value to him. In Heaton v Bell [1970] AC 728 the House of Lords held by majority that the benefit of the use of a car which an employer provided to its employees under a car loan scheme was taxable either as part of an employees wages, because the contract provided for a deduction from the employees wages to cover the cost of providing the car or, more relevantly, because the car was a perquisite which the employee could turn into money by surrendering it to his employer. These judicial decisions gained statutory expression in section 62 of ITEPA which in subsection (2)(b) provides that earnings include any gratuity or other profit or incidental benefit of any kind obtained by the employee if it is money or moneys worth and defines moneys worth in subsection (3) which looks to the monetary value of the thing to the employee (para 6 above). Thus, in contrast with the more open definitions of earnings in section 62(2)(a) and (c) (salary, wages or fee and anything else that constitutes an emolument of the employment), Parliament has required that the benefit be obtained by the employee and that it is or is capable of being converted into money or something of direct monetary value to the employee. The Notes on Technical Points, which were annexed to the Bill which became ITEPA, described subsection 2(b) as a significant departure in contrast with the continuity between the statutory concepts of emoluments and earnings (Annex 2, note 13). Section 62(2)(b) and (3) were intended to be the modern equivalent of the prior statutory reference to perquisites and profits whatsoever. It is not clear in principle why such benefits should be restricted to those which are received by and of value to the employee when the other forms of employment earnings are not. The provision may reflect judicial dicta such as in Pook v Owen [1970] AC 244, in which Lord Pearce (259) spoke of perquisites as meaning something that benefits a man by going into his own pocket. That case concerned the question of whether the reimbursement of travel expenses, from which the employee made no profit, was a perquisite, which Lord Guest (255) described as a casual emolument additional to regular salary or wages. The House of Lords held that the reimbursement was not such a perquisite. The question of payment to a third party did not arise. It may be that casual emoluments, such as gratuities, are almost always paid to the employee. But I see no proper basis for reading the other forms of earnings in section 62(2)(a) and (c) in a similarly restrictive way. A second circumstance, which falls outside the general rule, is where the employer spends money to confer a benefit in kind which the recipient cannot convert into money. Such expenditure is not a perquisite or profit, gratuity or incidental benefit for the reasons discussed above and only falls within the income tax regime because of special statutory provision, such as, currently, the benefits code in Part 3 chapters 2 11 of ITEPA, which cover among others the provision of living accommodation, cars or loans and the payment of expenses. Part 7 of ITEPA also has special rules for shares etc acquired in connection with an employment, and Part 6 of that Act is concerned with income which is not earnings or share related. A third circumstance is where the person entitled to receive the sums paid by the employer does not acquire a vested right in those sums until the occurrence of a contingency. This circumstance is illustrated by the case of Edwards v Roberts (1935) 19 TC 618, in which an employing company entered into an employment contract to give an employee, in addition to his salary, an interest in a conditional fund, into which it would make annual payments from its profits, as an incentive for him to advance the companys interests. The employee was entitled to receive the annual income from the fund but had no right to receive any of the capital of the fund other than that which had been held in the fund for five years or more. The contract provided that he would receive the whole fund if he died while still employed by the company or on termination of his employment by the company in specified circumstances. But the contract also provided that the employee would cease to have any right in the conditional fund in circumstances which included his dismissal for misconduct. The trustees of the fund handed over to the employee the investments in the fund when he later resigned with the consent of the company. The employee argued that the sums which the company had paid into the conditional fund formed part of his emoluments in each of the years in which they were paid into the fund. But the Court of Appeal (Lord Hanworth MR, Romer and Maugham LJJ) held that those sums did not constitute his emoluments in those years because he had only a conditional interest in them; instead the value of the investments transferred to him after his resignation were his emoluments in the tax year in which they were transferred to him. The payments in that year reflected his status as an employee at the time when the contingency was fulfilled. In that case the court distinguished the case of Smyth v Stretton (1904) 5 TC 36, in which Channell J had construed an employers scheme, which provided for payments into a provident fund for payment to employees on their retirement, as providing for an agreed application of part of the employees salary and held that the payments into the fund were therefore taxable as emoluments for services provided in the year of payment into the fund. The recent judgment of this court in Forde and McHugh Ltd v Revenue and Customs Comrs [2014] 1 WLR 810, which turned on the wording of provisions in the Social Security Contributions and Benefits Act 1992, is consistent with the approach in Edwards v Roberts in holding that sums paid by an employer, other than out of an employees salary, which were to provide contingent benefits to an employee, did not fall within the charge to NICs on earnings before the occurrence of the contingency and the payment of the benefits. Otherwise, on HMRCs approach to the legislation in question, liability to pay NICs on earnings would have arisen both on payment of sums into the trust and on the later payments of the benefits (if any) from it. Mr Thornhill founds on the case, and in particular on its emphasis in para 17 of the judgment on what the employee received, to support his submission that the payment of remuneration cannot be the payment of emoluments unless the employee is entitled to receive it. But Forde and McHugh Ltd was not concerned with the payment of an employees remuneration to a third party or the provision of that money to the employee without the interposition of any contingency. What the court said in para 17 of that case should be read in its context, which involved (a) the conferring of only a contingent benefit on the employee and (b) (if HMRC had been correct in their submission) the imposition of a double charge, levied both on the settlement of funds on to the pension trust and on receipt of the deferred remuneration from it. The case did not create or support the principle for which Mr Thornhill contends. In summary, the statutory provision for the taxation of what were in the past called perquisites and profits, namely section 62(2)(b) of ITEPA, has confined the tax charge to benefits received by the employee. But there is no such restriction in section 62(2)(a) or (c). In none of the cases, which I have mentioned in paras 42 44, 47 and 48 and on which RFC relies, was the court concerned with the identity of the recipient of the benefit. The focus in each was on the source or the nature of the right which the employee received. Accordingly, the cases do not assist in determining the issue on this appeal. By contrast, the advice of the Privy Council in Hadlee v Comr of Inland Revenue [1993] AC 524 is in point. The appeal concerned income tax legislation in New Zealand. Section 38(2) of the Income Tax Act 1976 provided that income tax was payable by every person on income derived by him during the year for which tax was payable. A partner in an accountancy firm assigned a proportion of his share in the partnership to a trust under which the primary beneficiaries were his wife and child. He sought to argue that he was not liable to income tax on that proportion of his annual partnership income. The New Zealand courts rejected that contention and the Privy Council upheld their decision, holding that income tax was a tax on income which was the product of the taxpayers personal exertion and that the taxpayer could not escape liability to pay that tax by assigning a part of his share in the partnership. While the relevant provision of the New Zealand statute was worded differently from the United Kingdom legislation, the latter, by its emphasis on emoluments arising from a taxpayers employment, adopts a similar concept of the tax charge. It supports the view which I have reached that a charge to income tax on employment income can arise when an arrangement gives a third party part or all of the employees remuneration. As well as ascertaining whether remuneration amounts to emoluments or earnings, it is necessary under the provisions relating to PAYE to determine whether there has been a payment from which deductions were required. In para 11 above, I referred to cases of high judicial authority which warned against misplaced reliance on judicial glosses. Such misplaced reliance has been evident in the case law which led up to this appeal in relation to the concept of payment. In Garforth v Newsmith Stainless Ltd [1979] 1 WLR 409 Walton J addressed the meaning of payment in the context of the statutory provisions and regulations which then set out the PAYE system. In the tax year 1974/75 a taxpayer company voted to award bonuses to its two directors and controlling shareholders and credited the sums to accounts with the company from which the directors were free to draw. The directors did not draw on those sums. The Inland Revenue assessed the company to tax, arguing that the company should have deducted tax under the PAYE system on the full sums credited to those accounts. Walton J, upholding the revenues assessment, said (412G) that the word payment had no one settled meaning but took its colour from its context. He held that there was no need for the directors to withdraw the money from their loan accounts for there to have been payment by the company, stating (414A B) when money is placed unreservedly at the disposal of directors by a company, that is equivalent to payment. He held (415C E) that different considerations would have arisen if the company had required a further decision by the board of directors or by the shareholders in general meeting before the money could have been withdrawn. In my view, the interpretation or gloss which Walton J placed on payment (money placed unreservedly at the disposal ) was a practical and sensible one in the context of the circumstances which he was addressing, which later became the subject of statutory provision in section 202B of ICTA. That interpretation or gloss was also adopted by the Inner House in Aberdeen Asset Management plc v Revenue and Customs Comrs 2014 SC 271 in analysing the nature of the rights which a tax avoidance scheme, involving an offshore employee benefits trust and family benefit trusts and shares in Isle of Man companies, had conferred on the relevant employees. By the time the case reached the Inner House, the employing company had accepted that the sums which it had paid though the employee benefits trust to an Isle of Man company were taxable as emoluments and that the scheme was ineffective to reduce the value of those emoluments. The question was whether the employing company was liable to pay the tax under the PAYE system or the benefited employees individually should pay. The issue, to which the gloss was unexceptionably applied, was whether the money in an Isle of Man company, whose shares the employee had acquired through the scheme, was to be treated as being received by the employee so that there was payment within the meaning of section 203 of ICTA and the 1993 Regulations. Lord Drummond Young, having cited Walton Js judgment in Garforth, stated (para 34): In considering what amounts to payment for the purposes of the PAYE legislation, it is important in my opinion to bear in mind that money is a medium of exchange. In practical terms, therefore, the crucial question is whether funds have been placed in a position where as a practical matter they may be spent by the employee as he wishes; it is at that point that the employee can be said to obtain the benefit of those funds. If the PAYE legislation is construed purposively it is in my view obvious that it is such a benefit that is to be taxed. For this purpose it is not appropriate to deconstruct the precise legal nature of the employees rights, drawing fine distinctions according to the methods that he must adopt in order to use the funds for his benefit. The fact that the employee has practical control over the disposal of the funds is sufficient to constitute a payment for the purposes of the legislation. See also the Lord President (Lord Gill) (para 7) and Lord Glennie (paras 65 66). The Inner House did not have to address the argument which HMRC has advanced in this appeal that a payment of an employees emoluments to a third party, including a trustee, could be covered by the PAYE system. The gloss is no basis for establishing a general rule or principle that a payment is made for the purposes of PAYE only if the money is paid to or at least placed unreservedly at the disposal of the employee. Yet it has been so used. In Sempra Metals Ltd v Revenue and Customs Comrs [2008] STC (SCD) 1062 one of the issues which the Special Commissioners had to address was whether payments by the taxpayer company of senior employees bonuses into an employee benefit trust involved the payment of earnings for the purposes of PAYE. In 1995 the company established the trust by deed of settlement in order to provide tax efficient benefits to its employees. The employees could choose to take their annual bonuses in cash or have them paid to the trust. Each employee had the choice of taking the amount allocated to him as a loan or leaving it invested in the trust. No application for a loan was ever refused by the trustee. After changes were made by the Finance Act 2003 which prevented the deduction from profits for the purpose of corporation tax of sums paid into such trusts unless they gave rise to an income tax charge on employment income and a liability to pay NICs, the company replaced the employee benefit trust with a family benefit trust. The beneficiaries of the family benefit trust were members of the employees family as nominated by the employee and the trust operated in a very similar way to the earlier trust. Counsel for the taxpayer company submitted that the employees had received loans and not earnings or emoluments and the trustee had exercised the discretion subject to which it held the funds. Counsel for HMRC argued that the payments to the trusts became emoluments and earnings when they vested unconditionally in the employees and that occurred when the trustee allocated amounts to the individual employees or their nominated beneficiaries. He referred to Garforth for the principle that money placed unreservedly at the disposal of an employee amounted to payment. That was one of the principles which the special commissioners adopted in their reasoning, holding (para 142) that the existence of the trusts, the continuing discretion of the trustee and the existence of the loans, in those cases in which loans were made, meant that the employees were not free to do whatever they liked with the funds allocated to them. They concluded (para 144): When the appellant made payments to the trusts, no transfer of cash or its equivalent was placed unreservedly at the disposal of the employees. That means that there was no payment by the appellant of emoluments or earnings giving rise to an obligation to deduct income tax and pay it to the Revenue. The special commissioners (para 147) reached the same conclusion in relation to NICs. In my view, for the reasons discussed above, Sempra Metals was wrongly decided. HMRC had earlier taken the same approach in its arguments before the special commissioners in Dextra Accessories Ltd v Macdonald (Inspector of Taxes) [2002] STC (SCD) 413, which concerned an employee benefit trust into which a company transferred the bulk of the remuneration of its three director shareholders. In that case the special commissioners rejected the assertion that funds which an employer contributed to an employee benefit trust and which its trustee allocated to trust sub funds were at the absolute disposal of the employees. They held that the trustee would have to exercise its discretion and appoint the funds absolutely to the employees as beneficiaries of the sub trust before those funds could be at the employees absolute disposal. From that conclusion the special commissioners inferred that the sums were not subject to income tax, holding (para 17): The reason why the employees are not taxed on funds in the EBT is simply that they do not belong to the employees. For the reasons set out above I do not agree with this conclusion. But their decision on this issue was not appealed and the special commissioners decision on the deductibility of the companys expenditure for the purpose of corporation tax was reversed by the House of Lords: (2003) 77 TC 146. It is therefore sufficient to note that the special commissioners were not presented with the arguments which HMRC advanced in this appeal before the Inner House and this court. In summary, (i) income tax on emoluments or earnings is due on money paid as a reward or remuneration for the exertions of the employee; (ii) focusing on the statutory wording, neither section 131 of ICTA nor section 62(2)(a) or (c) of ITEPA, nor the other provisions of ITEPA which I have quoted (except section 62(2)(b)), provide that the employee himself or herself must receive the remuneration; (iii) in this context the references to making a relevant payment to an employee or other payee in the PAYE Regulations fall to be construed as payment either to the employee or to the person to whom the payment is made with the agreement or acquiescence of the employee or as arranged by the employee, for example by assignation or assignment; (iv) the specific statutory rule governing gratuities, profits and incidental benefits in section 62(2)(b) of ITEPA applies only to such benefits; (v) the cases, to which I have referred above, other than Hadlee, do not address the question of the taxability of remuneration paid to a third party; (vi) Hadlee supports the view which I have reached; and (vii) the special commissioners in Sempra Metals (and in Dextra) were presented with arguments that misapplied the gloss in Garforth and erred in adopting the gloss as a principle so as to exclude the payment of emoluments to a third party. Parliament in enacting legislation for the taxation of emoluments or earnings from employment has sought to tax remuneration paid in money or moneys worth. No persuasive rationale has been advanced for excluding from the scope of this tax charge remuneration in the form of money which the employee agrees should be paid to a third party, or where he arranges or acquiesces in a transaction to that effect. Having adopted this purposive construction of the legislation, I turn to apply it to the facts of this appeal. (ii) Applying the legislation to the facts Having set out the law in some detail above, I can be brief in applying it to the facts as found by the majority of the FTT. The payment of money into the Principal Trust was a component of the remuneration of the footballers and other employees. I address first the footballers. The arrangement which led to the two contracts, being the contract of employment and the side letter relating to the trust arrangement, were negotiated between senior managers of RFC on the one hand and the footballers or their agents on the other. The focus of the discussions was on the net remuneration which would be made available to the footballer. Every time a footballer wanted to use the money provided to his sub trust, he was given a loan by the sub trust. Thus, as envisaged by the negotiation, the footballer was able to gain access to the cash when he wanted it. The expectation of both employer and employee was that the employee would not have to repay the loan while he lived and thus he would be able to gain an inheritance tax benefit through the diminution of his estate by the combination of the outstanding loan and its accrued interest. See paras 21 24 above. The assets of the sub trust, which were almost always the loan and the accruing interest, were held in trust for the benefit of members of the footballers family whom he had selected. Thus the funds available on repayment of the loan would go to his family. The footballer as protector of the sub trust could determine who the trustees of the sub trust were and also who were its beneficiaries. See paras 25 27 above. It was necessary for the operation of the scheme as the parties intended that the trust administration was lax, not least in the provision of the entire fund of a sub trust to the employee in the form of a loan without taking measures to secure its repayment. When the Jersey regulator caused Equity to tighten up the terms on which a sub trust provided loans, Equity was replaced by the more compliant Trident. See paras 28 and 29 above. The relevant provisions for the taxation of emoluments or earnings were and are drafted in deliberately wide terms to bring within the tax charge money paid as a reward for an employees work. The scheme was designed to give each footballer access without delay to the money paid into the Principal Trust, if he so wished, and to provide that the money, if then extant, would ultimately pass to the member or members of his family whom he nominated. Having regard to the purpose of the relevant provisions, I consider the sums paid to the trustee of the Principal Trust for a footballer constituted the footballers emoluments or earnings. There was a chance that the trust company as trustee of the Principal Trust might not agree to set up a sub trust and there was a chance that as trustee of a sub trust it might not give a loan of the funds of the sub trust to the footballer. But that chance does not alter the nature of the payments to the trustee of the Principal Trust. In applying a purposive interpretation of a taxing provision in the context of a tax avoidance scheme it is legitimate to look to the composite effect of the scheme as it was intended to operate. In Inland Revenue Comrs v Scottish Provident Institution [2004] 1 WLR 3172 Lord Nicholls stated (para 23): The composite effect of such a scheme should be considered as it was intended to operate and without regard to the possibility that, contrary to the intention and expectations of the parties, it might not work as planned. The footballers, when accepting the offer of higher net remuneration through the trust scheme which the side letters envisaged, were prepared to take the risk that the scheme might not operate as planned. The fact that the risk existed does not alter the nature of the payment to the trustee of the Principal Trust. The bonuses which RFC and the other employing companies gave their executives were made available through the same trust mechanisms. See para 31 above. The employees had no contractual entitlement to the bonuses before their employers decided to give them but that does not alter the analysis of the effect of the scheme. The fact that bonuses were voluntary on the part of the employer is irrelevant so long as the sum of money is given in respect of the employees work as an employee: Blakiston v Cooper [1909] AC 104, 107 per Lord Loreburn LC, Hartland v Diggines [1926] AC 289, 291 per Viscount Cave LC. For the same reasons as those which cause the footballers remuneration paid to the Principal Trust to be subject to taxation, the bonuses which were paid to the employees though the trust mechanism fall within the tax charge as emoluments or earnings when paid to the Principal Trust. In agreement with Lord Drummond Young, I consider that the PAYE system can operate without difficulty. The trustee of the Principal Trust is the person in receipt of the emoluments or earnings and payment to it should have been subject to deduction of income tax under the 1993 Regulations and now under the PAYE Regulations. See paras 38 and 39 above. The constraints of the statutory tax code? For completeness, I should explain why I am not persuaded by the assertion that other provisions in tax legislation militate against the view to which I have come. The majority of the FTT thought that a purposive approach to the interpretation of emoluments or earnings was curtailed by the existence of a highly prescriptive statutory code and by the legal effect of the trust arrangements and loans (paras 191 and 193). The creation of a trust structure can give rise to charges to income tax on trust income and, other things being equal, employment related loans can be the subject of a specific tax charge under Part 3 chapter 7 (sections 173 191) of ITEPA and formerly under Part V chapter 2 (sections 160 161B) of ICTA. But the taxation of income earned by the assets of a trust is the taxation of a separate source of income from a persons emoluments or earnings and is therefore irrelevant. The specific provisions for the taxation of employment related loans have the effect of deeming the benefit of the loans to be emoluments. But if, on a proper analysis, the sums paid into the Principal Trust are emoluments in the first place, these provisions cannot apply as otherwise the taxpayer would taxed twice on part of the same earnings. I agree with Dr Poon in her dissenting judgment in the FTT when she stated (para 181) that the legislative code for emoluments has primacy over the benefits code in relation to loans. I also agree with the conclusion of the FTT in Sloane Robinson Investment Ltd v Revenue and Customs Comrs [2012] UKFTT 451 (TC), [2012] SFTD 1181 (para 93): it suffices to say that in these circumstances [the provisions of Part 7 of ITEPA (which covered income related securities)] cannot apply to a situation which is already covered by sections 18 and 686 of the Act. Part 7A of ITEPA was introduced by the Finance Act 2011 (section 26 and Schedule 2) and is designed to tax as employment income, among other things, the value of loans provided by third parties to employees under arrangements to reward employment. This legislation appears to have removed many of the benefits which some believed that the tax scheme gave. More recently, the Finance Act 2017 (section 15 and Schedule 6) has amended Part 7A of ITEPA. But these provisions, which are designed further to counter tax avoidance schemes, cannot affect the interpretation of prior tax legislation. Finally, section 154 of ICTA imposed a charge on the provision of benefits to members of the family or household of a person employed as a director of a company or with emoluments of 8,500 or more. But it does not militate against the interpretation which I have favoured because it is a residual charge to tax and applies only if the cost of providing the benefit is not otherwise chargeable to tax: section 154(1)(b). The current residual liability to a tax charge on such a benefit is in chapter 10 of Part 3 of ITEPA, section 201(2). I am therefore satisfied that the purposive approach to the interpretation of the general provisions of ICTA and ITEPA in relation to emoluments or earnings is not excluded by these provisions. Disposal For these reasons, which are essentially the same as those of the Inner House, I would dismiss the appeal.

UK-Abs

RFC 2012 Plc (RFC) was a member of a group of companies whose parent company was Murray International Holdings Ltd. By a deed dated 20 April 2001, Murray Group Management Ltd, which was also a member of the group, set up a trust known as the Remuneration Trust (the Principal Trust). When a group company wished to benefit an employee it made a payment to the Principal Trust. On payment, the employing company asked the trustee of the Principal Trust to resettle the sum on to a sub trust and requested that the sub trust income and capital should be applied in accordance with the employees wishes. The trustee of the Principal Trust had a discretion whether to comply with those requests, but, in practice, the trustee without exception created the requested sub trust. The employee was appointed as protector of the sub trust with the power to change its beneficiaries. When RFC negotiated the engagement of a footballer, RFC would explain the sub trust mechanism, in particular, that the prospective employee could obtain a loan of the sum paid to the sub trust from its trustee which would be greater than the payment net of tax deducted under PAYE if he were to be paid through RFCs payroll. The trust fund would be held for the benefit of the beneficiaries of the sub trust, being members of the footballers family whom he specified. On the footballers death, the loans and interest would be repayable out of his estate, thereby reducing its value for Inheritance Tax purposes. RFC used the same mechanisms in paying discretionary bonuses to its senior executives. The Income Tax (Earnings and Pensions Act) 2003 (ITEPA) governs RFCs liability to income tax on employment income during the relevant tax years from 2003/04 to 2008/09. Section 6 imposes a tax on general earnings. Section 7 defines general earnings by reference to section 62. Section 62(2) provides [E]arnings, in relation to an employment, means (a) Any salary, wages or fee, (b) Any gratuity or other profit or incidental benefit of any kind obtained by the employee if it is money or moneys worth, or (c) Anything else that constitutes an emolument of the employment. The Income and Corporation Taxes Act 1988 (ICTA) applied in the tax years 2001/02 and 2002/003. The relevant provisions in ICTA, under which income tax is charged on emoluments, are essentially to the same effect as those in ITEPA. In accordance with the Income Tax (Employments) Regulations 1993 and the Income Tax (Pay As You Earn) Regulations 2003 (the PAYE Regulations), employers who pay emoluments or earnings which are assessable to tax are required to deduct income tax from their payments to their employees under the pay as you earn (PAYE) regime. Under the PAYE Regulations, HM Revenue and Customs Commissioners determined that RFC had failed to pay income tax and National Insurance Contributions (NICs) on the sums paid to the trusts as remuneration. The parties to the appeal agreed that the determination of the appeal in relation to income tax governs the liability to NICs. The First tier Tribunal (the FTT) held that the scheme was effective in avoiding liability to income tax and NICs because the employees had only received a loan of the moneys paid to the trusts. The Upper Tribunal (Tax and Chancery Chamber) upheld the FTTs decision. The Inner House allowed HMRCs appeal. It held that income derived from an employees work is assessable to income tax, even if the employee agrees that it be redirected to a third party. The central issue in this appeal is whether it is necessary that the employee should himself or herself receive, or at least be entitled to receive, the remuneration for his or her work in order for that payment to amount to taxable earnings. The Supreme Court unanimously dismisses RFCs appeal. Lord Hodge gives the judgment, with which the other Justices agree. Three aspects of statutory interpretation are important in determining this appeal. First, provisions in the tax code imposing specific tax charges do not militate against the existence of a more general charge to tax which may have priority over or qualify the specific charge. Secondly, it is necessary to pay close attention to the statutory wording and not be distracted by judicial glosses which have enabled the court to apply the statutory words in other factual contexts. Thirdly, a purposive approach to the interpretation of the taxing provisions must be adopted [15]. As a general rule, the charge to tax on income extends to money that the employee is entitled to have paid as remuneration irrespective of whether it is paid to the employee or to a third party [41]. The relevant ICTA and ITEPA provisions do not restrict the concept of earnings by requiring payment to a specific recipient [38]. Section 62(2)(b) ITEPA confines the charge on perquisites and profits to benefits received by the employee, but there is no such restriction in section 62(2)(a) or 62(2)(c) [49]. Nothing in the wider purpose of the legislation excludes from the tax charge remuneration which the employee is entitled to have paid to a third party [39]. Parliament has sought to tax remuneration paid in money or moneys worth. There is no rationale for excluding from the scope of this tax charge remuneration in the form of money which the employee agrees should be paid to a third party [59]. For the purposes of PAYE it is necessary to determine whether there has been a payment of earnings from which deductions were required. Misplaced reliance on judicial glosses in relation to the concept of payment is evident in the case law leading up to the appeal [51]. There is no basis for establishing a general rule that a payment is made for the purposes of PAYE only if the money is paid to or at least placed unreservedly at the disposal of the employee [54]. The references to making a relevant payment to an employee or other payee in the PAYE Regulations fall to be construed as payment either to the employee or to the person to whom payment is made with the agreement of the employee [58]. The sums paid to the trustee of the Principal Trust for a footballer constituted the footballers earnings [64]. The risk that the trustee might not set up a sub trust or give a loan of the sub trust funds to the footballer does not alter the nature of the payments made to the trustee of the Principal Trust [65]. The discretionary bonuses made available to RFCs employees through the same trust mechanisms also fall within the tax charge as these were given in respect of the employees work [66]. Payment to the Principal Trust should have been subject to deduction of income tax under the PAYE Regulations [67]. As the sums paid into the Principal Trust were earnings in the first place, the specific provisions of the tax code which deem the benefit of loans to be earnings cannot apply [69].

The appeals relate to the proper interpretation of paragraph 49 of the National Planning Policy Framework (NPPF), which is in these terms: Housing applications should be considered in the context of the presumption in favour of sustainable development. Relevant policies for the supply of housing should not be considered up to date if the local planning authority cannot demonstrate a five year supply of deliverable housing sites. The Court of Appeal observed that the interpretation of this paragraph had been considered by the Administrative Court on seven separate occasions between October 2013 and April 2015 with varying results. The court had been urged by all counsel to bring much needed clarity to the meaning of the policy. Notwithstanding the clarification provided by the impressive judgment of the court (given by Lindblom LJ), controversy remains. The appeals provide the opportunity for this court not only to consider the narrow issues of interpretation of para 49, but to look more broadly at issues concerning the legal status of the NPPF and its relationship with the statutory development plan. Both appeals relate to applications for housing development, one at Yoxford in the administrative area of the Suffolk Coastal District Council (the Yoxford site), and the other near Willaston in the area of Cheshire East Borough Council (the Willaston site). In the first the councils refusal of permission was upheld by the inspector on appeal, but his refusal was quashed in the High Court (Supperstone J), and that decision was confirmed by the Court of Appeal. In the second, the council failed to determine the application, and the appeal was allowed by the inspector. The councils challenge succeeded in the High Court (Lang J), but that decision was reversed by the Court of Appeal, the judgment of the court being given by Lindblom LJ. Both councils appeal to this court. The statutory provisions The relevant statutory provisions are found in the Town and Country Planning Act 1990 (the 1990 Act) and the Planning and Compulsory Purchase Act 2004 (the 2004 Act). Plan making Part 2 of the 2004 Act deals with local development. Each local planning authority in England is required to keep under review the matters which may be expected to affect the development of their area or the planning of its development (2004 Act section 13), and to prepare a local development scheme, which (inter alia) specifies the local development documents which are to be development plan documents (section 15). The authoritys local development documents must (taken as a whole) set out the authoritys policies (however expressed) relating to the development and use of land in their area (section 17). Local development documents are defined by regulations made under section 17(7). In short they are documents which contain statements as to the development and use of land which the authority wishes to encourage, the allocation of sites for particular types of development, and development management and site allocations policies intended to guide determination of planning applications. Together they comprise the development plan or local plan for the area (Town and Country Planning (Local Planning) (England) Regulations (SI 2012/767) regulations 5 and 6). In preparing such documents, the authority must have regard (inter alia) to national policies and advice contained in guidance issued by the Secretary of State (section 19(2)). Every development plan document must be submitted to the Secretary of State for independent examination, one of the purposes being to determine whether it complies with the relevant statutory requirements, including section 19 (section 20(1)(5)(a)). The Secretary of State may, if he thinks that a local development document is unsatisfactory, direct the local planning authority to modify the document (section 21). Section 39 gives statutory force to the concept of sustainable development (undefined). Any person or body exercising any function under Part 2 in relation to local development documents must exercise it with the objective of contributing to the achievement of sustainable development, and for that purpose must have regard to national policies and advice contained in guidance issued by the Secretary of State An adopted plan may be challenged on legal grounds by application to the High Court made within six weeks of the date of adoption, but not otherwise (section 113). Schedule 8 contained transitional provisions providing generally for a transitional period of three years, after which the plans produced under the previous system ceased to have effect subject to the power of the Secretary of State to save specified policies by direction. Planning applications taken into account in the handling of planning applications: Provision is made in the 1990 and 2004 Acts for the development plan to be 1990 Act section 70(2) In dealing with such an application the authority shall have regard to (a) material to the application, (b) material to the application, and (c) any local finance considerations, so far as the provisions of the development plan, so far as any other material considerations. 2004 Act section 38(6) If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise. Unlike the development plan provisions, these sections contain no specific requirement to have regard to national policy statements issued by the Secretary of State, although it is common ground that such policy statements may where relevant amount to material considerations. The principle that the decision maker should have regard to the development plan so far as material and any other material considerations has been part of the planning law since the Town and Country Planning Act 1947. The additional weight given to the development plan by section 38(6) reproduces the effect of a provision first seen in the Planning and Compensation Act 1991 section 54A. In City of Edinburgh Council v Secretary of State for Scotland [1997] 1 WLR 1447, the equivalent provision (section 18A of the Town and Country Planning (Scotland) Act 1972) was described by Lord Hope (p 1450B) as designed to enhance the status of the development plan in the exercise of the planning authoritys judgment. Lord Clyde spoke of it as creating a presumption that the development plan is to govern the decision, subject to material considerations, as for example where a particular policy in the plan can be seen to be outdated and superseded by more recent guidance. However, the section had not touched the well established distinction between the respective roles of the decision maker and the court: It has introduced a requirement with which the decision maker must comply, namely the recognition of the priority to be given to the development plan. It has thus introduced a potential ground on which the decision maker could be faulted were he to fail to give effect to that requirement. But beyond that it still leaves the assessment of the facts and the weighing of the considerations in the hands of the decision maker (p 1458) An appeal against a refusal of planning permission lies to the Secretary of State, who is subject to the same duty in respect of the development plan (1990 Act sections 78, 79(4)). Regulations under section 79(6) and Schedule 6 now provide for most categories of appeals, including those here in issue, to be determined, not by the Secretary of State, but by an appointed person (normally referred to as a planning inspector). The decision on appeal may be challenged on legal grounds in the High Court (section 288). The National Planning Policy Framework The Framework (or NPPF) was published on 27 March 2012. One purpose, in the words of the foreword, was to (replace) over a thousand pages of national policy with around 50, written simply and clearly, thus allowing people and communities back into planning. The Introduction explains its status under the planning law: Planning law requires that applications for planning permission must be determined in accordance with the development plan, unless material considerations indicate otherwise. The National Planning Policy Framework must be taken into account in the preparation of local and neighbourhood plans, and is a material consideration in planning decisions. NPPF is divided into three main parts: Achieving sustainable development (paragraphs 6 to 149), Plan making (paragraphs 150 to 185) and Decision taking (paragraphs 186 to 207). Paragraph 7 refers to the three dimensions to sustainable development: economic, social and environmental. Paragraph 11 begins a group of paragraphs under the heading the presumption in favour of sustainable development. Paragraph 12 makes clear that the NPPF does not change the statutory status of the development plan as the starting point for decision making. Paragraph 13 describes the NPPF as guidance for local planning authorities and decision takers both in drawing up plans and as a material consideration in determining applications. Paragraph 14, which is important in the present appeals, deals with the presumption in favour of sustainable development, which is said to be at the heart of the NPPF and which should be seen as a golden thread running through both plan making and decision taking. It continues: For plan making this means that: local planning authorities should positively seek opportunities to meet the development needs of their area; Local Plans should meet objectively assessed needs, with sufficient flexibility to adapt to rapid change, unless: any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or specific policies development should be restricted. this Framework indicate in For decision taking this means: approving development proposals that accord with the development plan without delay; and where the development plan is absent, silent or relevant policies are out of date, granting permission unless: any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or specific policies development should be restricted. this Framework indicate in We were told that the penultimate point (any adverse impacts ) is referred to by practitioners as the tilted balance. I am content for convenience to adopt that rubric. Footnote 9 (in the same terms for both parts) gives examples of the specific policies referred to: For example, those policies relating to sites protected under the Birds and Habitats Directives (see paragraph 119) and/or designated as Sites of Special Scientific Interest; land designated as Green Belt, Local Green Space, an Area of Outstanding Natural Beauty, Heritage Coast or within a National Park (or the Broads Authority); designated heritage assets; and locations at risk of flooding or coastal erosion. These are said to be examples. Thus the list is not exhaustive. Further, although the footnote refers in terms only to policies in the Framework itself, it is clear in my view that the list is to be read as including the related development plan policies. Paragraph 14 cannot, and is clearly not intended to, detract from the priority given by statute to the development plan, as emphasised in the preceding paragraphs. Indeed, some of the references only make sense on that basis. For example, the reference to Local Green Space needs to be read with paragraph 76 dealing with that subject, which envisages local communities being able through local and neighbourhood plans to identify for special protection green areas of particular importance to them, and so rule out new development other than in very special circumstances Section 6 (paragraphs 47 to 55) is entitled Delivering a wide choice of high quality homes. Paragraph 47 states the primary objective of the section: To boost significantly the supply of housing, local planning authorities should: use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in [the NPPF], including identifying key sites which are critical to the delivery of the housing strategy over the plan period; identify and update annually a supply of specific deliverable sites sufficient to provide five years worth of housing against their housing requirements with an additional buffer of 5% to ensure choice and competition in the market for land. ; identify a supply of specific, developable sites or broad locations for growth, for years six to ten and, where possible, for years 11 15; for market and affordable housing, illustrate the expected rate of housing delivery through a housing trajectory for the plan period and set out a housing implementation strategy for the full range of housing describing how they will maintain delivery of a five year supply of housing land to meet their housing target; and set out their own approach to housing density to reflect local circumstances. This group of provisions provides the context for paragraph 49, central to these appeals and quoted at the beginning of this judgment; and in particular for the advice that relevant policies for the supply of housing should not be considered up to date, unless the authority can demonstrate a five year supply of deliverable housing sites. Section 12 is headed Conserving and enhancing the historic environment (paragraphs 126 to 141). It includes policies for designated and non designated heritage assets, as defined in the glossary. The former cover such assets as World Heritage Sites, Scheduled Monuments and others designated under relevant legislation. A non designated asset is one identified as having a degree of significance meriting consideration in planning decisions because of its heritage interest. Paragraph 135 states: The effect of an application on the significance of a non designated heritage asset should be taken into account in determining the application. In weighing applications that affect directly or indirectly non designated heritage assets, a balanced judgment will be required having regard to the scale of any harm or loss and the significance of the heritage asset. Significance in this context is defined by the glossary in Annex 2 as meaning the value of a heritage asset to this and future generations because of its heritage interest, which may be derived not only from a heritage assets physical presence, but also from its setting. Annex 1 (Implementation) states that policies in the Framework are material considerations which local planning authorities should take into account from the day of its publication (paragraph 212); and that, where necessary, plans, should be revised as quickly as possible to take account of the policies through a partial review or by preparing a new plan (paragraph 213). However, it also provides that for a transitional period of a year decision takers may continue to give full weight to relevant policies adopted since 2004, even if there is a limited degree of conflict with this Framework (paragraph 214); but that thereafter due weight should be given to relevant policies in existing plans according to their degree of consistency with this framework (the closer the policies in the plan to the policies in [the NPPF], the greater the weight that may be given). (paragraph 215) NPPF Legal status and Interpretation The court heard some discussion about the source of the Secretary of States power to issue national policy guidance of this kind. The agreed Statement of Facts quoted without comment a statement by Laws LJ (R (West Berkshire District Council) v Secretary of State for Communities and Local Government [2016] EWCA Civ 441; [2016] 1 WLR 3923, para 12) that the Secretary of States power to formulate and adopt national planning policy is not given by statute, but is an exercise of the Crowns common law powers conferred by the royal prerogative. In the event, following a query from the court, this explanation was not supported by any of the parties at the hearing. Instead it was suggested that his powers derived, expressly or by implication, from the planning Acts which give him overall responsibility for oversight of the planning system (see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, paras 140 143 per Lord Clyde). This is reflected both in specific requirements (such as in section 19(2) of the 2004 Act relating to plan preparation) and more generally in his power to intervene in many aspects of the planning process, including (by way of call in) the determination of appeals. In my view this is clearly correct. The modern system of town and country planning is the creature of statute (see Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] AC 132, 140 141). Even if there had been a pre existing prerogative power relating to the same subject matter, it would have been superseded (see R (Miller) v Secretary of State for Exiting the European Union (Birnie intervening) [2017] 2 WLR 583, para 48). (It may be of interest to note that the great Case of Proclamations (1610) 12 Co Rep 74, which was one of the earliest judicial affirmations of the limits of the prerogative (see Miller para 44) was in one sense a planning case; the court rejected the proposition that the King by his proclamation may prohibit new buildings in and about London .) Although planning inspectors, as persons appointed by the Secretary of State to determine appeals, are not acting as his delegates in any legal sense, but are required to exercise their own independent judgement, they are doing so within the framework of national policy as set by government. It is important, however, in assessing the effect of the Framework, not to overstate the scope of this policy making role. The Framework itself makes clear that as respects the determination of planning applications (by contrast with plan making in which it has statutory recognition), it is no more than guidance and as such a material consideration for the purposes of section 70(2) of the 1990 Act (see R (Cala Homes (South) Ltd) v Secretary of State for Communities and Local Government [2011] EWHC 97 (Admin); [2011] 1 P & CR 22, para 50 per Lindblom J). It cannot, and does not purport to, displace the primacy given by the statute and policy to the statutory development plan. It must be exercised consistently with, and not so as to displace or distort, the statutory scheme. Law and policy The correct approach to the interpretation of a statutory development plan was discussed by this court in Tesco Stores Ltd v Dundee City Council (ASDA Stores Ltd intervening) [2012] UKSC 13; 2012 SLT 739. Lord Reed rejected a submission that the meaning of the development plan was a matter to be determined solely by the planning authority, subject to rationality. He said: The development plan is a carefully drafted and considered statement of policy, published in order to inform the public of the approach which will be followed by planning authorities in decision making unless there is good reason to depart from it. He added, however, that such statements should not be construed as if they were statutory or contractual provisions: It is intended to guide the behaviour of developers and planning authorities. As in other areas of administrative law, the policies which it sets out are designed to secure consistency and direction in the exercise of discretionary powers, while allowing a measure of flexibility to be retained. Those considerations point away from the view that the meaning of the plan is in principle a matter which each planning authority is entitled to determine from time to time as it pleases, within the limits of rationality. On the contrary, these considerations suggest that in principle, in this area of public administration as in others policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context. (para 18) Although a development plan has a legal status and legal effects, it is not analogous in its nature or purpose to a statute or a contract. As has often been observed, development plans are full of broad statements of policy, many of which may be mutually irreconcilable, so that in a particular case one must give way to another. In addition, many of the provisions of development plans are framed in language whose application to a given set of facts requires the exercise of judgment. Such matters fall within the jurisdiction of planning authorities, and their exercise of their judgment can only be challenged on the ground that it is irrational or perverse (Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759, 780 per Lord Hoffmann) (para 19) In the present appeal these statements were rightly taken as the starting point for consideration of the issues in the case. It was also common ground that policies in the Framework should be approached in the same way as those in a development plan. However, some concerns were expressed by the experienced counsel before us about the over legalisation of the planning process, as illustrated by the proliferation of case law on paragraph 49 itself (see paras 27ff below). This is particularly unfortunate for what was intended as a simplification of national policy guidance, designed for the lay reader. Some further comment from this court may therefore be appropriate. In the first place, it is important that the role of the court is not overstated. Lord Reeds application of the principles in the particular case (para 18) needs to be read in the context of the relatively specific policy there under consideration. Policy 45 of the local plan provided that new retail developments outside locations already identified in the plan would only be acceptable in accordance with five defined criteria, one of which depended on the absence of any suitable site within or linked to the existing centres (para 5). The short point was the meaning of the word suitable (para 13): suitable for the development proposed by the applicant, or for meeting the retail deficiencies in the area? It was that question which Lord Reed identified as one of textual interpretation, logically prior to the exercise of planning judgment (para 21). As he recognised (see para 19), some policies in the development plan may be expressed in much broader terms, and may not require, nor lend themselves to, the same level of legal analysis. It must be remembered that, whether in a development plan or in a non statutory statement such as the NPPF, these are statements of policy, not statutory texts, and must be read in that light. Even where there are disputes over interpretation, they may well not be determinative of the outcome. (As will appear, the present can be seen as such a case.) Furthermore, the courts should respect the expertise of the specialist planning inspectors, and start at least from the presumption that they will have understood the policy framework correctly. With the support and guidance of the Planning Inspectorate, they have primary responsibility for resolving disputes between planning authorities, developers and others, over the practical application of the policies, national or local. As I observed in the Court of Appeal (Wychavon District Council v Secretary of State for Communities and Local Government [2008] EWCA Civ 692; [2009] PTSR 19, para 43) their position is in some ways analogous to that of expert tribunals, in respect of which the courts have cautioned against undue intervention by the courts in policy judgments within their areas of specialist competence (see Secretary of State for the Home Department v AH (Sudan) [2007] UKHL 49; [2008] 1 AC 678, para 30 per Lady Hale.) Recourse to the courts may sometimes be needed to resolve distinct issues of law, or to ensure consistency of interpretation in relation to specific policies, as in the Tesco case. In that exercise the specialist judges of the Planning Court have an important role. However, the judges are entitled to look to applicants, seeking to rely on matters of planning policy in applications to quash planning decisions (at local or appellate level), to distinguish clearly between issues of interpretation of policy, appropriate for judicial analysis, and issues of judgement in the application of that policy; and not to elide the two. The two appeals Evolving judicial guidance To understand the reasoning of the two inspectors in the instant cases, it is necessary to set it in the context of the evolving High Court jurisprudence. The decisions in the two appeals were given in July and August 2014 respectively, after inquiries which ended in both cases in June. It is not entirely clear what information was available to the inspectors as to the current state of the High Court jurisprudence on this topic. The Yoxford inspector referred only to William Davis v Secretary of State for Communities and Local Government [2013] EWHC 3058 (Admin) (Lang J, 11 October 2013). This seems to have been the first case in which this issue had arisen. One of the grounds of refusal was based on a policy E20 the effect of which was generally to exclude development in a so called green wedge area defined on the proposals map. Lang J recorded an argument for the developer that the policy should have been regarded as a relevant policy for the supply of housing under paragraph 49 because the restriction on development potentially affects housing development. The judge rejected this argument summarily, saying policy E20 does not relate to the supply of housing and therefore is not covered by paragraph 49 (her emphasis). By the time the two inquiries in the present case ended (June 2014), and at the time of the decisions, it seems that the most recent judicial guidance then available on the interpretation of paragraph 49 was that of Ouseley J in South Northamptonshire Council v Secretary of State for Communities and Local Government and Barwood Land [2014] EWHC 573 (Admin) (10 March 2014) (the Barwood Land case). Ouseley J favoured a wider reading which examines the degree to which a particular policy generally affects housing numbers, distribution and location in a significant manner. He thought that the language could not sensibly be given a very narrow meaning because This would mean that policies for the provision of housing which were regarded as out of date, nonetheless would be given weight, indirectly but effectively through the operation of their counterpart provisions in policies restrictive of where development should go He contrasted general policies, such as those protecting the countryside, with policies designed to protect specific areas or features such as gaps between settlements, the particular character of villages or a specific landscape designation, all of which could sensibly exist regardless of the distribution and location of housing or other development. At that time, it seems to have been assumed that if a policy were deemed to be out of date under paragraph 49, it was in practice to be given minimal weight, in effect disapplied (see eg Cotswold District Council v Secretary of State for Communities and Local Government [2013] EWHC 3719 (Admin), para 72 per Lewis J). In other words, it was treated for the purposes of paragraph 14 as non policy, in the same way as if the development plan were absent or silent. On that view, it was clearly important to establish which policies were or were not to be treated as out of date in that sense. Later cases (after the date of the present decisions) introduced a greater degree of flexibility, by suggesting that paragraph 14 did not take away the ordinary discretion of the decision maker to determine the weight to be given even to an out of date policy; depending, for example, on the extent of the shortfall and the prospect of development coming forward to make it up (see eg Crane v Secretary of State for Communities and Local Government [2015] EWHC 425 (Admin), para 71 per Lindblom J). As will be seen, this idea was further developed in Lindblom LJs judgment in the present case. The Yoxford site In September 2013 Suffolk Coastal District Council refused planning permission for a development of 26 houses on land at Old High Road in Yoxford. The applicant, Hopkins Homes Ltd (Hopkins), appealed to an inspector appointed by the Secretary of State. He dismissed the appeal in a decision letter dated 15 July 2014, following an inquiry which began in February and ended in June 2014. The statutory development plan for the area comprised the Suffolk Coastal District Local Plan (SCDLP) adopted in July 2013, and certain saved policies from the previous local plan (the old Local Plan) adopted in December 1994. Chapter 3 SCDLP set out a number of strategic policies, including: i) Under the heading Housing, Policy SP2 (Housing numbers and Distribution) proposed as its core strategy to make provision for 7,900 new homes across the district in the period 2010 2027. In addition, an early review to be commenced by 2015 was to identify the full, objectively assessed housing needs for the district, with proposals to ensure that these were met so far as consistent with the NPPF. A table showed the proposed locations across the district to make up the total of 7,900 homes. ii) Under the heading The Spatial Strategy, Policy SP19 (Settlement Policy) identified Yoxford as one of a number of Key Service Centres, which provide an extensive range of specified facilities, and where modest estate scale development may be appropriate within the defined physical limits (under policy SP27 Key and Local Service Centres). Outside these settlements (under policy SP 29 The Countryside) there was to be no development other than in special circumstances. iii) The commentary to SP19 (para 4.05) explained that physical limits boundaries or village envelopes would be drawn up for the larger settlements, but that these limits are a policy tool and that where allocations are proposed outside the envelopes, the envelopes would be redrawn to include them. In his report on the examination of the draft SCDLP, the inspector had commented on the adequacy of the housing provision (paras 31 51). He had noted how the proposed figure of 7,590 homes fell short of what was later agreed to be the requirement for the plan period of 11,000 extra homes. He had considered whether to suspend the examination to enable the council to assess the options. He decided not to do so, recognising that there were other sites which might come forward to boost supply, and the advantages of enabling these to be considered in the context of an up to date suite of local development management policies that are consistent with the Framework The saved policies from the old plan included: AP4 (Parks and gardens of historic or landscape interest) The District Council will encourage the preservation and/or enhancement of parks and gardens of historic and landscape interest and their surroundings. Planning permission for any proposed development will not be granted if it would have a materially adverse impact on their character, features or immediate setting. AP13 (Special Landscape Areas) The valleys and tributaries of (named rivers) and the Parks and Gardens of Historic or Landscape Interest are designated as Special Landscape Areas and shown on the Proposals Map. The District Council will ensure that no development will take place which would be to the material detriment of, or materially detract from, the special landscape quality. The appeal site formed part of an area of Historic Parkland (related to an 18th century house known as Grove Park) identified by the council in its Supplementary Planning Guidance 6 Historic Parks and Gardens (SPG) dated December 1995. In his decision letter on the planning appeal, the inspector identified the main issues as including: consideration of a five years supply of housing land, the principle of development outside the defined village, and the effects of the proposal on the local historic parkland and landscape (para 4). He referred to paragraphs 14 and 49 of the NPPF, which he approached on the basis that it was very unlikely that a five years supply of housing land could now be demonstrated (paras 5 6). There had been a debate before him whether the recent adoption of the local plan meant that its policies are automatically up to date, but he read the comments of the examining Inspector on the need for an early review of housing delivery as indicating the advantages of considering development in the light of other up to date policies, whilst accepting that pending the review relevant policies for the supply of housing may be considered not to be up to date (para 7). He then considered which policies were relevant policies for the supply of housing within the meaning of paragraph 49 (paras 8 9). Policy SP2 which sets out housing provision for the District was one such policy and cannot be considered as up to date. Policy SP15 relating to landscape and townscape and not specifically to the supply of housing was not a relevant policy and so is up to date. For the same reason, policy SP19, which set the settlement hierarchy and showed percentages of total proposed housing for broad categories of settlements, but did not suggest figures or percentages for individual settlements, was also seen as up to date; as was SP27, which related specifically to Key and Local Service Centres, and sought, among other things, to reinforce their individual character. Of the saved policy AP4 he noted a degree of conflict with paragraph 215 of the Framework due to the absence of a balancing judgement in Policy AP4, but thought its broad aim consistent with the aims of the Framework. He said: these matters reduce the weight that I attach to Policy AP4, although I shall attach some weight to it. Similarly, he thought Policy AP13 consistent with the aims of the Framework to recognise the intrinsic quality of the countryside and promote policies for the conservation and enhancement of the natural environment (para 10). In relation to the proposal for development outside the defined village limits, he observed that the appeal site was outside the physical limits boundary as defined in the very recently adopted Local Plan. He regarded the policy directing development to within the physical limits of the settlement to be in accordance with one of the core principles of the Framework, recognising the intrinsic character and beauty of the countryside. On this aspect he concluded: I consider that the appeal site occupies an important position adjacent to the settlement, where Old High Road marks the end of the village and the start to the open countryside. The proposed development would be unacceptable in principle, contrary to the provisions of Policies SP27 and SP29 and contrary to one of the core principles of the Framework. (paras 13 14) As to its location within a historic parkland, he discussed the quality of the landscape and the impact of the proposal, and concluded: 20. In relation to the built character and layout of Yoxford and its setting, Old High Road forms a strong and definite boundary to the built development of the village here. I do not agree that the proposal forms an appropriate development site in this respect, but would be seen as an ad hoc expansion across what would otherwise be seen as the village/countryside boundary and the development site would not be contained to the west by any existing logical boundary. 21. In respect of these matters, the historic parkland forms a non designated heritage asset, as defined in the Framework and I conclude that the proposal would have an unacceptable effect on the significance of this asset. In relation to local policies, I find that the proposal would be in conflict with the aims of Policies AP4 and AP13 of the old Local Plan Finally, under the heading The planning balance, he acknowledged the advantage that the proposal would bring additional homes, including some affordable, within a District where the supply of homes is a concern, but said: However, I have found significant conflict with policies in the recently adopted Local Plan. I have also found conflict with some saved policies of the old Local Plan and I have sought to balance these negative aspects of the proposal against its benefits. In doing so, I consider that the unacceptable effects of the development are not outweighed by any benefits and means that it cannot be considered as a sustainable form of development, taking account of its three dimensions as set out at paragraph 7 of the Framework. Therefore, the proposal conflicts with the aims of the Framework. (paras 31 32) Hopkins challenged the decision in the High Court on the grounds that the inspector had misdirected himself in three respects: in short, as to the interpretation of NPPF paragraph 49; as to the status of the limits boundary to Yoxford; and as to the status of Policy AP4. The Secretary of State conceded that the inspector had misapplied the policy in paragraph 49. Supperstone J referred to the approach of Ouseley J in the Barwood Land case, with which he agreed, preferring it to that of Lang J in the William Davis case. He accepted the submission for Hopkins that the inspector had erred in thinking that paragraph 49 only applied to policies dealing with the positive provision of housing, with the result that his decision had to be quashed (paras 33, 38 41). He held in addition that this inspector had wrongly proceeded on the basis that the village boundary had been defined in the recent local plan, rather than in the earlier plan (para 46); and that he had failed properly to assess the significance of the heritage asset as required by paragraph 135 of the Framework (para 53). On 30 January 2015 Supperstone J quashed the decision. The councils appeal to the Court of Appeal failed. It now appeals to this court. The Willaston site The Crewe and Nantwich Replacement Local Plan, adopted on 17 February 2005 (the adopted RLP) sought to address the development needs of the Crewe and Nantwich area for the period from 1996 to 2011. Under the 2004 Act, it should have been replaced by a Local Development Framework by 2008. This did not happen. As a consequence, the policies were saved by the Secretary of State by Direction (dated 14 February 2008). Crewe is identified as a location for new housing growth in the emerging Local Plan, which is the subject of an ongoing examination in public and subject to objections, as are some of the proposed housing allocations. At the time of the public inquiry in June 2014, the emerging Local Plan was understood to be over two years from being adopted. Richborough Estates Partnership LLP (Richborough) in August 2013 applied to Cheshire East Borough Council for permission for a development of up to 170 houses on land north of Moorfields in Willaston. The council having failed to determine the application within the prescribed period, Richborough appealed. Willaston is a settlement within the defined urban area of Crewe, but for the most part is physically separate from the town. As a consequence there is open land between Willaston and the main built up area of Crewe, within which open land the appeal site lies. NE.2, NE.4, and RES.5: In the appeal Cheshire East relied on the adopted RLP, in particular policies i) Policy NE.2 (Open Countryside) seeks to protect the open countryside from new build development for its own sake, permitting only a very limited amount of small scale development mainly for agricultural, forestry or recreational purposes. ii) Policy NE.4 (Green Gap) relates to areas of open land around Crewe (including the area of the appeal site) identified as needing additional protection in order to maintain the definition and separation of existing communities. The policy provides that permission will not be granted for new development, including housing, save for limited exceptions. It has the same inner boundary as NE.2. iii) Policy RES.5 (Housing in the open countryside) permits only very limited forms of residential development in the open countryside, such as agricultural workers dwellings. In his decision letter dated 1 August 2014 the inspector allowed the appeal and granted planning permission for up to 146 dwellings. He concluded that Cheshire East was unable to demonstrate the minimum five year supply of housing land required under paragraph 47 of the NPFF. The council appears to have accepted at the inquiry that policy NE.2 was a policy for the supply of housing. The inspector thought that the same considerations applied to the other two policies relied on by the council, all of which were therefore relevant policies within paragraph 49, although he acknowledged that policy NE.4 also performed strategic functions in maintaining the separation and definition of settlements and in landscape protection. He noted also that two of the housing sites in the emerging local plan were in designated green gaps, which led him to give policy NE.4 reduced weight (paras 31 35). He concluded on this aspect (para 94): 94. I have concluded that there is not a demonstrable five year supply of deliverable housing sites (issue (i)). In the light of that, the weight of policies in the extant RLP relevant to the supply of housing is reduced (issue (ii)). That applies in particular to policies NE.2, NE.4 and RES.5 in so far as their extent derives from settlement boundaries that in turn reflect out of date housing requirements, though policy NE.4 also has a wider purpose in maintaining gaps between settlements. He considered the application of the Green Gap policy, concluding that there would be no significant harm to the wider functions of the gap in maintaining the definition and separation of these two settlements (para 95). His overall conclusion was as follows: 101. I conclude that the proposed development would be sustainable overall, and that the adverse effects of it would not significantly and demonstrably outweigh the benefits when assessed against the policies in the Framework as a whole. There are no specific policies in the NPPF that indicate that this development should be restricted. In such circumstances, and where relevant development plan policies are out of date, the NPPF indicates that permission should be granted unless material considerations indicate otherwise. There are no further material considerations that do so. The councils challenge succeeded before Lang J, who quashed the inspectors decision by an order dated 25 February 2015. In short, she concluded that the inspector had erred in treating policy NE.4 as a relevant policy under paragraph 49, and in seeking to divide the policy, so as to apply it in part only (para 63). Richboroughs appeal was allowed by the Court of Appeal with the result that the permission was restored. The council appeals to this court. The Court of Appeals interpretation Giving the judgment of the court, Lindblom LJ referred to the relevant parts of the NPPF and (at para 21) the three competing interpretations of paragraph 49: i) Narrow: limited to policies dealing only with the numbers and distribution of new housing, and excluding any other policies of the development plan dealing generally with the disposition or restriction of new development in the authoritys area. ii) Wider: including both policies providing positively for the supply of new housing and other policies, or counterpart policies, whose effect is to restrain the supply by restricting housing development in certain parts of the authoritys area. iii) Intermediate: as under (ii), but excluding policies designed to protect specific areas or features, such as gaps between settlements, the particular character of villages or a specific landscape designation (as suggested by Ouseley J in the Barwood Land case). He discussed the connection between paragraph 49 and the presumption in favour of sustainable development in paragraph 14, which lay in the concept of relevant policies being not up to date under paragraph 49, and therefore out of date for the purposes of paragraph 14 (para 30). He explained the courts reasons for preferring the wider view of paragraph 49. He read the words for the supply of housing as meaning affecting the supply of housing, which he regarded as not only the literal interpretation of the policy, but the only interpretation consistent with the obvious purpose of the policy when read in its context. He continued: 33. Our interpretation of the policy does not confine the concept of policies for the supply of housing merely to policies in the development plan that provide positively for the delivery of new housing in terms of numbers and distribution or the allocation of sites. It recognizes that the concept extends to plan policies whose effect is to influence the supply of housing land by restricting the locations where new housing may be developed including, for example, policies for the Green Belt, policies for the general protection of the countryside, policies for conserving the landscape of Areas of Outstanding Natural Beauty and National Parks, policies for the conservation of wildlife or cultural heritage, and various policies whose purpose is to protect the local environment in one way or another by preventing or limiting development. It reflects the reality that policies may serve to form the supply of housing land either by creating it or by constraining it that policies of both kinds make the supply what it is. (para 33) The court rejected the narrow interpretation, advocated by the councils, which it thought plainly wrong: It is both unrealistic and inconsistent with the context in which the policy takes its place. It ignores the fact that in every development plan there will be policies that complement or support each other. Some will promote development of one type or another in a particular location, or by allocating sites for particular land uses, including the development of housing. Others will reinforce the policies of promotion or the site allocations by restricting development in parts of the plan area, either in a general way for example, by preventing development in the countryside or outside defined settlement boundaries or with a more specific planning purpose such as protecting the character of the landscape or maintaining the separation between settlements. (para 34) Whether a particular policy of a plan was a relevant policy in that sense was a matter for the decision maker, not the court (para 45). Furthermore 46. We must emphasize here that the policies in paragraphs 14 and 49 of the NPPF do not make out of date policies for the supply of housing irrelevant in the determination of a planning application or appeal. Nor do they prescribe how much weight should be given to such policies in the decision. Weight is, as ever, a matter for the decision maker Neither of those paragraphs of the NPPF says that a development plan policy for the supply of housing that is out of date should be given no weight, or minimal weight, or, indeed, any specific amount of weight. They do not say that such a policy should simply be ignored or disapplied In relation to the Yoxford site, the court agreed with Supperstone J that the inspector had wrongly applied the erroneous narrow interpretation. Policies SP 19, 27 and 29, were all relevant policies in that they all affect the supply of housing land in a real way by restraining it (paras 51 52). The court also agreed with the judge that the inspector had been mistaken in assuming that the physical limits of the village had been established in the 2013 plan (para 58); and also that he had misapplied paragraph 135 relating to heritage assets (para 65). In that respect there could be no criticism of his treatment of the impact of the development on the local landscape, but what was lacking was a distinct and clearly reasoned assessment of the effect the development would have upon the significance of the parkland as a heritage asset, and, crucially, the balanced judgment called for by paragraph 135, having regard to the scale of any harm or loss and the significance of the heritage asset. (para 65) In respect of the Willaston site, the court disagreed with Lang Js conclusion that policy NE.4 was not a relevant policy for the supply of housing. The inspector had made no error of law in that respect, and his decision should be restored (paras 69 71). Discussion Interpretation of paragraph 14 The argument, here and below, has concentrated on the meaning of paragraph 49, rather than paragraph 14 and the interaction between the two. However, since the primary purpose of paragraph 49 is simply to act as a trigger to the operation of the tilted balance under paragraph 14, it is important to understand how that is intended to work in practice. The general effect is reasonably clear. In the absence of relevant or up to date development plan policies, the balance is tilted in favour of the grant of permission, except where the benefits are significantly and demonstrably outweighed by the adverse effects, or where specific policies indicate otherwise. (See also the helpful discussion by Lindblom J in Bloor Homes East Midlands Ltd v Secretary of State for Communities and Local Government [2014] EWHC 754 (Admin), paras 42ff) It has to be borne in mind also that paragraph 14 is not concerned solely with housing policy. It needs to work for other forms of development covered by the development plan, for example employment or transport. Thus, for example, there may be a relevant policy for the supply of employment land, but it may become out of date, perhaps because of the arrival of a major new source of employment in the area. Whether that is so, and with what consequence, is a matter of planning judgement, unrelated of course to paragraph 49 which deals only with housing supply. This may in turn have an effect on other related policies, for example for transport. The pressure for new land may mean in turn that other competing policies will need to be given less weight in accordance with the tilted balance. But again that is a matter of pure planning judgement, not dependent on issues of legal interpretation. If that is the right reading of paragraph 14 in general, it should also apply to housing policies deemed out of date under paragraph 49, which must accordingly be read in that light. It also shows why it is not necessary to label other policies as out of date merely in order to determine the weight to be given to them under paragraph 14. As the Court of Appeal recognised, that will remain a matter of planning judgement for the decision maker. Restrictive policies in the development plan (specific or not) are relevant, but their weight will need to be judged against the needs for development of different kinds (and housing in particular), subject where applicable to the tilted balance. Paragraph 49 Unaided by the legal arguments, I would have regarded the meaning of paragraph 49 itself, taken in context, as reasonably clear, and not susceptible to much legal analysis. It comes within a group of paragraphs dealing with delivery of housing. The context is given by paragraph 47 which sets the objective of boosting the supply of housing. In that context the words policies for the supply of housing appear to do no more than indicate the category of policies with which we are concerned, in other words housing supply policies. The word for simply indicates the purpose of the policies in question, so distinguishing them from other familiar categories, such as policies for the supply of employment land, or for the protection of the countryside. I do not see any justification for substituting the word affecting, which has a different emphasis. It is true that other groups of policies, positive or restrictive, may interact with the housing policies, and so affect their operation. But that does not make them policies for the supply of housing in the ordinary sense of that expression. In so far as the paragraph 47 objectives are not met by the housing supply policies as they stand, it is quite natural to describe those policies as out of date to that extent. As already discussed, other categories of policies, for example those for employment land or transport, may also be found to be out of date for other reasons, so as to trigger the paragraph 14 presumption. The only difference is that in those cases there is no equivalent test to that of the five year supply for housing. In neither case is there any reason to treat the shortfall in the particular policies as rendering out of date other parts of the plan which serve a different purpose. This may be regarded as adopting the narrow meaning, contrary to the conclusion of the Court of Appeal. However, this should not be seen as leading, as the lower courts seem to have thought, to the need for a legalistic exercise to decide whether individual policies do or do not come within the expression. The important question is not how to define individual policies, but whether the result is a five year supply in accordance with the objectives set by paragraph 47. If there is a failure in that respect, it matters not whether the failure is because of the inadequacies of the policies specifically concerned with housing provision, or because of the over restrictive nature of other non housing policies. The shortfall is enough to trigger the operation of the second part of paragraph 14. As the Court of Appeal recognised, it is that paragraph, not paragraph 49, which provides the substantive advice by reference to which the development plan policies and other material considerations relevant to the application are expected to be assessed. The Court of Appeal was therefore right to look for an approach which shifted the emphasis to the exercise of planning judgement under paragraph 14. However, it was wrong, with respect, to think that to do so it was necessary to adopt a reading of paragraph 49 which not only changes its language, but in doing so creates a form of non statutory fiction. On that reading, a non housing policy which may objectively be entirely up to date, in the sense of being recently adopted and in itself consistent with the Framework, may have to be treated as notionally out of date solely for the purpose of the operation of paragraph 14. There is nothing in the statute which enables the Secretary of State to create such a fiction, nor to distort what would otherwise be the ordinary consideration of the policies in the statutory development plan; nor is there anything in the NPPF which suggests an intention to do so. Such an approach seems particularly inappropriate as applied to fundamental policies like those in relation to the Green Belt or Areas of Outstanding Natural Beauty. No one would naturally describe a recently approved Green Belt policy in a local plan as out of date, merely because the housing policies in another part of the plan fail to meet the NPPF objectives. Nor does it serve any purpose to do so, given that it is to be brought back into paragraph 14 as a specific policy under footnote 9. It is not out of date, but the weight to be given to it alongside other material considerations, within the balance set by paragraph 14, remains a matter for the decision maker in accordance with ordinary principles. The two appeals Against this background I can deal relatively shortly with the two individual appeals. On both I arrive ultimately at the same conclusion as the Court of Appeal. It is convenient to begin with the Willaston appeal, where the issues are relatively straightforward. On any view, quite apart from paragraph 49, the current statutory development plan was out of date, in that its period extended only to 2011. On my understanding of paragraph 49, the council and the inspector both erred in treating policy NE.2 (Countryside) as a policy for the supply of housing. But that did not detract materially from the force of his reasoning (see the summary in paras 44 45 above). He was clearly entitled to conclude that the weight to be given to the restrictive policies was reduced to the extent that they derived from settlement boundaries that in turn reflect out of date housing requirements (para 94). He recognised that policy NE.4 had a more specific purpose in maintaining the gap between settlements, but he considered that the proposal would not cause significant harm in this context (para 95). His final conclusion (para 101) reflected the language of paragraph 14 (the tilted balance). There is no reason to question the validity of the permission. The Yoxford appeal provides an interesting contrast, in that there was an up to date development plan, adopted in the previous year; but its housing supply policies failed to meet the objectives set by paragraph 47 of the NPPF. The inspector rightly recognised that they should be regarded as out of date for the purposes of paragraph 14. At the same time, it provides a useful illustration of the unreality of attempting to distinguish between policies for the supply of housing and policies for other purposes. Had it mattered, I would have been inclined to place in the housing category policy SP2, the principal policy for housing allocations. SP 19 (settlement policy) would be more difficult to place, since, though not specifically related to housing, it was seen (as the commentary indicated) as a planning tool designed to differentiate between developed areas and the countryside. Understandably, in the light of the judicial guidance then available to him, the inspector thought it necessary to make the distinction, and to reflect it in the planning balance. He categorised both SP 19 and SP 27 as non housing policies, and for that reason to be regarded as up to date (see para 35 above). Under the Court of Appeals interpretation this was an erroneous approach, because each of these policies affected the supply of housing, and should have been considered out of date for that reason. On my preferred approach his categorisation was not so much erroneous in itself, as inappropriate and unnecessary. It only gave rise to an error in law in so far as it may have distorted his approach to the application of paragraph 14. As to that I agree with the courts below that his approach (through no fault of his own) was open to criticism. Having found that the settlement policy was up to date, and that the boundary had been approved in the recent plan, he seems to have attached particular weight to the fact that it had been defined in the very recently adopted Local Plan (para 37 above). I would not criticise him for failing to record that it had been carried forward from the previous plan. In some circumstances that could be a sign of robustness in the policy. But in this case it was clear from the plan itself that the settlement boundary was, to an extent at least, no more than the counterpart of the housing policies, and that, under the paragraph 14 balance, its weight might need to be reduced if the housing objectives were to be fulfilled. He should not have allowed its supposed status as an up to date policy under paragraph 49 to give it added weight. It is true that he also considered the merits of the site (quite apart from the plan) as providing a strong and definite boundary to the village (para 20). But I am not persuaded that this is sufficient to make it clear that the decision would have been the same in any event. I do not, however, agree with the Court of Appeals criticisms of his treatment of the Heritage Asset policy. Paragraph 10 of his letter (summarised at para 36 above) is in my view a faithful application of the guidance in paragraph 215 of the Framework. That does not, and could not, suggest that even saved development plan policies are simply replaced by the policies in the Framework. What it does is to indicate that the weight to be given to the saved policies should be assessed by reference to their degree of consistency with the Framework. That is what the inspector did. Having done so he was entitled to be guided by the policies as stated in the saved plans, and not treat them as replaced by paragraph 135. In any event, in so far as there needs to be a balanced judgement, which the Court of Appeal regarded as crucial (para 65), that seems to me provided by the last section of his letter, headed appropriately the planning balance. Overall the letter seems to me an admirably clear and carefully constructed appraisal of the relevant planning issues, in the light of the judicial guidance then available. It is with some reluctance therefore that I feel bound to agree with the Court of Appeal that the decision must be quashed, albeit on narrower grounds. The result, is that the order of Supperstone J will be affirmed, and the planning appeal will fall to be re determined. Conclusion For these reasons I would dismiss both appeals. LORD GILL: (with whom Lord Neuberger, Lord Clarke and Lord Hodge agree) I agree with Lord Carnwaths conclusions on the decision that is appealed against and with his views as to the disposal of these appeals. I only add some comments on the approach that should be taken in the application of the National Planning Policy Framework (the Framework) in planning applications for housing development. These appeals raise a question as to the respective roles of the courts and of the planning authorities and the inspectors in relation to guidance of this kind; and a specific question of interpretation arising from paragraph 49 of the Framework. In Tesco Stores Ltd v Dundee City Council, (ASDA Stores Ltd intervening) ([2012] UKSC 13) Lord Reed considered the former question in relation to development plan policies. He expressed the view, as a general principle of administrative law, that policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context (at para 18). The proper context, in my view, is provided by the over riding objectives of the development plan and the specific objectives to which the policy statement in question is directed. Taking a similar approach to that of Lord Reed, I consider that it is the proper role of the courts to interpret a policy where the meaning of it is contested, while that of the planning authority is to apply the policy to the facts of the individual case. In my opinion, the same distinction falls to be made in relation to guidance documents such as the Framework. In both cases the issue of interpretation is the same. It is about the meaning of words. That is a question for the courts. The application of the guidance, as so interpreted, to the individual case is exclusively a planning judgment for the planning authority and the inspectors. The guidance given by the Framework is not to be interpreted as if it were a statute. Its purpose is to express general principles on which decision makers are to proceed in pursuit of sustainable development (paras 6 10) and to apply those principles by more specific prescriptions such as those that are in issue in these appeals. In my view, such prescriptions must always be interpreted in the overall context of the guidance document. That context involves the broad purpose of the guidance and the particular planning problems to which it is directed. Where the guidance relates to decision making in planning applications, it must be interpreted in all cases in the context of section 70(2) of the Town and Country Planning Act 1990 and section 38(6) of the Planning and Compulsory Purchase Act 2004, to which the guidance is subordinate. While the Secretary of State must observe these statutory requirements, he may reasonably and appropriately give guidance to decision makers who have to apply them where the planning system is failing to satisfy an unmet need. He may do so by highlighting material considerations to which greater or less weight may be given with the over riding objective of the guidance in mind. It is common ground that such guidance constitutes a material consideration (Framework, para 2). In relation to housing, the objective of the Framework is clear. Section 6, Delivering a wide choice of high quality homes, deals with the national problem of the unmet demand for housing. The purpose of paragraph 47 is to boost significantly the supply of housing. To that end it requires planning authorities (a) to ensure inter alia that plans meet the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in the Framework, including the identification of key sites that are critical to the delivery of the housing strategy over the plan period; (b) to identify and update annually a supply of specific deliverable sites sufficient to provide five years worth of housing against their housing requirements, with an additional buffer of 5% to ensure choice and competition in the market for the land; and (c) in the longer term to identify a supply of specific, developable sites or broad locations for growth for years six to ten and, where possible, for years 11 15. The importance that the guidance places on boosting the supply of housing is further demonstrated in the same paragraph by the requirements that for market and affordable housing planning authorities should illustrate the expected rate of housing delivery through a housing trajectory for the plan period and set out a housing implementation strategy for the full range of housing, describing how they will maintain delivery of a five years supply of housing land to meet their housing target; and that they should set out their own approach to housing density to reflect local circumstances. The message to planning authorities is unmistakeable. These requirements, and the insistence on the provision of deliverable sites sufficient to provide the five years worth of housing, reflect the futility of authorities relying in development plans on the allocation of sites that have no realistic prospect of being developed within the five year period. Among the obvious constraints on housing development are development plan policies for the preservation of the greenbelt, and environmental and amenity policies and designations such as those referred to in footnote 9 of paragraph 14. The rigid enforcement of such policies may prevent a planning authority from meeting its requirement to provide a five years supply. This is the background to the interpretation of paragraph 49. The paragraph applies where the planning authority has failed to demonstrate a five years supply of deliverable sites and is therefore failing properly to contribute to the national housing requirement. In my view, paragraph 49 derives its content from paragraph 47 and must be applied in decision making by reference to the general prescriptions of paragraph 14. To some extent the issue in these cases has been obscured by the doctrinal controversy which has preoccupied the courts hitherto between the narrow and the wider interpretation of the words relevant policies for the supply of housing. I think that the controversy results from too narrow a focus on the wording of that paragraph. I agree with the view taken by Lindblom LJ in his lucid judgement that the task of the court is not to try to reconcile the various first instance judgments on the point, but to interpret the policy of paragraph 49 correctly (at para 23). In interpreting that paragraph, in my opinion, the court must read it in the policy context to which I have referred, having in view the planning objective that the Framework seeks to achieve. I regret to say that I do not agree with the interpretation of the words relevant policies for the supply of housing that Lindblom LJ has favoured. In my view, the straightforward interpretation is that these words refer to the policies by which acceptable housing sites are to be identified and the five years supply target is to be achieved. That is the narrow view. The real issue is what follows from that. If a planning authority that was in default of the requirement of a five years supply were to continue to apply its environmental and amenity policies with full rigour, the objective of the Framework could be frustrated. The purpose of paragraph 49 is to indicate a way in which the lack of a five years supply of sites can be put right. It is reasonable for the guidance to suggest that in such cases the development plan policies for the supply of housing, however recent they may be, should not be considered as being up to date. If the policies for the supply of housing are not to be considered as being up to date, they retain their statutory force, but the focus shifts to other material considerations. That is the point at which the wider view of the development plan policies has to be taken. Paragraph 49 merely prescribes how the relevant policies for the supply of housing are to be treated where the planning authority has failed to deliver the supply. The decision maker must next turn to the general provisions in the second branch of paragraph 14. That takes as the starting point the presumption in favour of sustainable development, that being the golden thread that runs through the Framework in respect of both the drafting of plans and the making of decisions on individual applications. The decision maker should therefore be disposed to grant the application unless the presumption can be displaced. It can be displaced on only two grounds both of which involve a planning judgment that is critically dependent on the facts. The first is that the adverse impacts of a grant of permission, such as encroachment on the greenbelt, will significantly and demonstrably outweigh the benefits of the proposal. Whether the adverse impacts of a grant of permission will have that effect is a matter to be assessed against the policies in the Framework, taken as a whole. That clearly implies that the assessment is not confined to environmental or amenity considerations. The second ground is that specific policies in the Framework, such as those described in footnote 9 to the paragraph, indicate that development should be restricted. From the terms of footnote 9 it is reasonably clear that the reference to specific policies in the Framework cannot mean only policies originating in the Framework itself. It must also mean the development plan policies to which the Framework refers. Green belt policies are an obvious example. Although my interpretation of the guidance differs from that of the Court of Appeal, I have come to the same conclusions in relation to the disposal of these cases. I agree with Lord Carnwath that in the Willaston decision, notwithstanding an erroneous interpretation of policy NE.2 as being a policy for the supply of housing, the Inspector got the substance of the matter right and accurately applied paragraph 14. I agree too with Lord Carnwath, for the reasons that he gives (at para 68), that in the Yoxford decision the Inspector made a material, but understandable, error. I would therefore dismiss both appeals.

UK-Abs

These appeals relate to the proper interpretation of paragraph 49 of the National Planning Policy Framework (NPPF), as well as the NPPFs relationship with the statutory development plan. Part 2 of the Planning and Compulsory Purchase Act 2004 requires local planning authorities to prepare a development plan. In preparing local development documents authorities must have regard to national policies and advice issued by the Secretary of State, pursuant to section 19(2). Section 38(6) of the 2004 Act and section 70(2) of the Town and Country Planning Act 1990 provide for the development plan to be taken into account in the handling of planning applications. The NPPF was published on 27 March 2012. Paragraph 14 of the Framework deals with the presumption in favour of sustainable development, and includes the tilted balance provision: that where the development plan is silent or policies out of date, permission should be granted unless any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole. Paragraph 49 adds that: Relevant policies for the supply of housing should not be considered up to date if the local planning authority cannot demonstrate a five year supply of deliverable housing sites. In Suffolk Coastal the council refused planning permission for a development of 26 houses in Yoxford, upheld by the inspector on appeal. The inspector considered which local policies were relevant policies for the supply of housing within the meaning of paragraph 49 of the NPPF. The High Court held that he had erred in thinking that paragraph 49 only applied to policies dealing with the positive provision of housing and so quashed his refusal. Its decision was confirmed by the Court of Appeal. In Richborough Estates the council failed to determine the application, and Richborough Estates appeal was allowed by the inspector. The council succeeded in the High Court on the basis that the inspector erred in treating one of the local policies as a relevant policy under paragraph 49 and in seeking to divide the policy, so as to apply it in part only. That decision was reversed by the Court of Appeal. The Supreme Court unanimously dismisses both councils appeals. Lord Carnwath gives the lead judgment, with which Lord Neuberger, Lord Clarke and Lord Hodge agree. Lord Gill gives a concurring judgment, with which Lord Neuberger, Lord Clarke and Lord Hodge agree. The Secretary of States power to issue national policy guidance such as the NPPF derives, expressly or by implication, from the planning Acts which give him overall responsibility for oversight of the planning system. This is reflected both in specific requirements and more generally in his power to intervene in many aspects of the planning process [19 20]. The policy making role should not, however, be overstated: the NPPF itself makes clear that in respect of the determination of planning applications (by contrast with plan making) it is not more than guidance for the purposes of section 70(2) of the 1990 Act. It does not displace the primacy of the statutory development plan [21]. The correct approach to the interpretation of a statutory development plan was discussed by the Supreme Court in Tesco Stores Ltd v Dundee City Council [2012] UKSC 13 [23]. It is important that the role of the court is not overstated: in Tesco Stores Lord Reed identified the interpretation of the word suitable as the short point to determine, and further recognised that some policies in the development plan may be expressed in broader terms and not require the same level of legal analysis [24]. These are statements of policy whether in a development plan or in a non statutory statement such as the NPPF and must be read in that light; they are not statutory texts [74]. Lord Gill adds that the NPPF expresses general principles applied by more specific prescriptions. These must always be interpreted in the overall context of the guidance document [75]. Furthermore, the courts should respect the expertise of the specialist planning inspectors, and start at least from the presumption that they will have understood the policy framework correctly. Their position is in some ways analogous to that of expert tribunals, in respect of which the courts have cautioned against undue intervention by the courts in policy judgments within their areas of specialist competence [25]. Recourse to the courts may sometimes be needed to resolve distinct issues of law, or to ensure consistency of interpretation in relation to specific policies. However, it is important to distinguish clearly between issues of interpretation of policy, appropriate for judicial analysis, and issues of judgement in the application of that policy [26]. Lord Gill describes the proper role of the courts as interpreting a policy or the NPPF where its meaning is contested, while that of the planning authority is to apply the policy or guidance to the facts of the individual case [72, 73]. The primary purpose of paragraph 49 of the NPPF is simply to act as a trigger to the operation of the tilted balance under paragraph 14 [54]. Paragraph 14 unlike paragraph 49 is not concerned solely with housing policy and needs to work for other forms of development covered by the development plan. For example, whether a relevant policy for the supply of employment land becomes out of date is a matter of planning judgment [55]. Housing policies deemed out of date under paragraph 49 must also be read in that light and it is not necessary to label other policies as out of date merely in order to determine the weight to be given to them under paragraph 14 [56]. Paragraph 49 appears in a group of paragraphs dealing with the delivery of housing, with paragraph 47 providing the objective of boosting the housing supply [76, 80]. In that context the words policies for the supply of housing indicate the category of policies with which we are concerned: the word for simply indicates the purpose of the policies in question. There is no justification for substituting the word affecting which has a different emphasis [57, 82]. Although this can be regarded as adopting the narrow meaning, it should not be seen as leading to the need for a legalistic exercise to decide whether individual policies do or do not come within the expression. The important question is not how to define the individual policies, but whether the result is a five year supply in accordance with the objectives set by paragraph 47 [59]. On both appeals the Supreme Court reaches the same result as the Court of Appeal [62, 86]: in Richborough Estates the inspector erred in treating policy NE.2 as a policy for the supply of housing under paragraph 49, but that did not detract materially from the force of his reasoning [63]. In Suffolk Coastal the inspectors approach was open to criticism because his categorisation of SP 19 and SP 27 was inappropriate and unnecessary, rather than erroneous as the Court of Appeal held. It nevertheless gave rise to an error of law insofar as it may have distorted his approach to paragraph 14 [65, 68].

The appellant in this case was sentenced to an extended sentence of ten years imprisonment, comprising a custodial term of seven years and an extension period of three years. He was released on licence after serving two thirds of the custodial term, but was recalled to custody after committing a further offence. He then remained in prison until the sentence had been served in full. In these proceedings, he complains that he was not provided with appropriate rehabilitation courses following his recall to prison, contrary to article 5 of the European Convention on Human Rights and Fundamental Freedoms (the Convention), as given effect in our domestic law by the Human Rights Act 1998. The principal issue arising in the appeal is whether the duty under article 5 to provide prisoners with a real opportunity for rehabilitation applies to prisoners serving extended sentences. The appeal also provides an opportunity to consider the approach adopted by this court in R (Kaiyam) v Secretary of State for Justice [2014] UKSC 66; [2015] AC 1344 in the light of the more recent case law of the European Court of Human Rights. Article 5 The essential aim of article 5 is to confer protection against arbitrary or unjustified deprivation of liberty. Article 5(1) provides a list of permissible grounds for deprivation of liberty, each of which is qualified by the requirement that the detention is lawful and in accordance with a procedure prescribed by law. In the present case, it is article 5(1)(a) which is relevant: 1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: the lawful detention of a person after conviction (a) by a competent court . It has long been accepted by the European court that article 5(1) requires a relationship between the detention regime and the purpose of the deprivation of liberty. As the court stated in Ashingdane v United Kingdom (1985) 7 EHRR 528, para 44: More generally, it follows from the very aim of article 5(1) that no detention that is arbitrary can ever be regarded as lawful. The court would further accept that there must be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention. For example, article 5(1)(d) permits the detention of a minor by lawful order for the purpose of educational supervision. This is understood as implying that the nature of the detention supports the objective of educational supervision. The placement of minors in penal institutions without educational facilities cannot therefore be justified under that provision, except as an interim measure: see, for example, Bouamar v Belgium (1988) 11 EHRR 1. Similarly, article 5(1)(e) permits the lawful detention of persons of unsound mind. The detention of a person as a mental health patient will, however, only be lawful for the purposes of article 5(1)(e) if effected in a hospital, clinic or other appropriate institution: see, for example, Ashingdane v United Kingdom and Brand v Netherlands (2004) 17 BHRC 398. It is to be noted that in the Brand case, in which a violation of article 5(1) was found, the court made a modest award as just satisfaction for the feelings of frustration, uncertainty and anxiety which the applicant must have suffered while detained in a remand centre pending his admission to a custodial clinic. The award was not made on the basis that the applicant should not have been deprived of his liberty. In other words, the court did not treat its finding that the applicants detention in the remand centre had been unlawful as meaning that he had a right under the Convention to immediate release from detention. The requirement that there must be a relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention was affirmed by the Grand Chamber in Saadi v United Kingdom (2008) 47 EHRR 17. The case concerned article 5(1)(f), which permits the lawful arrest or detention of a person to prevent his effecting an unauthorised entry into the country or of a person against whom action is being taken with a view to deportation or extradition. The Grand Chamber observed that, where the lawfulness of detention was in issue, compliance with national law was necessary but not sufficient: article 5(1) laid down in addition the requirement that any deprivation of liberty should be in keeping with the purpose of protecting the individual from arbitrariness. It was, it said, a fundamental principle that no detention which was arbitrary could be compatible with article 5(1) (para 67). Key principles had been established on a case by case basis as to what types of conduct on the part of national authorities might constitute arbitrariness for the purposes of article 5(1). One such principle, which the court derived from authorities including Bouamar, was that there must be a relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention. In that regard, the Grand Chamber stated: 69. One general principle established in the case law is that detention will be arbitrary where, despite complying with the letter of national law, there has been an element of bad faith or deception on the part of the authorities. The condition that there be no arbitrariness further demands that both the order to detain and the execution of the detention must genuinely conform with the purpose of the restrictions permitted by the relevant sub paragraph of article 5(1). There must in addition be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention. 70. The notion of arbitrariness in the contexts of sub paras (b), (d) and (e) also includes an assessment whether detention was necessary to achieve the stated aim. The detention of an individual is such a serious measure that it is justified only as a last resort where other, less severe measures have been considered and found to be insufficient to safeguard the individual or public interest which might require that the person concerned be detained. The principle of proportionality further dictates that where detention is to secure the fulfilment of an obligation provided by law, a balance must be struck between the importance in a democratic society of securing the immediate fulfilment of the obligation in question, and the importance of the right to liberty. The duration of the detention is a relevant factor in striking such a balance. 71. The court applies a different approach towards the principle that there should be no arbitrariness in cases of detention under article 5(1)(a), where, in the absence of bad faith or one of the other grounds set out in para 69 above, as long as the detention follows and has a sufficient causal connection with a lawful conviction, the decision to impose a sentence of detention and the length of that sentence are matters for the national authorities rather than for the court under article 5(1). (emphasis added) In that passage, the last sentence of para 69 made it clear that the principle, that there must be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention, was one which applied to all the sub paragraphs of article 5(1). Paras 70 and 71 explained that there was a difference between article 5(1)(a) and sub paragraphs (b), (d) and (e) in relation to the application of the principle of proportionality, but the first sentence of para 71 confirmed that the general principles set out in para 69 applied to article 5(1)(a). That sentence also made it clear that the existence of a causal connection between the detention and a lawful conviction was not in itself sufficient to ensure compliance with article 5(1)(a). James v United Kingdom In James v United Kingdom (2013) 56 EHRR 12, the court applied the general principle established in Saadi, that article 5(1) requires the conditions of detention to be consistent with the purpose of the detention, to detention sought to be justified under article 5(1)(a). It derived from that principle the conclusion that, after the punishment part or tariff element of an indeterminate sentence for public protection (IPP) has been served and the prisoner remains in detention for reasons of public protection, a real opportunity for rehabilitation should be provided. The case came before the European court after first being considered by the House of Lords: R (Walker) v Secretary of State for Justice [2009] UKHL 22; [2010] 1 AC 553. It concerned IPP prisoners who had been unable to access the courses recommended by the Parole Board. The argument before the House of Lords did not focus on the need for a correlation between the purpose of detention and the conditions of detention. Instead, the argument, and the speeches of Their Lordships, referred to a different strand of the European courts jurisprudence, concerned with the requirement under article 5(1)(a) for detention to be after conviction, which the court had interpreted as meaning that there must be a causal connection between the conviction and the detention. Unsurprisingly, Their Lordships held that such a connection existed in the cases before them, notwithstanding the unavailability of the courses. That being so, it was concluded that there had been no violation of article 5(1)(a). When the case was considered by the European court, it summarised the principles established in its earlier case law under article 5(1)(a) concerning the need for there to be a conviction and for the detention to be after the conviction. It then turned to the stipulation that the detention must be lawful, which meant, first, that the detention must be in compliance with national law, and secondly, that it should be in keeping with the purpose of protecting the individual from arbitrariness (para 191). The court then set out some key principles relating to the types of conduct which might constitute arbitrariness for the purposes of article 5(1), which could be extracted from the courts case law. The third of those was the following (para 194): Thirdly, for a deprivation of liberty not to be arbitrary there must be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention (see Saadi, para 69). Thus, as noted above, detention for educational supervision pursuant to article 5(1)(d) must take place in a setting and with the resources to meet the necessary educational objectives (see Bouamar, para 50). Where article 5(1)(e) applies, the detention of a person for reasons relating to his mental health should be effected in a hospital, clinic or other appropriate institution (see Aerts v Belgium (1998) 29 EHRR 50, para 46; and Brand, para 62). In the context of article 5(1)(a), a concern may arise in the case of persons who, having served the punishment element of their sentences, are in detention solely because of the risk they pose to the public, if there are no special measures, instruments or institutions in place other than those available to ordinary long term prisoners aimed at reducing the danger they present and at limiting the duration of their detention to what is strictly necessary in order to prevent them from committing further offences (see M v Germany (2009) 51 EHRR 41, para 128; and Grosskopf v Germany (2010) 53 EHRR 7, para 51). The court immediately made it clear (para 194) that the principle that the conditions of detention must reflect its purpose had to be applied realistically and flexibly: However, in assessing whether the place and conditions of detention are appropriate, it would be unrealistic, and too rigid an approach, to expect the authorities to ensure that relevant treatment or facilities be available immediately: for reasons linked to the efficient management of public funds, a certain friction between available and required treatment and facilities is inevitable and must be regarded as acceptable. Accordingly, a reasonable balance must be struck between the competing interests involved. Turning to the facts of the applicants cases, the court agreed with the House of Lords that the need for a causal connection between the convictions and the detention was satisfied (para 199). But there remained the question whether the detention violated article 5(1)(a) by reason of the absence of a genuine correlation between the aim of the detention and the detention itself (para 204). In that regard, the court accepted that one of the purposes of the applicants detention was rehabilitation (para 209). It followed that reasonable opportunities to participate in rehabilitation courses should be made available: As the court has indicated above, in circumstances where a government seeks to rely solely on the risk posed by offenders to the public in order to justify their continued detention, regard must be had to the need to encourage the rehabilitation of those offenders. In the applicants cases, this meant that they were required to be provided with reasonable opportunities to undertake courses aimed at helping them to address their offending behaviour and the risks they posed . While article 5(1) does not impose any absolute requirement for prisoners to have immediate access to all courses they may require, any restrictions or delays encountered as a result of resource considerations must be reasonable in all the circumstances of the case (para 218) The applicants had had little if any access to offending behaviour programmes for substantial periods after their tariffs had expired. Instead, for around two and a half years, they were simply left in local prisons where there were few, if any, offending behaviour programmes (para 220). The inadequate resources which brought about this situation appeared to be the consequence of the introduction of draconian measures for indeterminate detention without the necessary planning and without realistic consideration of the impact of the measures (para 220). In those circumstances, following the expiry of the applicants tariff periods and until steps were taken to progress them through the prison system with a view to providing them with access to appropriate rehabilitative courses, their detention was arbitrary and therefore unlawful within the meaning of article 5(1) of the Convention (para 221). The detention became lawful again, within the meaning of article 5(1), once access to relevant courses was provided (para 244). Two of the applicants also complained of a breach of article 13 of the Convention, which guarantees the right to an effective remedy, on the ground that even if they had succeeded in the domestic courts in their challenge to their detention, they would not have been able to secure their release, because of the relevant statutory provisions. The court examined that complaint under article 5(4), on the basis that it provided a lex specialis in relation to the more general requirements of article 13. Article 5(4) provides: Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. The court observed that lawfulness in article 5(4) had the same meaning as in article 5(1), so that the arrested or detained person was entitled to a review of the lawfulness of his detention in the light not only of domestic law but also of the Convention. The court held that the requirements of article 5(4) were met, notwithstanding that the applicants release could only be ordered by the Parole Board if it concluded that they were no longer dangerous. It reached that conclusion on the basis that the Secretary of States failure to provide access to relevant courses, which rendered their detention unlawful during the periods in which such access was unavailable, could be challenged by proceedings for judicial review. Such proceedings had in fact resulted in the applicants being given access to the relevant courses and assessments. Their release could be ordered by the Parole Board, in accordance with the relevant statutory provisions, if it was satisfied that the individual was no longer dangerous. Thus the combination of the Parole Board and judicial review proceedings could have resulted in an order for their release (paras 231 232). This reasoning is consistent with the courts finding that the detention was unlawful, due to the failure to provide courses, only until steps were taken to progress them through the prison system with a view to providing them with access to appropriate rehabilitative courses (para 221). A judicial remedy was available to ensure that such steps were taken, and thus to bring an end to the unlawful detention. The implication of the reasoning is that the unlawfulness of detention, where it arises from a failure to provide a real opportunity for rehabilitation, does not entitle the prisoner to release, where it can be otherwise addressed. The same approach can be seen in the courts treatment of the award of just satisfaction. The finding of a violation of article 5(1) was not treated as implying that the applicants were entitled under the Convention to immediate release: The basis for the finding of a violation of article 5(1) was that the failure to give timeous access to the relevant courses rendered the applicants detention after the expiry of their tariffs arbitrary. It therefore cannot be assumed that, if the violations in the present cases had not occurred, the applicants would not have been deprived of their liberty. (para 244) The award of just satisfaction was therefore not in respect of a deprivation of liberty, but in respect of the feelings of distress and frustration which continued detention without access to necessary courses must have provoked. The conclusion reached by the court in James in the context of article 5(1)(a) was thus based upon the application of a principle which was established in the case law of the court and had previously been applied in cases falling under article 5(1)(d), (e) and (f): namely, that the conditions of detention must reflect the purpose of the detention, if the detention was to be lawful within the meaning of article 5(1). James decided that it followed that measures aimed at reducing the risk which prisoners present to the public should be in place in circumstances where a government seeks to rely solely on the risk posed by offenders to the public in order to justify their continued detention (para 218, cited at para 12 above). The Grand Chamber rejected the Governments request that James be referred to that chamber. Although the decision went beyond any previous Grand Chamber judgment, the general principle on which it was based had been recognised in Saadi. It was presumably on that basis that it was not considered to raise a serious question affecting the interpretation or application of the Convention or the Protocols thereto, or [a] serious issue of general importance (Rule 73 of the Rules of Court). Subsequent Strasbourg case law The principle established in James was subsequently applied by the European court in a series of cases involving prisoners serving IPP sentences. In each of these cases, as in James itself, the courts decision was based on a careful individual analysis of each applicants prison history. Repeated reference was made to the statement in James that the court must have regard to the detention as a whole (para 201). It was repeatedly stated that, in considering whether a delay in access to required prison courses resulted in a violation of article 5(1), the applicants general progression through the prison system must be assessed in light of the particular circumstances of the case. Examples include Hall v United Kingdom (Application No 24712/12) given 12 November 2013, where there was a post tariff delay of over a year in providing a particular course, but where the applicant had nevertheless been provided with a reasonable opportunity to rehabilitate himself by courses throughout his detention; Dillon v United Kingdom (Application No 32621/11) given 4 November 2014, where a nine month delay between the expiry of the tariff and assessment for a particular course was considered to be not unreasonable having regard to the access to courses which the applicant had previously enjoyed, the continued efforts to ensure his further progress through the prison system, and his overall progression throughout the period of his detention; and Thomas v United Kingdom (Application No 55863/11) given 4 November 2014, where a six month delay in commencing a course was not considered unreasonable having regard both to resource considerations and to the progress that the applicant had already made. A further example, decided after R (Kaiyam) v Secretary of State for Justice, is Alexander v United Kingdom (Application No 54119/10) given 30 June 2015, where there was a post tariff delay of around 14 months in being assessed for a recommended course, and a further delay of about 18 months in obtaining a place, but where prompt steps had nevertheless been taken to begin the applicants progression through the prison system, and he had been given access to a wide range of rehabilitative courses which enabled him to present evidence of risk reduction. The principles which the European court has itself derived from these cases, and others, are discussed at para 33 below. There does not appear to be any case since James in which a complaint under article 5(1) arising from lack of access to courses has succeeded. R (Kaiyam) v Secretary of State for Justice The judgment of the European court in James was considered by this court in R (Kaiyam) v Secretary of State for Justice. The claimants were a life prisoner, named Haney, and three IPP prisoners, named Kaiyam, Massey and Robinson. They argued that the Secretary of States delay in providing them with rehabilitative courses had breached their rights under article 5(1). In a joint judgment with which the other members of the court agreed, Lord Mance and Lord Hughes accepted the European courts conclusion in James that there was an obligation to provide life and IPP prisoners with a real opportunity for rehabilitation. They therefore departed from the decision of the House of Lords in Walker. They declined, however, to accept that the obligation was imposed by article 5(1), as the European court had decided. They were concerned that the European courts reasoning might imply that IPP and life prisoners detained without access to rehabilitation courses were entitled under the Convention to immediate release, and that the statutory regime preventing their release except where recommended by the Parole Board might therefore have to be declared incompatible with Convention rights (para 34). In that regard, they stated: On the reasoning of the European court in James v United Kingdom 56 EHRR 12, failure after the tariff period properly to progress a life or IPP prisoner towards release makes detention during the period of such failure arbitrary and therefore unlawful. If that reasoning be adopted, then such detention is in breach of the express language of article 5(1)(a), and the prisoner should (in the eyes of the European court) be entitled to an immediate order for speedy release under article 5(4). (para 23; emphasis in original) Lord Mance and Lord Hughes responded to that concern by concluding that James went beyond the reasoning in Saadi and did not form part of a clear and constant line of decisions (the case of Ostermnchner v Germany (Application No 36035/04) given 22 March 2012, para 74, which was the closest predecessor, was not cited in Kaiyam, but might have been distinguished in any event). On that basis, following such authorities as Manchester City Council v Pinnock (Secretary of State for Communities and Local Government intervening) [2010] UKSC 45; [2011] 2 AC 104, para 48, they considered that domestic courts need not adopt the analysis in James. Instead, they treated the duty to facilitate the progress of prisoners subject to life and IPP sentences towards release as being implied as an ancillary duty in the overall scheme of article 5 as a whole. They considered that the ancillary duty existed throughout the prisoners detention (para 48), rather than being confined to the post tariff period, as the European court had held in James, in accordance with the logic of its reasoning. As explained above, however, far from holding that the prisoner was entitled under article 5(4) to an immediate order for speedy release, the European court held in James that article 5(4) was satisfied by (1) the availability of judicial review to challenge the failure to provide the relevant courses, and (2) the ability of the Parole Board to order release under the statutory provisions once satisfied that the individual was no longer dangerous. The logic of the European courts approach was that an obligation to bring an end to unlawful detention can be met by bringing an end to the factor which renders the detention unlawful. No reference was however made to that part of the James judgment in Kaiyam. As explained at para 15 above, the European courts treatment in James of the claims for just satisfaction also confirmed that unlawfulness under article 5(1) arising from a failure to provide courses did not entail an obligation under the Convention to secure the applicants immediate release. Lord Mances and Lord Hughess concern was exacerbated by a passage in the James judgment in which the European court, when considering whether there had been a violation of article 5(1), referred to an argument advanced on behalf of the Government: The court acknowledges that the IPP sentence was intended to keep in detention those perceived to be dangerous until they could show that they were no longer dangerous. The Government has suggested that, in these circumstances, a finding of a violation of article 5(1) as a result of the lack of access to appropriate treatment courses would allow the release of dangerous offenders who had not yet addressed their risk factors. The court accepts that where an indeterminate sentence has been imposed on an individual who was considered by the sentencing court to pose a significant risk to the public at large, it would be regrettable if his release were ordered before that risk could be reduced to a safe level. However, this does not appear to be the case here. (para 217) It is not clear from the James judgment what exactly the Governments argument was, to which para 217 was directed, but given the European courts conclusion that the violation of article 5(1) did not entitle the prisoners to immediate release, it presumably understood the argument to concern the position under domestic law. Applying the courts reasoning as to the position under article 5(4) of the Convention, however, there cannot in ordinary circumstances be a right to immediate release under domestic law. As the court explained, where detention is in violation of article 5(1) by reason of a failure to provide a real opportunity for rehabilitation, an appropriate remedy is provided by an order requiring such an opportunity to be provided, with monetary compensation for the absence of the opportunity in appropriate cases. As the court has also made clear, however, the threshold for establishing a violation of article 5(1) on this basis is a high one: see paras 11 and 21 above, and para 34 below. It is essential to bear in mind the realism and flexibility of the European courts approach. As Lord Mance and Lord Hughes noted, failings in the prison system which arise due to a lack of resources and facilities cannot always be redressed at the drop of a hat, whatever order a court may make. As explained in para 21 above, however, the court said in terms in James that it would be unrealistic, and too rigid an approach, to expect the authorities to ensure that relevant treatment or facilities were made available immediately. Its decision under article 5(4) confirmed that approach: the court focused upon the prompt transfer of the applicants to prisons where the necessary courses were available, rather than on the time which subsequently passed before places on the courses were provided (which, in the case of the applicant Lee, was significant). The high threshold for establishing a violation of article 5 on this basis was also emphasised by Lord Mance and Lord Hughes. As they observed at para 60, article 5 does not create an obligation to maximise the coursework or other provision made to the prisoner, nor does it entitle the court to substitute, with hindsight, its own view of the quality of the management of a prisoner and to characterise as arbitrary detention any case which it concludes might have been better managed. It requires that an opportunity must be afforded to the prisoner which is reasonable in all the circumstances, taking into account, among all those circumstances, his history and prognosis, the risks he presents, the competing needs of other prisoners, the resources available and the use which has been made of such rehabilitative opportunity as there has been. On the facts of the claimants cases, Lord Mance and Lord Hughes considered that the ancillary duty (which, as explained above, they considered to apply throughout the prisoners detention) had been breached in the cases of two of the claimants. In the case of Mr Haney, the life prisoner, there had been a delay of about a year, prior to the expiry of his tariff, in transferring him to an open prison after the Secretary of State had issued a letter indicating that that was appropriate. The court posed the question, was Haney afforded a reasonable opportunity to reform himself and . to demonstrate that he no longer presented an unacceptable risk to the public, and stated that the answer to this question is . given by the letter to him from the Secretary of State (paras 48 49). On the view that by this letter the Secretary of State identified what a reasonable opportunity was for Haney to demonstrate that he was no longer a danger . and adjudged that he should have that opportunity there and then (para 49), there was held to have been a violation of the ancillary obligation, prior to the expiry of the tariff. In the case of Mr Massey, one of the IPP prisoners, a timetable for his progress had been provided by the Secretary of State in a letter, but had not been adhered to. In the view of the court, the letter effectively defined what was regarded as a reasonable opportunity for Massey to build on the partial progress which he had made and to demonstrate (if he could) that he was safe to release (para 69). Given the failure to adhere to the timetable, there was a failure to provide him with the opportunity to try to demonstrate that he was safe for release which the Secretary of State regarded as reasonable (ibid), and therefore a breach of the ancillary obligation. The court was divided in the case of a third claimant, Mr Robinson, the majority concluding that there had been no violation. Kaiyam v United Kingdom The three IPP prisoners subsequently presented applications to the European court, complaining of violations of article 5(1). Their complaints were all rejected as manifestly unfounded: (2016) 62 EHRR SE13 (there is an unfortunate misprint in the report of the decision at para 84: Mr Masseys application was not held to be admissible, but inadmissible). The European court thus found that the complaint made by Mr Massey of a violation of article 5, which this court had upheld, was manifestly unfounded. The same conclusion was reached in relation to Mr Robinsons complaint. It is clear from the European courts reasoning that Mr Haneys complaint relating to a pre tariff delay, which this court had upheld, would also have been rejected. As the European court explained, it had been held in James that a real opportunity for rehabilitation was a necessary element of any part of the detention which was to be justified solely by reference to public protection. It follows, the court stated, that, strictly speaking, article 5(1)(a) does not require a real opportunity for rehabilitation during the tariff period itself, since this represents the punishment part of the sentence (para 67). The court provided a valuable summary of its reasoning in James and in the subsequent case law: 69. In examining whether part of an applicants detention post tariff was unjustified for the purposes of article 5(1)(a) of the Convention, regard must be had to the detention as a whole (see James at para 201). Thus, where, as in the present applications, the applicant claims that delay in his access to prison courses constituted a violation of article 5(1)(a), the applicants general progression through the prison system is to be assessed in light of the particular circumstances of the case (see Hall v United Kingdom at para 32; Black v United Kingdom (Application No 23543/11) 1 July 2014 at para 54; Thomas v United Kingdom at para 49; and Taylor v United Kingdom (Application No 2963/12) 3 March 2015 at para 39). Such assessment should include consideration of whether, and to what extent, the applicant was provided with an opportunity to progress even before the expiry of his tariff (see, for an example of the courts approach, James at paras 211, 213 215 and 219 220). 70. It is clear from the courts case law in this area that cases in which it is prepared to find that a period of post tariff detention has failed to comply with the requirements of article 5(1)(a) on account of a delay in access to rehabilitative courses will be rare. In particular, it is not for this court to second guess the decisions of the qualified national authorities as regards the appropriate sentence plan (see Dillon v United Kingdom at para 50; and Alexander v United Kingdom at para 47). Neither is it the courts role to impose a particular timetable on the authorities. Any delays encountered in the provision of specific courses must be assessed in the context of the gravity of the offence and the amount of offending behaviour work therefore required, and against the backdrop of the range of rehabilitative courses already accessed by the applicant (see Alexander at para 46). In finding a violation in the case of James, the court drew attention to the fact that substantial periods of time passed in respect of each applicant before they even began to make any progress in their sentences (at para 220). They had therefore not been afforded reasonable opportunities to undertake courses aimed at helping them address their offending behaviour. The European court declined to adopt this courts analysis of an ancillary duty and adhered to the reasoning in James. It made clear the high threshold imposed by its test of arbitrariness and hence unlawfulness, and explained why it attached less significance to the Secretary of States letter to Mr Massey than this court had done: 71. In finding a breach of that ancillary duty in Mr Masseys case, the Supreme Court referred solely to the failure to provide him with the opportunity which the Secretary of State had regarded as reasonable in his letter of October 2010 to try to demonstrate that he was safe for release. The nature and extent of the delay in affording Mr Massey access to the ESOTP was in and of itself sufficient to give rise to a violation of the ancillary duty. 72. It is not the role of this court to determine in the abstract whether the UK has properly implemented the judgment in James within its domestic legal order. This is primarily a matter for the Committee of Ministers in the exercise of its jurisdiction under article 46(2) of the Convention. This courts role is confined to determining whether delays in the provision of rehabilitative courses to the present applicants were such as to introduce a degree of disproportionality leading to arbitrariness, as understood by James, and thus rendering the relevant periods of detention unlawful within the meaning of article 5(1)(a) of the Convention. In making this assessment, this court cannot examine specific periods of delay in a vacuum: it must view any period of delay in the light of the detention as a whole and the specific factors identified in its case law. The fact that a delay occurred, even where that delay was at odds with what the Secretary of State had indicated as a reasonable opportunity to try and demonstrate safety for release, is not sufficient to meet the threshold required for the establishment of arbitrariness in breach of article 5(1)(a) of the Convention under James. In this sense, the test applied by this court to whether a violation of article 5(1)(a) has been made out in cases concerning delayed access to rehabilitative courses might be said to be more stringent than the approach applied by the Supreme Court to whether a breach of the ancillary duty which it read into article 5 to facilitate the progress of IPP prisoners towards release by appropriate courses and facilities has been demonstrated. (footnotes omitted) In its consideration of the facts of the applicants cases, the court found that, in the cases of Mr Kaiyam and Mr Robinson, prompt steps were taken to begin their progression through the prison system well before the expiry of their tariffs. A real opportunity for rehabilitation was provided to them, through the provision of reasonable opportunities to undertake courses aimed at helping them to address their offending behaviour. There was therefore no appearance of a violation of article 5(1). In the case of Mr Massey, he had to wait 18 months post tariff to begin a course, and was not provided with access to any other courses during that time. There was no doubt that the delay was significant, given the practical importance of completion of the course for his ability to satisfy the Parole Board that he was safe to be released. The question, however, was whether, in the light of his detention as a whole, the delay was of such a degree as to render that period of his detention arbitrary and thus unlawful. That period of inactivity had therefore to be put in context. In the space of five years detention, Mr Massey had completed four courses aimed at tackling the reasons for his offending. He had made significant progress in his sentence and had been afforded multiple opportunities to present to the Parole Board evidence of his work in reducing his risk. Against that backdrop, the delay in access to the course could not be said to have deprived Mr Massey of a real opportunity for rehabilitation through the provision of reasonable opportunities to undertake courses aimed at helping him to address his offending behaviour. There was therefore no appearance of a violation of article 5(1). Murray v Netherlands Finally, in this survey of the evolution of the Strasbourg case law, it is necessary to note the judgment of the Grand Chamber in Murray v The Netherlands (2016) 64 EHRR 3. The case concerned a mentally disordered prisoner serving a life sentence, who had been detained for 19 years in an ordinary prison without access to medical treatment. His complaint was brought under article 3 of the Convention, which prohibits inhuman or degrading treatment. In the course of its judgment, the Grand Chamber cited the judgment in James: 102. The court observes that the principle of rehabilitation, that is, the reintegration into society of a convicted person, is reflected in international norms (see paras 70 76 above) and has not only been recognised but has over time also gained increasing importance in the courts case law under various provisions of the Convention (see, apart from Vinter v United Kingdom [GC] (2016) 63 EHRR 1, for instance Mastromatteo v Italy [GC], Reports of Decisions and Judgments 2002 VIII, para 72; Dickson v the United Kingdom [GC], (2008) 46 EHRR 41, para 28; James, Wells and Lee v United Kingdom, para 209; and Khoroshenko v Russia [GC] (Application No 41418/04) given 30 June 2015, paras 121 and 144 145). In a slightly different context the court has, moreover, held that, in circumstances where a Government seek to rely solely on the risk posed by offenders to the public in order to justify their continued detention, regard must be had to the need to encourage the rehabilitation of those offenders (James, Wells and Lee, para 218). 103. Notwithstanding the fact that the Convention does not guarantee, as such, a right to rehabilitation, the courts case law thus presupposes that convicted persons, including life prisoners, should be allowed to rehabilitate themselves. Indeed, the court has held that . a whole life prisoner is entitled to know . what he or she must do to be considered for release and under what conditions (Vinter, cited above, para 122). It has also held, with reference to Vinter, that national authorities must give life prisoners a real opportunity to rehabilitate themselves (see Harakchiev and Tolumov (Application Nos 15018/11 and 61199/12) given 8 July 2014, para 264). It follows from this that a life prisoner must be realistically enabled, to the extent possible within the constraints of the prison context, to make such progress towards rehabilitation that it offers him or her the hope of one day being eligible for parole or conditional release. This could be achieved, for example, by setting up and periodically reviewing an individualised programme that will encourage the sentenced prisoner to develop himself or herself to be able to lead a responsible and crime free life. Para 218 of the James judgment, which the Grand Chamber cited at para 102, was quoted at para 12 above. In it, the court derived the obligation to encourage rehabilitation from article 5(1). The Grand Chamber referred again to the cases cited at para 102 of its Murray judgment in Hutchinson v United Kingdom (Application No 57592/08) given 17 January 2017, para 43. Should this court align its approach with that of the European court? It is apparent from this survey of the Strasbourg case law that the approach adopted by the European court in James has been applied by the court in a substantial number of subsequent cases, and has been cited by the Grand Chamber with apparent approval. The question arises whether this court should now follow its reasoning, and depart from the position which it adopted in Kaiyam, on the basis that it is no longer possible to deny that the analysis in James forms part of a clear and constant line of decisions. The question would be of limited importance if the issue was merely one of taxonomy: whether the relevant obligation arises under article 5(1) or is immanent in article 5 considered as a whole. But the issue goes beyond that: it also affects the substance of the obligation. In the first place, as explained earlier, in Kaiyam this court treated the ancillary obligation which it found to be implicit in article 5 as one which applied, in addition to obligations arising under the common law, throughout the prisoners detention (para 24 above). Indeed, Mr Haneys application, which succeeded, was brought almost a year before his tariff expired. The European court, on the other hand, regards the issue of lawfulness as arising only after the tariff or punishment part of an IPP sentence has expired, although earlier measures to encourage the prisoners rehabilitation will form part of the relevant circumstances (paras 32 33 above). In that regard, the European courts approach reflects the logic of locating the obligation in article 5(1)(a): it is only after the tariff has expired that any question can arise whether the continued detention is arbitrary, and therefore not lawful within the meaning of article 5(1)(a). Secondly, in Kaiyam this court treated the ancillary obligation as being to afford the prisoner a reasonable opportunity to rehabilitate himself and to demonstrate that he is no longer a risk to the public. The relevant standard was one of reasonableness, not arbitrariness. The court concluded that that standard had not been met in two of the cases before it. More recently, the Court of Appeal has expressed the view that the apparent theoretical difference between this standard and the common law standard of Wednesbury unreasonableness is unlikely to lead to different outcomes in many, if any, cases: R (Weddle) v Secretary of State for Justice [2016] EWCA Civ 38, para 50 (a case decided before the prisoners tariff had expired). The expression reasonable opportunities was also used by the European court in James, but in a context where the legal issue was whether the detention was arbitrary and therefore unlawful within the meaning of article 5(1) (paras 10 and 13 above). As the outcome of the applications to the European court in Kaiyam v United Kingdom makes clear, and as that court itself noted (para 34 above), this is a more stringent standard. The stringency of the standard applied is thus derived from the language of article 5(1)(a). Thirdly, in Kaiyam this court treated the Secretary of States own assessment of what was reasonable, in the cases of Mr Haney and Mr Massey, as conclusive of the question whether the ancillary obligation had been fulfilled (para 34 above). As the European court made clear in its own judgment in Kaiyam, its approach is more stringent: the fact that a delay occurred, even where that delay was at odds with what the Secretary of State had indicated as a reasonable opportunity to try and demonstrate safety for release, is not sufficient to meet the threshold required for the establishment of arbitrariness in breach of article 5(1)(a) (see para 34 above). In all these respects, this courts reluctance to accept that the relevant obligation derives from article 5(1)(a) has resulted in the imposition on the prison authorities of a duty which is significantly different from, and more demanding than, the duty imposed by the Convention. That is a notable departure from the usual situation in which domestic and Strasbourg jurisprudence march hand in hand. What, then, of this courts fundamental reason for declining to follow the reasoning of the European court in James: that, if the obligation were located in article 5(1), its violation might entitle the prisoner under the Convention to immediate release? In considering that concern, it has to be borne in mind in the first place that, as later Strasbourg cases have made clear, the threshold for finding a violation of the obligation imposed by article 5(1)(a) is higher than this court considered it to be in Kaiyam. More fundamentally, as explained in paras 14 16 and 25 above, the European court held in James that the requirement under article 5(4), that a persons release should be ordered if his detention was not lawful, was satisfied by the availability of remedies (1) to bring an end to the aspect of the detention which rendered it unlawful within the meaning of article 5(1)(a), namely the failure to provide an opportunity for the prisoner to rehabilitate himself, and (2) to enable the prisoner to secure his release if the Parole Board was satisfied that he was no longer dangerous. No reference was made to this aspect of the judgment in James by this court in Kaiyam. The European courts treatment of the claims for just satisfaction in James also confirmed that unlawfulness under article 5(1) arising from a failure to provide courses did not entail an obligation under the Convention to secure the applicants immediate release. In this unsatisfactory situation, it is necessary for this court to confront squarely the difficulties arising from its reasoning in Kaiyam. The appropriate course is for this court now to adopt the same approach to the interpretation of article 5(1)(a) as has been followed by the European court since the case of James, and cease to treat the obligation in question as an ancillary obligation implicit in article 5 as a whole. Emphasis should however be placed on the high threshold which has to be surmounted in order to establish a violation of the obligation. As the European court stated in Kaiyam at para 70, cases in which a violation is found will be rare (see para 33 above). That is consistent with the statement in R (Sturnham) v Parole Board (No 1) [2013] UKSC 23; [2013] 2 AC 254, para 13, that a violation of article 5(1) of the Convention . would require exceptional circumstances warranting the conclusion that the prisoners continued detention had become arbitrary. The guidance given by the European court, for example at paras 69 70 of Kaiyam, as well as that given in the present judgment, should be borne in mind. Extended sentences All the cases so far discussed in which this court, or the European court, has found there to be an obligation to provide an opportunity for rehabilitation have concerned life or IPP sentences. They can be contrasted with cases concerned with ordinary determinate sentences of imprisonment, in which both the European court and this court have treated the sentence as in itself rendering the detention lawful for the duration of the sentence period: see, for example, R (Whiston) v Secretary of State for Justice [2014] UKSC 39; [2015] AC 176, and the cases cited there. The question which arises in the present appeal is whether, and if so how, the obligation to provide an opportunity for rehabilitation applies to a prisoner sentenced to an extended sentence. The power to impose an extended sentence was introduced by the Crime and Disorder Act 1998 (the 1998 Act). Section 58 conferred the power to impose an extended sentence on courts in England and Wales (corresponding provisions are currently contained in sections 226A and 226B of the Criminal Justice Act 2003, as inserted by section 124 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012). In relation to Scotland, section 86(1) of the 1998 Act inserted section 210A of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act). That provision forms part of a body of law which is highly complex and has been subject to frequent change. I shall confine myself to the provisions which are directly relevant to this appeal, as in force at the material time. So far as relevant, section 210A provides: (a) (1) Where a person is convicted on indictment of a sexual or violent offence, the court may, if it intends, in relation to (i) sentence of imprisonment; or (ii) a violent offence, to pass such a sentence for a term of four years or more; and a sexual offence, to pass a determinate (b) considers that the period (if any) for which the offender would, apart from this section, be subject to a licence would not be adequate for the purpose of protecting the public from serious harm from the offender, pass an extended sentence on the offender. (2) An extended sentence is a sentence of imprisonment which is the aggregate of (a) the term of imprisonment (the custodial term) which the court would have passed on the offender otherwise than by virtue of this section; and a further period (the extension period) for (b) which the offender is to be subject to a licence and which is, subject to the provisions of this section, of such length as the court considers necessary for the purpose mentioned in subsection (1)(b) above. (3) The extension period shall not exceed . ten years. (5) The term of an extended sentence passed for a statutory offence shall not exceed the maximum term of imprisonment provided for in the statute in respect of that offence. It follows from section 210A that an extended sentence comprises, in the first place, a custodial term, which is the term of imprisonment which the court would have imposed if section 210A did not exist, and in addition an extension period for which the offender is to be on licence beyond the period during which he would have been on licence if section 210A did not exist. Both periods are fixed by the court. They cannot total more than the maximum sentence available, and the extension period cannot exceed ten years. In fixing the custodial term, as in fixing an ordinary sentence of imprisonment, the court will take account of all matters relevant to sentencing and have regard to all the accepted objectives of a custodial sentence, including punishment, deterrence, public protection and rehabilitation. The reason for imposing an extended sentence is that the period for which the offender would have been subject to a licence under early release provisions, if he had received an ordinary sentence of imprisonment equal in length to the custodial term, is considered by the court to be insufficient for the protection of the public. The circumstances must also be such as do not require or justify the imposition of a sentence of life imprisonment or an order for lifelong restriction. Release on licence is intended to ensure that the process of transition from custody to freedom is supervised, so as to maximise the chances of the ex prisoners successful reintegration into the community and minimise the chances of his relapse into criminal activity. The licence is accordingly subject to conditions designed to assist in achieving those objectives, which normally place the ex prisoner under supervision and require him to comply with the instructions of his supervising officer. The licence can be revoked, and the ex prisoner recalled to custody, in the event that he breaches the conditions of his licence. The statutory provisions governing early release, set out in Part 1 of the Prisoners and Criminal Proceedings (Scotland) Act 1993 (the 1993 Act), apply in relation to extended sentences as if any reference to a sentence or term of imprisonment was a reference to the custodial term of an extended sentence: section 26A(2), inserted by section 87 of the Crime and Disorder Act 1998. Those provisions have also been the subject of frequent amendment. For present purposes, it is necessary only to consider the provisions which are relevant to this appeal, as in force at the relevant time. Under those provisions, a prisoner, such as the appellant, whose custodial term is of four years or more is entitled under section 1(2) to be released on licence after serving two thirds of the custodial term (a different regime applies to prisoners who were sentenced after 1 February 2016, under section 1(2A) of the 1993 Act, inserted by section 1(2)(b) of the Prisoners (Control of Release) (Scotland) Act 2015). He is also eligible for release on licence, on the recommendation of the Parole Board for Scotland (the Board), after serving one half of the custodial term: section 1(3). When he is released on licence, the licence remains in force until the end of the extension period, unless revoked under section 17: section 26A(3). The court which fixes the custodial term of an extended sentence is, of course, aware of the statutory provisions governing early release. But those provisions do not influence the length of the custodial term. The court does not, for example, impose a custodial term of six years because it judges four years to be the appropriate period in custody. The provisions governing early release are, however, relevant to the imposition of an extended sentence. As explained earlier, in terms of section 210A of the 1995 Act it is only where the period (if any) for which the offender would, apart from this section, be subject to a licence would not be adequate for the purpose of protecting the public from serious harm from the offender that an extended sentence can be imposed. The court therefore has to consider the period for which the offender would be on licence under early release provisions, and therefore subject to supervision with the possibility of being recalled to custody, if an ordinary sentence of imprisonment were imposed, and assess whether that period would be adequate to protect the public from serious harm. If not, the court can ensure that the offender is on licence for a further period, fixed as the extension period. Under section 17(1) of the 1993 Act, substituted by section 36(4) of the Criminal Justice (Scotland) Act 2003, the Scottish Ministers are empowered to revoke a licence and recall the prisoner to prison if recommended to do so by the Board, or if it is in their opinion expedient in the public interest and it is not practicable to await the recommendation of the Board. On the revocation of the licence, the prisoner is liable to be detained in pursuance of his sentence: section 17(5). Under section 17(3), also substituted by section 36(4) of the 2003 Act, the Scottish Ministers must refer the case of a person whose licence is revoked to the Board. Under section 3A(4), on a reference under section 17(3) the Board must, if it is satisfied that it is no longer necessary for the protection of the public from serious harm that the prisoner should be confined (but not otherwise), direct that he should be released. If such a direction is given, the Scottish Ministers must release the prisoner on licence: section 3A(5). Section 3A(2) provides for the review by the Board of the cases of prisoners serving extended sentences whose licences have been revoked, at not less than annual intervals. Section 3A(4) and (5), inserted by section 88 of the Crime and Disorder Act 1998, apply to such a review. Under section 16 of the 1993 Act, read with section 26A(11), where a prisoner serving an extended sentence is released on licence and then commits another offence punishable by imprisonment prior to the expiry of the sentence, the court which imposed the extended sentence may order him to be returned to prison for the whole or any part of a period equal in length to the period between the date when the new offence was committed and the date when the extended sentence would have expired. The period ordered to be served is taken to be a sentence of imprisonment for the purposes of the 1993 Act (section 16(5)), and is therefore subject to the early release provisions. Article 5(1) and extended sentences As was emphasised by counsel for the Board, the Scottish Ministers, and the Advocate General for Scotland, the previous cases in which the European Court and this court have applied the principle established in James have all concerned life or IPP sentences. That does not, however, imply that the principle is necessarily confined to sentences of that kind. When the question arises whether the principle applies to a different type of sentence, it is necessary to consider whether the differences are such as to lead to a different result. In that regard, counsel emphasised that an extended sentence is determinate, in the sense that the court fixes the length of the extension period. That was argued to be a critical difference. Counsel for the appellant, on the other hand, emphasised that the court does not impose any period of imprisonment to be served once the custodial term has passed: the duration of any detention during the extension period depends, as in life and IPP cases, on decisions made by the executive and the Board. The Advocate General also laid emphasis on the fact that section 210A(2) of the 1995 Act refers to the aggregate of the custodial term and the extension period as a sentence of imprisonment. As Lord Hope of Craighead remarked, however, in R (Giles) v Parole Board [2003] UKHL 42; [2004] 1 AC 1, para 37, the approach which the European court adopts is to look beyond the appearances and the language used and concentrate on the realities of the situation. Attention therefore needs to be focused on the practical effect of such a sentence. Prisoners who are detained during the custodial term, or during a period ordered to be served under section 16 of the 1993 Act (as explained in para 55 above), are during that period in an analogous position to prisoners serving determinate sentences. They are serving a period of imprisonment of a term of years which the court has stipulated as appropriate for the offence committed. If they are released on licence and then recalled during that period, they continue to serve the period of imprisonment imposed by the court. It follows, according to the Strasbourg jurisprudence relating to determinate sentences, and the majority view in Whiston, that the order of the court imposing that period of imprisonment is sufficient to render their detention during the custodial term lawful for the purposes of article 5(1)(a), and the judicial supervision required by article 5(4) is incorporated in the original sentence. Prisoners who are detained during the extension period, other than by virtue of an order made under section 16 or another sentence, are in a different position in three closely related respects. First, no court has ordered that the prisoner should be detained during that period. Rather, the court has ordered that he should be subject to compulsory supervision in the community during that period. The court has therefore taken the view that, prima facie, the risk to the public can be satisfactorily managed in the community by means of that supervision (otherwise another type of sentence would have been imposed). But in the event that the supervision arrangements break down or fail to achieve their objective, the order has the consequence, under the relevant statutory provisions, that the person is subject to detention if (1) his licence is revoked by the Scottish Ministers and (2) the Board is not satisfied that it is no longer necessary for the protection of the public from serious harm that he should be confined. It follows that if the licence is revoked, the prisoner is not being recalled to serve a period of imprisonment imposed by the court. Whether he is detained, and the duration of any such detention, are determined by the Scottish Ministers and the Board. The fact that the court has set a limit to the extension period does not alter that analysis (see, for example, Van Droogenbroeck v Belgium (1982) 4 EHRR 443, and the discussion of that case in R (Giles) v Parole Board, para 37). Secondly, the purpose of detention during the extension period is materially different from that of a determinate sentence. In terms of section 210A(2)(b) of the 1995 Act, the extension period is of such length as the court considers necessary for the purpose mentioned in subsection (1)(b), namely protecting the public from serious harm from the offender: see para 48 above. The punitive aspect of the sentence has already been dealt with by the custodial term, which is the term of imprisonment . which the court would have passed on the offender otherwise than by virtue of this section: section 210A(2)(a). Where a prisoner serving an extended sentence is detained during the extension period, other than by virtue of an order made under section 16 or another sentence, his continued detention is therefore justified solely by the need to protect the public from serious harm. In terms of section 3A(4) of the 1993 Act, he will be released, following his recall by the Scottish Ministers, only if the Board is satisfied that it is no longer necessary for the protection of the public from serious harm that the prisoner should be confined. Thirdly, the fact that the prisoners detention during the extension period has not been ordered by a court, but depends on recall by the Scottish Ministers, means that it must be supervised by a judicial body. That consequence also flows from the fact that the lawfulness of detention during the extension period, for the purposes of article 5(1)(a) of the Convention, depends on whether or not the prisoner ceases to present a risk to the public of serious harm. That is not a matter which was determined by the original sentence of the court. It depends on factors which are susceptible to change with the passage of time, namely mental instability and dangerousness: Mansell v United Kingdom (Application No 32072/96) given 2 July 1997 and Thynne, Wilson and Gunnell v United Kingdom (1990) 13 EHRR 666, para 70. Judicial supervision of detention during the extension period is therefore necessary under article 5(4) of the Convention: see the principles set out in R (Giles) v Parole Board, paras 40 41, which were applied to extended sentences in R (Sim) v Parole Board [2003] EWCA Civ 1845; [2004] QB 1288. The requirement of judicial supervision is met by the provision made by sections 3A(2) and 17(3) of the 1993 Act for reviews by the Board (explained in para 54 above). Since that system of periodical reviews is predicated on the possibility that prisoners may be reformed, the provision of a real opportunity for rehabilitation forms a necessary element of detention during that period. Having regard to these circumstances the indefinite (albeit not unlimited) duration of detention during the extension period, its preventive purpose, and the possibility of change in response to opportunities for rehabilitation the reasoning which led the European court to decide in James, in the context of IPP sentences, that article 5(1)(a) imposed an obligation to provide the prisoner with a real opportunity for rehabilitation is equally applicable. As was explained earlier, the reasoning in James was based on the need for the conditions of detention to be related to the purpose of the detention, in order to avoid arbitrariness and hence unlawfulness within the meaning of article 5(1)(a). The critical feature of IPP sentences, after the prisoners had served the punishment element of their sentences, was that they were in detention solely because of the risk they pose to the public (para 194, cited at para 10 above). It followed that there must be measures in place aimed at reducing the danger they present and at limiting the duration of their detention to what is strictly necessary in order to prevent them from committing further offences (ibid). That reasoning applies equally to prisoners detained during the extension period of an extended sentence, other than by virtue of a section 16 order or a concurrent sentence. The same rationale is apparent in the courts statement in James that in circumstances where a government seeks to rely solely on the risk posed by offenders to the public in order to justify their continued detention, regard must be had to the need to encourage the rehabilitation of those offenders (para 218, cited at para 12 above). That statement was repeated by the Grand Chamber in Murray v The Netherlands (para 102, cited at para 37 above). The situation of a prisoner who is detained during the extension period of an extended sentence is an example of such circumstances. under article 5(1)(a). The facts of the present case On 5 January 2006 the appellant was convicted at the High Court at Edinburgh of culpable homicide, after fatally stabbing another youth in the heart with a flick knife. He received an extended sentence of ten years imprisonment, of which the custodial term was seven years and the extension period was three years. The sentence was backdated to 3 August 2005. The appellant was initially held at HMYOI Polmont, a unit for young offenders. He undertook rehabilitative course work provided there. During 2006 he completed the Anger Management programme. During 2007 he completed the Constructs course (a programme designed for persistent offenders, with a focus on addressing poor problem solving skills). He was assessed as unsuitable for the Violence Prevention programme. In September 2008 he was transferred to HMP Friarton, a national top end facility for long term prisoners (national top end being the half way point between closed and open conditions). In December 2008 It is necessary next to consider the present case in the light of the obligation he was considered by the Board for release at the halfway point in his custodial term. It decided against his release. It noted that he had incurred numerous misconduct reports, including for fighting and assaults. The risk of his reoffending was assessed as medium, following his completion of the programmes, but the risk of his potential for causing serious harm should he reoffend remained high. In January 2009 the appellant was returned to closed conditions at HMYOI Polmont following a number of positive drugs tests. During 2009 he completed an Alcohol Awareness course and a First Steps Drug Awareness course. In October 2009 he was transferred to HMP Edinburgh, as he was then over 21. On 1 April 2010 he was released on licence, having served two thirds of his custodial term. On 18 August 2010 the appellant stole a car while under the influence of alcohol. His plea of guilty to a charge of the theft, and of not guilty to several other charges, was accepted on 26 August 2010. On 7 September 2010 he appeared in the High Court pursuant to section 16 of the 1993 Act (explained in para 55 above). In the event, no order was made. On 28 September 2010 the Board decided that he should be recalled to custody. His licence was then revoked by the Scottish Ministers, and he returned to custody at HMP Edinburgh on 30 September 2010. On 21 October 2010 he was sentenced at the Sheriff Court to 40 days imprisonment in respect of the new offence, to run concurrently with his extended sentence. His case was also referred to the Board in accordance with section 17(3) of the 1993 Act (explained in para 54 above). During November 2010 the appellant was involved in a serious assault on another prisoner (he was subsequently found guilty of the assault). He refused to attend a case management conference held in anticipation of the hearing before the Board. He was also not engaging with an organisation which provided drugs and alcohol courses. The case conference regarded it as highly concerning that he had incurred numerous misconduct reports prior to his release on licence, despite having completed the Constructs course and the Anger Management programme. The Board reviewed his case on 8 December 2010 and decided that it was necessary for the protection of the public from serious harm that he should continue to be confined. In the Boards view, he remained a high risk of reoffending and of causing harm to others, and the risk he posed could not be managed in the community. The Board advised that he should be assessed for his suitability to repeat the Constructs course and to undertake the Violence Prevention programme. The appellant was listed for assessment for the Constructs course and the Violence Prevention programme, which were available at the prison where he was then located. In June 2011, prior to the assessment being carried out, he was transferred to HMP Addiewell, where the Violence Prevention programme was not available, following a fight with another prisoner. During August and September 2011 he undertook an Alcohol Awareness course. During November 2011 he completed the Goals course (concerned with pro social behaviour). On 6 December 2011 the Board again reviewed his case and decided not to direct his release. It noted that since his recall he had been the subject of several misconduct reports, including three assaults. He had also been the subject of a number of intelligence entries relating to violence, which he denied. He had failed to demonstrate that he could comply with the prison routine. He was not currently engaging with the organisation which offered drug and alcohol programmes, despite the role of excessive drinking in his offending history. He continued to be assessed as presenting a high risk of reoffending and of causing harm. He required to progress to the open estate to allow him to demonstrate his ability to adhere to licence conditions and gradually reintegrate into the community. Transfer to open conditions was however dependent on re classification as a low risk prisoner. In January 2012 the appellant was found guilty of another assault. In February 2012 he underwent the Generic Programme Assessment, the purpose of which was to assess which courses would be appropriate for him. Following that assessment, the Programme Case Management Board decided in May 2012 that he should repeat the Constructs course and then undertake the CARE programme (Controlling Anger and Regulating Emotion). On 4 August 2012 his custodial term ended, and the extension period began. It is said on his behalf that he was informed about that time that there were 60 prisoners at HMP Addiewell awaiting placement on the Constructs course and the CARE programme, and that the prison had the capacity to run two such courses every nine weeks, each course taking ten prisoners at a time. Places were allocated in accordance with a waiting list prepared in accordance with a national policy which prioritised prisoners according to the earliest date when they might be eligible for release. Given his position on the waiting list, he was expected to begin the Constructs course in November 2012. In the event, the course due to begin in November was postponed as a result of changes in the intervention team who provided courses at the prison. On 6 December 2012 the Board again reviewed his case, and decided that he should remain in custody and progress in terms of his management plan, which envisaged his progression towards a transfer to open conditions following the completion of course work and a sustained period of good behaviour. It noted that little progress had been made, partly because he had been unable to undertake the programme work planned for him, but also because he had incurred five misconduct reports during 2012, including one for assault, which would have been taken into account in considering his suitability to progress. The responsibility for that lay with him. The Board encouraged him to engage with the management plan for his sentence and to demonstrate and maintain good behaviour, without adverse reports, for a sustained period so that he could offer evidence to the Board that his risk was manageable in the community. In January 2013 the appellant commenced the Constructs course, having been transferred to HMP Perth so as to enable him to do so earlier than would have been possible at HMP Addiewell. He completed it during April 2013. In May 2013 he commenced the CARE programme. He completed it during September 2013. He then underwent assessment for progression to open conditions. He was assessed as suitable, and a place was found at HMP Castle Huntly. Supported accommodation was secured in Edinburgh where he could spend periods of home leave, and thus provide evidence that the risk he presented was manageable in the community. On 9 December 2013 the Board again reviewed his case. It welcomed the progress which had been made, but decided not to direct his immediate release. It was noted that he had incurred a further two misconduct reports during 2013. The risks which he presented were still assessed as being at a high level, and were likely to remain so until he had been tested in the community. A period at HMP Castle Huntly would provide him with an opportunity to put into practice what he had learned, and provide a staged approach to his return to living in the community. The Board suggested that he should apply for a further review in six months time. On 10 December 2013 the appellant was transferred to open conditions at HMP Castle Huntly. He began to take home leaves. In February 2014 he was returned to closed conditions at HMP Addiewell, after illicit substances were found in a locker to which he had a key. In August 2014 he was returned to open conditions at HMP Castle Huntly. Three days later he was returned to closed conditions at HMP Addiewell, after he was found to be under the influence of an illicit substance. He declined to engage with the addictions team there. Later that month he appeared in court on two historical charges of sexual abuse of children and one of rape. A case conference held in September 2014 concluded that he did not need to repeat any courses, but needed to apply what he had already learned. On 26 September 2014 the Board again reviewed his case, and decided not to direct his release. It noted that, notwithstanding his completion of all required programme work, he had not acquired the skills which he had been taught. The risk of his reoffending and causing serious harm remained too high to be managed in the community. The appellant was released from prison on 4 August 2015, on the expiry of the extension period. Discussion There can be no doubt, in the light of this history, that the appellant was provided with a real opportunity for rehabilitation. From the outset of the custodial term of his sentence, he was provided with rehabilitative courses during 2006 and 2007 which enabled him to progress to a top end facility in 2008. He nevertheless continued to be involved in violent behaviour and to abuse drugs, leading to his return to closed conditions in 2009. He was then provided with courses designed to assist him in avoiding drug and alcohol misuse, prior to his release on licence in 2010. Around four months later, however, he reoffended while under the influence of alcohol, and in consequence was recalled to custody. Following his return to custody, he continued to be involved in violent behaviour, leading to the Boards advice in December 2010 that he should be assessed for his suitability to repeat the Constructs course he had previously undertaken in 2007, and the Violence Prevention programme. In the event, however, he was transferred to another prison, following further violent conduct, before that assessment had been carried out. Although the Violence Prevention programme was not available there, it is not apparent from the documents before the court why an assessment of his suitability to repeat the Constructs course was not carried out. The appellant has not sought to adduce any evidence in relation to this matter, for example from those who were involved in the management of his sentence during that period. In the circumstances, the court cannot speculate as to whether there was or was not a good reason for his not being assessed at this time for the Constructs course. It is however clear that the appellant was not simply left in limbo: there continued to be an annual case conference to consider his management plan (including the provision of appropriate work and education), and an annual review by the Board, and he was provided with two other courses during 2011, namely the Alcohol Awareness course and the Goals course. There is no reason to doubt that those courses were appropriate for him. Any delay in assessment for the Constructs course during this period is in any event only a small part of the overall picture. Once the appellant was assessed in May 2012 as suitable to repeat the Constructs course, to be followed by the CARE programme, he was provided with places on those courses without unreasonable delay. The period between May 2012 and January 2013, when the Constructs course began, was longer than would be ideal, but the prison authorities cannot be criticised for allocating the available places in accordance with a consistent scheme of prioritisation. The reasonableness of the decision to adopt that particular scheme is not challenged in these proceedings. It was unfortunate that staff changes resulted in the postponement of the course, but an effort was then made to avoid further delay by arranging a transfer to a prison where the course was available sooner. The overall delay was not of an order which might render the appellants detention after the expiry of his custodial term arbitrary. As was said by Lord Mance and Lord Hughes in Kaiyam at para 60, article 5 does not entitle the court to characterise as arbitrary detention any case which it concludes might have been better managed: It requires that an opportunity must be afforded to the prisoner which is reasonable in all the circumstances, taking into account, among all those circumstances, his history and prognosis, the risks he presents, the competing needs of other prisoners, the resources available and the use which has been made of such rehabilitative opportunity as there has been. After completing the CARE course in September 2013, the appellant was then transferred to open conditions without any greater delay than was necessitated by the need to make the necessary arrangements. The problems which then ensued, between his transfer to open conditions in December 2013 and the final review of his case in September 2014, were entirely his own responsibility. He failed to apply what he had been taught, and instead continued to misuse illicit substances. There is no question in this case of the appellants being left in limbo without sentencing planning and without any attempt to provide him with an opportunity to rehabilitate himself. This case bears no resemblance to that of James. On the contrary, there were courses provided and completed, regular planning meetings, efforts made to find appropriate rehabilitative work, and transfers to less restrictive conditions. The problem which resulted in the appellants serving the whole of his sentence was not the failure of the prison authorities to provide appropriate courses, but his own misconduct. There is simply no question of his detention during the extension period, or at any other point during his sentence, having been arbitrary. Conclusion For these reasons, I reach the same conclusion as the Lord Ordinary and the judges of the Inner House, although their reasoning was understandably different in some respects, reflecting the development of this area of the law during the course of these proceedings. I would therefore dismiss the appeal.

UK-Abs

The appellant was sentenced to an extended sentence of ten years imprisonment, comprising a custodial term of seven years and an extension period of three years. He was released on licence after serving two thirds of the custodial term, but was recalled to custody after committing a further offence. He then remained in prison until the sentence had been served in full. In these proceedings, he complains that he was not provided with appropriate rehabilitation courses following his recall to prison, contrary to article 5 of the European Convention on Human Rights (the Convention), as given effect in domestic law by the Human Rights Act 1998. The principal issue in this appeal is whether the duty under article 5 to provide prisoners with a real opportunity for rehabilitation applies to prisoners serving extended sentences. The lower courts found that there was no violation of article 5. The Supreme Court unanimously dismisses the appeal, upholding the decision that there was no violation of article 5(1)(a). Lord Reed gives the lead judgment, with which the rest of the Court agrees. Previous decisions on Article 5(1)(a) In James v United Kingdom (2013) 56 EHRR 12 (James), the European Court of Human Rights (ECtHR) applied the general principle that article 5(1) requires the conditions of detention to be consistent with the purpose of the detention. Based on that principle the court concluded that after the punishment part (the tariff period) of an indeterminate sentence for public protection (IPP) has been served and the prisoner remains in detention for reasons of public protection, a real opportunity for rehabilitation should be provided [8 18]. The Supreme Court (UKSC) in R (Kaiyam) v Secretary of State for Justice [2014] UKSC 66 (Kaiyam) accepted there was an obligation to provide life and IPP prisoners with a real opportunity for rehabilitation, but held this was not imposed by article 5(1). Rather, the duty was an ancillary duty in the overall scheme of article 5 and existed throughout the prisoners detention. James was not part of a clear and constant line of decisions. The UKSC was concerned that the approach in James might give prisoners a right to immediate release under the Convention [22 25]. The ECtHR in Kaiyam v United Kingdom (2016) 62 EHRR SE 13 rejected the article 5(1) complaint in Kaiyam as inadmissible on the basis that article 5(1)(a) does not require a real opportunity for rehabilitation during the tariff period, since this represents the punishment part of the sentence. The ECtHR declined to adopt the UKSCs analysis, and adhered to the approach in James. On the facts of Kaiyam, a real opportunity for rehabilitation had been provided to the applicants [32 36]. Whether the UKSC should align its approach with the ECtHR The question of whether the obligation to provide rehabilitation opportunities arises under article 5(1) (as the ECtHR held in James and Kaiyam), or is immanent in article 5 as a whole (as the UKSC held in Kaiyam), affects the substance of the obligation, including: the period during which the obligation applies, the standard of the duty, and the weight to be placed on the Secretary of States assessment of what amounts to a reasonable opportunity [38 41]. In light of this, the UKSCs approach in Kaiyam has resulted in the imposition of a duty on the prison authorities which is significantly different from, and more demanding than, the duty imposed by the Convention. This position is a departure from the usual situation in which the jurisprudence of the UK and the ECtHR aligns. As to the UKSCs concern in Kaiyam, noted above, the ECtHRs approach does not entail an obligation under the Convention to secure the applicants immediate release, as other remedies exist which can remedy the lack of opportunity for rehabilitation [42 43]. Accordingly, the UKSC should now adopt the same approach to the interpretation of article 5(1)(a) as the ECtHR in James, and cease to treat the obligation to provide opportunities for rehabilitation as an ancillary obligation implicit in article 5 as a whole. It is noted, however, that a high threshold has to be surmounted in order to establish a violation of the obligation [44 45]. Application to extended sentences Whereas the previous cases on the duty to provide an opportunity for rehabilitation concerned life or IPP sentences, the present case concerns extended sentences, which may be imposed pursuant to section 210A of the Criminal Procedure (Scotland) Act 1995. An extended sentence comprises a custodial term and an extension period for which the offender is to be on licence beyond the licence period under the custodial term. A court may impose an extended sentence if it considers the licence period under the custodial term to be insufficient for the protection of the public. When the prisoner subject to the extended sentence is released on licence, the licence remains in force until the end of the extension period. The licence may be revoked if the offender commits a further offence [46 55]. The duty to provide an opportunity for rehabilitation established in James should apply equally to prisoners detained during the extension period of an extended sentence, having regard to the indefinite (albeit not unlimited) duration of detention during the extension period, its purpose of protecting the public from serious harm, and the possibility of change in response to opportunities for rehabilitation. The rationale in James that rehabilitation opportunities had to be available to IPP prisoners where they were detained solely because of the risk they pose to the public, applies to prisoners detained during the extension period of an extended sentence [59 63]. Application to the present case In light of the various opportunities for rehabilitation provided to the appellant in the present case, there can be no doubt that he was provided with a real opportunity for rehabilitation during his custodial sentence and his extended sentence. The appellant was not left in limbo without sentencing planning and without any attempt to provide him with an opportunity to rehabilitate himself. On the contrary, there were courses provided and completed, regular planning meetings, efforts made to find appropriate rehabilitative work, and transfers to less restrictive conditions. The problem which resulted in the appellants serving the whole of his sentence was not the failure of the prison authorities to provide appropriate courses, but his own misconduct. There is no question of his detention during the extension period, or at any other point during his sentence, having been arbitrary [65 85].

This appeal is concerned with a challenge to the legality of legislation of the Scottish Parliament which deprives a person, A, who is accused of sexual activity with an under aged person, B, of the defence that he or she reasonably believed that B was over the age of 16, if the police had previously charged A with a relevant sexual offence. The appellant raises a compatibility issue, which is a question, arising in criminal proceedings, as to whether an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament is incompatible with any of the Convention rights: section 288ZA(2)(b) of the Criminal Procedure (Scotland) Act 1995 (the CPSA 1995). Convention rights are the rights set out in the articles of the European Convention on Human Rights (ECHR) which are listed in section 1(1) of the Human Rights Act 1998, and include the rights in articles 6, 8 and 14 of the ECHR which are the subject of this appeal. The compatibility issue raises a question of legality because section 29 of the Scotland Act 1998 provides: (1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. (2) A provision is outside that competence so far as any of the following paragraphs apply it is incompatible with any of the Convention (d) rights The legislative provisions Sections 28 to 37 of the Sexual Offences (Scotland) Act 2009 (the 2009 Act) create various sexual offences against older children, who are children who have attained the age of 13 years but who have not attained the age of 16 years. Section 39 provides the qualified defence (the reasonable belief defence), as follows: (1) It is a defence to a charge in proceedings (a) against A under any of sections 28 to 37(1) that A reasonably believed that B had attained the age of 16 years, The defence is qualified because subsection (2) provides: (2) But (a) the defence under subsection 1(a) is not available to A if A has previously been charged by the (i) police with a relevant sexual offence, (ia) if A has a previous conviction for a relevant foreign offence committed against a person under the age of 16, or (ii) sexual harm order. if there is in force in respect of A a risk of The relevant sexual offences to which section 39(2)(a) refers are set out in 34 paragraphs in Schedule 1 to the 2009 Act and cover a wide range of sexual offences against children under the age of 16 in Scotland, England and Wales or under the age of 17 in Northern Ireland. In relation to offences under the 2009 Act, paragraph 1 of Schedule 1 includes in the phrase relevant sexual offences: Any of the following offences under this Act an offence under Part 1 against a person under (a) the age of 16, (b) an offence under Part 4 (but not an offence of engaging while an older child in sexual conduct with or towards another older child (section 37(1)) or engaging while an older child in consensual sexual conduct with another older child (section 37(4)), (c) under the age of 16, (d) sexual abuse of trust of a mentally disordered person (section 46) of a person under the age of 16. sexual abuse of trust (section 42) of a person Offences in Part 1 of the 2009 Act, to which paragraph 1 of Schedule 1 refers, cover both consensual and non consensual sexual activity. They range from rape to indecent communications, exposure of ones genitals and voyeurism. Those offences can be committed against a person of any age but paragraph 1(a) of Schedule 1 makes them a relevant sexual offence only if the victim is under the age of 16. Paragraph 15 of Schedule 1 lists common law offences against a person under the age of 16, which have been replaced by offences under the 2009 Act, including lewd, indecent or libidinous practice or behaviour. The history of the reasonable belief defence Since 1885 our law has recognised the possibility of an honest mistake as to a young persons age and has allowed a reasonable belief defence in some form. Section 5 of the Criminal Law Amendment Act 1885 (the 1885 Act) created the offence of unlawful carnal knowledge of a girl between the ages of 13 and 16 but that offence was subject to a defence that the accused had reasonable cause to believe that the girl was aged 16 or over. The defence was restricted by section 2 of the Criminal Law Amendment Act 1922 (the 1922 Act) to a man aged 23 or under and was available only on the first occasion that he was charged with the offence under section 5 of the 1885 Act. The law was restated in Scotland in section 4 of the Sexual Offences (Scotland) Act 1976 so that the reasonable belief defence was available only when the accused man was under the age of 24 and had not previously been charged with a like offence. The offences which were like offences were defined as (i) having or attempting to have unlawful sexual intercourse with a girl aged between 13 and 16, and (ii) permitting a girl under the age of 16 to use premises for sexual intercourse. The law was restated without any substantive change in section 5 of the Criminal Law (Consolidation) (Scotland) Act 1995 (the 1995 Act). Although there was no Scottish judicial authority on the point, it was widely understood that the prior charge in the relevant provisions of the legislation, including the 1995 Act, referred to a charge at a trial in Scottish proceedings. In English law there was judicial authority that it referred to a charge at committal proceedings: R v Rider [1954] 1 WLR 463. In the highly respected textbook, Sir Gerald Gordon, The Criminal Law of Scotland, 3rd ed (2000), para 36.06, it was stated: These words [ie previously charged] have not generally been judicially defined in Scotland. They could refer to a charge by the police, an appearance on petition or complaint at the instance of the procurator fiscal, or an appearance on indictment. In England it has been held that where a man appears before a magistrate in committal proceedings that is a previous charge, being an appearance before a competent court, except where he is committed for trial, in which case the trial itself is his first charge. [fn: R v Rider [1954] 1 WLR 463] The nearest Scots equivalent to committal proceedings is an appearance on petition, but it is unlikely that such an appearance would be regarded as a previous charge for the purposes of the subsection, particularly as it does not nowadays involve any adjudication on the case by the court. In practice, therefore, a man may not be regarded as having been previously charged with an offence unless he has previously stood trial for it. In recent years Scots law and English law have diverged. In England and Wales section 6 of the Sexual Offences Act 1956 made the offence of unlawful sexual intercourse with a girl between the ages of 13 and 16 subject to exceptions which included the exception that the defendant was under the age of 24, had not previously been charged with a like offence, and believed on reasonable grounds that the girl was aged 16 or over. In this Act a like offence was the offence of unlawful sexual intercourse with a girl aged between 13 and 16 or an attempt to commit that offence. Under the Sexual Offences Act 2003 the absence of reasonable belief as to age is made part of the definition of many sexual offences by persons aged 18 or over against children aged between 13 and 16. Under that Act the prosecution must establish that absence of belief against all such defendants, regardless of their age. The existence of a previous charge is no longer relevant in English law. In 2006 the Scottish Law Commission published a Discussion Paper on Rape and Other Sexual Offences (Scot Law Com DP No 131) in which it described the reasonable belief defence, which was confined to accused persons under the age of 24, as unprincipled and suggested that it was a political compromise which led to the enactment of the 1922 Act. It proposed (a) that the age of the accused person should not be a formal restriction on the raising of the defence, and (b) that the fact that the accused may have raised the reasonable belief defence before should go to the accused persons credibility and not be a restriction on the raising of the defence (paras 5.63 5.67). The Scottish Law Commission in its Report on Rape and Other Sexual Offences (2007) (Scot Law Com No 209) recommended that there should be a defence to an offence relating to sexual activity with a child aged between 13 and 16 that the accused believed on reasonable grounds that the child was 16 or older (para 4.64). The Commission saw merit in the view that the Crown should in appropriate cases be allowed to lead evidence that the accused had previously been charged with a like offence whenever the accused raised the defence for a second time, in order to test the accused persons credibility rather than to disallow the defence (paras 4.61 4.62). It recommended that the accused should bear an evidential, but not a legal, burden of establishing that defence (para 4.74). The rationale of the current legislation The Scottish Parliament in enacting the 2009 Act took up the Scottish Law Commissions recommendation that the reasonable belief defence should be available regardless of the age of the accused person. But it chose to reformulate the previous charge proviso in two material respects. First, as section 39(2)(a)(i) expressly states, a prior police charge is sufficient to disentitle the accused to the reasonable belief defence; a charge at trial is not necessary. Secondly, the prior charge is not confined to the like offences to which I referred in para 5 above, but extends to all of the relevant sexual offences in Schedule 1 to the 2009 Act (para 4 above). In the Policy Memorandum to the Bill the Scottish Government explained the policy and their rejection of the Scottish Law Commissions recommendation. They stated (a) that the proposed restriction on the reasonable belief defence reflected the then current law in preventing someone who had been charged with a like offence from using the defence (paras 131 132) and (b) that the restriction was being re enacted because they were concerned that its removal could enable serial predators to evade conviction (para 135). Both statements are problematic. First, the assertion (in paras 131 132) that the Bills restriction of the defence reflected the current law was incorrect because the range of relevant sexual offences extended far beyond the like offences of the prior law. Secondly, as I will show, the Lord Advocate has not attempted to defend the impugned provision on the basis that its purpose was to prevent serial sexual predators repeatedly exploiting the defence. In evidence to the Scottish Parliament, the Scottish Governments Bill Team Leader adopted the line of the Policy Memorandum by asserting that the purpose of the restriction of the defence was to prevent a serial sexual predator who relied on that defence on a previous occasion but was acquitted of all charges from using the same defence to evade conviction on a subsequent offence or offences (Subordinate Legislation Committee, 28 October 2008, col 392). But, immediately afterwards, a representative from the Scottish Government Legal Directorate expressed a different view as to the purpose of the restriction. He described the prior charge as a shot across the bows and as effectively [putting the accused person] on notice to be careful not to engage in sexual activity with another person who was under the age of 16 and thereby discouraging them from engaging in such activity (Subordinate Legislation Committee, 28 October 2008, cols 392 393). The Lord Advocate in his written case in this appeal did not attempt to defend the reasoning in the Policy Memorandum and relied instead on the latter rationale which the Scottish Government had presented to the Parliament, stating (para 19): The defence is excluded where the accused has been charged by the police with a relevant sexual offence and has therefore received an official warning about sexual offences with children. In his careful oral submissions, the Lord Advocate again founded on the rationale of an official warning that one must make sure that ones sexual partner was aged 16 or over. The factual background to the appeal In 2009, when the appellant was aged 14, the police charged him with two charges of lewd and libidinous practices at common law and one contravention of section 6 of the Criminal Law (Consolidation) (Scotland) Act 1995, which concerned indecent behaviour towards a girl aged between 12 and 16. One of the common law charges involved the allegation of showing online pornographic images to a young boy. The other common law charge and the statutory charge involved the allegations of exposing his penis to, and chasing after, three other children, who were girls aged 4, 12 and 13. The police reported the case to the Procurator Fiscal and a decision was made not to prosecute the appellant. Instead, the case was referred to the Childrens Reporter. The outcome of this referral is unknown as there are no extant records, but it is legitimate to infer that the case did not proceed to a Childrens Hearing. In July 2015, when the appellant was aged 19, he appeared on petition on charges of having shortly before engaged in sexual intercourse with a girl who was then aged 14 years and 11 months, contrary to sections 28 and 30 of the 2009 Act. He does not deny that sexual intercourse took place. His only defence to the charges is that at the time he reasonably believed that the girl had attained the age of 16 years. In other words, he wishes to plead the reasonable belief defence in section 39(1)(a) of the 2009 Act. But section 39(2)(a)(i) of the 2009 Act, if lawful, has the effect that the reasonable belief defence is not available to him. He has therefore challenged the legality of that statutory provision by raising a compatibility issue. The prior proceedings Sheriff Joan Kerr, Sheriff of Glasgow and Strathkelvin at Glasgow, referred the compatibility issue to the High Court under section 288ZB of the CPSA 1995. In the reference Sheriff Kerr asked whether article 8 of the ECHR was engaged by the prohibition against utilising the reasonable belief defence and, if so, whether the interference was compatible with the appellants article 8 right; whether the lack of a mechanism to challenge the validity of the police charge would result in his trial being unfair under article 6 of the ECHR; and whether the prohibition applied when the police charged a child and the Lord Advocate did not instruct a prosecution on the charge. On 26 February 2016 the Appeal Court of the High Court of Justiciary (the Lord Justice General (Lord Carloway), Lady Dorrian and Lord Bracadale) issued their opinion on the reference. In that opinion the court rejected the appellants submission that the prohibition on raising the reasonable belief defence created a presumption of guilt and held that, absent any relevant complaint of procedural unfairness, the appellant was not within the ambit of article 6 of the ECHR. The court held that the appellants decision as an adult to engage in sexual activity with a child under the age of 16 did not engage the protection of article 8 of the ECHR. It held that, even if article 8 were engaged, the interference was both in accordance with the law and proportionate. The court stated (para 25): The purpose of section 39(2)(a)(i) is to give legal significance to a charge by the police as a shot across the bow. An individual is entitled to plead ignorance of a childs true age on one occasion only. If the provision were not framed to cover charges, as distinct from convictions, the aim of protecting children from adults who may prey on their vulnerability may not be realised. The defence could be utilised over and over again. This would undermine the purpose of the provision. There is nothing disproportionate about the measure. Had article 8 been engaged, the interference would have been justified under article 8(2). The court answered the questions accordingly. The appellant applied for leave to appeal to this court. On 24 March 2016 the High Court of Justiciary issued a statement of reasons on the application to appeal to this court. It held that the ground of appeal concerning article 6 of the ECHR was not arguable but that the ground relating to article 8 was, and that the latter raised a matter of general public importance. The High Court therefore granted leave to appeal to this court. The challenge and the response Mr Aidan ONeill QC for the appellant advances four arguments. First, he argues that section 39(2)(a)(i) of the 2009 Act (the impugned provision) is incompatible with article 6(2) of the ECHR because it breaches the presumption of innocence. Secondly, he submits that the impugned provision is incompatible with article 8 of the ECHR because it is not rationally connected to a legitimate aim, because it is not in accordance with the law, because there were less intrusive means of achieving the desired result and because it is disproportionate in its effect on the protected right. Thirdly, he argues that it unjustifiably discriminated (a) between those persons who had been previously charged with a relevant sexual offence and those who had not and (b) between UK nationals and others: article 14 read with article 8 of the ECHR. His fourth submission is that the impugned provision failed to distinguish between accused persons who had previously been charged as children and those who had previously been charged as adults, contrary to article 14 read with article 8 of the ECHR. The court also has the benefit of submissions by Ms Morag Ross, advocate (now QC), on behalf of the charity, Community Law Advice Network, which aims to improve life chances for children and young people in Scotland by obtaining for them access to legal advice and securing the recognition and enforcement of their rights. Her submissions focus on the challenge under article 8 of the ECHR, and describe how offending by a child is treated differently from adult offending under the childrens hearing system, which has existed in Scotland for over 50 years and which treats the welfare of the child as a paramount consideration. She submits that the rationale of an official warning has no place in such a scheme. There are less intrusive means of achieving the legitimate aims of protecting older children from sexual activity and predation. The impugned provision does not strike a fair balance between the public interest and the accused persons article 8 rights. In essence, her submission is that the impugned provisions interference with a persons article 8 rights when he or she has committed the relevant sexual offence as a child is not justified. The Lord Advocate, in response, argues that the appellants circumstances do not come within the ambit of article 6. Contrary to the opinion of the High Court of Justiciary, he accepts that the appeal comes within the ambit of article 8 of the ECHR because the prosecutor relied on the earlier police charges in the course of the criminal proceedings against the appellant and disclosed the charges to the court. In essence, he submits that the impugned provision strikes a fair balance between the accused persons rights and the public interest in the prevention of crime, the protection of health and morals, and the protection of the rights and freedoms of others. He also submits that any difference in treatment or absence of difference, on which the appellant founds, is objectively justified and so meets the requirements of article 14. The appellant whilst a child has been afforded the special treatment which the criminal justice system gave to children. Reliance on the 2009 charges once he had become an adult does not upset the fair balance which the Parliament had struck. Discussion (i) Article 6 of the ECHR Like the High Court, I am satisfied that the impugned provision is not within the ambit of article 6, which guarantees that a trial will be procedurally fair. The impugned provision did not, as the appellants counsel asserts, create an irrebuttable presumption that the appellant did not have a reasonable belief as to the age of the girl with whom he had sexual intercourse, thereby overriding the presumption of innocence in breach of article 6(2) of the ECHR which provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. Instead, the impugned provision, when applicable, makes the offences under sections 28 and 30 strict liability offences by treating as irrelevant the accused persons state of knowledge of the victims age. The creation of what amounts to a strict liability offence in relation to the victims age in such circumstances does not violate article 6(2) of the ECHR, which is concerned with procedural guarantees and not with the substantive elements of a criminal offence: R v G [2009] AC 92, paras 27 31 per Lord Hope, para 46 per Lady Hale; Salabiaku v France (1988) 13 EHRR 379, para 27; and G v United Kingdom (2011) 53 EHRR SE 25, paras 26 27 (which was a case concerning the strict liability offence of sexual intercourse with a child under the age of 13). The European Court of Human Rights (ECtHR) concluded in para 29 of G v United Kingdom that the court does not consider that Parliaments decision not to make available a defence based on reasonable belief that the complainant was aged 13 or over can give rise to any issue under article 6(1) or (2) of the Convention. In my view, that reasoning applies, mutatis mutandis, to the decision of the Scottish Parliament in its enactment of the impugned provision. (ii) Article 8 of the ECHR Article 8 of the ECHR provides: (1) Everyone has the right to respect for his private and family life, his home and his correspondence. (2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. As I have said, the Lord Advocate concedes that in this case the impugned provision fell within the ambit of article 8 because the prosecutor relied on the earlier police charge in the course of the criminal proceedings and disclosed its existence to the court. In my view that concession is rightly made. I would go further: the recording for possible later use of the charges involved interference with the appellants article 8 rights which may have to be justified. In S v United Kingdom (2008) 48 EHRR 1169 the Grand Chamber of the ECtHR held that, save in exceptional circumstances, the retention by the police of DNA samples and fingerprints taken from persons who were suspected but never convicted of a criminal offence represented an interference with their article 8 rights. In Bouchacourt v France (Application No 5335/06) [2009] ECHR 2276 (unreported), a case which concerned material on a sex offenders register, the ECtHR in a judgment given on 17 December 2009 declared (para 57) that the retention by a public authority of data relating to a persons private life by itself represented interference with that persons article 8 rights. In R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35; [2015] AC 49, Lord Wilson at para 21 referred to those cases but left open the question whether retention by a public authority of data relating to private life which were not sensitive amounted to an interference with article 8 rights. It is not necessary to resolve that issue in this appeal as a criminal charge relating to a sexual offence is sensitive personal data under domestic law: Data Protection Act 1998, section 2. Further support for this view of the ambit of article 8 can be found in the judgments of the ECtHR in Rotaru v Romania (2000) 8 BHRC 449, para 46 and MM v United Kingdom [2012] ECHR 24029/07, para 159, which Lord Reed discussed in R (T) (above) between paras 95 and 112. See also Leander v Sweden (1987) 9 EHRR 433, para 48 and Amann v Switzerland (2000) 30 EHRR 843, para 69. In this case, however, it is sufficient to focus only on the disclosure of the charge in court. It is necessary to consider, first, whether the impugned provision is in accordance with the law and, secondly, whether it was necessary in the interests of one or more of the desirable outcomes set out in article 8(2). The second issue involves a consideration (i) whether the objective of the impugned provision is sufficiently important to justify the limitation of the appellants right under article 8(1), (ii) whether there is a rational connection between the impugned provision and that legitimate aim or objective, (iii) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective, and (iv) whether the impact of the rights infringement is proportionate, having regard to the likely benefit of the impugned provision. In accordance with the law: It is well established that in order to be in accordance with the law under article 8(2) of the ECHR the measure must not only have some basis in domestic law but also be accessible to the person concerned and foreseeable as to its effects. There is a clear basis in domestic law in the 2009 Act, which is an enactment of a democratic legislature. The additional qualitative requirements of accessibility and foreseeability have two elements: (i) a rule must be formulated with sufficient precision to enable any individual, with appropriate advice when needed, to regulate his or her conduct and (ii) the rule must be sufficiently precise to give legal protection against arbitrariness. In relation to the latter element, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined: R (T) (above), para 114 per Lord Reed. The impugned provision innovates on the prior law by making a criminal charge by a police officer the basis for excluding the reasonable belief defence. The Lord Advocate explains that police officers are trained to charge an individual with an offence if they are satisfied that there is sufficient evidence that a crime has been committed. There is no formal guidance on charging people with criminal offences and no distinction is made between adults and children. He informs the court that this appeal has alerted him to the lack of any guidelines on charging children and that he has instructed a review of whether such guidelines are required. If the only rationale of the impugned provision was to prevent a person asserting a reasonable belief defence more than once, the provision could have arbitrary results because it could deprive a person of that defence when he or she had never used it in the past. But the rationale, which the Lord Advocate advances and which is supported by what the representative of the Scottish Governments Legal Directorate told the Parliament, is that the charge by the police officer gives the person charged an official warning that consensual sexual activity with children between the ages of 13 and 16 is an offence. On the hypothesis that there was a warning or notice, the rule that a person once warned would not in future be able to advance the reasonable belief defence would in my view be sufficiently accessible to enable the person charged to regulate his or her conduct and thus be in accordance with the law. Finally on the topic of the requirement to be in accordance with the law, I do not accept the submission of the appellants counsel that the impugned provision gives rise to arbitrary results because a prior charge could relate to an alleged offence which occurred after the occurrence which is the subject of the criminal proceedings in which the accused person wishes to advance the reasonable belief defence. It is straightforward to interpret the impugned provision in a way which avoids that absurd result by reading A has previously been charged with a relevant sexual offence to refer to an offence which is alleged to have occurred before the events which are the subject matter of the proceedings in which the accused person seeks to advance the defence. Thus, as a prior charge can act as a relevant warning, I consider the provision to be in accordance with the law. The problem in this case, which is relevant to the issue of proportionality, is that the prior charges, which were not charges of consensual sexual activity with a child aged between 13 and 16, did not by themselves provide such a warning. Necessary for the prevention of crime, the protection of health or morals, and the protection of the rights of others: (i) The importance of the aims: Of the public purposes listed in article 8(2) as possible justifications for an interference with an article 8(1) right, the prevention of crime, the protection of health or morals, and the protection of the rights of others, in this case potential victims of sexual offending, appear the most relevant. The aims of the legislation, as the Lord Advocate submits, include the protection of children from premature sexual activity, young teenage pregnancy, sexually transmitted diseases, and also exploitation and abuse. It also seeks to deter adults from sexual activity with children under the age of 16. Those aims are undoubtedly legitimate and are consistent with the states positive obligation to protect children from exploitation and abuse. The aims are, in my view, sufficiently important to justify some limitation of the appellants right to privacy. (ii) Rational connection: As a matter of policy both the United Kingdom Parliament and the Scottish Parliament have not sought to criminalise all sexual activity between an adult and children between the ages of 13 and 16, recognising the possibility of reasonable mistake as to age. In the 2003 Act in England and Wales and in the 2009 Act in Scotland the democratic legislatures have created strict liability offences where sexual activity is with children under the age of 13, but have allowed a role for honest belief as to age to exclude criminal liability where that activity is with older children. In English law the prosecution must exclude such honest belief (para 7 above); in Scots law a reasonable belief defence is available so long as the accused person has not been charged with an earlier relevant sexual offence (paras 10 and 11 above). The rational connection between the restriction of the reasonable belief defence in the impugned provision and the legitimate aims of protecting children and deterring adults from sexual activity with older children principally, but not exclusively, depends on the extent to which the prior police charge can operate as a warning to the person so charged. There are no operating procedures which require police officers to give any particular warning. Instead, the official warning or notice on which the Lord Advocate relies is (if it exists at all) an implied notice as it is left to the charged person to infer from the particular charge that consensual sexual activity with older children is a criminal activity. Until the 2009 Act was enacted, the prior charge which excluded the reasonable belief defence in a charge of sexual intercourse with an older child was a charge of a like offence, ie principally, having or attempting to have (consensual) sexual intercourse with an older child (para 5 above). As I have said, it was generally accepted that the relevant charge had to proceed to trial before the reasonable belief defence was excluded. In the 2009 Act, by contrast, the charge can relate to a wide range of relevant sexual offences in Schedule 1, involving both consensual and non consensual sexual activity and including offences, such as coercing a person into looking at a sexual image, sexual exposure or voyeurism (sections 6, 8 and 9), in which the age of the victim is not an essential component. The sexual offence in, for example, Part 1 of the Act becomes a relevant sexual offence under Schedule 1 if the victim is in fact under the age of 16. Thus, while the police officer in formulating the charge of a sexual offence may follow the practice in a formal charge in an indictment by narrating the date of birth of the victim, if a child, in cases where that persons age is not an essential component of the crime, the charge itself would contain no further warning about the criminality of consensual sexual activity with an older child. In addition, it is striking that Schedule 1, Part 1, paragraph 1(b) excludes from the list of relevant sexual offences those which prima facie would have been most relevant as a warning to a person who, like the appellant, committed the prior offence while still aged between 13 and 16, namely the offences of older children engaging in sexual conduct with each other: section 37(1) and (4). In my view there will in many cases be no rational connection between the suggested warning and the deterrence of the person who is charged from consensual sexual activity with older children, because there will not be an adequate basis in the charge from which the charged person can infer the official warning about sexual behaviour with children under 16, for which the Lord Advocate contends. On the other hand, the limitation of the availability of the reasonable belief defence, which may often be difficult for the Crown to disprove, is rationally connected with the protection of children from sexual activity and predation, because it creates strict liability offences which are easier for the Crown to prove. It may therefore contribute towards the aim stated in the Policy Memorandum of preventing serial sexual predators evading conviction by repeated use of the reasonable belief defence. I conclude therefore that the impugned provision does not infringe the appellants article 8 right because of an absence of rational connection. (iii) Less intrusive means: Mr ONeill submits that the Parliament could sufficiently have achieved the legitimate aims of protecting older children from sexual activity and deterring adults from such activity with them by other means which would not interfere with the appellants article 8 right to the same extent. He puts forward four possibilities. He suggests that the reasonable belief defence could be disallowed either if the accused person has been convicted of a relevant sexual offence or if the accused has actually relied on the defence in court on a previous occasion. Alternatively, the Parliament could have adopted the recommendation of the Scottish Law Commission to allow the Crown to challenge the credibility of the accused if he or she has attempted to raise a reasonable belief defence in earlier criminal proceedings. Finally, he suggests that if the mere fact of a police charge were to be used as the basis for modifying the individuals defences, its effect could be confined, for example, to imposing a legal burden rather than merely an evidential burden on the accused to establish the existence of the reasonable belief. I am not persuaded. It is important to recall that the question of whether the Parliament could have used a less intrusive measure does not involve the court in identifying the alternative measure which is least intrusive. The court allows the legislature a margin of discretion and asks whether the limitation on the article 8 right is one which it was reasonable for the Parliament to propose: Bank Mellat v HM Treasury (No 2) [2013] UKSC 38, [2014] AC 700, para 75 per Lord Reed; Animal Defenders International v United Kingdom (2013) 57 EHRR 21, para 110. Had the 2009 Act provided that the reasonable belief defence would not be available if on an earlier occasion the accused had been charged with an offence which itself objectively entailed a warning of the illegality of consensual sexual activity with older children, the fact that there were other options, which were less intrusive, to restrict the availability of that defence would not cause an infringement of the individuals article 8 right. The problem for the Lord Advocate in this appeal is where to find such a warning. (iv) Proportionality: The Scottish Parliament has sought to strike a balance between protecting young people under the age of 16 from both premature sexual activity and predation on the one hand and the recognition that it might be harsh to criminalise an honest mistake when an older child appears older than his or her true age. It has expanded the reasonable belief defence by making it available to accused persons regardless of their age. But it has set a limit on the defence by excluding it when the accused person has previously been charged with a relevant sexual offence. As I have said, the principal rationale now advanced for the use of the prior charge to limit the availability of the defence is that the charge amounts to an official warning about sexual offences with children as the Lord Advocate states in his written case. The balance, which this court is enjoined to address, is different. It is the question of a fair balance between the public interest and the individuals right to respect for his or her private life under article 8. The question for the court is, in other words, whether the impact of the infringement of that right is proportionate, having regard to the likely benefit of the impugned provision. In addressing this question, I acknowledge that the Scottish Parliament might have chosen to make sexual activity with older children a strict liability offence by excluding altogether the reasonable belief defence. But it did not. Instead, it chose to use as a limit on the defence the prior police charge of a relevant sexual offence, thereby bringing the limitation in the impugned provision within the ambit of article 8. defence and its effect on the appellants article 8 right I bear in mind that it will almost always be possible for the courts to conclude that a more precisely tailored bright line rule might have been devised than the one selected by the body to which the choice has been democratically entrusted and which, unlike the courts, is politically accountable for that choice. the courts are not called on to substitute judicial opinions for legislative or executive ones as to the place at which to draw a precise line. In addressing the limit which the Parliament has chosen to place on the (R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57, [2015] 1 WLR 3820, para 93 per Lord Sumption and Lord Reed (in a dissenting judgment)). I also have regard to the fact that once a police officer has charged a person with a relevant sexual offence, the record of that charge will remain available to exclude the reasonable belief defence for the rest of that persons life. I am satisfied that in principle a warning by a police officer that sexual activity with older children, including consensual activity, was a criminal offence, could form a basis for the exclusion of the reasonable belief defence without infringing an accused persons article 8 right. The problem in this case is that there does not appear to have been such a warning. The relevant sexual offences with which the appellant was charged when he was aged 14 (para 13 above) were common law offences which could be committed only against children under the age of puberty and a statutory offence which could be committed only against girls aged 12 or over and under 16. To that extent, he, when a child, was given notice that certain sexual activity involving children was criminal. But the charges, which involved showing online pornographic images to a young boy and the exposure of his genitals to girls, did not involve consensual sexual activity with an older child and could not amount to an implicit warning that such activity was an offence. There is no suggestion that the police officer gave any explicit warning that such consensual activity amounted to an offence or that in future any such sexual activity with an older child would be a strict liability offence because the reasonable belief defence would not be available. No charge was laid against the appellant at a trial. Instead, the case was referred to the Childrens Reporter, who appears to have decided to take no action. In my view the use of the prior charges in this case to exclude the reasonable belief defence amounts to a disproportionate interference with the appellants article 8 right because the prior charges did not give the official warning or official notice, which is the only rationale of the impugned provision which the Lord Advocate seeks to defend. If the appellant had in the past been charged with an offence of consensual sexual activity under section 37 of the 2009 Act and that offence had been listed as a relevant sexual offence, it would clearly be arguable that he had been given sufficient notice to meet the rationale of an official warning. Similarly, if an adult had been charged with the equivalent of a like offence under the prior law, there would clearly be scope for finding that there had been an implicit warning which would justify a restriction of the defence by the Parliament. But that is not what happened in this case. When discussing whether there was a rational connection between the impugned provision and the legitimate aim, I have observed that the list of relevant sexual offences includes charges in which the age of the victim is not an essential component, extends far beyond consensual sexual activity with an older child and excludes charges relating to sexual conduct (including consensual conduct) under section 37 of the 2009 Act, which might be most relevant to a person of the appellants age when he was first charged. This suggests that the impugned provision is likely in many other cases to give rise to infringements of article 8 because of the absence of a warning. Discrimination: article 8 and article 14 Having reached the conclusions which I have in relation to proportionality, it is not necessary to discuss this alternative challenge. Conclusion and remedy I am satisfied that section 39(2)(a)(i) of the 2009 Act is incompatible with Convention rights in its application to the appellant because it interferes disproportionately with his article 8 right (paras 43 44). It is likely to do so in all other cases where the prior charge does not objectively give the relevant warning. I do not consider that it is possible to invoke section 101 of the Scotland Act 1998 to interpret the impugned provision narrowly so as to bring it within the competence of the Parliament. The courts power under section 102 of the Scotland Act 1998 to suspend or vary the effect of its decision on a compatibility issue is to be exercised by the High Court of Justiciary: Scotland Act 1998, section 102(5A). Court of Justiciary. LORD REED: (with whom Lord Kerr, Lord Wilson and Lord Hughes agree) When the provision which became section 39(2)(a)(i) of the Sexual Offences (Scotland) Act 2009 was introduced into the Scottish Parliament, as part of the Sexual Offences (Scotland) Bill, the Parliament was told, in the Scottish Governments policy memorandum which accompanied the Bill: I would therefore allow the appeal and remit the proceedings to the High The Bill provides that it shall be a defence to a charge of sexual activity with an older child that the accused reasonably believed that the child was 16 years old or older. This is similar to what the SLC [Scottish Law Commission] proposed but differs by restricting the use of the defence to those not previously charged with a like offence. This reflects the current law, where the defence is allowed in respect of a charge of intercourse with a girl under 16, but it is a requirement that the accused had not previously been charged with a like offence. (paras 131 132) As Lord Hodge has explained, however, the new provision departed from the then current law in two important respects. First, it restricted the defence to those not previously charged by the police, whereas the then current law (contained in section 5 of the Criminal Law (Consolidation) (Scotland) Act 1995), as generally understood, restricted the defence to those who had not previously stood trial. That was a significant change, since people who are charged by the police are not necessarily brought to trial. The present case provides an example: the appellant was charged by the police when he was 14, but was not prosecuted. Instead, like most children in such circumstances, he was referred to the Childrens Reporter, who seemingly decided to take no action. Secondly, the defence was previously restricted to those not previously charged with a like offence, defined as meaning (i) having or attempting to have unlawful sexual intercourse with a girl aged between 13 and 16, and (ii) permitting a girl under the age of 16 to use premises for sexual intercourse. The new provision, on the other hand, restricted the defence to those not previously charged with a relevant sexual offence, defined in Schedule 1 to the 2009 Act so as to include a far wider range of offences. That was another important change. As to the policy justifying the provision, the policy memorandum explained that the Scottish Government disagreed with the Scottish Law Commissions recommendation that there should be no restriction on the availability of the defence, and stated: We were concerned that removing this restriction could enable serial sexual predators to evade conviction and have therefore re instated it. (para 135) In evidence to the Scottish Parliament, the Scottish Governments Bill Team Leader explained the thinking more fully: Now, as regards the relevant offence and its restriction, the defence is restricted to those not previously . charged by the police with a relevant offence to prevent a serial sexual predator who relied on that defence on a previous occasion but was acquitted of all charges from using the same defence to evade conviction on a subsequent offence or offences. In each individual instance, the accuseds claim of mistaken belief as to the childs age may appear to be reasonable. However, when considered together, the accused's behaviour would indicate that he or she was deliberately preying on children. (Subordinate Legislation Committee, 28 October 2008, col 392) So the policy justification was to prevent the defence from being exploited by serial sexual predators. No one could quarrel with that objective. The problem is that it cannot provide a legally tenable justification for the measure which was introduced and enacted. Indeed, the Lord Advocate has not attempted to defend the rationale put forward in the policy memorandum and in the Bill Team Leaders evidence. The difficulty with that rationale is that the restriction on the availability of the defence is not confined to persons who relied on the defence on a previous occasion, or even to persons who could conceivably have relied on the defence on a previous occasion. For example, a person who, like the appellant, was previously charged with offences against children under the age of puberty could not possibly have relied on a defence that he reasonably believed that the victims were 16 or older, since that would not be a defence to the charge. The justification for the interference with article 8 rights The need for a legally defensible justification for the provision arises from the fact, conceded on behalf of the Crown, that the application of section 39(2)(a)(i) involves an interference with rights guaranteed by article 8 of the European Convention on Human Rights, since it involves the disclosure of information about an earlier police charge. That concession departs from the Crowns position before the courts below. Given that concession, it is legally necessary for the interference to be justified under article 8(2). The justification which is now put forward was first advanced in evidence given to the Scottish Parliament by a representative of the Scottish Government Legal Directorate. It was not, however, the policy which underlay the drafting of the provision and was set out in the policy memorandum, namely to prevent the defence from being exploited by serial sexual predators. Unsurprisingly, the justification now put forward does not fit particularly well with a provision which was drafted with a different rationale in mind. The justification now put forward is that where the accused has been charged by the police with a relevant sexual offence [he] has therefore received an official warning about sexual offences with children. It is argued that such a warning alerts the person charged to the importance of a young persons age in relation to sexual behaviour, and therefore justifies depriving that person, if he is later charged with one of the sexual offences against older children set out in sections 28 to 37 of the 2009 Act, of the defence that he reasonably believed that the complainer was 16 or older. On that basis, it is argued that the disclosure of the previous charge is justified in the interests of protecting older children from sexual exploitation. In considering this justification, it is important to understand that sections 28 to 37 are concerned primarily with consensual sexual behaviour involving older children. Non consensual offences, such as rape or sexual assault, are dealt with elsewhere in the 2009 Act. For example, a boy and girl of 15 who willingly have sexual intercourse together are both guilty of an offence under section 37. Section 39(1), which provides the defence taken away by section 39(2)(a)(i), provides the boy and the girl with a defence if they reasonably believed that their partner was 16 or older. If, on the other hand, the girl did not consent to sexual intercourse, the offence would be rape, which is dealt with in section 1 of the 2009 Act. No question of a defence under section 39(1) would arise: it is, of course, no defence to a charge of rape that the rapist was mistaken as to his victims age. Similarly, a boy of 16 who touches sexually a girl of 15, with her consent, commits an offence under section 30 of the 2009 Act. If he reasonably believed that she was 16 or older, he has a defence under section 39(1), unless he is deprived of it under section 39(2)(a)(i). If, on the other hand, the girl did not consent to being touched, the offence would be sexual assault, which is dealt with in section 3 of the 2009 Act. No question of a defence under section 39(1) could arise: a mistake as to the age of the victim is irrelevant to the question whether she was assaulted or not. There are also some offences in sections 28 to 37 which can be committed either consensually or not (such as causing a child aged over 13 but under 16 to look at a sexual image), but in practice the offences charged under those sections are primarily concerned with sexual activities involving two or more willing parties. It is because even willing children need to be protected from premature sexual activities that these offences have been created; and it is because of the possibility that a person can make a reasonable mistake as to the age of an older child that the defence in section 39(1) has been provided. Considered against that background, the fundamental problem with the justification now put forward for depriving a person of the defence namely, that by being previously charged with a relevant sexual offence, he has been alerted to the importance of making sure that his partner in sexual activities is over the age of consent is readily apparent. The problem is that relevant sexual offences are defined in Schedule 1 to the 2009 Act as including almost all sexual offences, provided they were committed against a person under the age of 16. That made sense when the policy was to prevent the defence from being exploited by serial sexual predators. But it does not make sense if the justification is that the person charged has been warned about the importance of the age of consent. That is because the age of the victim is irrelevant to many sexual offences. As I have explained, rape and sexual assault, for example, are offences whatever the age of the victim; and the same is true of many other offences concerned with non consensual sexual activities. A person who is charged with an offence of that nature, even if the complainer is aged under 16, is not in consequence put on notice that consensual sexual activity with a person of that age is equally unlawful. An analogous problem arises also where the relevant sexual offence is one which can be committed only against younger children. For example, a person who is accused of having sexual intercourse with a girl under 13 will be charged with the rape of a young child, under section 18 of the 2009 Act. No question arises of a defence under section 39(1): sexual intercourse with a child under 13 is an offence of strict liability. It is difficult to regard such a charge as constituting a warning of the need to make sure that an older girl who is sexually mature and willing to engage in sexual intercourse is 16 or older. This point also arises in relation to the common law offences with which the appellant was charged when he was 14, since they could be committed only against children under the age of puberty. Even the statutory offence with which he was then charged, although one which could only be committed against someone aged between 12 and 16, was concerned with non consensual conduct. On what basis could it be said that his being charged with offences of those kinds alerted him to the importance of ensuring that an older person who was willing to engage in consensual sexual behaviour with him was over the age of consent? In short, the difficulty arises from the width of the definition of relevant sexual offences in Schedule 1 to the 2009 Act. Since such offences are not confined to sexual conduct which is illegal because it is with children in the relevant age group, prior charges of such offences cannot be taken to have alerted the accused to the importance of making sure that a person is over 16 before engaging in the sexual activities which are criminalised by sections 28 to 37. In addition, since the offences listed in Schedule 1 include non consensual offences, prior charges cannot be taken to have alerted the accused to the importance of age in the context of consensual sexual conduct. The difficulty is underlined by the fact that relevant sexual offences are defined in paragraph 1(b) of Schedule 1 so as to exclude consensual sexual activities between older children. For example, a 15 year old who has previously been charged with having sexual intercourse with another 15 year old is not deprived of the defence. Yet that is the clearest example of a situation where the charge alerts the person charged to the importance of the age of consent when engaging in consensual sexual behaviour. The explanation, presumably, is that it was considered inappropriate to apply the serial sexual predator policy to offenders who were themselves children at the time of a previous charge involving consensual behaviour with another child. It follows that the interference with the right guaranteed by article 8 which is implicitly authorised by section 39(2)(a)(i) cannot be regarded as proportionate in cases (such as the present case) where the necessary link between the prior charge and the supposed warning does not exist. This problem cannot be resolved by interpreting the legislation narrowly: it can only be resolved by further legislation. It follows that section 39(2)(a)(i) must be held to be incompatible with article 8 and therefore not law. Given that conclusion, and bearing in mind also that the Lord Advocate has instructed a review in relation to the charging of children, it is unnecessary to reach a concluded view on the challenge under article 14. Conclusion For these reasons, and those given by Lord Hodge, I agree that the appeal against the decision of the High Court of Justiciary should be allowed, and that the proceedings should be remitted to that court.

UK-Abs

In 2009, when the appellant was aged 14, the police charged him with two charges of lewd and libidinous practices at common law and one contravention of section 6 of the Criminal Law (Consolidation) (Scotland) Act 1995. One of the common law charges involved the allegation of showing online pornographic images to a young boy. The other common law charge and the statutory charge involved the allegation of exposing his penis to, and chasing after, three other children, who were girls aged 4, 12 and 13. The police reported the case to the Procurator Fiscal but a decision was made not to prosecute the appellant. In July 2015, when the appellant was aged 19, he was charged with having sexual intercourse with a girl who was aged 14 years and 11 months, contrary to sections 28 and 30 of the Sexual Offences (Scotland) Act 2009 (the 2009 Act). The appellant did not deny that sexual intercourse had taken place, but sought to rely on the defence in section 39(1)(a) of the 2009 Act that at the time he reasonably believed that the girl was aged 16. However, section 39(2)(a)(i) of the 2009 Act provides that the reasonable belief defence is not available to an individual who has previously been charged by the police with a relevant sexual offence. The relevant sexual offences are set out in Schedule 1 to the 2009 Act and cover a wide range of sexual offences, both consensual and non consensual, and include offences in which the age of the victim is not an essential component of the crime. The definition excludes consensual sexual activities between older children. The offences with which the appellant had been charged in 2009 fell within the meaning of a relevant sexual offence and the appellant could not therefore plead the reasonable belief defence. He argued that section 39(2)(a)(i) was not compatible with his rights as set out in the European Convention on Human Rights and therefore, in accordance with section 29 of the Scotland Act 1998, was outside the competence of the Scottish Parliament and was not law. He argued that that the provision breached both the presumption of innocence in Article 6(2) and his Article 8 right to privacy, and was unjustifiably discriminatory for the purposes of Article 14 read with Article 8. The Lord Advocate argued that any interference with the appellants Convention rights was justified in the interests of protecting older children from sexual exploitation. He argued that the prior charge acts as an official warning, alerting the person charged to the importance of a young persons age in relation to sexual behaviour, and therefore justifies depriving that person, if later charged with a sexual offence against an older child set out in section 28 to 37 of the 2009 Act, of the reasonable belief defence. The Supreme Court unanimously allows ABs appeal and remits the proceedings to the High Court of Justiciary. Lord Hodge gives the lead judgment, with which the other Justices agree. Lord Reed gives a concurring judgment, with which Lord Kerr, Lord Wilson and Lord Hughes agree. Article 6 Section 39(2)(a)(i) is not within the ambit of Article 6. Section 39(2)(a)(i) did not create an irrebuttable presumption that the appellant did not have a reasonable belief as to the age of the girl with whom he had sexual intercourse, thereby overriding the presumption of innocence in Article 6(2). The provision created what amounts to a strict liability offence, by treating as irrelevant the accused persons knowledge of the victims age. Such an offence does not violate Article 6(2), which is concerned with procedural guarantees and not with the substantive elements of a criminal offence [21]. Article 8 There was an interference with Article 8 which requires to be justified under Article 8(2) because the prosecutor relied on the earlier police charge in the criminal proceedings [23 24, 56 57]. Lord Hodge concludes that section 39(2)(a)(i) is incompatible with the appellants Article 8 rights [47]. The exclusion of the reasonable belief defence in this case is a disproportionate interference with the appellants Article 8 rights because the prior charges did not give the official warning or notice that consensual sexual activity with children between the ages of 13 and 16 is an offence [44]. Those prior charges were not charges of sexual activity with a child aged between 13 and 16 and therefore did not provide such a warning [29]. The list of relevant sexual offences includes charges in which the age of the victim is not an essential component, extends far beyond consensual sexual activity with an older child and excludes charges where the charged person was an older child at the time of the charge. This suggests that section 32(2)(a)(i) is likely in many other cases to give rise to infringements of article 8 because the prior charge does not objectively give the relevant warning [45, 47]. Lord Reed agrees that the interference with the Article 8 right is not proportionate where the necessary link between the prior charge and the supposed warning does not exist [66]. The difficulty arises from the width of the definition of relevant sexual offences. Since such offences are not confined to sexual conduct which is illegal because it is with children, prior charges of such offences cannot be taken to have alerted the accused to the importance of making sure that a person is over 16 before engaging in sexual activities. Further, since the definition includes non consensual offences, prior charges relating to those offences cannot be taken to have alerted the accused to the importance of age in the context of consensual sexual conduct [64]. The definition also excludes consensual sexual activities between older children, perhaps the clearest example of a situation where the charge alerts the person charged to the importance of the age of consent when engaging in consensual sexual behaviour [65]. Article 14 In light of the conclusions in relation to Article 8, it is unnecessary to discuss this challenge [46, 67]. Remedy It is not possible to interpret section 39(2)(a)(i) narrowly to bring it within the competence of the Parliament [48, 66]. Section 39(2)(a)(i) is therefore not law [66] and proceedings are remitted to the High Court of Justiciary to exercise the power to suspend or vary the effect of this decision [49 50].

Ewa Michalak began employment as a doctor with the Mid Yorkshire Hospitals NHS Trust in April 2002. She remained in that employment until she was dismissed in July 2008. Following her dismissal, Dr Michalak brought an unfair dismissal claim against the Trust in the Employment Tribunal. The tribunal found that her dismissal had been unfair and contaminated by sex and race discrimination and victimisation. Dr Michalak received a compensation award and a public apology from the Trust. Before the tribunal had issued its determination, and, on foot of Dr Michalaks dismissal, the Trust had reported her to the General Medical Council (the GMC) in relation to her conduct, so that the question of whether she should continue to be registered as a medical practitioner could be considered. The Trust later accepted that there had not been proper grounds on which to refer her to the GMC. She remains registered as a medical practitioner, therefore. In the meantime, however, the GMC had begun fitness to practise proceedings against Dr Michalak under Part V of the Medical Act 1983. She claims that the GMC discriminated against her in the way in which it pursued those proceedings. She also alleges that the discrimination extended to the GMCs failure to investigate complaints that she had made against other doctors employed by the Trust. Dr Michalak presented a claim to the Employment Tribunal in relation to these complaints in August 2013. The respondents named on the application form were the GMC, Niall Dickson, its chief executive, and Simon Haywood, an investigation officer of the GMC. They are the current appellants, although for all intents and purposes, the effective appellant is the GMC. It is agreed that the second and third appellants cases do not require separate consideration. The appellants applied to have Dr Michalaks complaint to the tribunal struck out on the basis that the tribunal did not have jurisdiction to hear the claims. The complaints of discrimination and breach of contract against the GMC relating to the period before 1 October 2010 were struck out. The tribunal decided that it did have jurisdiction in relation to complaints regarding unlawful sex, race and disability discrimination after that date but not in relation to breach of contract. So far as the complaints against the second and third appellants were concerned, the complaint was confined to one of unlawful discrimination and the tribunal considered that it had jurisdiction to entertain this complaint. The appellants appealed, arguing that section 120(7) of the Equality Act 2010 precluded jurisdiction, since judicial review afforded an appeal for the acts complained of. The Employment Appeal Tribunal (Langstaff P) agreed and allowed the appeal. An appeal against that decision was successful before the Court of Appeal (Moore Bick, Kitchin and Ryder LLJ) [2016] ICR 628. It held that the Employment Tribunal had jurisdiction to deal with Dr Michalaks complaints and remitted the case to the tribunal for further case management. The appeal to this court raises a single issue. It is whether the availability of judicial review proceedings in respect of decisions or actions of the first appellant excludes the jurisdiction of the Employment Tribunal by virtue of section 120(7) of the Equality Act. Section 120(7) Under section 120(1)(a) of the Equality Act, an employment tribunal has jurisdiction to determine a complaint relating to a persons work. But section 120(7) provides that subsection (1)(a) does not apply to a contravention of section 53 in so far as the act complained of may, by virtue of an enactment, be subject to an appeal or proceedings in the nature of an appeal. Section 53 deals with discrimination by qualifications bodies. Section 54 defines qualifications bodies. In its material parts, it provides: (2) A qualifications body is an authority or body which can confer a relevant qualification. (3) A relevant qualification is an authorisation, qualification, recognition, registration, enrolment, approval or certification which is needed for, or facilitates engagement in, a particular trade or profession. (5) A reference to conferring a relevant qualification includes a reference to renewing or extending the conferment of a relevant qualification. All parties accept, therefore, that the GMC is plainly a qualifications body. It is an independent organisation which regulates the profession of doctors within the United Kingdom under the Medical Act 1983. Its main objective, under section 1(1A) of that Act, is to protect, promote and maintain the health and safety of the public. The GMC maintains the register of doctors and is responsible for certain undergraduate and postgraduate medical education, and for the training and revalidation of doctors. Under Part V of the Medical Act and the General Medical Council (Fitness to Practise) Rules 2004, the GMC has power to investigate complaints against doctors. Under the fitness to practise jurisdiction, the GMC receives and considers complaints about medical practitioners. Where it is decided that the complaints warrant an inquiry, the GMC prepares the evidence and the drafting of allegations. Any hearing that follows is conducted by the Medical Practitioners Tribunal Service. It is described as a part of the GMC but is independent of it. A decision to erase a medical practitioners name from the register or to suspend, or to impose conditions on his or her registration may be appealed to the High Court under sections 38 and 40 of the Medical Act. The High Court may allow the appeal and quash the original decision; it may also substitute a new decision for the original decision; or remit the matter for re hearing. The Medical Act also provides for various other types of appeal against fitness to practise decisions. To take an example, section 41A(10) states that the relevant court has the power to terminate an interim order of suspension, and section 41A(14) states that relevant court has the same meaning as in section 40(5). Section 40(5) contains the definition of the relevant court as the High Court. In effect, therefore, an appeal against the making of an interim order of suspension lies to the High Court. But neither this nor any of the other possible statutory avenues of appeal is relevant to the respondents position. Her complaints do not relate to any action by the GMC as to her registration. Her series of claims of discrimination on the part of the GMC relate to the manner in which it pursued its fitness to practise application and its failure to investigate her complaints against other doctors in the trust where she had been employed. No statutory appeal is available to her to pursue those complaints. It is accepted, however, that she could seek judicial review of the decisions that are said to constitute the various acts of discrimination. The essential issue in the case, therefore, is whether the availability of judicial review animates the exemption contained in section 120(7). This in turn depends on whether that remedy can properly be described as a proceeding in the nature of the appeal and whether it is available to the respondent by virtue of an enactment. It is important to note that both these conditions must be satisfied before section 120(7) comes into play. Both issues will have to be examined separately but, first, one must look at the context in which they require to be decided and that is provided principally by the Equality Act itself. The Equality Act The purpose of the Equality Act 2010, as explained in the Explanatory Memorandum (para 10), is to harmonise discrimination law, and to strengthen the law to support progress on equality. The Act repealed and replaced existing equality legislation, including the Equal Pay Act 1970, the Sex Discrimination Act 1975, the Race Relations Act 1976 and the Disability Discrimination Act 1995. In these various items of legislation, Parliament provided for discrimination claims in the work, employment and occupation contexts to be dealt with by a specialist tribunal, first called the Industrial Tribunal and now known as the Employment Tribunal. The establishment of these specialist tribunals reflected the growing awareness of the importance which should be attached to equal treatment rights in the field of employment, not least because those rights are protected under European Union law see, for instance, article 16 of the Framework Equality Directive (2000/78/EC) which required member states to take measures to ensure that any laws, regulations and administrative provisions contrary to the principle of equal treatment were abolished. Not only was the Employment Tribunal designed to be a specialised forum for the resolution of disputes between employee and employer, it was given a comprehensive range of remedies which could be deployed to meet the variety of difficulties that might be encountered in the employment setting. Thus, for instance, the tribunal may make a declaration as to the rights of the complainant and the respondent in relation to the matters that arise in the proceedings before it (section 124(2)(a)); it may order a respondent employer to pay compensation to a complainant employee (section 124(2)(b)); and it may make a recommendation (section 124(2)(c)). If a recommendation is not followed, the tribunal has power (under section 124(7)) to increase the award of compensation, or, if an award has not been already made, to make one. These considerations provide the backdrop to the proper interpretation of section 120(7). Part of the context, of course, is that appeals from decisions by qualification bodies other than to the Employment Tribunal are frequently available. It would obviously be undesirable that a parallel procedure in the Employment Tribunal should exist alongside such an appeal route or for there to be a proliferation of satellite litigation incurring unnecessary cost and delay. Where a statutory appeal is available, employment tribunals should be robust in striking out proceedings before them which are launched instead of those for which specific provision has been made. Employment tribunals should also be prepared to examine critically, at an early stage, whether statutory appeals are available. Parliament plainly intended that section 120(7) would exclude jurisdiction for certain challenges against decisions of qualification bodies. The rationale for doing so is plain. Where Parliament has provided for an alternative route of challenge to a decision, either by appeal or through an appeal like procedure, it makes sense for the appeal procedure to be confined to that statutory route. This avoids the risk of expensive and time consuming satellite proceedings and provides convenience for appellant and respondent alike. That rationale can only hold, however, where the alternative route of appeal or review is capable of providing an equivalent means of redress. Quite apart from the range of remedies available to it, the Employment Tribunal, as a forum for dealing with complaints by employees concerning their employment, has distinct advantages for complainants. It is a specialist tribunal with expertise in hearing discrimination claims across a range of sectors; it is designed to be accessible to litigants in person; and it is generally a cost free jurisdiction (Rule 74 of the Employment Tribunal Rules of Procedure). Proceedings in the nature of an appeal In its conventional connotation, an appeal (if it is not qualified by any words of restriction) is a procedure which entails a review of an original decision in all its aspects. Thus, an appeal body or court may examine the basis on which the original decision was made, assess the merits of the conclusions of the body or court from which the appeal was taken and, if it disagrees with those conclusions, substitute its own. Judicial review, by contrast, is, par excellence, a proceeding in which the legality of or the procedure by which a decision was reached is challenged. It is, of course, true that in the human rights field, the proportionality of a decision may call for examination in a judicial review proceeding. And there have been suggestions that proportionality should join the pantheon of grounds for challenge in the domestic, non human rights field see, for instance, Kennedy v Charity Commission (Secretary of State for Justice intervening) [2014] UKSC 20; [2015] AC 455, paras 51 and 54; and Pham v Secretary of State for the Home Department (Open Society Justice Initiative intervening) [2015] UKSC 19; [2015] 1 WLR 1591, paras 96, 113 and 115; and Keyu v Secretary of State for Foreign and Commonwealth Affairs [2015] UKSC 69; [2016] AC 1355, paras 133, 143 and 274 276. But an inquiry into the proportionality of a decision should not be confused with a full merits review. As was said in Keyu at para 272: a review based on proportionality is not one in which the reviewer substitutes his or her opinion for that of the decision maker. At its heart, proportionality review requires of the person or agency that seeks to defend a decision that they show that it was proportionate to meet the aim that it professes to achieve. It does not demand that the decision maker bring the reviewer to the point of conviction that theirs was the right decision in any absolute sense. Judicial review, even on the basis of proportionality, cannot partake of the nature of an appeal, in my view. A complaint of discrimination illustrates the point well. The task of any tribunal, charged with examining whether discrimination took place, must be to conduct an open ended inquiry into that issue. Whether discrimination is in fact found to have occurred must depend on the judgment of the body conducting that inquiry. It cannot be answered by studying the reasons the alleged discriminator acted in the way that she or he did and deciding whether that lay within the range of reasonable responses which a person or body in the position of the alleged discriminator might have had. The latter approach is the classic judicial review investigation. On a successful judicial review, the High Court merely either declares the decision to be unlawful or quashes it. It does not substitute its own decision for that of the decision maker. In that sense, a claim for judicial review does not allow the decision of the GMC to be reversed. It would be anomalous for an appeal or proceedings in the nature of an appeal to operate under those constraints. An appeal in a discrimination case must confront directly the question whether discrimination has taken place, not whether the GMC had taken a decision which was legally open to it. The genesis of the view that judicial review was in the nature of an appeal lies in the obiter dictum observations of His Honour Judge McMullen QC in Tariquez Zaman v General Medical Council (UKEAT/0292/06/DM). In that case, the issue was whether section 54(2) of the Race Relations Act 1976 (which was in similar terms to section 120(7) of the Equality Act) precluded the Employment Tribunal from entertaining the complainants claim. Judge McMullens conclusion on the issue was obiter because the claimant had voluntarily relinquished his registration. There was therefore no action by the GMC on which Dr Zaman could found his claim. At para 31 of his judgment, Judge McMullen dealt with the argument that judicial review was in the nature of an appeal in these terms: judicial review is aptly described as proceedings in the nature of an appeal. Judges in the administrative court are familiar with dealing with cases under the Medical Act in the form of appeals proper; thus, they constitute the obvious destination intended by Parliament for disputes of this nature, once a decision had been made at first instance. So, if I were required to make a decision, I would uphold the submission that section 54(2) ousts the jurisdiction of the ET because, in this case, proceedings can be brought by way of judicial review. Judge McMullen had relied on the decision of the Court of Appeal in the case of Khan v General Medical Council [1996] ICR 1032. In that case, the appellants application for full registration as a qualified medical practitioner had been refused by the GMC after a five year maximum period of limited registration. His application for full registration in accordance with section 25 of the Medical Act 1983 was refused by the GMC. He then applied to the Review Board for Overseas Qualified Practitioners for a review pursuant to section 29 of the Act. That application failed, as did a second application and request for review. The appellant then made a complaint to an industrial tribunal that he had been indirectly discriminated against on the ground of his race within the meaning of section 1(1)(b) of the Race Relations Act 1976, contrary to section 12(1) of the Act. On a preliminary issue the industrial tribunal found that the right under section 29 of the Medical Act 1983 to apply for a review of the decision of the General Medical Council was a proceeding, in the nature of an appeal for the purposes of section 54(2) of the Race Relations Act 1976 and the appellants right to present a claim under section 54(1) was therefore excluded. The appellants appeal to the Court of Appeal was, unsurprisingly, dismissed. It was clear that his application to the Review Board constituted a proceeding in the nature of an appeal. The question of whether judicial review, as opposed to review by a differently constituted body, would qualify as a proceeding in the nature of an appeal, was not germane to the issue in Khan. In Zaman, however, Judge McMullen found a passage from the judgment of Hoffmann LJ to be particularly instructive. At 1042, Hoffmann LJ had observed: It is a short question of construction which, in my judgment, admits of an easy answer, namely, Yes. Section 29 of the Act of 1983 allows the decision of the General Medical Council to be reversed by a differently constituted set of persons. For present purposes, I think that this is the essence of what is meant by proceedings in the nature of an appeal. I note that in Wootton v Central Land Board [1957] 1 WLR 424 Lord Evershed MR had to consider whether an application to the Lands Tribunal by a party who was dissatisfied with the determination of a land value by the Central Land Board was in the nature of an appeal. He maintained that it was. He said that it might fairly be described as an appeal to another body having the right either of affirming the development value or altering it. In saying that the decision could be reversed by a differently constituted set of persons, Hoffmann LJ did not have in mind a judicial review challenge, in my opinion. It was because the Review Board could, by the recommendation that they made to the President of the GMC, effectively reverse the decision of the GMC, that he considered that a review was in the nature of an appeal. The review by the Board was open ended and the decision that they were entitled to reach was unconstrained and not inhibited by the circumstance that the GMC had reached a particular decision. Hoffmann LJ did refer to judicial review later in his judgment. At p 1043, dealing with an argument that claimants such as Dr Khan were not able to pursue claims for race or sex discrimination if they were not permitted to make complaints to an industrial tribunal, he said this: For my part, I do not see why [an application for review under section 29] should not be regarded as an effective remedy against sex or race discrimination in the kind of case with which section 12(1) of the Race Relations Act 1976 deals. That concerns qualifications for professions and trades. Parliament appears to have thought that, although the industrial tribunal is often called a specialist tribunal and has undoubted expertise in matters of sex and racial discrimination, its advantages in providing an effective remedy were outweighed by the even greater specialisation in a particular field or trade or professional qualification of statutory tribunals such as the review board, since the review board undoubtedly has a duty to give effect to the provisions of section 12 of the Act of 1976: see per Taylor LJ in R v Department of Health, Ex p Gandhi [1991] ICR 805, 814. This seems to me a perfectly legitimate view for Parliament to have taken. Furthermore, section 54(2) makes it clear that decisions of the review board would themselves be open to judicial review on the ground that the board failed to have proper regard to the provisions of the Race Relations Act 1976. In my view, it cannot be said that the Medical Act 1983 does not provide the effective remedy required by Community law. It is important to understand that Hoffmann LJ was not referring here to judicial review as a possible candidate for inclusion in the category of a proceeding in the nature of an appeal. His remarks in this passage were made in the context of an argument that, in order to have an effective remedy, a claimant had to be allowed to present a complaint to the industrial tribunal. He was merely pointing out that the availability of the review procedure, especially when considered with the opportunity to apply for judicial review of that review provided an adequate remedy. More importantly, this passage emphasises the breadth of the review procedure. As Hoffmann LJ pointed out, the review board was bound to have proper regard to the provisions of the Race Relations Act. It could only do so by conducting a scrupulous inquiry as to whether the discrimination alleged had in fact taken place in other words, a full blown inquiry into the allegations of discrimination was required. I do not consider, therefore, that the decision in Khan supports the proposition that section 54(2) ousted the jurisdiction of the Employment Tribunal because proceedings could have been brought by way of judicial review. Judge McMullen returned to this theme in his later decision in Jooste v General Medical Council [2012] EQLR 1048. In that case Dr Jooste claimed that the acts of an Interim Orders Panel of the GMC suspending his registration were discriminatory under the Equality Act. Judge McMullen, sitting in the Employment Appeal Tribunal, upheld the decision of the Employment Tribunal, that it had no jurisdiction to hear the claimants complaints against the GMC as the remedy available in judicial review was an alternative statutory remedy under section 120(7). At para 44 of his judgment he said that an appeal simply is the opportunity to have a decision considered again by a different body of people with power to overturn it. For the reasons given earlier, I cannot agree with that statement. An appeal is different from a review of the legal entitlement to make a decision; it involves an examination of what decision should be taken in the dispute between the parties. The Court of Appeal in the present case concluded that Jooste had been wrongly decided. I agree. By virtue of an enactment The GMC accepts that when the provisions which preceded section 120(7) were originally enacted they did not exclude decisions subject to challenge by way of the prerogative writs. That is because judicial review originated as a common law procedure and not by virtue of any enactment. The appellant argues, however, that judicial review proceedings became proceedings by virtue of an enactment on the coming into force of the Senior Courts Act 1981. Section 31(1) of that Act provides: (1) An application to the High Court for one or more of the following forms of relief, namely a mandatory, prohibiting or quashing order; a declaration or injunction under subsection (2); (a) (b) or (c) an injunction under section 30 restraining a person not entitled to do so from acting in an office to which that section applies, shall be made in accordance with rules of court by a procedure to be known as an application for judicial review. The appellants case misconstrues both section 31(1) of the Senior Courts Act and section 120(7) of the Equality Act 2010. It rests on a misunderstanding of the nature of judicial review. Judicial review is not a procedure which arises by virtue of any statutory source. Its origins lie in the common law. As Laws LJ said in R (Beeson) v Dorset County Council [2002] EWCA Civ 1812: The basis of judicial review rests in the free standing principle that every action of a public body must be justified by law, and at common law the High Court is the arbiter of all claimed justifications. (at para 17) [emphasis added] See also the observations of Lady Hale in R (Cart) v The Upper Tribunal [2011] UKSC 28; [2012] 1 AC 663, para 37: the scope of judicial review is an artefact of the common law whose object is to maintain the rule of law that is to ensure that, within the bounds of practical possibility, decisions are taken in accordance with the law, and in particular the law which Parliament has enacted, and not otherwise. Section 31 of the Senior Courts Act did not establish judicial review as a procedure, but rather regulated it. The remedies remain the same as those under the prerogative writs. All that section 31 does is to require that applications for judicial review be brought by way of a new procedure under the rules of court. The point was put succinctly and clearly in terms with which I fully agree by Moore Bick LJ at para 53 of his judgment in the Court of Appeal in the present case, where he said: the words by virtue of an enactment in section 120(7) are directed to cases in which specific provision is made in legislation for an appeal, or proceedings in the nature of an appeal, in relation to decisions of a particular body, as, for example, in Khan v General Medical Council [1996] ICR 1032. They are not intended to refer to the general right to seek judicial review merely because, since 1981, that happens to have been put on a statutory footing. Another way of looking at the question is to consider what the effect would be of the repeal of the 1981 Act. I suggest that the High Courts jurisdiction would remain, even if the procedure by which it would have to be brought might require to be provided for in any amending legislation. Section 120(7) is part of a carefully constructed statutory scheme. It is the most recent incarnation of similarly worded provisions in legislation such as is mentioned in para 14 above. Before 1981, there could have been no question of judicial review coming within any of the predecessor provisions. Given the importance of judicial review, it is to be assumed that Parliament would have had the procedure in mind when it formulated the phrase now contained in section 120(7). Had it, in 1981 or in 2010, intended to remove all decisions by qualification bodies whose decisions were susceptible to judicial review from the jurisdiction of the Employment Tribunal, one would surely expect that to be provided for expressly. Conclusions In my view, judicial review in the context of the present case is not in the nature of an appeal. Nor is it a remedy provided by reason of an enactment. I would dismiss the appeal. LORD MANCE: reasons he gives. My only additional observations are these: I agree with Lord Kerr that the appeal should be dismissed broadly for the i) I would not circumscribe the development of judicial review or its ability to cater, in appropriate circumstances, for close examination of a claim on its merits: see eg the authorities which Lord Kerr cites in para 20; ii) judicial review may, in appropriate circumstances, lead the court to a conclusion that there exists only one possible outcome of a relevant legislative or executive decision making process: see eg In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] AC 173, para 144; iii) conventional appellate review is itself not infrequently circumscribed by considerations of respect for the original or first instance decision maker: see eg the discussion in Assicurazioni Generali SpA v Arab Insurance Group (Practice Note) [2002] EWCA Civ 1642; [2003] 1 WLR 577; see also Datec Electronic Holdings Ltd v United Parcels Services Ltd [2007] UKHL 23; [2007] 1 WLR 1325. Here, however, the Employment Tribunal offers the natural and obvious means of recourse in respect of the respondents surviving complaints. There is no need in this context to strain the ordinary usage or understanding of the concept of appeal to embrace judicial review. In parenthesis, it is unsurprising to find that, where the Medical Act 1983 does allow an appeal, it does so expressly: section 40. Finally, the history, which Lord Kerr recounts under the rubric By virtue of an enactment in paras 31 to 35, points very strongly against judicial review having become, suddenly but silently in 1981, a relevant appeal for the purposes of the similarly worded predecessor provisions to section 120(7) of the Equality Act 2010.

UK-Abs

Ewa Michalak was a doctor employed by the Mid Yorkshire Hospitals NHS Trust from April 2002 until she was dismissed in July 2008. Following her dismissal, Dr Michalak brought an unfair dismissal claim against the Trust in the Employment Tribunal. The tribunal found that her dismissal had been unfair due to sex and race discrimination and victimisation. Dr Michalak received a compensation award and a public apology from the Trust. Before the tribunal had issued its determination, the Trust had reported Dr Michalak to the General Medical Council to consider whether she should continue to be registered as a medical practitioner. The Trust later accepted that there had not been proper grounds to refer her and she remains registered as a medical practitioner. In the meantime, however, the GMC had begun fitness to practice proceedings against Dr Michalak. She claims that the GMC discriminated against her in the way in which it pursued those proceedings, including a failure to investigate complaints she had made against other doctors employed by the Trust. In August 2013, Dr Michalak brought a claim in the Employment Tribunal against the GMC, its chief executive and one of its investigation officers in relation to these complaints. The GMC argued that section 120(7) of the Equality Act 2010 meant that the Employment Tribunal did not have jurisdiction to hear the claim, as judicial review already provides for an appeal in these matters. The issue in this appeal was whether the availability of judicial review proceedings in respect of decisions or actions of the GMC can properly be described as proceedings in the nature of an appeal and, on that account, the jurisdiction of the Employment Tribunal is excluded by section 120(7) of the 2010 Act. The Supreme Court dismisses the appeal. Lord Kerr gives the judgment with which all other members of the panel agree. Lord Mance provides an additional short judgment with further explanation of his reasons. It is accepted that Dr Michalak could seek judicial review of the decisions that are alleged to constitute discrimination. The issue is whether the availability of judicial review comes within section 120(7) of the 2010 Act. This depends on two requirements being satisfied: (i) whether judicial review can be described as a proceeding in the nature of an appeal and (ii) whether it is available by virtue of an enactment [13]. The Employment Tribunal was designed to be a specialised forum for the resolution of disputes between the employee and employer, with the power to award a comprehensive range of remedies. Where Parliament has provided an alternative route of challenge to a decision through an appeal or an appeal like procedure, however, it makes sense for the appeal procedure to be confined to that statutory route. This avoids the risk of expensive and time consuming satellite proceedings and is convenient for both the appellant and respondent. Employment tribunals should be prepared to examine critically whether statutory appeals are available, and where they are, should strike out proceedings before them. This rationale only applies where the alternative route is capable of providing an equivalent means of redress, however. [16 18]. Conventionally, an appeal is a procedure which entails a review of an original decision in all its aspects an appeal body may thus examine the basis on which the original decision was made, assess the merits of the conclusions reached and, if it disagrees, substitute its own view. Judicial review, by contrast, is a proceeding in which the legality of or procedure by which a decision is reached is challenged. It cannot partake of the nature of an appeal the remedy available on a judicial review application in circumstances such as the present is a declaration that the decision is unlawful or that the decision be quashed. The court cannot substitute its own decision for that of the decision maker and, in that sense, the decision of the GMC could not be reversed. An appeal in a discrimination case must confront directly the question whether discrimination has taken place, not whether the GMC had taken a decision which was legally open to it. [20 22]. The origins of judicial review lie within the common law and it is not a procedure which arises by virtue of any statutory source section 31 of the Senior Courts Act 1981 did not establish judicial review as a procedure, but rather regulated it. If Parliament had intended that judicial review was within the scope of the procedures contemplated by section 120(7), one would expect that it would have provided for it expressly [32 33, 35]. Lord Mance agrees with Lord Kerr but adds that he would not necessarily limit the ability of judicial review to cater for a close examination of a claim on its merits in appropriate circumstances, judicial review may lead the court to a conclusion that there exists only one possible outcome of a properly conducted legislative or executive decision making process. In this situation, however, the Employment Tribunal offers the natural means of recourse and there is no need to strain the ordinary understanding of the concept of appeal to embrace judicial review [37 38].

This appeal raises an important question in relation to the law of damages: in what circumstances can damages for breach of contract be assessed by reference to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to perform? Damages assessed on this basis, sometimes described as Wrotham Park damages, after the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, have attracted considerable debate, both judicial and academic. That debate, and the confused state of the authorities, have reflected a lack of clarity as to the theoretical underpinning of such awards, and consequent uncertainty as to when they are available. This is the first occasion on which the issue has come before the highest court for decision, although there was some discussion of Wrotham Park in Attorney General v Blake [2001] 1 AC 268. In engaging with this issue, the court has had the assistance of strongly argued submissions by counsel, supported by extensive citation of case law and academic scholarship. It is necessary to recognise at the outset that the term Wrotham Park damages has been used rather loosely in the authorities, as Lord Walker of Gestingthorpe observed in Pell Frischmann Ltd v Bow Valley Iran Ltd [2009] UKPC 45; [2011] 1 WLR 2370, para 46. He referred in particular to the failure to distinguish clearly between its use, on the one hand, to describe every type of compensatory damages which exceed the actual financial loss to the claimant, and, on the other hand, damages awarded in lieu of specific performance or an injunction under the jurisdiction created by section 2 of the Chancery Amendment Act 1858 (Lord Cairns Act); and, in the latter context, between non proprietary breaches of contract, and those involving the invasion of a property right. This judgment will abjure the use of the term Wrotham Park damages. Although it will be necessary to consider the case of Wrotham Park, it is a source of potential confusion because of the opacity of its reasoning, and it can now be regarded as being of little more than historical interest. Instead, this judgment will use the expression negotiating damages, introduced by Neuberger LJ in Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] EWCA Civ 430; [2006] 2 EGLR 29, para 22. In Pell Frischmann, Lord Walker listed what he regarded as the most illuminating of the judgments on this subject since Wrotham Park itself. He extracted from them the following general principles, at para 48: (1) Damages (often termed user damage) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass) (2) Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights of a proprietary character (3) Damages under Lord Cairnss Act are intended to provide compensation for the courts decision not to grant equitable relief in the form of an order for specific performance or an injunction in cases where the court has jurisdiction to entertain an application for such relief (4) Damages under this head (termed negotiating damages by Neuberger LJ in Lunn Poly at para 22) represent such a sum of money as might reasonably have been demanded by [the claimant] from [the defendant] as a quid pro quo for [permitting the continuation of the breach of covenant or other invasion of right]: Lunn Poly at para 25. (5) Although damages under Lord Cairnss Act are awarded in lieu of an injunction it is not necessary that an injunction should actually have been claimed in the proceedings, or that there should have been any prospect, on the facts, of it being granted In Pell Frischmann it was unnecessary to consider the wider issues raised by the present appeal. For reasons which will be explained, it will be necessary to qualify principles (4) and (5) to some extent, and to add a number of others. It is convenient to preface the discussion with an explanation of the context in which the question arises in the present case, by summarising the facts of the case and the history of the proceedings. The facts The relevant events can be summarised as follows. In 1999 the first defendant established a business providing support for young people leaving care. In 2002 she agreed to sell a 50% interest to a Mr and Mrs Costelloe. The claimant company, One Step (Support) Ltd (One Step), was incorporated as a vehicle for the transaction. The first defendant and Mrs Costelloe each subscribed for 50% of its issued share capital and were appointed as its directors. They entered into a shareholders agreement which included provision for dealing with a deadlock between the directors by enabling each of them to serve a notice requiring the other director either to buy the shares of the director serving the notice at a specified price, or to sell her own shares to that director at the same price. The first defendant and Mr Costelloe then ran the business, and the second defendant performed a managerial role. The business comprised the provision of rented accommodation and support services to enable vulnerable individuals referred by local authorities, such as children and young people leaving care, and adults with mental health and learning disabilities, to live as independent lives as possible in the community. The services were provided to local authorities in West London and the Thames Valley. The business prospered for some years, but over time the working relationship between the first defendant and Mr Costelloe deteriorated. In April 2006, the first defendant emailed to her personal email account confidential market research information held by the claimant. In May 2006, Mrs Costelloe gave notice of her intention to serve a deadlock notice. In July 2006, the first defendant incorporated another company, Positive Living Ltd. She and the second defendant were its sole shareholders. In August 2006 Mrs Costelloe served a deadlock notice, offering either to sell her shareholding to the first defendant, or to buy the first defendants shareholding, for 3.15m. The first defendant elected to require Mrs Costelloe to buy her shares. In December 2006 a buy out agreement was entered into. The first defendant sold her shares to Community Support Project Ltd (CSPL), a vehicle company incorporated and owned by Mr Costelloe, for 3.15m, and agreed to resign as a director of the claimant. She also agreed with the claimant to be bound for a period of three years by covenants requiring her to keep information concerning its business transactions confidential, and prohibiting her from engaging in a business that was in competition with it or soliciting its clients, without its consent, such consent not to be unreasonably withheld. As part of the same transaction, the second defendant terminated her employment with the claimant and agreed to be bound by similar covenants against competition and solicitation. In August 2007, Positive Living began trading in West London and the Thames Valley in competition with the claimant. By early 2008, the claimants business had experienced a significant downturn. In February 2008, solicitors acting on its behalf wrote to the first defendant, threatening to bring proceedings for an injunction. Following an exchange of correspondence, the matter was not pursued further at that time. In December 2009, the three year period of restraint specified in the covenants expired. In September 2010, after further correspondence had passed between the defendants solicitors and solicitors acting for the claimant, the defendants sold their shares in Positive Living for 12.8m. In July 2012, the claimant issued the present proceedings, alleging that the defendants had acted in breach of the covenants and in breach of an equitable duty of confidence, had induced each other to breach the covenants, and had conspired with each other to injure it by unlawful means. In relation to remedies, in respect of the breach of the non compete and non solicit covenants it sought an account of profits, or alternatively what were described as restitutionary damages, in such sum as it might reasonably have demanded as a quid pro quo for releasing the defendants from those covenants, or, in a further alternative, what were described as compensatory damages for the loss it had suffered by reason of the defendants breach of those covenants. In respect of the breach of confidence, it sought an account of profits, or alternatively damages. For the purposes of the proceedings, the claimant produced reports by forensic accountants quantifying the loss which it had allegedly suffered in consequence of the defendants alleged breach of the covenants, the benefits obtained by the defendants, and the hypothetical release fee. Mr Christopher Hine estimated the loss that the claimant had suffered at between 3.4m and 4.6m, depending on the gross profit margin on sales which was assumed. Put shortly, he estimated the sales which the claimant would have made in the absence of competition from Positive Living during the period when the defendants were in breach of contract, compared those with the sales actually made, and applied a profit margin to the shortfall. He based his estimate of the sales which would have been made in the absence of competition from Positive Living on the trend of sales during the period after the defendants departure from the business and before the breach of contract commenced, on a forecast of profits which had been independently prepared for the claimant in September 2006, and on a market analysis establishing the extent to which Positive Livings sales were achieved at the expense of the claimant. He added a further sum in respect of an additional loss of profits after the restrictive covenants expired, again based on a comparison between projected sales in the absence of competition from Positive Living and actual sales. He added that loss of goodwill was not within his expertise. Mr Andrew Grantham estimated the hypothetical licence fee at between 5.6m and 6.3m. He did so by estimating what a reasonable person in the position of the claimant would have agreed to accept in return for releasing the defendants from the covenants, and what a reasonable person in the position of the defendants would have agreed to pay for that release, and then identifying the area of overlap. The hypothetical negotiation which he envisaged was highly complex and cannot be easily summarised. In simplified terms, the reasonable person in the position of the claimant was envisaged as seeking the payment of an initial release fee and the grant of an option entitling it to acquire the defendants competing business at a discount to its market value, while the reasonable person in the position of the defendants was envisaged as being unwilling to pay more than the discounted value of an accelerated sale of Positive Livings business, plus the amount obtained on the first defendants sale of her shares in the claimant, to the extent that it was invested in activities on the part of Positive Living which were not in competition with the claimant. One notable feature is that the starting point, on the claimants side of the hypothetical negotiation, was an estimate of the claimants cash flows and profits in the absence of competition from Positive Living, the equivalent figures in the presence of such competition, and an assumed profit margin. These estimates were taken from Mr Hines report. Since damages have not yet been assessed, it is appropriate for this court to be circumspect in its comments on the reports. One observation can however be made. Much has been made in the judgments below, and in the submissions on behalf of the claimant, of the difficulty of estimating the loss which it suffered, and the comparative simplicity of estimating the hypothetical release fee. So far as appears from the reports, the proposition that estimating the hypothetical release fee is simpler in this case than estimating the loss suffered does not hold water. The proceedings below The trial judge, Phillips J, ordered that the issues of liability, and the claimants entitlement to the remedies sought, should be tried first. Following trial, he found ([2014] EWHC 2213 (QB)) that the defendants had acted in breach of contract by breaching the non compete covenants (although less extensively than had been assumed in the expert reports) between August 2007 and 20 December 2009, that they had also breached the non solicit covenants between 20 December 2006 and 20 December 2009 by soliciting business from seven local authorities, and that the first defendant had also acted in breach of the contractual confidentiality clause and an equitable duty of confidence by appropriating the market research information in April 2006 and subsequently using it to set up Positive Living. He did not find it necessary to determine the claims in tort. In relation to remedies, the judge did not make any separate order in respect of the first defendants breach of her contractual and equitable duties of confidence. He also declined to order an account of profits in respect of any of the breaches of duty. Implicitly, he appears to have proceeded on the basis that no separate award for the breach of confidence was necessary, since the harm which it caused would be reflected in an award in respect of the breach of the non compete and non solicit covenants. No appeal has been taken against these aspects of his decision. He concluded that this was a prime example of a case in which Wrotham Park damages (as he described them) should be and were available. It would, he said, be difficult for the claimant to identify the financial loss it had suffered by reason of the defendants wrongful competition, not least because there was a degree of secrecy in the establishment of Positive Livings business which had not been fully reversed by the disclosure process. In his judgment it would be just for the claimant to have the option of recovering damages in the amount which might reasonably have been demanded in 2007 for releasing the defendants from their covenants, not least because the covenants provided that the restraint was subject to consent, not to be unreasonably withheld. He accordingly granted a declaration that the claimant was entitled to judgment for damages to be assessed on a Wrotham Park basis (for such amount as would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations) or alternatively ordinary compensatory damages. The claimant then elected for damages on the so called Wrotham Park basis, and a hearing on quantum was fixed. It has not yet been held. An appeal was dismissed. Christopher Clarke LJ, with whom King LJ agreed ([2017] QB 1), considered that the test was whether an award of damages on the Wrotham Park basis was the just response in the particular case. That was a matter for the judge to decide on a broad brush basis. He was entitled to take into account the difficulties which the claimant would have in establishing damages on the ordinary basis. There would be very real problems in showing what placements the claimant lost because of the appearance of Positive Living on the scene, and in addition any loss of goodwill was inherently difficult to measure. Christopher Clarke LJ observed that the amount taken as the reasonable sum for the relaxation of restrictive covenants might represent more, perhaps far more, than the loss realistically to be regarded as, in the event, suffered by their breach. So a Wrotham Park award could bear no relationship to the practical effect of any competition from Positive Living. Further, the assessment of a reasonable price might involve consideration of several imponderables, such as the likely effect of future competition, which would also arise in any assessment of general damages. Nevertheless, Christopher Clarke LJ did not regard these considerations as justifying a denial of Wrotham Park damages. First, the price that might reasonably be demanded for the relaxation of a covenant might necessarily exceed the loss that would have been suffered by the actual breach, since the price reflected the risk that breach of the covenant might result in a greater risk than had in fact occurred (something which, it might be thought, was a reason for declining to award damages on the Wrotham Park basis, rather than the reverse). Secondly, in deciding on the appropriate price the court must exercise a robust judgment (para 131) which took account of the likely extent and effect of any competition. Further, justice might require the court to take into account facts and events after the date of the hypothetical negotiation, or to take a post breach valuation date. Longmore LJ gave a concurring judgment, in which he confessed to having found the question more difficult. As he put it, judges like to act in accordance with accepted principle and it is not easy to set out the principles by which it is possible to decide that Wrotham Park damages should be awarded (para 143). He treated an award of Wrotham Park damages as being justified where three factors, identified by Peter Gibson LJ in Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323; [2003] 1 All ER (Comm) 830, para 58, were present: (1) there was a deliberate breach by the defendant of its contractual obligations for its own reward; (2) the claimant would have difficulty in establishing financial loss therefrom; and (3) the claimant had a legitimate interest in preventing the defendants profit making activity in breach of contract. On the facts, all three factors were considered to be present. The issues in the present appeal are agreed by the parties to be, first, where a party is in breach of contract, in what if any circumstances is the other party to the contract entitled to seek negotiating damages, ie damages assessed by reference to a hypothetical negotiation between the parties, for such amount as might reasonably have been demanded by the claimant for releasing the defendants from their obligations; and secondly, whether the Court of Appeal was correct to uphold the judges finding that such damages are available in this case. First principles The award of negotiating damages under Lord Cairns Act, and also at common law, has been influenced by the award of user damages at common law for the tortious invasion of rights to tangible property, and the award of damages on a similar basis for infringements of intellectual property rights. Before considering the circumstances in which negotiating damages may be available at common law for breach of contract, it is necessary to consider (i) the award of user damages in tort, and also to remind oneself of some general principles governing (ii) common law damages for breach of contract, and (iii) the jurisdiction to award damages under Lord Cairns Act. (i) User damages in tort In tort, although damages may in some circumstances be awarded for punitive purposes, the general principle is that damages are compensatory. As Lord Blackburn said in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39; (1880) 7R (HL) 1, 7: I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. Lord Blackburns principle can readily be applied in situations where some tangible loss has been sustained: for example, where real property has been damaged or taken by a trespasser (as in the Livingstone case itself), or where goods have been converted. Its application is less obvious in situations where there has been an invasion of rights to tangible moveable or immoveable property, but there has been no pecuniary loss or physical damage to the property in question. Nevertheless, where a trespasser has made valuable use of someone elses land, without causing any diminution in its value, the landowner has been held to be entitled to damages measured as what a reasonable person would have paid for the right of user: see, for example, Whitwham v Westminster Brymbo Coal and Coke Co [1896] 2 Ch 538. A similar approach has been adopted in cases of detinue, such as Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246. Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights. The basis of the award of damages in cases of this kind was considered by Lord Shaw of Dunfermline in Watson, Laidlaw & Co Ltd v Pott, Cassels & Williamson 1914 SC (HL) 18; (1914) 31 RPC 104. The case concerned the sale of machines which infringed the pursuers patent. The issue in dispute was whether the pursuers were entitled to recover damages for sales which had been made by the defenders in a territory where the pursuers could not themselves have traded, and which, moreover, the defenders would have made even if the machines had not incorporated the infringing part. It was held that they were so entitled. Lord Shaw contrasted the principle underlying the assessment of damages in general, whether in contract or in tort, which he described as the principle of restoration as he defined it, with a second principle of price or hire, applicable not only to patent cases but whenever an abstraction or invasion of property has occurred (pp 29 31). As he explained, this distinction was relevant to the case before him, since the restoration principle could not support a claim by a patentee relating to a section of trade in which, it was argued, he can have sustained no damage, because he would never have sold his patented articles within that section (p 30). Lord Shaw described the second principle as follows, in a passage at p 31 subsequently quoted by Brightman J in Wrotham Park: It is at this stage of the case, however, that a second principle comes into play. It is not exactly the principle of restoration, either directly or expressed through compensation, but it is the principle underlying price or hire. It plainly extends and I am inclined to think not infrequently extends to patent cases. But, indeed, it is not confined to them. For wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or of hire. He illustrated this by the example of the liverymans horse, also at p 31: If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise. Lord Shaw also endorsed the view expressed by Fletcher Moulton LJ in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, 165 that, even if it was not the claimants practice to grant licences, it would be right for the court to consider what would have been the price at which although no price was actually quoted could have reasonably been charged for that permission, and estimate the damage in that way. The approach adopted in these cases was described by Nicholls LJ in Stoke on Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 as the user principle. He summarised it as follows, at p 1416: It is an established principle concerning the assessment of damages that a person who has wrongfully used anothers property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the others property. The law has reached this conclusion by giving to the concept of loss or damage in such a case a wider meaning than merely financial loss calculated by comparing the property owners financial position after the wrongdoing with what it would have been had the wrongdoing never occurred. Furthermore, in such a case it is no answer for the wrongdoer to show that the property owner would probably not have used the property himself had the wrongdoer not done so. In The Mediana [1900] AC 113, 117, Earl of Halsbury LC made the famous observation that a defendant who had deprived the plaintiff of one of the chairs in his room for 12 months could not diminish the damages by showing that the plaintiff did not usually sit upon that chair or that there were plenty of other chairs in the room. In these cases, the courts have treated user damages as providing compensation for loss, albeit not loss of a conventional kind. Where property is damaged, the loss suffered can be measured in terms of the cost of repair or the diminution in value, and damages can be assessed accordingly. Where on the other hand an unlawful use is made of property, and the right to control such use is a valuable asset, the owner suffers a loss of a different kind, which calls for a different method of assessing damages. In such circumstances, the person who makes wrongful use of the property prevents the owner from exercising his right to obtain the economic value of the use in question, and should therefore compensate him for the consequent loss. Put shortly, he takes something for nothing, for which the owner was entitled to require payment. (ii) Common law damages for breach of contract It is necessary next to consider some basic principles of the law relating to damages for breach of contract: principles which it will be necessary to bear in mind at a later stage of this judgment, when considering the case of Attorney General v Blake and its aftermath. Damages in contract serve a different remedial purpose from damages in tort, reflecting the different nature of the obligation breached by the wrongdoer in each case. The law of tort is concerned with civil wrongs, that is to say with breaches of duties imposed by the law, sometimes generally and sometimes on those who are party to particular relationships or have assumed particular responsibilities, which protect the interests of others in respect of such matters as their bodily integrity, their liberty, their property, their privacy and their reputation. Damages in tort are generally intended to place the claimant as nearly as possible in the same position as he would have been in if the tort had not been committed. The law of contract, on the other hand, gives effect to consensual agreements entered into by particular individuals in their own interests. Remedies granted by the courts are designed to give effect to what was voluntarily undertaken by the parties. Damages in contract are therefore intended to place the claimant in the same position as he would have been in if the contract had been performed. In Robinson v Harman (1848) 1 Exch 850, Parke B said: The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed. That statement has been endorsed on many occasions at the highest level, most recently in Bunge SA v Nidera NV (formerly Nidera Handelscompagnie BV) [2015] UKSC 43; [2015] Bus LR 987, para 14, where it was described as the fundamental principle of the common law of damages. It has also been described as the ruling principle (Wertheim v Chicoutimi Pulp Co [1911] AC 301, 307), the fundamental basis for assessing damages (British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd (No 2) [1912] AC 673, 689), and the lodestar (Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 AC 353, para 36). That is not to say that damages in contract will always be different from damages in tort. For example, the damages awarded in cases of medical negligence do not normally depend on whether the claimant was a private patient: the substance of the obligation breached, and the recoverable harm caused, are normally the same whether the cause of action is framed in contract or in tort. Equally, the user principle derived from the property cases discussed earlier is of potential relevance whether the wrongful use of property arises in a contractual or tortious context. The compensatory nature of damages for breach of contract, and the nature of the loss for which they are designed to compensate, were explained by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 848 849. As his Lordship stated, a contract is the source of primary legal obligations upon each party to it to procure that whatever he has promised will be done is done. Leaving aside the comparatively rare cases in which the court is able to enforce a primary obligation by decreeing specific performance of it, breaches of primary obligations give rise to substituted or secondary obligations on the part of the party in default. Those secondary obligations of the contract breaker arise by implication of law: The contract, however, is just as much the source of secondary obligations as it is of primary obligations . Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract breaker to which it gives rise by implication of the common law is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach . (p 849) Damages for breach of contract are in that sense a substitute for performance. That is why they are generally regarded as an adequate remedy. The courts will not prevent self interested breaches of contract where the interests of the innocent party can be adequately protected by an award of damages. Nor will the courts award damages designed to deprive the contract breaker of any profit he may have made as a consequence of his failure in performance. Their function is confined to enforcing either the primary obligation to perform, or the contract breakers secondary obligation to pay damages as a substitute for performance (subject, according to the decision in Attorney General v Blake, to a discretion to order an account of profits in exceptional circumstances where the other remedies are inadequate). The damages awarded cannot therefore be affected by whether the breach was deliberate or self interested. It follows from the principle in Robinson v Harman that the language of election is not appropriate in a discussion of the quantification of damages for breach of contract. The objective of compensating the claimant for the loss sustained as a result of non performance (an expression used here in a broad sense, so as to encompass delayed performance and defective performance) makes it necessary to quantify the loss which he sustained as accurately as the circumstances permit. What is crucial is first to identify the loss: the difference between the claimants actual situation and the situation in which he would have been if the primary contractual obligation had been performed. Once the loss has been identified, the court then has to quantify it in monetary terms. The quantification of economic loss is often relatively straightforward. There are, however, cases in which its precise measurement is inherently impossible. As Toulson LJ observed in Parabola Investments Ltd v Browallia Cal Ltd (formerly Union Cal Ltd) [2010] EWCA Civ 486; [2011] QB 477, para 22: Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendants wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss. An example relevant to the present case is the situation where a breach of contract affects the operation of a business. The court will have to select the method of measuring the loss which is the most apt in the circumstances to secure that the claimant is compensated for the loss which it has sustained. It may, for example, estimate the effect of the breach on the value of the business, or the effect on its profits, or the resultant management costs, or the loss of goodwill: see Chitty on Contracts, 32nd ed (2015), paras 26 172 26 174. The assessment of damages in such circumstances often involves what Lord Shaw described in Watson, Laidlaw at pp 29 30 as the exercise of a sound imagination and the practice of the broad axe. Evidential difficulties in establishing the measure of loss are reflected in the degree of certainty with which the law requires damages to be proved. As is stated in Chitty, para 26 015, [w]here it is clear that the claimant has suffered substantial loss, but the evidence does not enable it to be precisely quantified, the court will assess damages as best it can on the available evidence. In so far as the defendant may have destroyed or wrongfully prevented or impeded the claimant from adducing relevant evidence, the court can make presumptions in favour of the claimant. The point is illustrated by the case of Armory v Delamirie (1721) 1 Str 505, where a chimney sweeps boy found a jewel and took it to the defendants shop to find out what it was. The defendant returned only the empty socket, and was held liable to pay damages to the boy. Experts gave evidence about the value of the jewel which the socket could have accommodated, and Pratt CJ directed the jury that, unless the defendant did produce the jewel, and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did. There are also many breaches of contract where the loss suffered by the claimant is not economic. At one time, this was thought to present a problem for the award of damages, unless it was possible to identify some form of physical detriment, on the view that placing a person in the same situation, so far as money can do it, as if the contract had been performed meant placing him in as good a situation financially. A wider view was however taken by the Court of Appeal in Jarvis v Swan Tours Ltd [1973] QB 233, and was confirmed by the House of Lords in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344, where the defendants loss was the difference to him, in terms of satisfaction and pleasure, between the swimming pool for which he had contracted and the one which he received, and it was therefore necessary to place a reasonable monetary value on that difference. Lord Mustill stated at pp 360 361: the law must cater for those occasions where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure. This excess is usually incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non monetary gain. Nevertheless where it exists the law should recognise if the misperformance takes it away [I]n several fields the judges are well accustomed to putting figures to intangibles, and I see no reason why the imprecision of the exercise should be a barrier, if that is what fairness demands. it and compensate the promisee That approach is consistent with the logic of damages for breach of contract: they are a substitute for the end result of performance, not for the economic end result of performance. It is therefore necessary in cases of non economic loss, as in cases of economic loss, to identify the difference in the claimants situation resulting from the non performance of the obligation in question, and then to place a reasonable monetary value on that difference, provided that the loss or damage in question is of a kind for which the law provides monetary compensation. (iii) Damages in equity under Lord Cairns Act Historically, the Court of Chancery could provide remedies in aid of equitable rights, including restitution if the right was violated. It could also provide remedies which were not available at common law, such as an injunction or specific performance, in aid of common law rights. Its jurisdiction was wider than that of the common law courts, for it could give relief where there was no cause of action at common law, for example by granting an injunction to prevent a threatened wrong. However, one form of relief which it could not grant (except, according to some authorities, where it was granted in addition to specific performance) was damages, ie monetary relief for the breach of a common law obligation. If the plaintiff wished to claim damages in addition to equitable relief, it was normally necessary to apply to the common law courts. The damages which could then be claimed were restricted to compensation for loss in respect of which there was a cause of action at common law. That inconvenience was addressed by section 2 of the Chancery Amendment Act 1858, commonly known as Lord Cairns Act. The section provided: In all cases in which the Court of Chancery has jurisdiction to entertain an application for an injunction against a breach of any covenant, contract, or agreement, or against the commission or continuance of any wrongful act, or for the specific performance of any covenant, contract, or agreement, it shall be lawful for the same court, if it shall think fit, to award damages to the party injured, either in addition to or in substitution for such injunction or specific performance, and such damages may be assessed in such manner as the court shall direct. Equivalent provision is now contained in section 50 of the Senior Courts Act 1981. Lord Cairns Act enabled the Court of Chancery to award damages in the circumstances specified in addition to an injunction. That power enabled the Court of Chancery to award damages which could otherwise have been awarded by the common law courts, and has lost its significance since the fusion of the administration of law and equity. The Act also enabled the Court of Chancery to award damages in substitution for an injunction: a statutory power to award damages in circumstances in which they could not be awarded at common law. As Millett LJ explained in Jaggard v Sawyer [1995] 1 WLR 269, 284: Damages at common law are recoverable only in respect of causes of action which are complete at the date of the writ; damages for future or repeated wrongs must be made the subject of fresh proceedings. Damages in substitution for an injunction, however, relate to the future, not the past. They inevitably extend beyond the damages to which the plaintiff may be entitled at law. In Leeds Industrial Co operative Society Ltd v Slack [1924] AC 851 the House of Lords confirmed the jurisdiction of the courts to award damages under the Act in respect of an injury which was threatened but had not yet occurred. No such damages could have been awarded at common law. Damages awarded in substitution for an injunction are, as one might expect, a monetary substitute for an injunction. As Viscount Finlay stated in Leeds Industrial Co operative Society Ltd v Slack [1924] AC 851, p 859, the power to give damages in lieu of an injunction must in all reason import the power to give an equivalent for what is lost by the refusal of the injunction. Where it is likely that the refusal of an injunction will result in the claimants sustaining loss and damage as a consequence of the tort, breach of contract or other wrongful act which the court has declined to prevent, the damages should provide compensation for that loss and damage, as Sir Thomas Bingham MR and Millett LJ explained in Jaggard v Sawyer at pp 276 277 and 286 respectively. The power to award damages in substitution for an injunction is dependent on the courts having jurisdiction to grant an injunction, determined as at the commencement of the proceedings. The provision that damages can be awarded in substitution for such injunction might be thought to imply that the court must also have before it an application for an injunction, which it has decided to withhold. The point does not arise for decision in these proceedings, but I would be inclined for that reason to hesitate before endorsing the first part of Lord Walkers principle (5), set out in para 4 above. Like the jurisdiction to grant an injunction, the jurisdiction to grant damages in lieu is equitable in nature, as Millett LJ explained in Jaggard v Sawyer at p 287: When the plaintiff claims an injunction and the defendant asks the court to award damages instead, the proper approach for the court to adopt cannot be in doubt. Clearly the plaintiff must first establish a case for equitable relief, not only by proving his legal right and an actual or threatened infringement by the defendant, but also by overcoming all equitable defences such as laches, acquiescence or estoppel. It follows that it is necessary to treat with care Lord Wilberforces remark in Johnson v Agnew [1980] AC 367, 400 that he found in Lord Cairns Act no warrant for the court awarding damages differently from common law damages. As Millett LJ explained in Jaggard v Sawyer at pp 290 291, all that Johnson v Agnew decided was that damages, whether at common law or under the Act, are not invariably to be measured by reference to the value of the land ascertained at the date of the breach of contract. Lord Wilberforces words should not be read out of context and taken to imply that damages awarded in substitution for an injunction must necessarily be measured in the same way as damages recoverable at common law. That is hardly to be expected, given that the damages are available on a different basis, in different circumstances, and in respect of different types of wrong (past, on the one hand, and future or continuing, on the other). Negotiating damages It is necessary to turn next to the most important of the Wrotham Park line of cases. These can be divided into two phases: an initial period in which awards based on a hypothetical release fee were made in the exercise of the jurisdiction under Lord Cairns Act in substitution for injunctions to prevent interferences with property rights and breaches of restrictive covenants over land, and a later period in which awards calculated in a similar way were made at common law on a wider and less certain basis. The two phases are divided by the case of Attorney General v Blake, in which the wider availability of such awards was signalled, but the seeds of uncertainty were sown. (i) The first phase The first phase began with the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd. It concerned land originally forming part of an estate, which had been conveyed by its owners to developers, subject to a restrictive covenant that the land would not be developed except in accordance with plans approved by the estate owners. The land was then developed as housing, the plans being approved by the estate owners on the basis that a central area would remain free of buildings. The undeveloped area was later offered for sale as building land for houses, and acquired by developers at a price which reflected its development value. The plaintiffs, who were the current owners of the estate, were aware of the basis on which the land was being sold, but did not inform either the sellers or the developers that they objected to its development. The developers then began to develop it as housing without seeking the plaintiffs approval. The plaintiffs brought proceedings against the developers for an injunction before any substantial construction took place, but did not apply for interim relief. The houses were built, and purchasers moved in. They were made additional defendants. Brightman J decided that the plaintiffs had a prima facie entitlement to a mandatory injunction requiring the removal of the houses, but that such relief should be refused as a matter of discretion. The question which then arose was what damages ought to be awarded in substitution for such an injunction. Brightman Js starting point was to consider the effect of the breach of covenant on the value of the estate. That measure would however result in nil or purely nominal damages, as the breach caused the plaintiffs no financial damage, nor any other form of loss. That would be a result of questionable fairness on the facts of this case (p 812). In that regard, he emphasised that it was only because the breach of covenant took the form of a housing development that an injunction was being refused: had it been the erection of an advertising hoarding, for example, an injunction would been granted. If, for social and economic reasons, the court did not see fit in the exercise of its discretion to order the demolition of the houses, was it just, he asked, that the plaintiffs should receive no compensation and that the defendants should be left in undisturbed possession of the fruits of their wrongdoing? In addressing that question, Brightman J referred to the trespass and detinue cases discussed earlier, where damages were assessed according to the value of the use which the defendants had unlawfully obtained, and to Lord Shaws statement of the principle of price or hire in Watson, Laidlaw. Citing Lord Sumners observation in the Leeds Industrial Co operative Society case at p 870 that damages awarded under Lord Cairns Act in substitution for an injunction should be designed to be a preferable equivalent for an injunction and therefore an adequate substitute for it, he noted that the defendants could have carried out the development lawfully if they had obtained a relaxation of the covenant. He concluded that a just substitute for an injunction would be such a sum of money as might reasonably have been demanded by the plaintiffs from [the developers] as a quid pro quo for relaxing the covenant (Wrotham Park, p 815). That measure was appropriate notwithstanding that the plaintiffs would not have been willing to bargain for the relaxation of the covenant. There was evidence that landowners whose property stood in the way of a development commonly demanded a half or a third of development value. The judge did not however agree with that approach. He noted that the plaintiffs had made no protest when the land was sold as housing land, and the developers had paid for it on that basis. Observing that damages must be assessed in such a case on a basis which is fair (p 816), he concluded that 5% of the anticipated profits from the development (which were taken to be the same as the actual profits) was the most that is fair. This case is unlikely to have been regarded at the time as having the significance which was later ascribed to it. The reasoning is less elaborate than the subsequent exegesis, and is not altogether clear. In particular, the relevance of the discussion of user damages to the award actually made was not clearly explained. A restrictive covenant over land is enforceable in contract only as between the original parties, but it is enforceable in equity as between their successors in title to the land in question. Its effect is to create an equitable obligation whose benefit and burden run indefinitely with the ownership of each parcel of land, rather like a negative easement. It is for that reason that the benefit of a restrictive covenant is recognised as a new kind of property right created by equity: Megarry & Wade, The Law of Real Property, 8th ed (2012), para 5 026. Wrotham Park resembled the earlier cases in which user damages were awarded, in that the use to which the defendants wrongfully put their property infringed a valuable right held by the plaintiffs to control such use. That justified an award of damages under Lord Cairns Act based on the value of the right infringed, since the refusal of an injunction effectively deprived the plaintiffs of the benefit of their right, and therefore of its value. An appropriate sum could be determined by considering what the plaintiffs could fairly and reasonably have charged for relinquishing the right voluntarily. Thus, as Mance LJ noted in Experience Hendrix at para 45, the right was treated as an asset with a commercial value. Another notable aspect of Brightman Js reasoning is that he took account of other circumstances besides the economic value of the plaintiffs covenant: in particular, the fact that an injunction had been refused only because of the particular form of the defendants infringement (ie a housing development), and the plaintiffs failure to inform the defendants in advance that consent would not be forthcoming. Much ink has been spilled on attempts to reconcile the latter aspect of the judgment with orthodox reasoning in relation to common law damages. Unrealistic suggestions have been made that the judge was taking account of the plaintiffs failure to mitigate their loss, or of contributory negligence. It was also suggested by Millett LJ in Jaggard v Sawyer at p 291 that delay in seeking an injunction diminished the prospects of obtaining one, and therefore also diminished the value of the covenant. If the delay was such that it was no longer possible for the plaintiff to obtain an injunction, then the plaintiffs bargaining position was destroyed. One difficulty with that suggestion is that the assessment of damages in Wrotham Park was concerned with the value of the covenant at the time of the breach, rather than at the time of the trial. As Anthony Mann QC (sitting as a deputy High Court judge) said in Amec Developments Ltd v Jurys Hotel Management (UK) Ltd (2001) 82 P & CR 286, para 31, the non availability of an injunction when the trial takes place is the reason for awarding damages, not a bar on awarding them. A more convincing explanation is that the judge was influenced by considerations of fairness, as his language repeatedly indicated, underlining the fact that the award was made in the exercise of an equitable jurisdiction. A further issue which arises from Wrotham Park concerns the date, and hence the knowledge and other circumstances, by reference to which the hypothetical price is to be assessed. This issue has been discussed in the authorities (such as Lunn Poly and Pell Frischmann), but does not arise for decision in the present appeal, and has not been the subject of argument. In those circumstances, although I am inclined to agree with para 159 of Lord Carnwaths judgment, I prefer not to express a concluded view. All that need be said is that, since the damages are awarded in the exercise of an equitable jurisdiction, and the courts objective is, in Viscount Finlays words, to give an equivalent for what is lost by the refusal of an injunction, it follows that the approach adopted should reflect those characteristics. It also follows that the approach which is appropriate when assessing common law damages is not necessarily the same. Wrotham Park was followed in Bracewell v Appleby [1975] Ch 408, where a house was built that could only be accessed by trespassing on land belonging to the plaintiffs. Proceedings for an injunction were brought after building operations began. Graham J decided to award damages in substitution for an injunction under Lord Cairns Act. He awarded an amount of damages which in so far as it can be estimated is equivalent to a proper and fair price which would be payable for the acquisition of the right of way in question (p 419). The amount awarded took account of the fact that the plaintiffs had delayed before bringing proceedings. The Court of Appeal considered Wrotham Park in Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361. The case was one in which the court had no jurisdiction to award damages under Lord Cairns Act (as Millett LJ explained in Jaggard v Sawyer at p 290), and damages were not sought on that basis. It is necessary to refer to the case in the present context only because of Steyn LJs comment that Wrotham Park was only defensible on the basis of restitutionary principles: the object of the award was to deprive the defendants of an unjustly acquired gain. That analysis was rejected in Jaggard v Sawyer. Sir Thomas Bingham MR, with whose judgment Kennedy LJ agreed, stated at [1995] 1 WLR 269, 281 282: I cannot, however, accept that Brightman Js assessment of damages in the Wrotham Park case was based on other than compensatory principles. The defendants had committed a breach of covenant, the effects of which continued. The judge was not willing to order the defendants to undo the continuing effects of that breach. He had therefore to assess the damages necessary to compensate the plaintiffs for this continuing invasion of their right. He paid attention to the profits earned by the defendants, as it seems to me, not in order to strip the defendants of their unjust gains, but because of the obvious relationship between the profits earned by the defendants and the sum which the defendants would reasonably have been willing to pay to secure release from the covenant. He continued, in a passage of wider significance to the issues in the present case, by citing with approval a passage in the judgment of Sir Robert Megarry V C in Tito v Waddell (No 2) [1977] Ch 106, 335, when he said, in relation to Wrotham Park: If the plaintiff has the right to prevent some act being done without his consent, and the defendant does the act without seeking that consent, the plaintiff has suffered a loss in that C the defendant has taken without paying for it something for which the plaintiff could have required payment, namely, the right to do the act. The court therefore makes the defendant pay what he ought to have paid the plaintiff, for that is what the plaintiff has lost. Millett LJ commented at p 291: It is plain from his judgment in the Wrotham Park case that Brightman Js approach was compensatory, not restitutionary. He sought to measure the damages by reference to what the plaintiff had lost, not by reference to what the defendant had gained. He did not award the plaintiff the profit which the defendant had made by the breach, but the amount which he judged the plaintiff might have obtained as the price of giving its consent. The amount of the profit which the defendant expected to make was a relevant factor in that assessment, but that was all. Jaggard v Sawyer itself concerned trespass and breach of covenant, on similar facts to Bracewell v Appleby. The plaintiff brought proceedings for an injunction to prevent the continuing wrongs. The judge refused to grant an injunction, but awarded damages in lieu under Lord Cairns Act, based on the amount which the defendants might reasonably have paid for a right of way and the release of the covenant. That award was upheld. The case is notable for the analysis of damages under Lord Cairns Act generally, and of the Wrotham Park line of cases in particular, in the judgments of Sir Thomas Bingham MR and Millett LJ, from which extensive citation has already been made. The awards made in Wrotham Park itself, and in the cases in which it was followed during the next quarter century, were made in the exercise of a unique statutory jurisdiction: the award of damages in lieu of an injunction. The purpose of the awards was to provide the claimant with an appropriate monetary substitute for an injunction in the circumstances of the particular case. Every reported case appears to have concerned either a tortious interference with property rights, or the breach of a restrictive covenant over land. Damages were assessed according to the amount which might fairly have been charged for the voluntary relinquishment of the right which the court had declined to enforce, subject to downward adjustment for reasons of fairness. That measure reflected the fact that the refusal of an injunction had the effect of depriving the claimant of an asset which had an economic value. But the cases did not purport to lay down a general rule as to how damages under Lord Cairns Act should be quantified, regardless of the circumstances. It is for the court to judge what method of quantification, in the particular circumstances of the case before it, will give an equivalent for what is lost by the refusal of the injunction. Lord Walkers principle (4), set out in para 4 above, should not therefore be understood as laying down a general rule. (ii) Attorney General v Blake Attorney General v Blake concerned a different issue. The question was whether the notorious traitor George Blake, living in exile in Moscow following his escape from Wormwood Scrubs, could be deprived of the profits earned from a book which he had published about his life and work as a spy. Since, as Lord Nicholls of Birkenhead stated at p 275, the information in the book was no longer confidential, nor was its disclosure damaging to the public interest, the only peg on which to hang such a deprivation was breach of contract: the book was written in breach of a contractual undertaking, given at the beginning of his service with the intelligence services, that he would not divulge official information gained as a result of his employment. The House of Lords, by a majority, granted a declaration that the Crown was entitled to be paid a sum equal to whatever amount was due and owing to Blake from his publisher. Lord Nicholls, with whose speech the rest of the majority agreed, emphasised that such an order was available as a remedy for breach of contract only in exceptional cases, where other remedies were inadequate, and at the discretion of the court. A useful guide was said to be whether the plaintiff had a legitimate interest in depriving the defendant of his profit. It was accepted by the majority of the House of Lords that the Crown had such an interest in relation to the profits made by Blake from the book. The case is relevant in the present context only because Lord Nicholls discussed the Wrotham Park line of cases in the course of his reasoning. Put briefly, the difficulty which he saw in the way of an award of damages was that the Crown had suffered no financial loss as a result of Blakes publication of the book. It was not suggested that it had suffered any other loss or damage. In particular, by the time of publication, the information in the book had ceased to be confidential. In those circumstances, he sought to establish that what were described as damages measured by the benefit gained by the wrongdoer were an available alternative to compensation for financial loss, and that to treat an account of profits as an available remedy for breach of contract was therefore a coherent development of the law. Lord Nicholls first stepping stone towards his conclusion was that the user damages awarded for interferences with rights of property in the cases considered earlier cannot be regarded as conforming to the strictly compensatory measure of damage unless loss is given a strained and artificial meaning, since the injured persons rights were invaded but, in financial terms, he suffered no loss (p 279). However, as explained at para 30 above, a compensatory analysis need not be regarded as strained or artificial. The person who makes wrongful use of property, in breach of another persons valuable right to control its use, prevents that person from exercising his right to obtain the economic value of the use in question, and should therefore compensate him for the consequent loss. The second stepping stone was a consideration of remedies for breach of fiduciary duty, which established the availability in equity of an order for an account of profits. That is in a context where the fiduciary owes his principal a duty of unqualified loyalty, and a consequent duty to account for all profits made from his position. The nature of the remedy reflects the nature of the obligation which has been infringed. The third stepping stone was a consideration of cases under Lord Cairns Act, such as Bracewell v Appleby and Jaggard v Sawyer, and pre 1858 cases which could now be brought under the Act, such as the case of a continuing wrong, such as maintaining overhanging eaves and gutters, as in Battishill v Reed (1856) 18 CB 696. These were said to show that in the same way as damages at common law for violations of a property right may be measured by reference to the benefits wrongfully obtained by a defendant, so under Lord Cairns Act damages may include damages measured by reference to the benefits likely to be obtained in future by the defendant ([2001] 1 AC 268, 281). A gains based analysis of awards under Lord Cairns Act was rejected in Jaggard v Sawyer, as explained at para 58 above. The damages awarded in that case, and in Bracewell v Appleby, were measured according to the amount which the claimant could fairly and reasonably have charged for the voluntary relinquishment of a valuable right of which he had effectively been deprived by the refusal of an injunction. In the absence of any reasons of fairness requiring its modification, the award was based on the economic value of the right: a value which was necessarily equivalent to that of the wrongful use which the claimant had to tolerate, since they were two sides of the same coin. That is consistent with Lord Nicholls approval of the analysis of the measure of damages awarded in this type of case as the price payable for the compulsory acquisition of a right (ibid). The claimant does not literally lose the right in question, but, as Lord Nicholls stated, the courts refusal to grant an injunction means that in practice the defendant is thereby permitted to perpetuate the wrongful state of affairs he has brought about (ibid). In the case of the overhanging eaves and gutters, on the other hand, the best measure of damages in the event of an injunction being refused might be found to be the consequent reduction in the value of the claimants property. It was only because that measure would have produced nil or purely nominal damages that Brightman J adopted a different measure in Wrotham Park (p 812). Under Lord Cairns Act, as under the common law, the situations in which damages are awarded are so various on their facts that the courts cannot adopt a uniform approach. Those three disparate types of award (damages for interferences with property, an account of profits made through a breach of fiduciary duty, and damages in substitution for an injunction), each reflecting the characteristics of the obligation which had been breached or the jurisdiction being exercised, formed the stepping stones to the fourth, namely damages for breach of contract. Lord Nicholls began by stating that such damages are compensatory: that, he said, is axiomatic (p 282). But a party to a contract may have an interest in performance which is not readily measurable in terms of money (ibid). In such cases, a financially assessed measure of damages is inadequate (ibid). The primary response of the law to this type of case was to provide specific relief, such as an injunction, so as to ensure that the contractual obligation was performed. These specific remedies, it was said, go a long way towards providing suitable protection for innocent parties who will suffer loss from breaches of contract which are not adequately remediable by an award of damages (p 282). But they were not always available. Lord Nicholls then cited Wrotham Park as an example of a case in which specific relief had been refused. The judge had been right to apply by analogy the cases concerning interferences with property rights, since it is not easy to see why, as between the parties to a contract, a violation of a partys contractual rights should attract a lesser degree of remedy than a violation of his property rights (p 283). Wrotham Park was said at pp 283 284 to shine as a solitary beacon, showing: . that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained. This part of Lord Nicholls speech is not altogether easy to interpret. A few observations can however be made. First, the fact that a party to a contract may have an interest in performance which is not readily measurable in terms of money (p 282) has long been recognised by the law of damages. The law normally responds to inherent difficulties of measurement, and to difficulties arising from a paucity of evidence in a particular case, in the ways discussed at paras 37 38 above. Such difficulties do not justify the abandonment of any attempt to measure loss, and the use of the benefit gained by the wrongdoer as an alternative basis for an award of contractual damages, since that alternative is inconsistent with the logic of contractual damages, as explained at paras 31 35 above. It is also necessary to recognise that the assessment of a hypothetical release fee is itself a difficult and uncertain exercise. In cases such as Wrotham Park, Bracewell v Appleby and Jaggard v Sawyer, judges estimated in a rough and ready way the amount which the claimant might fairly and reasonably have demanded as a quid pro quo for the relaxation of the obligation in question. More recently, the practice has developed of instructing forensic accountants to give expert evidence about a hypothetical negotiation between a reasonable person in the position of the claimant and a reasonable person in the position of the defendant. Such imaginary negotiations have become increasingly elaborate, and a host of questions can emerge as to the basis on which they should be hypothesised. This is well illustrated by Mr Granthams report in the present case. The artificiality of the exercise can be a further problem. Since the aim is to arrive at an objective valuation, the fact that the claimant might in reality have been unwilling to release the defendant from the obligation is not necessarily a problem, as Brightman J recognised in Wrotham Park. But the premise of the hypothetical negotiation that a reasonable person in the claimants position would have been willing to release the defendant from the obligation in return for a fee breaks down in a situation where any reasonable person in the claimants position would have been unwilling to grant a release, as was found to be the position in Marathon Asset Management LLP v Seddon [2017] EWHC 300 (Comm); [2017] ICR 791. The result of the exercise may be an appearance of precision, but as Hildyard J commented in CF Partners (UK) LLP v Barclays Bank plc [2014] EWHC 3049 (Ch), para 1199, the exercise is artificial; and, despite the apparent precision of the figures and calculations deployed typically (and necessarily) on each side, it necessarily involves a question of impression it is to some considerable extent a broad brush. Secondly, although it is not clear what Lord Nicholls meant by a lesser degree of remedy (p 283), it is not surprising that damages for breach of contract are generally assessed differently from damages for the invasion of a proprietary right, since the rights and obligations in question are generally of a different character. It is only in circumstances where they are analogous that it would be reasonable to expect some consistency of approach. As has been explained, damages for breach of contract are based on the difference to the claimant between the outcome of performance and non performance. That is not generally the same as the economic value of the right to performance, considered as an asset (which is not to deny that they may be the same, or similar, in some circumstances). This point was made in a different context by Lord Sumption, with whom Lord Neuberger, Lord Mance and Lord Clarke agreed, in Bunge SA v Nidera BV, para 21: Sections 50 and 51 of the Sale of Goods Act [1979], like the corresponding principles of the common law, are concerned with the price of the goods or services which would have been delivered under the contract. They are not concerned with the value of the contract as an article of commerce in itself. Thirdly, as Lord Walker remarked in Pell Frischmann at para 48, it is a little surprising that Lord Nicholls should have described Wrotham Park as a beacon in relation to common law damages for breach of contract. In the first place, the proceedings were not based on a contractual right: there was no contract between the parties. They were concerned with the invasion of a property right, as Lord Walker observed. Furthermore, Wrotham Park was not concerned with common law damages, but with damages awarded in substitution for an injunction. In the circumstances of the case, these were not merely arbitrary matters of legal categorisation, but bore directly on the damages awarded, as has been explained. That is not to say that common law damages for a particular breach of contract are necessarily different from damages for analogous breaches of other types of obligation. As was said earlier, in circumstances where the rights and obligations are analogous, it would be reasonable to expect some consistency of approach. Fourthly, it is plainly true that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. However, that proposition does not depend on the Wrotham Park line of cases. It is illustrated, in relation to breach of contract, by cases concerned with the award of damages at common law for breaches causing non economic loss, such as Ruxley Electronics and Milner v Carnival plc (trading as Cunard) [2010] EWCA Civ 389; [2010] 3 All ER 701. Fifthly, since the assessment of damages in the property cases was based on the value of the right to control the use of the property as it had been wrongfully used, there is a sense in which it can be said that the damages in those cases may be measured by reference to the benefit gained by the wrongdoer from the breach, provided the benefit is taken to be the objective value of the wrongful use. The same can be said of the Wrotham Park line of cases, subject to the same proviso, and subject also to the role of equitable considerations in the making of awards under Lord Cairns Act. The courts did not, however, adopt a benefits based approach, but conceived of the awards as compensating for loss. For the avoidance of doubt, the award of damages for skimped performance, based on the difference between the value of the goods or services contracted for and those actually provided, is not excluded by the principle in Robinson v Harman, but is an example of its application. That was recognised by Lord Nicholls in Blake at p 286. This is worth mentioning, as it was submitted on behalf of the defendants in the present case, under reference to the Canadian case of Smith v Landstar Properties Inc [2011] BCCA 44, that such awards amounted to Wrotham Park damages. Finally, in relation to Lord Nicholls speech, the connection which he drew between Wrotham Park and an account of profits has had consequences in the later case law which are unlikely to have been intended. One has been a view that damages assessed on the basis of a hypothetical release fee, and an account of profits, are similar remedies (partial and total disgorgement of profits, respectively), at different points along a sliding scale, calibrated according to the degree of disapproval with which the court regards the defendants conduct: see, for example, Experience Hendrix, paras 36 37 and 44. Related to this has been a view, illustrated by the present case, that damages assessed on the basis of a hypothetical release fee, like an account of profits in some circumstances, are available at the election of the claimant, and can be awarded by the court at its discretion whenever they might appear to be a just response. Neither view can be justified on an orthodox analysis of damages for breach of contract. The meaning and effect of Lord Nicholls discussion of damages for breach of contract have been much debated. It is unnecessary to pursue the matter further for the purposes of the present case. Negotiating damages were not sought in Blake and were not before the court. As the Earl of Halsbury LC observed in Quinn v Leatham [1901] AC 495, 506, a case is only an authority for what it actually decides. What Blake decided was that in exceptional circumstances an account of profits can be ordered as a remedy for breach of contract. The soundness of that decision is not an issue in this appeal. (iii) The second phase The citation of Wrotham Park in judgments has been more common in the period since Attorney General v Blake than in the period before it. There have continued to be cases in which damages in lieu of an injunction, for interferences with property rights, have been assessed on the basis of the amount payable for a royalty or licence. There have also been awards of damages for breach of contract, in substitution for an injunction, assessed on the Wrotham Park basis. An example is Pell Frischmann, which concerned the breach of a partys right to participate in a business opportunity under a joint venture agreement. An injunction was never sought, but the availability of damages in lieu of an injunction was nevertheless agreed. The award of damages based on the commercial value of the right infringed treated that right as a commercially valuable asset, of which the claimant had been effectively deprived. There have also been cases in which negotiating damages have been treated as available at common law in cases of breach of contract. An example is the case of Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch); [2010] Bus LR D 141, which also concerned the breach of a joint venture agreement, where the defendants used the information provided by the claimants about a commercial opportunity without including them in the transaction. There were breaches both of a confidentiality agreement and of an equitable duty of confidentiality. It was agreed that damages should be assessed on the basis of a hypothetical release fee. In effect, the court awarded damages based on the commercial value of the information which the defendants misused, as in a number of earlier cases concerned with breach of confidence. These cases can be understood as proceeding on the footing that the result of the breach of contract was that the claimants lost a valuable opportunity to exercise their right to control the use of the information. The decision of the Court of Appeal in Experience Hendrix LLC v PPX Enterprises Inc is less straightforward, and has given rise to difficulties of interpretation, if for example one compares WWF World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2007] EWCA Civ 286; [2008] 1 WLR 445, Devenish Nutrition Ltd v Sanofi Aventis SA [2008] EWCA Civ 1086; [2009] Ch 390, and the present case. The case concerned an agreement between Jimi Hendrixs estate and PPX, relating to recordings on which Mr Hendrix had played at an early stage of his career, before he was an established artist. The copyright in the recordings was owned by PPX. The agreement limited PPXs right to use its copyright, by requiring it to pay the estate royalties for the licensing of certain recordings, and prohibiting it from licensing others. In the event, PPX granted licences in respect of recordings whose licensing was prohibited. The claimant brought proceedings as the estates assignee for an injunction and damages. At the opening of the trial, counsel for the claimant made it clear (para 14): . that he had no evidence, and he said that he did not imagine that he could ever possibly get any evidence, to show or quantify any financial loss suffered by the [claimant] as a result of PPXs breaches. The judge granted injunctions to restrain further breaches of the agreement, but declined to award damages in respect of the past breaches. The claimant appealed. The Court of Appeal decided that damages should be awarded, assessed by reference to the royalties which might hypothetically have been demanded by the claimant in return for its agreement to the grant of the licences in question. Mance LJ, with whom the other members of the court agreed, described Blake as marking a new start in this area of law (para 16). Wrotham Park was said to illustrate that the law gives effect to the instinctive reaction that, whether or not the [claimant] would have been better off if the wrong had not been committed, the wrongdoer ought not to gain an advantage for free, and should make some reasonable recompense (para 26). PPX had done the very thing which it had contracted not to do (as in any case where there is a breach of a negative obligation). Its breach of contract was deliberate. Further, it can be said that the restriction against use of PPXs property of which PPX was in breach, was imposed to protect the [claimants] property (para 36): presumably a reference to the copyright in Mr Hendrixs later recordings, although the judgments do not state whether the copyright was held by the claimant. Finally, the grant of an injunction showed that the claimant had a legitimate interest in depriving PPX of its profits. As a matter of practical justice, PPX should make (at the least) reasonable payment for its use of the recordings in breach of the agreement. However, the case was not exceptional to the point where the court should order an account of profits. The financial remedy should be confined to an order that PPX pay a reasonable sum for its use of material in breach of the agreement. Peter Gibson LJ added a separate judgment, which has been influential (as in the present case) as a summary of the factors justifying the award made. He said at para 58: In my judgment, because (1) there has been a deliberate breach by PPX of its contractual obligations for its own reward, (2) the claimant would have difficulty in establishing financial loss therefrom, and (3) the claimant has a legitimate interest in preventing PPXs profit making activity carried out in breach of PPXs contractual obligations, the present case is a suitable one . in which damages for breach of contract may be measured by the benefits gained by the wrongdoer from the breach. To avoid injustice I would require PPX to make a reasonable payment in respect of the benefit it has gained. Notwithstanding some of the reasoning, the decision in the case can be supported on an orthodox basis. The agreement gave the claimant a valuable right to control the use made of PPXs copyright. When the copyright was wrongfully used, the claimant was prevented from exercising that right, and consequently suffered a loss equivalent to the amount which could have been obtained by exercising it. That analysis can be reconciled with some of the reasoning in the judgment of Mance LJ, but there are other aspects of the reasoning in the case with which it is more difficult to agree. In particular, in so far as the reasoning might convey the impression that the fact that loss or damage may be difficult to measure renders it unnecessary to identify such loss or damage, or that it is relevant to an award of damages that the breach of contract was deliberate or the party in breach benefited from his conduct, or that it is relevant to an award of damages that the claimant has a legitimate interest in preventing an activity carried out in breach of contract, or that damages for breach of contract and an account of profits are similar remedies at different points along a continuum, that impression would be mistaken. Conclusions The use of an imaginary negotiation can give the impression that negotiation damages are fundamentally incompatible with the compensatory purpose of an award of contractual damages. Damages for breach of contract depend on considering the outcome if the contract had been performed, whereas an award based on a hypothetical release fee depends on considering the outcome if the contract had not been performed but had been replaced by a different contract. That impression of fundamental incompatibility is, however, potentially misleading. There are certain circumstances in which the loss for which compensation is due is the economic value of the right which has been breached, considered as an asset. The imaginary negotiation is merely a tool for arriving at that value. The real question is as to the circumstances in which that value constitutes the measure of the claimants loss. As the foregoing discussion has demonstrated, such circumstances can exist in cases where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed, as for example in cases concerned with the breach of a restrictive covenant over land, an intellectual property agreement or a confidentiality agreement. Such cases share an important characteristic with the cases in which Lord Shaws second principle and Nicholls LJs user principle were applied. The claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the asset in question. The defendant has taken something for nothing, for which the claimant was entitled to require payment. It might be objected that there is a sense in which any contractual right can be described as an asset, or indeed as property. In the present context, however, what is important is that the contractual right is of such a kind that its breach can result in an identifiable loss equivalent to the economic value of the right, considered as an asset, even in the absence of any pecuniary losses which are measurable in the ordinary way. That is something which is true of some contractual rights, such as a right to control the use of land, intellectual property or confidential information, but by no means of all. For example, the breach of a non compete obligation may cause the claimant to suffer pecuniary loss resulting from the wrongful competition, such as a loss of profits and goodwill, which is measurable by conventional means, but in the absence of such loss, it is difficult to see how there could be any other loss. It is not easy to see how, in circumstances other than those of the kind described in paras 91 93, a hypothetical release fee might be the measure of the claimants loss. It would be going too far, however, to say that it is only in those circumstances that evidence of a hypothetical release fee can be relevant to the assessment of damages. If, for example, in other circumstances, the parties had been negotiating the release of an obligation prior to its breach, the valuations which the parties had placed on the release fee, adjusted if need be to reflect any changes in circumstances, might be relevant to support, or to undermine, a subsequent quantification of the losses claimed to have resulted from the breach. It would be a matter for the judge to decide whether, in the particular circumstances, evidence of a hypothetical release fee was relevant and, if so, what weight to place upon it. However, the hypothetical release fee would not itself be a quantification of the loss caused by a breach of contract, other than in circumstances of the kind described in paras 91 93 above. The foregoing discussion leads to the following conclusions: (1) Damages assessed by reference to the value of the use wrongfully made of property (sometimes termed user damages) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass). The rationale of such awards is that the person who makes wrongful use of property, where its use is commercially valuable, prevents the owner from exercising a valuable right to control its use, and should therefore compensate him for the loss of the value of the exercise of that right. He takes something for nothing, for which the owner was entitled to require payment. (2) Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights. (3) Damages can be awarded under Lord Cairns Act in substitution for specific performance or an injunction, where the court had jurisdiction to entertain an application for such relief at the time when the proceedings were commenced. Such damages are a monetary substitute for what is lost by the withholding of such relief. (4) One possible method of quantifying damages under this head is on the basis of the economic value of the right which the court has declined to enforce, and which it has consequently rendered worthless. Such a valuation can be arrived at by reference to the amount which the claimant might reasonably have demanded as a quid pro quo for the relaxation of the obligation in question. The rationale is that, since the withholding of specific relief has the same practical effect as requiring the claimant to permit the infringement of his rights, his loss can be measured by reference to the economic value of such permission. (5) That is not, however, the only approach to assessing damages under Lord Cairns Act. It is for the court to judge what method of quantification, in the circumstances of the case before it, will give a fair equivalent for what is lost by the refusal of the injunction. (6) Common law damages for breach of contract are intended to compensate the claimant for loss or damage resulting from the non performance of the obligation in question. They are therefore normally based on the difference between the effect of performance and non performance upon the claimants situation. (7) Where damages are sought at common law for breach of contract, it is for the claimant to establish that a loss has been incurred, in the sense that he is in a less favourable situation, either economically or in some other respect, than he would have been in if the contract had been performed. (8) Where the breach of a contractual obligation has caused the claimant to suffer economic loss, that loss should be measured or estimated as accurately and reliably as the nature of the case permits. The law is tolerant of imprecision where the loss is incapable of precise measurement, and there are also a variety of legal principles which can assist the claimant in cases where there is a paucity of evidence. (9) Where the claimants interest in the performance of a contract is purely economic, and he cannot establish that any economic loss has resulted from its breach, the normal inference is that he has not suffered any loss. In that event, he cannot be awarded more than nominal damages. (10) Negotiating damages can be awarded for breach of contract where the loss suffered by the claimant is appropriately measured by reference to the economic value of the right which has been breached, considered as an asset. That may be the position where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed. The rationale is that the claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the right in question, considered as an asset. The defendant has taken something for nothing, for which the claimant was entitled to require payment. (11) Common law damages for breach of contract cannot be awarded merely for the purpose of depriving the defendant of profits made as a result of the breach, other than in exceptional circumstances, following Attorney General v Blake. (12) Common law damages for breach of contract are not a matter of discretion. They are claimed as of right, and they are awarded or refused on the basis of legal principle. The present case Applying these conclusions to the present case, it is apparent that neither the judge nor the Court of Appeal applied an approach which can now be regarded as correct. The judge was mistaken in considering that the claimant had a right to elect how its damages should be assessed. He was mistaken in supposing that the difficulty of quantifying its financial loss, such as it was, justified the abandonment of any attempt to quantify it, and the award instead of a remedy which could not be regarded as compensatory in any meaningful sense. The Court of Appeal was mistaken in treating the deliberate nature of the breach, or the difficulty of establishing precisely the consequent financial loss, or the claimants interest in preventing the defendants profit making activities, as justifying the award of a monetary remedy which was not compensatory. The idea that damages based on a hypothetical release fee are available whenever that is a just response, that being a matter to be decided by the judge on a broad brush basis, is also mistaken. The basis on which damages are awarded cannot be a matter for the discretion of the primary judge. This is a case brought by a commercial entity whose only interest in the defendants performance of their obligations under the covenants was commercial. Indeed, a restrictive covenant which went beyond what was necessary for the reasonable protection of the claimants commercial interests would have been unenforceable. The substance of the claimants case is that it suffered financial loss as a result of the defendants breach of contract. The effect of the breach of contract was to expose the claimants business to competition which would otherwise have been avoided. The natural result of that competition was a loss of profits and possibly of goodwill. The loss is difficult to quantify, and some elements of it may be inherently incapable of precise measurement. Nevertheless, it is a familiar type of loss, for which damages are frequently awarded. It is possible to quantify it in a conventional manner, as is demonstrated by Mr Hines report. The case is not one where the breach of contract has resulted in the loss of a valuable asset created or protected by the right which was infringed. Considered in isolation, the first defendants breach of the confidentiality covenant might have been considered to be of that character, but in reality the claimants loss is the cumulative result of breaches of a number of obligations, of which the non compete and non solicitation covenants have been treated as the most significant, as explained in para 17 above. The judge has ordered a hearing on quantum. That hearing should now proceed, but it should not be, as he ordered, an assessment of the amount which would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations. The object of the exercise is that the judge should measure, as accurately as he can on the available evidence, the financial loss which the claimant has actually sustained. How that assessment is best carried out is, in the first instance, a matter for the judge to consider, proceeding in accordance with this judgment. If evidence is led in relation to a hypothetical release fee, it is for the judge to determine its relevance and weight, if any. It is important to understand, however, that such a fee is not itself the measure of the claimants loss in a case of the present kind, for the reasons which have been explained. The other judgments Lord Carnwath discusses differences between my reasoning and that of Lord Sumption. It is unnecessary for me to undertake a comparison. Ultimately, our judgments speak for themselves. Provided it is clear which judgment represents the view of a majority of the court, and therefore contains the ratio of the decision, any differences between them should not cause difficulty. Disposal The appeal should therefore be allowed to the extent of allowing a hearing on quantum of the nature which I have indicated. LORD SUMPTION: Oliver Wendell Holmes once wrote: I look forward to a time when the part played by history in the explanation of dogma will be small, and instead of ingenious research we shall spend our energy on a study of the ends sought to be attained and the reasons for desiring them. As a step towards that ideal it seems to me that every lawyer ought to see an understanding of economics: The Path of Law, (1897) 10 Harvard LR 457, 474, quoted in Edelman, The Meaning of Loss and Enrichment, Philosophical Foundations of the Law of Unjust Enrichment, ed Chambers, Mitchell and Penner (2009) 211, 221. This appeal raises in an acute form the problem posed by the historic categorisation of legal rules. The claimant, One Step (Support) Ltd, bought a business providing support for young people leaving care, which had previously been run by Karen and Andrea Morris Garner. In connection with the acquisition, it shortly afterwards entered into a valid agreement with the Morris Garners by which the latter agreed for a limited period not to engage in specified modes of competition with the business which they had just sold. The Morris Garners did compete with them in ways which contravened the agreement. The present appeal concerns the assessment of damages for those breaches. The ordinary measure of damages for breach of a non compete covenant is the value of the business profits which the claimant would otherwise have made but which it has lost as a result of the defendants unlawful competition, discounted in the case of future profits for accelerated receipt. As with many problems in the law of damages, difficulty arises in identifying the counterfactual by reference to which their loss falls to be measured. How many customers who contracted with the Morris Garners would have contracted with One Step if the Morris Garners had complied with their contract? When and for how long? For what volume of business? On what terms, especially as to price? And how profitable would the additional business have been for One Step? The economic effect of the breaches is inherently incapable of being precisely estimated, and may be incapable of even imprecise measurement. Nonetheless it is practically inconceivable that One Step has not suffered significant losses in this relatively small field of business. The law would be failing in its economic purpose if it confined One Step to the fraction of the business lost which was capable of being demonstrated with the necessary degree of confidence, or if it resorted to guesswork as an alternative to evidence. Because of the inherent uncertainties of the exercise, the claimant is normally awarded the value of the lost chance of doing more business: Sanders v Parry [1967] 1 WLR 753, SBJ Stephenson Ltd v Mandy [2000] FSR 286, CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704, para 141, Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB), paras 74 83. But even a chance must be valued by something better than guesswork. Wrotham Park damages Phillips J ([2014] EWHC 2213 (QB)) declared that One Step was entitled to damages to be assessed on a Wrotham Park basis (for such amount as would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations) or alternatively ordinary compensatory damages. The Court of Appeal ([2017] QB 1) upheld him. In my opinion, the courts below were wrong in a case like this to regard the Wrotham Park basis as an alternative measure of damages, differing from ordinary compensatory damages. But I consider that the notional price of a release may nonetheless be relevant, not as an alternative measure of damages but as an evidential technique for estimating what the claimant can reasonably be supposed to have lost. The characteristic features of an award of damages based on a notional release fee were described by Lord Walker, delivering the advice of the Privy Council in Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370, para 49: It is a negotiation between a willing buyer (the contract breaker) and a willing seller (the party claiming damages) in which the subject matter of the negotiation is the release of the relevant contractual obligation. Both parties are to be assumed to act reasonably. The fact that one or both parties would in practice have refused to make a deal is therefore to be ignored. It is to be noted that the assumption of a willing buyer and a willing seller, acting reasonably, means that one is not trying to reconstruct what the particular parties would hypothetically have done. Lord Walker, at para 53, expanded on this point in reference to the facts before the Board: A willing seller, acting reasonably, would have recognised that an excessively dog in the manger attitude would be counterproductive. At the same time BE and Bakrie [two of the defendants], as willing buyers acting reasonably, would have accepted that even negative rights must be bought out at a proper price, and that unless they were bought out, the project could not proceed at all. It is implicit in this approach that the hypothetical release fee is normally to be assessed as at the time of the breach, by reference to the facts existing at that time. In the same judgment, Lord Walker (at para 50) adopted the statement of Neuberger LJ on this point in Lunn Poly Ltd v Liverpool and Lancashire Properties Ltd [2006] 2 EGLR 29, para 29: Given that negotiating damages under [Lord Cairns Act] are meant to be compensatory, and are normally to be assessed or valued at the date of breach, principle and consistency indicate that post valuation events are normally irrelevant. However, given the quasi equitable nature of such damages, the judge may, where there are good reasons, direct a departure from the norm, either by selecting a different valuation date or by directing that a specific post valuation date event be taken into account. For this reason, the object of the exercise is to arrive at a money sum such as would hypothetically have been agreed between reasonable parties at the relevant time. It is not (as, unfortunately, the claimants expert appears to have thought in the present case) to arrive at a formula dependent on future events. The more difficult question is in what circumstances damages may be assessed in this basis. On this question, I take broadly the same view as Lord Reed, although for reasons which I would express more simply. The decision of Brightman J in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, has unfortunately given its name to the entire range of cases in which a notional release fee has been awarded by way of damages. This is unfortunate, because it has impeded analysis of a very disparate group of cases governed by different principles and not always consistent among themselves. The case law can be conveniently be categorised under three heads: (i) cases in which damages are not limited to pecuniary loss, because the claimant has an interest in the observance of his rights which extends beyond financial reparation; (ii) cases in which the claimant would be entitled to the specific enforcement of his right, and the notional release fee is the price of non enforcement; and (iii) cases in which the claimant has suffered (or may be assumed to have suffered) pecuniary loss, and the notional release fee is treated as evidence of that loss. Clear analysis requires a distinction to be made between these cases. But it does not require principles to be formulated for one category without regard to those which apply to another. The law should develop coherently across different categories. It should not be allowed to fragment into self contained sectors governed by arbitrary rules which have little relationship to the task in hand or to the principles applied in cognate areas. Category (i): Interest extending beyond financial reparation The invasion of property rights is the classic case in this category. The owner of the property is entitled to receive by way of damages a user rent equal to the amount that he would have had to pay for the right to do lawfully what he has in fact done unlawfully. The release fee is notional. It is awardable even if in fact the owner would not have consented in any circumstances. The leading case is Whitwham v Westminster Brymbo Coal and Coke Co [1896] 2 Ch 538. The defendant had tipped spoil onto the plaintiffs land. The plaintiff was held entitled to (i) the resulting diminution in the value of the land, and (ii) the reasonable rent that the defendant would have to pay for the right to do this. In Owners of Steamship Mediana v Owners, Master and Crew of the Lightship comet (The Mediana) [1900] AC 113, the defendants negligently damaged a lightship belonging to a harbour authority. The authority was held to be entitled by way of damages to (i) the cost of repairing the lightship, and (ii) a user rent for the period when she was out of service, although the authority had suffered no pecuniary loss by its unavailability because they were not in the business of renting out lightships and had a spare lightship for just such an event. Lord Halsbury LC asked (p 117): Supposing a person took away a chair out of my room and kept it for 12 months, could anybody say you had a right to diminish the damages by shewing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? In Watson, Laidlaw & Co Ltd v Pott, Cassels & Williamson (1914) 31 RPC 104, 119, Lord Shaw gave it as a general principle that wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle either of price or of hire. The effect of these decisions was summarised by Nicholls LJ in Stoke on Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406, 1416: It is an established principle concerning the assessment of damages that a person who has wrongfully used anothers property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the others property. The law has reached this conclusion by giving to the concept of loss or damage in such a case a wider meaning than merely financial loss calculated by comparing the property owners financial position after the wrongdoing with what it would have been had the wrongdoing never occurred. This is exceptional because in general the law is concerned only with the specific enforcement of obligations or the money equivalent of their due performance. The exceptions in the case of trespass to or appropriation of property are justified by the nature of the right which the wrongdoer has infringed. Property rights confer an exclusive dominion over the asset in question. The law treats that exclusivity as having a pecuniary value independent of any pecuniary detriment that he might have suffered by the breach of duty. The user rent is simply the measure of that value. Although the concept of user rent as a measure of damages originates in the field of wrongful injury to or appropriation of property, in Attorney General v Blake [2001] 1 AC 268, the principle was applied by analogy in order to justify an order for an account of profits in a case of breach of contract with no proprietary element. The facts are well known. In breach of his contract of employment the convicted traitor George Blake had published a book disclosing information acquired in the course of his duties as an intelligence officer. The government had suffered no pecuniary loss, but was held to be entitled to a restitutionary remedy, namely an account of Blakes profits. This was because, as in the property cases, a party to a contract may be recognised by the law as having an interest in its performance extending beyond financial reparation for a breach. In Blake, damages were incapable of putting the government in the same position as it would have been but for the wrong. This was because the nature of the obligation was such that the governments only interest in the performance of an intelligence agents duties of confidentiality was a non pecuniary governmental interest. In a case where it was too late to get an injunction, its rights against Blake would have been inherently worthless if the only remedy had been the recovery of pecuniary loss. After stating the ordinary rule of damages, Lord Nicholls, with whom Lord Goff, Lord Browne Wilkinson and Lord Steyn agreed, expressed the principle in this way at p 282: It is equally well established that an award of damages, assessed by reference to financial loss, is not always adequate as a remedy for a breach of contract. The law recognises that a party to a contract may have an interest in performance which is not readily measurable in terms of money. On breach the innocent party suffers a loss. He fails to obtain the benefit promised by the other party to the contract. To him the loss may be as important as financially measurable loss, or more so. An award of damages, assessed by reference to financial loss, will not recompense him properly. For him a financially assessed measure of damages is inadequate. In reasoning in this way, Lord Nicholls (pp 278 279) drew a direct analogy with the award of user damages for invasion of a property right. It was, he observed (p 283) not easy to see why, as between the parties to a contract, a violation of a partys contractual rights should attract a lesser degree of remedy than a violation of his proprietary rights. The governments legal interest as against Blake was a purely contractual right. It was not a property right. Yet Lord Nicholls was prepared to cross the boundary in pursuit of an analogy which justified a similar treatment. The analogy justified a similar treatment because in both cases the claimant was entitled to recover more than his pecuniary loss when his interest in performance extended beyond pecuniary loss. Category (ii): Damages in lieu of an injunction I turn now to the second category, comprising cases where the relevant obligation was in principle specifically enforceable, and the release fee was the price of non enforcement. Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, was a case of this kind. The Plaintiff had conveyed part of his land to a developer subject to a restrictive covenant against developing it otherwise than in accordance with a lay out plan to be approved by the vendor or its surveyor. A successor in title to the developer built houses on part of the land without submitting the vendors consent to a lay out plan. No question of user rent arose, for the plaintiff had parted with his interest in the land, subject only to the covenant. It was, moreover, common ground that the value of the Wrotham Park estate had not been diminished by the offending development. An injunction was in principle available, but Brightman J declined to order the demolition of the houses. Instead, he awarded damages in lieu of an injunction under the statutory jurisdiction originating with the Chancery Amendment Act 1858 (now the Senior Courts Act 1981, section 50). His reasoning is summed up in the following passage, at p 815: As I have said, the general rule would be to measure damages by reference to that sum which would place the plaintiffs in the same position as if the covenant had not been broken. Parkside [the first defendant] and the individual purchasers could have avoided breaking the covenant in two ways. One course would have been not to develop the allotment site. The other course would have been for Parkside to have sought from the plaintiffs a relaxation of the covenant. On the facts of this particular case the plaintiffs, rightly conscious of their obligations towards existing residents, would clearly not have granted any relaxation, but for present purposes I must assume that it could have been induced to do so. In my judgment a just substitute for a mandatory injunction would be such a sum of money as might reasonably have been demanded by the plaintiffs from Parkside as a quid pro quo for relaxing the covenant. He went on to assess the damages as a proportion (5%) of the profit that the developer had made. In subsequent cases, the courts have had some difficulty in identifying the principle on which Brightman J arrived at this assessment, but it is clear that he was seeking to determine the value to the claimant of a hypothetical injunction to the claimant. Whether he necessarily chose the best method of doing so does not matter for present purposes. In Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 the facts were similar but Wrotham Park was distinguished on the ground that no injunction was sought. The correctness of this distinction has more than once been doubted, notably by Millett LJ in Jaggard v Sawyer [1995] 1 WLR 269, 289 290 and by Lord Nicholls in Attorney General v Blake, p 283. Millett LJs analysis (pp 290 291) repays study. As he pointed out, the award of a notional release fee by way of damages was in fact compensation for pecuniary loss. It was not restitutionary, albeit that the amount of the developers gain was a relevant factor in assessing what the notional release fee would have been. He considered that the critical factor was that an injunction was in principle available, whether or not it was actually sought. The measure of the claimants loss was the diminution in the value of property resulting from the defendants breach of the restrictive covenant. The notional price that could have been charged for releasing the covenant was recoverable in lieu of an injunction, because the availability of an injunction increased the value of the claimants land by an amount equal to what he could have exacted in return for releasing it. That sum therefore represented the diminution in the value of the claimants land resulting from the courts discretionary refusal specifically to enforce the covenant. It was the proper measure of compensation. The same measure would have been awarded at common law if an injunction was still available. But if an injunction was not available, for example because the covenant was not specifically enforceable or the claimants delay had made it impossible, the buy out value did not contribute to the value of the land because there was none. In that case, damages could not be awarded on that basis either at common law or in lieu of an injunction. This seems to me to be sound in principle, sounder perhaps than the suggestion made, obiter, by Lord Walker in Pell Frischmann, at para 48, that it is not necessary that there should have been any prospect on the facts, of it being granted. This observation, if taken literally, would expand the concept so far as to lose almost any connection with the courts jurisdiction to grant injunctive relief. Difficulty has been caused by Lord Nicholls observations about Wrotham Park in Attorney General v Blake [2001] 1 AC 268. Lord Nicholls was not directly concerned with damages in lieu of an injunction. But he fortified his reasoning with an analogy between an account of profits and an award of damages in lieu of an injunction. He offered an analysis (p 281) of the basis on which a notional release fee might be awarded as damages, which was similar to that of Millett LJ in Jaggard v Sawyer. Citing that case as an example, he considered that such damages may include damages measured by reference to the benefits likely to be obtained in future by the defendant (p 281). He went on to hold that damages measured on that basis were available for the infringement of contractual as well as property rights. Turning to Wrotham Park, he described it (pp 283 284) as a solitary beacon, showing that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained. This passage is apt to cause confusion. Two points should, I think, be made about it. The first is that Wrotham Park was for practical purposes a contract case. The restrictive covenant was binding on the defendant because the covenant ran with the land and there was privity of estate. Lord Nicholls was well aware that Brightman J had been awarding damages as the financial equivalent of the injunction to which claimant was in principle entitled, and not as the financial equivalent of performance of the covenant. His point was that the two things, although conceptually different, were for practical purposes the same, because the value to the claimant of an order specifically enforcing the covenant would have been substantially the same as the value of performance. Secondly, when Lord Nicholls referred to damages measured by the benefit gained by the wrongdoer, he cannot have meant to say that the juridical basis of the award in cases like Wrotham Park was restitution of the defendants gain. Restitution of an unjustly retained gain serves to reverse the financial effect of the transaction. It is not the same as damages for breach of it. I do not believe that Lord Nicholls overlooked this basic difference. He was simply pointing out that in some circumstances, including those which obtained in Wrotham Park, damages may be awarded according to a measure which has substantially the same financial effect as a disgorgement or partial disgorgement of profits. This was one reason why he felt able to order an account of profits. As he observed later in his speech (p 284), the label is not always a sufficient description of what is in the bottle. Category (iii): Notional release fee as the measure of pecuniary loss This category comprises cases in which there is no question of injunctive relief and no legally recognised interest of the claimant in performance beyond the recovery of pecuniary loss for a breach. The amount that reasonable people in the position of the parties would agree should be paid for the right to do the acts complained of is treated as evidence of what that pecuniary loss is. This is not because the claimant is entitled to restitution or to some other remedy involving the disgorgement of the defendants gains. It is because it represents the value that reasonable people in the position of the parties would place on the performance of the relevant obligation. There is of course a conceptual difference between the value of performance and the cost of being released from performance, just as there is a conceptual difference between the value of performance and the value of an injunction enforcing performance. But there is commonly no practical difference between them. The notional release fee is in many cases a useful surrogate for the loss of profits arising from the breach, for straightforward economic reasons. The claimants right to performance is an asset. It may not be marketable generally, but as between the parties it has a financial value which is measured by the buy out price that would be agreed between them. The claimants recoverable loss is the additional profit that he would have made if the contract had been performed. If he is hypothetically to assess a reasonable charge for releasing the defendant from the relevant obligation (in this case the non compete obligation) he will do it by estimating what that obligation is worth to him. It is worth the additional profit that he would have made if it were to be performed. It is true that the value of a release may not be same for both parties. But the claimant, acting reasonably, has no reason to demand more than he anticipates he will lose by non performance, and the defendant, acting reasonably, has no reason to share with the claimant any benefit which the latter may expect to derive from some especially profitable use attributable to his own skill or effort. Of course, the parties, lacking perfect foresight, may get this wrong. But that is because what they are valuing is not the actual performance as it turns out to be, but the prospects as seen at the time of the breach. In other words, they are valuing the chance, as the court itself does in cases of this kind. The paradigm case in which damages are assessed on this basis, and the context in which this question was first considered by the courts, is the award of damages for patent infringement. A patentee may exploit his legal monopoly in either or both of two ways, (i) by manufacturing and selling the patented article or (ii) by licensing others to do so. In case (i), the measure of damages is the profits which he has lost by the diversion of sales to the infringer: United Horse Shoe and Nail Co Ltd v John Stewart & Co (1888) 13 App Cas 401. This is the same as the ordinary measure of damages for breach of a non compete agreement. In case (ii), the measure of damages is the royalty which the infringer would have had to pay if he had obtained the licence which would have been available: Penn v Jack (1867) LR 5 Eq 81; English and American Machinery Co v Union Boot and Shoe Machine Co (1896) 13 RPC 64; Pneumatic Tyre Co Ltd v Puncture Proof Pneumatic Tyre Co Ltd (1899) 16 RPC 209; Aktiengesellschaft fur Autogene Aluminium Schweissung v London Aluminium Co Ltd (No 2) (1923) 40 RPC 107. In his classic statement in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, Fletcher Moulton LJ suggested that even where there is no pattern of granting licences and no going royalty rate, damages could properly be measured by the notional royalty that would have been agreed as between willing patentee and licensee. The reason was that that was evidence of the value to the parties of performance of the defendants obligation. At pp 164 165, he observed: There is one case in which I think the manner of assessing damages in the case of sales of infringing articles has almost become a rule of law, and that is where the patentee grants permission to make the infringing article at a fixed price in other words, where he grants licences at a certain figure. Every one of the infringing articles might then have been rendered a non infringing article by applying for and getting that permission. The court then takes the number of infringing articles, and multiplies that by the sum that would have had to be paid in order to make the manufacture of that article lawful, and that is the measure of the damage that has been done by the infringement. The existence of such a rule shows that the courts consider that every single one of the infringements was a wrong, and that it is fair where the facts of the case allow the court to get at the damages in that way to allow pecuniary damages in respect of every one of them. I am inclined to think that the court might in some cases, where there did not exist a quoted figure for a licence, estimate the damages in a way closely analogous to this. It is the duty of the defendant to respect the monopoly rights of the plaintiff. The reward to a patentee for his invention is that he shall have the exclusive right to use the invention, and if you want to use it your duty is to obtain his permission. I am inclined to think that it would be right for the court to consider what would have been the price which although no price was actually quoted could have reasonably been charged for that permission, and estimate the damage in that way. Indeed, I think that in many cases that would be the safest and best way to arrive at a sound conclusion as to the proper figure. But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reason of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully. In General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819, 825, Lord Wilberforce (with whom Viscount Dilhorne, Lord Diplock and Lord Kilbrandon agreed) restated these principles and made it clear that a notional royalty was relevant evidence of the patentees loss, whether it arose from diverted sales (his category 1) or from lost royalties (his category 2), simply on the ground that it may in practice be difficult to estimate the loss in any other way, at p 826: In some cases it is not possible to prove either (as in 1) that there is a normal rate of profit, or (as in 2) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and of any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant of weight, in the face of the more concrete and direct type of evidence referred to under 2. But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications. The true principle, which covers both cases when there have been licences and those where there have not, remains that stated by Fletcher Moulton LJ in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, 164 165 He then set out the passage from Fletcher Moulton LJs judgment which I have quoted above. It is right to say that a patent is a species of property, albeit incorporeal. It can be assigned like any other item of property, or the benefit transferred by license. But that is entirely irrelevant to the present issue, because the concept of awarding a notional royalty as damages for infringement does not depend on the characterisation of a patent as a species of property. The infringer has not appropriated or used the patent like the man who trespasses on the claimants land or takes or damages his chattels. The patentee does not have an interest in the observance of his patent exceeding its financial value, in the way that a landowner may. He is not entitled to any more than his actual pecuniary loss. What he has is a personal claim against the infringer for competing with him unlawfully. In cases of diverted sales (Lord Wilberforces category 1) the measure of damages for the infringement is precisely the same as it is in this case, namely the profit lost by the diverted sales. And the value of those diverted sales may be measured by the amount that the patentee could reasonably charge the infringer for not enforcing his monopoly against him. The same principle has been applied in other cases of tortious competition, which involve no invasion of property rights unless property is so broadly defined as to encompass any right whatever. For example, confidential information is not property in the proper sense of the word, for there is no title against the world but only a personal right against the person owing the duty of confidence. However, a notional royalty (or its capitalised value) is commonly awarded as damages for breach of a duty not to misuse confidential information, whether that duty arises from contract or from equitable doctrines: Seager v Copydex Ltd (No 2) [1969] 1 WLR 809, 813; Force India Formula One Team Ltd v 1 Malaysia Racing Team Sdn Bhd [2012] RPC 29, paras 383 387, 424, approved without consideration of this point, [2013] EWCA Civ 780; [2013] RPC 38. This is not because of some principle peculiar to equitable relief. Nor is it because the claims were in reality for restitution. These were expressed to be, and in fact were awards of compensatory damages. Irvine v Talksport Ltd [2003] 1 WLR 1576 was a passing off action. The defendant had published a photograph of the claimant, a racing driver, thereby falsely suggesting that he had endorsed their radio station. The Court of Appeal awarded a notional endorsement fee. In a loose sense, passing off can be described as an appropriation of the claimants property in his goodwill, which is how the judge had characterised it at first instance in that case. The same could probably be said of the breach of confidence cases. But I doubt whether this characterisation contributes anything to the argument. In one sense almost any legal right can be described as a right of property, including the business and goodwill which the Morris Garners may be said to have appropriated by their breach of the non compete covenant. Hence the use of the same technique of assessment in straightforward cases of breach of contract, where no question arose of the invasion of proprietary rights. In Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370, the Privy Council extended the concept of awarding damages in lieu of an injunction to a case where there was no prospect of an injunction. I have already pointed out that the effect is to sever any real connection between the financial award and the hypothetical alternative of an injunction, because the alternative of an injunction did not exist. But in reality what the Board was doing was awarding damages for breach of contract on the same measure as damages in lieu of an injunction, ie in an amount equal to the notional value of not having to perform. Similarly, in Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch), a notional release fee was awarded by way of damages for breach of a joint venture agreement. This explains why, in Pell Frischmann (paras 47 48), Lord Walker, delivering the advice of the Board, regarded Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 as instructive. In Experience Hendrix, the defendant owned the copyrights in certain master recordings of the singer Jimi Hendrix, but in an agreement to settle earlier litigation it had undertaken not to license them. The claimant, which had succeeded to the rights of Jimi Hendrix, complained that recordings had been licensed in breach of the settlement agreement. The claimant asserted that the breach had damaged the market reputation of its own Jimi Hendrix recordings, but told the trial judge (para 14) that it had no evidence and did not imagine that he could ever possibly get any evidence to show or quantify any financial loss. This was not an admission that there were no losses. It is clear that what the claimant was saying was that there were, but that it was impossible to establish how much it had lost. The Court of Appeal (para 45) awarded damages equal to the amount which would reasonably have been paid for permission to license the recordings. In the absence of any possibility of assessing the difference that the breach had made to the claimants sales, the notional release fee in that case was simply the value which the reasonable people in the position of the parties would have placed on the prospect of performance of the relevant obligation. In refusing to be deterred by the fact that Experience Hendrix was neither a property case nor a case in which damages were being awarded in lieu of an injunction, Mance LJ was doing no more than follow the call of Lord Nicholls in Blake for a more coherent approach to the law of damages, and in particular for an assimilation in appropriate cases of the principles for awarding a notional release fee as damages in property and contract cases. Lord Nicholls analysis has had the valuable effect of freeing the law of damages from artificial categorisations which had turned the principles with which we are presently concerned into an incoherent mass of sub rules for different categories which exhibit no real differences in fact. These authorities, drawn from a diverse range of cases on the law of obligations over a considerable period, suggest that the concept of treating a notional release fee as an evidential tool for assessing a partys true loss in appropriate cases has been found valuable and is certainly not impractical. It is frequently employed. Conclusion As a result of the order which Phillips J made in the second week of the trial, his judgment was confined to liability and to the question whether in principle the claimant was entitled to what he compendiously called Wrotham Park damages. He did not seek to quantify those damages, and although he had substantial expert reports before him he made no finding about them. This makes it necessary to proceed at the same level of abstraction in determining the present appeal. For the reasons which I have given, I would modify the declaration of the judge so as neither to require nor to exclude the use of a notional release fee as evidence of the claimants loss. I put in it that way because the use of a notional release fee is not to be regarded as a rule of law. As Fletcher Moulton LJ explained in the Meters case and Lord Wilberforce in General Tire, the award of a notional release fee is not a measure of damages but an evidential technique for estimating the claimants loss. Its use is appropriate only if there is material on which the notional release fee can be assessed and then only so far as the trial judge finds it helpful, in the light of such other evidence as may be before him. I doubt whether it matters, on the facts of this case, whether the right which One Step asserts is analogous to a right of property. They are not claiming, nor are they entitled to more than their pecuniary loss. But I would tentatively suggest that the analogy is in fact close. The restrictive covenants were given by the Morris Garners to procure the sale of their shares in a business. The value of the business included its goodwill. The effect of their proceeding to compete unlawfully with the business, was to appropriate to themselves part of the goodwill of the business which they had sold. For these reasons, I would allow the appeal to the extent that I have indicated. My reasons are not in all respects the same as Lord Reeds, but our conclusions appear to me to be closely aligned. LORD CARNWATH: I agree that the appeal should be allowed for the reasons given by Lord Reed. In view of the importance of the case in the development of the law of damages, I shall add some comments of my own, in particular with regard to some important issues raised by Lord Sumptions judgment, in view of what appear to my mind to be significant differences between the two approaches. Lord Reeds analysis, as I understand it, follows an entirely orthodox approach. He starts from the distinction identified and explained by Lord Shaw more than a century ago (Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson 1914 SC (HL) 18; (1914) 31 RPC 104): that is, between cases governed by the traditional compensatory principle (restoration of loss), and those covered by his second principle (referred to in later cases as the user principle), applicable to cases involving the abstraction or invasion of property or analogous rights. That in turn is compared by Lord Reed with a third group of cases involving damages in lieu of an injunction under Lord Cairns Act, of which the Wrotham Park case itself is taken as a prime example. It is only in the second and third groups that an award based on a user fee or negotiating damages can be supported. Lord Sumptions approach is more radical. He starts with an open challenge to the historic categorisation of legal rules (para 103), which he regards as problematic and economically unsound. This leads him to propose a new, avowedly simpler, division into three inter related categories, not to be fragment(ed) into self contained sectors governed by arbitrary rules (para 109). As is apparent from the judgment as a whole, this reformulation is in part a response to Lord Nicholls speech in Attorney General v Blake [2001] 1 AC 268, 283, and what Lord Sumption sees as (at para 122) the call for a more coherent approach to the law of damages, and in particular for an assimilation in appropriate cases of the principles for awarding a notional release fee as damages in property and contract cases. He adds that Lord Nicholls analysis has had the valuable effect of freeing the law of damages from artificial categorisations which had turned the principles with which we are presently concerned into an incoherent mass of sub rules for different categories which exhibit no real differences in fact. (at para 122) It is symptomatic of their differences of approach that Lord Reed regards the same passage in Lord Nicholls judgment as not altogether easy to interpret, for reasons he explains but finds unnecessary to pursue further for the purposes of the present case (paras 72 82). Lord Sumptions second category (damages in lieu of an injunction: para 112ff) covers much of the same ground as Lord Reeds discussion of the same topic (paras 41ff), although there are significant differences of emphasis. The other two categories are more innovative. The first category, headed Interest extending beyond financial reparation (para 110ff), is in part based on the user principle group of cases, starting from the classic case of invasion of property rights. That is expanded into a new group not limited to such rights, but defined by the non pecuniary nature of the claimants interest. The scope of the expansion is typified by Blake itself, where the governments only interest in protecting itself against disclosure of information by an agent was a non pecuniary governmental interest (para 111). Conversely, cases of patent infringement, traditionally associated with the user principle, are carved out of the first category, and treated as the paradigm example of Lord Sumptions third category Notional release fee as the measure of pecuniary loss (paras 115ff). Although it is accepted that a patent is a species of property, its status as such is said to be irrelevant to the issue of damages: [t]he infringer has not appropriated or used the patent like the man who trespasses on the claimants land or takes or damages his chattels (para 119). This category is exemplified by Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, as applied by Lord Wilberforce in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819, 825). Those cases are treated as supporting the use of a notional release fee as not a measure of damages but an evidential technique for estimating the claimants loss (para 124); a technique which in his view should be available to the judge, if there is material on which the notional release fee can be assessed, so far as the trial judge finds it helpful, in the light of such other evidence as may be before him (para 124). Discussion Lord Sumptions analysis provides some valuable insights, in particular in relation to the special treatment of the governments non pecuniary interest in Blake itself. However, I am unable with respect to accept his reformulation as a helpful guide in the general run of cases. In the first place it conflicts with the previous development of the law, up to and including the description of the user principle by Nicholls LJ in Stoke on Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406, 1416. That is cited by both Lord Reed (para 29) and Lord Sumption (para 110), and as I understand them treated as an authoritative statement of the principle. Nicholls LJ cited, as examples of the principle, the cases of Meters, General Tire, and Watson, Laidlaw noting that they were patent infringement cases (pp 1416 17). Nothing in that judgment or the previous cases justifies treating them as part of a separate category. Nor in my view does anything in Lord Nicholls speech in Attorney General v Blake [2001] 1 AC 268. He made no mention of the Stoke on Trent City Council case (which does not appear to have been mentioned in argument). He did, however, cite Lord Shaws statement of the equivalent principle in Watson, Laidlaw, noting that it was a patent infringement case, and describing the principle as established and not controversial (p 279A D). Secondly, the two cases on which Lord Sumption principally relies Meters and General Tire do not to my mind support the use of a negotiated fee as an evidential technique in other contexts. The observations of Fletcher Moulton LJ in the former case (quoted by Lord Sumption at para 117) were directed specifically to cases of patent infringement. In that context, it was said to be almost a rule of law that where permission is granted to make the infringing article at a fixed price, that price, multiplied by the number of offending articles, is taken as the basis for assessing damages. An equivalent approach was then applied by the Lord Justice to cases where there was no such fixed price, by looking for the price which although no price was actually quoted could have reasonably been charged for that permission It was in the same context that Lord Wilberforce in General Tire (again in a passage quoted by Lord Sumption: para 118) spoke of the broad categories of evidence which may be relevant to the ultimate process of judicial estimation. There is nothing in either passage which supports the use of a negotiated fee, actual or hypothetical, as an evidential technique for assessing loss more generally. I accept that, if one were to turn the clock back 100 years one might question the analogy drawn by Lord Shaw between borrowing a horse and infringement of a patent. As Lord Sumption fairly says, patent infringement, although involving a property right, is not the same as the appropriation or use of anothers land or chattels. However, that has not hitherto been seen as a reason for separation. Nicholls LJ himself, in the Stoke on Trent City Council case (at p 1416H), observed that the principle was not confined to the physical use of anothers property, but had been applied in relation to incorporeal property, in particular patents. He did not see that anomaly, if anomaly it be, as requiring qualification of the principle. Lord Sumption also observes that the principle has been applied to cases which involve no invasion of any property right, as properly understood, for example misuse of confidential information. There again, however, the principle has been justified by analogy with the taking of property. In the first case he cites (Seager v Copydex Ltd (No 2) [1969] 1 WLR 809, 813), the award was in terms justified by Lord Denning MR (with the agreement of his colleagues) by analogy with damages for conversion. Thirdly, Lord Sumption appears to give no clear indication of the circumstances which are expected to come within the third category. As I understand it, the suggested criteria for use of this technique are twofold: whether there is material on which a negotiated release fee can be assessed, and, if so, whether the trial judge finds it helpful in the light of the other evidence before him (para 124). I cannot with respect regard that as providing adequate guidance to parties or to the courts, on an issue which may have a substantial impact on the level of damages, and accordingly on decisions about disclosure and about the evidence to be called. This cannot be left as a matter depending simply on what, at the end of the day, the judge may find helpful. More generally, I am unpersuaded that it is necessary or helpful to redefine, or break down the barriers between, the established categories; nor that to do so offers any improvement in the coherence of the law. The concept of loss suffered, or value diminished, is well understood in the law. So is the concept of a negotiated fee, actual or hypothetical, for use of anothers property or for release from an obligation. But they are different concepts, and the differences should not be blurred. If in a particular context a negotiated fee basis of claim cannot be justified in its own terms, the case is not improved by treating it as an evidential technique for assessing something conceptually different. Statutory compensation A further concern, which needs to be taken into account before redefining the traditional categories, is the possible impact of our reasoning on other related areas of the law, for example compensation for statutory interference with property rights. Arguments based on Wrotham Park have been deployed with mixed results in support of claims for enhanced, negotiated fee compensation in two important contexts: for injurious affection caused by statutory works on land subject to restrictive covenants (Compulsory Purchase Act 1965 section 10); and for discharge or modification of restrictive covenants by the Upper Tribunal (Law of Property Act 1925 section 84). Injurious affection The Compulsory Purchase Act 1965 section 10 (like its predecessor: Land Clauses Act 1845 section 68) has been interpreted as permitting statutory works on land subject to restrictive covenants, subject only to payment of compensation for any diminution in value of the dominant tenement. In a case relating to land on the same Wrotham Park estate (Wrotham Park Settled Estates v Hertsmere Borough Council [1993] 2 EGLR 15 the Hertsmere case) the Court of Appeal rejected an argument that the compensation should include a sum reflecting the price which that the landowner could have exacted for allowing the development or a ransom price (p 16H). In the leading judgment Sir Thomas Bingham MR expressed reservations about the correctness of Brightman Js judgment in the earlier Wrotham Park case (p 18J), but held that it had no application to compensation under section 10. He cited a comment by Professor Gareth Jones (The recovery of benefits gained from a breach of contract (1983) 99 LQR 443, 450; referring to Tito v Waddell (No 2) [1977] Ch 106, 335 336): In Wrotham Park Estate, the defendants had taken something for nothing for which the plaintiffs could have required payment, namely the release of the restrictive covenant; this was not the case in Tito v Waddell (No 2) for the defendants had done nothing which the plaintiffs had the right to prevent Sir Thomas Bingham thought the same reasoning could be applied to the instant case: the authority had done nothing wrong nor taken anything to which it was not entitled, but was simply performing its statutory duty to supply housing (p 18H). He had earlier accepted that this might result in less than perfect compensation, but that was acceptable in the wider communal interests represented by the local authority (pp 17M 18A). This case was considered by the Law Commission in its review of the law of compensation for compulsory purchase of land (Towards a Compulsory Code: (1) Compensation Final report (2003) Law Com No 286 para 9.6ff). It was suggested that it seemed somewhat anomalous to treat the owner of the dominant tenement in such a case as a person from who no land is taken. However, it was decided, in line with the majority of responses (para 9.10), not to recommend a change to the law in this respect. More recently the issue has been revisited by a leading textbook (Michael Barnes QC The Law of Compulsory Purchase and Compensation (2014) para 10.60 61). It is there argued that the Hertsmere case should be reconsidered, following the imprimatur said to have been given by the House of Lords in Attorney General v Blake [2001] 1 AC 268 to a voluntary agreement basis for awards in private law. Comment Under this statutory provision the law must in my view be taken as settled for the time being by the Court of Appeal decision in the Hertsmere case. As far as I am aware, there has been no suggestion, then or since, that a negotiated fee might be brought in by a different route, as an evidential technique for assessing loss under the section. There are, as the Law Commission recognised, arguments for a more generous basis of compensation. However, that is a matter properly left to Parliament taking account of all the interests involved, including the public interest considerations mentioned by the Master of the Rolls in Hertsmere. Restrictive covenants A more confused picture emerges from the history of the Wrotham Park analogy, in claims relating to statutory modification of restrictive covenants. The authorities were reviewed by the Court of Appeal in Winter v Traditional & Contemporary Contracts Ltd [2007] EWCA Civ 1088; [2008] 1 EGLR 80 (in which I gave the judgment of the court). The statutory framework for the power to discharge or modify restrictive covenants is found in section 84 of the Law of Property Act 1925. Under section 84(1)(aa), the Lands Tribunal (now Upper Tribunal) was given power to discharge or modify a restrictive covenant in order to allow some reasonable user of land, where the restriction either (a) did not secure to the person entitled to the benefit any practical benefits of substantial value or advantage; or (b) was contrary to the public interest; and where, in either case, money would be an adequate compensation for any loss or disadvantage suffered. The tribunal was empowered to direct the payment of a sum by way of consideration to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification. A few months after the judgment in Wrotham Park, such a claim came before the Lands Tribunal in In re SJC Construction Co Ltds Application (1974) 28 P & CR 200. It concerned a development of six flats on land subject to a restrictive covenant in favour of the local borough council. The development had been begun without seeking a modification. The Tribunal (President Sir Douglas Frank QC) refused to modify the covenant under ground (a) (no substantial benefit), but did so under ground (b) (public interest). In relation to compensation, the President mentioned the free negotiation approach adopted in Wrotham Park. This was seen by him as equivalent to the familiar Stokes v Cambridge principle (Stokes v Cambridge Corp (1962) 13 P & CR 77, 91). Stokes v Cambridge is commonly relied on by valuers in assessing the market value of land subject to compulsory acquisition (under the Land Compensation Act 1961 section 5), where adjoining land holds the key to its development. The value is treated typically as reduced by between one third and one half, to reflect the likely cost of securing the necessary interest from the adjoining landowner. This precedent was probably in the mind of the witness mentioned by Brightman J (Wrotham Park, p 815E), who spoke of one a half or a third of the development value being commonly demanded by an adjoining landowner, although Brightman J adopted the much lower percentage of 5% for reasons he explained. In SJC Construction the President favoured the free negotiation approach over an approach limited to loss or disadvantage affecting the dominant land as such (p 206). He did so in part because he saw statutory modification of the covenant as in effect a compulsory expropriation of a right which together with the servient land has a market value (p 206). Assessing the development value at 19,000, he fixed compensation at 9,500, on the basis that the likely outcome of friendly negotiations would have been to split the development value equally (p 207). In the Court of Appeal ((1975) 29 P & CR 322) the Presidents award was upheld, but on what seems a quite different conceptual basis. Lord Denning MR (with whom the other members of the court agreed) noted the purpose of compensation as being to make up for the loss or disadvantage suffered by the person entitled, adding, at p 326: It is however, to be assessed for loss of amenities, loss of view and so forth, which are things which it is hard to assess in terms of money. It is similar to compensation for pain and suffering He approved the Presidents reliance on Wrotham Park, as a method by which he was getting at the loss or disadvantage, that being an intangible matter which is incapable of exact calculation (pp 326 327) This reasoning is not easy to follow, given the Presidents express refusal to limit the award to loss or damage to the dominant land, and the lack of any hint in his judgment of an attempt to assess loss of amenities, loss of view and so forth. Lord Dennings explanation of Wrotham Park is also difficult to reconcile with Brightman Js finding that in that case the plaintiff had suffered no loss. Lip service at least was paid to his approach in the next case in the Court of Appeal (Stockport Metropolitan Borough Council v Alwiyah Developments (1983) 52 P & CR 278), but with a markedly less generous outcome in financial terms. Dillon LJ saw ground (a) as concerned with practical benefits on the land in the nature of amenities and not with the merely financial bargaining position (p 284). However, he accepted that on the tribunals findings there was a loss of amenity to be valued and that a possible method of assessment might have been by reference to some share, probably small, of the development value (p 285). In the Winter case (para 28) those cases were treated as establishing, at least up to Court of Appeal level, that compensation under section 84 was based on the impact of the development on the objectors land, not on the loss of the opportunity to extract a share of the released development value (para 28); that the negotiated share approach was a permissible tool (para 33), but that the percentage must bear a reasonable relationship to the actual loss suffered by the objector; and that the 50% percentage used in SJC established no precedent. SJC was described as undoubtedly a difficult decision, because the Court of Appeal seemed to have re interpreted the tribunals award to fit its own different view of the law, but the Stockport case should have dispelled any idea that objectors in cases of this kind have any expectation of a windfall Stokes percentage of the released development value, or anything like it (para 37). That more modest view seems thereafter to have been reflected in the pattern of awards by the tribunal, as documented for example in Preston and Newson: Restrictive Covenants affecting Freehold Land 10th ed (2013) cap 14. Comment Here again a case can be made for a more generous basis of award, at least in some circumstances. Where as in SJC itself modification is made on public interest grounds, it is easy to see the force of the Presidents analogy with the refusal of an injunction on similar grounds in Wrotham Park itself. It is less easy to see on what principled basis one is to fix the appropriate percentage of development value, within the range offered by those two cases (between 5% to 50%). The current law may fairly be criticised as a somewhat uneasy compromise between two competing concepts. However, as was pointed out by the Court of Appeal in Winter (para 34 5) those conceptual problems seem to have been negotiated by experienced members of the tribunal so, in subsequent cases, as to produce a reasonably consistent practice. Again, in my view, if change is to be made it is for Parliament rather than the courts to determine the appropriate balance. Date of assessment Finally, I would add a comment on an issue mentioned by Lord Reed (para 56), but not treated by him as needing to be resolved in this appeal. Lord Sumption touches on the same issue, noting that the hypothetical release fee is normally to be assessed at the time of the breach (para 108). He cites the statement by Neuberger LJ in Lunn Poly Ltd v Liverpool and Lancashire Properties Ltd [2006] 2 EGLR 29, para 29: Given that negotiating damages under the Act are meant to be compensatory, and are normally to be assessed or valued at the date of breach, principle and consistency indicate that post valuation events are normally irrelevant. However, given the quasi equitable nature of such damages, the judge may, where there are good reasons, direct a departure from the norm, either by selecting a different valuation date or by directing that a specific post valuation date event be taken into account. As Lord Sumption notes, this passage was cited with approval by Lord Walker in Pell Frischmann. However, neither he nor Neuberger LJ found it necessary on the facts of their cases to look at events later than the date of breach, nor to examine the flexibility allowed by the quasi equitable nature of the remedy. Although this is not an issue in the appeal, I note that at least one of the expert reports in this case treats that passage as allowing the negotiated fee to be assessed taking account of the the eventual outcome. Some comment may therefore be appropriate. In Lunn Poly itself the issue arose somewhat obliquely, and on unusual facts relating to the breach of a covenant for quiet enjoyment in the lease of a unit in a shopping centre. The breach in question involved works for the stopping up and replacement of a fire door. An injunction to restrain the breach having been refused, damages in lieu were assessed on the basis of a hypothetical negotiations for sale of the tenants right to prevent the works. An issue then arose as to whether account could be taken of the risk of subsequent forfeiture of the lease for a separate breach of covenant by the tenant shortly before the landlords works. As Neuberger LJ observed it was a very weak point in practice (para 15), in view of the strong likelihood of relief being granted to the tenant. However, the court thought it right to consider the point as a matter of principle, having regard to discussion in recent cases. Neuberger LJ referred in particular to AMEC Development v Jurys Hotel Management (UK) Ltd (2001) 82 P & CR 22. The judge (Anthony Mann QC, sitting as a Deputy High Court judge) noted that Brightman J in Wrotham Park (p 815H) had taken as his starting point for the hypothetical negotiation the profit which the developer with the benefit of foresight would have assumed. As the deputy judge commented, Brightman J seems to have imagined a negotiation before the infringement, but using actual profits as evidence of what the parties would have contemplated before they actually accrued. He took this as showing that the negotiation analysis need not be pursued rigorously to its logical end, and that he was not required to guess at something which events have in fact made certain (para 13). While declining to lay down any firm general guidance, Neuberger LJ did not accept the deputy judges approach as generally applicable. Once the court had decided on a particular date of valuation, consistency, fairness and principle pointed against ignoring factors existing at that date or taking account of factors which occurred afterwards (para 29). He then set out what he regarded as the proper analysis in the passage cited above. As can be seen, he saw the quasi equitable nature of the jurisdiction as permitting a relatively flexible approach, guided only (it seems) by whether the judge sees good reasons to direct a departure from the norm. In my view, the more detailed examination by this court of the subject of negotiating damages allows for more precise and principled guidance. Here again there are useful statutory parallels. The Bwllfa case (Bwllfa and Merthyr Dare Steam Collieries Ltd (1891) v Pontypridd Waterworks Co [1903] AC 426) established that, in assessing compensation for loss caused by limits to mine working imposed under a statutory notice, the arbitrator was entitled to take account of evidence of increase of prices since the date of the notice; he was not required to conjecture on a matter which has become an accomplished fact (p 431 per Lord Macnaghten). That was in a case where, as Lord Robertson observed (p 432) the statutory compensation was not for an assumed sale of the coal at the date of the notice, but for a continuing embargo on working. In the same way, in the present context account must be taken of the nature of the claim. Under the user principle, whether as applied to the taking of a horse or infringement of a patent, the inquiry is as to the price or fee that the defendant would have been expected to pay at the time of the taking or the infringement. Logically the assumed knowledge should be limited to that which was available to the parties at the time. The position is different where the award is by way of compensation for the refusal of an injunction. This is a reflection not simply of the more flexible (quasi equitable) nature of the jurisdiction, but (as Lord Reed explains: para 47) the different bases of the awards: past, on the one hand, and future or continuing, on the other. Where the causes of the claimants loss are not limited to past breaches, but include the judges refusal of an injunction to restrain future breaches, there is no reason in principle to exclude information available to the parties up to the time of the judges decision.

UK-Abs

In 1999, the first appellant established a business providing support for young people leaving care. In 2002, she sold a 50% interest to Mr and Mrs Costelloe. The respondent company, One Step (Support) Ltd (One Step) was incorporated as the vehicle for this transaction. In 2004, relations began to deteriorate between the first appellant and the Costelloes. In August 2006, Mrs Costelloe served a deadlock notice under the shareholders agreement, requiring the first appellant either to buy her shares or to sell her own for a certain price. The first appellant opted to sell her shares in One Step to the Costelloes for 3.15m. Both appellants agreed to be bound for three years by restrictive covenants prohibiting them from competing with One Step or from soliciting its clients. In 2004, without the Costelloes knowledge, the appellants had incorporated a new company, called Positive Living. In 2007, Positive Living began trading, in competition with One Step. In 2010, the appellants sold their shares in Positive Living for 12.8m. In 2012, the claimant company issued the present proceedings for breaches of the restrictive covenants. The trial judge, Phillips J, found that the appellants had breached the restrictive covenants and that One Step was entitled to damages to be assessed on a Wrotham Park basis (for such amount as would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations) or alternatively ordinary compensatory damages. Wrotham Park damages, named after the case Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, and also known as negotiating damages1, refer to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to perform. The Court of Appeal upheld the decision of the trial judge. The appellants appealed to the Supreme Court on the question of damages. The Supreme Court allows the appeal on the basis that the courts below erred in their approach to the assessment of damages. The case should now return to the High Court for a hearing on quantum to measure the claimants actual financial loss. Lord Reed gives the main judgment, with which Lady Hale, Lord Wilson and Lord Carnwath agree. Lord Carnwath gives a concurring judgment. Lord Sumption gives a separate judgment, agreeing that the appeal should be allowed. 1 This is the term preferred by Lord Reed in his judgment at [3]. First principles Before considering negotiating damages for breach of contract, it is necessary to consider general principles relating to user damages in tort, damages in equity, and damages for breach of contract [24]. (i) User damages in tort: Damages assessed by reference to the value of the use wrongfully made of property, measured by what a reasonable person would have paid for the right of user (sometimes termed user damages), are readily awarded at common law for the invasion of property rights. Damages are available on a similar basis for the invasion of intellectual property rights [25 30, 95(1) (2)]. (ii) Damages in equity under Lord Cairns Act: Under section 2 of the Chancery Amendment Act 1858 (Lord Cairns Act), now re enacted in section 50 of the Senior Courts Act 1981, damages can be awarded in substitution for an injunction or specific performance where the court had jurisdiction to grant such a remedy when the proceedings were commenced. Damages on this basis are a monetary substitute for what is lost by the withholding of the remedy. One method of quantifying damages under this head is by reference to the economic value of the right which the court has declined to enforce. Such a valuation can be arrived at by reference to the amount which the claimant might reasonably have demanded in return for the relaxation of the obligation in question [41 47, 95(3) (5)]. (iii) Common law damages for breach of contract: Common law damages for breach of contract are intended to place the claimant in the same position as he would have been in had the contract been performed. They are therefore normally based on the difference between the effect of performance and non performance upon the claimants situation. Where the breach of a contractual obligation has caused the claimant to suffer loss, that loss should be measured or estimated as accurately and reliably as possible. The law tolerates imprecision, and there are different legal principles which can assist in estimating the claimants loss [31 40, 95(6) (9)]. Contract law damages cannot be awarded merely for the purpose of depriving the defendant of profits made as a result of the breach, except in exceptional circumstances, following Attorney General v Blake [2001] 1 AC 268 [35, 73, 82, 95(11)]. Contract law damages are not a matter of discretion. They are claimed as of right, and are awarded or refused on the basis of legal principle [36, 81, 95(12)]. Negotiating damages for breach of contract Lord Reed reviews the Wrotham Park line of cases at [48 90], dividing the caselaw into two phases. In the initial period, beginning with Wrotham Park, awards based on a hypothetical release fee were made in the exercise of the jurisdiction under Lord Cairns Act in substitution for injunctions to prevent interferences with property rights and breaches of restrictive covenants over land [49 63]. In the later period, awards calculated in a similar way were made at common law on a wider and less certain basis [83 90]. This later phase includes Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323. Lord Reed expresses some doubts on the reasoning of Experience Hendrix, but supports the decision as it can be understood on an orthodox basis [89 90]. The two phases are divided by the case of Attorney General v Blake, in which the wider availability of hypothetical release fee awards was signalled, but the seeds of uncertainty were sown. However, although Wrotham Park was discussed in Attorney General v Blake, negotiating damages were not sought, and were not before the court [64 82]. The discussion above leads to the conclusion that negotiating damages can be awarded for breach of contract where the loss suffered by the claimant is appropriately measured by reference to the economic value of the right which has been breached, considered as an asset. The imaginary negotiation is merely a tool for arriving at that value. That value may be the measure of loss where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed, as in the case of the breach of a restrictive covenant or an intellectual property agreement. The rationale is that the claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the right in question, considered as an asset. The defendant has taken something for nothing, for which the claimant was entitled to require payment [91 93, 95(10)]. The present case Applying these conclusions to the present case, both the trial judge and the Court of Appeal adopted a mistaken approach [96 97]. The substance of the claimants case is that it suffered financial loss in the form of lost profits and goodwill. Though difficult to quantify, this is a familiar type of loss, which can be quantified in a conventional manner. The claimants did not suffer the loss of a valuable asset created or protected by the right which was infringed. Accordingly, the case should be remitted for the judge to measure the financial loss which the claimant has actually sustained. If evidence is led in relation to a hypothetical release fee, it is for the judge to determine its relevance and weight, if any. However, such a fee is not itself the measure of the claimants loss in a case of the present kind [96 100]. The other judgments Lord Sumption would also allow the appeal. He considers that damages based on a notional release fee may be awarded in three categories of cases: (i) where the claimant has an interest, such as a property right, or the governments interest in Attorney General v Blake, which extends beyond financial reparation [110 111]; (ii) where the claimant would be entitled to the specific enforcement of his right, and the notional release fee is the price of non enforcement [112 114]; and (iii) where the notional price of a release may be relevant as an evidential technique for estimating the claimants loss, such as in cases of patent infringement [115 123]. The present case may fall into this third category [106]. Lord Sumption would modify the declaration of the judge accordingly [124]. Lord Carnwath agrees with Lord Reeds analysis and takes issue with certain aspects of Lord Sumptions analysis [133 137]. Lord Carnwath also considers the impact of the reasoning on other areas of the law concerning compensation for statutory interference with property rights [138 152], and makes some observations on the date of assessment of negotiating damages in different types of cases [153 159].

John Walker, the appellant in these proceedings, started to work for Innospec Ltd on 2 January 1980. From the beginning of his employment, he was required to become a member of the firms contributory pension scheme. He continued to pay into the scheme throughout the time that he was employed by Innospec. His employment continued until Mr Walker accepted early retirement on 31 March 2003. He would have reached normal retirement age, as prescribed by the pension scheme, in 2007. Under the terms on which Mr Walker could take early retirement, he was able to maximise his pension to the level that it would have reached if he had retired in 2007. The concessions made by his employer which allowed him to do so were not made in exchange for any waiver by him of his future pension rights. Mr Walker is gay. He has lived with his male partner since 1993. They applied for a civil partnership on 5 December 2005 (the same day the Civil Partnership Act 2004 came into force) and their civil partnership was registered on 23 January 2006. They are now married. Shortly after the civil partnership was registered, Mr Walker asked Innospec to confirm that, in the event of his death, they would pay the spouses pension, which the scheme provides for, to his civil partner. They refused, because his service predated 5 December 2005. The basis of the refusal (which was confirmed after Mr Walker and his partner married) is paragraph 18 of Schedule 9 to the Equality Act 2010. This provision must be considered in greater detail later in this judgment but, in broad outline, it provides an exception to the general non discrimination rule implied into occupational pension schemes. Under this exception, it is lawful to prevent or restrict access to a benefit, facility or service to a person (a) where the right to that benefit etc accrued before 5 December 2005, or (b) which is payable in respect of periods of service before that date. If Mr Walker was married to a woman, or, indeed, if he married a woman in the future, she would be entitled on his death to the pension provided by the scheme to a surviving spouse. When the claim was issued, the value of that spouses pension was about 45,700 per annum. As things stand at present, Mr Walkers husband will be entitled to a pension of about 1,000 per annum (the statutory guaranteed minimum). The proceedings In November 2011, Mr Walker lodged a claim in the Employment Tribunal (ET) against his employers, alleging that they had discriminated against him on the ground of his sexual orientation. On 13 November 2012, the ET unanimously decided that there had been both direct and indirect discrimination on that ground. It had been argued on behalf of the respondents that there had not been direct discrimination and that, although the operation of the pension scheme amounted to indirect discrimination, this was justified. Both arguments were rejected by the ET. The discrimination was direct, the ET said, in that it involved unequal treatment of straightforwardly comparable individuals viz heterosexual married couples and same sex couples who had entered a lifetime commitment to each other. It was likewise indirect discrimination because an unwarranted requirement had been imposed in respect of the couple of the same gender. The proffered justification by the respondents (that it was necessary to have the restriction in place in order to ensure proper funding of the scheme) was found by the ET to be unsupported by sufficiently cogent evidence. The ET concluded that paragraph 18 could and should be read in a manner which would render it compliant with Council Directive 2000/78/EC of 27 November 2000 [2000] OJ L 303/16 (the Framework Directive). This establishes a general framework for equal treatment in employment and occupation. It therefore upheld Mr Walkers claim on liability and fixed a date for a remedies hearing. Innospec appealed. Its arguments on direct and indirect discrimination failed. The Employment Appeal Tribunal (EAT) rejected the argument that because, as a matter of status, a spouse is entitled to a pension or survivors benefit without the restriction which paragraph 18 places upon a civil partner, they were not comparable: [2014] ICR 645. The EATs dismissal of the argument drew on section 23(3) of the Equality Act 2010 which provides that if the protected characteristic is sexual orientation, the fact that one person is a civil partner while another is married is not a material difference between the circumstances relating to each case and on the statement of Lady Hale in Bull v Hall [2013] UKSC 73; [2013] 1 WLR 3741, para 29, to the effect that the criterion of marriage or civil partnership [should be regarded] as indissociable from the sexual orientation of those who qualify to enter it. On the question of indirect discrimination, the EAT held that the ET was entitled to conclude that Innospec had failed to produce any cogent evidence on the issue of justification but had merely relied on generalised assertions. It had thus failed to show that the indirect discrimination was proportionate. The EAT allowed Innospecs appeal, however. It held that the Framework Directive did not have retrospective effect to render unlawful inequalities based on sexual orientation that arose before the last date for its transposition. After that date the Directive provided a basis for ensuring equal treatment between those with different sexual orientation but not before. Paragraph 18 was therefore not incompatible with the Directive. The EAT further held that if, contrary to its view, paragraph 18 was, on its face, incompatible with the Directive, it was not open to it to interpret that provision in a way that rendered it compatible. The plain purpose of the paragraph was to create an exception. To nullify that exception would run directly contrary to the grain of the legislation (Ghaidan v Godin Mendoza [2004] 2 AC 557). It was also held that paragraph 18 could not be disapplied. In reaching that conclusion, the EAT referred to the judgment of Lord Mance in R (Chester) v Secretary of State for Justice [2013] UKSC 63; [2014] AC 271, at paras 61 62 where he said: The Court of Justice has accepted that, although the Treaty contemplates that the general principle of non discrimination underlying article 13 EC will be implemented by Directives, member states will be bound thereby to discontinue, disregard or set aside measures so far as they involve discrimination on a basis contrary to article 13 at least after the time for transposition of such a Directive: Kckdeveci v Swedex GmbH and Co KG (Case C 555/07) [2010] All ER (EC) 867, Rmer v Freie und Hansestadt Hamburg (Case C 147/08) [2011] ECR I 3591, para 61 . however, for the general principle of non discrimination to apply, the context must fall within the scope of Community or now Union law . The EAT considered that Mr Walkers claim, in so far as it related to an asserted entitlement to spousal pension, could not be brought within the scope of European Union (EU) law in respect of the period prior to the time limit for transposing the Framework Directive. Mr Walker appealed the EATs decision. In the Court of Appeal the Secretary of State argued that the EAT was wrong in its conclusion on direct discrimination. In effect, he repeated the argument advanced by Innospec to the EAT that civil partners and married persons are not in a comparable position in respect of pension rights because paragraph 18 itself created a difference in status between the two groups. That argument was rejected, Lewison and Underhill LJJ finding that civil partnership and marriage were indeed comparable situations in the UK and Lord Dyson MR agreeing with both: [2016] ICR 182. The Court of Appeal nevertheless dismissed Mr Walkers appeal. At the outset, Lewison LJ identified what he described as two relevant principles of EU law. These were said to be the no retroactivity principle and the future effects principle. Lewison LJ described the first of these principles as prescribing that EU legislation does not have retroactive effect unless, exceptionally, it is clear from its terms or general scheme that the legislator intended such an effect, that the purpose to be achieved so requires and that the legitimate expectations of those concerned are duly respected para 5 of his judgment. Because the Court of Appeal found that to require payment of a spouses pension to Mr Walkers husband, after Mr Walkers death, would be to give the Framework Directive retrospective effect, it concluded that the no retroactivity principle precluded this. The second principle was said to be that amending legislation applies immediately to the future effects of a situation which arose under the law as it stood before amendment, unless there was a specific provision to the contrary again para 5. The application of those principles by the Court of Appeal is central to their decision. They underpin critically their conclusion that the Framework Directives prohibition of discrimination on grounds of sexual orientation applies only to pension payable in the future in respect of service and/or contributions paid prior to 2 December 2003, the deadline for its transposition. In turn that conclusion depends vitally on the Court of Appeals analysis of the EU cases which, it says, articulate the no retroactivity and future effects principles. The issues in broad outline The appellant identified three principal issues. The first is whether the differential treatment provided for by paragraph 18 of Schedule 9 is compatible with the Framework Directive. The second issue is whether, if the differential treatment is not compatible with the Framework Directive, the appellants claim must nonetheless fail because paragraph 18 must be given effect, or whether, as the appellant contends, the paragraph must be disapplied because of its inescapable conflict with the Directive. The final issue raised by the appellant is whether a declaration of incompatibility under section 4 of the Human Rights Act 1998 should be made by this court, declaring that paragraph 18 is incompatible with article 14, read with article 8 and/or article 1 of the First Protocol of the European Convention on Human Rights and Fundamental Freedoms (ECHR). Some general considerations Until the beginning of this century there was no legal prohibition on discrimination on the grounds of sexual orientation at work. Since then, the legal status of gay and lesbian employees has been transformed, mainly because of two developments. The first was the introduction of equal treatment legislation by the European Union. The Framework Directives prohibition of discrimination in the field of employment and occupation extended to unequal treatment on the ground of sexual orientation. The deadline for transposing the Directive into domestic law was 2 December 2003 and the UK did this initially by way of regulations (the Employment Equality (Sexual Orientation) Regulations 2003) (SI 2003/1661)) and subsequently in primary legislation now incorporated into the Equality Act 2010. Part 5 of that Act prohibits direct and indirect discrimination on grounds of sexual orientation in the context of employment. The second development is domestic in origin. Parliament has legislated to recognise same sex unions, first by introducing civil partnerships equivalent to marriage (the Civil Partnership Act 2004) and subsequently by legalising same sex marriage itself (the Marriage (Same Sex Couples) Act 2013). The recognition of same sex partnerships, which is not required by EU law, was motivated by an appreciation that formal equality for same sex couples will always be deficient if they are unable to avail themselves of the legal benefits attendant on marriage. In her foreword to the consultation paper preceding the introduction of the Civil Partnership Act 2004, Jacqui Smith, the Minister of State for Industry and the Regions and Deputy Minister for Women and Equality, noted: Many [same sex couples] have been refused a hospital visit to see their seriously ill partner, or have been refused their rightful place at their partners funeral. Others find themselves unable to access employment benefits reserved only for married partners. Couples who have supported each other financially throughout their working lives often have no way of gaining pension rights. Grieving partners can find themselves unable to stay in their shared home or to inherit the possessions they have shared for years when one partner dies suddenly without leaving a will. In so many areas, as far as the law is concerned, same sex relationships simply do not exist. That is not acceptable. Although EU law does not impose any requirement on member states to recognise same sex partnerships, the European Court of Justice has held that if a status equivalent to marriage is available under national law, it is directly discriminatory contrary to the Framework Directive for an employer to treat a same sex partner who is in such a partnership less favourably than an opposite sex spouse (Maruko v Versorgungsanstalt der Deutschen Bhnen (Case C 267/06) [2008] 2 CMLR 32). Thus in the UK it is unlawful as a matter of both EU and domestic law for an employer to deny a same sex civil partner or spouse of an employee a benefit that would be provided to a spouse of the opposite sex. That is not an end of the matter, however. When it introduced civil partnerships, Parliament also decided to include an exception to the prohibition on discrimination in the context of employment. That is now contained in paragraph 18 of Schedule 9 of the Equality Act 2010, which provides in its current form: (1) A person does not contravene this Part of this Act, so far as relating to sexual orientation, by doing anything which prevents or restricts a person who is not [within sub paragraph (1A)] from having access to a benefit, facility or service (a) the right to which accrued before 5 December 2005 (the day on which section 1 of the Civil Partnership Act 2004 came into force), or (b) which is payable in respect of periods of service before that date. Mr Walker does not come within section 1A. (It concerns either (a) a man who is married to a woman, or (b) a woman who is married to a man, or (c) someone married to a person of the same sex in a relevant gender change case.) If the effect of the Framework Directive is to prohibit discrimination on the ground of sexual orientation with regard to the payment of pensions in respect of periods of service before 5 December 2005, paragraph 18 is plainly incompatible with it. The essential question, therefore, is whether that is the effect of the Directive. The rule against retroactive legislation The general rule, applicable in most modern legal systems, is that legislative changes apply prospectively. Under English law, for example, unless a contrary intention appears, an enactment is presumed not to be intended to have retrospective effect. The logic behind this principle is explained in Bennion on Statutory Interpretation, 6th ed (2013), Comment on Code section 97: If we do something today, we feel that the law applying to it should be the law in force today, not tomorrows backward adjustment of it. Such, we believe, is the nature of law. those who have arranged their affairs in reliance on a decision which has stood for many years should not find that their plans have been retrospectively upset. EU law is no different in this respect. As the Court of Appeal observed, the Court of Justice of the European Union (CJEU) has developed two principles to establish the temporal application of EU legislation the no retroactivity principle and the future effects principle. These were described by the CJEU in Land Nordrhein Westfalen v Pokrzeptowicz Meyer (Case C 162/00) [2002] 2 CMLR 1, paras 49 50 as follows: According to settled case law, in order to ensure observance of the principles of legal certainty and the protection of legitimate expectations, the substantive rules of Community law must be interpreted as applying to situations existing before their entry into force only in so far as it clearly follows from their terms, their objectives or their general scheme that such effect must be given to them (see, in particular, Bout (Case C 21/81) [1982] ECR 381, para 13, and GruSa Fleisch (Case C 34/92) [1993] ECR I 4147, para 22). It also follows from settled case law that new rules apply immediately to the future effects of a situation which arose under the old rules (see, among other cases, Licata v Economic and Social Committee (Case C 270/84) [1986] ECR 2305, para 31). In application of that principle the Court has held, in particular, that since the Act concerning the conditions of accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (OJ 1994 C 241, p 21, and OJ 1995 L 1, p 1) contains no specific conditions whatsoever with regard to the application of article 6 of the EC Treaty (now, after amendment, article 12 EC), that provision must be regarded as being immediately applicable and binding on the Republic of Austria from the date of its accession, with the result that it applies to the future effects of situations arising prior to that new member states accession to the Communities (Case C 122/96) Saldanha and MTS [1997] ECR I 5325, para 14). The policy behind the no retroactivity principle is thus similar to that described in Bennion the need to ensure legal certainty and to protect the legitimate expectations of those who have relied on the law as it previously stood. The future effects principle is simply the other side of the same coin. It is a method developed by the CJEU to avoid any retrospective effect and to ensure the immediate prospective application of legislation to ongoing legal relationships. The principle is necessary because it is not always easy to identify the point at which a right accrues. Employment provides a paradigm example. How should a new EU provision be applied to an ongoing employment relationship that had begun before the provision came into force? In Land Nordrhein Westfalen, the CJEU answered that question by holding that the application of a new rule from the date of its entry into force, to a contract of employment concluded prior to its entry into force, cannot be regarded as affecting a situation arising prior to that date (para 52). As Advocate General Jacobs explained at para 59 of his Opinion: Applying a legal provision to a fixed term employment contract which has not finally ended by the time that provision enters into force does not involve the retroactive application of the law; it entails only the immediate application of that provision to the effects in the future of situations which have arisen under the law as it stood before amendment. The CJEU draws a distinction, therefore, between the retroactive application of legislation to past situations (which is prohibited unless expressly provided for) and its immediate application to continuing situations (which is generally permitted). The distinction was elucidated by Advocate General Cosmos in Andersson v Svenska Staten (Case C 321/97) [2000] 2 CMLR 191, para 57: Retroactive effect consists in the application of the rule to situations which were permanently fixed before that rule came into force. Immediate effect, which, in principle, works likewise according to the principle tempus regit actum, consists in applying the rule to situations which are continuing. The application of these principles presents a challenge when one is dealing with entitlement to an occupational retirement pension. Conventionally, the right to a pension accumulates over decades. During the time that the right is accruing, actuarial assumptions are made based on existing legal conditions, notwithstanding that the pension is payable in the future. Those assumptions are upset when, because of changes in social values, a new equal treatment provision is introduced. It is not immediately easy to identify the point at which entitlement to a pension becomes permanently fixed whether for example at the date of retirement or when the pension is paid. The Directive So far as are material to the circumstances of this case, the relevant passages from Recitals 11 and 12 of the Framework Directive are these: (11) Discrimination based on religion or belief, disability, age or sexual orientation may undermine the achievement of the objectives of the EC Treaty, in particular the attainment of a high level of employment and social protection, raising the standard of living and the quality of life, economic and social cohesion and solidarity, and the free movement of persons. (12) To this end, any direct or indirect discrimination based on religion or belief, disability, age or sexual orientation as regards the areas covered by this Directive should be prohibited throughout the Community. Article 1 provides that The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the member states, the principle of equal treatment. Article 2 provides: 1. For the purposes of this Directive, the principle of equal treatment shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. 2. For the purposes of paragraph 1: (a) direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in article 1; indirect discrimination shall be taken to occur (b) where an apparently neutral provision, criterion or practice would put persons having a particular . sexual orientation at a particular disadvantage compared with other persons unless: (i) that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary . The appellants arguments For the appellant, Mr Martin Chamberlain QC submits that the Court of Appeal has fundamentally misconstrued the nature of the issues involved in the jurisprudence of the CJEU. Mr Chamberlain argues that the line of cases on which the Court of Appeal relied are all concerned with temporal limitations imposed on claims for equal pay for men and women, not for claims for equal treatment in relation to pension entitlement for heterosexual and gay men and women. Moreover, that limitation was, he says, introduced as an exceptional measure to deal with the consequence of the abrupt, financially catastrophic impact that retrospective entitlement to equality of pay would have had on the economies of many member states of the EU. The cases considered by the Court of Appeal In Defrenne v Sabena (Case 43/75) [1976] ECR 455; [1981] 1 All ER 122 (Defrenne II) the court held that article 119 had direct effect and could be relied on from the date by which it had required member states to implement the principle of equal pay (1 January 1962). The court recognised, however, that this would have far reaching economic consequences. In light of these and the anticipated impact of large numbers of backdated claims, the court exceptionally limited the effect in time of its judgment, so that the direct effect of article 119 could not be relied on to support claims for pay periods before the judgment date (except those that had already been launched by that date). That this was a pragmatic decision, inspired by the combination of unusual circumstances surrounding the application of article 119, is clear from the final part of the judgment. In para 70 it referred to the fact that many undertakings could not have foreseen that they might become liable for claims from the date that member states were required to implement the principle of equal pay and that many might be driven to bankruptcy in consequence. Then at paras 72 74, the court said this: 72. However, in the light of the conduct of several of the member states and the views adopted by the Commission and repeatedly brought to the notice of the circles concerned, it is appropriate to take exceptionally into account the fact that, over a prolonged period, the parties concerned have been led to continue with practices which were contrary to article 119, although not yet prohibited under their national law. 73. The fact that, in spite of the warnings given, the Commission did not initiate proceedings under article 169 against the member states concerned on grounds of failure to fulfil an obligation was likely to consolidate the incorrect impression as to the effects of article 119. 74. In these circumstances, it is appropriate to determine that, as the general level at which pay would have been fixed cannot be known, important considerations of legal certainty affecting all the interests involved, both public and private, make it impossible in principle to reopen the question as regards the past. It is clear from these passages that the CJEU was not propounding a general rule relating to the retrospective application of legislation. Rather, it was expressing an exception to the general rule that judicial decisions will generally have retrospective application. The statement in para 5 of Lewison LJs judgment (see para 12 above) that EU legislation does not have retroactive effect unless, exceptionally, it is clear from its terms or general scheme that the legislator intended such an effect, though no doubt correct, is not supported in any way by Defrenne II. Moreover, the statement that the legitimate expectations of those concerned are required to be duly respected must also be approached with some caution in the context of judicial decisions, which are generally retroactive. In Defrenne II, it was the combination of the expectations of undertakings (fuelled as they were by the inaction of the Commission) and the circumstance that considerable financial hardship might accrue which led the court to take the exceptional course which it did. Bilka Kaufhaus GmbH v Weber von Hartz (Case C 170/84) [1986] ECR 1607; [1986] 2 CMLR 701 determined that benefits under an occupational pension scheme amounted to pay within the meaning of article 119, being consideration received by the worker from the employer in respect of his employment (para 22). The issue whether there was entitlement to benefits deriving from service before article 119 should have been implemented in Germany did not arise. Barber v Guardian Royal Exchange Assurance Group (Case C 262/88) [1990] ECR I 1889; [1991] 1 QB 344 involved a different question from that in Bilka Kaufhaus. The issue in Barber was whether benefits under contracted out schemes fell within pay for the purposes of article 119. The court held that they did para 28. Under the cross heading, Effects of this judgment ratione temporis the court considered in paras 40 44 the question whether the judgment should be restricted in relation to any retrospective effect. Some passages from these paragraphs are of significance in understanding whether this case has any bearing on the principle of non retroactivity of legislation. At para 40 the court recorded the submissions of the Commission and the UK government: 40. the Commission has referred to the possibility for the court of restricting the effect of this judgment ratione temporis in the event of the concept of pay, for the purposes of the second paragraph of article 119 of the Treaty, being interpreted in such a way as to cover pensions paid by contracted out private occupational schemes, so as to make it possible to rely on this judgment only in proceedings already pending before the national courts and in disputes concerning events occurring after the date of the judgment. For its part the United Kingdom emphasised at the hearing the serious financial consequences of such an interpretation of article 119. The number of workers affiliated to contracted out schemes is very large in the United Kingdom and the schemes in question frequently derogate from the principle of equality between men and women, in particular by providing for different pensionable ages. Referring to its judgment in Defrenne II, the court then made clear in para 41 that taking the course that the Commission and the UK government had invited it to follow was only possible as an exceptional measure. It said that it may, by way of exception, taking account of the serious difficulties which its judgment may create as regards events in the past, be moved to restrict the possibility for all persons concerned of relying on the interpretation which the court, in proceedings on a reference to it for a preliminary ruling, gives to a provision. (emphasis added) Another factor in play in the courts decision to restrict the effect of its judgment was that, because of earlier Directives, the member states and the parties concerned were reasonably entitled to consider that article 119 did not apply to pensions paid under contracted out schemes and that derogations from the principle of equality between men and women were still permitted in that sphere para 43. This factor carries echoes of the situation which pertained in Defrenne II. As in that case, the decision in Barber does not constitute an example of a general principle of non retroactivity for EU legislation. It is, rather, an instance of curtailing what would otherwise be the logical application of the judgment to existing and precedent situations for essentially practical reasons. The scope of the Barber limitation was considered in Ten Oever v Stichting Bedrijfspensioenfonds voor het Glazenwassers en Schoonmaakbedrijf (Case C 109/91) [1993] ECR I 4879; [1995] ICR 7. That case related to an occupational pension scheme. Until 1 January 1989 rules of the scheme provided for survivors pensions for widows only, but after that date widowers also were entitled to pensions. After the death in October 1988 of the applicants wife, who had been a member of the scheme, he requested but was refused the grant of a widowers pension. He brought proceedings for a declaration that he was entitled to the pension because such a pension was to be treated as pay within the meaning of article 119 of the EEC Treaty and that no discrimination between men and women was permissible. The national court referred to the Court of Justice the questions whether pay in article 119 covered non statutory benefits to surviving relations and, if so, from what date the applicant could claim a widowers pension. Various possible interpretations of the effect of the Barber limitation were considered by the judge rapporteur and the Advocate General see AG10. One of these was to apply equal treatment to all pension payments made after 17 May 1990 [the date of the Barber judgment], including benefits or pensions which had already fallen due and irrespective of the date of the periods of service during which the pension accrued. Advocate General Van Gerven explained in AG13 17 why he considered that it was not appropriate to do so. An important passage appears at AG13: Before I take my position on the effect in time of Barber v Guardian Royal Exchange Assurance Group (Case C 262/88) [1990] ICR 616, I consider it important to clarify the rationale which led the court to introduce that limitation into its judgment. That that is an unusual step needs no demonstration, given the declaratory character which in principle attaches to the courts interpretation of Community law pursuant to article 177 of the EEC Treaty: That was formulated by the court in Amministrazione delle Finanze dello Stato v Denkavit Italiano Srl (Case 61/79) [1980] ECR 1205, 1223 1224, paras 16 18 and Amministrazione delle Finanze dello Stato v Meridionale lndustria Srl (Cases 66/79, 127/79, 128/79) [1980] ECR 1237, 1260 1261, paras 9 11: The interpretation which, in the exercise of the jurisdiction conferred on it by article 177, the Court of Justice gives to a rule of Community law clarifies and defines where necessary the meaning and scope of that rule as it must be or ought to have been understood and applied from the time of its coming into force. It follows that the rule as thus interpreted may, and must, be applied by the courts even to legal relationships arising and established before the judgment ruling on the request for interpretation, provided that in other respects the conditions enabling an action relating to the application of that rule to be brought before the courts having jurisdiction, are satisfied. As the court recognised in its judgment of 8 April 1976 in Defrenne v Sabena (Case C 43/75) [1976] ECR 455, it is only exceptionally that the court may, in application of the general principle of legal certainty inherent in the Community legal order and in taking account of the serious effects which its judgment might have, as regards the past, on legal relationships established in good faith, be moved to restrict for any person concerned the opportunity of relying on the provision as thus interpreted with a view to calling in question those legal relationships (emphasis added) Once again, the exceptionality of restricting the full availability of a right declared by the CJEU as deriving from an EU measure is emphasised. AG Van Gerven was clearly heavily influenced to the view that a restriction on the availability of the right was essential because of the dire financial consequences that would otherwise follow. They had been described in the Judge Rapporteurs report at p 86. If the option discussed above had been chosen, the additional financial impact on occupational pension schemes would be at least 45 billion, and [under another canvassed option] 33 billion. [To these figures would have to be] added approximately 2 billion per annum required in any event to meet the effect of equalisation of pensions for the future. It is unsurprising, therefore, that in para 26, AG Van Gerven stated that the financial consequences of allowing article 119 to have retroactive effect would be catastrophic. It is important to recognise, however, that AG Van Gerven accepted that a literal reading of the Barber judgment would apply equal treatment to all pension payments made after 17 May 1990, including those which had already fallen due irrespective of the date of the periods of service during which the pension accrued. At para 19 he said: On a literal reading, it may indeed be asserted that the effects of an occupational pension are only fully exhausted once the pension has been paid in full to the retired employee. [He then explained why that could not be permitted by continuing ] Such a reading would mean that the temporal limitation of the judgment decided on by the Court would have almost no significance and that the useful effect of the limitation imposed by the Court would largely vanish. The Advocate General expanded on his reasons for adopting the more restrictive interpretation of Barber in para 21: The fact that the good faith of the parties concerned, in particular of employers and occupational pension funds, is to be taken into account means that, before Barber, those parties, in the belief that article 119 was not applicable, could promise pensions and make payments based on a different pensionable age for men and women. The financial balance of the pension schemes concerned could therefore be maintained on that basis before the judgment. Only in respect of periods of service after Barber did employers know that, in administering occupational pension schemes and calculating the contributions to be made to them, account had to be taken of a pensionable age which was the same for men and women. If no account were taken of their good faith and that of pension scheme administrators, that would entail serious financial problems for pension schemes. All these factors argue in favour of not allowing obligations entered into and payments made before the date of the Barber judgment to be affected. The court accepted the more restrictive definition, stating at para 19: Given the reasons explained in Barber [1990] ICR 616, 672, para 44, for limiting its effects in time, it must be made clear that equality of treatment in the matter of occupational pensions may be claimed only in relation to benefits payable in respect of periods of employment subsequent to 17 May 1990, the date of the judgment in Barber, subject to the exception in favour of workers or those claiming under them who have, before that date, initiated legal proceedings or raised an equivalent claim under the applicable national law. The court thus allied itself closely to the reasons in Barber (discussed in paras 33 and 34 above) for espousing and extending to occupational pension schemes a similar restriction on the retroactive effect of article 119. Vroege v NCIV Instituut voor Volkshuisvesting BV (Case C 57/93) [1994] ECR I 4541; [1995] 1 CMLR 881, concerned a pension scheme that until 1990 did not admit married women. Among the questions referred to the CJEU was whether the Barber limitation applied to Mrs Vroeges claim for equal access to the scheme. The court said that it was important to remember the context in which it was decided to limit the effects in time of the Barber judgment (para 20), and reaffirmed the two essential criteria for such a limitation, viz, the general principle of legal certainty and the serious difficulties which its judgment may create as regards the past for legal relations established in good faith (para 21), both of which had been met in Barber (paras 22 25). On that basis, it stated that the Barber limitation concerns only those kinds of discrimination which employers and pension schemes could reasonably have considered to be permissible owing to the transitional derogations for which Community law provided and which were capable of being applied to occupational pensions para 27. The Court of Appeal in the present case understood the decision in Ten Oever to establish a general principle of EU law, to the effect that entitlement to a survivors pension is permanently fixed as it is earned. It concluded that the same principle could be applied where the law is changed not by a judgment, but by legislation. It was influenced to this view by the opinion that the same policy considerations lay behind the no retroactivity principle and the CJEUs power to limit the retrospective application of its judgments. To an extent, the same policy considerations are in play. In both scenarios one can acknowledge the need to ensure legal certainty and to protect the legitimate expectations of those who rely on the law as it was thought to be. But it is vital to keep the two concepts distinct. No retroactivity and future effects are principles of law which apply to all EU legislation, unless a contrary intention can be found. The Barber exception is an example of a technique used by the CJEU to limit the generally retroactive application of its judgments, which it will only exercise in the most exceptional circumstances and where the impact would be truly catastrophic. The court limits the temporal application of its judgments in cases where reliance has been placed on a different understanding of the law and legitimate expectations may be upset, but only in the most special circumstances. Therefore, how the court exceptionally applies a temporal limitation to one of its rulings has no inevitable bearing on the temporal application of legislation as a matter of principle. Mr Chamberlain submits that all the cases considered by the Court of Appeal and the EAT, in so far as they concerned article 119, involved the application of the exceptional limitations imposed in Defrenne II and Barber. None expressed a general rule that immediate application of EU legislation at the point of enactment should normally be avoided. On the contrary, the consistent theme of the CJEU jurisprudence was that rights established by legislation should be activated at the time that they were stated to exist. I agree with Mr Chamberlains analysis of the relevant jurisprudence and I turn now to consider his principal argument that two recent decisions of the Grand Chamber of the CJEU (which troubled the Court of Appeal because of their perceived incongruence with what that court considered to be the fundamental principles governing retroactivity) put success for Mr Walkers claim beyond doubt. Those decisions are Maruko v Versorgungsanstalt der Deutschen Bhnen [2008] ECR I 1757; [2008] All ER (EC) 977; (Maruko) and Rmer v Freie und Hansestadt Hamburg (Case C 147/08) [2011] ECR I 3591, [2013] 2 CMLR 11 (Rmer). Maruko The claimant in Maruko was a registered life partner of a designer of theatrical costumes who had been a member of the German theatre pension institution (VddB). After his partners death in 2005, the VddB refused Mr Maruko the pension which would have been paid automatically to a surviving spouse. He brought a claim before the Bavarian Administrative Court, which referred several questions to the Court of Justice. The most pertinent of these for present purposes is the fifth. This was whether entitlement to the survivors benefits should be restricted to the period from 17 May 1990 in the light of Barber, as considered in Coloroll Pension Trustees Ltd v Russell (Case C 200/91) [1995] All ER (EC) 23; [1994] ECR I 4389. The spouses pension in issue arose from Mr Marukos service and contributions during a period that started in 1959 and ended (in all likelihood) before 2003. Although the question proceeded on the premise that any limitation to the relevant period of service would be from the date of the Barber judgment, the CJEUs summary of the issue makes it clear that it considered that wider considerations were potentially at stake, for it said at para 74 that the referring court seeks to know whether entitlement to the survivors benefit must be restricted in time and in particular to periods subsequent to [the Barber judgment]. The pension fund in the Maruko case presented an argument similar to that advanced by the Secretary of State in the present appeal. It suggested that, to take account of service before the Framework Directives implementation deadline would give the Directive retrospective effect. The court summarised that argument in para 75: The VddB considers that the case which led to the judgment in Barbers case differs, on its facts and in law, from the case in the main proceedings and that Directive 2000/78 cannot be given retroactive effect by means of a decision that the Directive applied at a date prior to the date of expiry of the period allowed to member states for its transposition. At paras 77 79, the CJEU unambiguously rejected that argument: 77. It is clear from the case law that the court may, exceptionally, taking account of the serious difficulties which its judgment may create as regards events in the past, be moved to restrict the possibility for all persons concerned of relying on the interpretation which the court gives to a provision in response to a reference for a preliminary ruling. A restriction of that kind may be permitted only by the court, in the actual judgment ruling upon the interpretation sought (see inter alia Barber at para 41; and Meilicke v Finanzamt Bonn Innenstadt (Case C 292/04) [2007] 2 CMLR 19 at para 36). 78. There is nothing in the documents before the court to suggest that the financial balance of the scheme managed by VddB is likely to be retroactively disturbed if the effects of this judgment are not restricted in time. 79. It follows from the foregoing that the answer to the fifth question must be that there is no need to restrict the effects of this judgment in time. The material ruling of the court was that The combined provisions of articles 1 and 2 of Directive 2000/78 preclude legislation such as that at issue in the main proceedings under which, after the death of his life partner, the surviving partner does not receive a survivors benefit equivalent to that granted to a surviving spouse. The effect of this, as regards Mr Walker and his husband, is unmistakable. If he survives Mr Walker, his husband is entitled to a spouses pension on the same basis as would a wife. This was a case of a pensioner who had been in a registered life partnership. His claim was for the same supplementary pension payments that were given to married pensioners. His pension rights arose from contributions paid during a period of service from 1950 until 31 May 1990. The CJEU held that he was entitled to equal treatment if German life partnerships were comparable to marriage. One of the supplementary questions which the court considered was whether, if Mr Rmer was entitled to pension payments, their amount should be calculated only by reference to the contributions that were made after the Barber judgment. Advocate General Jskinen approached this question on the basis that any limitation of the period of service to be considered would require a restriction on the otherwise natural application of the principle that contemporaneous discrimination was forbidden unless exceptional circumstances would justify such a restriction (AG157 158). As it happened, no party had requested one in the Rmer case, and it was, moreover, by no means apparent from the documents in the case that the financial balance of the supplementary pension scheme managed by the defendant in the main proceedings risks being retroactively disturbed by the lack of such limitation. (AG159) In the circumstances, the CJEU held that Barber had no bearing on Mr Rmers entitlement. Neither the Federal Republic of Germany nor the Freie und Hansestadt Hamburg had suggested any limitation in time of the effects of the present judgment and no evidence submitted to the court indicated that they should be so limited. From this it is clear that, unless evidence establishes that there would be unacceptable economic or social consequences of giving effect to Mr Walkers entitlement to a survivors pension for his husband, at the time that this pension would fall due, there is no reason that he should be subjected to unequal treatment as to the payment of that pension. The decisions of the EAT and the Court of Appeal Mr Chamberlain submitted that the EAT wrongly took AG Van Gervens description of pension benefits in Ten Oever as deferred pay as equating the time at which a pension right accrues with the time at which any discrimination in the provision of resulting benefits is to be judged. I agree that the EAT was wrong to do so. The point of unequal treatment occurs at the time that the pension falls to be paid. If Mr Walker married a woman long after his retirement, she would be entitled to a spouses pension, notwithstanding the fact that they were not married during the time that he was paying contributions to his pension fund. Whether benefits referable to those contributions are to be regarded as deferred pay is neither here nor there, so far as entitlement to pension is concerned. Mr Walker was entitled to have for his married partner a spouses pension at the time he contracted a legal marriage. The period during which he acquired that entitlement had nothing whatever to do with its fulfilment. As AG Jskinen said in Rmer at AG160: In the hypothetical case that Mr Rmer had been able to enter into a marriage in October 2001, instead of a life partnership, the Freie und Hansestadt Hamburg would have had to increase the supplementary pension paid to him . The financing of the retirement scheme concerned must have been planned taking into account the possibility of changes in the marital status of pensioners. Likewise, the financing of Innospecs retirement scheme should have been planned taking into account a possible change in Mr Walkers marital status. He could not have been denied entitlement to a spouses pension if, perfectly legally, he married a woman after he retired. His marriage to his current partner is just as legal as would be a heterosexual marriage. His entitlement to a spouses pension is equally well founded. The Court of Appeal considered that the Barber case explained how the future effects principle should be applied to the Framework Directive. At para 11 of his judgment, Lewison LJ said of the exception in Barber, The concept underpinning this limitation on the effect of the judgment is, in my judgment, the same concept that distinguishes between situations that are permanently fixed or established and those that are not. In fact, none of the Barber line of cases mentions the future effects principle. As Mr Chamberlain submitted, this is because that principle is concerned with the effects of legislation, whereas Barber and Ten Oever dealt with temporal limitations on judgments. The approach of the Court of Appeal led it to the same conclusion as the EAT, in equating the time at which a right to a pension accrues with the time at which discrimination in the provision of benefits is to be judged. The implication of this approach was considered by Professor Wintemute in an article in (2014) 43 ILJ 506, 510, commenting on the EAT judgment when he said: The implication of the EATs analogy was that, from 1980 to 2003, Mr Walker had been paid the lower gay wage (one with no expectation that a survivors pension would ever be paid to the employees surviving partner despite the employees equal contributions to the pension scheme), rather than the higher heterosexual wage (one with an expectation that a survivors pension might be paid to the employees surviving spouse based on the employees contributions to the pension scheme). This illustrates the essential flaw in the approach of the EAT and the Court of Appeal. The salary paid to Mr Walker throughout his working life was precisely the same as that which would have been paid to a heterosexual man. There was no reason for the company to anticipate that it would not become liable to pay a survivors pension to his lawful spouse. The date when that pension will come due, provided Mr Walker and his partner remain married and his partner does not predecease Mr Walker, is the time at which denial of a pension would amount to discrimination on the ground of sexual orientation. Dealing with Maruko Lewison LJ said that the fifth question which the referring court had posed (set out at para 47 above) was very puzzling para 37. He suggested (at para 40) that the court had given an unnecessary answer to the wrong question. Undoubtedly, the referring courts reference to 17 May 1990 was misplaced how could that date, being the date of the Barber judgment on equal pay under article 119, have any possible relevance to the temporal application of the judgment in Maruko on equal treatment under the Framework Directive? But the Court plainly understood the referring court as asking essentially whether the effect of its judgment should be limited in time. That question is only puzzling or unnecessary if one proceeds on the assumption that there is a general rule that the time at which a pension right accrues should be equated with the time at which discrimination in the provision of resulting benefits occurs. For the reasons given earlier, I do not consider that this is correct. The response given to the fifth question in Maruko is therefore perfectly explicable and provides the inescapable answer in Mr Walkers case. In order to deal with the Court of Appeals treatment of the Rmer decision, it is necessary to say a little more about the questions referred to the CJEU in that case. The fifth question had two parts which the CJEU interpolated as 5(a) and (b). Question 5(a) asked whether, if the domestic legislation contravened the Framework Directive, Mr Rmer was entitled to supplementary pension payments in line with married people before that legislation was amended. This was answered affirmatively by the court see paras 53 56. Question 5(b) was whether, if the domestic legislation contravened the Directive, Mr Rmer was entitled to backdated supplementary pension payments even for the period before the transposition deadline for the Framework Directive. Question 6 was whether, if Mr Rmer was entitled to supplementary pension payments, the amount of those payments should be calculated by reference to the contributions made after the Barber judgment. Mr Rmer had conceded that the answer to question 5(b) might be that he could only receive backdated supplementary payments from 2003. But, as far as question 6 was concerned, his pension payments should, in any event, be calculated from that date on the basis of all the contributions he has paid, irrespective of their date. A G Jskinen AG142. The CJEU accepted that Mr Rmer was not entitled to payments that were due to be paid before 2003 (because the Directive had not been implemented before then) but that when it came to the calculation of the quantum of the pension payments, the fact that the contributions underpinning the entitlement had been paid before then made no difference para 66. Put simply, Mr Rmer could not claim pension payments before 2003 but the pension due to him after that date should be calculated on the basis of all the years during which entitlements to them had been built up. Translating that to Mr Walkers case, the message is clear. He could not have claimed entitlement to the payment of the pension before the transposition of the Directive into UK law but, once that happened, the rate of his pension was to be based on all the years of his service, even those which preceded the date of the transposition. The Court of Appeal misunderstood Rmer. At para 43, Lewison LJ said that the CJEU had held that entitlement to equal treatment did not become part of EU law until the time limit for transposing the Directive had expired. On that basis, the answer to question 5 was plainly a negative answer: the entitlement did not apply before the deadline for transposing the Directive (para 44). It was, of course, true that entitlement did not arise until the Directive had to be transposed, but this does not address the question of what the entitlement was after the deadline was reached. Lewison LJ thought that question 6 was conditional on an affirmative answer to question 5 and since, in his estimation, a negative answer had been given to question 5, question 6 was irrelevant. This was, I am afraid, wrong. In the first place, both parts of question 5 had not been given a negative answer. Question 5(a) had been answered affirmatively. More importantly, question 6 remained supremely relevant to Mr Walkers case. His entitlement to a spouses pension did not materialise until after the transposition of the Directive but the response to question 6 provided the key to the nature of the right that Mr Walker then acquired. It was entitlement to a pension calculated on the basis of his years of service before the Directive was transposed. Parris v Trinity College Dublin The case Parris v Trinity College Dublin (Case C 443/15) [2017] Pens LR 3 was a reference to the CJEU from the Labour Court in Ireland. It also concerned a claim for a survivors pension under the Framework Directive. Dr Parris had entered a civil partnership with his partner of 30 years in the UK on his 63rd birthday in 2009. This civil partnership was not recognised in Ireland until a change in the law on 12 January 2011. Dr Parris had been employed as a lecturer by Trinity College Dublin (TCD) from 1972 to 2010. He took early retirement in 2010. He had been a member of TCDs non contributory occupational pension scheme. The scheme provided a survivors pension, but only where the marriage or civil partnership took place before the members 60th birthday. The questions referred to the CJEU concerned whether TCDs refusal to provide the survivors pension to Dr Parris civil partner, by reference to that rule, constituted indirect discrimination on sexual orientation grounds, direct age discrimination, and/or discrimination on a combination of those grounds. The questions referred did not concern Dr Parriss period of service. In fact, his employment almost entirely predated the deadline for transposing the Framework Directive, and had ended before Irelands recognition of civil partnerships. The UK nevertheless made submissions to the CJEU which broadly mirror those of the Secretary of State in the present appeal. It was submitted that since Dr Parriss pension entitlements were based almost entirely on periods of service completed before the coming into force of the Directive, they could not be subject to the principle of equal treatment. Advocate General Kokott rejected those submissions. At paras 39 42 of her Opinion she said 39. that objection is unfounded. For it is settled case law that a new rule of law applies from the entry into force of the act introducing it, and, while it does not apply to legal situations that have arisen and become definitive under the old law, it does apply to their future effects, and to new legal situations. It is otherwise, subject to the principle of the non retroactivity of legal acts, only if the new rule is accompanied by special provisions which specifically lay down its conditions of temporal application. 40. Those principles also apply to the temporal application of Directive 2000/78. A restriction of the temporal scope of that Directive, in derogation from the aforementioned general principles, would have required an express stipulation to that effect by the EU legislature. No such special provision has been made, however. 41. Consequently, the Court has already declared Directive 2000/78 to be applicable to cases concerning occupational and survivors pension schemes the entitlements under which had arisen much as they did here long before the entry into force of that Directive and any contributions or reference periods in respect of which also predated the entry into force of that Directive. Unlike in Barber, for example, concerning article 119 of the EEC Treaty (now article 157 TFEU), the Court expressly did not apply a temporal restriction to the effects of its case law relating to occupational pension schemes under Directive 2000/78. I would add that there was, moreover, no longer any need for such a temporal restriction, since it had become sufficiently apparent to all the interested parties since the judgment in Barber that occupational pensions fall within the EU law concept of pay and are subject to any prohibitions on discrimination. It is true that the Court has held that the prohibition on 42. discrimination contained in Directive 2000/78 cannot give rise to claims for payments in respect of periods in the past that predate the time limit for transposing that Directive. However, the recognition of the right to a future survivors pension, at issue in the present case, is unaffected by that principle because such recognition is concerned only with future pension scheme payments, even though the calculation of those payments is based on periods of service completed or contributions made in the past. These statements are entirely consistent with the analysis of Maruko and Rmer which Mr Chamberlain offered and which I accept. The CJEU held that Dr Parriss case did not amount to discrimination at all, citing the principle in Maruko that legislation treating surviving civil partners less favourably than surviving spouses will amount to direct discrimination if the two are in comparable situations under national law, but noting that the rule in issue in Dr Parriss case applied equally to opposite sex marriages and same sex civil partnerships. His inability to meet the qualifying criterion for the survivors pension resulted from the lack of provision for same sex partnerships under Irish law at the time of his 60th birthday and it was for member states to decide both whether to make such provision and, if so, whether to make it retrospective. The CJEU did not, therefore, need to address the UK governments argument that Dr Parriss claim fell outside the temporal scope of the Directive but nothing in its judgment cast doubt on AG Kokotts clearly expressed opinion that the submissions of the UK were incompatible with Maruko and Rmer. Conclusion on the first issue I would therefore hold that Mr Walkers husband, provided he does not predecease him, and that they remain married at the time of Mr Walkers death, is entitled under the Framework Directive to a spouses pension calculated on the basis of all the years of Mr Walkers service with Innospec. On that account, paragraph 18 of Schedule 9 is incompatible with the Framework Directive. In particular, paragraph 18(1)(b) which authorises a restriction of payment of benefits based on periods of service before 5 December 2005 cannot be reconciled with what I consider to be the plain effect of the Directive. Must effect be given to paragraph 18 or should it be disapplied the second issue? The appellant claims that, applying the principles established by Kckdeveci v Swedex GmbH and Co KG (Case C 555/07) [2010] 2 CMLR 33, paragraph 18 must be disapplied. As Lord Mance explained in R (Chester) v Secretary of State for Justice in the passage cited at para 10 above, for the general principle of non discrimination to apply, the context must fall within EU law. Both the EAT and the Court of Appeal considered that non discrimination did not become a fundamental principle of EU law until the transposition deadline of the Framework Directive Lewison LJ at para 49 and Underhill LJ at para 59. Mr Chamberlain submits that this is incorrect, arguing that the CJEU did not say that non discrimination only became a general principle of EU law in 2003. Its relevant finding was that Mr Rmers claim for equal pension benefits only came within the material scope of EU law from that time. Whether that is right or not need not be decided finally in this case because Mr Chamberlains second argument disposes of the issue. That is that non discrimination on grounds of sexual orientation is now a principle of EU law. It follows that any contemporary denial to his husband of a spouses pension, calculated on all the years of Mr Walkers service, would be incompatible with the Framework Directive. In so far as paragraph 18 authorises that, it must be disapplied on the basis of the principles articulated in Kckdeveci and Chester. The third issue In light of my conclusion on the first two issues, it is not necessary to decide the third issue, viz whether paragraph 18 is incompatible with Mr Walkers rights under article 14 of ECHR, when read together with article 8 and article 1 of the First Protocol. Final conclusion I would allow Mr Walkers appeal and declare that, in so far as it authorises a restriction of payment of benefits based on periods of service before 5 December 2005, paragraph 18 of Schedule 9 to the 2010 Act is incompatible with the Framework Directive and must be disapplied. I would make a further declaration that Mr Walkers husband is entitled to a spouses pension calculated on all the years of his service with Innospec, provided that at the date of Mr Walkers death, they remain married. LORD CARNWATH AND LORD HUGHES: We agree that Mr Walkers appeal should be allowed, but on more limited grounds. This appeal was heard at the same time as the appeal in OBrien v Ministry of Justice [2017] UKSC 46, in which the court has decided to refer to the European court a question relating to the pension entitlement of part time workers. As explained in the judgment of Lord Reed, that arises from a difference among the members of the court as to the interpretation of the Ten Oever line of authority (as he describes it para 20). In so far as Lord Kerrs reasoning in the present case (in particular, paras 35 46) turns on his interpretation of that line of authority, we prefer to await the authoritative ruling of the European court. The present case is in our view distinguishable substantially for the reasons given by Lord Kerr at paras 56 58. On any view Mr Walker had earned a right to a pension for his spouse. That right, and the possibility of a change in his marital status, should have been taken into account in the financing of the scheme. The question who qualified as his spouse fell to be answered at a date when it was unlawful under the Directive to discriminate as between heterosexual and same sex marriages. At that time, as Lord Kerr says (para 56), he was entitled to have for his married partner a spouses pension; The period during which he acquired that entitlement had nothing whatever to do with its fulfilment. To the extent that paragraph 18 of Schedule 9 to the Equality Act 2010 restricted that right it was incompatible with European law, and must be disapplied.

UK-Abs

John Walker, the appellant in these proceedings worked for the respondent, Innospec Ltd, from 1980 until his retirement in 2003. Throughout that time he made regular contributions to the firms occupational pension scheme. Mr Walker is gay and has lived with his male partner since 1993. They entered into a civil partnership on 23 January 2006 and are now married. In 2006 Mr Walker asked Innospec to confirm that, in the event of his death, they would pay the spouses pension, which the scheme provides for, to his civil partner. Innospec refused, because his service predated 5 December 2005, the date that civil partnerships were introduced in the UK, and any discriminatory treatment is therefore permitted under paragraph 18 of Schedule 9 to the Equality Act 2010. This provides that it is lawful to discriminate against an employee who is in a civil partnership or same sex marriage by preventing or restricting them from having access to a benefit, facility or service the right to which accrued before 5 December 2005 or which is payable in respect of periods of service before that date. If Mr Walker was married to a woman (or indeed if he married a woman in the future) she would be entitled on his death to a spouses pension of about 45,700 per annum. As things stand at present, Mr Walkers husband will be entitled to a pension of about 1,000 per annum (the statutory guaranteed minimum). Mr Walkers claim for discrimination was upheld by the Employment Tribunal, but Innospecs appeal to the Employment Appeals Tribunal was allowed, and Mr Walkers appeal to the Court of Appeal was dismissed. He now appeals to the Supreme Court. The Supreme Court unanimously allows Mr Walkers appeal and makes a declaration that (i) paragraph 18 of Schedule 9 to the Equality Act 2010 is incompatible with EU law and must be disapplied and (ii) Mr Walkers husband is entitled on his death to a spouses pension, provided they remain married. Lord Kerr (with whom Lady Hale and Lord Reed agree) gives the lead judgment. Lord Carnwath and Lord Hughes give a judgment concurring in part. EU Directive 2000/78/EC (the Framework Directive) requires member states to prohibit discrimination in the field of employment and occupation on various grounds including sexual orientation. The deadline for transposing the Directive into domestic law was 2 December 2003 and the UK did this within the deadline through legislation now incorporated into Part 5 of the Equality Act 2010 [17]. Parliament also, however, provided for the exception now contained in paragraph 18 of Schedule 9 to the 2010 Act restricting benefits payable in respect of periods of service before 5 December 2005. The essential question in this appeal is whether paragraph 18 of Schedule 9 is incompatible with the Framework Directive [20 21]. Although EU law does not impose any requirement on member states to recognise same sex partnerships, the European Court of Justice (CJEU) has held that if a status equivalent to marriage is available under national law, it is directly discriminatory contrary to the Framework Directive for an employer to treat a same sex partner who is in such a partnership less favourably than an opposite sex spouse. In the UK, Parliament has chosen to recognise same sex partnerships, first through the introduction of civil partnerships and subsequently through the recognition of same sex marriage itself [17 19]. The general rule under EU law, as in most modern legal systems, is that legislative changes apply prospectively. The CJEU has developed two principles to establish the temporal application of EU legislation the no retroactivity principle and the future effects principle [22 23]. These principles draw a distinction between the retroactive application of legislation to past situations (which is prohibited unless expressly provided for) and its immediate application to continuing situations (which is generally permitted). The relevant question is whether the legal situation has become permanently fixed [25]. The application of these principles presents a challenge when one is dealing with entitlement to an occupational retirement pension, the right to which may accumulate over decades and it may not be easy to identify the point at which it becomes permanently fixed [26]. The Court of Appeal, in dismissing Mr Walkers appeal, wrongly concluded that entitlement to a survivors pension is permanently fixed at the date of retirement [43]. It was influenced in this view by a line of the CJEUs case law exceptionally limiting the temporal application of one of its judgments relating to equal pay for men and women (the Barber line of case law). In the opinion of the majority of the Court, these cases are not relevant to the application of the Framework Directive in a case such as this. How the CJEU exceptionally applies a temporal limitation to one of its rulings has no inevitable bearing on the temporal application of legislation as a matter of principle [46]. In any event, two recent decisions of the Grand Chamber of the CJEU concerning the equal treatment rights of same sex partners to survivors pensions put success for Mr Walkers claim beyond doubt (Case C 267/06 Maruko v Versorgungsanstalt der Deutschen Bhnen and Case C 147/08 Rmer v Freie und Hansestadt Hamburg) [46]. From these cases, it is clear that, unless evidence establishes that there would be unacceptable economic or social consequences of giving effect to Mr Walkers entitlement to a survivors pension for his husband, at the time that this pension would fall due, there is no reason that he should be subjected to unequal treatment as to the payment of that pension [55]. Mr Walkers husband, provided he does not predecease him, and that they remain married at the time of Mr Walkers death, is therefore entitled under the Framework Directive to a spouses pension calculated on the basis of all the years of Mr Walkers service with Innospec. On that account, paragraph 18 of Schedule 9, in so far as it authorises a restriction of payment of benefits based on periods of service before 5 December 2005, is incompatible with the Framework Directive and must be disapplied [77]. Lord Carnwath and Lord Hughes agree with the majority that Mr Walkers appeal should be allowed, but on the more limited basis that the question of who qualified as his spouse fell to be determined after the Directive had come into force. They prefer to leave the broader question of whether the Barber line of case law is of any relevance to the application of the Framework Directive to be determined by the CJEU in OBrien v Ministry of Justice [2017] UKSC 46, in which the Court has decided to refer to the CJEU a question relating to the pension entitlement of part time workers [77 78].

Under section 37 of the Solicitors Act 1974 the Law Society may make rules requiring solicitors to maintain professional indemnity insurance with authorised insurers and specifying the terms on which indemnity is to be available. As the House of Lords explained in Swain v Law Society [1983] AC 598, the power is intended to be for the protection of the public as well as the premium paying solicitor. The rules made by the Law Society require such insurance to satisfy certain Minimum Terms and Conditions (MTC). There is a prescribed minimum figure for which solicitors must be insured for any one claim, but clause 2.5 of the MTC permits the aggregation of claims in the following circumstances: The insurance may provide that, when considering what may be regarded as one Claim (a) one act or omission; all Claims against any one or more Insured arising from: (i) (ii) one series of related acts or omissions; (iii) matters or transactions; (iv) similar acts or omissions in a series of related matters or transactions the same act or omission in a series of related will be regarded as one Claim. Sub clauses (iii) and (iv) were added in 2005 in circumstances to which I will refer. The dispute in this appeal arises from sub clause (iv). More specifically, it is about the meaning of the expression related matters or transactions. The claims against the solicitors In 2013 two actions were begun in the Chancery Division (EWHC 13E01675 and EWHC 13C02077) against two now defunct firms of solicitors. One of the firms, the International Law Partnership LLP, was the successor in practice of the other, John Howell & Co. It is unnecessary for present purposes to distinguish between the two firms, and I will refer to them as the solicitors. The actions were brought by a total of 214 claimants. The claimants in 13E01675 were all investors in a project to develop holiday resorts on a plot near Izmir, Turkey, referred to as Peninsula Village. The claimants in 13C02077 were all investors in a similar project at Marrakech, Morocco. A certain number of investors in the Peninsula Village development subsequently transferred their investment to the Marrakech development because of planning delays. They have been referred to as the crossover investors. I will refer to the investors collectively as the investors or, where appropriate, as the Peninsula Village investors, the Marrakech investors or the crossover investors. The developers were a UK property company called Midas International Property Development Plc, which operated through subsidiary Midas companies for each development. The precise details of the companies interrelationship do not matter and I will refer to them as the developers. In 2004 they instructed the solicitors to devise a legal mechanism for the financing of foreign developments by private investors who would have security over the development land. The investments would take the form either of loans, at an attractive rate of interest, or of purchase of holiday properties. A trust was created for each development with the object of providing security for the investors. The solicitors were the initial trustees. The trust would either own or hold a charge over the development land as security for the amounts invested. The beneficiaries were the investors. The funds advanced by the investors would initially be held by the solicitors in an escrow account. They were not to be released to the developer unless and until the value of the assets held by the trust was sufficient to cover the investment to be protected, applying a cover test set out in the trust deed. As well as devising the scheme, the solicitors acted for the developers in relation to the individual investments. For each investment the solicitors would open a file, which would include a loan or purchase agreement between the investor and the developer and an escrow agreement between the investor, the developer and the solicitors. The developers signed an agreement for the purchase of the Peninsula Village site in April 2007. They did not enter into a similar agreement for the Marrakech site, but instead they entered into an agreement in November 2007 to buy the shares in the local company which owned it. The solicitors released tranches of Peninsula Village investment funds to the developers in April 2007 and October 2008. They released tranches of Marrakech investment funds on five occasions between November 2007 and March 2008. In May 2008 the Financial Services Authority prohibited the developers from receiving any further investment in relation to the developments. The developers were unable to complete either the purchase of the Peninsula Village site or the purchase of the shares in the company which owned the Marrakech site, and in November 2009 the developers were wound up. All the money in the escrow accounts had been paid out. The investors claims against the solicitors were put in various ways, alleging breach of contract, breach of trust, breach of fiduciary duty, misrepresentation and negligence, but the essence was that the solicitors failed properly to apply the cover test before releasing funds to the developers, with the result that the funds were released without adequate security. The claims were due to be tried in the next few months. The insurance action The solicitors had professional indemnity insurance with the appellant (the insurers) on terms corresponding with the MTC. The insurers liability is limited to 3m in respect of each claim. The investors claims in total amount to over 10m. In March 2014 the insurers issued proceedings against the solicitors in the Commercial Court for a declaration that the investors claims in the two Chancery Division actions are to be considered as a single claim under the MTC. The present trustees of the Peninsula Village and Marrakech trusts (the trustees) applied successfully to be joined in the proceedings as representatives of all the beneficiaries under each trust. The insurers case is that the investors claims against the solicitors all arise from similar acts or omissions in a series of related matters or transactions within the meaning of clause 2.5(a)(iv) and therefore there is an overall limit of indemnity of 3m. The trustees primary case is that none of the investors claims fall to be aggregated with those of any other investor. If that argument fails, their secondary case is that the Peninsula Village claims and the Marrakech claims cannot be aggregated with one another and so there are two available pots of indemnity. It was also the insurers alternative case that the claims could be aggregated by reference to the two developments. The case was tried by Teare J, whose judgment is reported at [2016] Lloyds Rep IR 147. He accepted that all the claims arose from similar acts or omissions, and that finding is not challenged in this court, but he rejected the argument that they were in a series of related matters or transactions. He interpreted those words as referring to transactions which were related in the sense that, by reason of their terms, they were conditional or dependent on each other. Since the transactions entered into between the developers and each investor were not mutually dependent, the claims of each investor did not fall to be aggregated with one another. The action was therefore dismissed. Teare J gave permission to appeal. The Court of Appeal ordered an expedited hearing, confined to issues of principle. The parties agreed a list of issues, the first of which was what is the true construction of the words in a series of related matters or transactions? The judgment of the Court of Appeal (Longmore, Kitchin and Vos LJJ) is reported at [2016] Lloyds Rep IR 289; [2017] 1 All ER 143. The court concluded that Teare J went too far in saying that the transactions had to be dependent on each other. It accepted a submission made by Mr David Edwards QC, appearing for the Law Society as an intervener, that there must be an intrinsic relationship between the transactions rather than a relationship with some outside connecting factor, even if that factor was common to the transactions. If the relevant transaction was the payment of money out of an escrow account, which should not have been paid out of that account, what would be intrinsic would depend on the circumstances of that payment. The court summarised its interpretation, at para 33, by saying that the true construction of the words in a series of matters or transactions is that the matters or transactions have to have an intrinsic relationship with each other, not an extrinsic relationship with a third factor. It allowed the appeal and remitted the action to the Commercial Court to determine in accordance with the guidance in its judgment. The insurers criticise the Court of Appeal for introducing an unwarranted qualification into the concept of related matters or transactions. Those words, they say, are unspecific as to the nature of the relationship, because the clause may fall to be applied in a huge variety of factual situations not capable of prediction; that its application requires an exercise of judgment tailored to assessing whether on the particular facts there is a substantial connection; and that it is wrong for the court to try to create a greater degree of certainty than the natural meaning of the words allows. The trustees and the Law Society support the Court of Appeals interpretation. Analysis Aggregation clauses have been a long standing feature of professional indemnity policies, and there have been many variants. Because such clauses have the capacity in some cases to operate in favour of the insurer (by capping the total sum insured), and in other cases to operate in favour of the insured (by capping the amount deductible per claim), they are not to be approached with a predisposition towards either a broad or a narrow interpretation. There is a further reason for adopting a neutral approach in the interpretation of the MTC. The Law Society is not in a position comparable to an insurer proffering an insurance policy. It is a regulator, setting the minimum terms of cover which firms of solicitors must maintain. In doing so it has to balance the need for reasonable protection of the public with considerations of the cost and availability of obtaining professional indemnity insurance. Clause 2.5 of the MTC authorises the aggregation of more than one claim when each claim arises from acts or omissions falling within any one of sub clauses (a)(i) to (iv). Sub clause (i) (one act or omission) requires no further explanation. Sub clause (ii) (one series of related acts or omissions) was interpreted in Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] 4 All ER 43 by Lord Hoffmann as confined to acts or omissions which together resulted in each of the claims (para 27). Lord Hobhouse was prepared to go somewhat further by including the scenario of the misselling of a pension scheme, by means of the same misleading document, to a succession of people who brought a series of claims. The other three judges expressed no view on the point of difference between Lords Hoffmann and Hobhouse. In the light of that decision, and in response to market pressures by professional indemnity insurers, the Law Society amended clause 2.5 by adding sub clauses (iii) and (iv). But the point of difference between Lords Hoffmann and Hobhouse may not have been rendered academic, as I will explain. The additional sub clauses cover multiple claims arising from the same act or omission (sub clause (iii)), or similar acts or omissions (sub clause (iv)), subject to the important limitation that the setting of the act(s) or omission(s) giving rise to the claims was a series of related matters or transactions. Looking at the matter broadly, it is easy to see the reason for such a limitation. If insurers were permitted to aggregate all claims arising from repeated similar negligent acts or omissions arising in different settings, the scope for aggregation would be so wide as to be almost limitless. By requiring that the acts or omissions should have been in a series of related transactions, the scope for aggregation is confined to circumstances in which there is a real connection between the transactions in which they occurred, rather than merely a similarity in the type of act or omission. In the Lloyds TSB case emphasis was put on the importance of the particular language used in any aggregation clause to specify the factors permitting different claims to be treated as one. Individual words or phrases may not carry the same meaning in different clauses of different policies. Longmore LJ rightly said in the present case, at para 27, that the word related in the phrase a series of related matters or transactions (with which we are presently concerned) does not bear the same connotation as in the phrase related series of acts or omissions (with which the House of Lords was concerned in the Lloyds TSB case). Mr Edelman QC for the insurers accepted that for matters or transactions fairly to be described as related, there must be some identifiable substantive link or connection between them beyond mere similarity. But he criticised the Court of Appeals interpretation of the words a series of related matters or transactions as additionally requiring the matters or transactions to have an intrinsic relationship with each other, not an extrinsic relationship with a third factor. With respect to the Court of Appeal, I do not consider its formulation to be necessary or satisfactory. My difficulty is with the word intrinsic itself and what it means in this context. It is possible to describe things or people as having certain intrinsic qualities or characteristics, but it is a more elusive term when used as a descriptor of a relationship between two transactions. Take Lord Hobhouses example of a pension scheme missold to a group of investors in the same venture by use of the same document. On one interpretation of the Court of Appeals formula it could be said that there was no intrinsic relationship between the matters giving rise to the investors claims, because their only connection was an extrinsic relationship with the third party who sold the pension to all of them. If so, the addition of sub clauses (iii) and (iv) will not have helped to resolve the point of difference between Lords Hoffmann and Hobhouse; and if Lord Hoffmanns view is to be preferred, there would be no right to aggregate in such a case. It is hard to suppose that the Law Society so intended when it introduced the new sub clauses. Sub clause (iv) separates the requirement that the acts or omissions giving rise to the claims should be similar and the requirement that they were in a series of matters or transactions which were related. Each limb must be satisfied for the sub clause to apply. Use of the word related implies that there must be some inter connection between the matters or transactions, or in other words that they must in some way fit together, but the Law Society saw fit after market negotiation not to circumscribe the phrase a series of related matters or transactions by any particular criterion or set of criteria. The absence of further prescription is not particularly surprising, considering the very wide range of transactions which may involve solicitors providing professional services. Determining whether transactions are related is therefore an acutely fact sensitive exercise. To borrow the language of Rix LJ in Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] Lloyds Rep IR 696, para 81, it involves an exercise of judgment, not a reformulation of the clause to be construed and applied. In considering the application of the phrase a series of related matters or transactions it is necessary to begin by identifying the (matters or) transactions. The Court of Appeal appears to have taken a narrow view of the transactions when it spoke, at para 19, of the relevant transaction being the payment of money out of an escrow account which should not have been paid out of that account. That was an act giving rise to a claim, but the act occurred in the course of a wider transaction. The transaction involved an investment in a particular development scheme under a contractual arrangement, of which the trust deed and escrow agreement were part and parcel, being the means designed to provide the investor with security for his investment. The transaction was principally bilateral, but it had an important trilateral component by reason of the solicitors role both as escrow agents and as trustees, and the trust deed created a multilateral element by reason of the investors being co beneficiaries. The transactions entered into by the Peninsula Village investors were connected in significant ways, and likewise the transactions entered into by the Marrakech investors. The members of each group were investing in a common development, for which the monies advanced by them were intended, in combination, to provide the developers with the necessary capital. Notwithstanding individual variations, they were all participants in what was in overall terms a standard scheme. They were co beneficiaries under a common trust. There was some debate about whether the question of the application of the aggregation clause was to be viewed from the perspective of the investors or the solicitors. The answer is that the application of the clause is to be judged not by looking at the transactions exclusively from the viewpoint of one party or another party, but objectively taking the transactions in the round. Viewed objectively, the connecting factors identified above drive me to the firm conclusion that the claims of each group of investors arise from acts or omissions in a series of related transactions. The transactions fitted together in that they shared the common underlying objective of the execution of a particular development project, and they also fitted together legally through the trusts under which the investors were co beneficiaries. The case for aggregating the claims of the Peninsula Village investors with those of the Marrakech investors is much weaker. They bear a striking similarity, but that is not enough. Once again, the proper starting point is to identify the relevant matters or transactions: see para 23 above. On the basis of that characterisation of the transactions, it is difficult to see in what way the transactions entered into by the members of the Peninsula Village group of investors were related to the transactions entered into by the members of the Marrakech group of investors, leaving aside for the moment the particular position of the crossover investors. Although the development companies were related, being members of the Midas group, and the legal structure of the development projects was similar, the development projects were separate and unconnected. They related to different sites, and the different groups of investors were protected by different deeds of trust over different assets. Accordingly, on the facts as they currently appear, the insurers have no right to aggregate the claims of the Peninsula Village investors with those of the Marrakech investors. In saying on the facts as they currently appear, I am conscious that although I have taken the facts from the agreed statement of facts and issues and the factual description in Teare Js judgment, which has not been challenged, the parties did not address the court fully on the facts and wished to reserve the opportunity of analysing them in greater detail if the case is remitted to the Commercial Court, as the Court of Appeal ordered. If any party wishes to argue that on fuller analysis of the facts, the characterisation of the transactions in this judgment is somehow defective, they should have that opportunity. Understandably, the parties did not go into detail about the position of the crossover investors, but each crossover investor entered into a new Marrakesh loan agreement and a new escrow agreement. I do not presently see that the fact that some investors agreed to switch their funds from one investment to the other has any bearing on the position of those who did not, but I do see that entering into one investment and then switching to another would obviously be related transactions. On the facts as they currently appear, the logical analysis would seem to be that any claim made by crossover investors in respect of the first transaction will fall to be aggregated with the claims of other members of that group of investors, and that any claim made by them in respect of the second transaction will fall to be aggregated with their first claim, but we heard no argument on the point. Disposal I would allow the appeal and either remit the case to the Commercial Court to determine in accordance with this judgment or order its transfer to the Chancery Division so that any outstanding matters can be dealt with by the judge who tries the investors claims against the solicitors. I see practical advantages in the second course but would invite the parties written submissions within 28 days. The trustees had a cross appeal against the Court of Appeals order on costs, but that is no longer relevant. The parties submissions on costs should also be made within 28 days.

UK-Abs

The Solicitors Act 1974 allows the Law Society to make rules requiring solicitors to maintain professional indemnity insurance. The rules made by the Law Society require such insurance to satisfy certain Minimum Terms and Conditions (MTC). The MTC prescribes a minimum figure for which solicitors must be insured for any one claim. It also permits the aggregation of claims in a number of circumstances including where the claims arise from similar acts or omissions in a series of related matters or transactions (Clause 2.5(a)(iv)) [1]. Midas International Property Development Plc sought to develop two holiday resorts, one in Turkey known as Peninsula Village and one in Marrakech, Morocco [3]. These were to be financed by private investors who would be granted security over the development land. A trust was set up for each development which either owned, or held a charge over, the development land. The developers solicitors were the initial trustees and the investors were the beneficiaries. The funds advanced by the investors were initially held by the solicitors in an escrow account. They were not to be released to the developers unless and until the value of the assets held by the trust was sufficient to cover the investment to be protected, applying a cover test set out in the trust deed [4]. For each investment, the developers solicitors opened a file, including a loan or purchase agreement between the investor and developers and an escrow agreement between the investor, developer and the solicitors [5]. The developers entered an agreement for the purchase of (i) the Peninsula Village site in April 2007 and (ii) shares in a local company which owned the Marrakech site in November 2007. The solicitors subsequently released to the developers tranches of the investment funds for each development. In May 2008, the Financial Services Authority prohibited the developers from receiving any further investment in relation to the developments and the developers were unable to complete the purchase of either site. The developers were wound up in November 2009 [6 7]. The investors brought two claims against the developers solicitors in the Chancery Division; one relating to each of the development sites. They alleged that the solicitors had failed to properly apply the cover test before releasing funds to the developers, resulting in the funds being released without adequate security [3, 8]. The solicitors had professional indemnity insurance with the appellant. The appellants liability is limited to 3m in respect of each claim. The investors claims amount to over 10m in total. The insurers issued proceedings against the solicitors in the Commercial Court for a declaration that the investors claims in the Chancery Division be considered as one claim under the aggregation provision in clause 2.5(a)(iv) MTC [9]. The Commercial Court dismissed the claim. It accepted that all the claims arose from similar acts or omissions, but rejected that they were in a series of related matters of transactions since the transactions between the developers and each investor where not mutually dependent [11]. The Court of Appeal did not agree that the transactions had to be dependent on each other. In allowing the appeal it held that the matters or transactions had to have an intrinsic relationship with each other, not an extrinsic relationship with a third factor [12]. The Supreme Court unanimously allows AIGs appeal. Lord Toulson, with whom the other justices agree gives the lead judgment. Clause 2.5(a)(iv) MTC has two separate limbs, each of which must be satisfied in order for it to apply. The first is that the claims arose from similar acts or omissions. It is not in dispute that this is satisfied in this case. The second is the requirement that the claims were in a series of related matters or transactions. This is an important limitation, without which the scope for aggregation would be almost limitless [17, 22]. However, it is difficult to understand what the Court of Appeal meant by the term intrinsic in the context of a relationship between two transactions [21]. The use of the word related implies that there must be some interconnection between the matters or transactions, however the Law Society did not see it fit to circumscribe this limb by any particular criteria, such as intrinsic. This is unsurprising since determining whether transactions are related is an acutely fact sensitive exercise [22]. The application of the aggregation clause is not to be viewed from the perspective of any particular party. It is to be judged objectively, taking the transactions in the round [25]. The starting point is to identify the relevant matter or transactions [23, 27]. The transactions in this case involved an investment in a particular development scheme under a contractual arrangement that was primarily bilateral, but had an important trilateral component by reason of the solicitors role as trustees and escrow agent [23]. The transactions entered into in respect of each development were connected in significant ways. Each set of investors invested in a common development, they were participants in a standard scheme and co beneficiaries under a common trust [24]. On the facts as they currently appear, the claims of each group of investors arise from acts or omissions in a series of related transactions; the transactions shared a common underlying objective of the execution of a particular development project and also fitted together legally through the trusts [26]. However, the transactions entered into by the Peninsula Village investors cannot be said to be related to those entered into by the Marrakech investors. They related to different sites, had different groups of investors and were protected by different deeds of trust over different assets. They should therefore not be aggregated together [27]. A number of investors transferred their investments from Peninsula Village to the Marrakech development, entering into a new loan agreement and new escrow agreement. On the facts as they currently appear, any claim made by such an investor in respect of the Peninsula Village development should be aggregated with the claims made by the other investors in that development and any claim made by that investor in respect of the Marrakech development should be aggregated with their first claim [29].

This is a test case brought against the Commissioners for Her Majestys Revenue and Customs (HMRC) by the Prudential Assurance Co Ltd (PAC). PAC is a typical United Kingdom-resident recipient of dividends on portfolio investments overseas, representing less (usually much less) than 10% of the relevant overseas companies share capital. The issues originate from two features of the UK tax position in the period 1990 to 1 July 2009. First, throughout that period dividend income received from overseas investments was in principle taxable, subject (as will appear) to certain reliefs. Second, until 6 April 1999 Advance Corporation Tax (ACT) was levied on dividends distributed to UK companies shareholders. The scope of the issues arising from these features and open on this appeal is, as will appear, itself in some dispute, but the appeal on any view involves a number of conceptually difficult points. The principal issues on this appeal can be summarised as follows: I. Does EU law require a tax credit in respect of overseas dividends to be set by reference to the overseas tax actually paid, or by reference to the foreign nominal tax rate (FNR)? II. Is PAC entitled to compound interest in respect of tax which was levied in breach of EU law, on the basis that HMRC were unjustly enriched by the opportunity to use the money in question? III. Subject to HMRCs being granted permission to argue the point, does a claim in restitution lie to recover lawful ACT which was set against unlawful mainstream corporation tax (MCT)? IV. If the answer to (I) is that EU law requires a tax credit to be set by reference to the overseas tax actually paid, PAC seeks permission to cross- appeal on the following question: should the charge to corporation tax on the foreign dividend income under Case V of Schedule D (Income and Corporation Taxes Act 1988 (ICTA), section 18) (DV tax) be disapplied, or should PAC be allowed to rely on FNRs, or on consolidated effective tax rates, as a simplification or proxy for tax actually paid? If HMRC are granted permission to argue Issue III, PAC seek V. permission to cross-appeal on the following questions: (a) where ACT from a pool which includes unlawful and lawful ACT is utilised against an unlawful MCT liability, should the unlawful ACT be treated as a pre-payment of the unlawful MCT liability, or is the ACT so utilised to be treated as partly lawful and partly unlawful; and (b) where domestic franked investment income (FII) was carried back to an earlier quarter, is it to be treated as having been applied to relieve the lawful and unlawful ACT pro rata, or only lawful ACT? Issue I The first issue - Issue I - arises from the approach adopted by UK law in order to avoid or mitigate double taxation of dividends. It is now clear that this was inconsistent with EU law, but in what precise respects and what is due by way of restitution or compensation are live issues. The inconsistency with EU law arose as follows. Domestically, dividends received by one UK-resident company, the source of which was a distribution made by another UK-resident company, were exempt from tax under section 208 of ICTA. The effect is that corporation tax was only levied once, on the latter company which made the profit out of which it distributed the dividend to the former company. In contrast, dividends received by a UK-resident company, the source of which was an overseas company, were in principle subject to DV tax. But where the UK-resident company controlled a certain percentage of the voting power of the relevant overseas company (typically 10%), certain relief was given for foreign tax paid on the underlying profits out of which such dividends were paid. This was done either pursuant to a double taxation treaty or unilaterally under ICTA, section 790. No relief against DV tax was however afforded in respect of portfolio investments, that is investments involving lesser percentage holdings. In Metallgesellschaft Ltd v Inland Revenue Comrs; Hoechst v Inland Revenue Comrs (Joined Cases C-397/98 and C-410/98) EU:C:2001:134; [2001] ECR I-1727; [2001] Ch 620, the European Court of Justice (CJEU) held that the unharmonized domestic tax regime fell under the EC Treaty, and could therefore be challenged if inconsistent with a Treaty provision. Pursuant to a group litigation order dated 30 July 2003, PAC was on 13 November 2003 appointed to conduct the present test case, in which PACs primary contention has been that the UK tax position is inconsistent with article 63 of the FEU Treaty. Article 63FEU (ex article 56 of the EC Treaty) provides: 1. Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between member states and between member states and third countries shall be prohibited. 2. Within the framework of the provisions set out in this Chapter, all restrictions on payments between member states and between member states and third countries shall be prohibited. At an early stage in the present case, a reference to the CJEU was found necessary. But, before that reference was heard, the CJEU determined a separate UK reference, in Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C-446/04) EU:C:2006:774; [2006] ECR I-11753; [2012] 2 AC 436 (FII ECJ I - FII standing for franked investment income). In it, the CJEU held, at paras 1 and 2 of the operative part: 1. where a member state has a system for preventing or mitigating the imposition of a series of charges to tax or economic double taxation as regards dividends paid to residents by resident companies, it must treat dividends paid to residents by non-resident companies in the same way. [The Treaty provisions] do not preclude legislation of a member state which exempts from corporation tax dividends which a resident company receives from another resident company, when that state imposes corporation tax on dividends which a resident company receives from a non-resident company in which the resident company holds at least 10% of the voting rights, while at the same time granting a tax credit in the latter case for the tax actually paid by the company making the distribution in the member state in which it is resident, provided that the rate of tax applied to foreign-sourced dividends is no higher than the rate of tax applied to nationally- sourced dividends and that the tax credit is at least equal to the amount paid in the member state of the company making the distribution, up to the limit of the amount of the tax charged in the member state of the company receiving the distribution. Article [63FEU] precludes legislation of a member state which exempts from corporation tax dividends which a resident company receives from another resident company, where that state levies corporation tax on dividends which a resident company receives from a non-resident company in which it holds less than 10% of the voting rights, without granting the company receiving the dividends a tax credit for the tax actually paid by the company making the distribution in the state in which the latter is resident. 2. [The Treaty provisions] preclude legislation of a member state which allows a resident company receiving dividends from another resident company to deduct from the amount which the former company is liable to pay by way of advance corporation tax the amount of that tax paid by the latter company, whereas no such deduction is permitted in the case of a resident company receiving dividends from a non-resident company as regards the corresponding tax on distributed profits paid by the latter company in the state in which it is resident. This ruling was re-affirmed in the Reasoned Order by which the CJEU disposed of the reference made by the High Court in the present case: Test Claimants in the CFC and Dividend Group Litigation v Inland Revenue Comrs (Case C- 201/05) EU:C:2008:239; [2008] ECR I-2875; [2008] STC 1513. The issue of a Reasoned Order, without a formal Advocate Generals opinion and with the same juge rapporteur involved as in FII ECJ I, indicates that the CJEU saw the position as relatively straightforward. In the light of these two decisions of the CJEU, it is common ground that the UKs treatment of overseas dividends was incompatible with EU law. In a judgment in the present case, Prudential Assurance Co Ltd v Revenue and Customs Comrs [2013] EWHC 3249 (Ch); [2014] STC 1236, Henderson J held (para 148) that the appropriate means of rectifying this was for PAC to be accorded an appropriate tax credit. (This was on the basis that a complete exemption from UK corporation tax would go further than the CJEU had stated that EU law required.) HMRC also accept that PAC is entitled to repayment or restitution of any corporation tax unlawfully charged as a result of the incompatibility: Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case C-199/82) [1983] ECR 3595 (San Giorgio). However, the amount to be awarded depends significantly on issues of EU law and domestic law which are either open or which HMRC seek to raise on this appeal. Issue I is whether the credit in respect of overseas dividends should under EU law be set by reference to the overseas tax actually paid, as HMRC submit, or by reference to the foreign nominal tax rate (FNR), as PAC submits. HMRC rely in this connection upon the CJEUs judgments in FII ECJ I and on its Reasoned Order in the present case, as well as upon a further judgment of the CJEU in Haribo Lakritzen Hans Riegel BetriebsgmbH v Finanzamt Linz and sterreichische Salinen AG v Finanzamt Linz (Joined Cases C-436/08 and C-437/08) EU:C:2011:61; [2011] ECR I-355; [2011] STC 917. In all three cases, the juge rapporteur was Judge Lenaerts, now the President of the CJEU. In HMRCs submission, these cases demonstrate, first, a difference in principle between portfolio investments, such as PAC held, and non-portfolio investments, conferring a significant measure of control, and, secondly, that at any rate in relation to portfolio investments the credit to be imputed to PAC is in respect of the actual tax incurred overseas. In response, PAC relies upon a later CJEU decision in the FII litigation, Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (Case C-35/11) EU:C:2012:707; [2013] Ch 431 (FII ECJ II). Judge Lenaerts was once again the juge rapporteur. In this judgment, PAC submits, the CJEU refined its jurisprudence to require the use of the FNR in respect of all dividends received by PAC from overseas. HMRC in reply point out that FII ECJ II was concerned essentially with non-portfolio dividends, and criticise some aspects of its reasoning, particularly its treatment of Haribo. Finally, HMRC submit that the European legal position is unclear, and requires a further reference to the CJEU. There are further issues which HMRC seek to attach to Issue I. The first, identified before us as issue 4 CA, is whether, when considering the relevant overseas tax position, attention should focus on the overseas company directly responsible for the remission of the dividend to the UK (the overseas waters edge company) or on the overseas company (or companies) responsible for generating the profits out of which such dividend was paid and on which it (or they) paid tax overseas. The second issue, which HMRC submit that the Supreme Court should take into account, was identified as issue 6 CA, and is whether any difference has been shown to exist between the effective rate incurred by domestic companies declaring dividends to PAC and the nominal rate payable by UK companies. This is relevant, HMRC submit, because the existence of such a difference was a reason why the CJEU indicated in FII ECJ II that it was appropriate to give a credit for the FNR, rather than the actual tax, incurred on an overseas dividend. PAC submits that neither of issues 4 CA and 6 CA is open in this court. The Court of Appeal refused permission for either issue to be raised before it, and neither issue is properly part of or essential to the resolution of Issue I. The CJEU in FII ECJ I and in its Reasoned Order in the present case clearly established that the discrimination involved in the UKs arrangements for taxation of dividends sourced domestically and from overseas could be resolved by a mixed system, whereby dividends with a domestic source remained exempt, while credit was given against DV tax for tax actually incurred overseas on dividends received from overseas. HMRC point out that the CJEU in FII ECJ I addressed separately the position of dividends received from non-portfolio and from portfolio companies. In relation to the former, the question arose whether a mixed system of exemption in respect of domestically sourced dividends coupled with a credit in respect of dividends received from overseas was compatible with EU law. The CJEU dealt with this at paras 46 to 57. The claimants drew attention to the situation arising if, under the relevant UK legislation, such an exemption was granted in respect of a nationally- sourced dividend received from a company which for some reason had no corporation tax liability or paid corporation tax at a lower rate than the normal UK rate (para 54). The CJEU understood the UK Government to explain that this arose only exceptionally (para 55), and on that basis contented itself with saying (para 56): In that respect, it is for the national court to determine whether the tax rates are indeed the same and whether different levels of taxation occur only in certain cases by reason of a change to the tax base as a result of certain exceptional reliefs. The inference seems to be that, were a significant difference to exist between the effective rate of tax paid by the UK source of the dividend (eg because of some relief or allowance available to the company which was the source of the dividend) and the nominal rate of tax to which the exemption under section 208 of ICTA applied, then a system of credit in respect of overseas-sourced dividends which limited the tax credit to tax actually paid overseas (ie the effective rate of tax) would not be consistent with EU law - because the overseas-sourced dividend would remain liable for any DV tax chargeable after the credit had been taken into account. In other words, the overseas-sourced dividend would not be enjoying, under the tax credit system, any relief or allowance which had reduced the tax actually paid on it, whereas the UK-sourced dividend would enjoy any such relief or allowance. In respect of portfolio dividends, the CJEU faced a more fundamental objection. The UK system was inherently discriminatory, because it failed to give any credit at all for overseas tax paid (paras 61 to 72). The CJEU gave short shrift to the UK Governments argument that practical difficulties in ascertaining the tax actually paid justified a different system for portfolio dividends. It does not however follow from the separate treatment of non-portfolio and portfolio holdings in FII ECJ I that the CJEU saw any significant difference between them regarding the manner in which the deficiencies in the UK tax system needed to be addressed. It is true that the judgment in Haribo in February 2011 concerned portfolio dividends; following FII ECJ I and the Reasoned Order in the present case, it spoke of the need to credit tax actually paid. But it was only in FII ECJ II, where the focus was on non-portfolio holdings, that the CJEU identified the FNR as a more relevant criterion in any context. That therefore in no way indicates that the FNR is not also relevant to portfolio investments. As a matter of logic and principle, there seems no basis in this connection for any distinction between portfolio and non-portfolio holdings, when applying the mixed system of domestic exemption coupled with a credit in respect of overseas- sourced dividends to each. Rather than concentrating on the practical difficulties advanced before the CJEU in FII ECJ II, HMRC now suggest that there are important differences in the approaches and expectations which investors would have with regard to portfolio investments, when compared with non-portfolio investments. There are of course differences between holdings giving a degree of control and smaller holdings, but it is not obvious what relevance they have to the question of central interest on this appeal: that is, the proper treatment of domestically-sourced and overseas-sourced dividends so as to avoid unfair discrimination between them. The CJEUs change of approach in FII ECJ II arose from correction of the misunderstanding evidenced in paragraph 54 in FII ECJ I. Far from being exceptional, it had been established conclusively that it was commonly the position in the UK that a companys effective rate of tax was (due for example to group relief, or the carry forward of trading losses or other reasons) less than the nominal tax rate, and on that basis it was held that the UK tax system infringed what is now article 63: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2008] EWHC 2893 (Ch); [2009] STC 254 (FII High Court I), affirmed [2010] EWCA Civ 103; [2010] STC 1251 (FII CA). Pursuant to an order for a further reference made by Henderson J on 20 December 2010, it became necessary for the CJEU to address the implications. The European Commission in written submissions in FII ECJ II said (para 28) that in circumstances where the effective rate borne by the company making the profits from which the dividend came was lower than the nominal rate: 28. to exempt domestic dividends (which in effect amounts to giving credit for the full amount of tax at the statutory rate even where this full amount has not been paid) while giving credit only for the actual amount of tax paid in respect of the profits giving rise to foreign dividends results in more favourable treatment for domestic dividends. The Commission drew from this (para 29) that: 29. It can no longer be said that the credit method is equivalent to exemption, because foreign dividends receive less favourable treatment than domestic dividends. To understand why, let us imagine identical resident and non- resident companies which each have revenues of 100 and have, say, a loss carry-forward of 50. The tax rate is 30% in both the source and residence states. A company which is a shareholder in the resident company and receives a dividend from it will have no further tax obligation, even though that company has paid only 15 in tax (that is, has an effective rate of 15%). A shareholder in the non-resident company will receive a credit equivalent to only 15% and will have to pay an additional 15%. The same result will ensue where both states grant, for example, an identical research and development incentive. That is not equal treatment, and it constitutes a serious obstacle to outward investment. The Commission then discussed how the problem might be addressed (paras 31-34): 31. In such circumstances there seem to the Commission to be two ways of ensuring equal treatment. One is to exempt both domestic and foreign dividends. That solution has the drawback, as outlined above, that it may permit excessively favourable treatment of foreign dividends where the tax rate in the source state is lower than in the United Kingdom. The other, which is wholly consistent with the courts reasoning in Case C-446/04 [FII ECJ I], is to have regard solely to the nominal rate of tax in calculating the tax credit on foreign dividends. 32. That is to say, recipients of such dividends should receive a tax credit representing the amount which would flow from the application of the nominal rate of tax in the source state to the accounting profits of the distributing company. Such a measure would correspond more truly to the exemption of domestic dividends, since the latter amounts in effect to the grant of a credit for tax at the nominal rate. The court has seen and approved a measure of this kind in Joined Cases C-436/08 and C-437/08 Haribo, judgment of 10 February 2011 see point 99 of the judgment. It would no doubt be desirable for a member state applying such a measure to insert a safeguard clause limiting its scope to dividends distributed by a company which is subject to the normal system of taxation in the source state. 33. It should be noted that such a measure would also alleviate to a very large extent the administrative burden faced by taxpayers in relation to foreign dividends, especially taxpayers with small shareholdings. 34. Such a solution does not ensure substantive equal treatment in all cases. In particular, where the tax system in the source state is a simple one in which the effective rate is systematically the same as the nominal rate (because the tax base is constituted by accounting profits, with no modifications), foreign dividends will treated less favourably than domestic dividends, since the latter will benefit from any tax advantages enjoyed by the distributing company. However, to ensure full substantive equal treatment would require systematic re-calculation of the tax position of the foreign company - essentially a simulation of the tax which it would have paid were it resident in the United Kingdom. Such an approach seems impractical. The solution advocated by the Commission ensures formal equality of treatment, is easy to apply and achieves a fair result. It is worth noting in passing para 33. The Commission evidently had no doubt about the relevance of its proposed solution to overseas portfolio holdings. It was a neat solution which evidently appealed to the juge rapporteur, who (according to the informal transcript with which the Supreme Court has been supplied) put to counsel for the UK a series of points, starting with this very simple question: does such an exemption system not in fact come down to as Mr Lyal said, tantamount to a credit system applied at the normal rate of tax applicable to the taxing of those dividends with the shareholding company? Judge Lenaerts went on to put that an exemption system does more than a system crediting tax actually paid, because It gives more relief than the tax actually paid by the distributing company and when you say that you have an exemption system, in fact, you exonerate from any tax liability, you exempt from any tax liability, the shareholding companies at the rate applicable to the taxing of dividends with that shareholding company. The reasoning was the same as the Commissions. Subsequently various questions were put by Advocate General Jskinen to Mr Lyal for the Commission. The Advocate General expressed some doubt whether the Commissions proposed solution was really consistent with the CJEUs previous judgment. He suggested that it would seem to work if there was equivalence of both the domestic and the overseas nominal and effective tax rates, but pointed to a risk of distortion if the nominal and effective tax rates were similar in one state, but diverged significantly in the other. Mr Lyals response was: Yes, my Lord, thats quite right. Thats a danger. It is a danger that can be minimised, if what I said a moment ago about recognizing only the type of tax benefits or discounts or manners of calculation that are recognized in the state of residence of the parent. The practical likelihood of the problem is to some extent limited to the extent that there is something of a correlation between higher taxes, higher company tax rates and lots of discounts, and equally a correlation between lower company tax rates and broad tax bases. So, if there is a source company in Slovakia, say, which has set their tax at, whatever their rate now is, 17%, perhaps, one can be pretty sure that its 17% on accounting profits. And thirdly, this is after all said to be a rough equivalent because the only other practical option that I can see for a rough equivalent of the domestic exemption is exemption for foreign-source dividends as well which would compound the problem that your Lordship refers to. That is to say you would not only have the freedom from taxation represented by the difference between the lower rate, the lower effective rate and [?in] the source state, but also the difference between the statutory rate in the UK and the lower statutory rate. So, again, the problem that your Lordship advances is certainly a correct one, but in circumstances in which the resident state applies an exemption system, we need to find something that gives substantive equivalent taxation for inbound dividends, a measure of which focuses on the actual tax, the effective rate of tax borne by inbound dividends simply is not equivalent. Against this background, the CJEU in FII ECJ II addressed the problem as follows. First, it pointed out (paras 43 to 48) that the tax rate applied to foreign- sourced dividends would be higher than that applied to domestic-sourced dividends, and their equivalence compromised, if the resident company generating the dividends was subject to either a nominal or an effective rate of tax below that to which the resident company receiving the dividends was subject, since in a case where an overseas company generating dividends was subject to an effective tax rate lower than the UK nominal rate, the difference would be chargeable to DV tax. On this basis, it explained that in its judgment in FII ECJ I, para 56, the reference to the tax rates related to the nominal rate of tax while the reference to the different levels of taxation by reason of a change to the tax base related to the effective levels of taxation. The CJEU in FII ECJ II, after stating why such discrimination could not be justified under EU law as necessary to preserve the cohesion of the domestic tax system, then adopted use of the FNR as an acceptable solution in the following paragraphs: 61. The tax exemption to which a resident company receiving nationally-sourced dividends is entitled is granted irrespective of the effective level of taxation to which the profits out of which the dividends have been paid were subject. That exemption, in so far as it is intended to avoid economic double taxation of distributed profits, is thus based on the assumption that those profits were taxed at the nominal rate of tax in the hands of the company paying dividends. It thus resembles grant of a tax credit calculated by reference to that nominal rate of tax. 62. For the purpose of ensuring the cohesion of the tax system in question, national rules which took account in particular, also under the imputation method, of the nominal rate of tax to which the profits underlying the dividends paid have been subject would be appropriate for preventing the economic double taxation of the distributed profits and for ensuring the internal cohesion of the tax system while being less prejudicial to freedom of establishment and the free movement of capital. It is to be observed in this connection that in the Haribo 63. case [2011] ECR I-305, para 99, the court, after pointing out that the member states are, in principle, allowed to prevent the imposition of a series of charges to tax on dividends received by a resident company by applying the exemption method to nationally-sourced dividends and the imputation method to foreign-sourced dividends, noted that the national rules in question took account, for the purpose of calculating the amount of the tax credit under the imputation method, of the nominal rate of tax applicable in the state where the company paying dividends was established. 64. It is true that calculation, when applying the imputation method, of a tax credit on the basis of the nominal rate of tax to which the profits underlying the dividends paid have been subject may still lead to a less favourable tax treatment of foreign-sourced dividends, as a result in particular of the existence in the member states of different rules relating to determination of the basis of assessment for corporation tax. However, it must be held that, when unfavourable treatment of that kind arises, it results from the exercise in parallel by different member states of their fiscal sovereignty, which is compatible with the Treaty 65. In light of the foregoing, the answer to the first question is that articles 49FEU and 63FEU must be interpreted as precluding legislation of a member state which applies the exemption method to nationally-sourced dividends and the imputation method to foreign-sourced dividends if it is established, first, that the tax credit to which the company receiving the dividends is entitled under the imputation method is equivalent to the amount of tax actually paid on the profits underlying the distributed dividends and, second, that the effective level of taxation of company profits in the member state concerned is generally lower than the prescribed nominal rate of tax. These paragraphs are generally stated, and there is no reason why they should not be as applicable to portfolio holdings as they are to non-portfolio holdings. There is no hint of any distinction between portfolio and non-portfolio holdings. If any had been intended, one would have expected it to be mentioned, particularly when the same juge rapporteur was active in all four of the key decisions, covering between them both types of holding. Instead, in para 63 of FII ECJ II, quoted above, reliance is actually placed on Haribo, a case of portfolio holdings, in support of the use of the FNR. The reliance may, as Mr David Ewart QC for HMRC submitted, be misplaced, achieving a coherence in the development of the jurisprudence that is more apparent than real - because the reference to FNR in Haribo was in the context of a simplified method permitted by the Austrian tax authorities to show the tax actually paid. But that is presently irrelevant. What matters is that the CJEU in FII ECJ II presented its development of the law in the context of non-portfolio holdings as being in line with, and supported by, its previous jurisprudence in the context of portfolio holdings. It is inconceivable that it contemplated any material distinction in the principles applicable to both. It follows that, subject to one reservation, the CJEUs jurisprudence establishes clearly that the credit for foreign dividends in the present case should be by reference to the FNR, rather than by reference to the actual or effective tax incurred overseas. The one reservation arises from the assumption made throughout the discussion in FII ECJ II, that, in the Commissions words (para 20 above): to exempt domestic dividends in effect amounts to giving credit for the full amount of tax at the statutory rate even where this full amount has not been paid; or in Judge Lenaerts words (para 23 above) that an exemption system does more than a system crediting tax actually paid by the distributing company. This assumption is readily understandable, if one also assumes that the domestic company which is the source of and distributes the dividend has an effective tax rate less than the nominal tax rate, while the receiving company which is exempted from tax would, but for the exemption, pay tax at the full nominal rate. There is then a benefit from the exemption, which would have no parallel if the credit in respect of overseas-sourced dividends was by reference only to the actual tax incurred overseas. However, in the UK domestic context, there appears to be no reason to think that companies receiving domestically-sourced dividends are any less able to reduce the effective tax rate they would have borne on such dividends than are the companies from which the dividend is sourced. In other words, the evidence appears to have been that all UK companies are generally taxed at an effective level below the nominal rate. That being so, the domestic exemption does not confer a benefit at the nominal rate, but at their effective rate. It follows that to give a credit for overseas dividends at the FNR may confer a benefit on overseas dividends, compared with domestic dividends. By way of example, given by HMRC, one can suppose an overseas waters edge company with a nominal tax rate of 20% and an effective rate of 10%, which makes a profit after tax of 100 and distributes a dividend of 100. The UK recipient company has a nominal rate of 30%, but an effective tax rate of 20%. One would expect the UK company to bear a 10% charge on the dividend to reflect the higher tax rate charged in the UK (and that is so, whether one is looking at and comparing the nominal or the effective tax rate in this connection). But a tax credit can necessarily only reduce the tax which would actually otherwise be charged. Here, since the UK companys effective tax rate is only 20%, the effect of giving credit to the UK company for the FNR of 20% is in fact to eliminate any UK tax charge. Does this reservation about the rationale and solution adopted by the CJEU mean that we should once again refer the case back to the CJEU, for it to reconsider once again whether its approach is appropriate? In our opinion, it does not. It is clear that the CJEU was well aware that the adoption of the FNR would not eliminate all inequities or incongruities: see the Commissions written observations, para 34, cited in para 22 above, the Advocate Generals question put to Mr Lyal and Mr Lyals answer cited in para 24 above and the CJEUs own judgment, para 64, cited in para 26 above. There could, depending on the incidence of nominal and effective tax rates, be swings and roundabouts in the equivalence achieved by a mixed system of domestic exemption combined with overseas credits. But the ideal alternative of a comparison between two tax systems to ensure equivalence (subject only to each states right to set its own nominal tax levels) was consciously rejected as wholly impractical. In these circumstances, such inequity as may arise from the reservation discussed in the previous three paragraphs is not in our view a reason for referring the matter yet again to the CJEU. The prospect that the CJEU would, at this stage in history, contemplate revising yet again its jurisprudence appears to us negligible to the point where it can be discarded. We turn finally to the two further issues which HMRC suggest should be taken into account, and should lead to or encourage the making of a reference. The short answer in relation to each is that permission to raise it before the Court of Appeal was specifically refused by that court: [2016] EWCA Civ 376; [2016] STC 1798. In these circumstances, there is no constitutional basis for consideration of either before the Supreme Court: Access to Justice Act 1999, section 54(4), Supreme Court Practice Direction No 1 para 1.2.5. Issue I at first instance might have been wide enough to embrace one or both of issues 4 CA and 6 CA, since it asked inter alia what the appropriate amount of any tax credit required was, but in fact neither issue was raised at the trial before Henderson J. Issue 6 CA was first raised six weeks after the trial by letter to the judge, who refused permission to appeal on it. Issue 4 CA only emerged as ground 2 in HMRCs Grounds of Appeal to the Court of Appeal. The Court of Appeal expressly refused permission to appeal to it on Issues 4 and 6 CA, and the declaration it made read simply that (para 99): the effect of the rulings of the CJEU is that the foreign dividend should be afforded equivalent treatment, taking the form of the imputation method according to which credit should be given for the relevant foreign tax at the effective rate [ie the actual tax paid] or the nominal rate (whichever is the higher), subject to a cap at the rate of the UKs nominal rate of ACT [ie the corporation tax rate or the rate of ACT as applicable]. This declaration does not address or require the Supreme Court to address either of Issues 4 and 6 CA. (In the event, the Supreme Court has not even been asked to address the question whether the Court of Appeal was right to declare that credit required to be given for the higher of the effective and nominal foreign rate, that issue being we were told of no present relevance, but reserved for a further instalment of the FII litigation.) Issue IV It is however appropriate at this point to deal with Issue IV which is before the Supreme Court. That is whether, if PAC had no entitlement under EU law to a credit by reference to the FNR, effect should, in the light of what is said to be the impossibility of showing the tax actually borne by its portfolio holdings, be given to the CJEUs judgments either: (a) by disapplying the DV charge; or (b) by allowing PAC to rely on FNRs (or consolidated effective tax rates) as a simplification or proxy for tax actually paid. The short answer to this issue is that it does not arise or need answering, having regard to our conclusion that PAC is entitled to credit in respect of overseas-sourced dividends by reference to the FNR. Issue II: Introduction PAC seeks restitution, on the ground of unjust enrichment, of an amount calculated on the basis of compound interest, in respect of each category of claim which has succeeded. The amounts on which interest is sought, and the periods over which it is submitted that interest should be compounded, are as follows: (a) unlawfully levied ACT which was subsequently set off against lawfully levied MCT, from the date of payment by PAC to the date of set- off; (b) all other unlawfully levied tax (including unlawfully levied ACT which was never set off against lawful MCT, and unlawfully levied ACT which was set off against unlawfully levied MCT), from the date of payment by PAC to the date of repayment by HMRC; and (c) date of set-off to the date of payment by HMRC. the time value of utilised ACT (resulting from (a) above), from the PAC submits that the interest should be compounded at conventional rates calculated by reference to the rates of interest, and rests, applicable to borrowings by the Government in the market during the relevant period, that being the approach favoured by a majority of the House of Lords in Sempra Metals Ltd v Inland Revenue Comrs (formerly Metallgesellschaft Ltd) [2007] UKHL 34; [2008] 1 AC 561. HMRC have accepted that compound interest is payable in respect of the utilised ACT falling within category (a) above, since that is what the House of Lords decided in Sempra Metals. PAC submits that the principles set out in Sempra Metals entail that the same approach should also apply to the amounts falling within categories (b) and (c) above. HMRC, on the other hand, submit that only simple interest should be awarded, in accordance with section 35A of the Senior Courts Act 1981 (the 1981 Act), inserted by the Administration of Justice Act 1982, section 15(1) and Schedule 1, Part I. An award of interest on that basis would, they argue, be compatible with the requirement under EU law that PAC should receive an adequate indemnity, in accordance with the decision of this court in Littlewoods Ltd v Revenue and Customs Comrs [2017] UKSC 70; [2017] 3 WLR 1401. Although the difference between simple and compound interest is modest in the present case, the point also arises in other cases which are pending against HMRC, and the total amount at stake, on HMRCs estimate, is of the order of 4-5 billion. The point is also one of considerable importance from a legal perspective, since it raises some fundamental issues in the law of unjust enrichment. The approach of the courts below In a careful judgment, Henderson J held that compound interest should be awarded in respect of all three categories of claim, on the basis that, applying the reasoning of the majority in Sempra Metals, PAC was entitled on the ground of unjust enrichment to compound interest on all its claims: [2013] EWHC 3249 (Ch); [2014] STC 1236, paras 242-246. His Lordship subsequently followed that decision in other proceedings, concerned with the recovery of VAT paid under a mistake: Littlewoods Retail Ltd v Revenue and Customs Comrs [2014] EWHC 868 (Ch); [2014] STC 1761, para 417. That paragraph was then expressly approved by the Court of Appeal in the Littlewoods proceedings: Littlewoods Ltd v Revenue and Customs Comrs [2015] EWCA Civ 515; [2016] Ch 373; [2015] STC 2014, paras 203-204. When the present case reached the Court of Appeal, it dismissed the appeal on this issue on the basis that it was bound by its previous decision in the Littlewoods case. So the only detailed consideration of this issue, in the context of the present case, has been that of Henderson J. It is only necessary to add that, following the decision of this court in the Littlewoods proceedings (Littlewoods Ltd v Revenue and Customs Comrs [2017] UKSC 70; [2017] 3 WLR 1401), which reversed the decision of the Court of Appeal, it is no longer argued that there is a right to compound interest under EU law. A preliminary point As a preliminary point, PAC submits that HMRC should not be permitted to advance an argument to the effect that the opportunity to use money mistakenly paid is not a benefit obtained at the expense of the person who made the mistaken payment. They point out that HMRC did not advance any argument along these lines at the trial before Henderson J in 2013. On the contrary, it was conceded in advance of the trial that PAC was entitled to compound interest in respect of the claims in category (a), following Sempra Metals, and that position was maintained in the agreed Statement of Facts and Issues. Although HMRC do not seek to withdraw that concession, PAC submits that the proposed argument challenges the reasoning in Sempra Metals, and therefore the basis on which the concession was made. Against this background, it is submitted that HMRC should not be permitted to advance this argument for the first time in this court. In so far as HMRC wish to advance submissions questioning the soundness of the reasoning in Sempra Metals, the court is not inclined to prevent them from doing so, in the particular circumstances of this case. As will be explained, there have been some significant developments in the law of unjust enrichment since the trial before Henderson J, and indeed since the present appeal was brought. In particular, the concept of a benefit being obtained at the expense of the claimant, and the related concept of a transfer of value, were considered by this court only relatively recently. In this appeal, PAC invites the court to extend the reasoning in Sempra Metals beyond the scope of that decision itself, albeit PAC submits that the extension is the logical consequence of that decision. The appeal therefore involves analysing the reasoning in Sempra Metals, and unavoidably requires the court to consider whether that reasoning is consistent with the approach which it has more recently adopted, so as to form part of a coherent body of law. As we explain later, there is indeed a difficulty involved in reconciling Sempra Metals with this courts more recent case law. Accordingly, even if HMRC had not wished to subject the decision in Sempra Metals to critical analysis, that is an exercise which this court could not have avoided. In addition, it is important to bear in mind that this appeal has to be decided in the context of a group litigation order, and also that the point of law which HMRC wish to argue is undoubtedly one of general public importance. We do not consider that allowing these matters of law to be argued involves unfairness to PAC. The essence of HMRCs argument was set out in the written case which they submitted in advance of the hearing of the appeal, although, as often happens, the argument was refined during the hearing. What did Sempra Metals decide? The issue in Sempra Metals was how effect should be given in domestic law to the judgment of the CJEU in the Metallgesellschaft case (Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C-397/98 and C-410/98) EU:C:2001:134; [2001] Ch 620; [2001] ECR I-1727) (Sempra Metals Ltd being the same company, under a new name, as Metallgesellschaft Ltd). The case concerned claims for compound interest in respect of unlawfully levied ACT which had been set off against lawful MCT: in other words, claims falling within category (a) above. The CJEU made it clear that it was for domestic law to determine the juridical basis of the claims: in particular, whether they lay in restitution or in damages. On the hypothesis that, under domestic law, the appropriate basis was restitution, the CJEU stated: 87 In such circumstances, where the breach of Community law arises, not from the payment of the tax itself but from its being levied prematurely, the award of interest represents the reimbursement of that which was improperly paid and would appear to be essential in restoring the equal treatment guaranteed by article 52 of the [EC] Treaty. 88. The national court has said that it is in dispute whether English law provides for restitution in respect of damage arising from loss of the use of sums of money where no principal sum is due. It must be stressed that in an action for restitution the principal sum due is none other than the amount of interest which would have been generated by the sum, use of which was lost as a result of the premature levy of the tax. Equally, on the hypothesis that the claim properly lay in damages, the argument that the claimants could not be awarded interest could not be accepted. Giving effect to the judgment of the CJEU, the lower courts held that the claimants were entitled to recover compound interest on the ACT in respect of the period between the date of payment and the date of set-off. They also expressed the view, obiter, that the same principles should apply to claims in respect of unutilised ACT, falling within category (b) above. HMRCs appeal to the House of Lords was dismissed ([2008] AC 561). For varying reasons, the House held, by a majority, that a claim would lie in unjust enrichment for restitution of compound interest on money which had been paid prematurely as the consequence of a mistake, and that the appropriate measure of restitution in the instant case was compound interest calculated on a conventional basis applicable to government borrowing. The House also held that compound interest was available as damages, where it was the measure of the loss foreseeably suffered by the claimant from the loss of the use of his funds. That aspect of the decision is not in issue in the present case and need not be considered. Lord Nicholls of Birkenhead and Lord Hope of Craighead, who were in the majority on the question of unjust enrichment, emphasised that the interest was not ancillary to a claim for the recovery of a principal sum: rather, the interest was itself the principal sum, claimed as restitution of the time value of money. They interpreted the CJEUs judgment in Metallgesellschaft as meaning that EU law required, as Lord Hope put it at para 9, that the companies must be provided with a remedy in domestic law which will enable them to recover a sum equal to the interest which would have been generated by the advance payments from the date of the payment of the ACT until the date on which the MCT became chargeable: see also, to the same effect, the speech of Lord Nicholls at para 60. In that regard, both Lord Hope and Lord Nicholls referred to para 88 of the judgment of the CJEU, cited above. Lord Nicholls identified the crux of the dispute, at paras 71-73, as being whether the provision English law made for the payment of interest satisfied the EU principle of effectiveness. Lord Hope and Lord Nicholls adopted similar analyses of the basis of the claim in unjust enrichment, at paras 33 and 102 respectively. Lord Hope described the Revenues enrichment at para 33 as the opportunity to turn the money to account during the period of the enrichment. Lord Nicholls analysed the issue in terms of Professor Birkss theory of unjust enrichment by subtraction (that is, at the expense of the claimant), and stated at para 102: The benefits transferred by Sempra to the Inland Revenue comprised, in short, (1) the amounts of tax paid to the Inland Revenue and, consequentially, (2) the opportunity for the Inland Revenue, or the Government of which the Inland Revenue is a department, to use this money for the period of prematurity. The Inland Revenue was enriched by the latter head in addition to the former. The payment of ACT was the equivalent of a massive interest free loan. Restitution, if it is to be complete, must encompass both heads. Restitution by the Revenue requires (1) repayment of the amounts of tax paid prematurely (this claim became spent once set off occurred) and (2) payment for having the use of the money for the period of prematurity. Since the enrichment which had to be undone was the opportunity to turn the money to account during the period before it was lawfully due, it followed that the measure of the enrichment did not depend on what HMRC actually did with the money during that period (Lord Hope at para 33, Lord Nicholls at para 117). In that connection, Lord Nicholls drew an analogy at para 116 with the award of user damages, although such awards are based on wrongdoing and are designed to compensate for loss: One Step (Support) Ltd v Morris-Garner [2018] UKSC 20; [2018] 2 WLR 1353, para 30. In the ordinary course, the market value of the benefit arising from having the use of money was said to be the cost the defendant would have incurred in borrowing the amount in question for the relevant period: a sum which, like all borrowings, would inevitably be calculated in terms of compound interest (Lord Nicholls at para 103). The court could however depart from the market value approach if it were established that it would produce an unjust outcome (Lord Hope at para 48, Lord Nicholls at para 119). Lord Hope and Lord Nicholls proceeded on the basis of a presumption that the innocent recipient of a mistaken payment has benefited from the use of the money, the value of the benefit being the market cost of borrowing the money over the relevant period. The onus is on the defendant to displace that presumption. The innocent recipient, rather than the mistaken payer, is thus exposed to the risks of litigation. Lord Nicholls acknowledged at para 125 that the decision might have serious consequences for public finances, because of the extended limitation period available in cases of mistake, but considered that the issue had been addressed by legislation: The seriously untoward consequences this may have for the Inland Revenue flow from the open-ended character of the extended limitation period prescribed by section 32(1)(c) of the Limitation Act 1980. Parliament has now recognised this extended period should not apply to payments of tax made by mistake: see section 320 of the Finance Act 2004. Lord Walker of Gestingthorpe stated that he was essentially in agreement with Lord Hope and Lord Nicholls (para 154), and that he too would dismiss the appeal, largely for the reasons which they give. He also observed that the crucial insight in their speeches was the recognition that income benefits were more accurately characterised as an integral part of the overall benefit obtained by a defendant who is unjustly enriched (para 178). He went on, however, to state that he must confess that his own inclination would be to extend the equitable jurisdiction to award compound interest, rather than to recognise a restitutionary remedy available as of right at common law (para 184). He added that he felt some apprehension about the suggested conclusion that compound interest should be available as of right, subject only to an exception for subjective devaluation. The other members of the Appellate Committee disagreed with the majority. Lord Scott of Foscote rejected the view that the mere possession of mistakenly paid money - and accordingly the ability to use it if minded to do so - is sufficient to justify not simply a restitutionary remedy for recovery of the money, but a remedy also for recovery of the wholly conceptual benefit of an ability to use the money (para 145). A restitutionary remedy could not in his view encompass the recovery of anything other than the money which the defendant had actually received. In reality, in his view, Sempra was asserting a claim for compensation for its loss of the use of the money, dressed up as a claim in restitution in order to take advantage of the more generous limitation period allowed by section 32(1)(c) of the Limitation Act 1980 (the 1980 Act). Lord Mance also noted the practical context of the issue. The basis on which Sempra principally put their claim was that they had paid the ACT under a mistake of law. On that basis, section 32(1)(c) of the 1980 Act would postpone the commencement of the limitation period until the time when Sempra discovered or could with reasonable diligence have discovered that the ACT was not due: a time which they identified with the date in 2001 when the CJEU issued its judgment in the Metallgesellschaft case. Lord Mance commented (para 200) that the appropriateness of an extended time limit in this context was questionable. As he noted, Lord Hoffmann had recognised in the Kleinwort Benson case (Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, 401) that allowing recovery for mistake of law without qualification, even taking into account the defence of change of position, may be thought to tilt the balance too far against the public interest in the security of transactions, adding that the most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. Like Lord Nicholls, Lord Mance noted that, as regards the future (although not as regards the instant case), section 320 of the Finance Act 2004 meant that section 32(1)(c) of the 1980 Act would no longer apply to mistakes of law relating to a taxation matter under the care and management of HMRC. Like Lord Walker, Lord Mance cautioned against a radical reshaping of the law, observing at para 205 that we must navigate using the reference points of precedent, Parliamentary intervention and analogy, and we should bear in mind the limitations of judicial knowledge and the assistance offered by a series of Law Commission reports. European law left it, in his view, to national law to provide an effective remedy and did not prescribe that this should be by way of compound, rather than simple, interest (paras 201-204). The common law had recognised a claim for money had and received, but not a claim for the use of money had and received. A claim of the latter kind faced a long line of authority over a period of nearly 200 years, including the recent decision of the House in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (paras 203-220). The common law rule had been recognised and effectively endorsed by the Law Revision Committee, whose recommendations on interest in their Second Interim Report, 1934 (Cmd 4546) were implemented by provisions of the Law Reform (Miscellaneous Provisions) Act 1934 (later replaced by section 35A of the 1981 Act) (paras 211-212), by the Law Commission in all its reports on the subject (paras 222-224), and most importantly by Parliament, which had legislated in recent times for the payment of interest, but invariably on a simple basis (paras 212 and 221). There were in addition policy reasons making it unwise to introduce an absolute right to compound interest in restitution. As the Law Commission had noted, compound interest evoked deep-seated fears, because it increased in an exponential rather than a linear way, especially during periods of high inflation (para 222). In the light of such concerns, the Law Commission had made a number of recommendations relating to the introduction of a right to compound interest on a restricted basis. Those recommendations had not been acted on (para 224). The decision of the House on the issues relevant to the present appeal can therefore be summarised as follows: (1) By a majority consisting of Lord Hope, Lord Nicholls and Lord Walker, the House held that the court had jurisdiction at common law (Lord Hope and Lord Nicholls) or at least in equity (Lord Walker) to make an award on the ground of unjust enrichment in respect of the time value of money which was paid prematurely as the consequence of a mistake. The basis of the award was that the benefit by which the recipient of the money was enriched was the time value of the money. The benefit was presumptively quantified as the market value of the use of the money during the period before it was lawfully due, that is, the cost of borrowing an equivalent amount in the market. (2) The same majority held that: in the instant case, the presumption that the Government had (a) benefited from the premature payment of the tax had not been displaced; but (b) the Government was in a different position from ordinary commercial borrowers, in that it could borrow at more favourable rates; and accordingly the claims should be quantified on a conventional basis (c) applicable to Government borrowing. Legal developments since Sempra Metals A number of relevant developments in the law have occurred since Sempra Metals. First, the jurisprudence of the CJEU has developed since its Metallgesellschaft judgment. As was noted above, that judgment described the sum due under EU law, where tax was paid prematurely, and on the hypothesis that the appropriate remedy in domestic law lay in restitution, as the amount of interest which would have been generated by the sum, use of which was lost as a result of the premature levy of the tax (para 88). More recent judgments have provided greater clarity. For example, in Littlewoods Retail Ltd v Revenue and Customs Comrs (Case C-591/10) EU:C:2012:478; [2012] STC 1714, the CJEU stated at para 27 that it is for the internal legal order of each member state to lay down the conditions in which such interest [that is, interest on amounts levied in breach of EU law] must be paid, particularly the rate of that interest and its method of calculation (simple or compound interest). The CJEU also made it clear, in relation to the principle of effectiveness, that national rules in relation to the calculation of interest should not lead to depriving the taxpayer of an adequate indemnity for the loss occasioned (para 29). In Littlewoods Ltd v Revenue and Customs Comrs [2017] 3 WLR 1401, this court held that an award of simple interest was sufficient to comply with that requirement, and that an award of compound interest on overpaid tax was therefore not required by the EU law principle of effectiveness. Recognition that an award of compound interest is not necessary in order to comply with the EU principle of effectiveness affects the context in which these issues have to be considered. Secondly, the Littlewoods case also revealed a conflict between the decision in Sempra Metals and prior legislation. Long before Sempra Metals was decided, Parliament had created a scheme for the repayment of overpaid VAT, currently set out in section 80 of the Value Added Tax Act 1994 (the 1994 Act), with provision for the payment of simple interest in section 78. That section requires HMRC to pay interest on the repaid tax if and to the extent that they would not be liable to do so apart from this section. Entitlement to interest under section 78 is subject to limitations which would be defeated if it were possible for taxpayers to bring a common law claim for interest on mistaken payments. Until Sempra Metals, it had been settled law for about 200 years that no such claim could be brought. In enacting section 78, Parliament legislated on that basis. In deciding Sempra Metals as it did, however, the House of Lords failed to have regard to the scheme which Parliament had established. Nor did it take account of section 826 of ICTA, which also provides for the payment of simple interest on overpaid tax, and covers a range of direct taxes, including ACT and MCT. These provisions are matched by corresponding provisions limiting the liability of taxpayers towards HMRC to simple interest on underpaid tax: see section 74 of the 1994 Act and section 826 of ICTA. The persuasiveness of the majoritys approach in Sempra Metals is diminished by their failure to have regard to these provisions. As Lord Hoffmann observed in Johnson v Unisys Ltd [2001] UKHL 13; [2003] 1 AC 518, para 37: judges, in developing the law, must have regard to the policies expressed by Parliament in legislation ... The development of the common law by the judges plays a subsidiary role. Their traditional function is to adapt and modernise the common law. But such developments must be consistent with legislative policy as expressed in statutes. The courts may proceed in harmony with Parliament but there should be no discord. Against the background of the 1994 Act, in particular, the effect of Sempra Metals, was to create discord of a serious character: it rendered section 78 a dead letter, if that provision were given its natural construction. This court therefore decided in Littlewoods that, in order for section 78 to have the effect which Parliament had intended, it was necessary to depart from its natural construction. Thus the approach of the majority in Sempra Metals led, as Lord Mance had predicted, to a dislocation in a related area of the law which the Appellate Committee had not considered. Thirdly, in Kleinwort Benson [1999] 2 AC 349 it was realised that allowing recovery of payments made under a mistake of law could create problems as the law of limitation then stood, since section 32(1)(c) of the 1980 Act would enable claims to be brought within six years of the mistake being discovered, no matter how long in the past the payment had been made. For that reason, Lord Browne-Wilkinson considered that the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period (p 364). The majority, however, were unpersuaded that reform of the law of restitution should be delayed, and assumed that legislation could be enacted if Parliament considered it desirable to address the limitation question (see, for example, Lord Hoffmann at p 401). Parliament duly enacted such legislation. By the time of the decision in Sempra Metals, the majority therefore considered that the seriously untoward consequences for HMRC (as Lord Nicholls described them at para 125) of claims arising from mistaken payments of tax in the distant past were guarded against by section 320 of the Finance Act 2004, which provided that section 32(1)(c) of the 1980 Act should not apply in relation to a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue. What has become apparent since Sempra Metals, however, is that the problems in relation to limitation which arise from the retrospective effect of that decision, and the decision in Kleinwort Benson, are incapable of being fully addressed by legislation. Repeated attempts by Parliament to address the retrospective impact of those decisions by introducing a limitation period with retrospective effect have been held to be incompatible with EU law: section 80 of the Value Added Tax Act 1994, as originally enacted, in Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] UKHL 2; [2008] 1 WLR 195; section 320 of the Finance Act 2004 in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (Case C-362/12) EU:C:2013:834; [2014] AC 1161; and section 107 of the Finance Act 2007 in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2012] UKSC 19; [2012] 2 AC 337. This problem, of which the House of Lords was unaware at the time when Kleinwort Benson and Sempra Metals were decided, illustrates the risks of effecting major changes to the law of restitution by judicial decision. By applying the declaratory theory of adjudication, the law as altered by the decisions was deemed always to have applied, and the previously settled understanding of the law was treated as a mistake for the purposes of limitation. Consistently with that theory, in Kleinwort Benson the House of Lords held that a right of action had arisen when payments were made under a mistake of law, notwithstanding that no such right of action was recognised by the courts at that time. Similarly in Sempra Metals, the right of action in unjust enrichment arose when the defendant obtained the opportunity to use the money mistakenly paid, notwithstanding that no such right was understood to exist at that time. The tension inherent in the decisions is that the House adhered to the declaratory theory for the purpose of finding that a cause of action based on unjust enrichment had accrued in the past, based on a mistake of law capable of invoking section 32(1)(c) of the 1980 Act, while straining the premise of the theory, namely the need for judicial development of the law to be justifiable by reference to existing legal principles. The consequence was that the rights established by those decisions were deemed to have vested in the claimants before the decisions were reached, with the result that, under EU law, they could not be taken away by retrospective legislation excluding or restricting the operation of section 32(1)(c) without a reasonable transitional period during which claims could be made. The position would have been different if the changes had been effected by legislation, since legislation can, and normally does, take effect prospectively. Fourthly, decisions subsequent to Sempra Metals have demonstrated the degree of disruption to public finances which the decision in that case, taken together with Kleinwort Benson, is capable of causing. The decision in Kleinwort Benson enabled claims to be brought for the repayment of tax which had been paid in ignorance of the fact that the UK law under which it was levied was incompatible with EU law. Since the limitation period did not begin to run until the mistake was or could reasonably have been discovered, such claims could in principle be backdated to the UKs entry into the EU in 1973. Not only could the principal amounts go back, in principle, for a period of several decades, but they had earned interest over that period. If, following Sempra Metals, the interest was compounded over that period, the resultant claims were potentially enormous. The Littlewoods case, for example, concerned overpaid VAT on goods supplied to agents employed to make catalogue sales, as a form of commission paid in kind. Like the present appeal, it was a test case. The amount turning on the outcome of that appeal was estimated by HMRC at 17 billion. That was not the amount of the overpaid tax, or even the amount of the interest on the overpaid tax. It was the difference between compound interest and simple interest. In the present case, as we have explained, the total amount turning on the outcome is estimated by HMRC at 4-5 billion. Even in the context of public finances, these are very large sums. Fifthly, the law of unjust enrichment has developed since Sempra Metals in ways which cannot easily be reconciled with the reasoning of the majority in that case. The development of greatest significance has been a more detailed analysis of the at the expense of question, in Investment Trust Companies v Revenue and Customs Comrs [2017] UKSC 29; [2018] AC 275. It is necessary next to consider that issue. At the expense of assuming for the present that an enrichment arises from having the opportunity to use money mistakenly paid, the question whether it is obtained at the expense of the claimant can best be answered by reference to the analysis of that question in the Investment Trust case. Lord Reed explained at para 42 that the law of unjust enrichment is designed to correct normatively defective transfers of value, usually by restoring the parties to their pre-transfer positions. He went on at para 44 to endorse Lord Clydes dictum in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221, 237 that the principle of unjust enrichment: requires at least that the plaintiff should have sustained a loss through the provision of something for the benefit of some other person with no intention of making a gift, that the defendant should have received some form of enrichment, and that the enrichment has come about because of the loss. Lord Reed also explained at para 50 that, as a general rule, a cause of action based on unjust enrichment is only available in respect of a benefit which the claimant has provided directly to the defendant (the only true exception identified being subrogation following the discharge of a debt, which is arguably based on a different principle). A causal connection between the claimants incurring a loss (in the relevant sense) and the defendants receiving a benefit was not enough to establish a transfer of value. When money is paid by mistake, the claimant normally provides a benefit directly to the defendant: he pays him the money. He normally does so at his own expense: he is less wealthy by virtue of the payment. The transaction is normatively defective: the benefit is provided as the result of a mistake. In those circumstances, an obligation arises immediately under the law of unjust enrichment to reverse the enrichment by repaying the money (or an equivalent amount). The cause of action accrues when the money is mistakenly paid. The majority in Sempra Metals considered that there was also an additional and simultaneous transfer of value, comprising the opportunity to use the money, which also gave rise to a cause of action based on unjust enrichment. That enrichment had to be reversed by the payment of compound interest. This analysis has a number of questionable features, which can be illustrated by an example. If on 1 April the claimant mistakenly pays the defendant 1,000, with the result that the defendant is on that date obliged to repay the claimant 1,000, the defendants repayment of 1,000 on that date will effect complete restitution. Restitution of the amount mistakenly paid in itself restores to the claimant the opportunity to use the money: there is no additional amount due in restitution. That is because there has been only one direct transfer of value, namely the payment of the 1,000. The opportunity to use the money mistakenly paid can arise as a consequence of that transfer, but a causal link is not sufficient to constitute a further, independent, transfer of value. Contrary to the analysis of Lord Nicholls in Sempra Metals (at para 102), the recipients possession of the money mistakenly paid to him, and his consequent opportunity to use it, is not a distinct and additional transfer of value. The position is essentially the same if the 1,000 is repaid not on 1 April but on 1 May. There has been no transfer of value subsequent to 1 April, when the mistaken payment was made. The only transfer of value needing to be reversed remains the payment of the 1,000. The claimant can however be awarded, in addition to the 1,000, simple interest on that amount under section 35A of the 1981 Act. That is because the obligation which arose under the law of unjust enrichment on 1 April, upon the making of the mistaken payment, created a debt. Interest can normally be awarded on a debt under section 35A of the 1981 Act. That interest is intended to compensate the claimant for the loss of the use of the money to which he became entitled to restitution on 1 April. There is no right to interest on the basis of unjust enrichment: failure to pay a sum which is legally due is not a transfer of value, and does not give rise to an additional cause of action based on unjust enrichment. If there was no distinct cause of action for restitution of the opportunity to use the money on the date of the mistaken payment (as explained above), a cause of action based on unjust enrichment cannot have subsequently accrued, since no further defective transfer of value has taken place. The point can also be illustrated by an example used by HMRC. If D owes C 1,000 under a contract, a claim also lies against D for interest under section 35A, from the date when the contractual payment became due. There is no claim against D for interest on the ground of unjust enrichment (even if an unjust factor is present). That is because any benefit obtained by D from his failure to pay the debt on time is not obtained at the expense of C in the relevant sense. There has been no transfer of value from C to D. The latters opportunity to use the money which remains in his possession is the result of his failure to pay the contractual debt. The same analysis applies where the debt is imposed by the law of unjust enrichment, for example as the result of a mistaken payment of 1,000. Any benefit obtained by D as a consequence of his possession of the 1,000 is derived from his failure to pay that debt. It cannot be said to have been transferred from C to D. All this is consistent with a long-established understanding of, first, the nature of the cause of action based on a mistaken payment, and secondly, the basis on which interest is payable. As to the first of these, Lord Mansfield stated in the classic case of Moses v Macferlan (1760) 2 Burr 1005, 1010, that the defendant in an action for money had and received can be liable no further than the money he has received. That approach was followed in many later authorities, until Sempra Metals: see, to give only a few examples, Walker v Constable (1798) 1 Bos & P 306, 307 (The court were of opinion, on the authority of Moses v Macferlan, 2 Burr 1005, that in an action for money had and received the plaintiff could recover nothing but the net sum received without interest), Depcke v Munn (1828) 3 C & P 111 per Lord Tenterden CJ ( the courts have held again and again that interest cannot be recovered in an action for money had and received This has been decided so often, that I cannot now venture to allow the question to be agitated.), Johnson v The King [1904] AC 817 and the Westdeutsche case [1996] AC 669. As to the basis on which interest is payable, a clear explanation was provided by Lord Wright, a judge who was well aware of unjust enrichment (see, for example, Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32), and had also had to consider interest as a member of the Law Revision Committee which reported in 1934, mentioned earlier. In Riches v Westminster Bank Ltd [1947] AC 390, 400, he stated: the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or conversely the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation. Once it is understood that the claim to interest is not truly based on unjust enrichment but on the failure to pay a debt on the due date, the conclusion inevitably follows that interest can be awarded on the claims within categories (b) and (c) under section 35A of the 1981 Act: see BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, and Sempra Metals at paras 104 (Lord Nicholls) and 175 (Lord Walker). On a literal reading of section 35A, no such interest could have been awarded on the claims under category (a). That is because section 35A applies only where there are proceedings for the recovery of a debt (or damages), and therefore does not apply where the defendant has repaid the debt (or has set it off) before the creditor has commenced proceedings for its recovery. An award of interest is nevertheless required in such circumstances by EU law, if an effective restitutionary remedy is to be available under English law in respect of San Giorgio claims: that was the point decided in Metallgesellschaft. It is unnecessary to decide in this appeal how an award of interest should be made available in those circumstances (and the court has heard no argument on the point). But there are a number of potential solutions. For the foregoing reasons, we therefore depart from the reasoning in Sempra Metals so far as it concerns the award of interest in the exercise of the courts jurisdiction to reverse unjust enrichment. As mentioned earlier, it is unnecessary for us to consider the reasoning in that case so far as it concerns the award of interest as damages, and nothing in this judgment is intended to question that aspect of the decision. Since the award of compound interest to PAC by the courts below was based on the application of the reasoning in Sempra Metals which we have disapproved, it follows that HMRC succeed on Issue II, and PACs claims to compound interest under categories (b) and (c) must be rejected. PACs claim to compound interest under category (a) would also have been rejected, if it had not been accepted by HMRC. Finally, in relation to this aspect of the appeal, it is worth adding that the view of the majority in Sempra Metals that the opportunity to use money mistakenly paid should be regarded as an enrichment also raises a number of questions, particularly in relation to the method by which, and the date or dates as at which, the enrichment is to be measured. In addition, if one stands back and considers the realism, and also the fairness, of the approach to enrichment adopted by the majority in Sempra Metals, the results which it produces are concerning. As Professor Burrows has written, in relation to the decision of Henderson J in the Littlewoods case, in his contribution to Commercial Remedies: Resolving Controversies, eds Virgo and Worthington (2017), p 266: if one were to step back from the complex detail, the result of Henderson J applying compound interest on all the mistaken payments from the date of receipt appears to be tantamount to saying that, had the Revenue not been paid those sums, it would have borrowed the same sums at a compound interest rate for five decades. Surely that cannot be right. These issues were not, however, discussed in argument in the present appeal, and in the circumstances it is inappropriate to consider them further. The remaining issues There remain two issues which are relevant to the computation of the amounts which EU law requires HMRC to repay. In order to understand those issues it is necessary to recollect how, under the legislation which was in force in the relevant years, ACT was charged on distributions by a UK-resident company and was set against the paying companys subsequent liability to MCT. Under section 14 of ICTA, ACT was charged when a UK-resident company paid a qualifying distribution, which included the payment of a dividend (section 209). Under section 231 of ICTA, when a UK-resident company made a qualifying distribution, the recipient of the distribution was entitled to a tax credit equal to the proportion of the amount of the distribution which corresponded to the rate of ACT in force when the distribution was made. Under section 238, when a UK-resident company made a qualifying distribution, the sum of the amount of that distribution together with the proportion of that amount which corresponded to the rate of ACT in force when the distribution was made was known as a franked payment (FP). Section 238 also provided that when a UK-resident company received a distribution, in respect of which it was entitled to receive a tax credit, the aggregate of the distribution and the amount of the tax credit was franked investment income (FII). When the recipient company itself made a qualifying distribution in the same accounting period as it received FII, it paid ACT only on the excess of FP over FII (section 241). The UK-resident company (company A) had to make a return and account to HMRC for the ACT quarterly by disclosing the FPs which it made and the FII which it received, foreign income dividends paid and received, and the ACT payable on the FPs and the foreign income dividends: paragraphs 1 and 3(1) of Schedule 13 to ICTA. The ACT which company A paid during an accounting period was then set against its liability (if any) to MCT on its profits in the accounting period by the operation of section 239 of ICTA, which we discuss below. Thus, if company A received a distribution from another UK-resident company (company B) it would not be liable to pay MCT on that distribution (section 208). If company A, having received a distribution from company B, itself made a distribution, it would be liable to pay ACT on the excess of its FP over its FII. When company A came to pay MCT on its profits in the same accounting period it would have been entitled to set off the ACT which it had paid (section 239). The illegality under EU law, which was caused by the UKs failure to match the exemption conferred on dividends received from UK-resident companies by an equivalent credit in respect of overseas-sourced dividends, is to be remedied by a credit for foreign dividends by reference to the FNR, as we have held under Issue I above. Applying the example above but with the receipt by company A of overseas- sourced dividends in place of UK-sourced dividends, under EU law the FNR credit would fall to be applied to its payment of MCT. Thus the MCT which company A paid was unlawful to the extent that the credit had not been given. If company A had itself paid a dividend, the FNR credit should have been applied to reduce the ACT which it had paid. With that introduction we turn to Issue III. Issue III Issue III, on which HMRC seek permission to appeal, is whether a claim for restitution lies to recover lawful ACT, which has been set against unlawful MCT. By the expression lawful ACT we refer to the element within an undifferentiated ACT charge which did not represent unduly levied tax on overseas- sourced dividends. Lawful ACT on the (UK-resident) Company As distribution refers to such ACT as is due after giving effect to (i) the exemption given to income from dividends of UK-resident companies and (ii) (in light of our answer to Issue I) the tax credit which EU law requires to be given to income from dividends from overseas companies. Unlawful MCT in this context refers to such part of the charge to MCT as is attributable to the failure to give the overseas-sourced dividends, which company A received, a tax credit at the FNR to achieve equivalence to the exemption which section 208 gave to dividends received from UK-resident companies. This issue was not argued in the courts below because Henderson J and the Court of Appeal, when considering this case, were bound by the Court of Appeals earlier decision in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2010] EWCA Civ 103; [2010] STC 1251 (FII CA). In that judgment the Court of Appeal held that a taxpayer was entitled to reimbursement of lawful ACT, which HMRC had retained because it had been set against an unlawful MCT charge. The court held that such ACT related directly to the unlawful MCT because the CJEU treated ACT as an advance payment of MCT: FII CA paras 148- 151. The statutory provisions governing the set-off of ACT against MCT were as follows. Section 239(1) of ICTA provided for the automatic set-off of ACT against MCT, thereby reducing company As liability to pay MCT. It provided: advance corporation tax paid by a company (and not repaid) in respect of any distribution made by it in an accounting period shall be set against its liability to corporation tax on any profits charged to tax for that accounting period and shall accordingly discharge a corresponding amount of that liability. Where the tax-paying company did not have a sufficient liability to MCT on its profits to use up the ACT by way of set-off in the same accounting period, the unused ACT could be carried back under section 239(3) which provided: Where in the case of any accounting period of a company there is an amount of surplus advance corporation tax, the company may, within two years after the end of that period, claim to have the whole or any part of that amount treated for the purposes of this section (but not of any further application of this subsection) as if it were advance corporation tax paid in respect of distributions made by the company in any of its accounting periods beginning in the six years preceding that period and corporation tax shall, so far as may be required, be repaid accordingly. In this subsection surplus advance corporation tax in relation to any accounting period of a company, means advance corporation tax which cannot be set against the companys liability to corporation tax for that period because the company has no profits charged to corporation tax for that period The surplus ACT could also be carried forward automatically under section 239(4) which provided: Where in the case of any accounting period of a company there is an amount of surplus advance corporation tax which has not been dealt with under subsection (3) above, that amount shall be treated for the purposes of this section (including any further application of this subsection) as if it were advance corporation tax paid in respect of distributions made by the company in the next accounting period. Section 239(5) explained how the set-off operated under both subsections (1) and (4). It provided: Effect shall be given to subsections (1) and (4) above as if on a claim in that behalf by the company and, for that purpose, a return made by the company under section 11 of the Management Act containing particulars of advance corporation tax or surplus advance corporation tax which falls to be dealt with under those subsections shall be treated as a claim. Company A could also surrender its ACT to its subsidiary in accordance with section 240, with the result that the ACT would be treated as ACT paid by the subsidiary and set against the subsidiarys liability to pay MCT. HMRCs case is simple. They argue that if a taxpaying company included relevant details of ACT paid in its tax return, sections 239(1) and (5) mandated an automatic set-off of the ACT against the companys liability for MCT. If, on a proper understanding of the law, the company did not owe sufficient MCT in the relevant accounting period, the ACT remained surplus and available to be set off in the next accounting period under section 239(4). In other words, HMRC argue that the law treats an unlawful MCT charge as a nullity, with the result that there is no set off under section 239(1) and no enrichment of HMRC by the payment of the ACT, which remained available to offset the taxpaying companys lawful MCT in other accounting periods. PAC opposes the grant of permission to HMRC on this issue and submits that it is a detailed issue of computation which is likely only to affect the appeal in PACs case if PACs approach to Issue V is correct. If this court were to give permission to appeal, PAC advances three arguments. First, it submits that the courts approach should be governed by the principle that the taxpayer should be entitled to recover unduly levied tax. Secondly, it argues that, because the CJEU has characterised ACT as nothing more than a payment of corporation tax in advance (eg FII ECJ I para 88), ACT could only lawfully be charged where it is itself a pre-payment of a lawful charge to MCT. As a result, it contends that the correct analysis is that a payment of ACT, which is subsequently set against an excessive liability to MCT, is an advance payment of an excessive tax liability and is itself the payment of an excessive tax liability. As such, it is liable to be recovered in a claim in restitution. Alternatively, PAC contends that the payment of the ACT relates directly to the unlawfully levied MCT and so is recoverable in a claim in restitution. In support of those contentions PAC relies on dicta of the CJEU in FII ECJ I and FII ECJ II. PACs third argument is that, if it had been aware that it did not have any liability for a substantial part of the MCT, it would have not have paid the ACT. PAC was a subsidiary of Prudential plc and it had no subsidiaries of its own which generated profits giving rise to a liability to corporation tax against which PACs ACT could have been used. It would therefore have paid dividends to its parent company within a group income election so that the ACT was paid at the level of the parent company and would have been available for set-off against the MCT of other subsidiary companies within the group. This, it submits, would have been the only sensible course to avoid the ACT being stranded in PACs accounts. Analysis In our view it is appropriate to give HMRC permission to raise this issue as it is a point of law of general public importance in an appeal to this court in the context of a group litigation order. While PAC submits that it alone is likely to be affected by the determination of this issue, the court is not in a position to assess whether or not that is so. The matter also arises in the FII litigation. HMRC had applied for permission to appeal the Court of Appeals ruling on this issue in FII CA but the determination of that application was postponed by this court by orders dated 8 November 2010 and 9 May 2017. The issue, which will be of relevance to the final determination of the FII litigation, therefore comes to this court in this appeal before this court has addressed the application to appeal in that litigation. In addressing this issue, the starting point is to recall that an entitlement to repayment or restitution in this context requires that there has been an unlawful charge to tax as a result of incompatibility with EU law: San Giorgio. The question we are asked to consider is in substance: have HMRC unlawfully levied ACT by setting it against MCT which has been unlawfully charged? But there is a logically prior question, which is whether there has been any set-off. Company A may have received income which has funded its distribution from UK-resident companies and also from companies resident elsewhere in the EU. In this computational issue the court is not concerned with unlawful ACT, which has been charged on a distribution by company A derived from income which it has received from an overseas-resident company in the absence of sufficient credit for foreign tax on the latter companys distributions. We are concerned with ACT which is unquestionably lawful but which has purportedly been set against an unlawful MCT charge on company A. PAC relies on dicta in FII ECJ I and FII ECJ II to argue that this prima facie lawful charge on company As dividend is tainted by its being merely an advance payment of an unlawful MCT charge. But the CJEU, when it characterised ACT as constituting a form of advance payment of corporation tax (FII ECJ I para 88 and FII ECJ II paras 68 and 110), was well aware of the provisions of ICTA which allowed the taxpaying company to utilise the ACT which it had paid in different ways. Thus, in FII ECJ II at para 6, the CJEU stated: A company had the right to set the ACT paid in respect of a distribution made during a particular accounting period against the amount of mainstream corporation tax for which it was liable in respect of that accounting period, subject to certain restrictions. If the liability of a company for corporation tax was insufficient to allow the ACT to be set off in full, the surplus ACT could be carried back to a previous accounting period or carried forward to a later one, or surrendered to subsidiaries of that company, which could set it off against the amount for which they themselves were liable in respect of corporation tax. (The reference to the surrender of ACT to a subsidiary is a reference to section 240 of ICTA.) As we have shown, section 239 of ITCA did not confine the MCT, against which the ACT could be set, to MCT due for the same accounting period as that in which the ACT was paid (the same accounting period). If there was insufficient MCT due in the same accounting period, the surplus ACT was carried forward automatically to the next accounting period, unless company A elected to use it otherwise, such as by carry back under section 239(3). If the company did not so elect, and if in the same accounting period and subsequent accounting periods company A did not have sufficient MCT to use up the ACT which it had paid, or if Company A did not surrender the ACT under section 240, the ACT was, in PACs words, stranded. But that stranding of the ACT, were it to have occurred, would not affect the lawfulness of the ACT charge. In our view, HMRC are correct in their submission that, if an apparent charge to MCT was unlawful, that charge was a nullity. The ACT could not have been set against a nullity but remained available to be carried back if a claim were made under section 239(3) or for automatic set-off against lawful MCT in a subsequent accounting period under section 239(4) or otherwise to be utilised. Being so available, the lawful ACT did not directly relate to the unlawful MCT in the same accounting period in the sense that penalties and interest may relate to an unlawfully levied tax. Accordingly, HMRC in receiving payment of the lawful ACT did not receive unlawfully levied tax which gave rise to a San Giorgio claim. Further, PAC was obliged by ICTA to pay the lawful ACT. The payment of the ACT did not entail a defective transfer of value which falls to be corrected: the ACT was due when it was paid, and was available to PAC to utilise thereafter. PACs loss in the context of Issue III (ie in relation to lawful ACT) is the result of the levying of unlawful MCT, and, through the misunderstanding of the law which it shared with HMRC, of its not having been able to set the unutilised ACT against its liability for lawful MCT in the same or other accounting periods or otherwise to utilise the ACT to reduce its liability to tax. Its loss in that sense does not support a claim in restitution: Investment Trust Companies v Revenue and Customs Comrs, especially paras 41-45 per Lord Reed. We are informed that PACs corporation tax liabilities in its accounting periods from 1994 to 1998 are not finalised as PACs returns in those years are still open and that therefore it may be possible for PAC to carry forward unutilised ACT to set against its MCT liabilities in those periods. But, whether or not that is the case, in agreement with Henderson J in FII High Court 1 ([2008] EWHC 2893) we consider that an enquiry into whether, and if so how, surplus ACT would otherwise have been used within a group of companies cannot give rise to a claim in restitution but would form part of a claim for damages if the criteria for such a claim were met. We therefore, in agreement with Henderson J in the FII litigation, answer the question raised in Issue III (Does a claim in restitution lie to recover lawful ACT set against unlawful corporation tax?) in the negative. Issue V PAC seeks permission to cross-appeal if (as we have done) we grant HMRC permission to appeal on Issue III. Again, the issue arises in the context of a GLO and we are unable to assess its significance in other cases within the GLO. But it is closely connected with Issue III and has significant consequences for PACs claim for interest. It is appropriate that we address it in the context of this appeal. We therefore grant permission for the issue to be raised. Issue V comprises two related questions concerning the utilisation of ACT on a hypothesis that an undifferentiated fund of lawful and unlawful ACT was purportedly set off against an amount of MCT which was in part lawful and in part unlawful. The first question (Issue V(a)) which the parties have raised is: Where ACT from a pool which includes unlawful and lawful ACT is utilised against an unlawful corporation tax liability, is the unlawful ACT regarded as a pre-payment of the unlawful corporation tax liability or is the ACT so utilised regarded as partly lawful and unlawful pro rata? PAC contends that the unlawful ACT which company A has paid is to be regarded as utilised first against the unlawful MCT. HMRC have argued for a pro rata approach by which the unlawful MCT is regarded as having been met by the utilisation of lawful and unlawful ACT in the same proportion as the unlawful MCT bears to the overall MCT charge. The background is that in so far as unlawful ACT has been utilised against lawful MCT, HMRC have conceded that the time value of the prematurely-paid ACT is recoverable in compound interest, as explained earlier in the discussion of Issue II. In so far as the unlawful ACT has purportedly been utilised against unlawful MCT, the unlawful ACT which the taxpaying company has paid is recoverable together with interest under section 35A of the 1981 Act, as explained in relation to Issue II, as both the ACT charge and the MCT charge were nullities. Henderson J in his second judgment in this case ([2015] EWHC 118 (Ch); [2015] STC 1119) addressed this issue at paras 34-37. He expressed an initial inclination to adopt the pro rata approach as everyone at the time had assumed that the whole of both the ACT and the MCT had been lawfully charged. He decided however that PACs approach was correct because, if the unlawful ACT was regarded as a prepayment of the unlawful MCT, the end result reflected precisely the credit for foreign tax which EU law required, whereas on HMRCs approach company A would have an additional and unnecessary claim to recover the element of lawful ACT which had been utilised against the unlawful MCT. His ruling was made expressly on the basis that he was bound by the Court of Appeals ruling on Issue III above, a ruling which we have now overturned. The Court of Appeal (paras 113-127) disagreed with Henderson Js approach. It stated that the issue was how to determine the extent of the benefit for HMRC in money terms from the payment or bringing into account of an unlawful MCT charge for the purpose of determining the extent of HMRCs unjust enrichment. The court looked for a fair way of determining that enrichment in a situation where an undifferentiated fund of lawful and unlawful ACT had purportedly been set against an apparent liability to MCT, which in fact comprised both lawful and unlawful MCT. The court attached weight to the fact that both PAC and HMRC were unaware of the meaning and effect of the relevant EU law at the time; neither was to blame for the situation; both were disabled by their ignorance of the true state of affairs from applying their minds at the time to the allocation of lawful and unlawful ACT as between the lawful and unlawful elements of MCT. As a result, the court sought to strike a fair balance between their interests by adopting an objective standard. That standard was the pro-rating approach which Henderson J had earlier favoured in his judgment in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2014] EWHC 4302 (Ch); [2015] STC 1471 (FII (High Court) Quantification), para 205. We are not able to reconcile the Court of Appeals ruling with our decision on HMRCs appeal on Issue III, which is inconsistent with the ruling in FII CA by which the Court of Appeal in this case was bound. As HMRC have submitted and we have held under that issue, section 239 has the effect that lawful ACT is not set against unlawful MCT, which is a nullity. The pro rata method, which involves unlawful MCT being met in part by unlawful ACT and in part by lawful ACT, cannot therefore work. Instead, lawful ACT, which was not utilised against lawful MCT, remained available to be claimed against lawful MCT in the same or other accounting periods. The unlawful ACT, which company A paid, was not set against the unlawful MCT charge in a given accounting period because both the unlawful ACT charge and the unlawful MCT charge are nullities. The principled answer is therefore that the unlawful ACT, which company A has paid, must be treated as having been utilised first against the unlawful MCT charge. Where there is no unlawful MCT against which to set the unlawful ACT which has been paid, the residual unlawful ACT is to be treated as utilised against lawful MCT. Because both of the unlawful charges are nullities, the unlawful ACT is itself recoverable, unless it has been set against a lawful MCT charge. When unlawful ACT has been set against lawful MCT, company A has a claim for interest on the ACT so used, as stated in para 78 above. The second question under Issue V relates to the carry back to an earlier quarter of domestic FII received in a later quarter in the same accounting period. To address this, it is necessary to explain the operation of paragraph 4 of Schedule 13 to ICTA. Rather than set out the provision we gratefully adopt the explanation of its effect which Henderson J gave in FII (High Court) Quantification at para 209: The effect of these rather densely worded provisions may be summarised by saying that FII received in a later quarterly return period must first be applied in franking any dividends paid by the company in that period, but that any surplus may then be carried back to frank unrelieved dividends paid in an earlier quarter, thus generating a repayment of ACT. If there has been a change of ACT rates in the meantime, the repayment is not to exceed the amount of the tax credit comprised in the FII which is carried back. If the excess FII was not so used in repayment of ACT paid in the earlier quarter, it was carried forward into the next annual accounting period to set against FPs in the same way (section 241(3)). Issue V(b) asks: Where domestic FII was carried back to an earlier quarter is it to be regarded as having been applied to relieve lawful and unlawful ACT pro rata or only lawful ACT? Henderson J in his second judgment in this case discussed the issue briefly in paras 40-43 after hearing full argument on the point. He decided, with considerable hesitation, that the FII was to be regarded as having been applied to relieve only lawful ACT in the earlier quarter because otherwise FII from UK-sourced dividends, which was entirely lawful, would be used to cancel out part of the credit which EU law requires on foreign income. In reaching this conclusion he departed from the view which he had reached on essentially the same issue in FII (High Court) Quantification at paras 207-211. The Court of Appeal disagreed and (paras 128-133) adopted an approach similar to that which it took on Issue V(a). Again, the court laid stress on the fact that at the time nobody appreciated that the ACT against which the FII was carried back might comprise both lawful and unlawful elements and no-one was to blame. The fair course therefore was to adopt the pro rata approach which the court had taken in relation to Issue V(a). The effect of that approach would be that the primary period of unjust enrichment of HMRC through receipt of the unlawful ACT would be brought to an end and HMRCs enrichment would be measured by the time value of the ACT payment. The court did not see this as cancelling out any part of the credit which EU law required on overseas-sourced dividends. In this appeal PAC renews the arguments which Henderson J favoured. The UK tax system was unlawful because credits were not given under section 231 for tax on overseas-sourced dividends in order to relieve an ACT liability. The use of carried-back FII to relieve unlawful ACT deprived company A of the credits which it should have had for the overseas-sourced dividends. The carried-back FII should therefore be regarded as having been applied to relieve only lawful ACT. HMRCs answer in their written case is that EU law does not mandate a form of credit for overseas-sourced dividends. They quote the statement of the CJEU in para 72 of FII ECJ II: As is clear from para 62 [of the present judgment], the obligation presently imposed on the resident company by national rules, such as those at issue in the main proceedings, to pay ACT when profits from foreign-sourced dividends are distributed is, in fact, justified only in so far as that advanced tax corresponds to the amount designed to make up the lower nominal rate of tax to which the profits underlying the foreign- sourced dividends had been subject compared with the nominal rate tax applicable to the profits of the resident company. HMRC, unexceptionably, interpret this statement as meaning that it is lawful to charge ACT on a dividend paid by company A only to the extent that it was lawful to charge MCT on the profits out of which that dividend was paid. But HMRC go on to say that the relief required was not in the form of a credit which was the equivalent of further FII. We do not accept HMRCs submission on Issue V(b) for the following three reasons. First, it follows from the answer which we have given on Issue I that we reject the contention that no particular form of credit is mandated by EU law. What the CJEU said in para 72 of FII ECJ II must be construed in the light of what it said in paras 61-65 which we have quoted in para 26 above. That in turn falls to be understood against the earlier ruling of the CJEU in FII ECJ I, which we have quoted in para 7 above. In other words, EU law requires a tax credit by reference to the FNR to which the profits of the overseas company have been subject. As a result, the UK can charge ACT in relation to company As dividends so far as they comprise profits from overseas-sourced dividends only to the extent that there is tax due in respect of those dividends after it has given company A that tax credit. Secondly, the consequence of this is that PAC is correct in its contention that HMRCs approach would result in depriving company A of the tax credits on overseas-sourced dividends which EU law mandates. Using the example which PAC gave in its written case, suppose that company A paid ACT of 100 in the first quarter when it had received overseas-sourced dividends which (if EU law had been applied correctly) would have entitled it to a credit of 25. If EU law had been applied correctly in that quarter, the ACT paid would have been 75. Suppose then that in the third quarter company A received FII for UK-sourced dividends which carried credits of 75 which it carried back to the first quarter. On PACs approach, the carried back FII would result in the repayment of all the ACT which had properly been paid. If, as on HMRCs approach, the 75 of FII, which is carried back from the third quarter, were utilised pro rata between the lawful and unlawful ACT which comprised the 100 paid in the first quarter, 18.75 (1/4 of the 75) would be attributed to the unlawful ACT, thereby cancelling to that extent the credit to which company A was entitled in EU law. Thirdly, we are not persuaded by the arguments as to fairness which influenced the Court of Appeal in relation to both of Issues V(a) and V(b). As unlawful ACT is a nullity, the principled answer is that domestic FII carried back to an earlier quarter is to be regarded as having been applied to relieve only lawful ACT so that any excess FII remained available for carry forward under section 241(3). We therefore answer Issue V(b) by holding that domestic FII which is carried back to an earlier quarter under paragraph 4 of Schedule 13 of ICTA is to be regarded as having been applied to relieve only lawful ACT. In further written submissions HMRC and PAC disagree on factual matters which may affect the working out of the rulings which we have made. This court is not in a position to resolve these matters. We will invite submissions in response to our judgment as to how our rulings may be applied. Conclusions For the foregoing reasons, we allow HMRCs appeal on Issues II and III, and dismiss it on Issue I. PACs proposed cross-appeal on Issue IV does not arise, as a result of its success on Issue I, and it also succeeds in its cross-appeal on Issue V(a). In relation to Issue V(b), the court holds that FII carried back to an earlier quarter is to be treated as having been applied to relieve only lawful ACT.

UK-Abs

Prudential Assurance Company (PAC) is a test claimant in this litigation, which relates to periods running from 19902009 and concerns the tax treatment of UK resident companies that received dividends from portfolio shareholdings (i.e. where the investor holds less than 10% of the voting power in the company) in overseas companies. The key features of the tax system at the relevant time were as follows. On receiving dividends from a UK resident company, a UK resident recipient company was exempt from corporation tax under s.208 of the Income and Corporation Taxes Act 1988 (ICTA), and by s.231(1) ICTA, would receive a tax credit equal to the amount of advance corporation tax (ACT) that the distributing company had paid on the distribution. By s.238(1) ICTA, the dividend received and the tax credit together constituted franked investment income (FII) in the hands of the recipient company, which, by s.241 ICTA, could be used to eliminate or reduce its own liability to ACT on distributions (franked payments) to its own shareholders. In contrast, a UK resident company receiving dividends from an overseas company was subject to corporation tax under schedule D of ICTA (DV tax). Furthermore, it did not receive a tax credit on the dividends, which did not qualify as FII, although it could be entitled to some relief against double taxation under domestic rules, or conventions between the UK and other countries. PAC brought a claim to recover corporation tax and ACT levied contrary to EU law. Before PACs claim was heard, the Court of Justice of the European Union (CJEU) concluded in two decisions that the UKs treatment of overseas dividends was contrary to EU law in that it treated dividends received from overseas companies less favourably than dividends from UK resident companies.1 Following these decisions, the first instance judge gave two judgments in favour of PAC. The Court of Appeal dismissed HMRCs appeal against the judges conclusions on Issues I, II, III and IV below, and allowed in part their appeal on Issue V. It is common ground that PAC is entitled to an appropriate tax credit, and to repayment of any tax unlawfully charged. The current dispute concerns the amount to be awarded, which depends on issues of domestic and EU law. The Supreme Court unanimously dismisses HMRCs appeal on Issue I, allows HMRCs appeal on Issues II and III, and allows PACs cross appeal on Issue V. Lord Mance, Lord Reed and Lord Hodge give a joint judgment, with which Lord Sumption and Lord Carnwath agree. Issue I: does EU law require the tax credit to be set by reference to the overseas tax actually paid, as HMRC submit, or by reference to the foreign nominal tax rate (FNR), as PAC submits? 1 See the decision in Case C 446/04 Test Claimants in the FII Group Litigation and the Reasoned Order in Case C 201/05 Test Claimants in the CFC and Dividend Group Litigation v Revenue and Customs Comrs The Supreme Court dismisses HMRCs appeal on this issue. The CJEU jurisprudence, particularly Case C 35/11 FII ECJ II, clearly establishes that the credit for foreign dividends should be by reference to the FNR, rather than by reference to the actual or effective tax incurred overseas. There is no suggestion in the CJEU case law that any distinction is to be drawn in this respect between portfolio and non portfolio holdings [17 18, 27 28]. As a result of the Courts conclusion on Issue I, Issue IV (i.e. the construction of the domestic provisions if HMRC were to succeed on Issue I) does not arise [34]. Issue II: is PAC entitled to compound interest in respect of tax which was levied in breach of EU law, on the basis that HMRC were unjustly enriched by the opportunity to use the money in question? The Supreme Court allows HMRCs appeal on this issue. In Sempra Metals Ltd v Inland Revenue Comrs [2007] UKHL 34 a majority of the House of Lords held that a claim would lie in unjust enrichment for restitution of compound interest on money which was paid prematurely as the consequence of a mistake [43 55]. A number of developments since that decision indicate that it failed to have regard to tax legislation, created problems in the law of limitation, and caused disruption in public finances [56 67]. Furthermore, it is inconsistent with Investment Trust Companies v Revenue and Customs Comrs [2017] UKSC 29, which explained the requirement for a defective transfer of value by the claimant to the defendant. The recipients possession of money mistakenly paid to him, and his consequent opportunity to use it, is not a distinct transfer of value, additional to the payment of the money. Accordingly, there is no right to interest on the basis of unjust enrichment [68 74]. The Supreme Court therefore departs from the reasoning in Sempra Metals on this issue and rejects PACs claims to compound interest (except insofar as they were conceded by HMRC) [80]. Issue III: does a claim in restitution lie to recover lawful ACT which was set against unlawful mainstream corporation tax (MCT)?2 The Supreme Court allows HMRCs appeal on this issue, answering this question in the negative. When the lawful ACT was set against unlawful MCT, HMRC did not receive unlawfully levied tax, as required for a San Giorgio claim [98].3 If an apparent charge to MCT was unlawful, that charge was a nullity. The lawful ACT could not have been set against a nullity, but would remain available to be otherwise utilised [101 102]. Furthermore, the payment of the ACT did not entail a defective transfer of value which fell to be corrected, as required by Investment Trust Companies (above) [103]. Issue V(a): where ACT from a pool which includes unlawful and lawful ACT is utilised against an unlawful MCT liability, is the unlawful ACT regarded as a pre payment of the unlawful MCT liability or is the ACT so utilised regarded as partly lawful and unlawful pro rata? The Supreme Court allows PACs cross appeal on this issue. Unlawful ACT is treated as set first against unlawful MCT. Further, because unlawful MCT is a nullity, the unlawful ACT is recoverable unless it has been set against a lawful MCT charge [111]. Issue V(b): where domestic FII was carried back to an earlier quarter, is it to be treated as having been applied to relieve the lawful and unlawful ACT pro rata, or only lawful ACT? The Supreme Court allows PACs cross appeal on this issue. Domestic FII which is carried back to an earlier quarter is to be regarded as having been applied to relieve only lawful ACT. HMRCs pro rata approach would deprive a company of the tax credit at the FNR required under EU law [118 122].

Three of the appeals involve linked issues as to the treatment of qualifying children and their parents, under the statutory regime contained in Part 5A of the Nationality, Immigration and Asylum Act 2002. The fourth (AP (Sri Lanka)) raises a related issue under the Rules. Part 5A, headed Article 8 of the ECHR: Public Interest Considerations, was introduced by amendment with effect from 28 July 2014 (section 19 of the Immigration Act 2014). By section 117A it is to apply where a court or tribunal is required to determine whether a decision made under the Immigration Acts breaches a person's right to respect for private and family life under article 8, and would so be unlawful under section 6 of the Human Rights Act 1998. For these purposes, the public interest question is defined as the question whether such an interference is justified under article 8(2). Section 117A(2) provides: (2) In considering the public interest question, the court or tribunal must (in particular) have regard in all cases, to the considerations listed in section (a) 117B, and (b) in cases concerning the deportation of foreign criminals, to the considerations listed in section 117C. Section 117B, applicable in all cases, lists a series of such considerations. They include in summary, the public interest in the maintenance of effective immigration controls (subsection (1)); the public interest in those seeking to enter being able to speak English (subsection (2)), and be financially independent (subsection (3)); the little weight to be accorded to private life or relationships established when a person was in the country unlawfully (subsection (4)), or when immigration status was precarious (subsection (5)); and (directly relevant in this case) (6) In the case of a person who is not liable to deportation, the public interest does not require the persons removal where the person has a genuine and subsisting parental (a) relationship with a qualifying child, and (b) leave the United Kingdom. it would not be reasonable to expect the child to A qualifying child is defined for this purpose as a person under the age of 18 who is a British citizen, or (b) has lived in the United Kingdom for a continuous period of seven years or more (section 117D(1)). The exclusion of persons liable to deportation covers non British citizens whose deportation is deemed conducive to the public good and foreign criminals as defined by the UK Borders Act 2007 (see Immigration Act 1971 section 3(5); UK Borders Act 2007 section 32(1) (4)). Section 117C sets out additional considerations in cases involving foreign criminals. For this purpose a foreign criminal is defined by section 117D(2) as a person, who not a British citizen, and who has been convicted of an offence in the United Kingdom, if it attracted a sentence of at least 12 months, or the offence caused serious harm or he is a persistent offender. To show the more intricate structure of this section, it needs to be set out in full: (1) The deportation of foreign criminals is in the public interest. (2) The more serious the offence committed by a foreign criminal, the greater is the public interest in deportation of the criminal. (3) In the case of a foreign criminal (C) who has not been sentenced to a period of imprisonment of four years or more, the public interest requires Cs deportation unless Exception 1 or Exception 2 applies. (4) Exception 1 applies where (a) C has been lawfully resident in the United Kingdom for most of Cs life, (b) C is socially and culturally integrated in the United Kingdom, and (c) there would be very significant obstacles to Cs integration into the country to which C is proposed to be deported. (5) Exception 2 applies where C has a genuine and subsisting relationship with a qualifying partner, or a genuine and subsisting parental relationship with a qualifying child, and the effect of Cs deportation on the partner or child would be unduly harsh. (6) In the case of a foreign criminal who has been sentenced to a period of imprisonment of at least four years, the public interest requires deportation unless there are very compelling circumstances, over and above those described in Exceptions 1 and 2. (7) The considerations in subsections (1) to (6) are to be taken into account where a court or tribunal is considering a decision to deport a foreign criminal only to the extent that the reason for the decision was the offence or offences for which the criminal has been convicted. It is unnecessary to refer in detail to the Changes to the Immigration Rules made at the same time (paragraphs 398 399), since it is not argued that any differences are material to the issues before us. It is to be noted however that the question whether the effect of Cs deportation would be unduly harsh (section 117C(5)) is broken down into two parts in paragraph 399, so that it applies where: it would be unduly harsh for the child to live in the (a) country to which the person is to be deported; and (b) UK without the person who is to be deported. it would be unduly harsh for the child to remain in the The Appellants case, in short, is that in determining whether it is reasonable to expect a child to leave the UK with a parent (under section 117B(6)), or whether the effect of deportation of the parent on the child would be unduly harsh (under section 117C(5)) the tribunal is concerned only with the position of the child, not with the immigration history and conduct of the parents, or any wider public interest factors in favour of removal. By contrast the Secretary of State argues that both provisions require a balancing exercise, weighing any adverse impact on the child against the public interest in proceeding with removal or deportation of the parent. Paragraph 276ADE(1)(iv) The fourth appeal (AP (Sri Lanka)) raises related issues under paragraph 276ADE(1)(iv). That paragraph of the Rules comes under the heading Requirements to be met by an applicant for leave to remain on the grounds of private life. It reads: The requirements to be met by an applicant for leave to remain on the grounds of private life in the UK are that at the date of the application the applicant: . (iv) is under the age of 18 years and has lived continuously in the UK for at least seven years (discounting any period of imprisonment) and it would not be reasonable to expect the applicant to leave the UK. It will be seen immediately that the substance of this provision, in particular the seven year criterion and the reasonableness tests, appears identical to that of section 117B(6), taken with the definition of qualifying child. However, in this context the so called seven year concession for children has a much longer history. It was reviewed by the Upper Tribunal (McCloskey J, President, sitting with UT Judge Bruce) in PD (Sri Lanka) v Secretary of State for the Home Department [2016] UKUT 108 (IAC), [2016] Imm AR 797, paras 8ff. He traced its ancestry back to Deportation Policy 5/96 (DP5/96), as revised in February 1999. For present purposes it may be noted that the policy in its original form did not incorporate a reasonableness test, but did include in a list of relevant factors any history of criminal behaviour by the parents. Unfortunately, as the Court of Appeal graphically explained in NF (Ghana) v Secretary of State for the Home Department [2008] EWCA Civ 906, [2009] Imm AR 155, paras 22ff, the application of the policy in practice was plagued by confusion caused by differing or uncertain Ministerial and Departmental statements over the ensuing years. It was eventually withdrawn in December 2008. The accompanying Ministerial statement indicated that it would be replaced by consideration under the Immigration Rules and article 8, which would ensure a fairer, more consistent approach to all cases involving children, whether accompanied or unaccompanied, across UKBA (Hansard (HC Debates), 9 December 2008, Written Ministerial Statements, cols 49 50WS) . Returning to the Presidents account in PD, the new paragraph 276ADE(1)(iv) was first introduced with effect from 9 July 2012, but without a specific reference to reasonableness. The President (para 12) referred to the accompanying Ministerial Statement of Intent including the following: The key test for a non British citizen child remaining on a permanent basis is the length of residence in the UK of the child which the Immigration Rules will set as at least the last seven years, subject to countervailing factors. The changes are designed to bring consistency and transparency to decision making. (Statement of Intent: Family Migration (June 2012), para 56) Paragraph (iv) was amended (with effect from 13 December 2012) to its present form, including the reasonableness test, apparently without further Ministerial explanation of the change. The President also cited (para 16) relevant guidance contained in an Immigration Directorate Instruction (IDI) of the Home Office entitled Family Life (as a partner or parent) and Private Life: Ten Year Routes, published in August 2015, extracts of which were appended to the judgment (Appendix 2). They included a section headed Would it be unreasonable to expect a non British citizen child to leave the UK?, under which were set out a number of relevant considerations, such as risk to the childs health, family ties in the UK and the likelihood of integration into life in another country and: b. Whether the child would be leaving the UK with their parent(s) It is generally the case that it is in a childs best interests to remain with their parent(s). Unless special factors apply, it will generally be reasonable to expect a child to leave the UK with their parent(s), particularly if the parent(s) have no right to remain in the UK. There was no reference in the list to the criminality or immigration record of the parents as a relevant factor. The most recent version of the IDI (22 February 2018), no doubt taking account of Court of Appeal decisions to which I shall refer below, includes an additional paragraph, which more closely reflects the Secretary of States submissions in the present case: The consideration of the childs best interests must not be affected by the conduct or immigration history of the parent(s) or primary carer, but these will be relevant to the assessment of the public interest, including in maintaining effective immigration control; whether this outweighs the childs best interests; and whether, in the round, it is reasonable to expect the child to leave the UK. (Family Migration: Appendix FM Section 1.0b. Family Life (as a Partner or Parent) and Private Life: Ten Year Routes, p 76) Interpretation General approach This group of sections needs to be looked at in the context of the history of attempts by the Government, with the support of Parliament, to clarify the application of article 8 in immigration cases. In Hesham Ali v Secretary of State for the Home Department [2016] UKSC 60, [2016] 1 WLR 4799 this court had to consider rule changes introduced with similar objectives in July 2012. The background to those changes was explained by Lord Reed (paras 19 21), their avowed purpose being to promote consistency, predictability and transparency in decision making, and to reflect the Governments and Parliaments view of how, as a matter of public policy, the balance should be struck (para 21). In a case heard shortly afterwards, R (Agyarko) v Secretary of State for the Home Department [2017] UKSC 11; [2017] 1 WLR 823, paras 8 10, Lord Reed referred to the previous law as established in Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167, where it was held that non compliance with the Rules, not themselves reflecting the assessment of proportionality under article 8, was the point at which to begin, not end consideration of article 8. The new Rules, as he said by reference to government policy statements, were designed to change the position comprehensively by reflecting an assessment of all the factors relevant to the application of article 8 (para 10). Part 5A of the 2002 Act takes that process a stage further by expressing the intended balance of relevant factors in direct statutory form. It is profoundly unsatisfactory that a set of provisions which was intended to provide clear guidelines to limit the scope for judicial evaluation should have led to such disagreement among some of the most experienced Upper Tribunal and Court of Appeal judges. Rather than attempt a detailed analysis of all these impressive but conflicting judgments, I hope I will be forgiven for attempting a simpler and more direct approach. I start with the expectation that the purpose is to produce a straightforward set of rules, and in particular to narrow rather than widen the residual area of discretionary judgment for the court to take account of public interest or other factors not directly reflected in the wording of the statute. I also start from the presumption, in the absence of clear language to the contrary, that the provisions are intended to be consistent with the general principles relating to the best interests of children, including the principle that a child must not be blamed for matters for which he or she is not responsible, such as the conduct of a parent (see Zoumbas v Secretary of State for the Home Department [2013] UKSC 74, [2013] 1 WLR 3690, para 10 per Lord Hodge). The specific provisions It is natural to begin with the first in time, that is paragraph 276ADE(1)(iv). This paragraph is directed solely to the position of the child. Unlike its predecessor DP5/96 it contains no requirement to consider the criminality or misconduct of a parent as a balancing factor. It is impossible in my view to read it as importing such a requirement by implication. As has been seen, section 117B(6) incorporated the substance of the rule without material change, but this time in the context of the right of the parent to remain. I would infer that it was intended to have the same effect. The question again is what is reasonable for the child. As Elias LJ said in MA (Pakistan) Upper Tribunal (Immigration and Asylum Chamber) [2016] EWCA Civ 705, [2016] 1 WLR 5093, para 36, there is nothing in the subsection to import a reference to the conduct of the parent. Section 117B sets out a number of factors relating to those seeking leave to enter or remain, but criminality is not one of them. Subsection 117B(6) is on its face free standing, the only qualification being that the person relying on it is not liable to deportation. The list of relevant factors set out in the IDI guidance (para 10 above) seems to me wholly appropriate and sound in law, in the context of section 117B(6) as of paragraph 276ADE(1)(iv). On the other hand, as the IDI guidance acknowledges, it seems to me inevitably relevant in both contexts to consider where the parents, apart from the relevant provision, are expected to be, since it will normally be reasonable for the child to be with them. To that extent the record of the parents may become indirectly material, if it leads to their ceasing to have a right to remain here, and having to leave. It is only if, even on that hypothesis, it would not be reasonable for the child to leave that the provision may give the parents a right to remain. The point was well expressed by Lord Boyd in SA (Bangladesh) v Secretary of State for the Home Department 2017 SLT 1245: 22. In my opinion before one embarks on an assessment of whether it is reasonable to expect the child to leave the UK one has to address the question, Why would the child be expected to leave the United Kingdom? In a case such as this there can only be one answer: because the parents have no right to remain in the UK. To approach the question in any other way strips away the context in which the assessment of reasonableness is being made He noted (para 21) that Lewison LJ had made a similar point in considering the best interests of children in the context of section 55 of the Borders, Citizenship and Immigration Act 2009 in EV (Philippines) v Secretary of State for the Home Department [2014] EWCA Civ 874, para 58: 58. In my judgment, therefore, the assessment of the best interests of the children must be made on the basis that the facts are as they are in the real world. If one parent has no right to remain, but the other parent does, that is the background against which the assessment is conducted. If neither parent has the right to remain, then that is the background against which the assessment is conducted. Thus the ultimate question will be: is it reasonable to expect the child to follow the parent with no right to remain to the country of origin? To the extent that Elias LJ may have suggested otherwise in MA (Pakistan) para 40, I would respectfully disagree. There is nothing in the section to suggest that reasonableness is to be considered otherwise than in the real world in which the children find themselves. Turning to section 117C the structure is not entirely easy to follow. It starts with the general rules (1) that deportation of foreign criminals is in the public interest, and (2) that the more serious the offence the greater that interest. There is however no express indication as to how or at what stage of the process those general rules are to be given effect. Instead, the remainder of the section enacts specific rules for two categories of foreign criminals, defined by reference to whether or not their sentences were of four years or more, and two precisely defined exceptions. For those sentenced to less than four years, the public interest requires deportation unless exception 1 or 2 applies. For those sentenced to four years or more, deportation is required unless there are very compelling circumstances, over and above those described in Exceptions 1 and 2. The difficult question is whether the specific rules allow any further room for balancing of the relative seriousness of the offence, beyond the difference between the two categories. The general rule stated in subsection (2) might lead one to expect some such provision, but it could equally be read as no more than a preamble to the more specific rules. Exception 1 seems to leave no room for further balancing. It is precisely defined by reference to three factual issues: lawful residence in the UK for most of Cs life, social and cultural integration into the UK, and very significant obstacles to integration into the country of proposed deportation. None of these turns on the seriousness of the offence; but, for a sentence of less than four years, they are enough, if they are met, to remove the public interest in deportation. For sentences of four years or more, however, it is not enough to fall within the exception, unless there are in addition very compelling circumstances. Given that exception 1 is self contained, it would be surprising to find exception 2 structured in a different way. On its face it raises a factual issue seen from the point of view of the partner or child: would the effect of Cs deportation be unduly harsh? Although the language is perhaps less precise than that of exception 1, there is nothing to suggest that the word unduly is intended as a reference back to the issue of relative seriousness introduced by subsection (2). Like exception 1, and like the test of reasonableness under section 117B, exception 2 appears self contained. On the other hand the expression unduly harsh seems clearly intended to introduce a higher hurdle than that of reasonableness under section 117B(6), taking account of the public interest in the deportation of foreign criminals. Further the word unduly implies an element of comparison. It assumes that there is a due level of harshness, that is a level which may be acceptable or justifiable in the relevant context. Unduly implies something going beyond that level. The relevant context is that set by section 117C(1), that is the public interest in the deportation of foreign criminals. One is looking for a degree of harshness going beyond what would necessarily be involved for any child faced with the deportation of a parent. What it does not require in my view (and subject to the discussion of the cases in the next section) is a balancing of relative levels of severity of the parents offence, other than is inherent in the distinction drawn by the section itself by reference to length of sentence. Nor (contrary to the view of the Court of Appeal in IT (Jamaica) v Secretary of State for the Home Department [2016] EWCA Civ 932, [2017] 1 WLR 240, paras 55, 64) can it be equated with a requirement to show very compelling reasons. That would be in effect to replicate the additional test applied by section 117C(6) with respect to sentences of four years or more. KO and the cases on section 117C(5) I will start by looking in detail at KO because it was the decision of the Upper Tribunal in that case which highlighted the area of disagreement lying at the heart of the main issues in these appeals. There is said to be a difference as to the extent to which account is to be taken of the relative severity of the relevant offences. As will be seen, when it comes to the actual determinations of the cases, the differences seem more apparent than real. KO the facts KO entered the UK unlawfully in 1986 and has no leave to enter or remain. He has a wife, a step daughter, and four children with his wife. The four children were born between 28 August 2005 and 9 August 2013 and are British citizens. The step daughter who has indefinite leave to remain was born on 23 December 1997 and is now an adult. KO is a foreign criminal as defined in section 117D(2) of the 2002 Act, having been convicted in August 2011 of conspiracy to defraud and sentenced to imprisonment for 20 months. On 8 April 2014, the Secretary of State decided to deport him. A determination of the First tier Tribunal allowing his appeal was set aside by the Upper Tribunal, while preserving certain findings of fact, and directions made for a resumed hearing. In a decision dated 25 September 2015, UT Judge Southern took the view that in applying the unduly harsh test it was necessary to take account of the criminality of the parent. In that respect he differed from the view recently taken by the Upper Tribunal in MAB (USA) v Secretary of State for the Home Department [2015] UKUT 435 16 June 2015 (UT Judge Grubb and Deputy UT Judge Phillips) (MAB). He determined that it would not be unduly harsh for the children to remain in the UK with their mother if KO were deported, but indicated that he would have reached a different view if required to focus solely on the position of the children. On 20 April 2016 the decision in KO was upheld by the Court of Appeal: MM (Uganda) v Secretary of State for the Home Department [2016] EWCA 617, [2016] Imm AR 954 (Laws, Vos, Hamblen LJJ). The earlier cases Authoritative guidance as to the meaning of unduly harsh in this context was given by the Upper Tribunal (McCloskey J President and UT Judge Perkins) in MK (Sierra Leone) v Secretary of State for the Home Department [2015] UKUT 223 (IAC), [2015] INLR 563, para 46, a decision given on 15 April 2015. They referred to the evaluative assessment required of the tribunal: By way of self direction, we are mindful that unduly harsh does not equate with uncomfortable, inconvenient, undesirable or merely difficult. Rather, it poses a considerably more elevated threshold. Harsh in this context, denotes something severe, or bleak. It is the antithesis of pleasant or comfortable. Furthermore, the addition of the adverb unduly raises an already elevated standard still higher. On the facts of that particular case, the Upper Tribunal held that the test was satisfied: Approached in this way, we have no hesitation in concluding that it would be unduly harsh for either of the two seven year old British citizen children concerned to be abruptly uprooted from their United Kingdom life setting and lifestyle and exiled to this struggling, impoverished and plague stricken west African state. No reasonable or right thinking person would consider this anything less that cruel. This view was based simply on the wording of the subsection, and did not apparently depend on any view of the relative severity of the particular offence. I do not understand the conclusion on the facts of that case to be controversial. The Secretary of States submission that section 117C(5) required the tribunal to balance, not merely the general interest in deportation of foreign criminals, but the relative severity of the particular offences, seems to have been first considered in detail by the Upper Tribunal in MAB noted above, although in the end the point was not determinative. The appellant had been sentenced to three years imprisonment for a number of sexual offences involving children and was to be deported to USA. The First tier Tribunal allowed his appeal, holding that it would be unduly harsh for his three children to have to live in the USA or to remain in the UK without him. This decision was reversed by the Upper Tribunal, which held following MK that it could not be established that the effect on the children was excessive, inordinate or severe, and that the only proper finding was that the effect on them was not unduly harsh (para 80). Again this view was reached without any consideration of the relative severity of the particular offences. However, the tribunal in MAB had earlier recorded a submission of Mr Richards, the Home Office Presenting Officer: Mr Richards submitted that even though deportation might have very harsh consequences, whether it was unduly harsh could only be determined by looking at the magnitude of the public interest furthered by the individuals deportation. He submitted that the more serious the crime the greater must be the consequences for them to be properly characterised unduly harsh. (para 50) At this time it seems to have been accepted by the Department that the issue of reasonableness under section 117B focussed only on the position of the child, but it was submitted that section 117C (and the equivalent paragraph 399) represented a change of approach. This submission was rejected: Mr Richards accepted the issue of whether it would be reasonable for a child to live in the deportees country or remain in the UK without the deportee did not involve an assessment of the public interest. We had also never understood it to require that. We do not consider that the replacement of reasonableness with unduly harsh had changed the approach to the Rules. Now, as then, the focus is on the impact upon the individual child (or partner) (para 72) The tribunal found some support for that approach in the use of the same expression, unduly harsh, in the context of asylum claims, where the possibility of internal relocation is in play, and where there is no balancing exercise but rather an evaluative exercise as to whether an individual cannot be expected to move and live within their own country because of the impact upon him or her. (para 73) Given that the decision in MAB was a fully reasoned judgment of a two judge Upper Tribunal, it is not clear why the Secretary of States representative felt it appropriate to argue for a different approach in KO, heard only three months later. (I will return to this point at the end of the judgment.) Nor is it clear from the report what if any submission was made about the relationship of sections 117B and 117C. However in KO Upper Tribunal Judge Southern disagreed with the approach of the tribunal in MAB. He thought that they had given insufficient weight to the need to give effect to different levels of criminality under section 117C(2). As he explained: One response to this difficulty might be thought to be as follows. As the rules themselves distinguish between levels of criminality by providing a different framework for those who have been sentenced to more than four years imprisonment, is that sufficient to accommodate the requirements of section 117C(2)? However, an example illustrates how that is not an adequate response. Imagine two persons, A and B, who are foreign criminals facing deportation. A has been sentenced to 12 months imprisonment for, say, making a fraudulent motor insurance claim. B has been sentenced 47 months imprisonment for a serious offence of possession [of] class A drugs with intent to supply, a category of offence that the Secretary of State considers to be particularly serious in the context of immigration control. If the approach advocated in MAB were correct there would be no basis upon which to distinguish between those two foreign criminals, despite the demand of section 117C(2) (para 15) The same emphasis on section 117C(2) was at the heart of the key passage of the judgment of Laws LJ in MM (Uganda) in holding that MAB was wrongly decided: 23. The context in these cases invites emphasis on two factors, (1) the public interest in the removal of foreign criminals and (2) the need for a proportionate assessment of any interference with article 8 rights. In my judgment, with respect, the approach of the Upper Tribunal in MAB ignores this combination of factors. The first of them, the public interest in the removal of foreign criminals, is expressly vouched by Parliament in section 117C(1). Section 117C(2) then provides (I repeat the provision for convenience): The more serious the offence committed by a foreign criminal, the greater is the public interest in deportation of the criminal. 24. This steers the tribunals and the court towards a proportionate assessment of the criminals deportation in any given case. Accordingly the more pressing the public interest in his removal, the harder it will be to show that the effect on his child or partner will be unduly harsh. Any other approach in my judgment dislocates the unduly harsh provisions from their context. It would mean that the question of undue hardship would be decided wholly without regard to the force of the public interest in deportation in the particular case. But in that case the term unduly is mistaken for excessive which imports a different idea. What is due or undue depends on all the circumstances, not merely the impact on the child or partner in the given case. In the present context relevant circumstances certainly include the criminals immigration and criminal history. He found no assistance in parallels with the use of the same term in the refugee law, since the asylum context of internal relocation issues was far removed from that of the present rules (para 25). He concluded that MAB was wrongly decided and that the expression unduly harsh in section 117C(5) and in the rules, requires regard to be had to all the circumstances including the criminal's immigration and criminal history (para 26). Laws LJs approach has the advantage of giving full weight to the emphasis on relative seriousness in section 117C(2). However, on closer examination of the language of the two exceptions, and of the relationship of the section with section 117B, as discussed above, I respectfully take a different view. Once one accepts, as the Department did at that stage (rightly in my view), that the issue of reasonableness under section 117B(6) is focussed on the position of the child, it would be odd to find a different approach in section 117C(5) at least without a much clearer indication of what is intended than one finds in section 117C(2). It is also difficult to reconcile the approach of Judge Southern or Laws LJ with the purpose of reducing the scope for judicial evaluation (see para 15 above). The examples given by Judge Southern illustrate the point. On his view, the tribunal is asked to decide whether consequences which are deemed unduly harsh for the son of an insurance fraudster may be acceptably harsh for the son of a drug dealer. Quite apart from the difficulty of reaching a rational judicial conclusion on such a question, it seems to me in direct conflict with the Zoumbas principle that the child should not be held responsible for the conduct of the parent. The decision in KO However, when one comes to the actual decision of Judge Southern in KO, it is not clear that his approach was materially different from that of the President in MK or indeed the tribunal in MAB. He adopted with one qualification the guidance in MAB as to the meaning of unduly harsh test: The consequences for an individual will be harsh if they are severe or bleak and they will be unduly so if they are inordinately or excessively harsh taking into account all of the circumstances of the individual Although I would add, of course, that all of the circumstances includes the criminal history of the person facing deportation. (para 26) Applying that test he said: 43. There is undoubtedly a close relationship between this father and his children, as one would expect in any family living together as does this one. The preserved finding of fact is that, although it would not be unduly harsh for the four younger children to move to Nigeria, the reality of the situation is that they will remain here and, as the family relationships cannot be maintained by modern means of communication, there will be a complete fracture of these family relationships. The claimant is not authorised to work and so has been unable to provide financial support for his family but his role within the household has meant that his wife has been able to work, which she would find hard or impossible if she had to care on a daily basis for the children without her husband's assistance. Thus it is said that if the claimant is removed, the main household income will be lost and the children would be subject to economic disadvantage. But, again, that is not an experience that can, in my judgment, be categorised as severe or bleak or excessively harsh as, like any other person lawfully settled in the United Kingdom, the claimant's wife and family will have access to welfare benefits should they be needed. 44. Nor do I have any difficulty in accepting the submission that the children, who have enjoyed a close and loving relationship with their father, will find his absence distressing and difficult to accept. But it is hard to see how that would be any different from any disruption of a genuine and subsisting parental relationship arising from deportation. As was observed by Sedley LJ in AD Lee v Secretary of State for the Home Department [2011] EWCA Civ 248: Judge Southern went on to consider how he would have decided the case applying his understanding of the approach in MAB. He described the difference as stark: The tragic consequence is that this family, short lived as it has been, would be broken up for ever, because of the appellants bad behaviour. That is what deportation does. This family relationship was not, of course, short lived but the point is the same. Nothing out of the ordinary has been identified to demonstrate that in the case of this particular family, when balanced against the powerful public interest considerations in play, although the children will find separation from their father to be harsh, it will not be, in all of the circumstances, unduly harsh for them each to remain in the United Kingdom after their father is removed to Nigeria. (paras 43 44, emphasis added) It will be recalled that the MAB approach has been summarised as follows: The phrase unduly harsh in paragraph 399 of the Rules (and section 117C(5) of the 2002 Act) does not import a balancing exercise requiring the public interest to be weighed against the circumstances of the individual (whether child or partner of the deportee). The focus is solely upon an evaluation of the consequences and impact upon the individual concerned. In this appeal if there is to be no balancing exercise requiring the public interest to be weighed and if the focus is solely upon an evaluation of the consequences and impact upon the claimants children, it is clear that the application of paragraph 399(a) can deliver only one answer, that being that it would be unduly harsh for the claimant's children to remain in the United Kingdom without their father, given that there is a close parental relationship which cannot be continued should their father be deported. (para 45) Miss Giovanetti for the Secretary of State takes issue with that alternative reasoning, which she criticises as applying too low a standard. I agree. The alternative seems to me to treat unduly harsh as meaning no more than undesirable. Contrary to the stated intention it does not in fact give effect to the much stronger emphasis of the words unduly harsh as approved and applied in both MK and MAB. Conversely, I find the main reasoning difficult to fault. It is notable that, in that passage, contrary to the thrust of the earlier discussion, no account is taken of the seriousness of the particular offences, or of the particular criminal history of the father. On its face that approach seems no different from that which I have accepted as correct in the earlier discussion. It is also consistent with that in the end adopted by the Upper Tribunal on the facts of MAB and by contrast with its response to the much more severe situation considered in MK. For these reasons I would dismiss the appeal in KO. The other cases Against that background I can deal more shortly with the other cases. IT is also a foreign criminal by reason of his conviction on four counts of supplying class A drugs, for which he was sentenced to imprisonment for 42 months. A deportation order was made against him on 29 October 2009, an appeal against that decision was dismissed and IT was deported to Jamaica on 21 July 2010, where he continues to reside. He has a wife (the sponsor) and child (R, born 30 September 2002) in the UK, who are both British nationals. IT applied to revoke his deportation order on 23 September 2013. That application was refused on 9 May 2014. In a decision given on 5 September 2014, the First tier Tribunal allowed ITs appeal, holding that the consequences were unduly harsh for the child R. It acknowledged the seriousness of the appellants offences, and that the more serious the offence the greater the public interest in deportation (para 33). However it noted that R had special educational needs and medical problems associated with microcephaly, and that he was about to start secondary school and was on the brink of puberty. The consequences were not unduly harsh for the sponsor, who could relocate to Jamaica. In Rs case however the threshold was crossed. It found that the parental relationship between IT and R was subsisting and genuine, adding: It is claimed that [R] cannot join the appellant in Jamaica because [R] has a flying phobia. There is no objective evidence of that. Following Sanade (British Children Zambrano Dereci) [2012] UKUT 48 (IAC); [2012] Imm AR 597, however, we find that [R] is a British citizen and it is not possible to expect him to relocate outside the European Union (para 30) The tribunal concluded: 33. [R] has reached an important stage in his life where his particular needs are likely to increase. The Sponsor cannot reasonably be expected to cope alone. 34. The consequences of deportation for the appellant are harsh: he is separated from his wife and child and step children but we find that that is the foreseeable consequence of his serious criminal behaviour. All other things being equal, those consequences could be mitigated by the Sponsor and [R] joining the appellant in Jamaica and living with him there, alternatively by visits and regular contact by telephone and other means. It is clear from the decision of the Upper Tribunal in Sanade however that as the Sponsor and [R] are British citizens and therefore citizens of the European Union, it is not possible to require them to relocate outside the European Union. Moreover, although the Sponsor has visited the appellant three times in the last four years [R] has not done so because of a phobia of flying. As a result [R] has not seen his father for over four years and has no prospect of doing so for the remainder of his childhood while the deportation order remains in effect. Given [R]s condition and special educational needs, we find that the consequences of not revoking the deportation order are unduly harsh and we allow the appeal. On 12 January 2015 the Upper Tribunal dismissed the Secretary of States appeal. It confirmed the relevance of the decision in Sanade (para 18). It accepted that the tribunal had found no evidence to support the alleged phobia of flying but saw this as one aspect of the determination, which did not have any material effect on the overall outcome (para 22). The Court of Appeal [2017] 1 WLR 240 took a different view, in a judgment given by Arden LJ. Although this was a case about revocation of a previous deportation, rather than deportation as such, she noted that it was effectively common ground that section 117C applied so that the deportation order could only be revoked if its retention is determined to be unduly harsh; the dispute was as to the weight to be given in that determination to the public interest in deporting foreign criminals who have committed serious offences (para 2). By that time MM (Uganda) had been decided. Following the approach in that case, she said: the public interest must be brought into account. Therefore, the court must know what that public interest is in any particular circumstance in order to give appropriate weight to it (para 51). She added: 54. Moreover, it is clear from section 117C(2) that the nature of the offending is also to be taken into account. The tribunal will have access to the circumstances of the offence and to the length of the sentence and so on. 55. Subsection (1) and (2) of section 117C together make manifest the strength of the public interest. In order to displace that public interest, the harshness brought about by the continuation of the deportation order must be undue, ie it must be sufficient to outweigh that strong public interest. Inevitably, therefore, there will have to be very compelling reasons She found little evidence that the tribunal had given appropriate weight to the public interest, for example by considering alternative ways in which Rs care needs could be met, or whether his phobia about flying ruled out other forms of contact, for example in some other part of Europe which he could access by car or train. She concluded: 62. I conclude that the FTT did not demonstrate that they had given appropriate weight to the public interest. If the FTT indeed considered that the circumstances were very compelling, it was for them to demonstrate this in the reasons they gave . 64. The balancing exercise in this case has to be performed again. The FTT did not seek to analyse whether there were very compelling reasons why the deportation order should be revoked Mr Drabble for IT submits that the courts reasoning is open to the same criticisms as the decision in MM (Uganda) on which it relied. In any event he criticises the courts introduction of a compelling reasons test which is not found in the relevant sub section. I agree that for that reason at least the Court of Appeals reasoning cannot stand. The FTT could not be criticised for not applying a test which was not in the relevant provision. For the reasons I have given, I also think it was wrong to proceed on the basis that section 117C(2) required the nature of the offending to be taken into account. It is to be noted that the decisions of both tribunals were made before the guidance given in MK and later cases as to the high hurdle set by the unduly harsh test. It may be that with the benefit of that guidance they would have assessed the facts in a different way. However, I do not consider that the decisions can be challenged for that reason alone. If the tribunals applied the correct test, and, if that may have resulted in an arguably generous conclusion, it does not mean that it was erroneous in law (see R (MM (Lebanon)) v Secretary of State for the Home Department [2017] UKSC 10; [2017] 1 WLR 771, para 107). The Court of Appeals suggestion that they should have considered alternatives ways of meeting, perhaps in Europe, does not seem to have been part of the Departments case before the tribunal. However, Miss Giovanetti submits that the tribunal erred in proceeding on the basis that R, as a British citizen, could not be expected to relocate outside the UK. In so far as a concession to that effect was made in Sanade (British children Zambrano Dereci) [2012] UKUT 48, [2012] Imm AR 597, it was in error, as had since been confirmed by the Court of Appeal (Secretary of State for the Home Department v VM (Jamaica) [2017] EWCA Civ 255, para 64). I agree that on this point the First tier Tribunal erred in law (although there appears to be some uncertainty about the Departments current practice on this issue). There is also a significant inconsistency in the tribunals reasoning in the other part of its concluding paragraph. Having earlier accepted that the alleged phobia of flying was unsupported by evidence, it went on to treat it as one of the reasons for allowing the appeal. I cannot agree with the Upper Tribunal that this point was immaterial. For these reasons I would dismiss the appeal and confirm the order of the Court of Appeal for remittal to the Upper Tribunal. NS and AR both entered the UK as students, on 19 February 2004 and 4 February 2003 respectively. NSs wife and elder child entered as dependants of NS in December 2004. NS has a second child, born in the UK in 2008. ARs wife and child entered as his dependants in February 2004. In October 2008, NS and AR made separate applications for leave to remain as Tier 1 (post study worker) migrants. In early 2009 the Secretary of State refused these applications on the basis that both NS and AR were involved in a scam by which they (and numerous others) falsely claimed to have successfully completed postgraduate courses at an institution called Cambridge College of Learning (CCL). NS and AR both appealed against the Secretary of States decisions. After some procedural delays, their appeals were ultimately joined, and came before UT Judge Perkins. In a determination issued on 5 November 2014, he dismissed the appeals, finding that NS and AR had deliberately submitted false documents to support applications to extend their stays, and by so doing were acquiescing in a cynical plot to undermine the Rules by issuing meaningless certificates (para 179). He acknowledged however that the difficulty is the children (para 182). It is unnecessary to set out in full the extended passage in which he carefully considered their position against the principles set out in section 117B. He started by referring to section 117B(6), of which he said: I remind myself that this is a NOT a deportation case and so the public interest does not require the persons removal where (a) the person has a genuine and subsisting parental relationship with a qualifying child (as is clearly the case here) and (b) it would not be reasonable to expect the child to leave the United Kingdom (see section 117B(6)). (para 183) He also referred to section 117B(5) requiring that little weight should be given to a private life established by a person at a time when the persons immigration status is precarious: I am satisfied that their status became precarious [at latest] when their applications for further leave were refused in 2009 so much of the private life relied upon attracts little weight. (para 186) He referred in detail to the evidence of the childrens experience of this country and their likelihood of being able to adapt to Sri Lanka. He thought that the parents would do well for the children in Sri Lanka just as they have in the United Kingdom, but added: He concluded: Nevertheless the children will lose much. They have no knowledge of life outside the United Kingdom and have done well in the United Kingdom. If they remained they could be expected [to] take full advantage of the education system and removing them will unsettle them. I have no difficulty in concluding that the best interests of the children require that they remain in the United Kingdom with their parents where they are settled. That, from their point of view, would be an ideal result. (paras 193 194) I do remind myself that one of the children, particularly, has been in the United Kingdom for more than ten years and that this represents the greater part of a young life by someone who can be expected to be establishing a private and family life outside the home. I remind myself, too, that none of the children here have any experience of life outside the United Kingdom and they are happy and settled and doing well. The fact is their parents have no right to remain unless removal would contravene their human rights. I remind myself of my findings concerning the need to maintain immigration control by removing the first, second and third appellants. Given their behaviour I would consider it outrageous for them to be permitted to remain in the United Kingdom. They must go and in all the circumstances I find that the other appellants must go with them. (paras 198 199) Mr Knafler supports the other appellants in their challenge to the reasoning of MM (Uganda). He says that it is even clearer in the context of section 117B that parental misconduct is to be disregarded. I accept that UTJ Perkins final conclusion is arguably open to the interpretation that the outrageousness of the parents conduct was somehow relevant to the conclusion under section 117B(6). However, read in its full context I do not think he erred in that respect. He had correctly directed himself as to the wording of the subsection. The parents conduct was relevant in that it meant that they had to leave the country. As I have explained (para I would dismiss this appeal. 18 above), it was in that context that it had to be considered whether it was reasonable for the children to leave with them. Their best interests would have been for the whole family to remain here. But in a context where the parents had to leave, the natural expectation would be that the children would go with them, and there was nothing in the evidence reviewed by the judge to suggest that that would be other than reasonable. Pereira (AP) AP is now 19 years of age. He first came to the UK on 6 August 2006, with his parents, and as the dependant of his father (Mr P) who had been granted leave to enter as a student, and obtained further grants of leave, up until 15 August 2012. On 15 August 2012, Mr P applied for a Tier 1 (Entrepreneur) visa. His leave, and that of his family including AP, were extended whilst that application was determined and the refusal unsuccessfully appealed. On 5 November 2013, AP applied for leave to remain in reliance upon paragraph 276ADE(1)(iv) of the Rules, since he had by that time been living continuously in the UK for seven years. The Secretary of State refused this application on 18 March 2014. APs appeal against this decision initially succeeded before the First tier Tribunal, but on 19 June 2015 the Upper Tribunal set aside this determination and, re determined and then dismissed APs appeal. It held that it was reasonable for AP to accompany his parents to their country of origin at what was a natural break in his education, and that the decision was proportionate. APs appeal was one of the cases before the Court of Appeal in MA (Pakistan) [2016] 1 WLR 5093. The Court of Appeal allowed his appeal on the basis, not of an error under the rule, but that the tribunal judge had erred in his approach to proportionality by failing to identify APs best interests or recognise them as a primary consideration (para 116 per Elias LJ). It ordered that the case should be remitted to the Upper Tribunal for a fresh determination. Mr Gill argues that, applying the correct approach to paragraph 276ADE(1)(iv), APs appeal should have succeeded under that rule also. The Secretary of State points out that, since AP is now aged 19 and has spent more than half of his life living continuously in the UK, he is in principle qualified for leave to remain under paragraph 276ADE(1)(v) of the Rules. It seems to me unnecessary to say more about this case, which is to be remitted in any event to the tribunal. The issues before the tribunal were not limited by the order. If it is not disposed of by agreement as suggested by the Secretary of State, it will fall to be considered in accordance with the law as stated in this judgment including the correct approach to para 276ADE(1)(iv). I would therefore simply dismiss the appeal, and confirm the order of the Court of Appeal remitting the case to the tribunal. Concluding remarks I end with a brief comment on procedure. It has taken almost four years for these cases to reach the Supreme Court. In the meantime there have been significant differences of approach and conflicting decisions at each level. The view of the Department itself, at least of the effect of section 117B(6), seems to have changed over time. I have noted the continuing debate before the Upper Tribunal and the Court of Appeal. Unfortunately these differences are far from surprising given the unhappy drafting of the statutory provisions. But it was clearly desirable that a definitive interpretation could be settled as quickly as possible. At the Upper Tribunal level Judge Southern was not strictly bound by the previous decision in MAB, although judicial comity would normally lead to it being treated as persuasive unless there were clear reasons for taking a different view. There is provision under the relevant Practice Directions for starred decisions to be treated as authoritative (Para 12.1 of the Practice Directions for the Immigration and Asylum Chamber of the First tier Tribunal and the Upper Tribunal); and see Nationality, Immigration, and Asylum Act 2002, section 107(3)) (as inserted by para 22 of Sch 2 to the Asylum and Immigration (Treatment of Claimants, etc) Act 2004 and as substituted by para 28 of Sch 1 to the Transfer of Functions of the Asylum and Immigration Tribunal Order 2010 (SI 2010/21)) . It may be that the uncertainty at that level could have been resolved at an early stage by selecting a suitable case for such treatment. This of course would not resolve the problem of disagreements at Court of Appeal level. However, I note that there is now provision in suitable cases for leapfrog of appeals from the Upper Tribunal to the Supreme Court. This was introduced by section 64 of the Criminal Justice and Courts Act 2015, by way of insertion of new section 14A and B into the Tribunal, Courts and Enforcement Act 2007. The procedure requires a certificate from the Upper Tribunal, one ground being that a point of law is involved of general public importance relating wholly or mainly to the construction of a statutory provision, which has been fully argued and considered in the Upper Tribunal (section 14A(4)(a)). It is then for the Supreme Court to decide whether it is expedient to grant permission (section 14B(3)). Clearly it is a procedure which should be used with care, since it will normally be more satisfactory for these issues to be resolved at Court of Appeal level, and in any event for the Supreme Court to have the benefit of its views. However, these appeals raised a relatively narrow point of construction of a new set of provisions intended to clarify a contentious area of law applicable to many cases before the Secretary of State and the tribunals. I say no more than that its use could properly be considered in future cases raising comparable issues, and calling for speedy resolution in the public interest.

UK-Abs

Part 5A of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) is headed Article 8 ECHR: Public Interest Considerations. Section 117A applies where a court or tribunal needs to determine whether an immigration decision breaches a persons right to respect for private and family life. In considering the public interest question whether an interference is justified under Article 8(2) the court must have regard to the considerations listed in section 117B and, in cases concerning the deportation of foreign criminals, to the considerations in section 117C. A foreign criminal is a person who is not a British citizen and who is convicted of an offence in the UK that attracted a sentence of at least 12 months, caused serious harm, or is a persistent offender. Section 117B includes a provision that where a person is not liable to deportation as a foreign criminal, the public interest does not require the persons removal if that person has a genuine and subsisting relationship with a qualifying child and it would not be reasonable to expect the child to leave the UK. A qualifying child is a person under 18 and is a British citizen or has lived in the UK for a continuous period of seven years or more. Section 117C provides that deportation of foreign criminals is in the public interest but, if sentenced to less than four years imprisonment, there is an exception where there is a genuine and subsisting parental relationship with a qualifying child, and the effect of deporting the person would be unduly harsh on the child. Three appellants (KO, IT and NS) argue that when determining whether it is reasonable to expect a child to leave the UK, or whether the effect of deportation of a person would be unduly harsh on their child, the tribunal is only concerned with the position of the child and not with the conduct of the parents. The respondent argued that both provisions require a balancing exercise, weighing the impact on the child against the wider public interest. The fourth appeal (Pereira, regarding AP) concerns immigration rule 276ADE(1)(iv), which provides that leave to remain on the grounds of private life should be granted to an applicant who is under 18, has lived continuously in the UK for seven years, and whom it would not be reasonable to expect to leave the UK. APs application was refused on the basis that it was reasonable for him to accompany his parents to their country of origin. The Supreme Court unanimously dismisses the appeals. Lord Carnwath gives the sole judgment, with which the other Justices agree. General approach The purpose of Part 5A of the 2002 Act is to produce a straightforward set of rules and to reduce the need for discretionary judgement when taking account of public interest or other factors not directly reflected in the wording of the statute. It also presumed that those rules are intended to be consistent with the general principles relating to the best interests of children [15]. The specific provisions Rule 276ADE(1)(iv) contains no requirement to consider the criminality or misconduct of a parent as a balancing factor and such a requirement cannot be read in by implication [16]. Section 117B of the 2002 Act does not include criminality as a consideration [17]. However, it is inevitably relevant to consider where the parents, apart from the relevant provision, are expected to be, as it will normally be reasonable for the child to be with them. To that extent the record of the parents may become indirectly material if it leads to them having to leave the UK. It is only if it would not be reasonable for the child to leave with them that the provision may give the parents a right to remain [18]. In section 117C of the 2002 Act, unduly harsh introduces a higher hurdle than that of reasonableness under section 117B. Unduly goes beyond a level of harshness that may be acceptable or justifiable in the relevant context. It does not require a balancing of relative levels of severity of the parents offence, other than is inherent in the distinction drawn by the section itself regarding length of sentence, and it does not require very compelling reasons [23]. The cases KO and IT concerned section 117C of the 2002 Act. In KO the Upper Tribunal judge was wrong to decide that he should take account of the criminality of the parent in applying the unduly harsh test [26, 32]. However, this did not affect the correctness of his conclusion, as his overall approach seemed no different to that which the Supreme Court accepts as correct [33 36]. In IT the Court of Appeal was wrong to introduce a compelling reasons test and to proceed on the basis that the assessment of harshness required the nature of offending to be considered [42]. However, the First tier Tribunal had erred in proceeding on the basis, unsupported by the evidence, that ITs child, as a British citizen, could not be expected to relocate outside the UK [44]. The Supreme Court confirms the order of the Court of Appeal for remittal to the Upper Tribunal [45]. NS concerned section 117B of the 2002 Act. The parents had falsely claimed to have completed a postgraduate course in order to obtain leave to remain [46]. The Upper Tribunal judges conclusion, read in its full context, did not involve any error of approach. He was entitled to regard the parents conduct as relevant to the extent that it meant they had to leave the country, and to consider the position of the child on that basis [51]. Pereira concerned rule 276ADE(1)(iv). The Court of Appeal ordered that the case should be remitted to the Upper Tribunal for a fresh determination and it did not limit the issues before the tribunal. As AP is now aged 19 he is in principle qualified for leave to remain under rule 276ADE(1)(v) and so the appeal may be disposed of by agreement. If not, it will fall to be considered in accordance with the law stated in this judgment. No further order is required [54 56].

A makes a careless misrepresentation which causes economic loss to B. There was no contract between them. But did A owe a duty of care to B? No, said the trial judge. Yes, said the appellate court. So it is A who brings this further appeal. Ms Steel, who was the first defender and is now the first appellant, is a solicitor. At the material time she was a partner in Bell & Scott LLP, a firm of solicitors in Glasgow, who were the second defenders and are now the second appellants; I will refer to them as the firm. NRAM Ltd, until recently named NRAM Plc and, prior to that, named Northern Rock (Asset Management) Plc, was the pursuer and is now the respondent; I will refer to it as Northern Rock. Ms Steel and the firm appeal against an interlocutor issued by an Extra Division of the Inner House of the Court of Session (Lady Smith; Lord Brodie who dissented; and Lady Clark of Calton who agreed with Lady Smith) on 19 February 2016. By its interlocutor, the Inner House allowed Northern Rocks reclaiming motion in respect of an interlocutor which had been issued in the Outer House by the Lord Ordinary, Lord Doherty, on 5 December 2014. He had sustained the pleas in law of Ms Steel and the firm and had assoilzied them from the first conclusion of the summons. In other words he had dismissed Northern Rocks claim. The Inner House, however, sustained Northern Rocks second plea in law and substituted an award of damages in its favour against Ms Steel and the firm in the sum of almost 370,000, being the sum which the Lord Ordinary had assessed as the amount of damages payable by them to Northern Rock in the event that, contrary to his conclusion, they were liable to it at all. For many years prior to 2007 Ms Steel had acted for Mr Hamish Munro. From 2005 onwards she also acted for a company in which he had an interest, namely Headway Caledonian Ltd; I will refer to it as Headway. In 1997 Headway had purchased Cadzow Business Park in Hamilton. The property, which comprised Units 1, 2, 3 and 4, had been registered in the Land Register under two separate titles. In order to make the purchase, Headway had borrowed part of the price from Northern Rock; and in return it had granted Northern Rock an all sums standard security over the property, which had been registered against the titles in 1998. Indeed in 2002 Headway had granted Northern Rock a floating charge over all its assets. In 2005 Headway proposed to sell Unit 3 of the business park. Ms Steel acted for it in the sale. So she negotiated on Headways behalf with Northern Rock for the release of the unit from its security. Northern Rock did not appoint solicitors to represent it in that regard; it was not its practice to do so in relation to a negotiation of that character. It agreed to release the unit from its security in return for a partial redemption of its loan, namely a repayment of almost 470,000. The transaction duly proceeded. Ms Steel forwarded for execution by Northern Rock deeds of restriction, by which its security was restricted to Units 1, 2 and 4. It executed them and returned them to her. The sale of Unit 3, unencumbered, then proceeded; and, on behalf of Headway, Ms Steel remitted the sum of almost 470,000 to Northern Rock. Later in 2005 Headway proposed to sell a property in Lossiemouth over which Northern Rock held a standard security for a separate loan. Again, Ms Steel acted for Headway in the sale. Again, she dealt directly with Northern Rock in respect of the repayment of its loan and the discharge of its security. The sale, the repayment and the discharge all duly proceeded. In 2006 Headway entered into heads of agreement for the sale of Unit 1 of the business park in Hamilton for 560,000. Ms Steel was instructed to act on its behalf in the proposed sale. Either she or Mr Munro himself asked Northern Rock to release Unit 1 from its security. Northern Rock obtained a valuation of Units 2 and 4 in the sum of 1,425,000. It noted that its loan to Headway then secured on the three units was about 1,222,000 and decided to require repayment of 495,000 in return for the release of its security upon Unit 1, which would leave the balance of its loan apparently well secured upon Units 2 and 4. In September 2006, by email to Mr Munro, Northern Rock therefore confirmed that it would release its security upon Unit 1 in consideration of a repayment of 495,000 by way of reduction of the loan. By its email Northern Rock made clear that it expected its security to remain in place in relation to Units 2 and 4 unless and until they were also sold. Mr Munro at once forwarded Northern Rocks email to Ms Steel. Headway accepted its terms. Ultimately it was agreed that the transaction of sale would settle on 23 March 2007. Several weeks beforehand Mr Munro had, by email, instructed Ms Steel that, upon settlement, she should remit 470,000 (later corrected to 495,000) to Northern Rock and should remit the balance of the proceeds to Headway. At 5.00 pm on 22 March 2007, namely the eve of the proposed settlement, Ms Steel sent to Northern Rock the email which is central to these proceedings. She wrote: Subject: headway caledonian limited sale of Pavilion 1 Cadzow Park Hamilton (title nos ) Helen/Neil I need your usual letter of non crystallisation for the sale of the above subjects to be faxed through here first thing tomorrow am if possible marked for my attention I have had a few letters on this one for previous other units that have been sold. I also attach discharges for signing and return as well as the whole loan is being paid off for the estate and I have a settlement figure for that. Can you please arrange to get these signed and returned again asap. Many thanks Jane A Steel On any view this was an extraordinary email. It was quite wrong for Ms Steel to say that the whole loan was to be paid off. It had never been suggested to her, or at all, that the whole loan was to be repaid. Her instructions from Headway had never been to that effect. On the contrary, and as she had been told, Northern Rocks loan was to be reduced by repayment only of 495,000 and its security upon Units 2 and 4 was to remain. Equally, it was quite wrong for Ms Steel to say that she had a settlement figure for repayment of the whole loan. She had no such thing. Northern Rock had never supplied such a figure to her; it would have been irrelevant. In evidence to the Lord Ordinary given seven years later, Ms Steel said that she accepted that she must have sent the email but said that she had no recollection of having done so and that she could not explain why she had so misrepresented the nature of the proposed transaction between her client and Northern Rock. No doubt Ms Steel is usually a solicitor of the utmost competence but on this occasion she was guilty of gross carelessness. Labouring, as she was at the time when she sent the email to Northern Rock, under the misapprehension that Headway was undertaking to repay the whole loan secured on the remaining three units, Ms Steel attached to it not the two draft deeds of restriction of Northern Rocks security to Units 2 and 4 which would have been appropriate to the agreement reached, but, instead, two draft deeds of discharge of its security upon all three units, being one deed for each of the two registered titles. Ms Steels email, addressed to Helen and Neil at Northern Rock, was read by Mr (Neil) Atkin, a case manager, and, at 8.58 am on 23 March 2007, attached to an email of his own, he forwarded it and its attachments to Mr Clarke, who, as the head of the Loan Review Team, had authority within Northern Rock to authorise discharges. One minute after receiving the two emails Mr Clarke, who had read them albeit not Ms Steels attachments, forwarded them to Ms Harrison in Northern Rocks administration team. Mr Clarke had made no attempt to check the accuracy of Ms Steels statements against the material on Northern Rocks file. Ms Harrison apparently understood, and correctly understood, that, by forwarding the emails to her, Mr Clarke was authorising her to cause the deeds of discharge to be executed as well as to draft, for his signature, the requested letter of non crystallisation of the floating charge over Unit 1. On that morning of 23 March 2007, the two deeds of discharge were therefore executed on behalf of Northern Rock; a letter of non crystallisation was drafted and signed by Mr Clarke; and copies of all of them were at once faxed to Ms Steel. Thus it was that, on that same day, upon her undertaking to deliver the original deeds of discharge to the solicitors for the purchasers within seven days, Ms Steel settled the sale of Unit 1 on Headways behalf. She remitted 495,000 to Northern Rock, which received it on 27 March and apparently raised no question about the amount of it. On that day it posted the original deeds of discharge to her and two days later, in compliance with her undertaking, she forwarded them to the purchasers solicitors, who caused them to be registered in the Land Register. Thus was Northern Rocks security on Units 2 and 4 discharged. Until 2010 Headway continued to make interest payments to Northern Rock on the balance of the loan. Headway then went into liquidation; and it was at that time, according to evidence given on behalf of Northern Rock, that it discovered that its security for the loan had been discharged. Units 2 and 4 had, however, by then been sold. As had been foreshadowed in 2006, Headway had sold them later in 2007; Ms Steel had again acted for it in the sales and she had extracted from Northern Rock the necessary letters of non crystallisation of the floating charge. One might expect that, when alerted to the proposed sales and if continuing to believe that its standard security upon the units remained in place, Northern Rock would then have purported to enforce it. But there is no evidence to that effect. These later events are shrouded in mystery. The court will proceed, as invited, on the basis that, by the email dated 22 March 2007, Ms Steel and the firm caused both the discharge of Northern Rocks security over Units 2 and 4 and, resulting therefrom, an ultimate loss to it, net of recovery elsewhere, of almost 370,000. It notes, however, that the issue in the case might well have been cast in terms of whether they were the cause of Northern Rocks loss rather than whether they owed a duty of care to it. In Customs and Excise Comrs v Barclays Bank Plc [2006] UKHL 28, [2007] 1 AC 181, Lord Mance at para 85 described the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 as the fountain of most modern economic claims. In the Hedley Byrne case the appellant asked its bankers to inquire into the stability of a company and, in response to the inquiry, the companys bankers, acting (so it was assumed) carelessly, gave false information about the company, which it expressed as without responsibility but on which the appellant relied to its detriment. Because of the disclaimer the appellants claim against the companys bankers failed. The House of Lords held, however, that in the absence of the disclaimer the bankers would have owed a duty of care to the appellant. At p 529 Lord Devlin held that, in the absence of a contract between a representor and a representee, a duty of care in making the representation arose only if the representor had assumed responsibility for it towards the representee; and he proceeded to interpret all five of the speeches delivered in that case as requiring that the responsibility should have been voluntarily accepted or undertaken. The assumption of responsibility could, he explained at pp 529 and 530, be express or implied from all the circumstances. Lord Pearce added at p 539 that liability in such circumstances could arise only from a special relationship. What is noteworthy for present purposes is the emphasis given in the decision in the Hedley Byrne case to the need for the representee reasonably to have relied on the representation and for the representor reasonably to have foreseen that he would do so. This is expressly stressed in the speech of Lord Hodson at p 514. In fact it lies at the heart of the whole decision: in the light of the disclaimer, how could it have been reasonable for the appellant to rely on the representation? If it is not reasonable for a representee to have relied on a representation and for the representor to have foreseen that he would do so, it is difficult to imagine that the latter will have assumed responsibility for it. If it is not reasonable for a representee to have relied on a representation, it may often follow that it is not reasonable for the representor to have foreseen that he would do so. But the two inquiries remain distinct. In the decades which followed the decision in the Hedley Byrne case, it became clear that not all claims in tort for losses consequent upon representations carelessly made could satisfactorily be despatched by reference to whether the representor had assumed responsibility for it towards the representee. A case in point is the situation in which the representor is bound by a contract with a third party to make a representation upon which the claimant has relied: an analysis of whether, in making the representation in those circumstances, he has voluntarily assumed responsibility for it towards the claimant would be artificial. Thus in Smith v Eric S Bush and Harris v Wyre Forest District Council [1990] 1 AC 831 the claimants, in purchasing their houses, had relied on information about their condition contained in reports given by surveyors pursuant to contracts between them and prospective mortgagees. The House of Lords held that the surveyors owed duties of care to the claimants. Lord Griffiths at p 862 explained that the law did not in the context before the court ask whether the surveyors had voluntarily assumed responsibility towards the claimants in giving the information. But he did so in terms which were arrestingly wide. He said that the test of an assumption of responsibility was neither helpful nor realistic (or, he added at p 864, at any rate not so in most cases) and that it had meaning only if it referred to the circumstances in which the law deemed responsibility to have been assumed. In effect Lord Griffiths was suggesting that the test identified only a conclusion rather than a criterion. Lord Griffiths, with whom three other members of the committee agreed, proceeded at p 865 to propound a threefold test by reference to which the surveyors owed a duty of care to the claimants. The test required first that it was foreseeable that, were the information given negligently, the claimants would be likely to suffer damage; second that there was a sufficiently proximate relationship between the parties; and third that it was just and reasonable to impose the liability. Months later the threefold test propounded by Lord Griffiths was addressed by the House of Lords in Caparo Industries Plc v Dickman [1990] 2 AC 605. The claimants had taken over a company in reliance on its accounts and alleged that the defendants had negligently discharged their statutory functions in the course of their audit of them. For years afterwards the speeches in the House were taken to have indorsed the threefold test. In fact, however, Lord Bridge of Harwich, with whom three other members of the committee agreed, observed at p 618 that the concepts of proximity and fairness were so imprecise as to deprive them of utility as practical tests; and Lord Oliver of Aylmerton suggested at p 633 that the three suggested ingredients of the so called test were usually facets of the same thing and that to search for a single formula was to pursue a will o the wisp. That the House in the Caparo Industries case did not indorse the threefold test was explained by Lord Toulson in Michael v Chief Constable of South Wales Police [2015] UKSC 2, [2015] AC 1732, at para 106; and it has recently been underlined by Lord Reed in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4, paras 21 to 29. In the Caparo Industries case both Lord Bridge at p 618 and Lord Oliver at p 633 quoted with approval the remarks of Brennan J in Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44 that it was preferable for the law to develop novel categories of negligence incrementally and by analogy with established categories; and, as Lord Reed has explained in the Robinson case, it was by declining to accept that the law should develop incrementally to the point for which the claimants contended that the House in the Caparo Industries case determined to allow the auditors appeal. More important for present purposes is the reassertion in the Caparo Industries case of the need for a representee to establish that it was reasonable for him to have relied on the representation and that the representor should reasonably have foreseen that he would do so. Thus at pp 620 621 Lord Bridge observed that a salient feature of liability was that the representor knew that it was very likely that the representee would rely on the representation; and at p 638 Lord Oliver observed that a usual condition of liability was that the representor knew that the representee would act on it without independent inquiry. Some months later, in James McNaughton Paper Group Ltd v Hicks Anderson & Co [1991] 2 QB 113, the Court of Appeal, confronted with a similar claim against company accountants, rejected it by reference to the decision in the Caparo Industries case. But Neill LJ expanded on the need for foreseeability of reliance. At pp 126 127 he said: One should therefore consider whether and to what extent the advisee was entitled to rely on the statement to take the action that he did take. It is also necessary to consider whether he did in fact rely on the statement, whether he did use or should have used his own judgment and whether he did seek or should have sought independent advice. In business transactions conducted at arms length it may sometimes be difficult for an advisee to prove that he was entitled to act on a statement without taking any independent advice or to prove that the adviser knew, actually or inferentially, that he would act without taking such advice. In July 1994, in Spring v Guardian Assurance Plc [1995] 2 AC 296, the House held that, in writing a reference for the claimant who had worked for them and who was now seeking work elsewhere, the defendants owed a duty of care to him. Lord Goff of Chieveley explained at p 316 that the basis of his conclusion was that the defendants had assumed responsibility to the claimant in respect of the reference within the meaning of the Hedley Byrne case. Weeks later, in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, the House held that underwriting agents at Lloyds owed a duty of care to a member in their conduct of his underwriting affairs even in the absence of any contract between them. In a speech with which the other members of the House agreed, Lord Goff held at p 181 that the case should be decided by reference to the concept of an assumption of responsibility. In Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830. Lord Steyn remarked at p 837 that there was no better rationalisation for liability in tort for negligent misrepresentation than the concept of an assumption of responsibility. It has therefore become clear that, although it may require cautious incremental development in order to fit cases to which it does not readily apply, this concept remains the foundation of the liability. The legal consequences of Ms Steels careless misrepresentation are clearly governed by whether, in making it, she assumed responsibility for it towards Northern Rock. The concept fits the present case perfectly and there is no need to consider whether there should be any incremental development of it. Nevertheless the case has an unusual dimension: for the claim is brought by one party to an arms length transaction against the solicitor who was acting for the other party. A solicitor owes a duty of care to the party for whom he is acting but generally owes no duty to the opposite party: Ross v Caunters [1980] Ch 297, 322. The absence of that duty runs parallel with the absence of any general duty of care on the part of one litigant towards his opponent: Jain v Trent Strategic Health Authority [2009] UKHL 4, [2009] AC 853. Six authorities, briefly noticed in chronological order in what follows, may illumine inquiry into the existence of an assumption of responsibility by a solicitor towards the opposite party. First, the decision of the Court of Appeal of New Zealand in Allied Finance and Investments Ltd v Haddow and Co [1983] NZLR 22. The claimant had agreed to make a loan to X and to take security for it on a yacht. The defendants, who were Xs solicitors, certified to the claimant that the instrument of security executed by X in relation to the yacht was binding on him. In fact, as the defendants knew, it was not binding on him because he was not, and was not intended to become, the owner of the yacht. The court held that the defendants had owed, and breached, a duty of care to the claimant. Richardson J said at p 30, in terms which the other members of the court echoed: This is not the ordinary case of two solicitors simply acting for different parties in a commercial transaction. The special feature attracting the prima facie duty of care is the giving of a certificate in circumstances where the [defendants] must have known it was likely to be relied on by the [claimant]. Second, the decision of the Lord Ordinary, Lord Jauncey, in the Outer House in Midland Bank Plc v Cameron, Thom, Peterkin and Duncans 1988 SLT 611. The pursuer had made a loan to X in assumed reliance on a statement by the defenders, who were Xs solicitors, about the extent of his assets. The statement was materially inaccurate. But the pursuers claim against the defenders failed. Having referred to the Hedley Byrne case as the proper starting point and to the Allied Finance case, the Lord Ordinary observed as follows at p 616: In my opinion four factors are relevant to a determination of the question whether in a particular case a solicitor, while acting for a client, also owes a duty of care to a third party: (1) the solicitor must assume responsibility for the advice or information furnished to the third party; (2) the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information; (3) the third party must have relied upon that advice or information as matter for which the solicitor has assumed personal responsibility; and (4) the solicitor must have been aware that the third party was likely so to rely. The Lord Ordinary concluded that the pursuer was able to establish none of the first three of the four factors. Third, the decision of the Court of Appeal in Al Kandari v J R Brown and Co [1988] QB 665. The claimant, a mother of two children, feared that the father would abduct them to Kuwait. The court had made an order which, with their consent, obliged the defendants, who were the fathers solicitors, to retain possession of his passport on which the children were registered. With the mothers consent, the solicitors allowed their agents to take the passport to the Kuwaiti embassy for alteration on condition that it would never be out of their sight. In fact the embassy insisted on retaining it overnight. The solicitors did not inform the mother that the embassy had retained the passport nor that (as they knew) the father was due to attend there on the following day. The embassy released the passport to the father, who abducted the children to Kuwait. The court held that, in failing so to inform the mother, the solicitors had breached a duty of care to her. Both Lord Donaldson of Lymington MR at p 672 and Bingham LJ at p 675 explained that, in agreeing to become obliged to retain possession of the fathers passport, the solicitors had stepped outside their role as his solicitors and assumed responsibility towards the mother. Fourth, the decision of Sir Donald Nicholls V C in the High Court in Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560. The claimant wished to purchase an underlease from the first defendant. The claimants solicitors inquired of the second defendants, a firm of solicitors acting for the first defendant, whether any provisions in the headlease might affect the length of the underlease. The negative answer of the second defendants was a misrepresentation, which, following its purchase of the underlease, caused loss to the claimant. The Vice Chancellor held that it had a valid claim against the first defendant but that the second defendants had themselves owed no duty of care to it. He observed at pp 571 572 that only in special cases, such as the Allied Finance case, would a solicitor owe a duty of care to the opposite party and that there was nothing special about the case before him. Fifth, the decision of the Court of Appeal of New Zealand in Connell v Odlum [1993] 2 NZLR 257. Prior to his marriage to W, the claimant wished to enter with her into an agreement of which the statutory effect would be to contract them out of the laws general provisions for the making of financial adjustments between them in the event of separation. Pursuant to one of the statutory requirements, the defendant, who was Ws solicitor, certified that, prior to her signing the agreement, he had explained its effect to her. Following separation a judge found that he had not explained its effect to her and held that the agreement was void. The Court of Appeal held that it was highly arguable that, in giving the certificate, the defendant owed a duty of care to the claimant and that the claim should not be struck out. Thomas J explained at p 269 that the claimant had relied, and had been expected by the defendant to rely, on the certificate as a feature of the validity of the agreement and that there had been the necessary assumption of responsibility towards him on the part of the defendant. And sixth, the decision of the Court of Appeal in Dean v Allin and Watts [2001] EWCA Civ 758, [2001] 2 Lloyds Rep 249. The claimant proposed to lend money to W and X on the security of property owned by Y and Z. W and X instructed the defendants, their solicitors, to effect the security in favour of the claimant, with which Y and Z were willing to co operate. The loan was made on the footing that the security was in place. But the defendants had carelessly misunderstood what was legally required in order to effect the security. In due course Y and Z established that the purported charge on their property was ineffective. The court held that the defendants had owed, and breached, a duty of care to the claimant. Robert Walker LJ explained in summary, at para 69, that the provision of effective security was of fundamental importance to the claimant and that, as the defendants knew or should have known, he was relying on them in that regard. Perhaps it helps only slightly for us to have been reminded in the authorities cited above that Ms Steel and the firm are liable to Northern Rock only if it was a special case. Probably of greater assistance is the analysis in the Al Kandari case that the solicitors owed a duty of care to the opposite party because they had stepped outside their normal role. But the six authorities cited above demonstrate in particular that the solicitor will not assume responsibility towards the opposite party unless it was reasonable for the latter to have relied on what the solicitor said and unless the solicitor should reasonably have foreseen that he would do so. These are, as I have shown, two ingredients of the general liability in tort for negligent misrepresentation; but they are particularly relevant to a claim against a solicitor by the opposite party because the latters reliance in that situation is presumptively inappropriate. Thus the reasonableness of the claimants reliance and of the defendants foreseeability of it comprised the special feature which gave rise to the liability in the Allied Finance case and in the Dean case and to the arguable liability in the Connell case; and, although the claim in the Midland Bank case failed for other reasons, the fourth of the requirements valuably identified in Lord Jaunceys judgment was that the solicitor should have been aware that the pursuer was likely to rely on what he had said. In dismissing Northern Rocks claim the Lord Ordinary held that the crucial question arose from the fact that, prior to executing and returning the deeds of discharge, it had failed to check the accuracy of the representations made by Ms Steel in the email dated 22 March 2007 against the material on its file. Had it done so, it would have seen immediately that it was entirely inappropriate for it to accede to her invitation to execute the deeds of discharge. Having heard her evidence, the Lord Ordinary found that, although she knew that Northern Rock was acting without solicitors in relation to the sale of Unit 1 and to the two earlier sales, she had generally expected it to check the propriety of her various requests before complying with them. Notwithstanding her inability, when giving evidence, to recall her state of mind when sending the email, the Lord Ordinary therefore found that Ms Steel had not foreseen that Northern Rock would rely on her assertions in it without checking their accuracy. He then proceeded to ask whether it was reasonable for her not to have foreseen that it would do so. His answer was that any prudent bank taking the most basic precautions would have checked the accuracy of her representations by reference to its file or indeed by asking for further clarification of an email which he had found in some respects to be vague and ambiguous; that it was therefore not reasonable for Northern Rock to have relied on her representations without thus checking their accuracy; and that it was reasonable for Ms Steel not to have foreseen that it would do so. That the Lord Ordinary had been entitled to reach this crucial conclusion formed the basis of Lord Brodies dissent upon the appeal to the Inner House. But the majority in the Inner House took a different view. Lady Smith held that circumstances were present which led to the attribution to Ms Steel of an assumption of responsibility for the representations in the email towards Northern Rock without any need for the court to inquire whether it should have checked its file. These circumstances were said to be that Ms Steel was a solicitor; that her representations fell within her area of expertise; that, as she knew, Northern Rock was not represented by solicitors; that Headway had not given her actual or even ostensible authority to make the representations; that, by her email, she was demanding an urgent response; and that the transaction between Headway and Northern Rock was not at arms length. With great respect, I would not accept that all the circumstances were as described by Lady Smith. Whether Headway had conferred on Ms Steel ostensible authority to make the representations had not been fully explored before the Lord Ordinary and rightly so because for obvious reasons no claim was brought against Headway and because an agent may well owe a duty of care to a third party even if he is acting within the scope of his authority. And, although Headway and Northern Rock were not engaged in hostile litigation, I find it impossible to subscribe to the suggestion that they were not at arms length in relation to the removal of security over Unit 1. Overarchingly, however, neither the general jurisprudence relating to liability in negligence for a misrepresentation leading to economic loss nor the focussed jurisprudence relating to a solicitors liability to the opposite party in that regard supports a conclusion that it is not always necessary for the representee to establish that it was reasonable for him to have relied on the representation. On the contrary, the reasonableness of his reliance on it is, as I have explained, central to the concept of an assumption of responsibility. Lady Smith added however that in any event Ms Steel should have foreseen that Northern Rock would rely on her representations without checking their accuracy. There was, so she said, no expert or other evidence in relation to the basic precautions taken by a lender to which the Lord Ordinary had referred and no scope for judicial knowledge to be taken of them; and it was likely and therefore foreseeable that Northern Rock would simply rely on Ms Steels representations. Resolution of the further appeal to this court could no doubt be based on inquiry into whether Lady Smith and Lady Clark were entitled to depart from the Lord Ordinarys conclusion that it was not reasonable for Northern Rock to have relied on Ms Steels representation without inquiry. How does the law classify a trial judges conclusion that it was not reasonable for a party to act as it did? It is not a conclusion of fact. It is a judgement referable to an already established fact and, albeit required by law, it is not a judgement about what the law is. So it is difficult to pigeon hole it as a conclusion either of fact or of law or even in my view as a conclusion of mixed fact and law. It is, rather, an evaluation; and in In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33, [2013] 1 WLR 1911, Lady Hale at para 203 recorded all members of the court as having agreed that an appellate court needed to be satisfied that an evaluative conclusion of a trial judge was wrong before it could be set aside. But in my view this court does not need to explain why the Lord Ordinary cannot be said to have been wrong in concluding that it was not reasonable for Northern Rock to have relied on Ms Steels representation without inquiry. We should bypass examination of whether he was wrong and should hold positively that he was right. We should accept that a commercial lender about to implement an agreement with its borrower referable to its security does not act reasonably if it proceeds upon no more than a description of its terms put forward by or on behalf of the borrower. The lender knows the terms of the agreement and indeed, as in this case, is likely to have evolved and proposed them. Insofar as the particular officers in Northern Rock who on 23 March 2007 saw and acted upon the email had never been aware of the terms or had forgotten them, immediate access to the correct terms lay literally at their finger tips. No authority has been cited to the court, nor discovered by me in preparing this judgment, in which it has been held that there was an assumption of responsibility for a careless misrepresentation about a fact wholly within the knowledge of the representee. The explanation is, no doubt, that in such circumstances it is not reasonable for the representee to rely on the representation without checking its accuracy and that it is, by contrast, reasonable for the representor not to foresee that he would do so. This court should allow the appeal and restore the Lord Ordinarys interlocutor.

UK-Abs

The First Appellant, Jane Steel, is a solicitor. In 2007 she was a partner in Bell & Scott LLP, the Second Appellant, who were a firm of solicitors in Glasgow. In her capacity as a solicitor Ms Steel had, for many years, acted for a Mr Hamish Munro, and subsequently a company in which he had an interest Headway Caledonian Ltd. This company was the registered owner of Cadzow Business Park in Hamilton, a property which comprised four different units, and had been registered with the Land Register in two separate titles. When the business park was purchased Headway Caledonian had granted the Respondent, NRAM, an all sums standard security over the property, which had been registered against the titles in 1998. In addition, in 2002, Headway had granted NRAM a floating charge over all its assets. In 2006 Headway entered into a contract for the sale of Unit 1 of the park and a request was duly made to NRAM to release this unit from its security. This was agreed by NRAM, in consideration of a repayment of 495,000, and it was understood by both parties that after the sale the security would remain in place in relation to Units 2 and 4 (Unit 3 having already been sold in 2005). The sale was due to complete on 23 March 2007. At 5pm on 22 March Ms Steel sent an email to NRAM asking for a letter of non crystallisation of the floating charge, and for the execution of two draft deeds of discharge. Ms Steel wrote: I also attach discharges for signing and returnas the whole loan is being paid off for the estate and I have a settlement figure for that. This request was not queried by NRAM, and the two deeds of discharge (which referred to the discharge of security over all three of the remaining units, rather than just Unit 1) were executed and a letter of non crystallisation drafted and signed. The letter was signed by Mr Clarke, the head of the Loan Review Team, who made no attempt to check the accuracy of Ms Steels statements against the material on NRAMs file. It has since been accepted by Ms Steel that the statement in her email was entirely inaccurate she had never been instructed that the whole loan was to be repaid, and neither did she have a settlement figure for that repayment. At trial, Ms Steel could not explain this error, and the fact that the security had been discharged went unnoticed by NRAM until 2010 when Headway Caledonian went into liquidation. NRAM consequently issued a claim against Ms Steel (and Bell & Scott LLP) for damages suffered as a result of its reliance on her email of 22 March 2007. NRAM alleged that she had owed it a duty of care and had made the statements in the email negligently. The Lord Ordinary dismissed the claim, but the Inner House allowed NRAMs reclaiming motion, and substituted an award of damages in its favour of 369,811.18. The Supreme Court unanimously allows the appeal and restores the interlocutor of the Lord Ordinary. Lord Wilson gives the judgment, with which Lady Hale, Lord Reed, Lord Hodge and Lady Black agree. The starting point, when considering whether someone is liable for a careless misrepresentation which causes economic loss, is the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. What lay at the heart of that decision was the need, in order for the representor to be liable, for the representee reasonably to have relied on the representation, and for the representor reasonably to have foreseen that he would do so [18 19]. However, it has since become clear that not all claims in tort for losses resulting from careless representations can easily be resolved by reference to this concept of assumption of responsibility. This was what prompted Lord Griffiths, in Smith v Eric Bush; Harris v Wyre Forest District Council [1990] 1 AC 831, to propose a threefold test that required (1) that it was foreseeable that, were the information given negligently, the claimants would be likely to suffer damage; (2) that there was a sufficiently proximate relationship between the parties; and (3) that it was just and reasonable to impose the liability [20 21]. This test was considered in Caparo Industries Plc v Dickman [1990] 2 AC 605, and for many years the court in Caparo was considered to have indorsed it. However, as has already been explained by the Supreme Court in other recent cases, the courts decision in Caparo was actually more nuanced than has often been allowed, and in fact the case is notable for its reassertion of the need for it to be reasonable for the representee to have relied on the representation, and for the representor to have reasonably foreseen that they would so rely [22 23]. Indeed, it is now clear that this concept of assumption of responsibility remains the foundation of liability for a careless misrepresentation, although the concept may sometimes require cautious incremental development in order to fit cases to which it does not readily apply [24]. Such development is unnecessary here, however, as the concept fits the case perfectly [25]. Consideration of six relevant authorities demonstrates that a solicitor will not assume responsibility towards the opposite party unless it was reasonable for the latter to have relied on what the solicitor said, and unless the solicitor should reasonably have foreseen that the opposite party would actually rely on the statement. These ingredients of reasonable reliance and foreseeability are particularly relevant to a claim against a solicitor by the opposing party, because it is presumed to be inappropriate for a solicitor to assume such a responsibility towards the other side [32]. In this case, the Lord Ordinary had found that Ms Steel generally expected NRAM to check her requests before complying with them, and therefore that she had not foreseen that they would rely on her assertions without checking their accuracy. In addition, any prudent bank taking basic precautions would have checked the accuracy of such statements, and it was therefore not reasonable for NRAM to have relied on the email [33]. The majority of the Inner House however had disagreed, and held that there were certain circumstances which led to the conclusion that Ms Steel had assumed responsibility for the representations in the email, such that the court did not even need to consider whether NRAM should have checked its file. These circumstances included, amongst other things, Ms Steels area of expertise, and the fact the NRAM had not instructed solicitors [34]. The approach of the majority was, however, incorrect. Nothing in the relevant case law supports a conclusion that it is not always necessary for a representee to show that it was reasonable of it to have relied on the relevant representation. This is an essential element of the concept of assumption of responsibility [35]. Moreover, the Lord Ordinary was correct to find that a commercial lender about to implement an agreement relating to its security does not act reasonably if it proceeds upon no more than a description of the agreements terms put forward by the borrower [38].

This case is about a credit reference negligently supplied by a bank for a person who subsequently defaulted. The facts are to that extent similar to those of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. But there is a critical difference. The reference was relied upon not by the party to whom it was addressed but by that partys undisclosed principal. The question at issue on this appeal is whether the bank is liable to the latter. In October 2010 Hassan Barakat wished to gamble at the London Playboy Club. He visited the club and applied for a cheque cashing facility for up to 800,000. Mr Barakat was a Lebanese resident and a well known figure at a casino in Lebanon. But he had only once played at the London club. Playboy Clubs policy for gamblers like him was to require a credit reference from his bankers for twice the amount of the facility, ie 1.6m. But in order to avoid disclosing the purpose of the credit facility, the Clubs practice was not itself to ask its customers bank for the reference. Instead, it arranged for an associated company called Burlington Street Services Ltd to do so without disclosing the purpose of the inquiry or the fact that the reference was required for the benefit of another company. Mr Barakat completed a written application for the cheque cashing facility, naming his bankers as Banca Nazionale del Lavoro in Reggio Emilia, Italy (BNL). A Status Enquiry Request was completed. It was written on Burlingtons printed letterhead and addressed to the relevant branch of BNL. The operative part of the request read: We request your opinion as to the means and standing of Hassan Barakat [details follow] and his/her trustworthiness to meet a financial commitment to the extent of 1,600,000 at any one time. Mr Barakat signed the form of authority at the foot of the printed form. The operative part of the authority was in the following terms: I, Hassan Barakat, hereby consent to BNL BNP Paribas Bank providing a reference on me to Burlington Services Ltd. The request was then sent to the Clubs bankers, National Westminster Bank, who forwarded it to BNL under cover of a letter beginning: We enclose a request on behalf of Burlington Street Services Ltd, who would be glad of your opinion on the character and standing of Hassan Barakat. The reply from BNL, faxed on 13 October 2010, was addressed to Burlington c/o National Westminster Bank. It confirmed that Mr Barakat had an account with them and that he was trustworthy up to 1,600,000 in any one week. It added: This information is given in strict confidential (sic). In reliance on the reference, the Club granted the cheque cashing facility on 13 October 2010 and shortly afterwards increased it to 1.25m. Over four days from 15 to 18 October Mr Barakat played at the club. He drew two cheques on BNL for a total of 1.25m in return for gaming chips of the same amount. His net winnings were 427,400, which the Club paid out to him. He then returned to Lebanon and was not seen again at the Club. Both cheques were returned unpaid. Including gaming duty, the Club suffered a total net loss of 802,940. It is common ground that BNL had no reasonable basis for their reference. It held no account for Mr Barakat until two days after the reference was sent, when an account was opened in his name which had a nil balance until it was closed on 14 December 2010. The Playboy Club, Burlington and another associated company subsequently began these proceedings against BNL. It is common ground that of the three claimants the Club is the only party with an interest, neither of the others having suffered any loss. The trial judge (His Honour Judge Mackie QC) said that BNL owed a duty of care in relation to its reference to the Club [2014] EWHC 2613 (QB). The Court of Appeal disagreed. They held that the only duty was owed to Burlington, to whom the reference was addressed [2016] 1 WLR 3169. The decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd was a landmark in the development of the law of tort. Contrary to the ordinary rule as it had previously been understood, it allowed the recovery of a purely economic loss in negligence where the existence of a special relationship between claimant and defendant made this appropriate. The facts were that Hedley Byrne asked its bank, National Provincial Bank, to obtain a credit reference for a company wishing to place advertising contracts through it. The companys bank, Heller & Partners, supplied the reference to National Provincial. The Appellate Committee inferred as a matter of fact that Heller & Partners must have appreciated that National Provincial was not acting for its own account but wanted the reference for a client intending to do business with Hellers client, even though they did not know who that client was: see, in particular, pp 482 (Lord Reid), 493 494 (Lord Morris of Borth y Gest), 530 (Lord Devlin). The ratio of the decision was that the reasonable reliance of Hedley Byrne on the reference, combined with Heller & Partners appreciation of the fact that they would reasonably rely on it, gave rise to a direct relationship between them involving a duty of care. All five members of the Appellate Committee gave reasoned judgments, but Lord Devlins analysis has generally been treated in the subsequent case law as most clearly expressing the reasoning. At pp 529 530, Lord Devlin, said this: I have had the advantage of reading all the opinions prepared by your Lordships and of studying the terms which your Lordships have framed by way of definition of the sort of relationship which gives rise to a responsibility towards those who act upon information or advice and so creates a duty of care towards them It is a responsibility that is voluntarily accepted or undertaken, either generally where a general relationship, such as that of solicitor and client or banker and customer, is created, or specifically in relation to a particular transaction. Responsibility can attach only to the single act, that is, the giving of the reference, and only if the doing of that act implied a voluntary undertaking to assume responsibility. This is a point of great importance because it is, as I understand it, the foundation for the ground on which in the end the House dismisses the appeal . I do not go further than this for two reasons. The first is that I have found in the speech of Lord Shaw in Nocton v Lord Ashburton and in the idea of a relationship that is equivalent to contract all that is necessary to cover the situation that arises in this case All that was lacking was formal consideration I shall therefore content myself with the proposition that wherever there is a relationship equivalent to contract, there is a duty of care. Such a relationship may be either general or particular. Examples of a general relationship are those of solicitor and client and of banker and customer There may well be others yet to be established. Where there is a general relationship of this sort, it is unnecessary to do more than prove its existence and the duty follows. Where, as in the present case, what is relied on is a particular relationship created ad hoc, it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility. The principle thus established is capable of development. Indeed it has undergone considerable development since 1964, for example to cover omissions and the negligent performance of services. But these have been incremental changes within a consistent framework of principle. One area in which the courts have resisted expanding the scope of liability concerns the person or category of persons to whom the duty is owed. The defendants voluntary assumption of responsibility remains the foundation of this area of law, as this court recently confirmed after a full review of the later authorities in NRAM Ltd (formerly NRAM plc) v Steel [2018] 1 WLR 1190, paras 18 24 (Lord Wilson JSC). It is fundamental to this way of analysing the duty that the defendant is assuming a responsibility to an identifiable (although not necessarily identified) person or group of persons, and not to the world at large or to a wholly indeterminate group. In Caparo Industries plc v Dickman [1990] 2 AC 605, the Appellate Committee held that foreseeability, although it was a necessary condition for liability, was not necessarily a sufficient one. The foundation of the duty is proximity, which may require more than the mere foreseeability of reliance. The problem before the Appellate Committee was to identify the outer limits of the class of persons whose reliance on a statement could properly be said to give rise to a sufficiently proximate relationship. They found the relevant limiting factors in the defendants knowledge of (i) the person known to be likely to rely on the statement, and (ii) the transaction in respect of which he was known to be likely to rely on. After reviewing the authorities supporting a duty of care for negligent statements, both before and after Hedley Byrne, Lord Bridge (with whom Lord Roskill, Lord Ackner and Lord Oliver agreed), summarised the position as follows at pp 620 621: The salient feature of all these cases is that the defendant giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation. In these circumstances the defendant could clearly be expected, subject always to the effect of any disclaimer of responsibility, specifically to anticipate that the plaintiff would rely on the advice or information given by the defendant for the very purpose for which he did in the event rely on it. So also the plaintiff, subject again to the effect of any disclaimer, would in that situation reasonably suppose that he was entitled to rely on the advice or information communicated to him for the very purpose for which he required it. The situation is entirely different where a statement is put into more or less general circulation and may foreseeably be relied on by strangers to the maker of the statement for any one of a variety of different purposes which the maker of the statement has no specific reason to anticipate. To hold the maker of the statement to be under a duty of care in respect of the accuracy of the statement to all and sundry for any purpose for which they may choose to rely on it is not only to subject him, in the classic words of Cardozo CJ to liability in an indeterminate amount for an indeterminate time to an indeterminate class: see Ultramares Corpn v Touche (1931) 174 N.E. 441, 444; it is also to confer on the world at large a quite unwarranted entitlement to appropriate for their own purposes the benefit of the expert knowledge or professional expertise attributed to the maker of the statement. Hence, looking only at the circumstances of these decided cases where a duty of care in respect of negligent statements has been held to exist, I should expect to find that the limit or control mechanism imposed upon the liability of a wrongdoer towards those who have suffered economic damage in consequence of his negligence rested in the necessity to prove, in this category of the tort of negligence, as an essential ingredient of the proximity between the plaintiff and the defendant, that the defendant knew that his statement would be communicated to the plaintiff, either as an individual or as a member of an identifiable class, specifically in connection with a particular transaction or transactions of a particular kind (eg in a prospectus inviting investment) and that the plaintiff would be very likely to rely on it for the purpose of deciding whether or not to enter upon that transaction or upon a transaction of that kind. In support of that analysis, Lord Bridge adopted the celebrated dissenting judgment of Denning LJ in Candler v Crane, Christmas & Co [1951] 2 KB 164 on the persons to whom an auditor owed a duty of care in respect of his audit report. At pp 180, 182, 184, Denning LJ had said: To whom do these professional people owe this duty? I will take accountants, but the same reasoning applies to the others. They owe the duty, of course, to their employer or client; and also I think to any third person to whom they themselves show the accounts, or to whom they know their employer is going to show the accounts, so as to induce him to invest money or take some other action on them. But I do not think the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer without their knowledge may choose to show their accounts. Once the accountants have handed their accounts to their employer they are not, as a rule, responsible for what he does with them without their knowledge or consent The test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him? To what transactions does the duty of care extend? It extends, I think, only to those transactions for which the accountants knew their accounts were required My conclusion is that a duty to use care in statement is recognised by English law, and that its recognition does not create any dangerous precedent when it is remembered that it is limited in respect of the persons by whom and to whom it is owed and the transactions to which it applies. In his concurring judgment, Lord Oliver, at p 638, identified the circumstances in which a duty of care may typically be held to exist as follows: (1) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially, to the adviser at the time when the advice is given; (2) the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (3) it is known either actually or inferentially, that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry, and (4) it is so acted upon by the advisee to his detriment. The defendants knowledge of the transaction in respect of which the statement is made is potentially relevant for three purposes: (i) to identify some specific person or group of persons to whom he can be said to assume responsibility; (ii) to demonstrate that the claimants reliance on the statement will be financially significant; and (iii) to limit the degree of responsibility which the defendant is taken to assume if no financial limit is expressly mentioned. We are presently concerned with its significance for the first of these purposes, which will vary according to what is known about the person or group expected to rely on the statement. Thus in Hedley Byrne itself, the defendant understood that the statement would be relied on by the unidentified, but readily identifiable, client on whose behalf National Provincial Bank was known to be making the inquiry. It was enough that the proposed transaction was said to be an advertising contract for 8,000 to 9,000. It would probably have been enough even if the transaction had not been identified as an advertising contract but simply as some kind of business transaction. For Lord Morris, for example, it was enough that the person contemplated was some one who was contemplating doing business with Easipower Ltd: see pp 493 494. In Caparo on the other hand, where the persons said to have been entitled to rely on the defendants audit report were any potential bidder for the auditors client, the absence of a specific transaction in the defendants contemplation assumed decisive significance. Mr Salzedo QC, who appeared for the Playboy Club, accepted that there was no evidence that BNL knew that its reference would be communicated to or relied on by anyone other than Burlington. He also accepted that in the ordinary course where a statement is relied upon by B to whom A has passed it on, the representor owes no duty to B unless he knew that the statement was likely to be communicated to B. That concession was plainly justified. I would go further and say that the representor must not only know that the statement is likely to be communicated to and relied upon by B. It must also be part of the statements known purpose that it should be communicated and relied upon by B, if the representor is to be taken to assume responsibility to B. Mr Salzedos submission was that the present case was different because the Club was Burlingtons undisclosed principal. He submitted that the relationship between BNL and the Club was, in Lord Devlins phrase, equivalent to contract because in contract the Club would have been entitled to declare itself and assume the benefit of the contract. This is an ingenious argument, but in my opinion it is fallacious. The rule of English law that an undisclosed principal may declare himself and enter upon a contract is an anomalous legacy of eighteenth and nineteenth century jurisprudence, which survives in the modern law on account of its antiquity rather than its coherence. The law on the point was summarised by Lord Lloyd of Berwick in Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199, 207: (1) An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority. (2) In entering into the contract, the agent must intend to act on the principals behalf. (3) The agent of an undisclosed principal may also sue and be sued on the contract. (4) Any defence which the third party may have against the agent is available against his principal. (5) The terms of the contract may, expressly or by implication, exclude the principals right to sue, and his liability to be sued. To this I would add that the third party must irrevocably elect whether to sue the agent or the undisclosed principal. The first problem about the appellants argument is that it assumes that because a relationship equivalent to contract is generally sufficiently proximate to found a duty of care, it must follow that the legal incidents of a contractual relationship are imported into it. This is a non sequitur. The expression equivalent to contract originates in the speech of Lord Shaw in Nocton v Lord Ashburton [1914] AC 932, 971 972. He used it to describe any kind of relationship which gave rise to a duty to give information or advice, and hence to liability for giving it negligently. The phrase was adopted by Lord Devlin in Hedley Byrne, at pp 528 529, and has passed into common currency: see in particular Smith v Bush [1990] 1 AC 831, 846 (Lord Templeman), Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 181 (Lord Goff), Spring v Guardian Assurance plc [1995] 2 AC 296, 324 (Lord Goff). It serves (i) as an allegory of proximity, to describe a case where a service is performed for a person pursuant to a relationship which would be contractual if there were consideration passing from that person; and (ii) as an explanation of why it is appropriate to award a purely economic loss as damages for negligence in the course of such a relationship. But it does not follow from the fact that a non contractual relationship between two parties is as proximate as a contractual relationship, that it is legally the same as a contractual relationship or involves all of the same legal incidents. Secondly, the relationship between a person dealing with another and the latters undisclosed principal is not at all analogous to the kind of relationship which will give rise to a duty of care. Whether a relationship is sufficiently proximate to give rise to a duty of care is essentially a question of fact from which the law draws certain conclusions. The liability of a contracting party to his counterpartys undisclosed principal, however, is not a legal conclusion from any factual relationship between them. It is a purely legal construct. The whole point about the law relating to undisclosed principals is that a person may be brought into contractual relations with some one with whom he has no factual relationship at all. As Lord Lloyd of Berwick observed in Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199, 207F G, the doctrine runs counter to fundamental principles of privity of contract. Such a relationship is by definition not proximate. Nor is it in any relevant sense voluntary or consensual so as to give rise to an assumption of responsibility. It has none of the features which were held in Caparo to be necessary to bring the claimant into proximity with the defendant. Thirdly, the appellants submission would require one to import into the law of tort just one aspect of the law relating to undisclosed principals. But in fact the law in this area is a complex bundle of interrelated rights and liabilities most of which are entirely inapposite to the law of tort. The relationship between A and Bs undisclosed principal may not be consensual, but it is at least mutual. The I would dismiss the appeal. undisclosed principal may not only sue but be sued on the contract. A may elect to sue the agent. If A is sued by the undisclosed principal, he may take any defences which would have been available to him as against B. But in the absence of a true contract there would be no corresponding mutuality in tort. It is impossible to feel much sympathy for BNL given the circumstances in which they came to give a favourable credit reference for some one with whom they appear to have had no relevant dealings. But they had no reason to suppose that Burlington was acting for some one else, and they knew nothing of the Playboy Club. In those circumstances, it is plain that they did not voluntarily assume any responsibility to the Club. It may well be, since they knew nothing of Burlington either, that they were indifferent to whom they were dealing with. But the fact that a representor may have been equally willing to assume a duty to some one else does not mean that he can be treated as if he had done so. LORD MANCE: I agree with the judgment which has been prepared by Lord Sumption. But one can, as he observes in para 16, have little sympathy for BNL; and the Club has suffered significant loss in undoubted reliance on BNLs negligent misrepresentation of Mr Barakats trustworthiness. In these circumstances, I think that there are one or two points worth examining further in order to identify precisely why the Clubs claim nevertheless fails. BNL was prepared to make an unconditional representation of credit worthiness without knowing anything about Burlington Street Services Ltd (Burlington). And all it knew about the context was, in Burlingtons words, that Burlington was seeking its opinion as to the means and standing of Hassan Barakat and his trustworthiness to meet a financial commitment to the extent of [1.6m] at any one time, or, in the words of NatWest, passing on Burlingtons request, its opinion of the character and standing of Hassan Barakat and trustworthiness in the way of business to the extent of [1.6m] at any one time. In response, BNL, without further enquiry, represented that Mr Barakat was trustworthy to the extent of 1.6m in any one week, adding This information is given in strict confidential [sic]. Passages can be found in authority where courts have used language suggesting that, for a duty of care to arise in tort in respect of a representation, (a) not only must the claimant be a specific person or within a group to whom responsibility may be said to have been undertaken, but (b) the purpose for which the representation is required must be specifically in connection with a particular transaction or transactions of a particular kind or must, whether particularly specified or generally described, be made known, either actually or inferentially, to the representor: see eg per Lord Bridge and Lord Oliver in Caparo Industries plc v Dickman [1990] 2 AC 605, 620 621 and 638, cited by Lord Sumption in his paras 8 and 9. BNL has argued that the Clubs claim must fail because it satisfies neither of the elements (a) and (b) suggested by these passages. The Court of Appeal [2016] 1 WLR 3169 focused on element (a), although two sentences in para 19 of Longmore LJs judgment may also indicate that the Court saw the claim as failing because neither element was satisfied. Longmore LJ said in particular: In the present case the customer was identified by name as Burlington and the true purpose of the reference (for a gambling club) was not revealed. In these circumstances there cannot, to my mind, be an assumption of responsibility to the Club (rather than to Burlington) or indeed a responsibility for its use by the Club in trusting Mr Barakat in his gambling activities (a purpose of which the Bank was unaware). I do not consider that this claim should fail for want of communication of the purpose or kind of purpose for which an assessment of trustworthiness was required. Had Burlington been the operator of the gambling club and suffered the loss, it should have succeeded. On the face of it, BNL was prepared, without further enquiry, to take the open risk of exposure to the tune of up to 1.6m in any one week whatever financial commitment or business to that tune was intended. There is no reason in principle why a duty of care should not arise in relation to so unspecific a purpose, provided (as is here clear) that the representation was requested and given in terms showing that it was intended to be and would be relied on. The decision in Caparo does not exclude liability on this basis. Caparo turned on the statutory purpose of an audit being to enable shareholders to exercise their class rights in general meeting, rather than to enable individual shareholders to buy more shares in the company (unless of course the auditors specifically agreed to extend the use of their audit report to such a use). The only contrary argument regarding purpose has to be that gambling is so unusual and risky a financial commitment in Burlingtons terms, or business in NatWests terms, that it must be excluded from what was objectively and reasonably covered by the representation sought and made. But many other high risk businesses other than gambling can be contemplated, eg trading in derivatives or on margin. BNL was evidently prepared to take the risk of all or any of these. So I would not be inclined to accept that argument, in a context where the bank showed absolutely no interest in the nature of the proposed commitment(s) or the level of risk involved. I would therefore dismiss the claim only because element (a) is not satisfied. The representation was directed simply and solely to Burlington. It is true that, so far as appears, BNL was probably as uninterested in Burlington and its identity as it was in the nature and purpose of the intended financial commitment. But the representation was, objectively, requested by Burlington alone and, objectively, confined in its making to Burlington. To my mind, this consideration is strengthened by the notation This information is given in strict confidential in BNLs representation mail. Had the representation been made, expressly or impliedly, for the benefit of an unnamed (rather than an entirely undisclosed) principal or client of Burlington, the case would have paralleled Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, and the claim should then have succeeded. Had it been made, expressly or impliedly, for the benefit of any principal or client of Burlington, to which Burlington might make it available, the same would have applied. BNL would then have undertaken an open exposure, as it did in my view in relation to the purpose for which the representation as to trustworthiness was sought. I agree with Lord Sumptions disposal of the ingenious and well presented submission that, as the Club could have intervened to rely on the representation had consideration been furnished for it to BNL, so the Court should recognise the existence for tortious purposes of a relationship akin to contract, in the absence of any consideration. The right of an undisclosed principal to intervene in contract is not easy to rationalise, but it does not rest or bear on proximity for tortious purposes. It is true that it follows from this that contributory fault will not be available as a response to a claim by an undisclosed principal relying on a representation for which consideration has been given since there will be no concurrency of contractual and tortious liability: see Vesta v Butcher [1989] AC 852, CA. But the oddity here is again, if anything, the existence of the right to intervene, or the limitations of the Law Reform (Contributory Negligence) Act 1945, not the absence of a relationship of duty of care. For these reasons, additional to those given by Lord Sumption, and tempting though the thought is that BNL is very lucky to avoid liability to the Club, I agree that the appeal falls to be dismissed.

UK-Abs

In October 2010 Hassan Barakat, a Lebanese resident, wished to gamble at the London Playboy Club and applied at the club for a cheque cashing facility for up to 800,000. Playboy Clubs policy for gamblers like Mr Barakat was to require a credit reference from his bankers for twice the amount. To avoid disclosing the purpose of the credit facility, Playboy Clubs practice was to arrange for an associated company, Burlington Street Services Ltd (Burlington), to ask the customers bank for the reference. Mr Barakat gave as his bankers Banca Nazionale del Lavoro (BNL) in Reggio Emilia, Italy. Burlington sent a Status Entry Request on Burlingtons headed paper to BNL. BNL stated that Mr Barakat had an account with them and that he was trustworthy up to 1,600,000 in any one week. Playboy Club granted the cheque cashing facility and increased it to 1.25m. Mr Barakat drew two cheques totalling 1.25m, made net winnings of 427,400 which were paid out to him by Playboy Club, returned to Lebanon, and was not seen again at the club. Both cheques were returned, and the club suffered a total net loss of 802,940 (including gaming duty). It was common ground between the parties that BNL had no reasonable basis for their reference. BNL held no account for Mr Barakat until two days after the reference was sent and that account had a nil balance until its closure on 14 December 2010. In the High Court, the trial judge held that BNL owed a duty of care to Playboy Club in relation to its reference. The Court of Appeal disagreed holding that the only duty BNL owed was to Burlington, to whom the reference was addressed. The Supreme Court unanimously dismisses the appeal. Lord Sumption gives the lead judgment with which Lady Hale and Lords Reed and Briggs agree. Lord Mance gives a concurring judgment. The principle espoused in Hedley Byrne & Co Ltd v Heller & Partners Ltd, which permits recovery of pure economic loss for a negligent misstatement where a special relationship exists, is capable of further development. However, voluntary assumption of responsibility remains the foundation of this area of law [7]. The defendants knowledge of the transaction, in respect of which the statement is made, is potentially relevant for several reasons. It identifies by name or description the person or group of persons to whom the defendant can be said to assume responsibility [10]. The representor must not only know that the statement is likely to be communicated to and relied upon by someone, it must also be part of the statements known purpose that it should be communicated and relied upon by that person if the representor is to be taken to assume responsibility to them [11]. Playboy Club argued that the relationship between BNL and the Club was equivalent to contract due to Playboy Clubs status as Burlingtons undisclosed principal. The rule of English law that an undisclosed principal may declare himself and enter upon a contract is an anomaly that survives in modern law due to its antiquity rather than its coherence [12]. It does not follow that simply because a relationship is treated in law as a contractual relationship that it is legally the same as a contractual relationship or involves all the same legal incidents [13]. Whether a relationship is sufficiently proximate to create a duty of care is a question of fact from which the law draws certain conclusions. The liability of a contracting party to an undisclosed principal is a legal, as opposed to factual, construct. It creates contractual relations between parties who do not have a factual relationship with each other. Such a relationship is not necessarily proximate and lacks the element of mutual consent required to give rise to an assumption of responsibility [14]. The majority of the principles governing undisclosed principals are entirely inapposite to the law of tort. In particular, while the relationship between a contracting party and an undisclosed principal may be mutual in a contractual sense it lacks mutuality in tort [15]. BNL had no reason to suppose that Burlington was acting for someone else, and they knew nothing of the Playboy Club. It is plain that they did not voluntarily assume any responsibility to the Club [16]. Lord Mance writes a concurring judgment. There are passages in some authorities which suggest that there are two requirements for a duty of care to arise in respect of a representation: (a) the claimant must be a specific person or group to whom the responsibility may be said to have been undertaken, and (b) the representation must be made specifically in connection with a particular transaction or transactions of a particular kind made known to the representor [20]. Lord Mance does not consider that this claim should fail for want of communication of the purpose or kind of purpose for which an assessment of trustworthiness was required [22]. The claim fails in this case because BNLs representation was directed simply and solely to Burlington, who alone objectively requested the representation, and not to Playboy Club [24].

This appeal raises significant issues regarding the procedures whereby, firstly, magistrates may issue warrants to enter and search premises and seize property under section 8 of the Police and Criminal Evidence Act 1984 (PACE), secondly, Crown courts may, under section 59 of the Criminal Justice and Police Act 2001 (CJPA), order the retention by the police of unlawfully seized material on the grounds that, if returned, the material would be immediately susceptible to lawful seizure and, thirdly persons affected may challenge such decisions by judicial review. Central to the issues is whether the relevant judicial authorities are, under the principle in Al Rawi v Security Service [2011] UKSC 34; [2012] 1 AC 531 and in the absence of express Parliamentary authorisation to conduct a closed material procedure, precluded at each or any of these stages from having regard to information which, on public interest grounds, cannot be disclosed to any person affected who wishes to challenge the warrant or any seizure or order for retention under section 59. warrant: Section 8 of PACE sets out conditions for obtaining a search and seizure that an indictable offence has been committed; (1) If on an application made by a constable a justice of the peace is satisfied that there are reasonable grounds for believing (a) and (b) that there is material on premises which is likely to be of substantial value (whether by itself or together with other material) to the investigation of the offence; and (c) and that the material is likely to be relevant evidence; (d) that it does not consist of or include items subject to legal privilege, excluded material or special procedure material; and (e) (3) below applies, that any of the conditions specified in subsection he may issue a warrant authorising a constable to enter and search the premises . (3) The conditions mentioned in subsection (1)(e) above are that it is not practicable to communicate with any (a) person entitled to grant entry to the premises; (b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the evidence; (c) unless a warrant is produced; that the purpose of a search may be frustrated or (d) seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them. that entry to the premises will not be granted (1) This section and section 16 below have effect in relation to the issue to constables under any enactment, including an enactment contained in an Act passed after this Act, of warrants to enter and search premises; and an entry on or search of premises under a warrant is unlawful unless it complies with this section and section 16 below. Section 15 of PACE contains safeguards relating to the procedure for obtaining such a warrant: (2) Where a constable applies for any such warrant, it shall be his duty (a) the ground on which he makes the the enactment under which the warrant to state (i) application; (ii) would be issued; and (iii) if the application is for a warrant authorising entry and search on more than one occasion, the ground on which he applies for such a warrant, and whether he seeks a warrant authorising an unlimited number of entries, or (if not) the maximum number of entries desired; to specify the matters set out in subsection (2A) to identify, so far as is practicable, the articles or (b) below; and (c) persons to be sought. (2A) The matters which must be specified pursuant to subsection (2)(b) above are (a) if the application relates to one or more sets of premises specified in the application, each set of premises which it is desired to enter and search; (b) if the application relates to any premises occupied or controlled by a person specified in the application as many sets of premises which it is (i) desired to enter and search as it is reasonably practicable to specify; (ii) the person who is in occupation or control of those premises and any others which it is desired to enter and search; (iii) why it is necessary to search more premises than those specified under sub paragraph (i); and (iv) why it is not reasonably practicable to specify all the premises which it is desired to enter and search. (3) An application for such a warrant shall be made ex parte and supported by an information in writing. (4) The constable shall answer on oath any question that the justice of the peace or judge hearing the application asks him. (5) A warrant shall authorise an entry on one occasion only unless it specifies that it authorises multiple entries. Section 59 of the CJPA provides for circumstances where property seized under a warrant or purported warrant would otherwise fall to be returned as for example where the search and seizure warrant was for some reason invalid but where, if the property were returned, it would immediately become appropriate to issue a fresh warrant in pursuance of which it would be lawful to seize the property. Section 59 provides that in such circumstances the court may order the retention of the property seized. Factual background The appeal arises from the issue on 16 June 2014 by St Albans Magistrates Court (JL Grimsey JP) of two search and seizure warrants in respect of London addresses at 22 Leys Gardens, Barnet and Unit 5, Island Blue Ltd, Overbury Road, Harringay (said to be addresses at which the appellant Mr John Haralambous respectively lived and was suspected to have a business interest) and from their execution on 26 June 2014 by entry and seizure of a number of items. The warrants were issued following an ex parte application by the second respondent, the Chief Constable of the Hertfordshire Constabulary, under section 8 of PACE. The appellant was also arrested on 26 June 2014 and bailed. Any further investigation by the police of any matter to which such warrants and arrest related has been suspended pending the outcome of these proceedings. The appellant sought disclosure of, inter alia, the written application for the warrants, and was on 16 September 2014 provided with what the second respondent informed him on 17 September 2014 was a redacted copy. On 18 September 2014 the appellant applied to the St Albans Magistrates Court for an unredacted version, relying on the procedure in Commissioner of Police of the Metropolis v Bangs [2014] EWHC 546 (Admin). The application was heard in the Luton Magistrates Court on 23 September by District Judge Mellanby. The appellant was provided from the courts file with JL Grimseys written statement dated 16 June 2014 of reasons for issuing the warrants, namely because of the substantial evidence that linked all the subjects together and the addresses, and was informed that the evidence, which was being withheld, consisted of two closely typed pages. On 25 September 2014 District Judge Mellanby issued her open reasons for refusing the application for disclosure of the redacted and withheld information, and on the next day she handed the second respondent a closed judgment. By a first judicial review claim issued on 26 September 2014 (CO/4505/2014), the appellant sought return of the material seized on 26 June 2014 on the basis that the warrants, entries, searches and seizures, were unlawful for a range of reasons. These included alleged deficiencies in the terms in which the application could be seen to have been expressed. They also included the appellants central contention that the information disclosed to him showed no basis on which lawful search warrants could have been issued, and that it had not been and was not permissible for reliance to be placed on the withheld information. By a consent order signed on 27 March and sealed on 6 May 2015, the second respondent agreed that the warrants should be quashed. Prior to so doing the second respondent on 23 March 2015 served a protective application for retention of the seized material under section 59 of the CJPA. On 9 June 2015 HHJ Bright QC sitting in the St Albans Crown Court ruled that the second respondent was entitled to rely on the withheld information in support of its section 59 application, and on 11 June 2015, in the light of this ruling, the parties agreed and HHJ Bright QC made an order authorising retention of the seized material under section 59. By a second judicial review claim issued on 26 June 2015 (CO/3114/2015), the appellant sought the return of the seized material on the grounds that the section 59 order should be quashed, since it was impermissible to rely on the withheld information in its support. In response to an application by the second respondent for directions to allow the Divisional Court, should it wish, to see the withheld information in an ex parte hearing, the appellant accepted that, if HHJ Bright QC had been entitled to have regard to the withheld information, then the lawfulness of his ruling was not in issue; the only issue was whether he was so entitled; and only if he was not, did the section 59 order fall to be quashed. Collins J on 20 January 2016 left it to the Divisional Court to decide at the hearing whether it should see the withheld information. The Divisional Court decided not to hold an ex parte hearing and that it did not need to consider the withheld information. It gave judgment on 22 April 2016 dismissing the appellants claim for judicial review: [2016] 1 WLR 3073. It held that it was open to a magistrate issuing a search and seizure warrant and a court deciding an application under section 59 to consider material which had in the public interest to be withheld from disclosure. It evidently took the same view in relation to a magistrates court hearing an application for disclosure pursuant to the procedure indicated in Bangs (para 6 above), although it wrongly referred to that procedure as one for challenging the issue or execution of a warrant. It is common ground between the parties before the Supreme Court that magistrates court decisions to issue a search and seizure warrant and Crown Court orders under section 59 are challengeable only by judicial review, which is the means the appellant correctly adopted. Finally, the Divisional Court noted that it had been no part of the argument before it that, if HHJ Bright QC had been correct to decide that the appellant should be denied access to the withheld information, his decision should still be quashed. It referred to R (AHK) v Secretary of State for the Home Department [2012] EWHC 1117 (Admin); [2013] EWHC 1426 (Admin) (Ouseley J) as providing possible support by analogy for a rejection of any such argument. The issues should address five issues, which I can slightly rephrase as follows: In the light of the above, the parties have agreed that the Supreme Court (i) How far can a magistrates court, on an ex parte application for a search and seizure warrant under sections 8 and 15(3) of PACE, rely on information which in the public interest cannot be disclosed to the subject of the warrant? (ii) issued ex parte under sections 8 and 15(3) of PACE: In proceedings for judicial review of the legality of a search warrant, (a) is it permissible for the High Court to have regard to evidence (upon which the warrant was issued) which is not disclosed to the subject of the warrant? (b) If a magistrates court is permitted to consider evidence not disclosable to the subject of the warrant, but the High Court is not, does it follow that the warrant must be quashed in circumstances where the disclosable evidence is insufficient, on its own, to justify the warrant? (iii) Is there jurisdiction in a Crown Court to rely on evidence not disclosable to the subject of the warrant in an application made inter partes to retain unlawfully seized material under section 59 of the CJPA? (iv) In proceedings for judicial review of an order, made inter partes, for retention of unlawfully seized material under section 59 of the CJPA, is it permissible for the High Court to have regard to evidence (upon which the warrant was issued) which is not disclosed to the subject of the warrant? (v) Do the principles concerning irreducible minimum disclosure apply to proceedings concerning search warrants? The assumption behind these questions is that no express Parliamentary authorisation exists for the operation of a closed material procedure at any stage. The appellants case was that the Justice and Security Act 2013 has no application, because proceedings relating to a search warrant or under section 59 of the CJPA are criminal in nature, not civil. The second respondent took no issue with this, but the Secretary of State for the Home Department as intervener suggested an alternative basis on which the 2013 Act would not apply (namely that it applies only where disclosure would be damaging to the interests of national security). No detailed submissions were addressed to these points, and the Court is content simply to proceed on the basis of the common ground that, for one reason or another, the 2013 Act does not apply. In the absence of any such express statutory authorisation, the appellants submission is that the common law principle in Al Rawi applies to preclude any form of closed material procedure. Although the agreed issues refer to the person who is the subject of the warrant, this does not reflect the actual language or effect of sections 8 and 15 of PACE. The subject of any warrant under those sections is premises, falling into one of two categories. The first category consists of specific premises, specified in the application. The present warrants fall into that category. The second category consists of any premises occupied or controlled by a person specified in the application. The pre conditions to issue of a warrant set out in section 8(3) also refer to any person entitled to grant entry to the premises as well as to any person entitled to grant access to the evidence who may or may not be the same or different persons. Again that does not mean that the warrant is addressed to any such person. There are, of course, likely to be persons whose interests are affected by the operation of a search and seizure order. Very often they will be persons occupying the relevant premises and in possession of the property seized. Sometimes there may be persons with privacy or confidentiality rights in respect of property seized. But this will not necessarily be the case. A search and seizure warrant may have as its aim and effect to obtain material relating to some third person with no proprietary, possessory or other interest in the material seized at all. The material may assist the investigation, and very possibly provide evidence against the third person. The occupier of the premises or person in possession of the material before its seizure may not make any challenge to the warrant or its execution. It is not clear that the third person would necessarily have any basis for doing so. The appellants primary case, advanced by Mr Mark Summers QC, is that it is not permissible for a magistrate or court, at any of the stages identified in issues (i) to (iv), to have regard to or rely on material which will on public interest grounds have to be withheld from a person affected by the order made. Alternatively, if it is legitimate for a magistrate on a section 8 application and/or a Crown Court judge on a section 59 application to have regard to and rely on material so withheld, there is no basis on which a court can, consistently with Al Rawi, do so on a judicial review challenge to the warrant or the section 59 order. Mr Summers invites the Supreme Court, when considering these issues, to start with the end position as it exists on an application for judicial review. If material has on public interest grounds to be withheld from the applicant then, it cannot, he submits, have been legitimate for it to be deployed at any earlier stage. Finally, if these submissions are not accepted, Mr Summers submits that neither a section 8 nor a section 59 order can withstand challenge by a person affected, unless that person has been supplied with the gist of the information relied upon to obtain it. Mr Martin Chamberlain QC for the second respondent and Mr James Eadie QC for the Secretary of State for the Home Department, as intervener, advance a contrary case at each stage. In their submission, both the magistrate under section 8 and a court under section 59 are entitled to rely on material which will have to be withheld from disclosure to a person affected. A court on judicial review is either entitled to adopt a similar procedure or, if it cannot, must simply assume that the material withheld justified the orders made under section 8 and/or 59. Further, although a search and seizure warrant involves an invasion of private property, the invasion does not, in their submission, equate with the infringements of liberty involved in previous cases, involving for example detention or a control or asset freezing order, where gisting of the substance of the material relied on has been regarded as essential. In considering the issues, Mr Chamberlain and Mr Eadie invite the Court to start with the initial application for a warrant and follow the process through each of the potential subsequent stages. There is in my opinion a logic in this last submission, since it means considering the statutory scheme from the ground up. It also takes the same starting point as the agreed issues. But I agree that it is important to review any conclusions reached about the earlier stages of the process in the light of whatever analysis is adopted of its later stages. Issue (i) the issue of a warrant In order for a magistrate to be able to issue a warrant under section 8(1) read with section 15(3) and (4), all that is required is that he or she be satisfied, from the information contained in the constables application and from the constables answers on oath to any questions put, that there are reasonable grounds for believing the matters set out in section 8(1)(a) to (e). Nothing in the language of these sections suggests that the material giving rise to such grounds must be of any particular nature, or take any particular form, or itself be admissible in evidence at any trial that might be envisaged. In the context of a procedure designed to be operated speedily by a constable at an early stage in a police investigation, that is unsurprising. It is also clear, and common ground, that the statutory scheme of sections 8 and 15 of PACE is designed to operate ex parte. Section 15(3) makes express provision to that effect, and the pre conditions to the operation of the scheme, set out in section 8(3), underline the point. The execution of the warrant for search and seizure may lead to the obtaining of material that may itself either be, or lead in due course to the obtaining of, evidence. Such evidence will only be capable of being deployed at any trial of any person who may be charged with any offence if it is disclosed: R v Davis [2008] AC 1128. But the statutory scheme of sections 8 and 15 operates at a stage preliminary to any trial and before any issue of guilt or innocence is joined with any particular person. The issue and execution of a search and seizure warrant does involve a statutorily authorised invasion and taking by the state of private property. Again not surprisingly, the courts have developed ancillary principles and protections. In R (Cronin) v Sheffield Justices [2002] EWHC 2568 (Admin); [2003] 1 WLR 752, the court addressed a number of issues that had been raised with reference to article 8 of the European Convention on Human Rights, and then noted that a question had also arisen as to whether there was any lawful justification for supplying to a citizen whose home had been entered pursuant to a search warrant a copy of the relevant information on which the warrant was based. As to this, Lord Woolf CJ said (para 29): Information may contain details of an informer which it would be contrary to the public interest to reveal. The information may also contain other statements to which public interest immunity might apply. But, subject to that, if a person who is in the position of this claimant asks perfectly sensibly for a copy of the information, then speaking for myself I can see no objection to a copy of that information being provided. The citizen, in my judgment, should be entitled to be able to assess whether an information contains the material which justifies the issue of a warrant. This information contained the necessary evidence to justify issuing the warrant. In R (Energy Financing Team Ltd) v Bow Street Magistrates Court [2005] EWHC 1626 (Admin); [2006] 1 WLR 1316 (EFT), the court set out ten general conclusions regarding warrants. It described the grant and execution of a search and seizure warrant as a serious infringement of the liberty of the subject, which needs to be clearly justified (para 24(1)). Its last two conclusions were as follows: (9) The remedy which is available to a person or persons affected by a warrant is to seek judicial review. It is an adequate remedy because the statutory provisions have to be read in the light of those articles of the European Convention which are now part of English law. In fact, . if the statutory provisions are satisfied the requirements of article 8 of the Convention will also be satisfied, and at least since the implementation of the Human Rights Act an application for judicial review is not bound to fail if, for example, the applicant cannot show that the Directors decision to seek a warrant in a particular form was irrational, but in deciding whether to grant permission to apply for judicial review the High Court will always bear in mind that the seizure of documents pursuant to a warrant is an investigative step, perhaps best reconsidered either at or even after the trial. (10) Often it may not be appropriate, even after the warrant has been executed, to disclose to the person affected or his legal representatives all of the material laid before the district judge because to do so might alert others or frustrate the purposes of the overall inquiry, but the person affected has a right to be satisfied as to the legality of the procedure which led to the execution of the warrant, and if he or his representatives do ask to see what was laid before the district judge and to be told about what happened at the hearing, there should, so far as possible, be an accommodating response to that request. It is not sufficient to say that the applicant has been adequately protected because discretion has been exercised first by the Director and then by the district judge. In order to respond to the request of an applicant it may be that permission for disclosure has to be sought from an investigating authority abroad, and/or that what was produced or said to the district judge can only be disclosed in an edited form, but judicial control by way of judicial review cannot operate effectively unless the person or persons affected are put in a position to take meaningful advice, and if so advised to seek relief from the court. Furthermore it is no answer to say that there is no general duty of disclosure in proceedings for judicial review. In Gittins v Central Criminal Court [2011] EWHC 131 (Admin), the court had before it claims judicially to review two warrants issued by HHJ Stephens QC on an ex parte application under section 9, read with Schedule 1 paragraph 12 to PACE. The warrants authorised HMRC to search premises occupied by the two claimants and seize documents there. Until the morning of the hearing, HMRC maintained that it could not disclose the information on the basis of which the warrants had been issued, for fear of prejudicing the continuing investigation which was not confined to the claimants. However, on the morning of the hearing HMRC provided a document giving the gist of its case, and a redacted transcript of the hearing before HHJ Stephens QC. Gross LJ made five numbered observations, including these: 27.(2) When an application for judicial review is launched seeking to quash the grant of a search warrant, it is, again, in some respects, akin to the return date for Marevas, Anton Pillers and Restraint Orders. Ordinarily, the expectation will be that the party challenging the grant of the warrant must be entitled to know the basis upon which the warrant was obtained. 28.(3) By their nature, criminal investigations are such that there will be occasions when, for good reason, HMRC (or other authorities as the case may be) will not be able to divulge the full information or the full contents of the discussion before the judge who granted the warrant. There is an important public interest in combating economic crime, and HMRCs proper efforts to do so should not be undermined. 30.(5) Where full disclosure cannot be given (and there will be cases where it cannot be), HMRC should, if at all possible, and again unless there is good reason for not doing so, make available, and in a timely fashion, a redacted copy or at least a note or summary of the information and the hearing before the judge, where appropriate, backed by an affidavit. Davis J addressed the same subject, saying: 77. It must not be overlooked that an order issuing a warrant of the kind sought and granted in this case is, by its very nature, highly intrusive. Hence indeed the stringent pre conditions under the 1984 Act Parliament has stipulated should be fulfilled before such an order may be made. Further, such orders are ordinarily, as here, sought on an ex parte basis: a reversal of course (albeit on well established grounds) of the usual rule that a party is entitled to be heard before any order is granted against him. Those two considerations seem to me to indicate that the prima facie starting point should be for HMRC to give, where requested, to the person who may be aggrieved at the issuing of the warrant and who may wish to challenge it, as much relevant information as practicable, provided it is not prejudicial to the investigation, as to the basis on which the warrant was obtained from the Crown Court. 78. It is of course relatively easy to envisage that there may be many cases where it could indeed be prejudicial to the investigation, prior to any charging decision, to disclose parts of the information and other materials deployed before the Crown Court judge in seeking the warrant. Non disclosure in such circumstances can be justified. In the present case for example, we are told that a 59 page information and three supporting folders of materials were placed before the judge. Those have not thus far, in their full terms, been disclosed to Mr Gittins, and indeed Mr Jones QC did not seek to say they should have been, at all events at this stage. But, to repeat, it is not legitimate to move, without additional justification, from a position whereby it can properly be said that not all the materials placed before the Crown Court judge should be disclosed, to a position whereby it can be said that the recipient of the warrant is to be told nothing at all as to the basis on which the warrant was sought. In my view, therefore, in each case where a request for 79. such information is made by the person the subject of a warrant of the kind made here, HMRC should consider such requests on a individuated basis. Specifically, HMRC should assess what materials and information relied on before the Crown Court can properly be disclosed, with or without editing, and whether by way of summary or otherwise, without prejudicing the criminal investigation. It would be wrong simply to hide behind an asserted general policy as a justification in itself for declining to give any information. Indeed, I suspect that, while there perhaps may be cases where declining to give any information at all may be justified in particular circumstances, such a situation is likely to be an exception. Certainly it should not be taken as a norm. Where such a situation is said by HMRC to arise, then HMRC should be prepared to justify it. It is indeed, as I see it, salutary that that should be so. It is clear (from paras 78 and 79 in particular of his judgment) that Davis J contemplated that there could be put before, and relied on by, the circuit judge information, some or even all of which would have to be withheld on public interest grounds from a person affected by, and wishing by judicial review to challenge, the warrants. In R (Golfrate Property Management Ltd) v Southwark Crown Court [2014] EWHC 840 (Admin); [2014] 2 Cr App R 12, paras 17 18, the court emphasised that a decision to claim on public interest grounds to withhold information placed before a magistrate to obtain a warrant should be taken by a Chief Constable and was required to be sanctioned by the court. Finally, in Bangs (para 6 above), the court held that, where the police were objecting to the disclosure to a person affected of information relied upon before a magistrate to obtain a search and seizure warrant, the magistrates court was not functus officio, and any challenge to the withholding was an issue for the magistrates court (para 28). The court acknowledged that the public interest might demand that some or all of the material relied on to obtain the warrant not be disclosed (para 25). Referring to Bank Mellat v HM Treasury (No 2) [2013] UKSC 38; [2014] AC 700, it also noted that the applicant might have to be excluded from parts, in some cases substantial parts, of the hearing and reasoning given on the disclosure application (para 35). In the authorities cited in paras 15 to 21 above, the procedure, whereby information put before and used by the magistrate is withheld from any person affected, is frequently referred to as a PII (public interest immunity) procedure. Conventionally, a PII procedure exists when a court assesses whether material should be disclosed to the other party, in which case it will be known on all sides, or should in the public interest be withheld from use by anyone, including the court: see Al Rawi v Security Service (para 1 above), paras 100 104; R (British Sky Broadcasting Ltd) v Central Criminal Court [2014] UKSC 17; [2014] AC 885, para 32. The procedure will then include an assessment of the significance of the material in the context of whatever decision is in issue (here, the issue of the warrant) and any challenge to it. However, I understand some of the dicta in the above authorities in a different sense. They contemplate that the magistrate in the case of an ex parte application for a warrant under section 8 of PACE, or the Crown Court judge, in the case of such an ex parte application under section 9 of PACE, will or may have been persuaded by material some, or even all, of which will at the later stage of a claim for disclosure under the principle in Bangs or for judicial review of the issue of the warrant, have to be withheld from the applicant on public interest grounds: see eg EFT, para 10, Gittins, paras 65 66 and Bangs, para 25. The authorities do not directly address the question of what a court hearing a judicial review application can or should do if it appears that the material withheld is likely to be decisive for a consideration of the legitimacy or otherwise of the issue of the warrant. That question was however considered in Competition and Markets Authority v Concordia International RX (UK) Ltd [2017] EWHC 2911 (Ch), in a judgment handed down by Marcus Smith J shortly after the hearing of this appeal in the Supreme Court. The judgment was helpfully sent by him to the Supreme Court, and we invited and received the parties submissions on it. The issue arose in Concordia in the context of a search warrant issued ex parte under section 28 of the Competition Act 1998. Section 28 can itself be regarded for present purposes as broadly paralleling section 8 of PACE. But the relevant Practice Directions provide not only that a warrant under section 28 must be served as soon as possible on the occupier or person appearing to be in charge of the premises (PD paras 7.3 and 8.1), but also that such occupier or person may apply to vary or discharge the warrant to the judge who issued the warrant or, if he is not available, another High Court judge (para 9). Concordia applied accordingly, but the Competition and Markets Authority (CMA) maintained that it could not, for public interest reasons, disclose all the information on the basis of which it had persuaded the judge to issue the warrant in its final form. In the course of a careful analysis of the possibilities, Marcus Smith J: (i) rejected a submission that, if the CMA was to be permitted to resist the challenge, it must disclose the full material; (ii) considered that the Supreme Courts judgment in Al Rawi precluded a closed material procedure, whereby the material withheld could be seen by the court, but not by Concordia; (iii) rejected the CMAs case that some form of confidentiality ring could be established, to allow disclosure to Concordias counsel, without disclosure to Concordia; and (iv) in these circumstances held that Concordias application to vary or partially revoke the warrant must be determined on the basis of such material as is not protected by public interest immunity (para 71). In so concluding, Marcus Smith J recognised that the excluded material may constitute the difference between the section 28 warrant being upheld or varied/revoked (para 70). The question on this appeal is whether the conclusions he reached are correct, at least in the context of a search and seize warrant issued under section 8 of PACE. The current Criminal Procedure Rules, as amended since the events giving rise to the present proceedings, contain provisions reflecting and regulating the procedure contemplated in the authorities discussed in paras 15 to 21 above. They expressly permit information to be placed before a magistrate under section 8 of PACE (rule 47.26(4)), in circumstances to which rule 5.7 (see below) applies, marked to show that it is only for the magistrate or court and not to be supplied to anyone else, and accompanied with an explanation as to why it is withheld. They go on to provide a number of safeguards. An application for a search warrant cannot be dealt with without a hearing (rule 47.25(1)). The applicant officer must confirm on oath or affirmation that the application discloses all information material to the decision the court must make, that the contents of the application are true, and that he has disclosed anything known or reported to him which might reasonably be considered capable of undermining any of the grounds (rules 47.25(4) and (5) and 47.26(3) and (5)). He must also answer any questions on oath or affirmation (rule 47.25(5)). An application must also include a declaration by an officer senior to the applicant that the senior has reviewed and authorised it (rule 47.26(5)(b)). The hearing, however, is required to be in private unless the court otherwise determines, and in the absence of any person affected by the warrant, including any person in occupation or control of the premises (rule 47.25(1)). Rule 5.7 makes detailed provision for circumstances in which information is sought by a party or person about the grounds on which an order was made, or a warrant issued, in his absence, and the person who applied for the order or warrant objects to the supply of the information requested. The notice of objection must in this situation mark the material to the disclosure of which the objection relates to show it is only for the court and give an explanation why it has been withheld (rule 5.7(8)). The hearing which follows may take place, wholly or in part, in the absence of the party or person applying for information, and in the event the general rule (though the court may direct other arrangements) is that the court will consider representations first by the party or person applying for information and then by the objector in the presence of both, and then further representations by the objector, in the absence of that party or person (rule 5.7(9)). Rule 47.39 (introduced by SI 2017/144) also contains in relation to applications under section 59 of the CJPA provisions regarding the marking of information to show that, unless the court otherwise directs, it is only for the court, accompanied with an explanation as to why it has been withheld, together with provisions mirroring those in rule 5.7(9). These provisions contemplate that the magistrate on an application for a warrant under section 8 or for disclosure, or the Crown Court under section 59 of the CJPA, will be able to see and rely on information which in the public interest cannot be disclosed to a person affected by the relevant order who would otherwise be entitled to disclosure of the information. Mr Summers submits that these provisions were in that respect ultra vires. One may surmise that this submission is made on the basis that the general power under section 69 of the Courts Act 2003 to make rules of procedure governing the practice and procedure in the criminal courts cannot tacitly authorise a departure from so fundamental a principle as the administration of open, inter partes justice. I express no view on that submission. It falls away if the statutory scheme of PACE and the CJPA itself permits the relevant magistrate or court to have regard to material which cannot on public interest grounds be disclosed to a person affected by a warrant or order. In my opinion, the statutory scheme of sections 8 and 15 of PACE does so permit. Read in terms, it involves, as indicated in paras 12 and 15 above, a purely ex parte process, directed to premises, rather than any particular person. It is a process designed to be operated speedily and simply, on the basis of information provided by a constable satisfying a magistrate that there are reasonable grounds for believing the matters stated in section 8(1). There is nothing in the statutory scheme which expressly restricts the information on which the magistrate may act. Parliament made no express provision for the information on which the warrant was sought to take any particular form or to be disclosed, even after the issue of the warrant, to any person affected. It would in many cases clearly be impracticable to expect such disclosure, for example where the information came from an informer, and in particular where it came from an informer whose identity could readily be identified from the nature of the information. I note, in parenthesis, that the police may well be under a duty, for example under articles 2 and 3 of the Human Rights Convention, to protect the safety of such an informer. Another area where disclosure to a person affected would clearly be impracticable would be where it would reveal the particular lines or methods of investigation being or proposed to be followed, in a way which would or could undermine their continuing usefulness in relation to other aspects of, or other persons potentially involved in, the investigation. The rules which I have summarised in para 25 above make very clear that the police owe a duty of candour towards the magistrate when seeking a warrant, and may well have to disclose such information, eg because it is material, or if asked by the magistrate. The suggestion that the police should in such a case simply refrain from seeking or further seeking a warrant would limit use by the police of important sources of information and the efficacy of police investigations. It is no doubt sensible practice for applicant officers to adopt, where practicable and where time permits, the permissive rule 47.26(4) procedure and to identify information which they contend ought not to be supplied to anyone but the court. That may reduce the risk of accidental disclosure, and no doubt a magistrate considering an application would, where this is done, bear in mind that there is information which a person affected might never be able to test. But there is no suggestion, or I think likelihood, that the scheme intended the constable or magistrate at this early stage, when speed is often of the essence, to try to form a definitive view as to what the public interest might ultimately prove to require. That is an exercise which in accordance with the rules falls to be undertaken at a later stage by a magistrate under the procedure in Bangs and/or a Crown Court under section 59 of the CJPA. The effect of the statutory scheme and the rules is that an application for a warrant under section 8 can be made and granted on the basis of all the relevant information available to the applicant, even though some of it may not at any stage be capable of being disclosed to a person affected. The courts and the rule makers, in developing ancillary principles and protections for persons affected, have been careful to qualify them, by reference to the public interest, so as not to undermine the efficacy of the scheme. That would be the effect of the appellants case. This conclusion is also consistent with and in my view supported by consideration of authority, decided before PACE, on the operation of a search and seizure warrant issued under section 20C of the Taxes Management Act 1970: Inland Revenue Comrs v Rossminster Ltd [1980] AC 952. Section 20C enabled the appropriate judicial officer (in casu, the Common Serjeant) to issue such a warrant: [i]f satisfied on information on oath given by an officer of the board that there is reasonable ground for suspecting that an offence involving any form of fraud in connection with, or in relation to, tax has been committed and that evidence of it is to be found on premises specified in the information . A warrant was issued and executed in relation to specified premises, including those of Rossminster Ltd, a banking company. No information was given to Rossminster Ltd about the precise nature of the alleged fraud, or when or by whom it was committed. Rossminster Ltd applied for judicial review to have the warrant quashed and the documents which had been seized delivered up. The House recognised the invasive nature of the warrant. Lord Wilberforce said that he could understand very well the perplexity, and indeed indignation, of those present on the premises, when they were searched (p 998H), and suggested that the statutory scheme called for a fresh look by Parliament. But, as the majority pointed out, the House was not concerned with unauthorised executive action, as in Entick v Carrington (1765) 2 Wils 275, but with an issue involving the construction and application of a statutory scheme. As to this, the majority members were agreed that there was no basis either for reading into section 20C or for deriving from the general law any requirement to give particulars of the offences suspected: see eg p 999A C, per Lord Wilberforce, p 1005E, per Viscount Dilhorne, p 1010B C, per Lord Diplock and p 1024A B, per Lord Scarman. (Lord Salmon dissented.) In this connection, Lord Wilberforce said (p 999A C) that: on the plain words of the enactment, the officers are entitled if they can persuade the board and the judge, to enter and search premises regardless of whom they belong to: a warrant which confers this power is strictly and exactly within the parliamentary authority, and the occupier has no answer to it. I accept that some information as regards the person(s) who are alleged to have committed an offence and possibly as to the approximate dates of the offences must almost certainly have been laid before the board and the judge. But the occupier has no right to be told of this at this stage, nor has he the right to be informed of the reasonable grounds of which the judge was satisfied. Both courts agree as to this: all this information is clearly protected by the public interest immunity which covers investigations into possible criminal offences. The reference to a general public interest immunity covering investigations into possible criminal offences may need qualification. Indeed, in the judgment of the Divisional Court in Rossminster, which was approved by the House of Lords, Eveleigh LJ suggested a more focused approach, depending on the particular circumstances: [1980] AC 952, 961D E. A specific public interest is however accepted or assumed to exist in relation to withholding of the material not disclosed to the appellant in this case. As to the words in the passage cited at this stage, Lord Wilberforce went on to note, with reference to a statement by Lord Reid in Conway v Rimmer [1968] AC 910, 953 954, that, after a verdict or a decision not to take proceedings, there is not the same need for secrecy (p 999D E) and the immunity which exists at the stage of initial investigation will lapse (p 1001A). However, where, at the stage which the present investigation has reached (pending the outcome of the present appeal), it is accepted that there is a current and continuing public interest in withholding information relied on for the issue of the warrant, that qualification has no application. The interests of other investigations, current or future, may also require the withholding of information in some circumstances. The analogy between a section 20C warrant and a warrant to search premises and seize stolen goods at common law (later the subject of section 42 of the Larceny Act 1916) was referred to by Lord Diplock and Lord Scarman at pp 1010H and 1023H 1024A in the Rossminster case. The approach to a section 20C warrant can fairly be assumed to have been in the mind of those drafting and enacting section 8 of PACE to crystallise the statutory position relating to ordinary search and seizure warrants. Mr Summers submits that the Rossminster case is the product of an earlier era. It is true that it was decided both before the Convention rights were domesticated by the Human Rights Act 1998 and before the decision in Al Rawi. But PACE itself was also enacted in the same era, not long after the decision in Rossminster. There may be other aspects of the decision in Rossminster which require reconsideration in the light of subsequent developments. But on the present issue whether the scheme of PACE contemplates that a magistrate on an application for a warrant under section 8 or for disclosure under Bangs, or the Crown Court on an application under section 59 of the CJPA, may rely on material which will have to be withheld from a person affected the judgment in Rossminster is in my view very relevant background to a proper understanding of the scheme. As in Rossminster, so under section 8, it must have been envisaged that the warrant might be issued on the basis of information which could not in the public interest be disclosed to persons affected at least until some future date after the investigation was over, or perhaps (as when it relates to an informer) for ever. It is of course the case that the issue and execution of a search and seizure warrant may, to a greater or lesser degree, involve interference with someones real or personal property, possessory or other interests. But there is no change in substantive property or possessory rights and any invasion of privacy interests is limited and in the general public interest; such interference as there is only occurs in the interests of the investigation of serious (indictable) offending. It is also relevant that the statutory procedure under section 8 is subject to a number of protections, expressed or inherent in the statutory language and in the current rules summarised in para 25 above. It only applies when a magistrate is on reasonable grounds satisfied by a constable that an indictable offence has been committed. A constable, when seeking ex parte to satisfy the magistrate that the requirements of section 8 are met, owes a duty of candour, meaning that the information on which he or she relies must constitute a fair and balanced presentation of the circumstances on the basis of which a warrant is sought: compare for example In re Stanford International Bank Ltd [2010] EWCA Civ 137; [2011] Ch 33, esp at paras 82 83 and 88, per Morritt C and para 191, per Hughes LJ. A further point is that the material sought must not consist of or include items subject to legal privilege, excluded material or special procedure material (section 8(1)(d)). Excluded material refers, in summary, to personal records which a person has acquired or created in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office and which he holds in confidence, as well as human tissue taken in a medical context and held in confidence and journalistic material held in confidence (section 11 of PACE). Special procedure material includes other journalistic material (section 14(1)), as well as material in the possession of a person who acquired or created it in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office (section 14(2)). Under Schedule 1 to PACE, only a Crown Court judge can make an order relating to special procedure material. There are two possibilities. One involves seeking a production order under Schedule 1 paragraph 4; such an order can under paragraph 2 be obtained under conditions which include conditions broadly mirroring those applicable under section 8(1)(a) to (d) (Schedule 1 paragraphs 2 and 3); but Schedule 1 paragraph 7 provides that: An application for an order under paragraph 4 above that relates to material that consists of or includes journalistic material shall be made inter partes. The other possibility is to seek a search and seizure warrant, which may be sought ex parte, again under conditions mirroring section 8(1)(a) to (d), provided that one of certain further conditions is satisfied (Schedule 1, paragraphs 12(a)(ii) and 14), namely: that it is not practicable to communicate with any person (a) entitled to grant entry to the premises ; (b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the material; [presently irrelevant]; (c) (d) that service of notice of an application for an order under paragraph 4 above may seriously prejudice the investigation. The Supreme Court has determined that, on an inter partes application for a production order in relation to journalistic material under Schedule 1 paragraph 4, a Crown Court judge is not entitled to conduct part of the proceedings ex parte and to hear during that part, and to have regard in his decision to, information withheld from the other party to the application: R (British Sky Broadcasting Ltd) v Central Criminal Court [2014] UKSC 17; [2014] AC 885. But, in the course of a judgment with which the whole Court agreed, Lord Toulson contrasted the case before the Court there with the general position when use is made ex parte of the courts procedural powers to obtain evidence. He said: 28. As a general proposition, I would agree with the Commissioners argument that the court should not apply the Al Rawi principle to an application made by a party to litigation (or prospective litigation) to use the procedural powers of the court to obtain evidence for the purposes of the litigation from somebody who is not a party or intended party to the litigation. This is because such an application will not ordinarily involve the court deciding any question of substantive legal rights as between the applicant and the respondent. Rather it is an ancillary procedure designed to facilitate the attempt of one or other party to see that relevant evidence is made available to the court in determining the substantive dispute. Applications of this kind, such as an application for a witness summons in civil or criminal proceedings, are typically made ex parte. 29. However, the present situation is different. Compulsory disclosure of journalistic material is a highly sensitive and potentially difficult area. It is likely to involve questions of the journalists substantive rights. Parliament has recognised this by establishing the special, indeed unique procedure under section 9 and Schedule 1 for resolving such questions. 30. Ultimately the issue in this appeal is a short one. It turns on the meaning and effect of paragraph 7 of Schedule 1. Parliament recognised the tension between the conflicting public interests in requiring that an application for a production order shall be made inter partes. The Government had originally proposed that a production order might be made ex parte, but that proposal met opposition and was dropped. When an application for a production order is made, there is a lis between the person making the application and the person against whom it is made, which may later arise between the police and the suspected person through a criminal charge. Equal treatment of the parties requires that each should know what material the other is asking the court to take into account in making its decision and should have a fair opportunity to respond to it. That is inherent in the concept of an inter partes hearing. In these paragraphs, Lord Toulson identified two categories of situation. The first, addressed in para 28, was focused on use of the courts procedural powers, typically on an ex parte basis, to obtain evidence for the purposes of the litigation from somebody who is not a party or intended party to the litigation. The second, contrasted in paras 29 and 30, concerned the inter partes procedure which applies under Schedule 1 paragraph 7 when journalistic material is sought. Lord Toulson noted that it had been a deliberate decision by the Government to drop its original proposal for an ex parte procedure, after this had met opposition. In the result there was a lis between the person making the application and the person against whom it is made ie typically the journalist, which may later arise between the police and the suspected person through a criminal charge. An ex parte application for a search warrant under section 8 of PACE falls naturally into an extended conception of the former category, rather than into the second category. There is no necessary proprietary or personal link between premises sought to be searched or material sought to be seized by a warrant under section 8 and any particular individual who may be being investigated. In the present case, there was a factual link, in that the underlying investigation related to, amongst others, the appellant. But the warrant was directed to the premises and material on it, not to the appellant. The procedure did not create any lis between the police or prosecution service and him, even if such a lis might later arise. The search warrant was, in Lord Toulsons terms, an ancillary procedure designed to enable the police to fulfil their role of investigating suspected criminality. For all these reasons, and subject to review in the light of the answers to subsequent issues, the answer to issue (i) is in my opinion that the statutory scheme entitles a magistrates court, on an ex parte application for a search and seizure warrant under sections 8 and 15(3) of PACE, to rely on information which in the public interest cannot be disclosed to the subject of the warrant. Issue (iii) the position under section 59 It is convenient to take issue (iii) before issue (ii). The question under issue (iii) is in substance whether a Crown Court, on an application made inter partes under section 59 of the CJPA to retain unlawfully seized material, can operate a closed procedure to have regard to information which for public interest reasons is not disclosable. This issue involves consideration of the interplay between the ex parte procedure for issue of a search and seizure warrant under section 8 and the inter partes procedure for authorising retention under section 59 of property seized but otherwise falling to be returned. Section 59(7) provides that retention may be authorised on the grounds that: (if the property were returned) it would immediately become appropriate to issue, on the application of the person who is in possession of the property at the time of the application under this section, a warrant in pursuance of which, or of the exercise of which, it would be lawful to seize the property . Section 59(7) accordingly requires the Crown Court, when deciding whether to authorise retention, to put itself in the shoes of a hypothetical magistrates court being asked, immediately after the return of the property, to issue a fresh warrant with a view to seizure of the property. In the light of the answer given to issue (i), such a magistrates court would have been entitled on the hypothetical ex parte application made to it for such seizure to have regard to information placed before it by the constable which on public interest grounds could not be disclosed to others. The Crown Court could not fulfil its role without having regard to such information. But if it did so inter partes that would involve disclosing the information in a way which the public interest would preclude (and which the hypothetical magistrate would not do). The statutory scheme of PACE and the CJPA must have been intended to be coherent, and Parliament must be taken in these circumstances to have contemplated that the Crown Court would, so far as necessary, be able to operate a closed material procedure, to ensure that it could have regard to material which would have been put before the hypothetical magistrates court and withheld from disclosure there, without contravening the public interest by disclosing such material on the section 59 application. In Bank Mellat v HM Treasury (No 2) this court was faced with a situation where there was no express provision for it to operate a closed material procedure on an appeal, although such a procedure had been provided for and applied in the courts below. The Supreme Court, by a majority, held a power to hold a closed material procedure to be implicit in the statutory provisions. These gave it a power to hear appeals against any order or judgment of the Court of Appeal (section 40(2) of the Constitutional Reform Act 2005 CRA) and a power to determine any question necessary for the purposes of doing justice in an appeal to it under any enactment (section 40(5) CRA). The Court also took into account that an appeal to it against a wholly or partially closed judgment could not otherwise be effective. The situation now before the Court presents an analogy. Section 59 postulates that the Crown Court will be able to put itself into the shoes of a hypothetical magistrates court. This will not work, unless the Crown Court can operate, so far as necessary, the same closed procedure as the magistrates court could and would have done. For these reasons, the answer I would, subject to review in the light of the answers to issues (ii) and (iv), give to issue (iii) is that a Crown Court, on an application made inter partes under section 59 of the CJPA to retain unlawfully seized material, can operate a closed procedure to have regard to information which for public interest reasons is not disclosable. Issues (ii) and (iv) the position regarding closed material on judicial review It is convenient to take these two issues together, as they raise essentially the same point. Judicial review is the means by which a person affected may challenge either the issue of a search and seizure warrant or an order under section 59 authorising the retention by the police of property seized which would otherwise fall to be returned. In the light of the conclusions already provisionally reached, the magistrate may issue such a warrant and the Crown Court may make an order under section 59 taking into account material which is closed, ie withheld from by any person affected. What is the position on a judicial review of the magistrates or Crown Courts decision? Mr Summerss answer to this question is that judicial review must on any view be subject to the principle in Al Rawi, that the court on judicial review cannot adopt a closed procedure and, further, that this undermines the conclusions already expressed in respect of issues (i) and (iii) above about the permissibility of a closed procedure by a magistrate issuing a warrant or a Crown Court considering a section 59 application. He also submits that, even if he is wrong on this last point, the inability of the court on judicial review to conduct a closed material procedure and to look at material withheld from the claimant must mean that the warrant or section 59 order is set aside, if the material disclosed does not itself justify the warrant or order. The commencement of judicial review proceedings would, in that situation, ensure the setting aside of a warrant or order which had itself been properly issued. In this connection, Mr Summers relies on and maintains the correctness of the fourth pillar of Marcus Smith Js reasoning in Concordia, set out in para 24(iv) above. Mr Chamberlains and Mr Eadies answers are to the opposite effect. They submit that, whatever the position regarding judicial review, there is no reason to disturb the scheme as it was in their submission intended to operate before a magistrate and the Crown Court. If the court on judicial review is required under Al Rawi to forego any sort of closed material procedure, there will be no basis upon which any person affected can complain that the issue of the warrant, or the making of the section 59 order, was not justified by material before the magistrate or Crown Court. However, their primary case in this situation is that, if the magistrate or Crown Court can rely on material withheld from a person affected, the court on a judicial review can and should fashion its procedures to be able to do so also. The Rossminster case is of relevance to these issues. In Rossminster, the material which had been before the judge when he issued the warrant was not before the courts on judicial review. The Divisional Court held that in these circumstances there was simply not the evidence to enable this court to say that the judge exercised his discretion improperly: p 961F. That conclusion was upheld by the House: see per Lord Wilberforce, p 998F G, Viscount Dilhorne, p 1006H, applying the maxim omnia praesumuntur rite esse acta and Lord Diplock, p 1013F G, stating that: Where Parliament has designated a public officer as decision maker for a particular class of decisions the High Court, acting as a reviewing court under Order 53, is not a court of appeal. It must proceed on the presumption omnia praesumuntur rite esse acta until that presumption can be displaced by the applicant for review upon whom the onus lies of doing so. Since no reasons have been given by the decision maker and no unfavourable inference can be drawn for this fact because there is obvious justification for his failure to do so, the presumption that he acted intra vires can only be displaced by evidence of facts which cannot be reconciled with there having been reasonable cause for his belief that the documents might be required as evidence or alternatively which cannot be reconciled with his having held such belief at all. Lord Scarman also said that there was no reason to suggest, nor was it possible to suggest, that the Common Serjeant had failed in his judicial duty and it was therefore necessary to approach the case on the basis that he did satisfy himself upon the relevant matters: pp 1022H 1023C D. All the members of the majority in the House emphasised the importance attaching to the Common Serjeants fulfilment of this judicial duty, but their decision meant that the prospects of a successful judicial review were much reduced. The approach taken in Rossminster was therefore (i) to treat the onus as being on the applicant for judicial review to establish that the warrant should be quashed and (ii) to treat the applicant as unable to satisfy this onus, in circumstances where the original decision maker had access to material withheld on public interest grounds from the person affected seeking judicial review; (iii) this result followed from the application of the maxim omnia praesumuntur rite esse acta. The same approach was followed and applied by the House in R v Inland Revenue Comrs, Ex p T C Coombs & Co [1991] 2 AC 283, in an application judicially to review a notice served by an inspector of taxes under section 20 of the Taxes Management Act 1970, requiring T C Coombs & Co to deliver or make available for inspection documents in their possession relevant to the tax liability of the taxpayer, their former employee. The notice was given with the consent of a commissioner, who, under section 20(7), was to give such consent only upon being satisfied in all the circumstances that the inspector was justified in proceeding under the section. The Revenue deposed that the information, which had led it to believe that documents in T C Coombs possession might contain information relevant to the taxpayers tax liability, could not be disclosed on grounds of confidentiality, but had been fully laid before the commissioner. The House, taking its guidance from Lord Diplocks approach in Rossminster, held that, as Parliament designated the inspector as the decision maker and the commissioner as the monitor of the decision [a] presumption of regularity applied to both (p 302). The same approach was taken by the Privy Council in Attorney General of Jamaica v Williams [1998] AC 351. The case involved the issue by a magistrate of a search and seizure warrant under a statutory power in section 203 of the Customs Act, where any officer had reasonable cause to suspect that any uncustomed or prohibited goods, or any books or documents relating [thereto] are harboured, kept or concealed in any house or other place in the island. The context was a customs investigation into possible fraudulent importation of motor vehicles by the applicants, a company and its majority shareholder. On the applicants constitutional challenge to the issue of the warrant, no evidence was put before the court showing any such reasonable cause, on the basis that it would have been contrary to the public interest to disclose such evidence to the applicants at that time. Applying the approach in Rossminster, the Board said that it cannot be assumed against the Crown that they did not have reasonable grounds for taking the documents which they did (p 363F G), and that (p 365E F): Although the courts may sometimes feel frustrated by their inability to go behind the curtain of the recital that the justice was duly satisfied and to examine the substance of whether reasonable grounds for suspicion existed (a frustration articulated by Lord Scarman in R v Inland Revenue Comrs, Ex p Rossminster Ltd [1980] AC 952, 1022) their Lordships think that it would be wrong to try to compensate by creating formal requirements for the validity of a warrant which the statute itself does not impose. In so doing, there is a risk of having the worst of both worlds: the intention of the legislature to promote the investigation of crime may be frustrated on technical and arbitrary grounds, while the courts, in cases in which the outward formalities have been observed, remain incapable of protecting the substance of the individual right conferred by the Constitution. Rossminster dates from a period when the principles governing judicial review were at a relatively early stage of development. The line of authority discussed in paras 47 to 49 dates from a period prior to the domestication of the Convention rights and prior to the emergence of the line of cases on disclosure discussed in paras 15 to 20 above. It is clear from the judgment in the first of such later cases, Cronin, that the recently domesticated Convention rights were very much in Lord Woolfs mind. Mr Summers submits that the Supreme Court should now therefore take a very different approach. As noted already, and although this is not their preferred solution, Mr Chamberlain and Mr Eadie invite the Court, if necessary, to follow and apply the Rossminster line of authority under section 8 of PACE. There are also two later decisions which could be said to lend support to its continuing existence. First, in Carnduff v Rock [2001] EWCA Civ 680; [2001] 1 WLR 1786, the Court of Appeal held that a claim by a police informer for payment for information and assistance to the police was un triable because a fair trial of the issues would require the police to disclose, and the court to investigate and adjudicate upon, sensitive information which should in the public interest remain confidential to the police. The public interest in withholding the evidence outweighed the countervailing public interest in having the claim litigated. Although this conclusion was reached on the basis that the case was un triable, rather than on the basis of any assumption as to the correctness of the polices defence, the effect, that the claim failed, was the same. Second, in AHK v Secretary of State for the Home Department [2012] EWHC 1117 (Admin), claims were made against the Home Secretary for refusal to grant the applicants naturalisation on the grounds that they were not of good character. The Home Secretary declined to give further reasons or disclose documents on which she had relied, explaining that to do so would be harmful to national security. Ouseley J held, on applications for judicial review of the refusals, that it was not open to the court to hold a closed material procedure, and that, if the Home Secretary gave evidence that, having considered the applicants representations, there were good reasons and a sound basis for her decision, which she could not disclose, it would be impossible for the court to say that she was wrong on that, and the claims would fail. There was no second possibility that the Home Secretary must lose, or that the court should assume what it knew to be false, viz that no relevant evidence was being withheld. This is an approach effectively identical to that taken in the Rossminster line of authority. On the other hand, in the still more recent judgment in Concordia, para 70, Marcus Smith J considered that the exclusion from consideration by the court of material which had properly been considered ex parte when the warrant was granted, but which had on public interest grounds to be withheld on an inter partes challenge, could well lead to a validly issued warrant being quashed. While the CMA is recorded as having argued to the contrary by reference to the presumption of regularity (para 43), and the Supreme Court is informed that its written case referred to both Rossminster and Ex p T C Coombs, Marcus Smith Js judgment does not specifically address the Rossminster line of authority. The result reached in the Rossminster line of authority is unattractive, in that it is in some circumstances capable of depriving judicial review of any real teeth. For this reason, Mr Chamberlain and Mr Eadie make their primary submission that the court on judicial review of a warrant under section 8 of PACE or of an order under section 59 of the CJPA can adopt a closed material procedure. Such a review would mirror that which, as I have already provisionally concluded, is open to the magistrate for a warrant under section 8 or for disclosure under Bangs or to the Crown Court on an application under section 59 of the CJPA. That is its attraction. Judicial review should be effective and able to address the decision under review on the same basis that the decision was taken. The Rossminster line of authority involves an awkward mismatch between the bases of the original and reviewing decisions. So too does the reverse approach taken by Marcus Smith J in Concordia. However, in Al Rawi the Supreme Court said that a closed material procedure is inadmissible, without Parliamentary authorisation, in judicial review as it is in any ordinary civil claim: see eg paras 39 and 62, per Lord Dyson. The two narrowly defined exceptions which it recognised as existing related to: (i) cases where the whole object of the proceedings is to protect and promote the best interests of a child [and] disclosure of some of the evidence would be so detrimental to the childs welfare as to defeat the whole object of the exercise (para 63, quoting Lady Hale in Secretary of State for the Home Department v MB [2008] 1 AC 440, para 58); and (ii) cases where the whole object of the proceedings is to protect a commercial interest, and where full disclosure would render the proceedings futile (cases in which a confidentiality ring is commonplace) (para 64). The situation in which a court is placed on a claim for judicial review in the present context can be compared with that which the Supreme Court faced in Bank Mellat. In that case, the courts below had express power to conduct a closed material procedure, under Part 6 of the Counter Terrorism Act 2008 (the 2008 Act). The Supreme Court had none. But the majority derived from the statutory language governing appeals to it and a close consideration of the consequences of the various alternative analyses a conclusion that the Supreme Court was also able to conduct a closed material procedure (paras 37 to 44). The statutory language governing appeals consisted of section 40(2) of the CRA, stating that an appeal lies to the court from any order or judgment of the Court of Appeal in England and Wales in civil proceedings, read with section 40(5), giving the Supreme Court power to determine any question necessary to be determined for the purposes of doing justice in an appeal to it under any enactment. If a closed material procedure was not permissible, the alternative analyses were that (a) the appeal could not be entertained (compare Carnduff v Rock) or (b) the Supreme Court could consider the closed material in open court, or (c) the Court could determine the appeal without looking at the closed material (compare Concordia), or (d) the Court would be bound to allow the appeal or (e) the Court would be bound to dismiss the appeal (compare Rossminster). Lord Neuberger, speaking for the majority, said that analysis (a) ran contrary to section 40(2), analysis (b) would wholly undermine Part 6 of the 2008 Act, analysis (c) would be self evidently unsatisfactory and would seriously risk injustice, and in some cases it would be absurd and each of analyses (d) and (e) was self evidently equally unsatisfactory. Each of the alternative possibilities to a closed material procedure identified by Lord Neuberger in Bank Mellat exists by analogy in relation to judicial review (as Marcus Smith Js judgment in Concordia illustrates); and, when so applied, each can be seen to be as unsatisfactory in relation to judicial review as in relation to an appeal in Bank Mellat. Judicial review is not generally an appeal, certainly not in terms or under conditions making it a precise homologue of an appeal to the Supreme Court under section 40(2) of the CRA: see eg the discussion, albeit in a very different context, in General Medical Council v Michalak [2017] UKSC 71; [2017] 1 WLR 4193. It is in origin a development of the common law, to ensure regularity in executive and subordinate legislative activity and so compliance with the rule of law, but it is regulated now by the Senior Courts Act 1981. Section 31(1) of the 1981 Act defines an application for judicial review as an application for a mandatory, prohibiting or quashing order (or for a declaration or injunction in some public law contexts), and section 31 also provides: (5) If, on an application for judicial review, the High Court quashes the decision to which the application relates, it may in addition (a) remit the matter to the court, tribunal or authority which made the decision, with a direction to reconsider the matter and reach a decision in accordance with the findings of the High Court, or (b) substitute its own decision for the decision in question. (5A) But the power conferred by subsection (5)(b) is exercisable only if the decision in question was made by a court or (a) tribunal, (b) has been an error of law, and the decision is quashed on the ground that there (c) without the error, there would have been only one decision which the court or tribunal could have reached. Although there are differences between judicial review and an appeal in the normal sense of that word, many of the considerations which were of weight in Bank Mellat on an appeal from lower courts conducting closed material procedures are also of weight in relation to judicial review of lower courts conducting such procedures. In Bank Mellat, a determination by the Supreme Court on a basis different from that required and adopted in the courts below would have been self evidently unsatisfactory, risk injustice and in some cases be absurd. So too in the present context it would be self evidently unsatisfactory, and productive potentially of injustice and absurdity, if the High Court on judicial review were bound to address the matter on a different basis from the magistrate or Crown Court, and, if it quashed the order, to remit the matter for determination by the lower court on a basis different from that which the lower court had quite rightly adopted and been required to adopt when first considering the matter. Moreover, subsections (5) and (5A), read together, only work on the basis that it is open to the High Court to consider and, where appropriate, itself give effect to the decision which the lower court or tribunal should have reached, if there is only one such decision which it could have reached. If the High Court cannot by a closed material procedure have regard to closed material, those subsections will not work. Since the events giving rise to the present litigation, section 31 has also been amended by the introduction of subsections (2A) and (3C) by section 84(1) and (2) of the Criminal Justice and Courts Act 2015. Subsection (2A) provides that the High Court must refuse relief on an application for judicial review if it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred (unless the court considers under subsection (2B) that it is appropriate to disregard this requirement for reasons of exceptional public interest). Subsection (3C) provides that, when considering whether to grant leave for judicial review, the High Court may of its own motion consider whether the outcome for the applicant would have been substantially different if the conduct complained of had not occurred. These subsections again postulate that the High Court will be considering the outcome on the same basis as the lower court or tribunal. In the light of these statutory provisions and of an analysis of the alternative possibilities paralleling that undertaken in Bank Mellat, I consider that the only sensible conclusion is that judicial review can and must accommodate a closed material procedure, where that is the procedure which Parliament has authorised in the lower court or tribunal whose decision is under review. The Supreme Court, when it referred in passing to judicial review in Al Rawi, was not directing its attention to this very special situation. If it had done so, it might also have seen a similarity between this situation and the two exceptions which it did identify, where inability to adopt a closed material procedure would render the whole object of the proceedings futile and where the interests of third parties (such as informers) are potentially engaged. Be that as it may be, I consider that the scheme authorised by Parliament for use in the magistrates court and Crown Court, combined with Parliaments evident understanding and intention as to the basis on which judicial review should operate, lead to a conclusion that the High Court can conduct a closed material procedure on judicial review of a magistrates order for a warrant under section 8 PACE or a magistrates order for disclosure, or a Crown Court judges order under section 59 of the CJPA. I add, for completeness, that, even before judicial review was regulated by statutory underpinning, I would also have considered that parallel considerations pointed strongly to a conclusion that the present situation falls outside the scope of the principle in Al Rawi and that a closed material procedure would have been permissible on a purely common law judicial review. Issue (v) minimum disclosure and gisting Issue (v) is whether the principles concerning minimum disclosure, if necessary by gisting, apply to proceedings concerning search warrants. It is clear that the use of a closed material procedure is not itself contrary to Convention rights: see Tariq v Home Office [2011] UKSC 35; [2012] 1 AC 452. The contrary has not been suggested on the present appeal. The authorities also include dicta suggesting that in some, rare cases no disclosure at all of the relevant closed information may be required at common law (see Gittins, para 79, per Davis J). Is this the case, or does article 6 of the Convention apply to require a person affected by a search warrant or order under section 59 to know at least the gist of the case made out to justify the relevant order? As a matter of principle, open justice should prevail to the maximum extent possible. Any closed material procedure should only ever be contemplated or permitted by a court if satisfied, after inspection and full consideration of the relevant material as well as after hearing the submissions of the special advocate, that it is essential in the particular case: Tariq v Home Office, para 67; and should, of course, be restricted as far as possible. Further, the nature of the issue may require, as a minimum, disclosure of the gist of the closed material, to enable the person from whom it is withheld to address the essence of the case against him: A v United Kingdom (2009) 49 EHRR 625, Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269 (a control order case). This will be so, where the issue affects the liberty of the person (A v United Kingdom, and Sher v United Kingdom (2015) 63 EHRR 24, para 149) or has an equivalent effect, as a control order or freezing order can do (AF (No 3); Tariq v Home Office, paras 26 27; and see, in the European Court of Justice, Kadi v Commission of the European Communities (Case T 85/09) [2011] 1 CMLR 24, paras 129 177). On the other hand, it is established by decisions of both the European Court of Human Rights and the Supreme Court that there are circumstances where it may in the public interest be legitimate to withhold even the gist of the material relied on for a decision which a person affected wishes to challenge. The relevant caselaw is analysed in Tariq v Home Office, paras 27 37. This approach has been applied in the European Court of Human Rights to material allegedly making a person a security risk unsuitable for permanent employment which would entail him having access to a naval base (Leander v Sweden (1987) 9 EHRR 433), to security material allegedly making a person unsuitable for employment with the central office of information (Esbester v United Kingdom (1994) 18 EHRR CD72), and to material explaining the meaning of a statement by the Investigatory Powers Tribunal that no determination had been made in his favour in relation to a complainant in respect of complaints that his communications were being wrongly intercepted a statement which could mean either that there had been no interceptions or that any interceptions taking place had been lawful (Kennedy v United Kingdom (2010) 52 EHRR 4). The approach in these cases was applied domestically by the Supreme Court in Tariq v Home Office. The complainants security clearance was withdrawn and he was suspended from his work as a Home Office immigration officer, after the arrest of close family members in the course of a suspected terrorism investigation. A closed material procedure was held, with a special advocate, under rule 54 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861). The majority concluded that there was no invariable rule that gisting must always occur. It depended on balancing the nature and weight of the circumstances on each side: see in particular para 25. In the cases mentioned in para 62, the courts were well aware that the complaints made involved significant personal interests. Employment and citizenship are undoubtedly important to personal identity and well being; and the withholding of information had a continuing effect on the complainants substantive position. Nonetheless, the circumstances did not give rise to a right to gisting, when important countervailing interests of state security made it impossible to disclose the information without undue prejudice. The circumstances were not regarded as impacting the person affected to the same extent as loss of personal freedom, or a control or freezing order. The issue of a warrant authorising a search of premises and seizure of documents involves a short term invasion of property. Such a warrant is, as I have pointed out, not specifically directed at, or necessarily even linked with, anyone occupying the premises or having any proprietary or possessory interest in the documents. Save that the taking of documents for so long as is required for the limited purposes of an investigation necessarily affects possession, such a warrant does not affect the substantive position of anyone who does occupy the premises or have any proprietary, possessory or other interest in any documents found therein. All it may do is provide information, and maybe direct evidence, of potential use in a current investigation into an indictable offence which the magistrate or Crown Court is satisfied that there are reasonable grounds for believing has been committed. If the investigation leads to criminal proceedings, any person affected will enjoy all the normal safeguards. Subject to any PII ruling in the conventional sense (in which case the material will not be disclosed or used at trial), there will be full disclosure. All material evidence relied on to establish guilt will be before the court openly, without any form of anonymity attaching to the witness or any restriction on questioning which might lead to a witnesss identification, unless under the strict statutory conditions of court ordered anonymity pursuant to Part 3 of the Coroners and Justice Act 2009 introduced subsequent to the House of Lords decision in R v Davis [2008] AC 1128. Any complaint about the propriety of use of any material seized will be capable of being raised and submitted to the courts decision under section 78 PACE. In my judgment, it cannot be axiomatic in this context that even the gist of the relevant information must be supplied to any person (such as the occupier or some other person claiming some proprietary, possessory or other interest in the documents) claiming to be affected by, and wishing to object to, the warrant or the search and seizure. Every case must of course be considered in the light of its particular circumstances. But, as a general proposition, I answer issue (v) in the negative. Conclusions Having addressed the individual issues in turn, I have also stepped back to consider whether the discussion in respect of the issues considered later (particularly (ii) and (iv)) necessitates or gives reason to revise the answers reached in respect of the issues considered earlier. In my opinion it does not. On the contrary, the answers which I reached in respect of each of the issues in turn appear to me to lead to a scheme which is both coherent and workable, as well as corresponding with Parliaments presumed intentions. The issues put before the Supreme Court have ranged wider than those argued or decided below. But it follows from the answers that I have reached that the appellants appeal should be dismissed.

UK-Abs

This appeal concerns the extent to which courts can rely on information which, in the public interest, cannot be disclosed to a person affected by a search and seizure warrant. In this case, search and seizure warrants were issued under s.8 of the Police and Criminal Evidence Act 1984 (PACE) by the St. Albans Magistrates Court in the absence of the Appellant (ex parte) on 16 June 2014, and executed on 26 June 2014. The Appellant was provided with a redacted version of the written application for the warrants on 16 September 2014. He applied for disclosure of the unredacted materials which was refused on grounds of public interest immunity (PII) on 25 September 2014. On 26 September 2014 the Appellant sought return of the material seized by a judicial review claim on the basis that the warrants, entries, searches and seizures were unlawful. By a consent order signed on 27 March and sealed on 6 May 2015 the Second Respondent agreed that the warrants should be quashed. Prior to consenting, on 23 March 2015, the Second Respondent made a protective application under s.59 of the Criminal Justice and Police Act 2001 (CJPA) for continued retention of the seized materials. That application was granted on 11 June 2015. The Appellant sought a further judicial review of that decision. This was dismissed by the Divisional Court which held that it was open to a magistrate issuing a search and seizure warrant and a court deciding an application under s.59 of CJPA to consider material which was withheld from disclosure on PII grounds. The Supreme Court addressed five issues on appeal: (i) how far a Magistrates Court, on an ex parte application for a search and seizure warrant under ss.8 and 15(3) of PACE, can rely on information which in the public interest cannot be disclosed to the subject of the warrant; (ii) whether in proceedings for judicial review of the legality of a search warrant, issued ex parte under sections 8 and 15(3) of PACE (a) it is permissible for the High Court to have regard to evidence upon which the warrant was issued which is not disclosed to the subject of the warrant and (b) whether, where a Magistrates Court is permitted to consider evidence not disclosable to the subject of the warrant, but the High Court is not, it follows that the warrant must be quashed if the disclosable material is insufficient on its own to justify the warrant; (iii) whether there is jurisdiction in a Crown Court to rely on evidence not disclosable to the subject of the warrant in an application made in the presence of both parties (inter partes) to retain unlawfully seized material under s.59 of CJPA; (iv) whether in proceedings for judicial review of an order made inter partes for retention of unlawfully seized material under s.59 of CJPA it is permissible for the High Court to have regard to evidence (upon which the warrant was issued) which is not disclosed to the subject of the warrant; and (v) whether the principles concerning irreducible minimum disclosure apply to proceedings concerning search warrants. The Supreme Court unanimously dismisses the appeal. Lord Mance writes the judgment of the court. The background to the appeal is that no express Parliamentary authorisation exists for the operation of a closed material procedure in any of the contexts outlined in the issues [11]. Under ss.8 and 15 of PACE premises, not a person, is the subject of a warrant [12]. Any analysis should start from the initial application for a warrant, rather than the end position of the application for judicial review but any conclusions reached about earlier stages will be reviewed in light of the analysis of later stages [14]. Issue (i) The statutory scheme of ss.8 and 15 of PACE permits a Magistrates Court in an ex parte application for a search and seizure warrant to have regard to material which cannot on public interest grounds be disclosed to a person affected by the warrant or order, even where this material is decisive for the legitimacy of the warrant [22, 37]. The statutory scheme of ss.8 and 15 of PACE is intended to be ex parte. It is a process designed to be operated speedily and simply on the basis of information provided by a constable satisfying a magistrate that there are reasonable grounds for believing the matters set out in s.8(1) of PACE. There is nothing in the statutory scheme which expressly restricts the information on which the magistrate may act [27]. The statutory procedure under s.8 and the Criminal Procedure Rules also provide protections to persons affected by a warrant and the Rules themselves contemplate that the magistrate or Crown Court will see and rely on information not disclosable for PII reasons [25 27, 34]. Requiring the police in these cases to refrain from seeking a warrant would limit important sources of information and the efficacy of police investigations [27]. A statutory ex parte procedure of this nature to secure evidence on premises is not within the general prohibition on closed procedures without express statutory authorisation recognised in Al Rawi v Security Service [2012] 1 AC 531. Issue (iii) The Crown Court can on an inter partes application under s.59(7) of CJPA operate a closed material procedure on PII grounds [43]. The Crown Court is required to put itself in the shoes of a hypothetical Magistrates Court being asked, immediately after the return of the property, to issue a fresh warrant with a view to seizure of that property [40]. In view of the answer to issue (i), that Magistrates Court is entitled in an ex parte application to have regard to information which cannot be disclosed for PII reasons [40]. Parliament must have intended PACE and CJPA to operate coherently and contemplated the Crown Court being able to operate a closed material procedure under s.59 [41]. An analogy is drawn with Bank Mellat v HM Treasury (No 2) [2014] AC 700 where there was no express provision enabling the Supreme Court to operate a closed material procedure on appeal, but without such a power an appeal to it against a wholly or partially closed judgment could not be effective [42]. Issues (ii) and (iv) are considered together as they raise essentially the same point The High Court can conduct a closed material procedure on judicial review of a magistrates order for a warrant under s.8 of PACE or a magistrates order for disclosure or a Crown Courts order under s.59 of CJPA [59]. The reference to judicial review in Al Rawi, was not directed to this situation [59]. An alternative analysis whereby, in the absence of a closed material procedure, a court must presume that a public authority has acted properly, depriving judicial review of any real teeth, is unacceptable [46 52]. Although judicial review and an appeal are not precisely equivalent, many of the considerations identified in Bank Mellat as favouring a closed material procedure in the context of an appeal also militate in favour of a similar result in the context of judicial review [54 57]. It would be unjust and potentially absurd if the High Court on judicial review had to address a case on a different basis from the magistrate or Crown Court or quashed the order and remitted it to the lower court on a basis different from that which the lower court originally adopted. The High Court would also be unable to give effect to the decision which the lower court or tribunal should have reached or to consider an outcome on the same basis as the lower court as may be required under s.31 of the Senior Courts Act 1981 unless it can operate a closed material procedure when necessary [57 58]. Issue (v) Open justice should prevail to the maximum extent possible [61]. However, it cannot be axiomatic that even the gist of the relevant information must be supplied to any person claiming to be affected and seeking to object to the warrant, search or seizure. Each case must be considered in the light of the particular circumstances. In general terms, issue (v) should be answered in the negative [65].

Part 4 of the Proceeds of Crime Act 2002 deals with the circumstances where benefits obtained by persons in Northern Ireland by their criminal activity can be confiscated. By virtue of article 2 of and the Schedule to the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003, Part 4 of the Act came into force on 24 March 2003. The first and central provision in Part 4 of the Act is section 156. That section is declared in the statute to be concerned with the making of confiscation orders. Subsection (1) of section 156 expressly requires that the Crown Court must proceed in accordance with the terms of the section, where two conditions are satisfied. The context for the way in which confiscation orders are to be applied for and obtained is therefore set. That context, in my view, is defined by the consideration that it is confined to confiscation orders which can be made under the Act. The relevant statutory provisions Subsections (2) and (3) of section 156 set out the two conditions foreshadowed in subsection 1. The first of these is that the defendant against whom a confiscation order is sought must either have been convicted of an offence or offences before the Crown Court or have been committed to the Crown Court in respect of an offence under section 218. There is an important rider to, or explanation of, the latter of these conditions. It is to the effect that the committal should have been with a view to a confiscation order being considered. This reinforces the nature of the context in which these provisions fall to be considered. The purpose of the committal is to deal with confiscation orders that might be made under the 2002 Act. The terms of section 218(1) again emphasise this essential aspect. Subsection (1)(b) makes clear that committal should take place when the prosecutor asks the court to commit the defendant to the Crown Court with a view to a confiscation order being considered under section 156. Thus, under this provision, the court is principally concerned with the making of a confiscation order under the 2002 Act. The magistrates court must commit the defendant to the Crown Court if requested to do so section 218(2)(a). But it may also, under section 218(2)(b), commit him in respect of other offences falling within subsection (3). Offences falling within the latter subsection are those of which the defendant has been convicted by the magistrates or other court and where the magistrates court has the power to deal with them. Thus, offences in respect of which it is not proposed to seek a confiscation order may be referred to the Crown Court. It is not difficult to deduce the reason for that. It would not be unusual for a defendant to be charged with a number of offences, only some of which would qualify for applications for a confiscation order. For administrative convenience, and to avoid the possibility of over penalisation, it may be considered prudent to commit the defendant to the Crown Court for a comprehensive sentencing exercise. The section 218(2) distinction between the two categories of case which the magistrates court may commit to the Crown Court is significant: those offences which are committed so that a confiscation order can be considered and other offences in which the question of a confiscation order does not arise. The important theme, in relation to this case, is that the first category relates to offences in respect of which a confiscation order can be made under the Act. This reflects the general, underlying purpose of the legislation, so far as concerns confiscation orders. It is that, in the first and principal instance, the cases which are to be dealt with by the Crown Court are those in respect of which a confiscation order under the 2002 Act can be made. The provision that a second type of case (the other offences category) can also be committed serves to demonstrate that the primary purpose of the Crown Court in dealing with cases emanating from the magistrates court is to make confiscation orders which can be made under the Act. Returning to section 156, the second condition which forms part of the enjoinder to the Crown Court to act is provided for in subsection (3). That condition is fulfilled where the prosecutor asks the court to proceed under the section or the court considers it is appropriate to do so. Both these alternatives are obviously geared to the making of confiscation orders that can be made under the Act. The theme of facilitating or requiring the making of confiscation orders under the 2002 Act is again apparent from subsection (4) of section 156. The court is required to consider whether the defendant has a criminal lifestyle by subsection (4)(a) and, if it so decides, it must determine whether he has benefited from his general criminal conduct under subsection (4)(b). If the court decides that the defendant does not have a criminal lifestyle, it must consider whether he has benefited from particular criminal conduct section 156(4)(c). All of these provisions have as their ultimate aim the ascertainment of whether a confiscation order under the Act is appropriate. That basic objective is evident from the succeeding subsections (5) to (8) of section 156. These do not require to be set out, but subsection (9) is material for other reasons. It provides: References in this Part to the offence (or offences) concerned are to the offence (or offences) mentioned in subsection (2). Drawing on the language used in this subsection and an allied provision, section 236(1), it is argued that the phrase, the offence (or offences) concerned is given a fixed and immutable meaning throughout the Act. (Section 236(1) provides that a reference to the offence (or offences) concerned must be construed in accordance with section 156(9)). Guidance as to that meaning is provided, it is suggested, by article 4 of the Commencement Order which provides: Transitional provisions relating to confiscation orders Northern Ireland 4(1) Section 156 of the Act (making of confiscation order) shall not have effect where the offence, or any of the offences, mentioned in section 156(2) was committed before 24 March 2003. In particular, the use of the words, any of the offences in article 4 is said to indicate that, if any of the offences on which a defendant has been committed pre date 24 March 2003, none of the offences, even those which were committed after that date can be treated as candidates for confiscation orders under the 2002 Act but must be dealt with under legislation which applied on the date when the first offence occurred. To say that this would produce a wholly anomalous result is not an exaggeration. This is particularly so since it is accepted by the appellants that, if the prosecution elects not to have a defendant committed to the Crown Court on a charge which might have warranted a confiscation order in respect of an offence committed before March 2003, and has the defendant committed only on offences committed after that date, it would be open to the Crown Court to make confiscation orders under the 2002 Act in respect of those offences. Likewise, it is accepted that in a case which starts in the Crown Court, if the prosecution chooses not to proceed on a charge relating to an offence committed before March 2003, a confiscation order may be made in relation to offences that occurred after 24 March 2003. In effect, therefore, the appellants accept that the jurisdiction of the court to make confiscation orders under the 2002 Act could be controlled by tactical decisions by the prosecution. Ironically, the appellants object to what they portray as the election of the prosecution to proceed under the 2002 Act and to ignore offences to which they had pleaded guilty and which occurred before the relevant date, when pre and post 24 March offences are proceeded with on the same indictment. They suggest that, in those circumstances, the prosecution should not be permitted to choose only the post March offences on which to seek compensation orders. The respondents riposte to this argument is, of course, that this is not a matter of election or choice. It submits that only offences which can be dealt with under the Act qualify for consideration as confiscation offences. It is therefore not a matter of tactical decision by the prosecution but, rather, the consequence of the correct construction of section 156. The appellants counter this argument by pointing to, among other provisions, section 224(3)(b) of the Act. As noted at para 8 above, the court is required to consider whether the defendant has a criminal lifestyle by subsection (4)(a) of section 156. If it decides that the defendant does not have a criminal lifestyle, it must consider whether he has benefited from particular criminal conduct section 156(4)(c). Section 224 deals with criminal conduct and benefit. Subsection (1) provides: Criminal conduct is conduct which constitutes an offence in Northern Ireland, or (a) (b) would constitute such an offence if it occurred in Northern Ireland. A distinction is made between general criminal conduct and particular criminal conduct. General criminal conduct is dealt with in subsection (2). Particular criminal conduct is the species of criminality involved in this case and it is provided for in subsection (3): (3) Particular criminal conduct of the defendant is all his criminal conduct which falls within the following paragraphs conduct which constitutes the offence or offences (a) concerned; (b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned; (c) conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned. The appellants argue that if the rubric, the offence or offences concerned, is given the interpretation advanced by the respondent, viz offences in respect of which confiscation orders could be made, it is clear from the terms of section 224(3)(b) that the court considering the defendants particular criminal conduct must have regard to offences which lie outside that definition, in other words, offences that were committed before 24 March 2003. This, say the appellants, makes the respondents interpretation unworkable. Despite its initial attraction, I do not accept the appellants argument on this point. The overarching consideration is that, plainly, it was Parliaments intention that offences which were committed before 24 March 2003 should not be included in the section 156 consideration. It was also Parliaments intention, in my opinion, that all offences committed after that date which could generate confiscation orders under the Act should be dealt with under section 156. It cannot have been intended that a swathe of post 2003 offences should be removed from the Acts purview simply because the defendant was convicted of an associated offence before the relevant date. If that was found to be the effect of the Act, it seems to me to be beyond question that this was a wholly unintended effect. In these circumstances, the proper approach to interpretation is to determine whether it is possible to give effect to Parliaments intention, notwithstanding the apparent incongruity of section 224(3)(b). I will explain why this is the correct way to interpret the 2002 Act in the next section of this judgment. In the meantime, however, it appears to me that subsection (3)(b) is explicable on the basis that the criminal conduct which the court may take into account under this provision is conduct on which a confiscation order might have been made under the 2002 Act but which has not been put forward by the prosecution as a potentially qualifying offence. That view is supported by a consideration of article 8 of the Commencement Order in its amended form which deals with the approach that the court should take in relation to the ascertainment of whether a defendant has a criminal lifestyle. Although the present case does not involve that question, it is argued that the amendments effected by the Order of 6 March 2003 provide an insight into the issue whether the 2002 Act can apply to offences committed after 24 March 2003, where the defendant has also been convicted of offences committed before that date. First it is necessary to set out the relevant provisions in section 223 of the Act. So far as material, it provides: 223 Criminal lifestyle (1) A defendant has a criminal lifestyle if (and only if) the following condition is satisfied. (2) The condition is that the offence (or any of the offences) concerned satisfies any of these tests it is specified in Schedule 5; it constitutes conduct forming part of a course of (a) (b) criminal activity; it is an offence committed over a period of at least (c) six months and the defendant has benefited from the conduct which constitutes the offence. (3) Conduct forms part of a course of criminal activity if the defendant has benefited from the conduct and in the proceedings in which he was convicted he (a) was convicted of three or more other offences, each of three or more of them constituting conduct from which he has benefited, or (b) in the period of six years ending with the day when those proceedings were started (or, if there is more than one such day, the earliest day) he was convicted on at least two separate occasions of an offence constituting conduct from which he has benefited. In order to set in context the argument in relation to article 8 in its original and amended form, it is necessary to set out both. In its first incarnation, article 8 provided: Transitional provisions relating to criminal lifestyle Northern Ireland 8.(1) This article applies where the court is determining under section 156(4)(a) of the Act whether the defendant has a criminal lifestyle. (2) The tests in section 223(2)(a) and (c) of the Act shall not be satisfied where the offence (or any of the offences) concerned was committed before 24 March 2003. In applying the rule in section 223(5) of the Act on the (3) calculation of relevant benefit for the purposes of section 223(2)(b) and (4) of the Act, the court must not take into account benefit from conduct constituting an offence which was committed before 24 March 2003. (4) Conduct shall not form part of a course of criminal activity under section 223(3)(a) of the Act where the offence (or any of the offences) concerned; or (a) (b) any one of the three or more offences mentioned in section 223(3)(a), was committed before 24 March 2003. (5) Conduct shall form part of a course of criminal activity under section 223(3)(b) of the Act, notwithstanding that any of the offences of which the defendant was convicted on at least two separate occasions in the period mentioned in section 223(3)(b) was committed before 24 March 2003. Two weeks after its promulgation on 20 February 2003, the Commencement Order was amended in order to substitute (so far as concerns Northern Ireland) a new article 8. It was in the following terms: Transitional provisions relating to criminal lifestyle Northern Ireland 8.(1) This article applies where the court is determining under section 156(4)(a) of the Act whether the defendant has a criminal lifestyle. (2) Conduct shall not form part of a course of criminal activity under section 223(3)(a) of the Act where any of the three or more offences mentioned in section 223(3)(a) was committed before 24 March 2003. (3) Where the court is applying the rule in section 223(5) of the Act on the calculation of relevant benefit for the purposes of determining whether or not the test in section 223(2)(b) of the Act is satisfied by virtue of conduct forming part of a course of criminal activity under section 223(3)(a) of the Act, the court must not take into account benefit from conduct constituting an offence mentioned in section 223(5)(c) of the Act which was committed before 24 March 2003. (4) Conduct shall form part of a course of criminal activity under section 223(3)(b) of the Act, notwithstanding that any of the offences of which the defendant was convicted on at least two separate occasions in the period mentioned in section 223(3)(b) were committed before 24 March 2003. (5) Where the court is applying the rule in section 223(5) of the Act on the calculation of relevant benefit for the purposes of determining whether or not the test in section 223(2)(b) of the Act is satisfied by virtue of conduct forming part of a course of criminal activity under section 223(3)(b) of the Act, the court may take into account benefit from conduct constituting an offence committed before 24 March 2003. (6) Where the court is applying the rule in section 223(6) of the Act on the calculation of relevant benefit for the purposes of determining whether or not the test in section 223(2)(c) of the Act is satisfied, the court must not take into account benefit from conduct constituting an offence mentioned in section 223(6)(b) of the Act which was committed before 24 March 2003. If the appellants argument that any proceedings which involved a pre March 2003 offence would have to be brought under a statutory regime existing before the 2002 Act was correct, the new article 8(2) (and, for that matter, the original article 8(4)) would not be required. Article 8(3) is also significant. This requires that a court, which is assessing benefit under section 223(5) for the purposes of determining whether or not the test set out in section 223(2)(b) of the Act is satisfied, must leave out of account benefit from an offence committed before 24 March 2003. That stipulation again serves to illustrate the ending of the application of pre March 2003 legislation for those purposes and the currency of the 2002 Act for offences committed after that date. The proper approach to interpretation As I have said, it is my opinion that Parliament cannot have intended that a potentially extremely wide range of post 2003 offences would be excluded from the ambit of the 2002 Act. That would produce a result which would be plainly at odds with the entire scheme of the legislation. It is, of course, possible to regard section 156 as an open and simple gateway and that, on a literal interpretation, every offence of which the defendant is convicted, whether or not it preceded March 2003, must be considered. But the absurd outcome which this would produce is a strong indication against treating the section in that way. author describes as the Code, the following statements are made: In Bennion on Statutory Interpretation (6th ed) at section 312 of what the (1) The court seeks to avoid a construction that produces an absurd result, since this is unlikely to have been intended by Parliament. Here the courts give a very wide meaning to the concept of absurdity, using it to include virtually any result which is unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter mischief. (2) In rare cases, there are overriding reasons for applying a construction that produces an absurd result, for example where it appears that Parliament really intended it or the literal meaning is too strong. Bennion suggests that the courts have been prepared to give the concept of absurdity an expansive reach. In support of that view, he cites Lord Millett in R (Edison First Power Ltd) v Central Valuation Officer [2003] UKHL 20, [2003] 4 All ER 209 at paras 116 and 117, where he said: The courts will presume that Parliament did not intend a statute to have consequences which are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless. But the strength of these presumptions depends on the degree to which a particular construction produces an unreasonable result. The more unreasonable a result, the less likely it is that Parliament intended it . See also Lord Scott of Foscotes approval of this dictum in Gumbs v Attorney General of Anguilla [2009] UKPC 27, para 44. The consequence of the 2002 Act being disapplied to a wide array of offences committed after the operative date of 24 March 2003, and requiring these to be dealt with under 1996 (or even, in the case of Ms McCool, 1990) legislation, is self evidently objectionable and undesirable. It means that contemporary cases would have to be dealt with according to standards and rules which have been replaced by the 2002 Act and secondary legislation made on foot of it. I consider, therefore, that if there is a workable interpretation of the legislation which allows post 2003 offences to be dealt with under the 2002 Act, even when those are associated with pre 2003 offences, that interpretation should be adopted. For the reasons given earlier, I think that such an interpretation is entirely feasible and that the 2002 Act was correctly applied to the appellants cases. I will discuss the facts of the appellants offences and the reasons that I consider that they were properly subject to confiscation orders under the 2002 Act later in this judgment. Ahmed, Martin, Simpson, Aslam and Stapleton The Court of Appeal in this case considered a number of authorities in which transitional provisions in similar terms to those involved in the present appeal were examined. The first of these was R v Ahmed (Court of Appeal, Criminal Division, unreported 8 February 2000). In that case, the appellant had pleaded guilty to three offences of conspiracy to defraud by inflating invoices for goods supplied. The first of those offences took place at a time between January 1995 and October 2006; the second between January 1995 and June 2007; and the third between January 1997 and 30 November 2007. Section 16(5) of the Proceeds of Crime Act 1995, which was the statute under which the confiscation orders were sought, provided: Section 1 shall not apply in the case of any proceedings against any person where that person is convicted in those proceedings of an offence which was committed before the commencement of that section. The section came into force on 1 November 1995. The Court of Appeal in Ahmed accepted that the first two conspiracy offences occurred partly before and partly after the operative date. That circumstance had been overlooked by the parties and the trial judge. If it had been adverted to, it would have been obvious that the judge had a discretion whether to make the confiscation order in the sum that he had decided upon. In the event, the Court of Appeal concluded that this would not have made a difference to his decision. But the appellants in the present case argue that the court in Ahmed effectively precluded the application of the 1995 Act because of the earlier offences. This is not what the court held, however. It was decided that the circumstance that two of the three offences had occurred before the operative date meant that the trial judge did indeed have a discretion to make a confiscation order for a lesser sum than that ordered. But the court was not required to, and did not address, the question whether the effect of section 16(5) of the 1995 Act was to preclude a confiscation order under that legislation, if an application had been made solely in relation to the offence which occurred after its coming into force. In contrast, the respondent in the present case relies exclusively on offences occurring after the coming into force of the 2002 Act. As the Court of Appeal in the present case observed (in para 9 of its judgment), it was common case that where the prosecution seeks a confiscation order in respect of an offence committed before the date of coming into force of the relevant statute, the earlier legislation will apply. The prosecution in the present case does not seek to rely on offences committed before 24 March 2003. On the contrary, it bases its claim for a confiscation order on offences committed after that date. Ahmed is therefore not in point in relation to the appellants claim in this appeal. In R v Martin [2001] EWCA Crim 2761; [2002] 2 Cr App R (S) 74, the appellant had pleaded guilty to conspiring with others to evade the payment of duty owed to HMRC. The evasion took place over the period between October 1994 and January 1997. It was held that. since the dates of the conspiracy straddled the commencement date of the 1995 Act, that legislation could not be applied to the appellants case, notwithstanding that overt acts in the perpetration of the conspiracy occurred after that date. The Court of Appeal held that Ahmed was directly in point and that it was bound to follow the decision in that case. Again, however, the situation in Martin is different from that which obtains in the present appeals. In Martin, the prosecution was relying on offences which had occurred before the commencement date for the 1995 Act, in support of its application for a confiscation order under that Act. In the present case, the prosecution places no reliance on offences committed before the coming into force of the 2002 Act. To the contrary, it says that such offences must be left strictly out of account in deciding whether confiscation orders should be made. The Court of Appeal in the present case considered that Martin did not add a great deal on [the issue arising] to Ahmed. In my view, it adds nothing to that issue. The next authority considered by the Court of Appeal in this case was R v Simpson [2003] EWCA Crim 1499, (2004) QB 118. In that case the appellant had pleaded guilty to offences involving VAT fraud. A confiscation order was made under section 71 of the Criminal Justice Act 1988. The appellant appealed against the confiscation order on the ground that the judge had no jurisdiction to make it because the notice served on the court by the prosecution was not in the form required by section 72(1) of the 1988 Act, and that, by virtue of section 16(5)(c) of the Proceeds of Crime Act 1995, since one of the offences to which he had pleaded guilty had been committed before 1 November 1995, the amendment to section 72, made by section 1 of the 1995 Act, and providing that service of a notice was no longer necessary, did not apply. He submitted that the application of section 16(5) was not limited to offences on which the confiscation order was based. The prosecution had not sought a confiscation order in respect of the sole charge of an offence that had predated the coming into force of the 1995 Act. It was common case that, if the appellant had not been convicted of the offence which had been committed before the commencement date, the 1995 Act would apply. But, because he had been convicted of that offence, it was argued that that single conviction determined that the earlier legislation was the only enactment under which a confiscation order could be sought. Lord Woolf CJ described this as an obviously absurd result. Before the Court of Appeal in the present case, Mr Hutton, and before this court, Mr Macdonald QC, on behalf of the appellants, challenged this description. It was, they said, in the nature of transitional provisions that a line had to be drawn somewhere. The choice of that line might in some cases seem arbitrary. That did not mean that the result produced was absurd. While I accept that the imposition of a cut off point will, in some instances, produce a result which might appear anomalous and that anomaly should not be equated with absurdity, for the reasons given earlier (in paras 23 26), I consider that if a significant number of offences committed after 24 March 2003 were excluded from the 2002 Acts application, solely because of the happenstance that a defendant had also been convicted of an offence committed before that date, this would indeed be an absurd outcome. The Court of Appeal in Simpson considered that section 16(5) of the 1995 Act should be applied so that, after the word offence in that section, there appears, the words in respect of which a confiscation order is or could be sought para 19. It is not clear whether the court proposed that these words be read into the section or merely that they were intended to be clarificatory of the extent of its application. Reading in words to a statute is problematic, of course. In Inco Europe v First Choice Distribution (a firm) (2000) 1 WLR 586, 592, 115, Lord Nicholls of Birkenhead said: It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross admirable opuscule, Statutory Interpretation (3rd ed, 1995) pp 93 105. He comments (p 103): In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role. This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation (see per Lord Diplock in Jones v Wrotham Park Settled Estates [1980] AC 74 at 105 106). For the reasons that I have given earlier, I consider that Parliaments intention in enacting the 2002 Act was that all offences committed after the date of its coming into force should be subject to its regime, irrespective of whether they were associated with offences committed before the commencement date. In light of the experience in this case, it would perhaps have been preferable that the 2002 Act had made it unmistakably clear that this was the intention. I am not sure, however, that the failure to do so amounts to inadvertence on the part of the draftsman. But I am entirely satisfied of the substance of the provision Parliament would have made if, indeed, the provision qualifies for the description of drafting inadvertence. The substance of the provision which Parliament intended was, as I have said, that all offences committed after March 2003, whether or not they were associated with offences that occurred before that date, should be dealt with under the 2002 Act. Whatever of that, it appears to me that it is not necessary to read in words such as those suggested in Simpson. The Act was intended to permit applications for confiscation orders for offences committed after 24 March 2003 and to exclude from its application offences which had taken place before that date. So understood, the legislation does not require the reading in of further words. Provided a clear segregation between pre and post March 2003 offences can be identified, the application of the Act does not present a problem. The next case dealt with by the Court of Appeal was R v Aslam [2004] EWCA Crim 2801; (2005) 1 Cr App R (S) 116. In that case the appellant pleaded guilty to a number of offences of dishonesty and asked for a number of others to be taken into consideration. One of the offences to which he had pleaded guilty and one of those which he had asked to be taken into consideration had occurred before the coming into force of the 1995 Act. On this account, it was argued on his behalf that the court had no jurisdiction to make a confiscation order under the 1995 legislation. That argument was rejected. At para 11, Bean J said: The legislative purpose of section16(5), as it seems to us, was to prevent the Crown from dividing convictions against a defendant in one set of proceedings into pre and post November 1, 1995 matters and then taking confiscation proceedings (concurrently or consecutively) under both statutes. So, if at the time the judge is asked to make a confiscation order under the 1995 Act on a number of counts there remains a pre commencement count on which the Crown is seeking, or could still seek, a confiscation order under the 1988 Act as amended in 1993, there is no jurisdiction to make an order under the 1995 Act. However, if the pre commencement count is one which could not be the basis of confiscation proceedings, there is no obstacle to using the 1995 Act regime. Similarly, if (as in this case) the Crown has expressly abandoned any reliance on the pre commencement count for the purposes of a confiscation order, the fact that it could have sought such an order in respect of that count seems to us entirely immaterial. In such a case also, in our judgment, there is no obstacle to using in the 1995 Act regime in respect of the post commencement counts. We do not understand Simpson to require a contrary conclusion. (Emphasis supplied) In Aslam, as in this case, the prosecution did not rely on a pre commencement offence in support of its application for a confiscation order. The court in that case referred to the approach in Simpson of treating section 16(5) as if it read in the manner described in para 36 above. It did not suggest (at least, not expressly) that words should be read into the section. For the reasons that I have given, I do not consider that this is necessary. The drawing of the line by the commencement provision is readily explicable for reasons quite different from the rationale suggested by the appellants in the present case. It is, as Bean J said, to avoid the undesirable prospect of having two sets of parallel or even consecutive proceedings under two different items of legislation, with all the undesirable consequences that would entail. It is also to provide a clear demarcation line between the effective application of the 2002 Act and preceding legislation. It is entirely consonant with common sense and good administration that the demarcation should be applied so that only those offences which were committed after it came into force were caught by the 2002 Act. It is also plainly sensible that the line should not be blurred by allowing the Act to apply solely to those cases which happened not to be associated with a pre March 2003 offence. It may be possible to construe the Act in that way but I am satisfied that this is not how it was intended to apply. The Court of Appeal in the present case also briefly considered the decision in R v Stapleton (2009) 1 Cr App R (S) 38. The appellant pleaded guilty to six offences of furnishing false information, contrary to the Theft Act 1968. She was committed to the Crown Court for sentence under the 2002 Act, with a view to a confiscation order being considered. She had made claims for housing benefit in the amount of 15,946 between July 2002 and August 2006. A confiscation order was made under the 2002 Act. On appeal, an argument was made on her behalf in broadly similar terms to those presented by the appellants in this case. Two of the offences had been committed before 24 March 2003. It was argued that the straightforward reading of the transitional provisions meant that there was no power to make an order under the 2002 Act. Reference was made to R v Clarke [2008] UKHL 8; [2008] 1 WLR 338, where it was said that where the statutory provisions were clear in their terms, the court was bound to apply them, even if the consequence was that a defendant is enabled to obtain what might be regarded as an unmerited outcome. In Clarke Lord Bingham said (at para 17): Technicality is always distasteful when it appears to contradict the merits of a case. But the duty of the court is to apply the law, which is sometimes technical, and it may be thought that if the state exercises its coercive power to put a citizen on trial for serious crime a certain degree of formality is not out of place. The Court of Appeal in Stapleton acknowledged the obvious authority of this statement but nevertheless considered itself bound by Aslam. The court also acknowledged that Aslam had been criticised by Professor Thomas in his commentary on the case which appeared in 2005 Criminal Law Review 154. But, Latham LJ, who delivered the judgment of the court, observed that it could not be said that Aslam was plainly wrong. It had to be followed. It is, I believe, possible to address somewhat more forthrightly than did the court in Stapleton the argument that the technical interpretation of the relevant provisions of the 2002 Act compel a result that the decision in Aslam was wrong. The correct interpretation of those provisions must be informed by the predominant purpose of the legislation. As I have said, its purpose was to provide a clear dividing line between those offences which were caught by the Act and those which were not. A sensible, workable segregation exists between offences committed before 24 March 2003 and those which occurred after that date. While it is theoretically possible to construe the Act as placing an embargo on its application to post March 2003 offences where they are associated with offences before that date, in no sense is that the only possible construction. This is not a question of the technical interpretation of the legislation compelling a particular result. Rather it is a matter of construing the legislation in a perfectly legitimate way which keeps faith with its plain and obvious purpose. Professor Thomass disapproval of Aslam, and in a second commentary in 2008 Criminal Law Review 1, of Stapleton founds on two principal criticisms. The first was that reading words into the statute was objectionable. For reasons given earlier, I do not believe that it is at all clear that the Court of Appeal in Simpson did read words into the provision but merely clarified how its interpretation should be approached by the device of instancing words that would have made its meaning clearer. In any event, if words were read into the statute, that was an unnecessary exercise. Finally, it is not in the least apparent that the Court of Appeal in Aslam did read words into the statute. The second major criticism made by Professor Thomas was that the court had no discretion to ignore offences of which the defendant has been convicted. This objection to the approach of the court in Aslam, Simpson and Stapleton was based on his consideration of section 76(3) of the 2002 Act (the equivalent of section 224(3) in Part 4). He suggested that a defendants particular criminal conduct [was] all of the defendants criminal conduct which constitutes the offence or the offences concerned, and conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned. This is the same argument as was advanced by the appellants in the present case and which, as I observed in para 17, I initially found attractive. For the reasons that I there gave, however, I consider that it is ill founded. The facts of the present cases At all material times the appellants, Ms McCool and Mr Harkin were man and wife. Ms McCool was charged with and pleaded guilty to four offences of obtaining benefit by fraud. These were of false accounting on 26 September 1990 for the purpose of obtaining income support as a single person, when in fact she was married; making a false declaration to similar effect on 28 November 2003; making the same false declaration on 20 October 2005 and again on 10 August 2010. One of the offences therefore preceded the coming into force of the 2002 Act. The other three did not. It was asserted that she had received an overpayment of 76,817.72 in the period between 11 November 2003 and 17 May 2011 and it was this sum which formed the basis of the application for the confiscation order. (It was adjusted to 84,966.30 to take account of the increase in the value of money between the time that the benefit was paid and the date of Ms McCools plea of guilty.) The available amount to meet the confiscation order was deemed to be 38.037, representing half the value of the estimated equity of a property which she owned jointly with her husband, Mr Harkin, the second appellant. The Crown Court judge held that Ms McCool had benefited in the amount of 84,996 and made a confiscation order for a sum exceeding 38,000. In the case of Mr Harkin, he pleaded guilty to making a false declaration on 16 December 1999 in relation to an application for income support, representing that he was single when he was in fact married to Ms McCool. He pleaded guilty to other offences, two of which were similar to the first offence in December 1999 and the remainder were in relation to housing benefit. In all of these cases, the offences were committed after the coming into force of the 2003 Act. The total amount of the benefits received was said to be 53,937.12, after making adjustment for the changes in the value of money. A confiscation order was made in his case in the same sum as Ms McCools. On appeal to the Court of Appeal, the appellants argued, as they have before this court, that the Crown Court did not have jurisdiction to make the orders which it did. They also argued, however, that the Crown Court should have applied Regulation 13 of the Social Security (Payments on Account, Overpayments and Recovery) Regulations (Northern Ireland) to reduce the amount of recoverable benefit by deducting the amounts to which the appellants would have been entitled, had they made honest and accurate applications for benefit. The Court of Appeal acceded to the latter argument and reduced the sums to be recovered by way of confiscation to 5,531.95 in the case of Ms McCool and 33,624 in the case of Mr Harkin. That order has not been challenged by the respondent on this appeal. An application for leave to appeal to this court was refused by the Court of Appeal but the court certified the following question as giving rise to a point of law of public general importance: Can a confiscation order under section 156 of the Proceeds of Crime Act 2002 be made by a Crown Court in circumstances where a defendant is convicted in proceedings before that Crown Court of an offence or offences which were committed before 24 March 2003, given the stipulations of the commencement, transitional and saving provisions set out in articles 2, 4 and 11 of the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003? Both appellants were convicted of offences which, in all instances save one in each case, were committed after the coming into force of the 2002 Act. I have concluded that the offences committed after 24 March 2003 had to be dealt with under the 2002 Act by the Crown Court considering whether to make confiscation orders against the appellants. I have also decided that the court was obliged to leave out of account offences which occurred before that date. I would therefore answer the certified question in the affirmative. Conclusion I would dismiss the appeal. Postscript I agree with what Lord Hughes has had to say about the power of the Court of Appeal to substitute an order under a different regime see paras 108 et seq of his judgment. LORD HUGHES: (with whom Lady Black agrees) Overview Not for the first time, this case concerns a technical issue relating to the construction of confiscation legislation. The two defendants, who have at all material times been married to one another, were both convicted of a series of offences of making dishonest claims for State benefits by pretending that they were single people when they were not and, in the case of Harkin, by claiming housing benefit for a house when he was living with Ms McCool at a different one. There is and was no significant dispute as to the total amounts which they thereby obtained over a period of some years. There is and was no serious dispute that confiscation orders were appropriate, nor that substantial assets were available, from which such orders could be met: the available amount was accepted to be 38,037 each. The only issue of substance in relation to the proper sum to be confiscated arose from the contention that the amount of the order ought to be reduced, in accordance with R v Waya [2012] UKSC 51; [2013] 1 AC 294 from the gross payments received (the benefit for the purposes of the legislation) to the amount of overpayment. The Court of Appeal accepted that contention and reduced the confiscation orders accordingly. The Crown accepts the reduction, and there thus remains no dispute as to the sums. But it is said on behalf of both defendants that the orders were made under the wrong set of confiscation legislation and must for that reason be quashed. The reason why this is said relates to the commencement dates of the confiscation legislation and the transitional provisions effecting the change from one set to another. The question here arises in a Northern Ireland case, but the legislation is substantially the same in England and Wales, and indeed very largely in Scotland. For convenience, the equivalent England and Wales provisions, where identical, are noted in brackets. By way of very broad summary, confiscation legislation in the UK began with the Drug Trafficking Offences Act 1986 (DTOA 1986). Shortly afterwards, the Criminal Justice Act 1988 (CJA 1988) introduced similar provisions for non drug offending. Both statutes responded to international co operation, and treaty obligations in both fields arose at about the same time. Initially the regime affecting drug offending was more severe than that applying to other offences. The DTOA 1986 was replaced by the Drug Trafficking Act 1994 (DTA 1994). Meanwhile by the Criminal Justice Act 1993 (CJA 1993) and the Proceeds of Crime Act 1995 (POCA 1995) a number of amendments were made. Three which affected non drugs offending may here be relevant: (1) the courts discretion as to the amount of the order was removed and replaced by an obligation (in all but immaterial exceptional situations) to make an order in the sum of the benefit obtained, capped by the available (or realisable) amount; (2) the concept of a minimum benefit disappeared, and (3) provision was introduced for including benefit from past offending where there was a course of criminal conduct. Those alterations brought the non drug regime closer into line with what the drug regime had always been. There was also in the past separate legislation for confiscation in relation to terrorist offences, which it is not necessary to consider here. Then, in 2002 the legislation was re worked and consolidated in the Proceeds of Crime Act 2002 (POCA 2002), which assimilates drug and other offending. This Act contains separate but similar sections for, respectively, England and Wales, Scotland and Northern Ireland. The Northern Ireland legislation relating to confiscation for both kinds of offence has been: (i) The Criminal Justice (Confiscation)(Northern Ireland) Order 1990, 1990 No 2588 (NI 17) (the 1990 Order); this dealt with both drugs and other offences; (ii) The Proceeds of Crime (Northern Ireland) Order 1996 (SI 1996/1299) (NI 9) (the 1996 Order); this essentially mirrored the changes made in England and Wales in 1993, 1994 and 1995 and came into force on 25 August 1996; and (iii) The Proceeds of Crime Act 2002; the chiefly relevant provisions of this Act came into force for Northern Ireland (as also for England and Wales) on 24 March 2003. The issue Ms McCools indictment, to which she pleaded guilty, charged four counts. The first related to 26 September 1990. The remaining three related to November 2003, October 2005 and August 2010. Those counts reflected a continuing course of repeated false representations made between 1990 and 2010. Harkins indictment, to which he also pleaded guilty, contained counts relating to offences committed in December 1999, October 2005, April 2006, May 2007 and August 2009. Those counts reflected a course of repeated false claims made between 1997 and 2009 (income support) and between March 2003 and 2011 (housing benefit). When calculating the benefit for the purpose of the confiscation proceedings, the prosecution disclaimed reliance, in both cases, on any offending before the commencement of POCA 2002 in March 2003. In Ms McCools case, her benefit was calculated from the date of her second count (28 November 2003). The gross sums obtained were 76,817.72; adjusted for inflation this became 84,966.30. The overpayments however, were 5531.95. In Harkins case, his benefit was similarly calculated. As to income support, benefit was calculated by the prosecution as running from 20 October 2005 to 18 November 2009, and as to housing benefit from 3 April 2006 to 27 March 2011. In each case the start date for the calculation of benefit was the date of the earliest count on the indictment which related to a time after the commencement of POCA 2002. The gross payments received, adjusted for inflation, were 53,937.12. The sum overpaid was (similarly adjusted) 33,624. It follows that these net benefit figures were significantly smaller than the total overpayments dishonestly obtained from 1990 onwards in the case of Ms McCool and from 1999 onwards in the case of Harkin. They were also, but not by nearly so much, somewhat smaller than the total overpayments obtained after the commencement of POCA 2002. The confiscation orders were made under POCA 2002. The appellants contend that there was no power to make orders under that Act. They say that any order could only be made under the relevant predecessor legislation, thus the 1990 Order for Ms McCool and the 1996 Order for Harkin. This contention is founded on the terms of section 156 of POCA 2002 and of the relevant Commencement Order. Section 156 [section 6 for England and Wales] is the foundation of the power to make a confiscation order. So far as relevant, it says: 156 Making of order (1) The Crown Court must proceed under this section if the following two conditions are satisfied. (2) The first condition is that a defendant falls within either of the following paragraphs (a) he is convicted of an offence or offences in proceedings before the Crown Court; (b) he is committed to the Crown Court in respect of an offence or offences under section 218 below (committal with a view to a confiscation order being considered). (3) The second condition is that the prosecutor asks the court to proceed (a) under this section, or (b) do so. the court believes it is appropriate for it to (4) The court must proceed as follows it must decide whether the defendant has (a) a criminal lifestyle; (b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct; (c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct. If the court decides under subsection (4)(b) or (c) (5) that the defendant has benefited from the conduct referred to it must (a) decide the recoverable amount, and (b) make an order (a confiscation order) requiring him to pay that amount. [exception where victim brings civil (6) proceedings]. (7) The court must decide any question arising under subsection (4) or (5) on a balance of probabilities. (8) [provision for absconding defendant]. (9) References in this Part to the offence (or offences) concerned are to the offence (or offences) mentioned in subsection (2). The relevant Commencement Order is the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003 (SI 2003/333) (C20) (the Commencement Order). So far as material, it says in article 4(1) [article 3(1) E & W]: 4.(1) Section 156 of the Act (making of confiscation order) shall not have effect where the offence, or any of the offences, mentioned in section 156(2) was committed before 24 March 2003. And by article 11, [article 10 E & W] it preserves the predecessor legislation for cases where article 4 precludes use of POCA 2002: 11. Where, under article 4 or 6, a provision of the Act does not have effect, the following provisions shall continue to have effect (e) Articles 3 to 40 of, and paragraph 18 of Schedule 3 to, the Proceeds of Crime (Northern Ireland) Order 1996. It follows that the issue in this case relates to which offences are contemplated by section 156(2) and thus referred to in article 4(1). Is it, in each case, any offence for which the defendant is before the court, or is it any such offence which is relied upon by the Crown (or the court) as justifying confiscation proceedings? Previous authority A similar problem arose (in England and Wales) in relation to the transition from the pre 1995 legislation to POCA 1995. Section 16(5) of that latter Act contained a provision very similar to the present article 4(1). It provided: Section 1 shall not apply in the case of any proceedings against any person where that person is convicted in those proceedings of an offence which was committed before the commencement of that section. As Lord Kerr explains, the Court of Appeal (Criminal Division) confronted this question in R v Simpson, R v Aslam and R v Stapleton. It concluded that the offence(s) referred to were ones which were relied upon for the making of a confiscation order, that is to say those which the Crown was seeking, or could still seek, to bring into account for confiscation purposes. It followed that if when it came to confiscation the Crown disclaimed reliance on a pre commencement count and brought into account only post commencement offences, the new Act applied. I agree with Lord Kerr that it is not necessary to read words into the new statute to achieve this. Nor, pace the Court of Appeal (Criminal Division) in R v Simpson, is it necessary to label the alternative construction absurd. The decisions were that the new statutes applied where the relevant offences, that is to say those relied on for confiscation purposes, post dated the commencement date. There is no doubt that these decisions have consistently been followed as a matter of practice since, as is shown by the considered decision of the Crown in the present case to disclaim reliance on the counts which pre dated March 2003. The decisions have also consistently been applied in the Court of Appeal (Criminal Division); see for example R v Aniakor [2014] EWCA Crim 2171. The present appellants contend that this established line of authority, and the practice based upon it, are wrong. Of course, if this construction of the statutes, despite such general acceptance, is not permissible, then it must follow that however technical the objection raised, the orders made in the present case cannot stand. The appellants argument The argument for the appellants rests principally upon the fact that there are some differences between the POCA 2002 regime and the earlier regimes which it replaced. The confiscation legislation is, it is rightly said, penal legislation. Accordingly, it is said that it ought to be construed strictly in favour of defendants to whom its provisions are applied. It is unjust, it is said, to permit the Crown by a process essentially of election, to choose which regime is to apply to a defendant. And it is contended that the wording of article 4(1) [article 3(1) E & W] of the Commencement Order is clear and can only sensibly mean that where any offence on the indictment dates back before the commencement date of POCA 2002, the old regime applies and not the new. Differences between the regimes The appellants helpfully assembled a list of differences. By no means all of them could even arguably affect them, but their case is that all of them are relevant to deciding the principle whether POCA 2002 can be applied to those who are before the Crown Court for offences which include pre commencement offences, even if the Crown disclaims reliance on the earlier offence(s) for the purposes of confiscation. The identified differences are addressed serially below. First, the pre 1995 non drug regimes provided for confiscation to be available only where the benefit exceeded a minimum amount (set at all material times at 10,000) and moreover made the same sum the minimum amount for which a confiscation order could be made: article 4(1) of the 1990 Order [the unamended section 71(2)(b)(ii) CJA 1988 for E & W]. Allied to this rule, the pre 1995 non drug regimes required the Crown to serve notice to the effect that an order in at least the minimum amount would be possible: article 4(6) of the 1990 Order [the unamended section 72(1) CJA 1988 for E & W]. This concept of a minimum amount never applied to drugs offending, and disappeared from the legislation after POCA 1995 and the 1996 Order. Second, the pre 1995 non drug regimes vested in the court a discretion as to the amount of a confiscation order. The court was given the power to make such order as it thought fit, subject to the ceiling of the assets available/realisable: Article 4(1) of the 1990 Order [the unamended section 71(1) CJA 1988 for E & W]. Since 1995/1996 the court has been required in all but immaterial cases to make an order in the amount of the benefit which the defendant has obtained, subject again to the ceiling of available/realisable assets. There was never any discretion in the drug regimes. Third, for the non drug regimes, there was until the 1995/96 changes no provision for taking into account benefit obtained from offences other than those before the court, either as charges or as offences taken into consideration. Since then, benefit from other offences has been taken into account in prescribed circumstances. The label attached to the prescribed circumstances was, until POCA 2002, a course of criminal conduct: article 9 of the 1996 Order [new section 72AA(1) CJA 1988 inserted by POCA 1995 for E & W]. Since POCA 2002 it has been criminal lifestyle: POCA 2002 section 156(4) and 223 [sections 6(4) and 75 for E & W]. The conditions for attracting these extended provisions have not remained identical, but are very similar. The post 1995/96 conditions were satisfied if the defendant was now, or had been in the preceding six years, convicted of one other offence: article 9(1) of the 1996 Order [new section 72AA(1) CJA 1988 for E & W]. Under POCA 2002 the defendant falls within the lifestyle provisions if there are either three additional convictions (four in all) in the present proceedings, or two previous convictions in the preceding six years: section 223(3) POCA 2002 [section 75(3) for E & W]. Moreover, the course of criminal activity lifestyle rules of POCA 2002 do not apply unless the total benefit is 5,000 or more: section 223(4) [section 75(4) E & W]. In these respects the qualifying conditions are narrower under POCA 2002 than under the previous 1995/96 regime. But under POCA 2002 a defendant is also to be treated as a lifestyle offender if he is convicted of certain specific offences, or (subject to the 5,000 minimum) of an offence committed over a period of at least six months: section 223(2) [section 75(2) for E & W]. The objective seems sensibly to have been to identify more reliably those whose offending spanned a period so as to raise the realistic possibility that their lifestyle was to a significant extent supported by crime. The effect of the course of conduct and lifestyle conditions being satisfied is, in each case, to make available to the court assumptions as to benefit, each applicable unless either the defendant disproves it on the balance of probabilities, or there would be a serious risk of injustice if it were made. The assumptions are the same under both regimes, although the first has been split into two in POCA 2002: compare section 160 POCA 2002 [section 10 E & W] with article 9, 1996 Order [new section 72AA(4) CJA 1988 E & W]. The chief assumptions are that any property held by the defendant over the preceding six years, and any expenditure made by him over the same period, are the product of criminal offences, so that they count towards his benefit. Plainly the objective under both regimes is to cast the onus onto a lifestyle offender to demonstrate, on the balance of probabilities, that his assets have been legitimate. There is one difference between the 1995/96 regime and the POCA 2002 regime, in that the assumptions, which were discretionary under the former, have become mandatory under the latter. In the case of drug offending, the assumptions were always available, and the confiscation order took into account all benefit from drug offending whenever it occurred, before or after the inauguration of the confiscation legislation: see eg DTOA sections 1(3), 2(1)(a) and 2(2). Fourth, the rules as to postponement of confiscation, which were the subject of a considerable amount of litigation until the House of Lords held in R v Soneji [2005] UKHL 49; [2006] 1 AC 340 and R v Knights [2005] UKHL 50; [2006] 1 AC 368 that failure strictly to comply with them did not usually render an order invalid, have been modified from time to time. Under the 1990 Order the maximum postponement was six months: article 7. Later that was revised to six months absent exceptional circumstances: article 11 of the 1996 Order [section 72A(3) CJA 1988 inserted by section 28 CJA 1993 E & W]. Under POCA 2002 postponement can be for up to a maximum of two years, and beyond in event of exceptional circumstances: section 164 [section 14 E & W]. Fifth, all the regimes have provided for the calculation of the ceiling amount of the defendants available or realisable assets to include gifts which he has made. Under the pre POCA 2002 non drug regimes, gifts which were thus to be included were those made by the defendant after the commission of the predicate offence which the court thought it appropriate to take into account: article 3(10) of the 1990 Order and article 7(1)(a) of the 1996 Order [section 74(10) unamended CJA 1988 E & W]. Under POCA 2002 the same rule for what are now termed tainted gifts applies by section 225(5) [section 77(5) E & W], but the expression is widened in lifestyle cases, logically enough, to include gifts either made during the six year period or which were of property obtained via criminal conduct: section 225(2)(3) [section 77(2)(3) E & W]. In both cases, if gifts qualify as tainted they are now to be added into available assets, without a further requirement that the court conclude it appropriate to do so. Sixth, from time to time the provisions relating to variation of confiscation orders have been revisited and revised. It is enough to record that the 1995/96 regimes somewhat extended the power to vary an order upwards, when compared with the pre 1995 regime, in the event of fresh evidence becoming available. POCA 2002 provides for additional specific situations in which there may be variation on the basis of fresh evidence; they include cases where the Crown Court made no confiscation order at all, either because it was not invited to do so, or where at that time the evidence did not show any benefit. Seventh, there are differences in the means of enforcement of confiscation orders. It is unnecessary to set them out. Essentially the system of enforcement has remained the same throughout. Confiscation orders are enforced by the magistrates as if they were Crown Court fines: see R v Guraj [2016] UKSC 65. Additional mechanisms have however been added from time to time, such as widening the range of officials who may exercise powers of seizure, extending the powers of management receivers appointed under restraint orders, and enlarging the ability to enforce as if civil debts. The appellants identify a particular aspect of enforcement. When making a confiscation order the court has always had power to stipulate the time within which payment must be made. In Northern Ireland the power derived until POCA 2002 from the general provisions for fines, found in section 35(1) of the Criminal Justice Act (NI) 1954, which permitted extension of the period from time to time. Under POCA 2002, section 161(5) [section 11(5) E & W] time cannot be extended beyond 12 months. The charging of interest depends on the time given to pay, because it runs from default. It follows that in this respect POCA 2002 is, at least theoretically, more severe than the previous regime, under which it was at any rate legally possible for time to be extended beyond 12 months. Eighth, the early legislation placed confiscation jurisdiction in the court of trial, whether the Crown Court or the Magistrates Court. POCA 2002 restricts it to the Crown Court and therefore includes provision for the defendant who is convicted of a benefit generating offence before the magistrates to be committed to the Crown Court for confiscation to be considered: section 218 [section 70 E & W]. This power of committal is separate from, and wider than, the ordinary power which magistrates have in England and Wales to commit a defendant for sentence where he is convicted of an offence triable either way. It extends to purely summary offences, and is a power of committal available only where confiscation is a possibility. The terms of the provisions for committal are relevant context on the construction question and are considered more fully below. Ninth, the earlier legislation made no provision for a right of appeal by the Crown. The defendants right of appeal was secured from the outset because a confiscation order was, although not strictly part of the sentence, an order made when dealing with an offender and thus appealable as if a sentence under section 30 Criminal Appeal Act (Northern Ireland) 1980 [section 50 Criminal Appeal Act 1968 E & W]: see R v Johnson [1991] 2 QB 249. This was later reinforced by inserting specific provision in those statutes including a confiscation order in the definition of sentence, such as section 30(3)(a) of the Criminal Appeal Act (Northern Ireland) 1980 [section 50(1)(d) Criminal Appeal Act 1968 E & W]. There is of course no general right of appeal by the Crown against sentence (although there existed the power to refer the case under section 36 of the Criminal Justice Act 1988 as unduly lenient). A general right in the Crown to challenge either a decision not to make a confiscation order, or the amount of it if made, had to be created separately and is found in section 181 182 of POCA 2002 [sections 31 32 E & W]. The detail and technicality of the confiscation legislation, sometimes necessary and sometimes not, is such that changes from time to time of the kind set out above are to be expected. The question which matters for present purposes is whether these differences mean that the Simpson/Aslam construction of POCA 2002 is thereby rendered impermissible. That in turn involves asking whether that construction would or might result in any unfairness to defendants. If it would, or might, then the principle that penal statutes must be construed strictly in favour of those penalised would carry considerable weight. There would be unfairness, and a breach of article 7 ECHR, if this construction had the effect of applying retrospectively to defendants a regime which was not in force at the time their offences were committed. But there is no question of this retrospective operation of POCA 2002 if it is applied only to confiscation proceedings depending on offences committed after its commencement. If the Crown disclaims reliance, for confiscation purposes, on any pre commencement offence, then retrospective operation simply does not arise. The principal rationale of the impermissibility of retrospective operation of a penal statute is that a citizen is entitled to know, at the time he decides how to behave, what the legal consequences of what he does may be. If now these appellants, or other defendants like them, were to be visited with consequences by way of confiscation of a kind different from what was available to the Crown when they committed the offence(s) attracting those consequences, there would be impermissible retrospective operation of the criminal law. But these appellants have committed offences since the commencement of POCA 2002. The consequences which have been visited upon them are precisely the same as would have been applied to anyone else who committed such offences after that commencement. It is true that both of them have also committed pre commencement offences. But the orders made owe nothing to those offences and are precisely the same as would have followed if the earlier offences had never occurred. There is nothing unfair in saying to Ms McCool that she should bear the confiscation consequences of her post March 2003 offences, as required by POCA 2002, unless those consequences differ in some way from what they would have been if she had not committed her earlier offences. They do not. The same is true of Harkin. There would also be likely to be a real risk of unfairness if a defendant faced the prospect of two different confiscation regimes being applied to him, because so much of the ground covered by each regime is the same. This was the consideration underlined by the Court of Appeal, Criminal Division, in Aslam [2005] 1 Cr App R (S) 116. Speaking of the commencement provisions in POCA 1995, the courts judgment contains the following analysis: 11. The legislative purpose of section 16(5), as it seems to us, was to prevent the Crown from dividing convictions against a defendant in one set of proceedings into pre and post November 1, 1995 matters and then taking confiscation proceedings (concurrently or consecutively) under both statutes. So if at the time the judge is asked to make a confiscation order under the 1995 Act on a number of counts there remains a pre commencement count on which the Crown is seeking, or could still seek, a confiscation order under the 1988 Act as amended in 1993, there is no jurisdiction to make an order under the 1995 Act. However, if the pre commencement count is one which could not be the basis of confiscation proceedings, there is no obstacle to using the 1995 Act regime. Similarly if (as in this case) the Crown has expressly abandoned any reliance on the pre commencement count for the purposes of a confiscation order, the fact that it could have sought such an order in respect of that count seems to us entirely immaterial. In such a case also, in our judgment, there is no obstacle to using in [sic] the 1995 Act regime in respect of the post commencement counts. However, for the reasons explained in that passage, there is no question of more than a single confiscation regime being applied to these appellants or anyone in a similar position. That is because the offences which are relevant to section 156 [section 6 E & W] are those on which the Crown and thus the court will found any confiscation order. Where, as here, any earlier pre commencement offences are disclaimed by the Crown, and not relied upon by the court, there can only be the single confiscation regime established by POCA 2002. This position is true despite the various differences between the regimes which are set out above. Ms McCool, had she been dealt with in the early 1990s for her offending up to that point, would have been subject to a confiscation regime under which 10,000 was the minimum sum for which an order could be made see the 1990 Order and para 71 above. But to say that an order can now be made against her under POCA 2002, where there is no minimum, is to subject her to no injustice if the order is made exclusively on the basis of offences committed since March 2003. It is exactly the same as if she had now been prosecuted only for the post March 2003 offences. In that event, everyone agrees that POCA 2002 would be the relevant regime and there would be no minimum sum. For the same reasons, there is no injustice to Ms McCool in the fact that the regime applied to her permits of no general discretion as to the amount of the confiscation order. She is in exactly the same position as she would have been in if prosecuted only for the post March 2003 offences. It might be added that, in any event, no basis is suggested on which any court considering her case at any time under any regime might have made an order in a sum smaller than the 5,531.95 actually made. The lifestyle provisions are of some complexity but the same reasoning applies. If these appellants had been prosecuted only for the post March 2003 offences, no one suggests that the POCA 2002 provisions would not correctly have been applied to them. The slightly different lifestyle provisions of POCA 2002 are deliberately applied to anyone convicted of offences committed after the commencement of that statute. They were in force when those post commencement offences were committed, and no improper retrospectivity is involved in applying them. In considering the lifestyle provisions it is necessary to distinguish between the conditions which must be met before they can be applied, and the consequences if they are. It is certainly true that the conditions for their application may to a strictly limited extent involve looking at past convictions. There are two possible routes to a finding that there has been a course of criminal activity. The first is that the defendant is convicted in the current proceedings of at least three other offences (ie at least four in all) from which he has benefited: section 223(2)(b) with section 223(3)(a) [section 75(2)(b) with section 75(3)(a) E & W]. The second is that he has previous convictions, sustained on two or more different occasions, for benefit generating offences: section 223(2)(b) with section 223(3)(b) [section 75(2)(b) with section 75(3)(b) E & W]. As to the first route, one or more of the three other offences might of course be pre commencement. But if it is, the Commencement Order requires it to be left out of consideration: Article 8(2) [article 7(2) E & W], and nor can its associated benefit count towards the minimum benefit condition of 5,000 required by section 223(4) and (5) [section 75(4) and (5) E & W]: Article 8(3) as amended [article 7(4) E & W]. The exception of pre commencement offences for this purpose of counting three others in the present proceedings, and counting a minimum of 5,000 benefit has clearly been stipulated for in the Commencement Order to avoid any risk of retrospectivity, for under the 1995/96 regime only one other offence was sufficient and there was no minimum benefit requirement. It may or may not have been necessary, in order to avoid infringement of article 7 ECHR, to make these stipulations, given that the new conditions are tighter, not looser, for the establishment of a course of criminal activity, but this must have been the aim. Whatever the reason, the outcome is that no pre commencement offences, even if the conviction occurs in the current proceedings, can count towards the establishment of a course of criminal activity via the three other offences (four in all) rule. It is also to be noted that the fact that it was thought necessary, in order to achieve this, to include articles 8(2) and (3) in the Commencement Order is relevant to the construction of section 156: see below. As to the second route, the past convictions may clearly have been pre commencement, as was the case under the previous regime. These can and do count, as article 8(5) of the Commencement Order [article 7(5) E & W] makes clear. There is no reason why they should not. There is no offensive retrospectivity so long as the past convictions only go to the calculation of benefit in respect of confiscation based on post commencement offence(s). It is similar to taking account of previous criminal history for sentencing purposes. The rule that such pre commencement benefit might be taken into account when fixing the confiscation order was in force and available to the defendant at the time he committed the post commencement offence(s) which generate the order. POCA also introduced two new routes to the lifestyle provisions, as additions to the course of criminal activity routes. The first is that some offences specified in Schedule 5 [Schedule 2 E & W] (intended to be the kind likely to be committed by professional criminals) now automatically bring the lifestyle provisions into play. The second is that an offence committed over a period of six months or more also does so, since it is likely to involve repetition. Both these new routes are more severe on defendants than the previous regimes. Accordingly, for both of them, the Commencement Order provides by article 8(2) [article 7(2) E & W] that pre commencement offences are to be left out of consideration. There is thus no risk of objectionable retrospectivity or unfairness. When it comes to the consequences of the lifestyle provisions applying, it is necessary to go back in the statute to section 160 [section 10 E & W]. This sets out the assumptions which must be made. As with the provisions of the previous regimes, they do involve counting as benefit assets obtained before the Act was passed, if but only if the defendant cannot displace the assumptions on the balance of probabilities. But that is the position for anyone convicted of (say) a course of dishonest conduct perpetrated between June and December 2003, if he qualifies under the lifestyle provisions. The counting of past obtained benefits is not objectionably retrospective, because it applies a regime which was in force when the offences were committed. Nor, for the same reasons, is there any unfairness to a defendant if the Crown disclaims reliance on any pre commencement offence in the present indictment and proceeds in relation only to the post commencement offence(s). A defendant whose case is treated in this way by the Crown is in exactly the same position as if he had only been prosecuted for, or indeed had only committed, the post commencement offence(s). Exactly the same applies to the various other differences between the regimes which are set out at paras 75 81 above. In all cases there is no unfairness to a defendant such as these appellants if the POCA 2002 regime is applied, based only on post commencement offences, because the rules which are being applied are those which were in force, and publicly known, at the time the offence(s) generating the confiscation order were committed. Even if it were to turn out possible for circumstances to occur in which the result of this, correct, construction of POCA 2002 as applied in the Aslam series of cases was to create real risk of unfairness to the defendant, the court retains a simple method of preventing such risk eventuating. On any view, under both the present POCA 2002 regime and its predecessors, the court is given the power to embark upon the confiscation process of its own motion, even if not asked by the Crown to do so: section 156(3)(b) POCA 2002 or article 8(1)(b) of the 1996 Order [section 6(3)(b) POCA 2002 or section 71(1)(b) CJA 1988 for E & W]. On the assumption that the Aslam construction is correct, the offence(s) in respect of which the confiscation inquiry is undertaken are therefore those which either the Crown seeks to rely on or the court determines should be made part of the process. It would therefore be open to a defendant to apply to the court to determine that one or more pre commencement counts ought to be included in the process, on the grounds that if they are not he would be at demonstrated risk of unfairness. If the court acceded to that application, the earlier count would be part of the confiscation inquiry and, as the Commencement Order ordains, the relevant statutory regime would then be the earlier one. It is clear from the judgment of Lord Reed that the foregoing conclusions as to the absence of risk of unfairness is not in issue; his differing conclusions depend on his construction of the legislation. The construction of section 156 and the Commencement Order There is no basis for the appellants assertion that it is improper, or inconsistent with POCA 2002, for there to be an element of election by the Crown in relation to which offences are relied on for the confiscation process. Section 156 [section 6 E & W] does not make a confiscation order available in respect of every person who profits from criminal behaviour. It makes it available in relation to those who are convicted of one or more offences. Certainly confiscation depends on benefit from conduct rather than attaching to particular offences, but the confiscation exercise is, by section 156(2) [section 6(2) E & W] triggered by the offences there referred to. It is axiomatic that the decision to prosecute for an offence is for the Crown. An element of choice as to which offence(s) to charge is inherent in the vast majority of prosecution decisions, and in all where there is serial offending. It is positively unusual for every offence revealed to be charged. It follows that by deciding to charge only those of a series of offences which were committed after the commencement date, the Crown can achieve exactly the same result as contemplated by Aslam and similar cases, that is to say the application of the POCA 2002 regime. No one suggests otherwise. There is nothing remotely improper about it. A similar telling indication is provided by the second part of section 156(2), viz section 156(2)(b) [section 6(2)(b) E & W]. As explained at para 80 above, the magistrates power to make confiscation orders disappeared in POCA 2002. Accordingly it was replaced by a power to commit a defendant to the Crown Court for consideration of confiscation. The power is found in section 218 [section 70 E & W]. This provides: 218 Committal by magistrates court (1) This section applies if a defendant is convicted of an offence by (a) a magistrates court, and (b) the prosecutor asks the court to commit the defendant to the Crown Court with a view to a confiscation order being considered under section 156. In such a case the magistrates court (a) must commit the defendant to the Crown Court in respect of the offence, and (b) may commit him to the Crown Court in respect of any other offence falling within subsection (3). (2) (3) An offence falls within this subsection if (a) the defendant has been convicted of it by the magistrates court or any other court, and (b) the magistrates court has power to deal with him in respect of it. If a committal is made under this section in (4) respect of an offence or offences (a) section 156 applies accordingly, and (b) the committal operates as a committal of the defendant to be dealt with by the Crown Court in accordance with section 219. (5) [provision for bail]. This power is explicitly to commit with a view to confiscation. It is not the same as the ordinary (English) magistrates power to commit for sentence in an either way offence. This power extends to purely summary offences, where the magistrates could not commit for sentence, and it exists only where consideration of confiscation is the purpose. Once invoked, it does transfer also to the Crown Court the function of sentencing the defendant: see sections 218(4) and 219 [sections 70(4) & 71 E & W]. But the sentencing power to be exercised by the Crown Court is not the same as it would be in the case of committal for sentence in an either way offence, for it is limited by section 219 to whatever (more limited) power the magistrates would have had by way of sentence [section 71(3)(b) E & W, with the variant that the magistrates may in that jurisdiction indicate under section 70(5) as to an either way offence that they would in any event have committed for sentence, and then the Crown Court has its own sentencing powers under section 71(2)(b).] In both jurisdictions it is to be noted the magistrates have no power to commit of their own motion with a view to confiscation. They can do so only where the Crown asks them to do so: section 218(1)(b) [section 70(1)(b) E & W]. So the Act recognises explicitly the power of the Crown to make a decision either way about committal. It provides an election to the Crown. If some of the offences before the magistrates court are pre commencement and the Crown opts to request committal with a view to confiscation only those which are later, post commencement, offences, then only the POCA 2002 regime will apply. There is nothing at all improper in the Crown adopting this course. If it can do so in relation to convictions in the magistrates court there is no reason why it should not also do so, via the Aslam procedure, if the convictions occur in the Crown Court. It is true that the magistrates can, if asked by the Crown to commit offences A D with a view to confiscation, also do the same of its own motion in relation to offences E G. But there is no obligation to do so, and the result is that the Crowns decision as to which are to be committed is permitted to stand, and in practice in most cases will be determinative. Section 224(3) [section 76(3) E & W] deals with the non lifestyle offender. Under section 156(4)(c) [section 6(4)(c) E & W] his benefit falls to be assessed from offences constituting his particular criminal conduct. Those, by section 224(3) [section 76(3) E & W] are (a) the offence(s) concerned and (b) any other offence(s) of which he was convicted in the same proceedings. (A third element, under subsection (3)(c) is offences taken into consideration, but this provision does not assist on the present construction question.) An offence concerned is, by section 156(9) [section 6(9) E & W] to be read as an offence mentioned in section 156(2) [section 6(2) E & W]. But section 224(3(b) demonstrates that there may be offences of which the defendant is convicted in the current proceedings which are not the offence(s) mentioned in section 156(2). That is a strong pointer against the appellants argument that section 156(2)(a), and thus article 7 of the Commencement Order, means all offences of which the defendant is convicted in the current proceedings. Rather, it supports the Crowns contention, that the offence(s) concerned are throughout those on which the Crown seeks to rely for the purposes of the statute, that is to say, to justify confiscation proceedings. It may just be possible to give section 224(3)(b) [section 76(3)(b) E & W] content without this construction. That might be possible if it could be read as intended only to deal with left behind offences, that is to say ones of which the defendant was convicted in the magistrates court (and thus in the present proceedings) but in respect of which he was not committed for confiscation. But if this is all it is for, it might have been expected to refer to magistrates offences specifically. Next, the suggested eventuality is unlikely, for if the Crown asks for the defendant to be committed with a view to confiscation in respect of offences A D, and there are also benefit generating offences E G, it is highly unlikely that the Crown would not seek committal in respect of all of them, unless of course the complication exists that some of the offences are pre commencement, and it is necessary to exercise the Aslam procedure. Thirdly, it is very significant that the Scottish section of POCA 2002 includes wording identical to section 224(b)(3): see section 143(3)(b). That is because the provisions as to general and particular criminal conduct are identical for each of the three national jurisdictions. But in Scotland there is no question of committal by justices of the peace (or anyone else) for consideration of confiscation. In Scotland, confiscation follows on conviction either in the High Court or before the Sheriff: section 92, and especially section 92(13). Confiscation in Scotland is dealt with by the court of conviction, whether the High Court or the Sheriff Court: section 92(1). Since there is no question of committal there is therefore no equivalent of sections 218 (NI) and 70 (England and Wales). So 224(3)(b) cannot have been intended to refer to left behind or un committed offences because if it were, there would be no occasion for the same words in the Scottish section. I do not think that the operation of the group of provisions found in sections 163 165 [sections 13 15 E&W] is in any way impaired by the construction of the statute here explained. As a matter of general sentencing principle, a court which contemplates fining a defendant for any offence before it is bound to take into account his means to pay. A confiscation order made, triggered by whichever offences, will be relevant to those means, in relation to any offence for which a fine is being considered. Likewise, as a matter of general sentencing principle a court ought in any event to sentence a defendant for all the offences before it at the same time, unless there is a reason to do otherwise. For the reasons explained above at para 84, I do not think that the consequence of this construction of POCA is that it is mandatory for the Crown, in a case where the indictment contains both pre and post commencement offences, to exercise the Aslam election to nominate only the latter for the purposes of asking the court to proceed to confiscation. There may well be cases where this is inappropriate, for example where the great majority of offences, or the most serious, are pre commencement. But in such a situation, where the earlier offences are relied on, the court will, according to the Commencement Order, proceed under the earlier regime. To the extent that the appellants argued that the effect of section 224(3)(b) is, unless their preferred construction is correct, to defeat the aim of confining POCA 2002 to post commencement offences, this is not so because article 9 of the Commencement Order [applicable also to E & W] specifically provides that conduct which constitutes an offence committed before the commencement date is not particular criminal conduct under section 76(3) or 224(3). That provision in the Commencement Order is likewise a good indication of the assumption that there might be offence(s) of which the defendant is convicted in the current proceedings which are not the offence(s) within section 156(2) [section 6(2) E & W]. A similar indication is given by article 8(2) [article 7(2) E & W]. This provides that when considering the two new routes to treating the defendant as a lifestyle offender (commission of a specified offence or of an offence committed over a six month period) pre commencement offences are to be ignored (see para 90 above). But if, as the appellants contend, every case in which there is a pre commencement offence in the present proceedings must for that reason alone be dealt with under the old 1995/96 regime, this stipulation in the Commencement Order would simply not be necessary. The same applies to the stipulation in article 8(3) [article 7(3) E & W] which excludes pre commencement offences from the course of criminal conduct (three additional offences and thus four in all) rule. I agree of course that subordinate legislation cannot control the meaning of the primary statute, but where, as here, the primary and subordinate legislation are part of a single scheme to substitute one statutory regime for another, and are plainly intended to operate in tandem, it is not irrelevant to take account of indications of consistency between them. If the appellants contention were correct, and the earlier confiscation regime has to be applied wherever there is a single pre commencement offence on the indictment (or before the magistrates) even if it is not relied on for confiscation, it would follow that that rule would have to apply even if the pre commencement offence could never, even arguably, have generated a benefit, and thus could never, even arguably, have had the slightest relevance to the issue of confiscation. Of course, in order to appear on the same indictment, in the Crown Court in Northern Ireland or in England and Wales at least, the offences have to satisfy the rules of joinder to be found in rule 21 of the Crown Court Rules (Northern Ireland) 1979 [Criminal Procedure Rules 2014, rule 14.2(3) for E & W]. But it is not difficult to imagine circumstances in which the earlier and the later offences would be a series of offences of the same or similar character for the purpose of these rules. There simply has to be a sufficient nexus between the counts, which do not at all have to be for the same form of criminal charge; see for the proper approach see R v Kray (1969) 53 Cr App R 569 and Ludlow v Metropolitan Police Comr [1971 AC 29. Sometimes acquisitive offences are part of a series of offences of abuse for example by carers. Count 1 may well charge an assault on the elderly person in January 2003, whilst counts 2 5 charge thefts from her bank account starting in April of the same year. A fire raiser may have committed a series of arsons prior to March 2003, which are all offences from which there is no arguable benefit, but the last in the series might be setting fire to his own house, followed by an insurance claim. But in these and similar cases, if the appellants are right, the offences referred to in section 156 or E & W 6 will include the earlier non benefit ones, and the confiscation proceedings in relation to the only benefit generating offences, all committed after March 2003, would have to be conducted under the earlier regimes. Even more oddly, the same would be true of a serial fraudster whose first offence was an unsuccessful attempt, committed before March 2003, followed by a succession of similar frauds which succeeded, all committed after that date. There is no rhyme or reason for this and such an outcome might well be termed absurd. Conclusion For these reasons, I agree with Lord Kerr that the appellants arguments fail. The offences referred to in sections 156 and E & W 6 are those on which the Crown relies as relevant to the possibility of confiscation. The context of POCA 2002, considered separately, and also together with its Commencement Order, shows that the construction applied in Simpson, Aslam, Stapleton and Aniakor is correct. The important rule that penal statutes must be construed strictly so as to avoid any possible unfairness to those potentially penalised provides no reason to the contrary. The consequence is that these appeals must be dismissed. Postscript: The powers of the Court of Appeal to substitute Although the question does not, in consequence, arise, this case ought not to be concluded without some reference to it. The argument put to this court by the appellants was that if they were correct, and the order in the present cases was made under the wrong legislation, the Court of Appeal had no power to put the error right by substituting an order, if satisfied that it was in the correct sum, under the correct statutory regime. In the present case the Crown had conceded in the court below that substitution was not available, and having taken that stand did not ask this court to permit it to withdraw the concession. Since the point was in consequence not argued, it is better not to express a concluded view about it. Equally, however, it ought not to be assumed that the concession made, and the appellants supportive argument, were correct. The appellants right of appeal is given by section 8 of the Criminal Appeal Act (Northern Ireland) 1980: 8. A person convicted on indictment may appeal to the Court of Appeal against the sentence passed on his conviction, unless the sentence is one fixed by law. The equivalent provision in England and Wales is section 9 of the Criminal Appeal Act 1968, and in that jurisdiction section 10 makes clear that the same right of appeal exists when a defendant is dealt with by the Crown Court after committal for sentence to that court by the magistrates. Section 30(3)(a) [section 50(1)(d) Criminal Appeal Act 1968 for E & W] expressly includes a confiscation order in the expression sentence for this purpose, confirming the earlier decision in R v Johnson. On an appeal against sentence, the powers of the Court of Appeal include the power, if quashing the sentence, to impose such alternative sentence as is available in law. Section 10(3) of the Criminal Appeal Act Northern Ireland 1980 provides: (3) On an appeal to the Court against sentence under section 8 or 9 of this Act the Court shall, if it thinks that a different sentence should have been passed, quash the sentence passed by the Crown Court and pass such other sentence authorised by law (whether more or less severe) in substitution therefor as it thinks ought to have been passed; but in no case shall any sentence be increased by reason or in consideration of any evidence that was not given at the Crown Court. The equivalent provision in England and Wales is section 11(3) Criminal Appeal Act 1968 which is in the same terms except that they are subject to the proviso that the defendant shall not, taking the case as a whole, be dealt with more severely than he was below. In the particular case of confiscation orders, the Criminal Appeal Acts have been amended to enable the Court of Appeal, instead of substituting its own order, to remit the case to the Crown Court. Section 10(3A) [section 11(3A) in E & W] provides: (3A) Where the Court of Appeal exercises its power under subsection (3) to quash a confiscation order, the Court may, instead of passing a sentence in substitution for that order, direct the Crown Court to proceed afresh under the relevant enactment. This power is very useful when there may be a need for the Crown Court to take fresh evidence to deal with the import of the judgment of the Court of Appeal. Where a case is thus remitted to the Crown Court, the Criminal Appeal Acts have consequential provisions. They include section 10(3C) [section 11(3D) E & W]. This provides, inter alia, that: relevant enactment in relation to a confiscation order quashed under subsection (3), means the enactment under which the order was made. The effect of this last provision, whether intended or not, is that when remitting a confiscation case the Court of Appeal is bound to direct the Crown Court to apply the same statutory regime that it did before. Section 10(3C) is the foundation of the argument of the appellants in the present case, to the effect that if their confiscation orders had had to be quashed on the grounds that they were made under the wrong statute, it would not be possible for the Court of Appeal to substitute an order under the right legislation. This, however, by no means necessarily follows. On its face, section 10(3C) only applies when the Court of Appeal is remitting the case under the new power to do so. Its longstanding and pre existing power simply to quash and substitute under section 10(3) is arguably quite unaffected. When dealing with a confiscation order which is found to contain some error justifying its quashing, it is not bound to remit the case to the Crown Court; it simply has power to do so if it wishes. If it chooses not to do so, section 10(3C) is arguably irrelevant. At least where the Court of Appeal can apply the findings of fact and the decisions on the evidence made by the Crown Court, there may be no reason at all why it should not, in a proper case, quash an order if made under the wrong legislation and substitute an order under the right statutory scheme, and it is relevant to note that this is the practice of the Court of Appeal, Criminal Division, in England and Wales see for example R v Lazarus [2004] EWCA Crim 2297; [2005] 1 Cr App R (S) 96 and R v Bukhari [2008] EWCA Crim 2915; [2009] 2 Cr App R (S) 18. LORD REED: (dissenting) (with whom Lord Mance agrees) The first appellant, Ms McCool, pleaded guilty at Derry Crown Court to four counts on an indictment. The first count was of false accounting contrary to section 17(1)(a) of the Theft Act (Northern Ireland) 1969, committed on 26 September 1990. The remaining counts were of making false declarations with a view to obtaining benefits contrary to section 105A(1) of the Social Security Administration (Northern Ireland) Act 1992, committed on dates between 28 November 2003 and 10 August 2010. The second appellant, Mr Harkin, appeared on the same indictment, and pleaded guilty to seven counts of offences under section 105A(1) of the 1992 Act, committed on 16 December 1999 (count 5) and on six other dates between 20 October 2005 and 3 August 2009. At sentencing, the court was asked by the prosecutor to proceed with confiscation proceedings pursuant to section 156(3) of the Proceeds of Crime Act 2002 (POCA). Prosecutors statements were subsequently served on the appellants. In an effort to avoid the problem which has given rise to these appeals, the statement served on the first appellant stated, in relation to the calculation of the benefit obtained: I have decided not to include the first charge on the bill of indictment (this is the first charge in relation to the defendant) for confiscation purposes and as such I have amended the Income Support overpayment period to commence from 28 November 2003. The statement served on the second appellant contained a similar statement in respect of count 5. The overpayment period was therefore calculated as if it had commenced on 20 October 2005. The explanation for this apparent generosity on the part of the prosecutor lies in the transitional provisions governing POCAs entry into force in Northern Ireland. It was thought that, by leaving out of account the offences committed before POCA came into force, the remaining offences could then be brought within POCAs ambit. The principal issue in the appeal is whether that manoeuvre has succeeded in achieving its purpose, or whether the presence of the earlier offences on the indictment means that all the offences properly fall within the scope of earlier confiscation legislation. The relevant provisions of POCA POCA contains broadly similar sets of provisions dealing with confiscation in England and Wales (Part 2: sections 6 to 91), Scotland (Part 3: sections 92 to 155) and Northern Ireland (Part 4: sections 156 to 239). Section 156 is the introductory section of Part 4, dealing with Northern Ireland: 156 Making of order (1) The Crown Court must proceed under this section if the following two conditions are satisfied. (2) The first condition is that a defendant falls within either of the following paragraphs (a) he is convicted of an offence or offences in proceedings before the Crown Court; (b) he is committed to the Crown Court in respect of an offence or offences under section 218 below (committal with a view to a confiscation order being considered). (3) The second condition is that (a) this section, or (b) the prosecutor asks the court to proceed under the court believes it is appropriate for it to do so. (4) The court must proceed as follows it must decide whether the defendant has a (a) criminal lifestyle; (b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct; (c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct. (5) If the court decides under subsection (4)(b) or (c) that the defendant has benefited from the conduct referred to it must (a) decide the recoverable amount, and (b) make an order (a confiscation order) requiring him to pay that amount. (6) But the court must treat the duty in subsection (5) as a power if it believes that any victim of the conduct has at any time started or intends to start proceedings against the defendant in respect of loss, injury or damage sustained in connection with the conduct. (7) The court must decide any question arising under subsection (4) or (5) on a balance of probabilities. (8) The first condition is not satisfied if the defendant absconds (but section 177 may apply). (9) References in this Part to the offence (or offences) concerned are to the offence (or offences) mentioned in subsection (2). For reasons which will appear, section 156(9) is of particular importance to the issue in this appeal. It provides a definition of the phrase the offence (or offences) concerned, where it appears in Part 4: a definition which is repeated in section 236(1). The phrase is defined as referring to the offence or offences mentioned in section 156(2). Section 156(2) applies to a defendant who (a) is convicted of an offence or offences in proceedings before the Crown Court, or (b) is committed to the Crown Court in respect of an offence or offences under section 218. Where the defendant has been convicted of an offence or offences in proceedings before the Crown Court, the offence (or offences) concerned is or are therefore the offence or offences of which he has been convicted in those proceedings. Where the defendant has been committed to the Crown Court in respect of an offence or offences under section 218, the offence or offences concerned is or are the offence or offences in respect of which he has been committed. There is nothing in section 156(2) or (9) which indicates that the meaning of the words the offence (or offences) concerned is limited in any other way. Section 156 sets out the steps which the Crown Court must follow where a defendant falls within either section 156(2)(a), because he has been convicted of an offence or offences in proceedings before that court, or section 156(2)(b), because he has been committed to that court in respect of an offence or offences under section 218, and, in accordance with section 156(3), either the prosecutor asks the court to proceed under section 156, or the court itself considers it appropriate to do so. Under section 156(4), the court has first to decide whether the defendant has a criminal lifestyle, because the answer to that question affects the subsequent steps to be taken. If he has a criminal lifestyle, it must then decide whether he has benefited from what is termed his general criminal conduct. If he does not have a criminal lifestyle, it must decide whether he has benefited from what is termed his particular criminal conduct. If the defendant has benefited either from his general criminal conduct or from his particular criminal conduct, as the case may be, the court is then required by section 156(5) to decide what is termed the recoverable amount and to make a confiscation order requiring him to pay that amount. It is to be noted that the object of the statutory scheme is to deprive the defendant of the benefit obtained from conduct: not to deprive him of the benefit obtained from any particular offence or offences of which he has been convicted. The remaining provisions of Part 4 flesh out that general scheme. In particular, section 157(1) defines the recoverable amount, subject to exceptions, as an amount equal to the defendants benefit from the conduct concerned. Section 157(2) however limits the recoverable amount to the available amount (defined by section 159), where that is less than the defendants benefit from the conduct concerned. Section 158 is concerned with the defendants benefit from the conduct concerned. The court is required to take account of conduct occurring up to the time it makes its decision, and of property obtained up to that time. Section 160 applies where the court decides that the defendant has a criminal lifestyle. It requires the court to make a number of assumptions for the purpose of deciding whether he has benefited from his general criminal conduct, and deciding the amount of his benefit from the conduct. These include an assumption that any property transferred to him at any time after the relevant day was obtained by him as a result of his general criminal conduct: the transfer need not be related to any offence of which he has been convicted. The relevant day is the date six years before proceedings for the offence concerned were started against the defendant, or if there are two or more offences and proceedings for them were started on different days, the earliest of those days. In this context, the relevance of the offence (or offences) concerned, as defined in section 156(2) and (9), is therefore to fix how far back POCA can bite on property obtained by a defendant with a criminal lifestyle. It can go back six years from the date on which proceedings were started for the earliest of those offences. Section 163 explains the effect of a confiscation order on the courts other powers. Under section 163(1), if the court makes a confiscation order it must proceed as mentioned in subsections (2) and (4) in respect of the offence or offences concerned. In terms of section 163(2), the court must take account of the confiscation order before it imposes a fine on the defendant, or makes any other order involving payment or forfeiture by the defendant, apart from a compensation order. Subject to that provision, the court is required by section 163(4) to leave the confiscation order out of account in deciding the appropriate sentence for the defendant. If the court makes both a confiscation order and a compensation order against the same person in the same proceedings, and it believes that he will not have sufficient means to satisfy both orders in full, section 163(5) provides for the potential shortfall in payment of the compensation order to be paid out of sums recovered under the confiscation order. The intended recipient of the compensation is thus protected against the risk of a shortfall, and the defendant is also protected against the risk of penal consequences of a failure to satisfy the confiscation order. In this context, the relevance of the offence or offences concerned is to define the scope of those protections. It is to be noted that these provisions make sense on the footing that the offences concerned encompass all the offences of which the defendant has been convicted in the proceedings in the Crown Court, or all the offences in respect of which he has been committed to that court. It makes sense to regulate the relationship between the confiscation order and any other financial orders made by the Crown Court in the same proceedings, since the confiscation order can affect the defendants ability to meet any other financial order, and vice versa. That is so, whether all of the offences concerned were offences involving financial gain or not. Section 164 allows the court either to proceed with confiscation proceedings before it sentences the defendant for the offence (or any of the offences) concerned, or to postpone confiscation proceedings for up to two years starting with the date of conviction, or potentially longer where there is an appeal or if there are exceptional circumstances. The date of conviction is defined as the date on which the defendant was convicted of the offence concerned, or if there are two or more offences and the convictions were on different dates, the date of the latest. In practice, confiscation proceedings are usually postponed, often for a substantial period. This provision again makes sense on the footing that the offences concerned encompass all the offences of which the defendant has been convicted in the proceedings in the Crown Court, or all the offences in respect of which he has been committed to that court. Like section 163, it reflects the potential relationship between the courts function of sentencing the defendant for the offences of which he has been convicted, or in respect of which he has been committed, and the confiscation order which it may also make. Section 165 explains the effect of postponement, and contains analogous provisions to section 163 in respect of the relationship between the confiscation proceedings and any sentence imposed during the postponement period for the offence (or any of the offences) concerned. This group of provisions (which is replicated elsewhere in Part 4 of POCA in a variety of contexts, and is also replicated in the corresponding provisions for the other parts of the United Kingdom) seems to me to be particularly difficult to reconcile with an interpretation of the offence (or offences) concerned which would restrict that phrase to only some of the offences before the court. The language of these provisions is prescriptive. I have difficulty seeing how they might be interpreted as excluding offences which the prosecution had elected to leave out of account for the purpose of assessing the benefit obtained by the defendant. If, however, all the offences before the court fall within the scope of the phrase in this context, then how can it be given a more restricted meaning in the context of section 156(2) and (9), given the definitional status of those provisions? Under section 166, in a case where the court is proceeding under section 156 at the request of the prosecutor, he must give it a statement of information within the period the court orders. Similarly, in a case where the court is proceeding under section 156 of its own motion, it can order the prosecutor to give it a statement of information within the period ordered. The statement must include the matters which are relevant to the making of a confiscation order, including whether the defendant has a criminal lifestyle, whether he has benefited from his general or particular criminal conduct as the case may be, and his benefit from the conduct. The defendant can then respond to the prosecutors statement in accordance with section 167. Section 218 is concerned with committal by the magistrates court. It applies if a defendant is convicted of an offence by a magistrates court, and the prosecutor asks the court to commit the defendant to the Crown Court with a view to a confiscation order being considered under section 156. In such a case, the magistrates court must commit the defendant to the Crown Court in respect of the offence, and may commit him to the Crown Court in respect of any other offence of which he has been convicted, and in respect of which the magistrates court has power to deal with him. The latter provision enables the Crown Court to deal with the defendant in relation to the same offences in respect of which he could be dealt with in the magistrates court, and thus enables the relationship between sentencing and confiscation proceedings to be regulated in accordance with sections 163 to 165. Section 219 confirms the power of the Crown Court to sentence the defendant for all the offences in respect of which he has been committed. Finally, in relation to the provisions of POCA, it is necessary to note a number of provisions concerned with interpretation. Section 223 defines the term criminal lifestyle. Under section 223(2), a defendant has a criminal lifestyle if the offence (or any of the offences) concerned satisfies any of the following tests: it is specified in Schedule 5; it constitutes conduct forming part of a course of (a) (b) criminal activity; it is an offence committed over a period of at least six (c) months and the defendant has benefited from the conduct which constitutes the offence. These tests are alternatives. In relation to test (a), it is sufficient that any of the offences concerned is specified in Schedule 5. That schedule specifies a number of offences, including the unlawful supply of controlled drugs, and possession of a controlled drug with intent to supply. It is irrelevant to test (a) whether the defendant has made any financial gain from an offence falling within Schedule 5, or whether he has made such a gain from any of the other offences of which he has been convicted in the proceedings in the Crown Court, or in respect of which he has been committed to that court. In relation to test (b), section 223(3) provides that conduct forms part of a course of criminal activity if the defendant has benefited from the conduct and: (a) in the proceedings in which he was convicted he was convicted of three or more other offences, each of three or more of them constituting conduct from which he has benefited, or (b) in the period of six years ending with the day when those proceedings were started (or, if there is more than one such day, the earliest day) he was convicted on at least two separate occasions of an offence constituting conduct from which he has benefited. In a case where the defendant was convicted of an offence or offences in proceedings in the Crown Court, test (b) is therefore satisfied by virtue of section 223(3)(a) if the defendant benefited from conduct constituting any of those offences, and was also the convicted in those proceedings of three or more other offences constituting conduct from which he benefited. The effect of section 223(3)(b) is that he will also have a criminal lifestyle if he benefited from conduct constituting any of the offences of which he was convicted in the proceedings in the Crown Court, and in addition he was convicted on at least two separate occasions, during the six years before those proceedings were started, of another offence constituting conduct from which he benefited. Section 223(3) operates in a similar way where the defendant has been committed to the Crown Court by the magistrates court in respect of an offence or offences, and benefited from conduct constituting any of those offences. It is therefore unnecessary for the defendant to have made a financial gain from any of the other offences of which he has been convicted in the proceedings in the Crown Court, or in respect of which he has been committed to that court. The same is also true in relation to test (c). It is sufficient that any of the offences concerned was committed over a period of at least six months and the defendant benefited from the conduct which constituted that offence. In relation to both test (b) and test (c), section 223(4) provides that an offence does not satisfy the test unless the defendant obtains relevant benefit of not less than 5,000. The expression relevant benefit is defined for the purposes of test (b) by section 223(5). It means: (a) benefit from conduct which constitutes the offence; (b) benefit from any other conduct which forms part of the course of criminal activity and which constitutes an offence of which the defendant has been convicted; (c) benefit from conduct which constitutes an offence which has been or will be taken into consideration by the court in sentencing the defendant for an offence mentioned in paragraph (a) or (b). A broadly similar definition (subject to the omission of paragraph (b)) applies for the purposes of test (c). Accordingly, even if the defendant has benefited from any of the offences concerned, and test (b) or (c) is potentially satisfied, it remains necessary to investigate the amount of the benefit and to ascertain whether it is at least 5,000. Section 224 defines criminal conduct, general criminal conduct, particular criminal conduct and benefit. Criminal conduct is conduct which constitutes an offence in Northern Ireland, or would constitute such an offence if it occurred there. General criminal conduct is all the defendants criminal conduct. It is immaterial whether it occurred before or after the passing of POCA, and whether property constituting a benefit from conduct was obtained before or after the passing of POCA (section 224(2)). Particular criminal conduct is all the defendants criminal conduct which falls within the following paragraphs of section 224(3): (a) conduct which constitutes the offence or offences concerned; (b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned; (c) conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned. So far as paragraph (a) is concerned, it follows from section 156(2) and (9) that the offences concerned are the offences of which the defendant was convicted in the proceedings in the Crown Court, or in respect of which he was committed to the Crown Court for confiscation proceedings. Paragraph (b) envisages a situation where the defendant has been convicted in the same proceedings of offences other than the offence or offences concerned. It must therefore be concerned with offences of which he was convicted in the magistrates court but in respect of which he was not committed to the Crown Court. Under section 224(4), a person benefits from conduct if he obtains property as a result of or in connection with the conduct. Returning to section 156, it follows from the later provisions that, at the time when the Crown Court is required to proceed under that section, it will not know the answers to all, or possibly any, of the questions which that section requires it to decide. In particular, it may not be in a position to know whether the defendants conviction in the Crown Court of the offences concerned, or his committal by the magistrates court in respect of those offences, will or may result in the making of a confiscation order, or how the order may relate to any of those offences. Section 156 simply provides for a process to be put in train, which may or may not lead to the making of such an order. The transitional provisions The relevant transitional provision is article 4 of the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003 (SI 2003/333) (the Order). So far as relevant, article 4 provides: 4(1) Section 156 of the Act (making of confiscation order) shall not have effect where the offence, or any of the offences, mentioned in section 156(2) was committed before 24 March 2003. The effect of article 4 is clear. Where the offence, or any of the offences, mentioned in section 156(2) was committed before 24 March 2003 (which was the commencement date of the relevant provisions), section 156 does not have effect, and POCA therefore does not apply. Instead, the position is regulated by article 11 of the Order, which provides for earlier legislation to continue to have effect. The offence or offences mentioned in section 156(2), as earlier explained, are the offence or offences of which the defendant has been convicted in the proceedings before the Crown Court, if the case falls within section 156(2)(a), or the offence or offences in respect of which he has been committed to the Crown Court, if the case is one in which the defendant has been committed under section 218. It follows that section 156 does not have effect, and POCA is therefore inapplicable, where that offence, of any of those offences, was committed before 24 March 2003. Instead, the previous law continues to apply. It follows that section 156 has no application to the case of either of the appellants. Article 4 cannot be obviated by the prosecutors ignoring those of the offences concerned which were committed before POCA came into force. The fact remains that the appellants were convicted of those offences in the proceedings before the Crown Court, and they are therefore among the offences concerned. It follows that the confiscation proceedings against the appellants should have proceeded under the legislation which was in force when the earliest of the offences concerned was committed. The confiscation orders made should therefore be quashed. Since the Crown conceded in the court below that the substitution of orders under the correct legislation was not possible, and it has not sought to withdraw that concession, it follows that the appeals should be allowed. Like Lord Hughes, I would wish to reserve my opinion as to whether the concession was rightly made. The reasoning of the majority The only matter which remains to be discussed is the reasoning by which a majority of this court have reached the opposite conclusion. Their judgments must speak for themselves, but so far as I understand them, they contain a number of different strands of reasoning. Their approach appears to be based first on a purposive interpretation of the words of the statute. As I shall explain, I respectfully disagree that the statute has the purpose which they attribute to it, and I do not in any event accept that such a strained interpretation of the statutory language can be justified by a purposive approach. Secondly, they support their interpretation of the statute by reference to the transitional provisions in the Order. That appears to me, with respect, to be an impermissible use of subordinate legislation, made under powers conferred by Parliament in POCA, to interpret the meaning of the provisions enacted by Parliament in POCA itself. Thirdly, the reasoning of the majority is also based in part on previous authorities, which appear to me to be distinguishable because they were concerned with the interpretation of a transitional provision contained in the primary legislation itself. The reasoning of the earlier authorities appears to me to be unsatisfactory in any event, and it has been subjected to cogent criticism (Thomas, (2005) Crim LR 145 and (2008) Crim LR 813). Purposive interpretation of the statute As I understand their reasoning, the majority of the court consider that it would be absurd if offences committed after the commencement of POCA were subject to an earlier confiscation regime. In their view, Parliament must have intended that all offences committed after the commencement of POCA which could generate confiscation orders should be dealt with under section 156. Having decided that that must have been Parliaments intention, the majority then construe the provisions of POCA so as to fulfil that intention. I see no absurdity. Given their natural meaning, and read with article 4 of the Order, section 156(2) and (9) of POCA achieve a rational purpose, which reflects two considerations identified by Lord Hughes. In the first place, POCA cannot apply to pre commencement offences, if retrospectivity, and a consequent breach of article 7 of the ECHR, is to be avoided. Otherwise, in Lord Hughes words, there would be impermissible retrospective operation of the criminal law (para 83). In the second place, practical difficulties are liable to arise if a court is required to apply different confiscation regimes in the same proceedings, where some counts relate to offences committed before the commencement date of POCA and some to offences committed after that date. In Lord Hughes words, there would also be likely to be a real risk of unfairness if a defendant faced the prospect of two different confiscation regimes being applied to him (para 84). It follows that pre commencement offences have to be dealt with under the previous confiscation regime in force at the time when they were committed, and that it is sensible that the same regime should also be applied to post commencement offences dealt with in the same proceedings. The natural way of achieving those objectives is to provide that in any case in which the defendant has been convicted in Crown Court proceedings of an offence committed before the commencement date, all the offences of which he has been convicted in those proceedings are to be governed by the confiscation regime in force at the time when the earliest offence was committed. Similarly, mutatis mutandis, in any case in which the defendant has been committed under section 218 in respect of an offence committed before the commencement date, and also of later offences. That is the effect of section 156(2) and (9) of POCA, read with article 4 of the Order. The interpretations of section 156 to which the majority are driven by their desire to avoid the supposed absurdity appear to me, with respect, not only to be strained beyond breaking point, but also to create anomalies of their own. As I understand Lord Kerrs judgment, he considers that, as a matter of construction of the statute, section 156(2) cannot apply to any offence committed before the date fixed for the entry into force of the provisions of Part 4 (which, in the event, was 24 March 2003). With respect, I cannot understand how that construction can be derived from the statutory wording. In my view, it requires the insertion of words which are not there, as the Court of Appeal acknowledged when it arrived at the same construction of the predecessor of section 156, as explained below. Furthermore, the logic of Lord Kerrs interpretation appears to be that one and the same court could undertake two or more different confiscation exercises in the same criminal proceedings: one, in respect of offences committed on or after 24 March 2003, under POCA, and others, in respect of earlier offences, under whichever confiscation regime was in force at the relevant time. That situation, it appears to me, might justifiably be described as anomalous. As I understand Lord Hughes judgment, he takes a different approach. He appears to interpret the phrase the offence (or offences) concerned defined by section 156(9) to mean the offence (or offences) mentioned in subsection (2) as if the definition referred to any offence (or offences) mentioned in subsection (2) in relation to which the condition mentioned in subsection (3)(a) is also satisfied (that condition being that the prosecutor asks the court to proceed under this section). Bearing in mind the clarity of section 156(9), and the level of detail and technicality which characterises the drafting of POCA, I find this hard to accept. Furthermore, the logic of Lord Hughes interpretation appears to be that, if pre commencement and post commencement offences are before one and the same court, the Crown must in effect forego any confiscation proceedings in respect of the pre commencement offences, and proceed only in respect of post commencement offences for whatever benefit they may yield. That is indeed what happened in the present case. It seems to me to be much more likely that the drafter of the transitional provisions intended to bring all the offences in any set of proceedings into one statutory confiscation scheme or the other. Then, at least, no offences would fall outside all confiscation regimes. The use of subordinate legislation in the construction of primary legislation The majority of the court also rely on their construction of a number of provisions in the Order, and more particularly the fact that they were substituted by different provisions shortly after the Order was made, as supporting their interpretation of section 156(2) and (9). With respect, this appears to me to be an example of using subordinate legislation to interpret the primary legislation under which it was made: an impermissible, and indeed illogical, method of statutory interpretation. The tail is wagging the dog. Even if I agreed with the majoritys construction of the Order, and the intention attributed to it, it follows that I would nevertheless reject this aspect of their reasoning. The Order cannot affect the meaning of section 156(2) and (9). But I am not in any event persuaded by their construction of the Order. The majority rely in particular on articles 8 and 9. In its original form, article 8 provided: 8.(1) This article applies where the court is determining under section 156(4)(a) of the Act whether the defendant has a criminal lifestyle. (2) The tests in section 223(2)(a) and (c) of the Act shall not be satisfied where the offence (or any of the offences) concerned was committed before 24 March 2003. (3) In applying the rule in section 223(5) of the Act on the calculation of relevant benefit for the purposes of section 223(2)(b) and (4) of the Act, the court must not take into account benefit from conduct constituting an offence which was committed before 24 March 2003. (4) Conduct shall not form part of a course of criminal activity under section 223(3)(a) of the Act where the offence (or any of the offences) concerned; or any one of the three or more offences mentioned (a) (b) in section 223(3)(a), was committed before 24 March 2003. (5) Conduct shall form part of a course of criminal activity under section 223(3)(b) of the Act, notwithstanding that any of the offences of which the defendant was convicted on at least two separate occasions in the period mentioned in section 223(3)(b) was committed before 24 March 2003. A different version of article 8 was substituted by the Proceeds of Crime Act 2002 (Commencement No 5) (Amendment of Transitional Provisions) Order 2003 (SI 2003/531) (the Amendment Order). The substituted provisions provide: 8.(1) This article applies where the court is determining under section 156(4)(a) of the Act whether the defendant has a criminal lifestyle. (2) Conduct shall not form part of a course of criminal activity under section 223(3)(a) of the Act where any of the three or more offences mentioned in section 223(3)(a) was committed before 24 March 2003. (3) Where the court is applying the rule in section 223(5) of the Act on the calculation of relevant benefit for the purposes of determining whether or not the test in section 223(2)(b) of the Act is satisfied by virtue of conduct forming part of a course of criminal activity under section 223(3)(a) of the Act, the court must not take into account benefit from conduct constituting an offence mentioned in section 223(5)(c) of the Act which was committed before 24 March 2003. (4) Conduct shall form part of a course of criminal activity under section 223(3)(b) of the Act, notwithstanding that any of the offences of which the defendant was convicted on at least two separate occasions in the period mentioned in section 223(3)(b) were committed before 24 March 2003. (5) Where the court is applying the rule in section 223(5) of the Act on the calculation of relevant benefit for the purposes of determining whether or not the test in section 223(2)(b) of the Act is satisfied by virtue of conduct forming part of a course of criminal activity under section 223(3)(b) of the Act, the court may take into account benefit from conduct constituting an offence committed before 24 March 2003. (6) Where the court is applying the rule in section 223(6) of the Act on the calculation of relevant benefit for the purposes of determining whether or not the test in section 223(2)(c) of the Act is satisfied, the court must not take into account benefit from conduct constituting an offence mentioned in section 223(6)(b) of the Act which was committed before 24 March 2003. The majority argue that the changes made to article 8 are consistent with their interpretation of section 156. As I have explained, I do not accept the logic of the argument. But I am not in any event persuaded that the inferences which the majority draw from the changes are justified. As it appears to me, the problem with article 8(2) of the Order in its original form was that POCA does not apply, by virtue of article 4(1), where the offence (or any of the offences) concerned was committed before 24 March 2003. There is therefore no question of section 223 of POCA applying in those circumstances, and article 8(2) was therefore otiose. Article 8(4)(a) of the Order was also otiose, for the same reason. Article 8(4)(b), on the other hand, could have applied in cases where the defendant was committed by the magistrates court. That view is consistent with the changes made. The provisions contained in articles 8(2) and 8(4)(a) of the Order did not appear in the Amendment Order. On the other hand, the terms of article 8(4)(b) of the Order reappeared as article 8(2) of the Amendment Order. I find it much more difficult to be certain of the thinking behind the replacement of articles 8(3) and (5) of the Order by articles 8(3) to (6) of the Amendment Order. Section 223(2)(b), (3), (4) and (5) of POCA form a complex group of provisions. The same is true of article 8(3) and (5) of the Order, and a fortiori of article 8(3) to (6) of the Amendment Order. An in depth analysis of these provisions would take this court into a minefield of difficulties. It would also take it beyond the scope of the parties submissions. In the circumstances, I do not express any view. So far as article 9 of the Order is concerned, it provides: Conduct which constitutes an offence which was committed before 24 March 2003 is not particular criminal conduct under section 76(3) or 224(3) of the Act. The majority suggest that that provision also supports their interpretation of section 156(2) and (9). I am not persuaded. The explanation of article 9, as it appears to me, is that particular criminal conduct is defined by sections 76(3) and 224(3) of POCA as including not only (a) conduct which constitutes the offence or offences concerned, but also (b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned, and (c) conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned. Since (b), interpreted as explained in para 138 above, and more plainly (c), could otherwise apply in respect of offences committed prior to the commencement of POCA, article 9 is necessary in order to exclude that possibility, consistently with the objectives explained in paras 146 148 above. Lord Hughes also relies on section 143(3)(b) of POCA, a provision applicable in Scotland which is in similar terms to section 224(3)(b). I have to acknowledge that, although section 224(3)(b) can be interpreted consistently with the approach which I have adopted to section 156(2) and (9), it is at least not obvious that section 143(3)(b) can also be interpreted consistently with that approach. This point has not, however, been the subject of argument, and I am reluctant to express a concluded view. I would not exclude the possibility that, in such a complex and technical piece of legislation, it is possible that the provisions applicable in England and Wales may have been replicated for Scotland, as for Northern Ireland, without noticing a material distinction. I am not, in the absence of fuller argument, inclined to accept that an apparent infelicity in the drafting of one of the Scottish provisions is a sufficient reason for departing from the natural meaning of section 156(2) and (9) and their equivalents for the other parts of the United Kingdom. Previous authority The majority place some reliance on three decisions of the Court of Appeal of England and Wales concerned with section 16(5) of the Proceeds of Crime Act 1995 (the 1995 Act), a transitional provision broadly analogous to article 4 of the Order. The 1995 Act operated by amending the Criminal Justice Act 1988 (the 1988 Act). Section 1 of the 1995 Act was analogous to section 156 of POCA. Section 16(5) provided: Section 1 above shall not apply in the case of any proceedings against any person where that person is convicted in those proceedings of an offence which was committed before the commencement of that section. The intended meaning and effect of section 16(5) could hardly have been made clearer. Where a person was convicted in any proceedings of an offence which was committed before the commencement of section 1, that section did not apply, with the result that it was the unamended version of the 1988 Act which generally applied. Where, on the other hand, all the offences of which the person was convicted were committed after the commencement of section 1, it was the 1995 Act (strictly speaking, the 1988 Act as amended by the 1995 Act) which applied. That straightforward interpretation of section 16(5) was however rejected by the Court of Appeal in a series of cases, on the ground that it led to absurd results: as to which, see paras 146 148 above. The first of these cases was R v Simpson [2003] EWCA Crim 1499; [2004] QB 118; [2003] 3 All ER 531; [2004] 1 Cr App R (S) 24, where a confiscation order made under the 1995 Act was challenged on the basis that one of the offences of which the appellant had been convicted in the relevant proceedings was committed before the commencement of section 1. The Court of Appeal considered it obviously an absurd result that an order could be made under the 1995 Act if a defendant were acquitted of an offence committed prior to the commencement date, but not if he were convicted of that offence. I see no absurdity: transitional provisions limiting the operation of penal provisions to offences committed after their entry into force are necessary in order to protect those who are convicted of earlier offences, not those who are acquitted of them. However, in order to avoid the supposed absurdity, the Court of Appeal read words into section 16(5): In our judgment section 16(5) has to be applied so that after the word offence there appears, the words in respect of which a confiscation order is or could be sought. (para 19) On the facts of the case, a confiscation order was not sought in respect of the offence in question; but there was no obvious reason why such an order could not be sought. The nature of the offence a VAT fraud did not in itself present any problem. More importantly, the Court of Appeals discussion of the issue was in any event obiter dictum, since it decided that the offence had actually been committed after the commencement of the 1995 Act: So in fact, the offence was committed after 1 November 1995. In any event the argument for the appellant, that the 1995 Act cannot be relied upon, fails on the facts. (para 20) The issue was considered again in R v Mohammed Aslam [2004] EWCA Crim 2801; [2005] 1 Cr App R (S) 116. In that case, the appellant had been convicted of numerous offences of dishonesty. At the confiscation hearing, it was pointed out that one of the offences had been committed before the 1995 Act came into force. The prosecution then disclaimed reliance on any benefit obtained as a result of that offence. The question was whether that cured the defect. Relying on Simpson, the Court of Appeal held that it did. The court noted that, in Simpson, a confiscation order could have been sought in respect of the offence in question. It concluded that the fact that the appellant had been convicted in the instant proceedings of a pre commencement count did not prevent the court from making a confiscation order under the 1995 Act where the pre commencement count was one which could not be the basis of confiscation proceedings, or if the prosecution had expressly abandoned any reliance on the pre commencement count for the purposes of a confiscation order. The Court of Appeal followed Aslam in R v Stapleton [2008] EWCA Crim 1308; (2009) 1 Cr App R (S) 38, stating that it could not properly say that the earlier decision was plainly wrong (para 7). The Court of Appeals approach in these cases raises a number of difficulties. First, and most importantly, it is inconsistent with the plain meaning of section 16(5) of the 1995 Act: a fact which the Court of Appeal acknowledged by effecting a judicial amendment of the provision. As amended by the Court of Appeal, section 16(5) permits the Crown to bring proceedings under the 1995 Act in circumstances where Parliament has directed that the proceedings are to be brought under the preceding legislation. That is not permissible under any canon of statutory construction. Secondly, the Court of Appeal was mistaken, as it respectfully appears to me, in thinking that the result of applying what Parliament had enacted was absurd, as explained earlier. Thirdly, the Court of Appeal was also mistaken, in my view, in thinking that the amount of a confiscation order under the 1995 Act could be restricted by the prosecution. Under the 1988 Act as amended by the 1995 Act, the court had to determine whether the defendant has benefited from any relevant criminal conduct (section 71(1A); emphasis supplied), and relevant criminal conduct was defined as meaning the offence of which the defendant had been convicted taken together with any other offences of a relevant description which are either (a) offences of which he is convicted in the same proceedings, or (b) offences which the court will be taking into consideration in determining his sentence for the offence in question (section 71(1D)). The prosecution could not, therefore, remove an offence of which the defendant had been convicted in the proceedings from the calculation by choosing not to rely on it: the court was under a statutory duty to assess the benefit arising from that offence in any event. There are at least three other difficulties with the approach of the Court of Appeal. First, it did not address the issues which arose, on its approach, from the role which the court itself has in bringing confiscation proceedings. By virtue of section 71(1)(b) of the 1988 Act, as substituted by section 1 of the 1995 Act, the court can initiate confiscation proceedings in respect of all the offences of which the defendant has been convicted in the proceedings if it considers that it is appropriate for it to do so. POCA contains an equivalent provision in section 156(3)(b). One might ask, in the first place, how that power bears on the assumption, implicit in the Court of Appeals reasoning, that the court should defer to the prosecutors decision not to proceed in respect of pre commencement offences. The whole point of the substitution of section 71(1)(b) was to enable the court to act independently of the prosecution. Further, and in any event, if in any case the court decides to exercise its power to initiate confiscation proceedings, can it too ignore certain offences so as to secure the application of the most draconian confiscation regime available? Under what power would it do so? If it cannot, does it not follow that the supposedly absurd outcome must indeed have been intended? These issues appear to me to be equally relevant to the approach adopted by the majority in the present case. Secondly, the Court of Appeal did not address the issue discussed in para 129 above, which also arose in relation to the corresponding provisions of the 1988 Act both as enacted and as amended. This issue is equally relevant to the approach adopted by the majority in the present case. Thirdly, in so far as the Court of Appeals approach, and that of the majority in the present case, is premised on the assumption that it is always possible to identify particular offences as being offences in respect of which a confiscation order can or cannot be sought (offences which would qualify for applications for a confiscation order, offences which can be dealt with under the Act, offences in respect of which confiscation orders could be made or offences which could generate confiscation orders, as Lord Kerr describes them in paras 5, 13, 16 and 17), before any inquiry has been made into whether the defendant has in fact obtained property as a result of, or in connection with, the offence, that does not appear to me to be a valid assumption. As explained earlier, a confiscation order is not sought in respect of offences, but in respect of the benefit obtained from criminal conduct, which may or may not have constituted an offence or offences of which the defendant has been convicted in the proceedings in question. Whether a given offence of which the defendant has been convicted may turn out to be one which is relevant to the confiscation order may not be readily apparent at the time when the confiscation proceedings are initiated. For example, a defendant does not usually obtain property as a result of or in connection with an assault; but sometimes he does. A defendant usually obtains property as a result of, or in connection with, the possession of a controlled drug with intent to supply; but not always. In short, the construction of section 156 of POCA, or of its equivalent in the earlier legislation, cannot be predicated on an assumption that whether a conviction of a particular offence will lead to the making of a confiscation order, or will affect the amount specified in the order, can be determined at the time when the confiscation proceedings are initiated. The proof of the pudding is in the eating. Conclusion For all these reasons, I would have answered the certified question in the negative, and allowed the appeal.

UK-Abs

The two appellants, Ms McCool and Mr Harkin, were at all material times married to one another. They were both convicted of a series of offences of making dishonest claims for state benefits by pretending that they were single people when they were not and, in the case of Mr Harkin, by claiming housing benefit for a house when he was living with Ms McCool at a different house. The Proceeds of Crime Act 2002 (the 2002 Act) came into force on 24 March 2003 (the commencement date). Section 156 of the 2002 Act provides for the making of orders to confiscate benefits obtained by criminal activity (confiscation orders). All of the offences in the present appeal, except one in each case, were committed after the coming into force of the 2002 Act. There are stipulations in the the commencement, transitional and savings provisions of the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendments) Order 2003 (the Commencement Order) which set out when the 2002 Act applies. The issue is whether, given these stipulations, a confiscation order under section 156 of the 2002 Act could be made by a Crown Court if the Crown disclaims reliance on any pre commencement offence for the purpose of the order. The Supreme Court by a majority of three to two (Lord Reed and Lord Mance dissenting) dismisses the appeal. Lord Kerr gives the main judgment. Lord Hughes gives a concurring judgment with which Lady Black agrees. Lord Reed gives the dissenting judgment, with which Lord Mance agrees. The appellants argue that the wording of the Commencement Order is such that where a defendant is committed for a number of offences, where any of the offences has been committed before the commencement date, then none of the offences can be dealt with under the 2002 Act. Lord Kerr observes that his would produce an anomalous result the appellants are effectively submitting that the jurisdiction of the court to make confiscation orders under the 2002 Act could be controlled by tactical decisions by the prosecution to not proceed with charging offences committed before the commencement date [11 12]. The overarching consideration is that it was Parliaments intention that (i) offences committed before the commencement date should not be included in the section 156 consideration; and (ii) offences committed after that date which could generate confiscation orders under the Act should be dealt with under section 156. It cannot have been intended that a number of post 2003 offences should be removed from the scope of the 2002 Act simply because the defendant was convicted of an associated offence before the commencement date [17]. Further, the court should seek to avoid an interpretation of the statute which would produce an absurd result. Here, the consequence of the 2002 Act being disapplied to a wide range of offences committed after the commencement date and requiring them to be dealt with under earlier legislation is undesirable. Contemporary cases would have to be dealt with according to standards and rules which have been replaced [24 26]. It is not necessary to read words into the statute in order to permit applications for confiscation orders for offences committed after the commencement date [38]. Lord Hughes agrees with Lord Kerr that it is not necessary to read words into the statute to achieve this result [68]. The issue depends on whether the offences referred to in section 156(2) are all offences or only those on which reliance is placed for the purposes of asking the court to make a confiscation order. He considers the differences between the earlier legislation and the 2002 Act and concludes that the key question is whether the construction proposed by the Crown would result in any unfairness to the defendants. If it would or might, then the principle that penal statutes must be construed strictly in favour of those penalised would carry considerable weight. There is nothing unfair in saying that the appellants should bear the confiscation consequences of post March 2003 offences, as required by the 2002 Act, unless those consequences differ in some way from what they would have been if they had not committed the earlier offences, which they do not [70 83]. There is no unfairness caused by any of the differences between the earlier regime and the regime under the 2002 Act where the 2002 Act regime is applied only to post commencement offences, because the rules which are being applied are those which were in force, and publicly known, at the time the offences generating the confiscation order were committed [93 94]. It is not improper for there to be an element of election by the Crown in relation to which offences are relied on for the confiscation process [97]. Although the question of the Court of Appeals power to put an error right by substituting an order did not arise given the conclusion, Lord Hughes notes that it ought not to be assumed that there is no such power [108 114]. Lord Kerr agrees with this analysis [55]. Lord Reed dissents from the conclusion of the majority and would have allowed the appeal. His view is that the language of the provisions cannot be interpreted as excluding offences which the prosecution had elected to leave out of account for the purpose of assessing the benefit obtained by the defendant [128].

The appellant, a litigant in person, purported to serve the claim form in these proceedings on the defendants solicitors by email, without obtaining any prior indication that they were prepared to accept service by that means. It is common ground that this was not good service. As a result, the claim form expired unserved on the following day. The question at issue on this appeal is whether the Court should exercise its power retrospectively to validate service. To date, the District Judge, the County Court judge and the Court of Appeal have declined to do so. If their order stands, the result will be that Mr Barton can proceed with his claim only by a fresh action. The present appeal has been conducted on the assumption that such an action would be statute barred. The facts Mr Barton has been locked in litigation for the past 12 years with two firms of solicitors who have successively acted for him. In October 2005, he brought an action in the Coventry County Court against a firm called Bowen Johnsons, which had acted for him in 1999 in proceedings for ancillary relief following his divorce. He alleged that they had failed properly to protect his interests in the drawing of the consent order by which those proceedings were terminated. The respondent, Wright Hassall LLP, acted for him in the litigation against Bowen Johnsons until 17 May 2007, when they were taken off the record on their own application by order of the District Judge, after an acrimonious dispute about fees. Mr Barton had resisted that application, and costs were awarded against him. His appeal to the County Court judge against the costs order was dismissed, also with costs, on 14 December 2007. In the meantime, acting in person, he had settled the proceedings against Bowen Johnsons on terms which were embodied in a consent order. There followed two actions between Mr Barton and Wright Hassall. In the first, Wright Hassall claimed their costs of acting for him before they came off the record, and obtained summary judgment. The second was the present action for professional negligence against the firm, which Mr Barton, acting in person, began by a claim form issued on 25 February 2013. In it, he alleged that Wright Hassall were in breach of their duties to him in their conduct of the action against Bowen Johnsons and in coming off the record at the time that they did. He claimed damages consisting in the difference between the value of the settlement and what he alleged to be the full value of his claim, together with the costs of unsuccessfully resisting Wright Hassalls application to come off the record and appealing against the costs order. In the ordinary course, the claim form would have been served on the defendant by the Court: CPR rule 6.4(1). But Mr Barton elected to serve it himself pursuant to the exception at (b). He had four months in which to do so, expiring on 25 June 2013: CPR rule 7.5. His first step, after correspondence in accordance with the Pre Action Protocol, was to ask for an extension of time to serve the claim form and particulars of claim, which was refused. On 26 March 2013, Wright Hassall instructed solicitors, Berrymans Lace Mawer. They sent an email on the same day to Mr Barton asking him to address all future correspondence to them. On 17 April 2013, Berrymans emailed Mr Barton to tell him that they had now been instructed in addition by Wright Hassalls liability insurers. They referred to a request which Mr Barton had apparently made for clarification of Wright Hassalls position on the costs of the earlier proceedings, which they said had already been made clear by Wright Hassall themselves. The email concluded I will await service of the Claim Form and Particulars of Claim. So far as the material before us shows, that was the full extent of the communications between Mr Barton and Berrymans until 24 June 2013, the last day before the expiry of the claim form. At 10.50 am on that day Mr Barton emailed them as follows: Please find attached by means of service upon you. Particulars of Claim 1. Claim Form and Response Pack 2. 3. Duplicated first and last pages of the Particulars of Claim showing the court seal and the signature on the statement of truth. The Particulars of Claim were filed into Chesterfield County Court this morning. I would appreciate if you could acknowledge receipt of this email by return. Mr Barton received an automatic reply, with a number to contact if the case was urgent, which he did not use. There was no substantive reply until 4 July. On that day, Berrymans wrote to Mr Barton saying that they had not confirmed that they would accept service by email. In the absence of that confirmation, email was not a permitted mode of service. In those circumstances, they said that they did not propose to acknowledge service or to take any other step. They added that the claim form had therefore expired unserved and that the claim was statute barred. On the same date they wrote in similar terms to the Court. The stage was set for the present issue. The rules Part 6 of the Civil Procedure Rules deals with the service of documents. Service of a claim form is governed by section II. CPR rule 6.3 provides for the permitted modes of service of a claim form. These include, at (1)(d), fax or other means of electronic communication in accordance with Practice Direction 6A. CPR 6APD contains directions supplementary to CPR 6. CPR 6APD.4 provides as follows: 4.1 Subject to the provisions of rule 6.23(5) and (6), where a document is to be served by fax or other electronic means (1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving that the party to be served or the solicitor (a) is willing to accept service by fax or other electronic means; and (b) the fax number, email address or other electronic identification to which it must be sent; and the following are to be taken as sufficient written (2) indications for the purposes of paragraph 4.1(1) (a) a fax number set out on the writing paper of the solicitor acting for the party to be served; (b) an email address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the email address may be used for service; or (c) a fax number, email address or electronic identification set out on a statement of case or a response to a claim filed with the court. 4.2 Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipients agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received). A claimant who is unable to serve the claim form in accordance with the rules within the four month period allowed by CPR rule 7.5 has two courses open to him. He may apply for an extension of the four month period, under CPR rule 7.6. If he makes the application after the expiry of that period (or any extension of it), then rule 7.6(3) provides that the court may make such an order only if the court has failed to serve the claim form; or (a) (b) the claimant has taken all reasonable steps to comply with rule 7.5 but has been unable to do so; and (c) in either case, the claimant has acted promptly in making the application. His other course is to apply under CPR rule 6.15 for an order that some step that he has taken or proposes to take is to stand as good service notwithstanding that it would not otherwise comply with the rules. CPR rule 6.15 provides: 6.15. Service of the claim form by an alternative method or at an alternative place (1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place. (2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service. Before the District Judge, Mr Bartons primary case was that his service complied with the rules, because Berrymans correspondence with him before 24 June 2013 amounted to an indication that they would accept service by email. Alternatively, he asked for service to be validated under CPR rule 6.15(2). In the further alternative, he asked for the validity of the claim form to be extended under CPR rule 7.6. He failed in all three contentions, and was given leave to appeal on the second one only. Accordingly, all subsequent hearings have been conducted on the footing that service by email was not valid, and that the sole question was whether it should be validated. Exercising the discretion under CPR 6.15(2) The Civil Procedure Rules contain a number of provisions empowering the court to waive compliance with procedural conditions or the ordinary consequences of non compliance. The most significant is to be found in CPR 3.9, which confers a power to relieve a litigant from any sanctions imposed for failure to comply with a rule, practice direction or court order. These powers are conferred in wholly general terms, although there is a substantial body of case law on the manner in which they should be exercised: see, in particular, Denton v TH White Ltd (De Laval Ltd, Part 20 defendant) (Practice Note) [2014] 1 WLR 3926 (CA), esp at para 40 (Lord Dyson MR and Vos LJ), Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] 1 WLR 4495 (SC(E)). The short point to be made about them is that there is a disciplinary factor in the decision whether to impose or relieve from sanctions for non compliance with rules or orders of the court, which has become increasingly significant in recent years with the growing pressure of business in the courts. CPR rule 6.15 is rather different. It is directed specifically to the rules governing service of a claim form. They give rise to special considerations which do not necessarily apply to other formal documents or to other rules or orders of the court. The main difference is that the disciplinary factor is less important. The rules governing service of a claim form do not impose duties, in the sense in which, say, the rules governing the time for the service of evidence, impose a duty. They are simply conditions on which the court will take cognisance of the matter at all. Although the court may dispense with service altogether or make interlocutory orders before it has happened if necessary, as a general rule service of originating process is the act by which the defendant is subjected to the courts jurisdiction. What constitutes good reason for validating the non compliant service of a claim form is essentially a matter of factual evaluation, which does not lend itself to over analysis or copious citation of authority. This court recently considered the question in Abela v Baadarani [2013] 1 WLR 2043. That case was very different from the present one. The defendant, who was outside the jurisdiction, had deliberately obstructed service by declining to disclose an address at which service could be effected in accordance with the rules. But the judgment of Lord Clarke of Stone cum Ebony JSC, with which the rest of the court agreed, is authority for the following principles of more general application: (1) The test is whether, in all the circumstances, there is good reason to order that steps taken to bring the claim form to the attention of the defendant is good service (para 33). (2) Service has a number of purposes, but the most important is to ensure that the contents of the document are brought to the attention of the person to be served (para 37). This is therefore a critical factor. However, the mere fact that the defendant learned of the existence and content of the claim form cannot, without more, constitute a good reason to make an order under rule 6.15(2) (para 36). (3) The question is whether there is good reason for the Court to validate the mode of service used, not whether the claimant had good reason to choose that mode. (4) Endorsing the view of the editors of Civil Procedure (2013), vol i, para 6.15.5, Lord Clarke pointed out that the introduction of a power retrospectively to validate the non compliant service of a claim form was a response to the decision of the Court of Appeal in Elmes v Hygrade Food Products plc [2001] EWCA Civ 121; (2001) CP Rep 71 that no such power existed under the rules as they then stood. The object was to open up the possibility that in appropriate cases a claimant may be enabled to escape the consequences for limitation when a claim form expires without having been validly served. This is not a complete statement of the principles on which the power under CPR rule 6.15(2) will be exercised. The facts are too varied to permit such a thing, and attempts to codify this jurisdiction are liable to ossify it in a way that is probably undesirable. But so far as they go, I see no reason to modify the view that this court took on any of these points in Abela v Baadarani. Nor have we been invited by the parties to do so. In the generality of cases, the main relevant factors are likely to be (i) whether the claimant has taken reasonable steps to effect service in accordance with the rules and (ii) whether the defendant or his solicitor was aware of the contents of the claim form at the time when it expired, and, I would add, (iii) what if any prejudice the defendant would suffer by the retrospective validation of a non compliant service of the claim form, bearing in mind what he knew about its contents. None of these factors can be regarded as decisive in themselves. The weight to be attached to them will vary with all the circumstances. Mr Bartons case Mr Bartons case on CPR 6.15(2) was argued with considerable skill by Mr Elgot, who also appeared for him in the Court of Appeal. It rested essentially on three points. The first was that the premise of the power to validate a service under CPR rule 6.15(2) was that service had purportedly been effected by some non compliant means. That was, so to speak, a given. It followed that the dominant consideration when deciding to exercise that power was whether the mode of service chosen had been effective to achieve the main purpose of service, namely to bring the contents of the claim form to the defendants attention. Mr Elgots second point was that, so far as it mattered what the reasons were for Mr Bartons failure to serve in accordance with the rules, he was entitled to assume that Berrymans would accept service by email. This was because (i) although he was aware that some solicitors did not accept service of documents by email, he did not know about CPR rule 6.3 or, presumably, Practice Direction 6A, which were relatively inaccessible to a litigant in person such as him; and (ii) he was entitled to assume that Berrymans were prepared to accept service of documents by email, because they had corresponded with him by email without saying that they were not prepared to do so. Third, he submitted that their failure to accept service of his claim form by email and their failure to respond before the expiry of the limitation period to his attempt to serve them, amounted to playing technical games, from which they should not be allowed to derive any advantage. The District Judge directed himself that there was a two stage test. The first stage was whether CPR rule 6.15(2) was engaged at all, which depended on whether there was good reason to make the order. The second was whether, if there was good reason, the court should exercise its discretion to do so. This was in accord with the literal language of the rule. But the parties were, I think, right to accept that it was unsatisfactory. If there is good reason to make the order, it would be irrational for a court to decline to make it as a matter of discretion. There is in reality only one stage to the inquiry, namely whether there is good reason to make the order. However, this error did not vitiate the District Judges reasoning, because he concluded that there was no good reason to make the order, and on that footing Mr Barton had to fail whether there be one stage or two. He reached that conclusion on the simple ground that the only reason why Mr Barton did not comply with the rules for service was that he did not know what those rules were, and that was not a good reason to make the order. The District Judge was not referred to Abela v Baadarani, but it is difficult to point to any respect in which his reasoning would have been different if he had directed himself in accordance with it. His Honour Judge Godsmark QC approached the matter on the basis that, the District Judge not having been referred to the relevant authorities, including Abela v Baadarani, he should deal with it afresh. He regarded the whole issue as turning, in the circumstances of Mr Bartons case, on the question posed at para 48 of Lord Clarkes judgment in Abela, namely whether there was any reason why the claim form could not be served within the period of its validity. He rejected Mr Bartons application on the ground that there was a number of ways in which service could have been properly effected, and his only reason for not adopting one of them was his ignorance of the rules. He rejected the suggestion that Mr Barton had been in some way lulled into a false sense of the position by the fact that Berrymans had been corresponding with him by email, and declined to accept that Mr Barton was entitled to greater indulgence because he had been unrepresented. His conclusion was that CPR 6.15 is not there to protect litigants in person or those who do not know the rules. It is there to protect those who for some reason have been unable to effect service satisfactorily within the rules. In the Court of Appeal, the main thrust of the argument, at least as they understood it, was that Judge Godsmark had concentrated too much on the reasons why the claim form had not been served in accordance with the rule, and not enough on the fact that Berrymans were aware of the claim and had received the claim form. A claimant could, it was submitted, succeed in an application under CPR rule 6.15(2) even if he had not taken all reasonable steps to serve the claim form in accordance with the rules. The only reasoned judgment was that of Floyd LJ, with whom Black LJ and Moylan J agreed. He dealt with the issue less summarily than Judge Godsmark, but reached substantially the same conclusion. He pointed out that the judge had accepted that the claim form had been successfully drawn to Berrymans attention, but had proceeded in accordance with Lord Clarkes analysis in Abela v Baadarani on the footing that that was not enough. The essential point was that although the question whether the claim form could have been served in accordance with the rules was not the totality of the legal test, it was the decisive consideration on the particular facts of Mr Bartons case. Floyd LJ accepted that a claimant who had failed to take all reasonable steps to serve in accordance with the rules might nevertheless succeed in obtaining an order under CPR rule 6.15(2). But he agreed with the judge that in circumstances where the claimant had done nothing at all other than attempt service in breach of the rules, and that through ignorance of what they were, there was no good reason to make the order. This ignorance was not excused by the fact that Mr Barton was unrepresented. He was no more impressed than the circuit judge had been by the argument that Berrymans had lulled Mr Barton into a false position. The present appeal Mr Barton is appealing against a discretionary order, based on an evaluative judgment of the relevant facts. In the ordinary course, this court would not disturb such an order unless the court making it had erred in principle or reached a conclusion that was plainly wrong. In my opinion both Judge Godsmark and the Court of Appeal identified the critical features of the facts of this case and reached a conclusion which they were entitled to reach. Indeed, save for one minor misdirection, which I have pointed out, I think that the same was true of the District Judge. The first point to be made is that it cannot be enough that Mr Bartons mode of service successfully brought the claim form to the attention of Berrymans. As Lord Clarke pointed out in Abela v Baadarani, this is likely to be a necessary condition for an order under CPR rule 6.15, but it is not a sufficient one. Although the purpose of service is to bring the contents of the claim form to the attention of the defendant, the manner in which this is done is also important. Rules of court must identify some formal step which can be treated as making him aware of it. This is because a bright line rule is necessary in order to determine the exact point from which time runs for the taking of further steps or the entry of judgment in default of them. Service of the claim form within its period of validity may have significant implications for the operation of any relevant limitation period, as they do in this case. Time stops running for limitation purposes when the claim form is issued. The period of validity of the claim form is therefore equivalent to an extension of the limitation period before the proceedings can effectively begin. It is important that there should be a finite limit on that extension. An order under CPR rule 6.15 necessarily has the effect of further extending it. For these reasons it has never been enough that the defendant should be aware of the contents of an originating document such as a claim form. Otherwise any unauthorised mode of service would be acceptable, notwithstanding that it fulfilled none of the other purposes of serving originating process. There are, moreover, particular problems associated with electronic service, especially where it is sought to be effected on a solicitor. A solicitor must have his clients authority to accept service of originating process. If he has that authority, it will in practice normally cover any mode of service. But a solicitors office must be properly set up to receive formal electronic communications such as claim forms. As the Law Societys Practice Guidance on electronic mail (May 2005) points out, email presents new problems, because it can arrive unperceived by other members of staff. The volume of emails and other electronic communications received by even a small firm may be very great. They will be of unequal importance. There must be arrangements in place to ensure that the arrival of electronic communications is monitored, that communications constituting formal steps in current litigation are identified, and their contents distributed to appropriate people within the firm, including those standing in for the person primarily responsible for the matter when he is unable to attend to such communications as they arrive. Turning to the reasons for Mr Bartons failure to serve in accordance with the rules, I start with Mr Bartons status as a litigant in person. In current circumstances any court will appreciate that litigating in person is not always a matter of choice. At a time when the availability of legal aid and conditional fee agreements have been restricted, some litigants may have little option but to represent themselves. Their lack of representation will often justify making allowances in making case management decisions and in conducting hearings. But it will not usually justify applying to litigants in person a lower standard of compliance with rules or orders of the court. The overriding objective requires the courts so far as practicable to enforce compliance with the rules: CPR rule 1.1(1)(f). The rules do not in any relevant respect distinguish between represented and unrepresented parties. In applications under CPR 3.9 for relief from sanctions, it is now well established that the fact that the applicant was unrepresented at the relevant time is not in itself a reason not to enforce rules of court against him: R (Hysaj) v Secretary of State for the Home Department [2015] 1 WLR 2472, para 44 (Moore Bick LJ); Nata Lee Ltd v Abid [2015] 2 P & CR 3. At best, it may affect the issue at the margin, as Briggs LJ observed (para 53) in the latter case, which I take to mean that it may increase the weight to be given to some other, more directly relevant factor. It is fair to say that in applications for relief from sanctions, this is mainly because of what I have called the disciplinary factor, which is less significant in the case of applications to validate defective service of a claim form. There are, however, good reasons for applying the same policy to applications under CPR rule 6.15(2) simply as a matter of basic fairness. The rules provide a framework within which to balance the interest of both sides. That balance is inevitably disturbed if an unrepresented litigant is entitled to greater indulgence in complying with them than his represented opponent. Any advantage enjoyed by a litigant in person imposes a corresponding disadvantage on the other side, which may be significant if it affects the latters legal rights, under the Limitation Acts for example. Unless the rules and practice directions are particularly inaccessible or obscure, it is reasonable to expect a litigant in person to familiarise himself with the rules which apply to any step which he is about to take. Mr Barton contends that CPR rule 6.3 and Practice Direction 6A are inaccessible and obscure. I do not accept this. They are accessible on the internet. Part 6 is clearly headed Service of Documents. Electronic service under rule 6.3 is expressly required to be in accordance with Practice Direction 6A, which is prominently flagged in the table of contents. Furthermore, when the claim form was issued, the Courts Service sent Mr Barton in the usual way on 26 February 2013 a blank certificate of service for him to complete when he had served it. This included the statement: Rules relating to the service of documents are contained in Part 6 of the Civil Procedure Rules (www.justice.gov.uk) and you should refer to the rules for information. Since he did not in fact refer to them, their alleged obscurity is perhaps immaterial. But they are not in my view obscure. They do not justify Mr Bartons assumption that Berrymans would accept service in that way unless they said otherwise. On the contrary, the paragraph 4.1(2)(b) of the Practice Direction clearly states that even where a solicitors writing paper includes an email address, service by that means was permissible only where it is stated that the email address may be used for service. It is fair to say that others have made the same mistake as Mr Barton, including the authors of A Handbook for Litigants in Person, ed HHJ Edward Bailey (2013), at p 157. But this is not for want of clarity in the rules. As it happens, Mr Barton never saw the Handbook, which was published after his abortive attempt at service. The salient facts in his case are that he was by June 2013 an experienced litigant. He knew, as he accepts, about limitation. He knew that not all solicitors accepted service by email. Yet, apart from looking at the legal notices on Berrymans website (which said nothing about email service), he took no steps to check whether Berrymans did so, or to ascertain what the rules regarding service by email were, but simply relied on his own assumption. Nor would I accept that that assumption was in itself reasonable. Berrymans had initially contacted Mr Barton by email and they engaged in brief and desultory email correspondence with him between the initial contact and the attempted service of the claim form. In rejecting Mr Bartons case that he had complied with the Practice Direction, the District Judge held his email correspondence with Berrymans did not amount to an indication that he could serve the claim form upon them in that way. I think that that was right. But in any event the point is not before us because of the limited basis on which Mr Barton received leave to appeal from the District Judge. If the correspondence did not amount to an indication for the purpose of the CPR 6APD.4 that Berrymans would accept service of the claim form by email, I find it difficult to see how Mr Barton could be entitled to assume they would. Like the Court of Appeal, I would readily accept Mr Elgots submission that the claimant need not necessarily demonstrate that there was no way in which he could have effected service according to the rules within the period of validity of the claim form. The Court of Appeal rejected this suggestion in Power v Meloy Whittle Robinson [2014] EWCA Civ 898. That, however, was a case in which the problem was that the court itself had failed to effect proper service because of an administrative error. The submission that the Court of Appeal rejected was that this did not justify relief under CPR rule 6.15 because it had been open to the claimants solicitor to effect personal service. However, I agree with the general point that it is not necessarily a condition of success in an application for retrospective validation that the claimant should have left no stone unturned. It is enough that he has taken such steps as are reasonable in the circumstances to serve the claim form within its period of validity. But in the present case there was no problem about service. The problem was that Mr Barton made no attempt to serve in accordance with the rules. All that he did was employ a mode of service which he should have appreciated was not in accordance with the rules. I note in passing that if Mr Barton had made no attempt whatever to serve the claim form, but simply allowed it to expire, an application to extend its life under CPR rule 7.6(3) would have failed because it could not have been said that he had taken all reasonable steps to comply with rule 7.5 but has been unable to do so. It is not easy to see why the result should be any different when he made no attempt to serve it by any method permitted by the rules. Mr Elgot repeated before us the submission that he made in the Court of Appeal that Berrymans had been playing technical games, with his client. However, the sole basis for that submission was that they had taken the point that service was invalid. Since they did nothing before the purported service by email to suggest that they would not take the point, this does nothing to advance his case. After the purported service by email, there is nothing that they could reasonably have been expected to do which could have rectified the position. The claim form expired the next day. Even on the assumption that they realised that service was invalid in time to warn him to re serve properly or begin a fresh claim within the limitation period, they were under no duty to give him advice of this kind. Nor could they properly have done so without taking their clients instructions and advising them that the result might be to deprive them of a limitation defence. It is hardly conceivable that in those circumstances the client would have authorised it. Naturally, none of this would have mattered if Mr Barton had allowed himself time to rectify any mishap. But having issued the claim form at the very end of the limitation period and opted not to have it served by the Court, he then made no attempt to serve it himself until the very end of its period of validity. A person who courts disaster in this way can have only a very limited claim on the courts indulgence in an application under CPR rule 6.15(2). By comparison, the prejudice to Wright Hassall is palpable. They will retrospectively be deprived of an accrued limitation defence if service is validated. If Mr Barton had been more diligent, or Berrymans had been in any way responsible for his difficulty, this might not have counted for much. As it is, there is no reason why Mr Barton should be absolved from his errors at Wright Hassalls expense. Article 6 of the European Convention on Human Rights It is submitted that the result arrived at by the courts below is incompatible with Mr Bartons right to a fair trial under article 6 of the Convention. This point does not appear to have been taken below. I deal with it for completeness, and briefly since in my view it is without merit. The rules governing the period of validity of a claim form and the mode of service are sufficiently accessible and clear, and serve a legitimate purpose in the procedure of the Court. Moreover, it is not the rules that have deprived Mr Barton of the ability to press his claim. It is the Limitation Act which has produced that result. A reasonable limitation period does not contravene article 6 even where (as in England and Wales) it operates procedurally. Perhaps because of these difficulties, the argument seems to have mutated into an allegation of bias, said to be implicit in the manner in which Mr Bartons arguments were addressed in the judgment of the Court of Appeal. The point was only faintly pressed, and in my opinion does not even have sufficient coherence to warrant reasoned refutation. Disposal I agree with the observations of Lord Briggs in his final paragraph that it is desirable that the Rules Committee should look at the issues dealt with on this appeal, if only because litigants in person are more likely to read the rules than the judgments of this court. In the meantime, however, I would dismiss this appeal. LORD BRIGGS: (dissenting) (with whom Lady Hale agrees) The Applicable Principles The courts task on the hearing of an application to validate service under CPR rule 6.15 is to decide whether there is good reason to do so. The question only arises where (i) there has been an attempt at service which (ii) was not in accordance with the rules as to service. The question is not expressed to be, and is not, was there good reason for failing to comply with the rules as to service although, as part of its review of all relevant circumstances, the court will generally wish to be appraised of the full reasons, good and bad, why the rules were not complied with. While I would not wish in any way to depart from Lord Clarkes dictum in the Abela case that the most important purpose of service is to ensure that the contents of the claim form (or other originating document) are brought to the attention of the person to be served, there is a second important general purpose. That is to notify the recipient that the claim has not merely been formulated but actually commenced as against the relevant defendant, and upon a particular day. In other words it is important that the communication of the contents of the document is by way of service, rather than, for example, just for information. This is because I would have allowed this appeal. service is that which engages the courts jurisdiction over the recipient, and because important time consequences flow from the date of service, such as the stopping of the running of limitation periods and the starting of the running of time for the recipients response, failing which the claimant may in appropriate cases obtain default judgment. There is (or at least was when promulgated), as Lord Sumption observes, a third particular purpose behind the specific provisions in Part 6APD regulating service by email, namely to ensure that recipients or their solicitors have the opportunity to put in place administrative arrangements for monitoring and dealing with what was then a new mode of service before being exposed to its consequences. Para 4.1(2)(b) permits service by email on the recipients solicitors once they advertise their readiness on their headed paper. Para 4.2 requires a prior inquiry of the intended recipient whether there are any relevant technical constraints. Now that issue and filing is required to be carried out online, by legally represented parties in the Business and Property Courts in London, as the first stage in eventually extending this as the mandatory method for all civil proceedings, it may be questioned for how long these constraints upon service upon solicitors by email will continue to serve a useful purpose, but any relaxation of them is of course a matter for the Civil Procedure Rule Committee. In a case where not merely the first, but all those three purposes of the rules about service by email have been achieved, that is in my judgment capable of being, at least prima facie, a good reason for validating service under rule 6.15. By prima facie I mean a sufficiently good reason provided that there are not, on a full review of the circumstances, adverse factors pointing against validation sufficient to outweigh the full achievement of those purposes. A non exhaustive list of such adverse factors might include a deliberate failure to comply by someone cognisant of the relevant rules, failure due to negligence (in particular by a trained professional who is expected to know the rules), or failure due to sheer neglect of the requirement for due service until the very last moment. That the presence of one or more of these adverse factors may frequently outweigh the full achievement of the purposes behind the rules as to service so as to lead the court to refuse validation is necessitated by the following matters. First, compliance with the rules is now part of the Overriding Objective, although I agree with Lord Sumption that the maintenance of good discipline may be of less importance in this context than in the context of relief from sanctions. Secondly, service of a claim form (or other originating process) is an important stage in civil procedure, with potentially serious consequences, as summarised above. Thirdly, if the identification of good reason were limited to the question whether all the underlying purposes of service had been achieved, claimants could choose to ignore the rules so long as they achieved those purposes by another route of their own devising. That would be a step on the road to procedural anarchy. I consider that both the judge and the Court of Appeal treated it as an essential aspect of an application for validation that there needed to be identified some additional good reason for validation beyond the complete achievement of the three underlying purposes of the rules as to service by email. In substance this led, and will always lead, to a search for a good reason for not having served in time in accordance with the rules. Sometimes that search will bear fruit, for example where the intended recipient is shown to be playing games, as in the Abela case. Sometimes there will be real and protracted difficulty in identifying an intended recipients last known residence or place of business. Sometimes service through diplomatic channels proves impossible to achieve in time. But it would be wrong in my judgment to confine the power to validate to such cases, where all the underlying purposes of service have been achieved. There are bound to be cases where the purposes have been fully achieved but there are no other good reasons for validation, where the failure to comply with the rules, though not excusable by a good reason for failure, is nonetheless only a minor or technical breach, or one readily understandable either because the relevant rule is obscure, or less accessible to a litigant in person than to an experienced and skilled lawyer. In such cases there should not be a vain search for an additional good reason beyond full achievement of the purposes of the rules as to service, but rather a weighing of all the circumstances leading to defective service, to see whether the inevitable element of culpability of the claimant is or is not sufficiently large to displace the prima facie good reason constituted by the full achievement of those purposes. I acknowledge that, at para 36 in the Abela case, Lord Clarke said: The mere fact that the defendant learned of the existence and content of the claim form cannot, without more, constitute a good reason to make an order under rule 6.15(2). I agree. First, that is not the end of the matter, for the reasons given above. The circumstances in which the failure to serve in accordance with the rules will need to be explained and considered. Secondly, mere knowledge of the existence and content of the claim form does not achieve the second general purpose, namely to bring home to the recipient that he is being served with, rather than just informed about, the claim form, with the important procedural consequences that flow. Thirdly, in the context of service by email, the absence of, or limitations upon, the recipients email handling facilities may have proved a real hindrance to a prompt response. I do not however consider that Lord Clarke was intending to lay down a requirement that there be identified in every case a separate good reason for validation beyond the complete fulfilment of the purposes of the relevant rules as to service. It was not necessary for him to do so in that case, because there was an independently good reason, in the form of the game playing by the intended recipient. But I do not read that as an invariable condition built into what Lord Clarke was at pains to point out was a single test, based upon a weighing of all relevant circumstances. He noted, as the editors of the White Book also acknowledged, that the new power retrospectively to validate otherwise deficient service was introduced to remedy a lack of jurisdiction to deal with mistakes as to service of the type addressed in Elmes v Hygrade Food Products plc [2001] EWCA Civ 121; (2001) CP Rep 71, where the claimants solicitors served the defendants insurers (who were by then handling the case) rather than the defendant, incidentally by fax. It appears to have been a case where no good reason other than the achievement of the purposes of service on the case handler was relied upon, and where the claimants solicitors should have known better than to serve upon the insurers. Similarly I do not read Lord Clarkes observation, at para 48 of the Abela case, that the relevant focus is on the reason why the claim form cannot or could not be served within the period of its validity as erecting the finding of a good reason for having failed to serve in accordance with the rules as an independent obstacle to validation, still less as confining validation so as to exclude cases where the claim form could have been validly served in time. Read in context he was merely explaining why, in the necessary analysis of the reasons for that failure, the focus is on the period after, rather than before, the issue of the claim form. The Judges Analysis Having embarked, by consent, upon a fresh decision making process, for reasons about the District Judges approach which do not matter, HHJ Godsmark decided that the central question for him to decide was whether there was a good reason why service had not been effected in accordance with the rules, and that ignorance of the relevant rule about service by email was not a good reason: see paras 10 and 15 to 16 of his concise and lucid ex tempore judgment. In the Court of Appeal Floyd LJ acknowledged (at para 45) that the judge could be said to have imposed upon himself an illegitimate threshold test, namely whether there was a good reason why service was not achieved in accordance with the rules, but in the end exonerated the judge from any error of principle, having regard to his judgment read as a whole. The Court of Appeal did not therefore conduct its own independent appraisal, being content with a conclusion that the outcome was one which the judge was entitled to reach; (see eg para 48). It is however fair comment that, had it conducted its own appraisal, the Court of Appeal would probably have reached the same conclusion as did the judge. In my view the judge did err in principle, for the reasons already given, so that the question whether service should be validated should be addressed afresh by this court, applying the principles which I have sought to identify. The starting point is that Mr Bartons attempt to serve both the claim form and the particulars of claim by email did fully achieve the three purposes underlying the rules about service by email. As to the first, it is and always has been common ground that the defendant firm was, through its agent solicitors, fully appraised by the email of the contents of the claim form. As to the second, the claim form was sent expressly by means of service upon you. The recipient solicitors could have been in no doubt that Mr Barton was seeking to achieve service, with its important consequences, rather than just sending the claim form by way of information. As to the third, it has not been suggested that, by comparison with postal service, the recipient firm was in any way hampered by not having appropriate monitoring procedures in place, or that its email systems were insufficient to permit prompt receipt of the whole of the documentation actually sent, although the particulars of claim were voluminous. There was therefore a prima facie good reason to validate service, unless the circumstances of Mr Bartons failure to comply with the rules were such as to swing the balance against validation. There are aspects of those circumstances which may be said to point both ways. Against validation may be said to be the following: i) Mr Barton does not appear to have taken the trouble to work through the relevant rules sufficiently to alight upon the key provisions about service by email in 6APD para 4. His fault was not therefore one of misinterpretation. ii) He elected to effect service himself, rather than leave it to the court. But he gave a reason for this, namely a desire first to complete his lengthy particulars of claim, rather than serve early and then have to seek an extension of time for the pleading. That may not have been a good reason for delaying service of the claim form, but it is at least understandable. iii) He left it until a very late stage to serve, after the expiry of the limitation period and in the last two days of the validity of the claim form, even though he says he still had time to achieve personal service by driving to the solicitors address if the email was not received. iv) He probably knew broadly of the very serious consequences of failure to serve validly within time. v) The rules about service by email are not expressed in lawyerish language, nor are they difficult to understand. vi) Mr Barton was by this time, although unrepresented, a reasonably experienced litigant, quite capable of criticising his former solicitors for wasting his money by serving documents personally rather than by post. In respectful disagreement with Lord Sumption, I do not regard the fact that validation would deprive the defendant of an accrued limitation defence as a factor militating against validation (or for that matter in favour of it). The defendants solicitors were aware of Mr Bartons attempt to serve them before the expiry of the claim form. The acquisition of a limitation defence would have been, in the words of Simon Brown LJ in the Elmes case (at para 13), a windfall. In mitigation of those aspects of Mr Bartons conduct are the following factors (although none of them add up to an independent good reason for validation): i) Mr Barton made an innocent mistake, rather than committed a deliberate breach of the rules. ii) His reasoning, that solicitors with authority to accept service who had communicated with him by email were impliedly content to be served by email, was understandable, even though wrong. iii) The rules about service by email are tucked away in a Practice Direction rather than in a rule. It may not be obvious to a lay litigant that non compliance with a PD attracts the same dire consequences as breach of a rule. Although Mr Barton did not read the PD, this has some mitigating effect upon the seriousness of the breach. iv) He was in extremely good company in thinking that solicitors with authority to accept service who have an email address on their headed paper are willing to accept service by email. This is what is (wrongly) stated in terms in the Handbook for litigants in person to which Lord Sumption refers. Again this did not actually mislead Mr Barton, since it had yet to be published, but it does seem to me to mitigate his offence that the distinguished judicial editors of that guide should have made the same mistake, even after (I do not doubt) reading the relevant rules. v) As an unrepresented litigant, Mr Barton has no recourse to solicitors insurers of the type which would be available to a represented litigant whose solicitor made the same mistake as he did. Although a number of the mitigating factors listed above are in a sense characteristics of Mr Barton being a litigant in person, that comes nowhere near saying that being a litigant in person constitutes a free standing good reason why his botched attempt at service should be validated. In that respect I adhere to what I said in Nata Lee Ltd v Abid [2015] 2 P & CR 3, at para 53, to which Lord Sumption refers. Save to the very limited extent to which the CPR now provides otherwise, there cannot fairly be one attitude to compliance with rules for represented parties and another for litigants in person, still less a general dispensation for the latter from the need to observe them. If, as many believe, because they have been designed by lawyers for use by lawyers, the CPR do present an impediment to access to justice for unrepresented parties, the answer is to make very different new rules (as is now being planned) rather than to treat litigants in person as immune from their consequences. The good reason in the present case is not that he is a litigant in person, but rather the fact that Mr Bartons attempted service by email achieved all the underlying purposes of the relevant rules. His being a litigant in person, with the particular consequences described above merely mitigates, at the margin, the gravity of non compliant conduct which, had it been done by a legal representative, would have been more serious as an impediment to validation. Taking all the relevant considerations into account, I consider that Mr Bartons attempt at service by email should be validated. He may fairly be criticised for having failed to read the relevant part of the rules, and making an incorrect assumption instead, but this does not on balance detract from the good reason constituted by his having, albeit in a modestly non compliant way, achieved all that which the rules as to service by email are designed to achieve. It troubles me that the meaning and effect of CPR 6.15 has now been considered by this court, which does not lightly embark upon procedural questions, twice in recent years and that, on this occasion, its meaning has divided the court. While recognising the pressures upon its time during a period of major procedural reform, I hope that the Rule Committee might be able to find time to satisfy itself that this rule, and the provisions in the PD about service by email, still satisfy current requirements, in the context of giving effect to the Overriding Objective, and do so with sufficient clarity.

UK-Abs

In 2005 the appellant, Mr Barton, brought a claim alleging professional negligence against a law firm, Bowen Johnsons, which had acted for him in 1999. The respondent law firm, Wright Hassall LLP, initially acted for him in that negligence claim, until they applied to come off the record following a dispute about fees. Mr Barton unsuccessfully resisted that application and was ordered to pay the costs. His appeal against that costs order was dismissed, also with costs against him. In the meantime, acting in person, he had settled the proceedings against Bowen Johnsons. Two actions followed between Mr Barton and Wright Hassall. In the first, Wright Hassall successfully claimed their costs of acting for him before they came off the record. The second was the present action against them, which Mr Barton, acting in person, began by a claim form issued on 25 February 2013. Under rule 7.5 of the Civil Procedure Rules a claim form is valid for four months from the issue date. His claim alleged that Wright Hassall had breached their duties to him in their conduct of the action against Bowen Johnsons and in coming off the record when they did. Mr Barton claimed damages reflecting: (i) difference between the settlement sum and the alleged value of his claim and (ii) the costs of resisting Wright Hassalls application to come off the record and of his appeal on costs. Wright Hassall had in March 2012 instructed solicitors, Berrymans Lace Mawer, who had emailed Mr Barton asking him to address all future correspondence to them. On 17 April 2013 Berrymans sent Mr Barton an email which ended: I will await service of the Claim Form and Particulars of Claim. On 24 June 2013, the last day before the expiry of the issued claim form, Mr Barton sent them an email which began: Please find attached by means of service upon you. 1. Claim Form and Response Pack On 4 July 2013 Berrymans wrote to Mr Barton, saying that they had not confirmed that they would accept service by email. In the absence of that confirmation, email was not a permitted mode of service. They added that the claim form had expired unserved and that the claim was now statute barred. A claimant who cannot properly serve the claim form within four months may apply for either: (i) an extension under rule 7.6 of that period or (ii) an order under rule 6.15 that an otherwise non compliant step be treated as good service. Before the District Judge, Mr Barton pursued both options as alternatives to his primary case that his service complied with the rules. He failed but was permitted to appeal on whether his purported service by email should be validated. The Circuit Judge held that it should not. The Court of Appeal upheld that order. Mr Barton appealed to this Court. The Supreme Court dismisses the appeal by a majority of three to two. Lord Sumption, with whom Lord Wilson and Lord Carnwath agree, gives the lead judgment. Lady Hale and Lord Briggs dissent. What constitutes good reason for validating the non compliant service of a claim form is essentially a matter of factual evaluation. The main factors, the weight of which will vary with the circumstances, are likely to be: (i) whether the claimant took reasonable steps to serve in accordance with the rules; (ii) whether the defendant or his solicitor knew of the contents of the claim form when it expired; (iii) what, if any, prejudice the defendant would suffer from validation of the non compliant service [9 10]. It cannot be enough that Mr Bartons email brought the claim form to Berrymans attention. That is likely to be necessary for validation but it is not sufficient. Rules of court must identify a formal step to be treated as informing the defendant of the contents of the claim form. A clear and precise rule is necessary: (i) to determine the exact point from which time limits run for the taking of further steps, or the entry of judgment in default of them, and (ii) because valid service of the claim form may have significant implications for the operation of any relevant limitation period, as in this case. Consequently it has never been enough that the defendant is aware of the contents of the claim form [15 16]. Moreover, particular problems are associated with electronic service. A solicitor must have his clients authority to accept service, which normally in practice covers any mode of service. But a solicitors office must be properly set up to receive and monitor formal electronic communications, which can arrive unnoticed and in the absence of the person primarily responsible for the matter [17]. Unless the rules and practice directions are particularly inaccessible or obscure, it is reasonable to expect a litigant in person to familiarise himself with the rules which apply to any step he is about to take. Rule 6.3 and Practice Direction 6A, to which Mr Barton did not in fact refer, are not inaccessible and obscure. They do not justify his assumption that Berrymans would accept service by email unless they said otherwise. Others have made the same mistake as Mr Barton, but not for want of clarity in the rules [18 19]. By June 2013 Mr Barton was an experienced litigant. He knew about limitation. He knew that not all solicitors accepted service by email. Yet he took no steps to check whether Berrymans did so, or to ascertain the rules on service by email [19 20]. A claimant need not necessarily show that compliant service was impossible. It is enough that he has taken such steps as are reasonable. In this case the problem was that Mr Barton made no attempt to serve in accordance with the rules. All that he did was employ a mode of service which he should have appreciated was not in accordance with the rules [21]. The contention that Berrymans, by raising this issue, had been playing technical games does not advance Mr Bartons case: they did nothing before the purported service to suggest that they would not raise it [22]. None of this would have mattered if Mr Barton had allowed himself time to rectify any mishap. But having issued the claim form at the very end of the limitation period, and having made no attempt to serve it until the very end of its period of validity, he can have only a very limited claim on the courts indulgence under rule 6.15(2). By comparison, validation of service would prejudice Wright Hassall by depriving them of an accrued limitation defence [23]. There is no merit in the contention that the outcome in the lower courts is incompatible with Mr Bartons right to a fair trial under article 6 of the European Convention on Human Rights. The relevant rules are sufficiently accessible and clear. They serve a legitimate purpose. The Limitation Act, not those rules, prevented Mr Barton from pressing his claim. A reasonable limitation period does not contravene article 6 [24]. Lord Sumption agrees with Lord Briggs that the Civil Procedure Rule Committee should look at the issues dealt with on this appeal, but the appeal is dismissed [25]. Lord Briggs, with whom Lady Hale agrees, would have allowed the appeal for the following reasons. The most important purpose of service is to ensure that the contents of the claim form are brought to the attention of the person to be served. A second important purpose is to notify the recipient that the claim has been commenced against the defendant, and on a particular day. The provisions in Practice Direction 6A regulating service by email are to ensure that recipients have the opportunity to put in place arrangements for monitoring and dealing with what was then a new mode of service [28 29]. Where all three of those purposes are achieved, that is a good reason for validating service under rule 6.15 provided that there are not sufficient adverse factors against it, which might include a deliberate failure to comply or professional negligence [30]. The power to validate service is not limited to cases where an independent good reason is identified, beyond satisfaction of those underlying purposes [32 35]. Mr Bartons attempted service fully achieved those purposes. That provides good reason for validation unless the circumstances swing the balance against it. Aspects of the circumstances may be said to point both ways. Berrymans loss of its accrued limitation defence does not militate against validation: the acquisition of the defence would have been a windfall. Taking all the relevant considerations into account, Mr Bartons attempt at service by email should be validated [38 43].

This appeal is concerned with Stamp Duty Land Tax (SDLT), which was introduced by the Finance Act 2003 (the FA 2003) to replace Stamp Duty, a tax on written instruments which had been the subject of many successful tax avoidance schemes. The principal question in the appeal is whether Project Blue Ltd (PBL) is due to pay SDLT of 50m arising out of its purchase from the Ministry of Defence (the MoD) of the former Chelsea Barracks in Chelsea Bridge Road, London. Since its enactment, the FA 2003 has been amended on several occasions. This appeal is concerned with that Act as it existed on 31 January 2008. Two issues lie at the heart of the appeal. The first concerns the relationship between section 45 of the FA 2003, which provides what is often called sub-sale relief where there is a transfer of rights to a contract for a land transaction which is to be completed by a conveyance, and section 71A of that Act, which creates exemptions for alternative property finance which complies with the prohibition of usury in Sharia law. The first issue does not arise in relation to transactions after 24 March 2011 because of an amendment to section 45(3) of the FA 2003 which was made by the Finance Act 2011, to which I refer in para 33 below. The second issue concerns the correct interpretation of the anti-avoidance provisions in section 75A of the FA 2003, which was introduced by the Finance Act 2007. If the anti- avoidance provisions do not apply to the transactions, PBL is not liable to pay the SDLT which HMRC claims; if they do apply, there is a dispute over the amount of SDLT which is due and who was or is liable to pay it. PBL purchased the Chelsea Barracks through a sealed bid deadline tender process for the price of 959m and exchanged contracts with the Secretary of State for Defence on 5 April 2007. A 20% deposit was paid on exchange of contracts and the balance of the price was to be paid in four equal instalments. Completion of the purchase was postponed by the contract until 31 January 2008 to allow the MoD to re-house the troops from the barracks. The principal shareholder in PBL was Qatari Diar Real Estate Investment Company (QD), which was owned by the Qatari Investment Authority, a sovereign wealth fund owned by the Qatari government. QD provided the funding for the initial deposit but PBL required to obtain finance for the purchase of the barracks from Qatari Bank Masraf al Rayan (MAR), a Qatari financial institution which provided a portfolio of Sharia-compliant products, and which syndicated the finance for the purchase. Financial institutions, which seek to comply with the Islamic prohibition on usury, have adopted structures for financing deals which do not involve lending in return for interest and the taking of security for the repayment of the borrowed sums and interest by means of a mortgage. One such form of Sharia -compliant financing, known as Ijara finance, was used to fund the purchase of the barracks. PBLs written case (paras 14 and 15) contains a convenient summary of the paradigm forms of Ijara arrangements, which I quote in full: 14. Such transactions are likely to occur in one of two categories of case. In the first, the counterparty wishes to acquire a property from a third party and requires funding to enable it to do so. The financial institution buys the property from the third party, leases it to the counterparty and, at the same time, grants the counterparty an option to acquire the financial institutions interest at a later stage. In the event that the counterparty has some, but insufficient, capital to acquire the property, each party can take an undivided share in the land; and the rent charged by the financial institution takes account of its reduced interest. 15. In the second case, the counterparty already owns the property but wishes to obtain funds to use for another purpose. In this case the Ijara involves the counterparty selling his own interest in the property to the financial institution and taking a lease back, together with an option to repurchase. HMRC in para 44 of their written case described the two situations in which Ijara finance was used in essentially similar terms and stated (as is clearly the case) that section 71A was drafted with those situations in mind. The funding of the purchase of the barracks was an adaptation of the first of the two categories. I set out the transactions in the following steps so as to assist understanding of the arguments which follow in relation to the tax consequences of the transaction: (1) 5 April 2007: PBL and the MoD entered into a contract to purchase the barracks. (2) 29 January 2008: PBL contracted to sub-sell the freehold to MAR. (3) 29 January 2008: MAR agreed to lease the barracks back to PBL. (4) 31 January 2008: On completion, (a) MAR and PBL entered into call and put options respectively entitling or requiring PBL to repurchase the freehold in the barracks; (b) the MoD conveyed the freehold in the barracks to PBL; (c) PBL conveyed the freehold in the barracks to MAR, and (d) immediately after that, MAR leased the barracks back to PBL. On 1 February 2008 PBL granted a 999-year lease to its subsidiary, Project Blue Developments Ltd (PBDL) with call and put options for the purchase of the freehold, but that transaction is not relevant to this appeal. As will be seen, it is not disputed that stages 4(b) and (c) brought into play the sub-sale relief provided by section 45 of the FA 2003, while it is contested whether stage 4(c) engaged the exemption for alternative property finance which section 71A(2) of the Act provides. This is the first of the two principal issues mentioned in para 2 above. On 1 February 2008, Clifford Chance LLP submitted a notification Disclosure of Tax Avoidance Scheme in accordance with the Stamp Duty Land Tax Avoidance (Prescribed Descriptions of Arrangements) Regulations (SI 2005/1868). The notification stated: No SDLT is payable by [PBL] on the sale from [the MoD] to [PBL] by virtue of sub-sale relief under section 45(3) Finance Act 2003. No SDLT is payable by [MAR] on the sale of the property from [PBL] to [MAR] by virtue of alternative property finance relief under section 71A(2) Finance Act 2003. Such a notification is not an acknowledgement that the arrangements were entered into for the purpose of tax avoidance. Arrangements are notifiable under section 306(1) of the Finance Act 2004 if they enable, or might be expected to enable, any person to obtain a tax advantage and are such that one of the main benefits that might be expected to arise from the arrangements is the obtaining of that advantage. The focus of the statutory provision is on the consequences of the arrangements and not on the intention of the parties who enter into them. On 22 February 2008 several land transaction returns were filed in relation to these transactions. Three are relevant to this appeal. First, a return lodged on behalf of PBL, which related to the completion on 31 January 2008 of the contract of 5 April 2007 between the MoD and PBL, claimed that there was no liability to SDLT because of the sub-sale relief in section 45(3) of the FA 2003. Secondly, a return lodged on behalf of MAR related to the completion on 31 January 2008 of the sale agreement between PBL and MAR dated 29 January 2008. The consideration was stated to be 1.25 billion, which was the Sterling equivalent of US$2,467,875,000 which was specified in the sale agreement. In the return MAR claimed alternative property finance relief under section 71A of the FA 2003. Thirdly, a return was filed relating to the grant by MAR of a lease to PBL on 31 January 2008. Again, alternative property finance relief was claimed under section 71A. The consequence was that the taxpayers claimed that nobody incurred a liability to SDLT as a result of the completion of those transactions. HMRC opened an inquiry into the SDLT returns which had been submitted in relation to these transactions. In relation to the first return, which was lodged on behalf of PBL, HMRC concluded the inquiry by a closure notice contained in a letter dated 13 July 2011, which amended that return by adjusting the amount of SDLT due from 0 to 38.36m. This sum is the SDLT which would be due on the completion of the sale by the MoD to PBL for the consideration of 959m if that were a chargeable transaction. PBL now argues that HMRC were not empowered to amend that return as they did. I discuss this challenge under the heading The wrong return challenge in paras 81-84 below. HMRC did not require any amendment to the other land transaction returns as a result of their inquiry. But when PBL appealed the amendment of the return, HMRC successfully applied to amend its case to increase the amount of SDLT due from 38.36m to 50m. This was because the total consideration which MAR agreed to provide to PBL was 1.25 billion, and, at first sight at least, 50m would be the tax due on that transaction. I discuss those figures in greater detail below. The sale contract which PBL and MAR entered into on 29 January 2008 involved payments by instalments which were subject to contingencies (clause 4.1 and 4.2). The fourth tranche of consideration, which was US$378,670,740 payable on 31 January 2011, was never paid because the arrangement was terminated on 1 March 2010. This is relevant to the dispute about the actual consideration and PBLs human rights challenge which I consider in paras 57-80 below. The Finance Act 2003 Part 4 of the FA 2003 introduced SDLT into British tax law. It is a tax on land transactions (section 42(1)). A land transaction is any acquisition of a chargeable interest (section 43(1)); and a chargeable interest is defined (in section 48(1)) as including an estate, interest, right or power in or over land in the United Kingdom other than an exempt interest. A security interest, which is an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any other obligation (section 48(3)), is an exempt interest (section 48(2)). Thus, in relation to land purchases and conventional property funding arrangements in the United Kingdom, the tax is levied on the acquisition of chargeable interests, such as freehold or leasehold interests in land, while security interests, including those which secure the financing of such acquisitions, are exempted. When persons enter into a contract for a land transaction under which the transaction is to be completed by a conveyance, section 44(2) provides that they are not regarded as entering into a land transaction by reason of entering into the contract. Thus steps (1) and (2) in para 5 above would not of themselves give rise to any liability to SDLT. Instead, if the transaction is completed without previously having been substantially performed, the contract and the transaction effected on completion are treated as parts of a single land transaction, whose effective date is the date of completion (section 44(3)). If the contract is not completed but is substantially performed (for example, if the purchaser takes possession of the subject matter of the contract or a substantial amount of the consideration is paid) the contract is treated as if it were the transaction provided for in the contract and its effective date is when the contract is substantially performed (section 44(4) and (5)). It is common ground in this appeal that section 45, which creates sub-sale relief by modifying the operation of section 44, applies in relation to the completion of the two contracts for the sale of the barracks (steps (1) and (2) in para 5 above) to prevent a charge to tax on the completion of the contract between the MoD and PBL at step 4(b) in para 5 above. Section 45 (as amended by section 49 of and paragraph 2 of Schedule 10 to the Finance (No 2) Act 2005) provides: (a) (b) (2) The transferee is not regarded as entering into a land transaction by reason of the transfer of rights, but section 44 (contract and conveyance) has effect in accordance with the following provisions of this section. (3) That section applies as if there were a contract for a land transaction (a secondary contract) under which - the transferee is the purchaser, and the consideration for the transaction is - (i) so much of the consideration under the original contract as is referable to the subject- matter of the transfer of rights and is to be given (directly or indirectly) by the transferee or a person connected with him, and (ii) rights. the consideration given for the transfer of The substantial performance or completion of the original contract at the same time as, and in connection with, the substantial performance or completion of the secondary contract shall be disregarded except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual). The consequence of the tailpiece of section 45(3) was that the completion of the contract between the MoD and PBL for the purchase of the barracks was disregarded. Section 71A The FA 2003 as originally enacted contained an exemption for Ijara financing in section 72. Section 71A was added in April 2005 by section 94 of and paragraph 2 of Schedule 8 to the Finance Act 2005 and applies in place of section 72, except in relation to land in Scotland, to which sections 72 and 72A apply. Section 71A(1) sets out the scope of the section; it provides: (1) This section applies where arrangements are entered into between a person and a financial institution under which - (a) the institution purchases a major interest in land or an undivided share of a major interest in land (the first transaction), (b) where the interest purchased is an undivided share, the major interest is held on trust for the institution and the person as beneficial tenants in common, (c) the institution (or the person holding the land on trust as mentioned in paragraph (b)) grants to the person out of the major interest a lease (if the major interest is freehold) or a sub-lease (if the major interest is leasehold) (the second transaction), and (d) the institution and the person enter into an agreement under which the person has a right to require the institution or its successor in title to transfer to the person (in one transaction or a series of transactions) the whole interest purchased by the institution under the first transaction. The section therefore has the scope to cover the contracts between PBL and MAR at steps (2), (3) and (4)(a) in para 5 above. The section then spells out the exemptions which it confers on Ijara arrangements as follows. First, subsection (2) exempts the first transaction (the institutions purchase of a major interest in land) if the vendor is the counterparty to the arrangement with the financial institution (or is another financial institution which has provided Ijara finance to that person). It provides: (2) The first transaction is exempt from charge if the vendor is - (a) the person, or (b) another financial institution by whom the interest was acquired under arrangements of the kind mentioned in subsection (1) entered into between it and the person. Secondly, subsection (3) exempts from charge the grant of the lease of the subjects to the counterparty by providing: The second transaction is exempt from charge if the provisions of this Part relating to the first transaction are complied with (including the payment of any tax chargeable). Thirdly, subsections (4), (5) and (7) exempt from charge the re-conveyance by the financial institution of the major interest in land to the counterparty. They provide: (4) Any transfer to the person that results from the exercise of the right mentioned in subsection (1)(d) (a further transaction) is exempt from charge if - the provisions of this Part relating to the first and (a) second transactions are complied with, and (b) the further transaction - at all times between the second transaction and (i) the interest purchased under the first transaction is held by a financial institution so far as not transferred by a previous further transaction, and (ii) second transaction is held by the person. the lease or sub-lease granted under the (5) The agreement mentioned in subsection (1)(d) is not to be treated - (a) as substantially performed unless and until the whole interest purchased by the institution under the first transaction has been transferred (and accordingly section 44(5) does not apply), or (b) 46 (options and rights of pre-emption). as a distinct land transaction by virtue of section (7) A further transaction that is exempt from charge by virtue of subsection (4) is not a notifiable transaction unless the transaction involves the transfer to the person of the whole interest purchased by the institution under the first transaction, so far as not transferred by a previous further transaction. Section 71A therefore reflects the two paradigm forms of Ijara finance set out in para 4 above. First, if the financial institution purchases the property from a third party, that transaction is not exempted under subsection (2) and the financial institution pays SDLT on completion or the substantial performance of that contract; but the lease to the party who is being financed and the eventual transfer of the interest by the financial institution to that party on repayment of the financing are exempt under subsections (3) and (4) respectively. Secondly, if the financial institution purchases the property from the counterparty whom it is financing, subsection (2) applies to exempt the transfer of the major interest in land to the financial institution and subsections (3) and (4) exempt the second transaction (the lease) and the further transaction (the re-transfer of the major interest in land to the counterparty). Because the arrangements for financing the purchase of the barracks involved PBL completing its purchase and its sale of the barracks to MAR on the same day in a connected transaction, PBL, as I have said, claimed sub-sale relief under section 45(3). Because MAR had purchased the barracks from PBL in the context of an Ijara arrangement, it claimed exemption under section 71A(2) for that purchase and a claim was also submitted on behalf of PBL for exemption under section 71A(3) for the lease to PBL. When HMRC amended PBLs return to assert a liability to pay SDLT of 38.36m, PBL appealed to the First-tier Tribunal (the FTT). Before the FTT the parties agreed that the combined effect of sections 45(3) and 71A was to exclude any liability to SDLT on the part of PBL or MAR in relation to the transactions unless the anti-avoidance provisions of section 75A applied to the transactions. The arguments before the FTT therefore concentrated on the meaning and application of section 75A, to which I turn later in this judgment. But when the appeal came before the Upper Tribunal (the UT), PBL changed its position. It continued to argue that it was not liable for SDLT on its purchase of the barracks from the MoD because of its entitlement to sub-sale relief under section 45(3). But it now argued that MAR was not entitled to exemption on its purchase of the barracks under section 71A(2) (para 14 above) because, on a proper understanding of the related provisions of the FA 2003, PBL was not the vendor of the barracks to MAR under that subsection. The tailpiece of section 45(3) (para 12 above) required that the completion of the sale by the MoD to PBL be disregarded and that tax was due on the notional contract created by section 45(3). Giving effect to that disregard and the notional contract meant that the vendor of the barracks was the MoD, and not PBL. The exemption in section 71A(2) therefore did not apply and MAR would have been liable to pay SDLT on the purchase price of 1.25 billion, if HMRC had not failed to so determine or to assess MAR within the six-year time limit since the transaction. This argument did not succeed before the UT (Morgan J and Judge Nowlan). Morgan J, with whom Judge Nowlan agreed in relation to section 71A held, at para 43, that the purpose of the section was to equate the position of a provider of an alternative form of finance (such as MAR), who acquires a chargeable interest, with the position of a funder who acquires a security interest (which is an exempt interest). He relied on section 45(5A) which I discuss in para 32 below, in interpreting the vendor in para 71A(2) as referring to PBL but also pointed out that his interpretation promoted the purpose of section 71A. If PBL were correct in its submission, SDLT would be paid on the level of funding provided by the financial institution and not on the price paid by the borrower for the land. He acknowledged that his interpretation meant that neither PBL or MAR was liable to pay SDLT in respect of the transactions unless section 75A applied, but considered the legislation to be flawed at the relevant time because the tailpiece of section 45(3) did not contain an exception to the disregard where the sub-sale was exempt from a charge under section 71A. The Court of Appeal (Patten, Lewison and Underhill LJJ) [2018] 1 WLR 368 disagreed with the Upper Tribunals interpretation of the relationship between section 45(3) and section 71A. Patten LJ began by observing, at para 28, that HMRCs approach by its reliance on section 75A produced a particularly inapt and harsh result because PBL would have to pay SDLT on the larger sum which MAR provided to it rather than on the purchase price which it paid to the MoD. Secondly, he held that PBL could not be the vendor in section 71A(2) because, as a result of the disregard of the transaction between the MoD and PBL in the tailpiece of section 45(3), the only contract by which MAR acquired the barracks for SDLT purposes was the secondary contract under that subsection. He referred to the Court of Appeals earlier judgment in DV3 RS LP v Revenue and Customs Comrs [2014] 1 WLR 1136 (DV3) in support of his analysis: vendor in section 71A(2) must be a reference to the person from whom MAR purchased the barracks; that person could not be PBL as, by virtue of the disregard, it had no chargeable interest so as to be regarded as entering into the secondary contract, which under section 45(3) was a contract for a land transaction. He rejected Mr Gammies submission on behalf of HMRC that section 71A was not addressing land transactions in the SDLT world but was framed to address transactions in the real world, and also his submission relying on section 45(5A). Thirdly, he considered that the scheme of section 71A was to limit SDLT in all cases to a single charge on the acquisition of the property from the third party vendor, whether the acquirer was the financial institution or its customer. Fourthly, he thought that it was unlikely that Parliament had intended to leave transactions, which fell within both of sections 45(3) and 71A, exempt from any SDLT charge and to have dealt with the problem by the anti-avoidance provisions of section 75A, which was introduced over a year later. The vendor under section 71A(2) was therefore the MoD, and not PBL, with the result that that subsection did not exempt MAR from the charge. Lewison LJ added two further points. First, he disagreed with the approach of the Upper Tribunal which equated the position of MAR with a traditional lender and saw the aim of section 71A as being that SDLT was to be paid by purchasers and not financiers. As under an Ijara arrangement the financial institution owned the asset for the duration of the lease, it was not surprising that it should be liable to pay SDLT on the purchase. Secondly, because section 75A did not apply until 20 months after section 71A had taken effect, the result of HMRCs approach was that no SDLT would have been payable on transactions which combined sub-sale relief and the section 71A exemption in that period. This provided a very strong context which made it inappropriate to apply an extended meaning of vendor in section 45(5A): para 49. I recognise the difficulty in interpreting the legislation which has been subjected to repeated incremental amendments and additions since 2003, as Parliament has struggled to optimise this new tax. But I have come to the conclusion that the Upper Tribunal was correct in concluding that PBL was the vendor under section 71A(2) and therefore that MARs purchase of the barracks from PBL was exempt from SDLT for the following four reasons. First, it is in my view significant that Parliament has chosen, when describing the alternative property finance transactions to be exempted from charge in section 71A, and also in sections 72, 72A and 73, not to use the language of land transaction and chargeable interest but to use what Mr Gammie described as the language of real world transactions. Parliament also adopted this practice in paragraphs 2-4 of Schedule 3, which exempt specified transactions from charge. Thus in section 71A(1)(a) the first transaction is described as the purchase of a major interest in land and in subsection (1)(c) the second transaction is described as the granting of a lease out of the major interest. This contrasts with the language of sections 42-45 which are concerned with the statutory constructs of land transactions, contracts for land transactions, and the acquisition and disposal of chargeable interests. As descriptions of real world transactions the provisions of section 71A match the paradigm descriptions of Ijara arrangements in para 4 above so that in the first example, when the financial institution purchases the property from a third party and then finances its customers acquisition by means of a lease and a contract to purchase, the institution pays SDLT on its purchase but not on the financing arrangements which follow, whereas in the second example, where the financial institution purchases the property from its customer, that purchase and the subsequent transactions are exempt. The distinctive treatment of the two examples is achieved by section 71A(2) which exempts the first transaction from charge if the vendor is the customer of the financial institution (or a financial institution which has previously provided Ijara finance to that customer). It appears to me that in enacting the section using real world terms, Parliament has sought to describe the two paradigms of Ijara finance. In the second example, in which subsection (2) exempts the first transaction, the customer may have purchased the major interest in land and paid SDLT on that purchase, or he may have received the major interest in land as a gift or through inheritance and therefore have incurred no charge to SDLT. It is not relevant to the application of section 71A(2) to ask whether or not the customer has incurred a liability to pay SDLT before entering into the Ijara arrangement. Subsection (2) requires one only to ask the real world question: who sold the major interest in land to the financial institution? If the answer to that question is the customer, no charge to SDLT would arise. In the present case, if one asks, who sold the barracks to MAR?, the answer is PBL. Secondly, this approach is consistent with the aim of section 71A, which the UT identified, of seeking to equate Ijara financing with conventional lending in the United Kingdom by taxing the purchaser of the property and exempting the financier. In conventional lending, security interests are exempt in all circumstances (section 48(2)). Section 71A operates as a self-contained statutory regime to achieve this result. As was stated in the Explanatory Notes to the original clauses 72 and 73 of the Finance Bill 2003 the aim was to place the amount of tax due on purchases by means of Islamic financing on a level footing with the amount due for purchases with conventional mortgage products. Thus in the case where the financial institution purchases from its customer, the whole transaction may be seen as the equivalent of a security transaction. In the case where the financial institution purchases from a third party, that purchase may be seen as a precursor of the equivalent of a security transaction effected by the lease and the conferring on the customer of the right to buy the property from the financial institution. Thirdly, there is nothing within section 71A which suggests that the exemption in subsection (2) will not apply when the sale by the customer to the financial institution is a sub-sale which takes place contemporaneously and in connection with the customers purchase of the major interest in land. What Parliament appears to have overlooked at the outset is the possibility of the combination of sub-sale relief with the exemption of Ijara arrangements. Fourthly, this interpretation has the benefit (subject to the operation in particular cases of section 75A which I discuss below) that, where the financial institution purchases the property from its customer, SDLT will not be charged on the amount which the financial institution provides its customer, which may in many circumstances be significantly less than the purchase price of the property, for example where the customer has provided a proportion of the purchase price of the land from its own resources. In some cases, as here, the amount which the financial institution contracts to provide may be significantly more than the purchase price of the property which the customer has paid. It is of note that the interpretation of section 71A(2) which the Court of Appeal has favoured in the context of a sub-sale has the effect of imposing a tax charge by reference to the amount which the financial institution provides the customer. This would not achieve the level footing which the section was designed to achieve. In DV3 the Court of Appeal was addressing relief under paragraph 10 of Schedule 15 to the FA 2003 which was available when a person transfers a chargeable interest to a partnership of which he is a partner. In that case the partner (A) purchased a lease from an insurance company (C) and transferred the lease to a newly created partnership (B) of which A and four others were the partners. Both contracts were completed on the same day. A claimed sub-sale relief under section 45(3) and also relief for B (the partnership) under paragraph 10 of Schedule 15. The claim for the Schedule 15 relief failed because the section 45(3) disregard prevented A from acquiring a chargeable interest from C, and paragraph 10 of Schedule 15 applies only if a partner transfers a chargeable interest to a partnership. Lewison LJ, when discussing the definition of land transaction in section 43(1), stated, at para 23: the fact that B acquires a chargeable interest as the result of an instrument giving effect to a transaction between him and A does not necessarily entail the proposition that the interest in As hands was itself a chargeable interest. If there is no land transaction, there cannot have been the acquisition of a chargeable interest. He continued at para 30: Paragraph 10 of Schedule 15 to the 2003 Act is not so much concerned with the acquisition of a chargeable interest by a partnership as the transfer by a partner of a chargeable interest. It looks at a transaction from the perspective of the transferor. It seems to me to be clear that a partner cannot transfer a chargeable interest to a partnership unless he has a chargeable interest to transfer. HMRC accept as correct the Court of Appeals analysis in DV3 but argue that the case casts no light on the correct interpretation of section 71A(2) because it is irrelevant to the operation of that subsection whether the completion of the sale from the MoD to PBL was a land transaction for the purpose of SDLT with the result that PBL acquired a chargeable interest. Equally, it is irrelevant to the interpretation of section 71A(2) whether or not the transaction between the customer and the financial institution is a land transaction. When the FA 2003 spoke of the vendor in section 71A and in the equivalent subsections in the other sections exempting alternative property finance, it was referring to the vendor in the real world transaction of the sale of the major interest in land. It was not concerned with whether or not the real world transaction was a land transaction for the purposes of SDLT. Accordingly, HMRC submit that section 43(4), which defines vendor in relation to a land transaction in Part 4 of the FA 2003 as the person disposing of the subject-matter of the transaction is not in point. For the reason set out in paras 24 and 25 above, I agree. It follows that the disregard in the tailpiece of section 45(3) has no bearing on the operation of section 71A(2). A consideration which influenced the Court of Appeal in reaching its view on section 71A(2) was that Parliament could not have intended to leave transactions which involved a sub-sale financed by an Ijara arrangement (and thus fell within both section 45(3) and section 71A) free of charge for over one year before it introduced the anti-avoidance provision of section 75A. I see the force of this point; it is without question a legitimate method of purposive statutory construction that one should seek to avoid absurd or unlikely results. But SDLT was a new tax created by the FA 2003 and, as I have said, required repeated amendments to make it effective. It is not surprising that lacunas may have existed in the early years of a new tax. In the early years of the tax, Parliament enacted amendments to close identified lacunas caused by the combination of sub-sale relief and exemptions. Thus section 45(5A) was inserted into the FA 2003 by section 296 of and paragraph 5 of Schedule 39 to the Finance Act 2004. It provided: In relation to a land transaction treated as taking place by virtue of subsection (3) - (a) references in Schedule 7 (group relief) to the vendor shall be read as references to the vendor under the original contract; (b) other references in this Part to the vendor shall be read, where the context permits, as referring to either the vendor under the original contract or the transferor. This provision would not have needed to define the vendor for the purpose of group relief in para (a) as it did if, consistently with the Court of Appeals reasoning, the disregard in the tailpiece to section 45(3) operated already to make the vendor a reference to the vendor under the original contract. Similarly, the insertion by the Finance (No 2) Act 2005 into the tailpiece of section 45(3) of the words of exception (ie except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual)) would not have been required to impose a charge to SDLT. If the Court of Appeal were correct in holding that the vendor in section 71A(2) had to have a chargeable interest and that the tailpiece of section 45(3) prevented it from having such an interest, sections 72(2), 72A(2) and 73(2), which are similarly worded, would operate in the same way in the context of a sub-sale so that the vendor in each case could not be the customer. The parties have not explained to the court what prompted each of the various amendments, but Parliament may have been responding to particular schemes which had the effect of avoiding SDLT. HMRC explained in their written case that section 75A, which the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (SI 2006/3237) and section 71 of the Finance Act 2007 inserted into the FA 2003, was a response to the formulation of tax avoidance schemes which combined reliefs (including sub-sale relief) and exemptions in ways which Parliament had not intended. As will be clear when I turn to section 75A, it has a very broad ambit. The problem of tax avoidance by combining sub-sale relief and the exemptions for the various forms alternative property finance was capable of a more focussed resolution. While subsequent amendments are not a legitimate tool in ascertaining prior parliamentary intention, it is relevant to note that the problem of the combination of the sub-sale relief and those exemptions was eventually resolved by a simple expedient. In section 82 of and paragraph 2 of Schedule 21 to the Finance Act 2011 Parliament amended the exception in the tailpiece of section 45(3) to read: except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of any of sections 71A to 73 (which relate to alternative property finance) (new wording emphasised). This amendment, like those referred to in para 32, would not have been needed to create a charge to SDLT if the interpretation which the Court of Appeal favoured were correct. The courts adopt a purposive approach to the interpretation of taxing statutes following the guidance of the House of Lords in Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes) [2005] 1 AC 684. In accordance with that guidance, summarised by Lord Nicholls of Birkenhead at para 32, the court asks itself two questions. First, it must determine the nature of the transaction to which a statutory provision is intended to apply; and secondly it must decide whether the actual transaction answers to the statutory description. If I am correct about the self- contained nature of the provisions of section 71A, the answer to the first question is that the exemption in section 71A(2) applies to the first transaction of the Ijara arrangement in section 71A(1) where the customer sells a major interest in land to the financial institution. The question whether PBLs sale of the barracks to MAR answers that description is answered in the affirmative. A purposive construction will not always operate in favour of HMRC and against the taxpayer as MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311 shows. Similarly, if there are lacunas in a statutory regime which enable tax avoidance, a purposive interpretation may not always remove them as the Court of Appeals judgment in Mayes v Revenue and Customs Comrs [2011] STC 1269 shows. I therefore conclude that, but for section 75A, the combination of the operation of sub-sale relief under section 45(2) and (3) and the exemption under section 71A(2) relieved the sale by the MoD to PBL and exempted the sale by PBL to MAR from a charge to SDLT. An argument against this approach, which has attracted Lord Briggs, is that section 71A(2) must be construed as exempting a transaction which would otherwise be a chargeable transaction under Part 4. The only transaction which is so chargeable, so the argument goes, is the completion of the notional secondary contract which section 45(3) creates, and section 45(5A)(b) gives instructions on the identification of the vendor in the notional land transaction. Because the identification of the vendor in section 45(5A)(b) depends on the context in which the word is used and that context would give rise to the avoidance of tax if vendor referred to the transferee because the combination of sub-sale relief and section 71A(2) would exempt both transactions, it is argued that the vendor in section 71A(2) must refer to the original vendor, ie the MoD. I do not agree. In relation to the first point, the statement that a transaction is exempt from charge, such as that in section 71A(2) referring to the first transaction, is an unqualified statement that a transaction of that description is free from a liability to pay the tax. That exclusion of liability is not removed if, for some extraneous reason such as the operation of sub-sale relief under section 45, the transaction in question would not have imposed a liability to SDLT: viz the first of my four reasons (paras 24 and 25 above). If that is correct, the second argument does not arise because operation of the exemption does not depend on section 45(5A)(b). In any event, if section 45(5A)(b) were relevant, (a) the context of the use of the word vendor was in relation to real world transactions and (b) the history of the amendment of the FA 2003 in the years before the transactions were carried out on 31 January 2008 suggests that HMRC were struggling to respond to schemes which exploited lacunas in the legislation. In that context the existence of a loophole in the tax legislation would not militate against the interpretation which I favour. This is not to say that a contextual construction of a statutory provision may not have regard to the consequences of a particular interpretation and lead one to prefer another interpretation, especially when the former interpretation would have absurd or unreasonable results. It is simply to say that in the early years of SDLT Parliament created a patchwork of provisions, which, for a while, allowed a transaction, which combined sub-sale relief and Ijara arrangements, what Lord Briggs correctly calls an unintended tax holiday. I recognise that the exclusion by the Finance (No 2) Act 2005 of the completion or substantial performance of the first contract from the section 45(3) disregard when the secondary contract would give rise to an exempt transaction under section 73(3) suggests that the draftsman in 2005 sought to impose a charge on the first transaction under section 73 while not addressing a similar problem in section 71A. But that indication of intention at that time is not sufficient in my view to outweigh the factors which have persuaded me to regard section 71A, which had been introduced earlier in 2005, as a self-contained statutory regime which confers exemption on real world transactions. Further, the different treatment in section 45(3) of the similarly-worded exemptions in sections 71A and 73 at the time of the relevant transactions has the result, on Lord Briggs approach which is focussed on avoiding tax loss, that vendor is interpreted differently under sections 71A(2) and 73(2). While section 45(5A)(b) may allow such an interpretation, I find HMRCs explanation of a patchwork of provisions and a lacuna a more persuasive explanation of the relevant provisions as they were then. Because, as a result of the combination of sections 45 and 71A(2), there is no SDLT charge on the sales between the MoD and PBL and between PBL and MAR, it is necessary to consider the correct interpretation and application of section 75A, to which I now turn. Section 75A (i) Whether and if so how it applies Section 75A is headed Anti-avoidance and provides: (1) This section applies where - (a) one person (V) disposes of a chargeable interest and another person (P) acquires either it or a chargeable interest deriving from it, (b) a number of transactions (including the disposal and acquisition) are involved in connection with the disposal and acquisition (the scheme transactions), and (c) the sum of the amounts of stamp duty land tax payable in respect of the scheme transactions is less than the amount that would be payable on a notional land transaction effecting the acquisition of Vs chargeable interest by P on its disposal by V. In subsection (1) transaction includes, in particular - (a) a non-land transaction, (2) any kind of arrangement whether or not it could an agreement, offer or undertaking not to take (b) specified action, (c) otherwise be described as a transaction, and (d) acquisition by P of the chargeable interest. a transaction which takes place after the (3) The scheme transactions may include, for example - the acquisition by P of a lease deriving from a a sub-sale to a third person; the grant of a lease to a third person subject to a (a) freehold owned or formerly owned by V; (b) (c) right to terminate; (d) take some other action; the exercise of a right to terminate a lease or to (4) Where this section applies - (a) any of the scheme transactions which is a land transaction shall be disregarded for the purposes of this Part, but (b) there shall be a notional land transaction for the purposes of this Part effecting the acquisition of Vs chargeable interest by P on its disposal by V. (5) The chargeable consideration on the notional transaction mentioned in subsections (1)(c) and (4)(b) is the largest amount (or aggregate amount) - (a) given by or on behalf of any one person by way of consideration for the scheme transactions, or (b) received by or on behalf of V (or a person connected with V within the meaning of section 839 of the Taxes Act 1988) by way of consideration for the scheme transactions. (6) The effective date of the notional transaction is - the last date of completion for the scheme (a) transactions, or if earlier, the last date on which a contract in (b) respect of the scheme transactions is substantially performed. (7) This section does not apply where subsection (1)(c) is satisfied only by reason of - (a) (b) sections 71A to 73, or a provision of Schedule 9. The breadth of section 75A was implicitly acknowledged by Parliament which in section 75C(11) and (12) empowered the Treasury to make an order, including an order with retrospective effect, which provides that section 75A is not to apply in specified circumstances. PBLs first argument, that section 75A could not apply because it had not been established that the parties entered into the transactions for the purpose of tax avoidance, failed before the FTT, the UT and the Court of Appeal. In my view the tribunals and the Court of Appeal reached the correct conclusion. The heading of the section, Anti-avoidance, is the only indication in the section which could support PBLs contention. The heading is relevant to assist an understanding as to the mischief which the provision addresses, but it says nothing as to the motives of the parties to the scheme transactions. There is nothing in the body of the section which expressly or inferentially refers to motivation. The provision was enacted to counter tax avoidance which resulted from the use of a number of transactions to effect the disposal and acquisition of a chargeable interest. It is sufficient for the operation of the section that tax avoidance, in the sense of a reduced liability or no liability to SDLT, resulted from the series of transactions which the parties put in place, whatever their motive for transacting in that manner. This is clear from subsection (1)(c) which compares the amount of SDLT payable in respect of the actual transactions against what would be payable under the notional land transaction in section 75A(4), by which P acquired Vs chargeable interest on its disposal by V. Section 75A does not identify who is V and who is P in relation to the transactions to which the section applies. As there is a number of transactions, it is possible that more than one person may be V and more than one person may be P. But Parliament has not conferred a discretion on HMRC to select whom they wish to treat as V or P. HMRC do not contend otherwise. In Vestey v Inland Revenue Comrs (Nos 1 and 2) [1980] AC 1170, in which the Revenue contended that they had a discretion to select whom among a class of beneficiaries it should assess as liable to tax, Lord Wilberforce identified the following principles as fundamental objections to that contention, at p 1172: Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined. A proposition that whether a subject is to be taxed or not, or, if he is, the amount of his liability, is to be decided (even though within a limit) by an administrative body represents a radical departure from constitutional principle. It is necessary therefore for the courts to analyse the words of a broadly-worded anti- avoidance provision to identify the persons on whom Parliament has imposed this charge to tax. The words of section 75A by themselves do not disclose who is V and who is P in a particular case. But the mischief which the provision addresses and the context of the provision within Part 4 of the FA 2003 provide the answer. The court adopts the purposive approach which the House of Lords sanctioned in Barclays Mercantile Business Finance Ltd, to which I have referred in para 34 above. The explanatory notes on clause 70 of the Finance Bill 2007 explained that the provision was introduced to counter avoidance schemes which have been developed to avoid payment of SDLT. It appears to be drafted in deliberately broad terms to catch a wide range of arrangements which result in tax loss. The examples of scheme transactions which are set out in subsection (3), although merely examples, give an indication of some at least of the targets of the provision. The task is to identify where the tax loss has occurred as a result of the adoption of the scheme transactions in relation to the disposal and acquisition of the relevant interest or interests in land. This in turn involves identifying the person on whom the tax charge would have fallen if there had not been the scheme transactions to which subsection (1)(b) refers and which exploited a loophole in the statutory provisions. It is clear from (i) subsection (1)(a), which refers to P acquiring either Vs chargeable interest or a chargeable interest deriving from it, and (ii) subsection (3)(a), which refers to the acquisition by P of a lease deriving from a freehold owned or formerly owned by V (emphasis added), that the section may operate not only when P acquires the chargeable interest directly from V but also when P acquires a chargeable interest, such as a lease, which is derived from a chargeable interest which V formerly owned. Thus the section can cover a series of transactions by which V disposes of its chargeable interest which comes to be acquired by another person and P ultimately acquires a chargeable interest derived from it from that other person. Turning to the application of the section to the transactions in this case, it is agreed by the parties that V in subsection (1)(a) is the MoD; its chargeable interest was the freehold in the Chelsea Barracks. I agree. In the course of the scheme transactions, PBL did not acquire a chargeable interest, the freehold, when the contract between the MoD and it was completed on 31 January 2008 because the transaction fell to be disregarded under section 45(3); on the same day MAR acquired a chargeable interest, again the freehold, when its contract with PBL was implemented as a result of the completion of the notional transaction in section 45(3); and, on the same day, PBL acquired a chargeable interest, the lease, from MAR. The put and call options were designed to enable PBL to re-acquire the freehold in the barracks, a result which was the ultimate aim of the series of transactions summarised in para 5 above. But those options did not result in the acquisition of a chargeable interest on 31 January 2008. They were nevertheless a scheme transaction within subsection (1)(b) because they were involved in connection with the disposal and acquisition of a chargeable interest and subsection (2)(d) includes within the definition of transaction under subsection (1) a transaction which takes place after P acquires the chargeable interest. They are part of the context in which the scheme transactions, which led to Ps acquisition of a chargeable interest on 31 January 2008, fall to be analysed as they were the final stage of the transactions by which MAR was to finance PBLs acquisition of the freehold in the barracks. If the court were to confine its attention to subsection (1)(a) alone, either MAR or PBL could be P, the former because it acquired a chargeable interest on its acquisition of the freehold in the barracks and the latter because it acquired the lease of the barracks from MAR. But the court cannot so confine its attention. It must go on to analyse how the scheme transactions gave rise to the loss of tax. In the real world the nature of the transaction is clear: PBL acquired the barracks with the benefit of finance from MAR. The sub-sale to MAR and the lease back to PBL were transactions involved in connection with the disposal by MoD of its chargeable interest, the freehold in the barracks, and the acquisition by PBL of its chargeable interest, the leasehold interest. The loophole which has enabled the avoidance of tax is the combination of sub-sale relief under section 45(3) with the exemption conferred on Ijara financing when the customer of the financial institution sells its freehold interest in land to the institution and then leases back the land. The simple means of removing the loophole, which Parliament eventually identified in 2011, was to exclude from the disregard in the tailpiece of section 45(3) a case where the secondary contract was exempt because of sections 71A to 73. Thus it was PBL which obtained the benefit of the avoidance of tax in relation to the completion of its contract with MoD. I recognise that the method which Parliament subsequently chose to remove the tax loss cannot be decisive. There might have been other ways of removing the tax loss. For example, it might have been possible to amend section 71A(2) to remove the exemption of the sale transaction between the customer and the financial institution if the vendor had benefited from the section 45(3) disregard and thereby impose the burden on the financial institution. But, as Judge Nowlan stated in his impressive judgment (para 137), it is appropriate to have regard to the overall structure of SDLT which seeks to impose the tax on purchasers and not financiers. The amendment of section 45(3) rather than section 71A(2) had the advantage of preserving this structure by keeping intact the exemption of the two paradigms of Ijara financing to which I referred in para 4 above. If the opportunity for tax avoidance were removed by amending section 71A(2), the consequence would be that SDLT would be paid on the price which the financial institution paid its customer in the context of the Ijara financing which, as I have said, might differ significantly from the purchase price of the major interest in land. Thus I conclude, like Judge Nowlan, that the error obviously lay in the failure to disapply the section 45(3) disregard, an error which benefited PBL. Taking a purposive approach to the interpretation of section 75A, therefore, I conclude that PBL is P; and, because the completion of the contract between the MoD and PBL is disregarded under section 45(3), the chargeable interest which PBL acquires in section 75A(1) is the lease which it received from MAR. The parties advanced two alternative approaches to the identification of P, which I comment on briefly to explain why I cannot accept either approach. First, PBL submits that the court should adopt a sequential approach and identify as P the first person who acquires a chargeable interest. As the completion of the MoD-PBL contract is disregarded under section 45(3), MAR is that person. But there is no justification in the wording of section 75A for the adoption of a sequential approach, when applying the section to the transactions which in fact took place, which stops the search at the first person to acquire a chargeable interest. One would thereby remove from consideration the leaseback and the grant of the options which were part of the contractual scheme which the section is designed to address. That approach appears to me to be inconsistent with the purpose of section 75A, which is to prevent a tax loss which otherwise would occur because of the totality of the connected transactions which have taken place in the real world. Secondly, HMRC submit that MAR could not be P because section 75A(7) disapplies section 75A if subsection (1)(c) is satisfied only by reason of sections 71A to 73. HMRC argues that, from MARs perspective, the only reason why MAR did not incur liability to SDLT on its acquisition of the freehold interest in the barracks from PBL was because of the exemption in section 71A. That may be so; but it is irrelevant. Subsection (1)(c) does not look at the question from the perspective of a party to one of the transactions. It sets up a comparison between the sum of SDLT payable on all of the connected transactions and that payable on the notional transaction. Subsection (7) would disapply section 75A in relation to the transactions in para 5 above only if the section 71A exemption were the sole reason why the amounts of SDLT payable on those transactions is less than the amount payable on the notional transaction. The first of those transactions was the completion of the MoD-PBL contract and the reason why the sum payable on that transaction was nil was because of the section 45(3) disregard. Thus subsection (7) would not disapply section 75A. PBL advanced a refinement of this approach in its written case, namely that if one adds up all of the SDLT which would have been charged if there had been no sub-sale relief and no exemption for the Ijara finance, it is only the section 71A exemption which takes the tax due on the scheme transactions below that due on the notional transaction in the subsection (1)(c) balance. Subject to its challenge on the quantum of the charge on the notional transaction, which I discuss below, PBL presents the sums payable on the four transactions in para 5 above, if there were no sub-sale relief and no section 71A exemption, as follows: (i) 38.36m in respect of the MoD-PBL transfer; (ii) 50m in respect of the PBL-MAR transfer; (iii) 16.41m in respect of the lease granted by MAR to PBL; and (iv) 0 for the option to purchase, A total of 104.77m If 50m is payable for the notional transaction, PBL argues that it is only the section 71A exemption (50m plus 16.41m) which takes the sums payable in respect of those transactions below the sum payable on the notional transaction (ie 104.77m - 66.41m = 38.36m). I do not accept this approach. I consider that the purpose of subsection (7)(a) is to exclude the application of section 75A where the only cause of the tax loss which the section counters is the exemptions available under sections 71A to 73. Those alternative property finance provisions involve a series of transactions which otherwise might themselves be scheme transactions under section 75A(1)(b) and it is clearly not the purpose of the section to strike at transactions which go no further than to achieve the intended exemption of alternative property finance. Where, as here, the combined effect of section 45(3) and section 71A is to diminish the SDLT payable below that payable on the notional transaction, section 75A must take effect. I conclude (i) that PBL is P under section 75A(1)(a), (ii) that the requirements of subsection (1)(b) also are met because the scheme transactions are those listed in para 5(4) above, and (iii) addressing the first side of the balance which subsection (1)(c) mandates, that the sum of SDLT payable in respect of the scheme transactions is nil. It is then necessary to consider the other side of the subsection (1)(c) balance. It will be recalled that subsection (4) requires that the scheme transactions which are land transactions be disregarded and establishes in their place a notional transaction by which P acquires Vs chargeable interest on its disposal by V. That notional transaction involves PBL acquiring MoDs freehold interest in the barracks. Under subsection (6) the effective date of that notional transaction is 31 January 2008. I turn then to the chargeable consideration on this notional transaction. ii) The actual consideration Subsection (5) provides, so far as relevant, that the chargeable consideration on the notional transaction is the largest amount (or aggregate amount) given by any one person for the scheme transactions. HMRC assert that that sum is the 1.25 billion which was the purchase price which MAR contracted to pay to PBL for the purchase of the freehold in the barracks. SDLT, which is chargeable at 4% on that figure, results in a liability of 50m. PBL contests this. It points out that the Ijara arrangement was brought to an end on 1 March 2010, at a time when the fourth tranche of the consideration under the PBL-MAR sale agreement (US$378,670,740) had not been paid. Before the FTT, PBL argued that MAR had therefore given consideration of only 970m and not the higher figure of 1.25 billion. PBL now asserts that the sterling equivalent of the amount which it had drawn down was approximately 847m, because paragraph 9 of Schedule 4 to the FA 2003 requires the sterling equivalent to be calculated at the effective date of the transaction (ie 31 January 2008). The higher figure of 970m was, PBL asserts, based on an erroneous calculation of the sterling equivalent of each of the US$ draw downs on its own draw down date. If the consideration which MAR actually paid to PBL for the conveyance to it of the freehold in the barracks was only 847m, the largest amount given by one person for the scheme transactions was the 959m paid by PBL to the MoD. In my view it is not necessary for this court to determine what is the correct sterling equivalent of the sums which MAR actually paid to PBL as I am persuaded, for the reasons set out below, that HMRC are correct that the consideration for MARs purchase of the barracks from PBL was 1.25 billion, but that PBL may claim a refund for the part of that consideration which was never paid. Mr Gammie does not dispute that it was open to PBL to make that claim. PBL asserts that it made that claim after the FTT handed down its decision. The starting point is paragraph 1(1) of Schedule 4 to the FA 2003 which defines the chargeable consideration in these terms: The chargeable consideration for a transaction is, except as otherwise expressly provided, any consideration in money or moneys worth given for the subject-matter of the transaction, directly or indirectly, by the purchaser or a person connected with him. This provision might appear, by itself, to support PBLs case. But section 51 addresses contingent consideration. It provides so far as relevant: (1) Where the whole or part of the chargeable consideration for a transaction is contingent, the amount or value of the consideration shall be determined for the purposes of this Part on the assumption that the outcome of the contingency will be such that the consideration is payable or, as the case may be, does not cease to be payable. (4) This section has effect subject to - section 80 (adjustment where contingency ceases or consideration is ascertained) Section 80, which provides for the adjustment of a return where a contingency ceases or the consideration is ascertained, provides so far as relevant (as amended by sections 299 and 326 of and Schedule 42 to the Finance Act 2004): (1) Where section 51 (contingent, uncertain or unascertained consideration) applies in relation to a transaction and - in the case of contingent consideration, the (a) contingency occurs or it becomes clear that it will not occur, or (b) in the case of uncertain or unascertained consideration, an amount relevant to the calculation of the consideration, or any instalment of consideration, becomes ascertained, the following provisions have effect to require or permit reconsideration of how this Part applies to the transaction (and to any transaction in relation to which it is a linked transaction). (2) If the effect of the new information is that a transaction becomes notifiable, or that additional tax is payable in respect of a transaction or that tax is payable where none was payable before - (a) within 30 days. (4) If the effect of the new information is that less tax is payable in respect of a transaction than has already been paid - the purchaser must make a return to [HMRC] the purchaser may, within the period allowed for (a) amendment of the land transaction return, amend the return accordingly; after the end of that period he may (if the land (b) transaction return is not so amended) make a claim to [HMRC] for repayment of the amount overpaid. (Emphasis added in sections (2)(a) and 4(a) & (b)) PBL submits that because section 51 is subject to section 80 and section 80 requires reconsideration of the manner in which the SDLT code applies, it was incumbent upon HMRC or the courts to amend the land transaction return to reflect the actual chargeable consideration and thus the SDLT payable. On that basis PBL asserts that the FTT erred in allowing HMRC to amend their statement of case to claim that the amount of SDLT which was payable was 50m. But this is to mis- read section 80. Subsection (1) speaks of the following provisions having effect to require or permit reconsideration. The use of the disjunctive conjunction is significant. Subsection (2) requires the purchaser to make a return where tax has been underpaid; but subsection (4), which applies where tax is overpaid, permits the taxpayer to amend the return or to claim the repayment. This statutory asymmetry has the effect that section 51 operates to tax the contingent consideration and, under section 80, the taxpayer has to take the initiative to obtain repayment if new information shows that less tax is payable than has been paid. There is no scope for the application of the Bwllfla principle, that where facts are available they are to be preferred to prophecies (Bwllfa & Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426), where Parliament has laid down the process by which the correct amount of SDLT which is payable is ascertained. I conclude therefore that, subject to the human rights challenge, HMRC are correct in their assertion that the chargeable consideration for the notional transaction (section 75A(4) and (5)) is 1.25 billion and the SDLT due thereon is 50m. HMRCs calculation of that sum as the SDLT due is however subject to the right to claim under section 80. PBL recorded in its written case (footnote 134) that it made such a claim shortly after the decision of the FTT and that HMRC opened an inquiry into that claim, which has been left in abeyance pending the outcome of this appeal. As HMRC has not addressed this matter, I need say no more. (iii) Section 75B and the human rights challenge In the UT Morgan J interpreted section 75B, to which I will turn, as enabling the tribunal to determine that the chargeable consideration on the notional transaction under section 75A was the 959m which PBL had paid the MoD for the freehold of the barracks and not the 1.25 billion which MAR had contracted to pay to PBL. PBL accepts that on a black-letter reading of section 75B, where the financial institution provides more finance than the price which the customer pays for the land, the section 75A charge on the notional transaction will take account of the whole of the amount payable for the chargeable interest which the financial institution acquires. But it asserts that the manner in which section 75B is drafted indirectly discriminates against those of Islamic faith who may be expected to adopt Sharia financing techniques. Under conventional mortgage financing, SDLT would have been payable on the consideration for PBLs acquisition of the freehold in the barracks from the MoD (959m) and the security transaction would have been exempt, notwithstanding that the financial institution had provided additional finance. By contrast, if Sharia compliant finance is obtained, the additional sums provided by the financial institution would be subjected to the SDLT charge. PBL argues that the transactions fall within the ambit of article 9 of the European Convention on Human Rights (ECHR) (in particular the freedom to manifest ones religion) and of Article 1 of Protocol 1 (A1P1) (the entitlement to the peaceful enjoyment of ones property and the right not to be deprived of ones possessions except in the public interest). Article 14 of the ECHR requires public authorities to secure the enjoyment of such rights and freedoms without discrimination on a ground such as religion. PBL submits that section 3(1) of the Human Rights Act 1998 requires the court to interpret section 75B in a manner which is compatible with article 14 read with article 9 and A1P1, and so to eliminate discrimination against those of the Islamic faith. Section 75B provides (so far as relevant): (1) In calculating the chargeable consideration on the notional transaction for the purposes of section 75A(5), consideration for a transaction shall be ignored if or in so far as the transaction is merely incidental to the transfer of the chargeable interest from V to P. (2) A transaction is not incidental to the transfer of the chargeable interest from V to P - (a) if or in so far as it forms part of a process, or series of transactions, by which the transfer is effected, or (c) if it is of a kind specified in section 75A(3). (3) A transaction may, in particular, be incidental if or in so far as it is undertaken only for a purpose relating to - the construction of a building on property to (a) which the chargeable interest relates, the sale or supply of anything other than land, or (b) (c) a loan to P secured by a mortgage, or any other provision of finance to enable P, or another person, to pay for part of a process, or series of transactions, by which the chargeable interest transfers from V to P. In subsection (3) - (a) paragraph (a) is subject to subsection (2)(a) to (c), (b) paragraph (b) is subject to subsection (2)(a) and (c), and (c) paragraph (c) is subject to subsection (2)(a) to (c). (4) (5) The exclusion required by subsection (1) shall be effected by way of just and reasonable apportionment if necessary. In this section a reference to the transfer of a chargeable (6) interest from V to P includes a reference to a disposal by V of an interest acquired by P. Absent the question of ECHR compatibility, I am satisfied that section 75B does not assist PBL. Morgan J in the UT sought to use section 75B to avoid what he saw as an unreasonable result by two means. First, he accepted PBLs submission that subsections (1) and (6) refer to the acquisition by P of the chargeable interest disposed of by V and that interest in this case could only be the freehold as V (the MoD) did not dispose of the leasehold. Thus the only transfer which was relevant in section 75B was the transfer of the freehold from the MoD to PBL, to which the sub-sale by PBL to MAR was incidental. Secondly, he interpreted the words in so far as in subsection (1) as authorising the apportionment of the consideration which MAR provided to PBL for the freehold between (a) the sum which reimbursed PBL for the price which it paid the MoD for the freehold and (b) the sum which MAR agreed to provide to enable PBL to pay any SDLT which was due and to fund other expenditure. He referred to PBLs submission that one could achieve this by reading into subsection (1) after the words in so far as the additional words the payment of the consideration or but said that it was not necessary to do so. I disagree on both points, for reasons which are essentially the same as those which Judge Nowlan advanced. In my view both section 75A and section 75B are difficult provisions to interpret and to apply to particular transactions. In summary, section 75A has been drafted in broad terms to catch a range of tax avoidance schemes and prevent unintended tax losses by the use within a series of transactions of a combination of reliefs and exemptions; and section 75B reduces the chargeable consideration of the notional transaction in section 75A(4) by excluding incidental transactions in that series of transactions from the section 75A(5) calculation. Looking at the matter in more detail, one starts with the chargeable consideration on the notional transaction in section 75A(5), which is calculated by reference to the scheme transactions which are the actual transfer or transfers by which a chargeable interest moves from V to P or P acquires a chargeable interest deriving from it (section 75A(1)(a)). That chargeable consideration, as I have said, is the largest amount (or aggregate amount) given by any one person by way of consideration for the scheme transactions. Section 75B is framed to remove from those actual transactions (ie the scheme transactions of section 75A(1)(b)) any transactions which in accordance with its provisions are to be treated as incidental. To achieve this, the reference in section 75B(1) to the transfer of the chargeable interest from V to P is a reference to the actual transfer or transfers which are the subject of section 75A(1)(a) and (b). Support for this view comes from (a) subsection (6) and (b) subsection (2). Subsection (6) (a reference to the transfer of a chargeable interest from V to P includes a reference to a disposal by V of an interest acquired by P) makes clear that subsection (1) covers a case where P acquires from another party the interest which V has disposed of. Thus section 75B could be applied to the circumstance where, within the scheme transactions, V sold the freehold in land to B who sold on that freehold to P. Subsection (2) is framed to place limits on the scope of subsection (1). Subsection (2)(a), which provides that a transaction is not incidental if or in so far as it forms part of a process or series of transactions, by which the transfer is effected, is a reference to the scheme transactions in section 75A(1)(b) in so far as they form part of the process by which the relevant disposal and acquisition or acquisitions are made. Subsection (2)(c) provides that a transaction is not incidental if it is of a kind specified in section 75A(3). That includes (in section 75A(3)(a)) the acquisition by P of a lease deriving from a freehold owned or formerly owned by V and (in section 75A(3)(b)) a sub-sale to a third person. To give effect to subsection (2) and achieve coherence both within section 75B and between that section and section 75A, the transfer of the chargeable interest from V to P in section 75B(1) and (6) must extend to the transactions to which section 75A(1)(a) and (b) and (3) refer, including the sub-sale to the third person under section 75A(3)(b) (ie PBLs sale to MAR) and the acquisition by P of an interest derived from the chargeable interest which V has disposed of under section 75A(3)(a) (ie the leasehold interest which MAR gave to PBL). This interpretation is wholly consistent with the purpose of section 75B which is to reduce the consideration given for the transactions in section 75A(1)(b) which are to be taken into account in the section 75A(5) calculation of the consideration on the notional transaction. I therefore conclude that the transactions which transfer the chargeable interest from V to P in section 75B(1) include both the sub-sale to MAR and the grant by MAR of the lease to PBL. I am also not persuaded by the second argument which Morgan J favoured, namely that the words in so far as in section 75B(1) required the tribunal to apportion the 1.25 billion consideration which MAR paid between the purchase price of the barracks and other finance. Those words in subsection (1) appear to be addressing a composite transaction which in part is necessary for the disposal and acquisition, to which section 75A(1)(a) refers, and in part serves some other, incidental, purpose, such as any of those identified in subsection (3). That cannot assist PBL in this case because of the overriding effect of subsection (2). It is arguable that subsection (2)(a) may not provide an answer, for as PBL points out, it uses the same if and in so far as formulation as subsection (1). But subsection (2)(c) is unqualified and prevents the sub-sale to MAR from being incidental because that transaction was of a kind specified in section 75A(3), ie a sub-sale to a third person. Any appeal to the terms of section 75B(3)(c) is excluded by subsection (4)(c) which overrides it by the operation of the exclusion in subsection (2)(a) and (c). I therefore conclude that the 1.25 billion consideration which MAR contracted to pay to PBL is the relevant consideration under section 75A(5)(a) unless section 3 of the Human Rights Act 1998 requires the court to adopt a more expansive interpretation of incidental transactions in section75B(1). PBLs argument in support of its challenge under article 14 of the ECHR (para 66 above) is that if a conventional lender were to advance sums to its customer in excess of the purchase price of the land, the purchaser would pay SDLT on the purchase price and the financiers security interest would be disregarded under section 48. In a section 75A exercise, section 75B(3)(c) would treat the security transaction (a transaction undertaken only for a purpose relating to - a loan to P secured by a mortgage) as incidental to the transfer of the land from the seller to the customer and therefore outside the calculation of the chargeable consideration for the notional transaction under section 75A(5). But if, as in this case, the financial institution using an Ijara arrangement were to provide funds in excess of the purchase price, section 75A(5) would operate to penalise it by using the larger funding as the measure of the chargeable consideration on the notional transaction. This, says PBL, amounts to unjustified discrimination on the ground of religion contrary to article 14 read with article 9 of the ECHR and A1P1. As I have said, PBL invites the court to read into section 75B(1) the words the payment of the consideration or after in so far as so as to enable the consideration given by the financial institution for the purchase of land from its customer at the first step of an Ijara arrangement to be allocated proportionately between the funding of the land purchase on the one hand and the funding of other expenditure by the customer on the other so that only the former would count towards the chargeable consideration on the notional transaction under section 75A(5). The FTT did not have to consider the merits of this challenge because it concluded that PBL had not established that it had entered into the Sharia compliant financing for religious reasons and that it had therefore not proved that it suffered discrimination on the ground of religion. Neither the UT nor the Court of Appeal had to address the argument because the UT by the presiding members casting vote held that the chargeable consideration was 959m and the Court of Appeal held that section 75A did not apply. I note in passing however that, but for the expiry of a time limit for HMRC, the Court of Appeals decision would have imposed a liability on MAR of 50m on the chargeable consideration of 1.25 billion, and in accordance with standard practice in Ijara arrangements the charge would have fallen on PBL by means of a tax indemnity. I have come to the view that this court does not need to consider the ECHR challenge in detail because the matter can be determined on the simple bases (a) that any discriminatory effect is objectively justified and (b) that, in any event, PBL is not a victim. There is in this case no need to delve into the question whether the FTT was correct in holding that it had not been established that there was any discriminatory treatment. If one were, for the sake of argument, to accept that section 75A had had the potential to give rise to indirect discrimination on the prohibited ground of religion, in cases where the financial institution using Sharia compliant financing had provided funds to its customer beyond what was needed to fund the purchase of land, one would still need to consider whether the provision giving rise to the discriminatory treatment was objectively justified. HMRC advances as justification (a) the need to frame section 75A in broad terms to deal with the lacunas which were giving rise to tax loss and (b) the safety valve created by section 75C(11) and (12) which empowers the Treasury to disapply section 75A in specified circumstances, including making provision with retrospective effect. Thus HMRC argue that if the provision were shown to give rise to a systemic or frequent infringement of ECHR rights, Parliament had provided the mechanism by which such infringements could be avoided. In addition, section 75A(7) disapplies section 75A where the requirements of subsection (1)(c) are satisfied only because of the use of alternative property finance. Paradigm forms of Ijara arrangements are therefore protected. It is the tax loss occasioned by the combination of sub-sale relief and the alternative property finance which has given rise to the section 75A(5) charge in this case. That circumstance cannot recur after section 45(3) was amended in 2011. There is no evidence of any widespread use before 2011 of Ijara arrangements by means of a sub-sale to the financial institution and involving the provision of funds in excess of the purchase price of the land, as occurred in this case. And it is that combination which is the basis of the allegation of discrimination. The fact that a broadly worded provision may on occasion have a harsh effect on an alternative property finance transaction which is structured in a particular way is not sufficient to establish unjustified discrimination under article 14 of the ECHR. In any event, it is not disputed that PBL has a claim under section 80 for the repayment of any amount which is overpaid. If, as appears to be the case, the sterling equivalent of the consideration, which MAR actually paid to PBL for the barracks before the Ijara arrangement was brought to an end, was less than the 959m which PBL paid to the MoD, it is the latter figure which is the chargeable consideration under section 75A(5)(a). In that event, PBL is paying no more than it would have paid if it had used a conventional form of loan financing. It is therefore not a victim of discriminatory treatment. interpretation of section 75B for which PBL argues. I therefore do not accept that article 14 of the ECHR can support the Procedural challenges (a) The wrong return challenge PBL submits that HMRC are in any event not entitled to pursue their claim for the SDLT because they had no power to amend the SDLT return, lodged on its behalf, relating to the completion of the contract of 5 April 2007 between the MoD and PBL (para 7 above), because it was not a return relating to the notional transaction under section 75A. PBL argues that the return, which referred to the section 45(3) disregard, was not strictly necessary but was submitted on its behalf in order to have the purchase of the barracks entered onto the Land Register. It submits that HMRC, while entitled to inquire into that return under section 76 of and paragraph 12 of Schedule 10 to the FA 2003 in relation to the sale by the MoD to PBL, had no power to amend the return in order to impose a liability to SDLT on the separate, notional transaction. The only avenues which had been open to HMRC to impose a liability to SDLT on the notional transaction, it submits, were to make a determination under paragraph 25 of Schedule 10, because no return had been lodged in respect of the notional transaction, or to make a discovery assessment under paragraph 28 of that Schedule. As the six-year time limit for either the determination or the assessment had now expired, HMRC could no longer seek payment of any SDLT due on a notional transaction. I do not accept that submission. The answer lies in the terms of paragraph 13 of Schedule 10, which sets out the scope of the inquiry which HMRC can make under paragraph 12 of that Schedule, and HMRCs powers on completion of the inquiry under paragraph 23. Paragraph 13 provides so far as relevant: (1) An inquiry extends to anything contained in the return, or required to be contained in the return, that relates - to the question whether tax is chargeable in (a) respect of the transaction, or (b) to the amount of tax so chargeable. The relevant information contained in the return included information about the sale of the barracks by the MoD to PBL. To my mind, the fact that the information in the return was provided to HMRC in relation to a transaction (the MoD-PBL sale), which was to be disregarded under both section 45(3) and section 75A(4), does not limit the scope of the inquiry. HMRC were entitled to inquire into the tax consequences of that sale. The powers of HMRC on completion of the inquiry are set out in paragraph 23 of Schedule 10 which provides: (1) An inquiry under paragraph 12 is completed when [HMRC] by notice (a closure notice) inform the purchaser that they have completed their inquiries and state their conclusions. (2) A closure notice must either - state that in the opinion of [HMRC] no (a) amendment of the return is required, or (b) make the amendments of the return required to give effect to their conclusions. HMRC were entitled to inquire into that sale and, on ascertaining that it was a part of a series of transactions which gave rise to a section 75A charge, to amend the return to reflect the tax due on the notional freehold acquisition under section 75A(5). Any obligation on PBL to submit a return in relation to the notional transaction does not limit the scope of HMRCs power to inquire into the MoD-PBL sale or their power to amend the return under paragraph 23. I therefore reject this procedural challenge. (b) Case management challenges It is not the normal practice of this court to review case management decisions of the FTT which have been upheld by the Upper Tribunal as involving no error of law. Having rejected the argument that HMRC were not entitled to amend PBLs SDLT return in relation to the purchase of the freehold from the MoD, it is not necessary to decide whether the FTT should have granted PBL permission to amend its notice of appeal to put forward that argument. The other procedural challenge is PBLs challenge to the FTTs decision to allow HMRC to amend its case to argue that the chargeable consideration was 1.25 billion and not 959m. It is hard to see how the FTT could have decided otherwise. Under paragraph 22(3) of the Stamp Duty Land Tax (Appeals) Regulations 2004 (SI 2004/1363) the FTT is bound to increase the amounts of tax due if the taxpayer has been undercharged: see (by way of analogy in relation to section 50(7) of the Taxes Management Act 1970) Glaxo Group Ltd v Inland Revenue Comrs [1996] STC 191. But, again, having reached the view that PBL has a claim for repayment of overpaid SDLT under section 80, there is no need to address this case management decision. A different approach? Before the hearing, the court drew the attention of counsel to the Observations in Bulletin No 78 to Emmet and Farrand on Title (September 2016). The authors there suggested that the courts might have found a simpler solution to the issues raised in this case if they had had regard to the equitable maxim that The test of a mortgage is in substance, not form. If a transaction is in substance a mortgage, equity will treat it as such, even if it is dressed up in some other guise, as by the documents being cast in the form of an absolute conveyance (Megarry and Wade, The Law of Real Property, 8th ed (2012), para 25.085). The authors suggested that the transfer of the Chelsea barracks to MAR in the Ijara transaction should be viewed in English law as a mortgage, with the result that PBL should have been registered as proprietor of the freehold and have paid SDLT on its purchase and MAR should have been registered as the proprietor of a charge, a security interest exempt from SDLT under section 48. Both HMRC and PBL submitted written observations in response to this request. Neither party disputed that Ijara was a method of financing PBLs purchase and development of the Chelsea barracks. Indeed, the Ministry of Defence had accepted that the Ijara was in the nature of a mortgage and this was reflected in the Deed of Clarification entered into between the Secretary of State for Defence, PBL and Qatari Diar Real Estate Investment Co. But the purpose of this clarification was to ensure that the provisions in the contract of sale between the MoD and PBL providing for overage in the event of a sale on by PBL would not apply to the sale to MAR. Neither party accepts that, for this or any other reason, the transactions between PBL and MAR were in substance a mortgage and should be treated as such. They were real transactions, albeit inextricably linked, and intended to take effect in accordance with their terms, and there is no reason for this court to treat them any differently. In particular, there is no need to protect the interests of PBL, as there used to be to protect the interests of mortgagors who might otherwise be prevented from recovering their property. Furthermore, if the effect of treating these linked transactions as a mortgage were that the rental payments made by PBL were to be regarded as interest on money advanced to finance the purchase and development, this would run counter to their whole purpose, which was to comply with the Islamic prohibition of lending money at interest. As PBL argues, the issue of the substance of a transaction is a fact sensitive matter and the burden of proving that the substance is other than the form falls upon the party suggesting it. In the Upper Tribunal, Morgan J was alive to the possibility that in some circumstances, a transaction which takes the form of an absolute transfer coupled with an option for the transferor to re-acquire the property from the transferee can be analysed as being in substance a funding transaction under which the transferee has advanced funds to the transferor and so that the transfer is by way of security only (para 26). But no-one had suggested that before the tribunal and further evidence would have been necessary had they done so. In those circumstances, and where neither party supports the alternative approach, it would be quite unfair of this court to pursue it. In any event, whatever might be the case in other contexts, it is clear from the terms of FA 2003 that Parliament did not intend to confer exemption from SDLT on an Ijara transaction by treating it as the creation of a security interest under section 48, but instead conferred exemptions under section 71A by recognising the substance of each of the three transactions within an Ijara. Thus, it would be contrary to the legislative scheme in FA 2003 to treat MAR as exempt under section 48 on the basis that it had acquired a security interest. That is a sufficient answer to the point. Conclusion Stamp Duty Land Tax (SDLT) is a relatively new tax, designed to generate broadly the same revenue stream as its venerable predecessor, Stamp Duty, which had become so easily avoided that it had acquired the unhappy reputation, among those who could afford skilled advice, of being a voluntary tax. Introduced in Part 4 of the Finance Act 2003, SDLT was designed around a wholly new conceptual approach to the identification of the chargeable event in a sale of land. Generally speaking it was no longer the stamping of a conveyance, but rather the completion or substantial performance of a contract for the sale of an interest in land in the UK, which Part 4 calls a land transaction. It was hoped that this new start would close off many of the loopholes through which advisers had previously been able to guide their clients. It is no surprise that, in its infancy, SDLT proved to have its own I would allow the appeal. unintended loopholes. During its first decade it has therefore been the subject of frequent tweaking and revision. Land may be sold and purchased by a chain of contracts, all made before the completion of any of them. This may occur for example in a rising market, where the first buyer B turns the property to a subsequent buyer C, for an immediate profit derived from the higher price payable under the second contract. The second contract is usually called a sub-sale. The first and second contracts may be completed by a transfer by the original seller A to C, or by simultaneous transfers from A to B and from B to C. The second contract may be a separate contract of sale, or an assignment to C of Bs rights under the first contract. The SDLT scheme is designed to avoid double taxation of sub-sales, that is charging the completion of both the AB purchase and the BC purchase or assignment to a full charge to tax. It does so by taxing neither the AB nor the BC purchase separately, but rather by taxing an artificial deemed land transaction, constituted by the notional completion of what is called a secondary contract, which contains elements of both. This treatment of sub-sales appears in section 45. Using the ABC example, section 45(3) tells you that the purchaser under the secondary contract is C, and that the consideration is a combination of the consideration payable under the AB and BC purchases. Subsection (5A) rather enigmatically explains that the identity of the vendor under the deemed land transaction to which the secondary contract gives rise is either A or B, depending on the statutory context in which it matters. It was never the objective of Stamp Duty, and is not the objective of SDLT, that it should tax the financing of the purchase of land. In the UK this is usually done by lending at interest on the security of a mortgage. Mortgages are exempt from SDLT. But an increasing number of the purchasers of land in the UK finance their acquisition by forms of finance which do not offend against the Sharia prohibition of usury (a prohibition once applied in Christendom, but abolished in the UK in the early 19th century). This may be because the purchaser is an individual of the Muslim faith, or (as here) because the purchaser wished to use a finance institution which itself carries on its business in accordance with Sharia principles. Sharia law does not prohibit the taking of security, but it does forbid the payment of interest in connection with the lending of money. Over time a variety of alternative financing structures were developed, in which the commercial return to the finance house was provided by something other than the payment of interest on a loan. In the present case the structure chosen, called Ijara, involved the acquisition of the freehold interest in property by the finance house (the bank), its lease to the finance customer (the customer), and the grant of put and call options which would enable the customer to acquire the freehold reversion from the bank. The commercial return for the bank lay initially in the rentals payable under the lease, and then (once exercised) in the amount payable under the options, which in effect capitalised the outstanding rental stream under the lease. Originally the lease and the transfer of the freehold under the options were exempted from SDLT by section 72 of the Finance Act 2003, later replaced, for land in England, by section 71A. The acquisition of the freehold by the bank was also exempted by section 71A(2), if but only if the vendor under that transaction was the customer. Thus if the customer had already purchased the property (and paid SDLT on that purchase), or inherited it, but wished to refinance by an Ijara structure, the first relevant finance transaction would be a sale of the property by the customer to the bank. It needed to be exempted from tax if the objective of making Ijara finance free from SDLT was to be achieved. Conversely, if the finance was being provided to fund the purchase, then the first relevant transaction would be the purchase of the property, usually by the bank direct from the third party seller. In that case there was no reason to exempt that purchase from SDLT. Although the bank had to pay the tax, the customer would indemnify the bank under a tax indemnity included in the terms of the Ijara financing. Viewed separately, the provisions for relief from the double taxation of sub- sale chains and for the exemption of alternative Sharia-compliant financing structures broadly achieved their objectives. All the intractable problems in the present case, which have divided the courts below, and divide the members of this court, derive from a structure for the simultaneous purchase of land and its Sharia- compliant financing which also involves a sub-sale. For particular reasons concerned with the nature of the marketing of Chelsea Barracks, and the desire of its seller, the Ministry of Defence (MOD), for a delayed completion, the Sharia compliant finance house (MAR) selected by the buying customer PBL could not make the original purchase from MOD. Instead PBL contracted to purchase from MOD, with MAR as a sub-purchaser. The result of using a sub-sale in connection with Ijara financing was that, for SDLT purposes, the MOD / PBL and the PBL / MAR transactions were both replaced by a secondary contract by reason of section 45(3), the completion of which gave rise to a land transaction which would have been chargeable to SDLT, unless excluded from charge under section 71A(2) because it was part of Sharia compliant alternative financing. That much is common ground. The critical question on this appeal is whether that land transaction was exempted from a charge to SDLT by section 71A(2) of the Finance Act 2003. Lord Hodge thinks that it was exempt, with the result that the series of transactions which began with the transfer by MOD to PBL and ended with the lease by MAR to PBL, coupled with the put and call options, was entirely tax-free, subject only to the effect of section 75A. If that were the effect of section 71A(2) then I would agree with all his conclusions as to the consequences, and with all his reasons for those conclusions. I also agree with his conclusion that the transactions are not to be treated as giving rise to a loan on mortgage security. In my view however the transfer to MAR was not exempt, because PBL was not the vendor under the relevant land transaction within the combined meaning of sections 45(5A)(b) and 71A(2). The vendor was MOD. Thus the condition in section 71A(2)(a) was not satisfied. MAR was therefore chargeable to SDLT on its purchase of Chelsea Barracks. In that respect I agree with the conclusion of the Court of Appeal, although my reasoning is not the same as theirs. In setting out my own reasons I gratefully adopt Lord Hodges summary of the facts, and do not need to set out again the relevant statutory provisions. The operative parts of section 71A are subsections (2), (3) and (4). Each of them exempts from charge to tax specific land transactions. Each has specific conditions which must be satisfied, even if the conditions of the gateway into section 71A, in subsection (1), are all satisfied, as they were in this case. But the common feature of subsections (2), (3) and (4) is that they apply, if at all, only to land transactions which would otherwise be chargeable under Part 4. In an ordinary Ijara financing which satisfied the gateway conditions in subsection (1), the purchase of the major interest by the institution (called the first transaction in subsection (1)(a)) would itself be a chargeable land transaction, regardless whether the vendor was the person to whom the lease was to be granted, or a third party. It would then be exempted under section 71A(2) only if the vendor was that person. The identity of the vendor would be readily apparent. It would be the person disposing of the subject-matter of the transaction: see section 43(4). In the context of a purchase effected (as here) by a Land Registry Transfer, it would be the transferor under that transfer. In the present case, but for the matter I am about to describe, that would have been PBL. But where, as here, the purchase by the institution takes place under a contract by way of a sub-sale to which section 45(1) applies, then the institution is not treated as having entered a land transaction at all by virtue of that purchase, let alone a chargeable land transaction: see section 45(2). This is because the agreement to purchase is a transfer of rights within the meaning of the last sentence of section 45(1) and the institution is the transferee. The ordinary consequence of the completion of that purchase laid down by section 44(3) (namely that the contract and its completion is treated as a single land transaction) is displaced by section 45(2) and (3). The contract is replaced by the statutory construct called a secondary contract under which the transferee institution is the purchaser, but the vendor is not identified. The secondary contract is not, on its own, a land transaction but, when it is completed by a conveyance, the secondary contract and its completion are together treated as a land transaction: see again section 44(3). I will call it, for short, the completed secondary contract. The identity of the vendor under that land transaction, wherever it matters elsewhere in Part 4, is regulated by section 45(5A)(b). The reference to the vendor in section 71A(2) is plainly within the contemplation of the phrase other references in this Part to the vendor in section 45(5A)(b). Thus, where there is a sub-sale, the vendor under section 71A(2) is either the vendor under the original contract (here MOD) or the transferor under the transfer of rights (here PBL), depending on the context. The relevant context, for present purposes, is a sub-sale under section 43, coupled with an Ijara finance structure compliant with section 71A(1), and the determination whether exemption is to be available under section 71A(2) for the completed secondary contract. In this context it is plain that this is the relevant land transaction, by analogy with the reference in the tail-piece to section 45(3) to exemption in section 73(3). It speaks of a case where the secondary contract gives rise to a land transaction that is exempt from charge by virtue of subsection (3) of section 73. That section exempts another kind of alternative finance structure. In a section 45 context, the scheme of Part 4 treats the alternative contract, rather than the real world contract which it replaces, as giving rise to the land transaction qualifying (or not qualifying as the case may be) for exemption under section 73. The same must be true of section 71A, which confers exemption in a very similar way. So, what choice, as between MOD and PBL is permitted by this context? There are considerations which may be said to pull both ways. In favour of PBL is the fact that it was the vendor under the real world contract by which MAR agreed to buy the Barracks, and the transferor under the Land Registry transfer by which the freehold interest was actually transferred to MAR. In favour of MOD is the fact that, if the completion of the original contract between MOD and PBL is to be disregarded under section 45(3), then PBL never received from MOD the chargeable interest which is deemed to be transferred to MAR by the completion of the secondary contract. Thus the person disposing of that chargeable interest (the subject matter of the transaction under section 43(4)) can only have been MOD, so that MOD is the only candidate as vendor in this context, under section 45(5A). The first of these considerations persuaded the Upper Tribunal, where the issue first arose for decision. The second persuaded the Court of Appeal. In this court the main battle between counsel has centred on the question whether the relevant context is one which calls to be resolved by a real world or an SDLT-world analysis. In my view neither of those ways of looking at the matter is decisively better than the other. The issue arises precisely at the point where the two worlds collide. Treating either MOD or PBL as vendor may loosely be said to be permitted by the context, if the contest is simply between those parallel worlds. Section 71A(1) sets out what appear to be real world conditions for the exemption of Ijara finance structures from SDLT. But the land transaction which either is or is not to be exempted by section 71A(2) is a pure SDLT construct, namely that notional land transaction to which the secondary contract imposed by section 43 gives rise. But there cannot be two vendors, nor is the taxpayer or HMRC free to choose between two available permitted candidates. The application of section 45(5A) to the context of section 71A(2) must produce a single answer in each case, although the context will not always lead to the same result. In my opinion there is a much more powerful third factor which provides a decisive answer to that question, namely an appreciation of the consequences. If the vendor is to be PBL then, subject only to section 75A, the combined sub-sale and Ijara financing means that the whole transactional structure by which Chelsea Barracks was purchased from MOD is exempted from SDLT. By contrast, if MOD is to be the vendor, there is a single charge to SDLT. The first outcome cannot have been one which Parliament intended. The second outcome accords with the overall purpose of Part 4 to charge SDLT on purchases of land in the UK, with the avoidance of double taxation on a sub-sale, and with the general objective of section 71A, namely to exempt those who use Sharia compliant alternative finance from incurring SDLT where finance by a loan on mortgage security would not do so. A choice, under section 45(5A) which, in this context, produces an unintended tax holiday for all the participants in the purchase, viewed as a whole, is simply not one permitted by the context, where the alternative choice produces a result broadly in accordance with the purpose of the legislation. I must now address some of the contrary arguments. The first is that a statutory requirement to have regard to the context does not permit regard to be had to the consequences. I respectfully disagree. A hallmark of the modern contextual approach to the construction of a contract is that a choice which produces a result which the parties cannot have intended is to be rejected if there is a less unsatisfactory alternative. I can see no reason why the same approach is inapplicable to the construction of a statute. On the contrary it is frequently used: see Bennion on Statutory Interpretation, section 9.6, In re British Concrete Pipe Associations Agreement [1983] 1 All ER 203, per Sir John Donaldson MR at p 205 and, in the context of a taxing statute, Fry v Inland Revenue Comrs [1959] Ch 86, per Romer LJ at p 105. The only distinction in the present case is that the need to make a contextual choice is expressly required by the plain meaning of the statute itself, namely section 45(5A)(b). But that is a distinction without a difference. The second, and main, argument is that section 71A itself commands a real- world approach to the identification of the vendor, because the transaction looking for a vendor in subsection (2) is the first transaction described in real world terms by subsection (1)(a). Since it is the same first transaction which is exempted by subsection (2) then any issue as to the satisfaction of the vendor condition must be addressed by a real world test as to who is the vendor, treating the first transaction as the real world sale by PBL to MAR, not the notional land transaction to which the secondary contract gives rise. This argument treats section 45(5A) as not being engaged at all, because it is not the completed secondary contract that is looking for a vendor. This is the argument which has persuaded Lord Hodge. I agree that both subsections (1)(a) and (2) describe the same transaction. That is the clear purpose of linking them by a common definition. But in my view the use of that link works the other way. Subsection (2) is plainly designed, and is only of any use, to exempt from tax land transactions which would otherwise be chargeable to SDLT. Usually they will be real world transactions but, in the present case because of the sub-sale, the relevant land transaction is a statutory construct, namely the completed secondary contract. If subsection (2) is not dealing with that land transaction, but some different transaction, then it simply misses its target altogether. If that is right, then the effect of the linking definition is that section 71A(1)(a) must also be dealing in this context with the completed secondary contract, if its language will bear that construction. There is nothing in the language of section 71A(1) which makes subsection (1)(a) inapposite as a reference to the completed secondary contract, where that is what section 45 requires. Subsection (1) speaks of arrangements under which certain transactions take place. Where (as here) the relevant arrangements include provision for a simultaneous sub-sale, then the first transaction to which SDLT might otherwise be chargeable is necessarily a completed secondary contract. Focus on the very similar language of section 73 is compelling. Section 73(1) also speaks of arrangements under which transactions take place. In fact the second transaction there described always takes place by way of sub-sale (because the same interest is the subject matter of both), so that the second transaction being exempted from charge by section 73(3) will always be a completed secondary contract. And this is what section 45(3) says in unambiguous express terms when it refers to section 73(3). For this real world argument to have real force it would be necessary to re- write section 71A(2) as follows: The first transaction and any land transaction to which a secondary contract gives rise where the first transaction is by way of sub-sale is exempt from charge if the vendor under the first transaction is But it makes no sense to re-write the subsection in that way just to produce a result which gives rise to an unintended tax holiday, if the ordinary meaning of the words enacted does no such thing. The next argument is that there cannot be a choice of the vendor under the original contract (here MOD) because, where there is a simultaneous sub-sale, the effect of section 45(3) is to disregard the original contract altogether, including its vendor. There are in my view two objections to that argument. The first is that section 45(3) does not require the original contract itself to be disregarded, but only its substantial performance or completion. The contract itself remains visible, together with its vendor. The second more serious objection is that section 45(5A) assumes that the vendor under the original contract remains an available choice, precisely where section 43(3) brings a completed secondary contract into deemed existence, and disregards the performance or completion of the original contract. Indeed it is only where there is a completed (or performed) secondary contract that it was thought necessary to provide a special means for the identification of its vendor. It may be suggested that, under section 45(3), there can be both a completed secondary contract and a performed or completed original contract which is not disregarded, for example where the two are not simultaneous and connected, or where section 73(3) applies, but this is not why section 45(5A) was introduced. Its main target was precisely the unintended potential tax holiday which would arise where there was a sub-sale, because of a disregard of the original completed contract and an exemption for the sub-sale, eg because of the simultaneous potential application of group relief. It is next said that what I have described as the compelling consequences in terms of an unintended tax holiday do not arise, because section 75A comes to the rescue of the public purse. I accept that, if need be, it does so on the facts of this case, which occurred after it came into force. But 20 months passed between the introduction of section 45(5A) and section 75A, during which, if facts such as these did give rise to a tax holiday, the Revenue was entirely unprotected. There are in my view powerful reasons why the construction and application of section 45(5A) should be undertaken without reference to the fact that, much later, section 75A floated into view, as a plank in a shipwreck. First, the exercise of construction and application of section 45(5A) ought to be based upon a perception of the intention of Parliament when enacting it. That is, by the same token, why the re-casting of section 45(3) in 2011, in a way that solved the present difficulties by removing the disregard of the completed original contract where the sub-sale was exempted by section 71A, cannot be prayed in aid in interpreting section 45 in its earlier form. Secondly, the impetus for enacting section 75A was not a perception that sections 45(3) and 71A, working together, produced a tax holiday. Section 75A was, by its title, primarily designed to deal with tax avoidance schemes, although I accept that it was cast in wide enough terms to provide the Revenue with a rescue from the tax holiday to which linking Ijara finance to a sub-sale might give rise. Thirdly it is counter-intuitive, to say the least, to adopt a construction and application of section 45(5A) which then gives rise to a further set of difficulties in the application of section 75A, when there is an alternative approach that does nothing of the kind. This is, in my view, an a fortiori case where section 45(5A) expressly requires that choice to be made. Fourthly, if a construction of sections 45(5A) and 71A(2) before the introduction of section 75A does not produce an unintended tax holiday, then there is no reason why the earlier sections need be re-interpreted in the light of section 75A. A rather different and more detailed objection to the identification of MOD as the vendor under section 71A(2) is that its effect is to charge the wrong taxpayer with the wrong amount of tax. By this the proponents mean that the policy objectives of a single charge to tax, based upon the real purchase price for the Barracks, with Ijara structures being altogether exempt, would only truly be satisfied if PBL rather than MAR was liable, and SDLT was payable as a percentage of the price paid to MOD, rather than the inflated price stated in the PBL / MAR agreement, which was driven by financing considerations. This is precisely what the amendments to section 45 made in 2011 now do achieve. Even the section 75A solution charges the right taxpayer, albeit still with the wrong amount of tax. This objection has significant force at first sight but there are compensating matters which in my view largely deflate its effect. Dealing first with the identity of the taxpayer, an ordinary Ijara structure to finance a purchase imposes SDLT on the bank rather than on the customer. This is because the first relevant land transaction is a purchase by the bank from the third party seller. Section 71A(2) does not apply because the vendor is not the customer. There is no sub-sale, because (as is common ground) a purchase followed by a lease does not trigger section 45. In commercial reality, (as in the present case) the customer ends up footing the tax bill, because the bank takes a tax indemnity from the customer. The Ijara structure to which the exemption in section 71A(2) typically applies is a re-finance by a customer who has already purchased the property and paid SDLT on completion. There is, again, no sub-sale. An interpretation and application of section 45(5A) in a sub-sale context so as to charge SDLT on the bank therefore imposes the same consequence of taxing the bank as does an ordinary Ijara structure to finance a purchase where there is no sub-sale. In both cases, the usual tax indemnity imposes the ultimate tax burden on the customer. In the present case the evidence suggests that the sub-sale route was chosen because MOD decided to use a sealed bid process in which MAR would have found it difficult to participate, and because MOD wanted a delayed completion, while it re-billeted the troops in the Barracks. These are relatively unusual fact-specific matters which ought not to affect the issues of construction. The reason why, in the present case, the tax payable was (at least initially) greater than the specified percentage of the price payable to MOD is because MAR and PBL chose to include within the financing a large amount over and above that purchase price, structured as part of the purchase price payable by MAR to PBL on the sub-sale. The main element in the excess appears to have been the deferred payment of amounts needed by PBL to make early rental payments under the lease from MAR. Their commercial effect, in cash flow terms, was to give PBL an initial rent holiday, in broadly the same way as is often achieved under conventional mortgaged-backed finance by the bank lending an additional amount above the purchase price to fund early payments of interest. It is possible, although the evidence does not so state in terms, that this at least could have been a reason for constructing the Ijara finance by way of sub-sale, because the excess finance amounts could hardly have been payable to MOD, if MAR had purchased directly. After 2011 it would attract no additional SDLT if achieved by way of sub-sale, because the original purchase (here between MOD and PBL) would not be disregarded, and section 71A(2) would exempt the completed secondary contract. Before 2011, taxation of this additional finance amount appears to have been inevitable, whether by treating MOD as the vendor under section 71A(2), or under section 75A. This is, again, not an ordinary consequence of Sharia compliant financing. Where the finance amount is less than the full purchase price, a shared ownership structure was usually adopted, with different tax treatment which the court did not need to investigate. The Ijara structure used here was applied where the whole purchase price was being financed. In such cases the amount of tax paid by the bank will not differ substantially from the tax which would have been payable on the price paid to the third party seller. Ironically, substantially the same result may yet ensue here, because the Ijara structure was terminated early, before most of the excess finance amount had been paid. In such circumstances it is common ground that Part 4 permits a claim for repayment of the excess tax from the Revenue. This is because SDLT is paid up-front on contingent consideration on an assumption that the contingency will occur, and then reclaimed if it does not. In conclusion therefore, I have not been persuaded by any of the objections to construing and applying sections 45 and 71A of the Act in a way which, in the unusual context of a sub-sale coupled with an Ijara financing structure, leads to SDLT being payable by MAR on the consideration payable under the completed secondary contract by which it acquired a chargeable interest in the Chelsea barracks under a chargeable land transaction, and all the other transactional parts of the structure being either disregarded or exempt. Of the only two interpretations of the relevant statutory provisions (from which I would exclude section 75A for the reasons given), that is the one which broadly achieves, rather than wholly frustrates, what must have been the underlying purpose of Part 4 in the relevant context. If MAR cannot now be made to pay, which the Revenue do not accept, and this leads to the shocking consequence that the public purse gets nothing from this large transaction by way of SDLT, that will only be because, in the words of Mr Thomas QC for PBL, the Revenue have been relentlessly pursuing the wrong taxpayer. It is a sad irony that, at all stages until the appeal to the Upper Tribunal, both parties appear to have thought that the only candidate as the taxpayer was PBL, but it is of no consequence to the outcome. In my view the Court of Appeal reached the right answer, and I would therefore dismiss the appeal.

UK-Abs

In 2007 the Respondent (PBL) purchased the former Chelsea Barracks in London from the Ministry of Defence (MoD) for 959m. In order make the purchase, PBL obtained finance from a Qatari Bank, Masraf al Rayan (MAR), which specialises in Islamic finance. Islamic finance seeks to comply with Sharia law, which forbids the payment of interest in connection with the lending of money. In this case, the Sharia compliant funding model used is known as Ijara finance. On 5 April 2007, PBL and the MoD entered into a contract to purchase the barracks. On 29 January 2008, PBL contracted to sub sell the freehold to MAR. Also on 29 January 2008, MAR agreed to lease the barracks back to PBL. Upon completion, on 31 January 2008, the following occurred: (a) MAR and PBL entered into put and call options respectively requiring or entitling PBL to repurchase the freehold in the barracks; (b) the MoD conveyed the freehold in the barracks to PBL; (c) PBL conveyed the freehold in the barracks to MAR, and (d) immediately after that, MAR leased the barracks back to PBL. On 22 February 2008, PBL lodged a tax return in relation to the contract between it and MoD and claimed that there was no liability to Stamp Duty Land Tax (SDLT) because of the sub sale relief provision in s45(3) of the Finance Act 2003 (FA 2003). A return lodged by MAR relating to the sale agreement between PBL and MAR claimed alternative property finance relief under s71A of FA 2003. Section 71A relief was also claimed in relation to the lease by MAR to PBL on 31 January 2008. Consequently, the parties to the scheme transactions claimed that nobody incurred a liability to SDLT. The Appellants (HMRC) challenged the return made by PBL and issued a closure notice which amended the amount of SDLT due from 0 to 38.36m (the sum which would have been due on the sale by the MoD to PBL if that were a chargeable transaction). PBL appealed to the First tier Tribunal (FTT). In the FTT, HMRC successfully applied to amend its case to increase the amount of SDLT due from 38.36m to 50m (based on the total consideration which MAR agreed to provide PBL). Upon appeal to the Upper Tribunal (UT), PBL changed its position and argued that MAR was not entitled to s71A relief because, on a proper understanding of the related provisions of the FA 2003, MoD was the vendor of the barracks in terms of s71A(2). However, the UT concluded that PBL was the vendor. The Court of Appeal (CoA) found, amongst other things, that the vendor was MoD, and not PBL, with the result that s71A(2) did not exempt MAR from charge. The CoA found that PBL could not be the vendor due to s45(3) which disregarded the contract between MoD and PBL for the purchase of the barracks. As a result of this disregard, PBL had no chargeable interest so as to be regarded as entering into the sub sale contract with MAR. The principal question in the appeal to the Supreme Court is whether PBL is due to pay SDLT of 50m arising out of its purchase from the MoD. The appeal is allowed. Lord Hodge gives the majority judgment with which Lady Hale, Lord Hughes and Lord Lloyd Jones agree. Lord Briggs gives a dissenting judgment [93 129]. The UT correctly concluded that PBL was the vendor under s71A(2) and therefore that MARs purchase of the barracks from PBL was exempt from SDLT [23]. Various reasons support this finding. For instance, there is nothing within s71A which suggests that the exemption in s71A(2) will not apply when the sale by the customer to the financial institution is a sub sale which takes place contemporaneously and in connection with the customers purchase of the major interest in land [24 28]. The disregard in the tailpiece of s45(3) has no bearing on the operation of s71A(2)[30]. In this case, but for s75A (a general and broadly drafted anti avoidance provision [44 45]), the combination of the sub sale relief under s45(2) and s45(3) and the exemption under s71A(2) relieved the sale by the MoD to PBL and exempted the sale by PBL to MAR from a charge to SDLT [34 35]. It is unsurprising that s75A was only introduced over one year after the combination of s45 and s71A could operate in this way. S75A was enacted by Parliament to close such lacunas [31 33]. In this case, the party referred to as V in s75A is the MoD [46]. Looking at s75 as a whole, and taking a purposive approach to interpretation, P as referred to in s75A is PBL. PBL did not obtain a chargeable interest on 31 January 2008 because the contract between it and the MoD fell to be disregarded under s45(3). PBL acquired its chargeable interest, a leasehold interest, following the sub sale to MAR and the lease back to PBL. These transactions were transactions involved in connection with the disposal by MoD of its chargeable interest (s75A(1)(b)) [46 49]. S75A(1)(c) requires that the sum of the amounts of SDLT payable in respect of the scheme transactions (which in this case is nil) is less than the amount that would be payable on a notional land transaction effecting the acquisition of Vs chargeable interest by P on its disposal by V. In this case, the relevant notional land transaction involves PBL acquiring MoDs interest in the barracks [56]. S75A(5) provides that the chargeable consideration on the notional transaction is the largest amount (or aggregate amount) given by any one person for the scheme transactions. HMRC correctly asserted that the relevant sum is 1.25bn (the purchase price which MAR contracted to pay to PBL). SDLT due thereon is 50m (although this is subject to PBLs right to make a claim under s80 of FA 2003) [57 64]. S75B does not assist PBL. This section operates by excluding incidental transactions from the calculation of the chargeable consideration on the notional transaction for the purposes of s75A(5). However, s75B(2) and s75B(6) support the conclusion that both the sub sale to MAR and the grant by MAR of the lease to PBL are included in the transactions which transfer the chargeable interest from V to P for the purposes of s75A(5)[68 72]. Therefore, the 1.25 billion consideration which MAR contracted to pay to PBL is the relevant consideration under s75A(5)(a)[73]. PBL also argued that s75A(5) and s75B read together indirectly discriminates against those of Islamic faith (who may be expected to adopt Sharia financing techniques) contrary to the European Convention on Human Rights [66; 74]. This matter can be determined on the simple bases (a) that any discriminatory effect is objectively justified and (b) that, in any event, PBL is not a victim [75 80]. Various procedural challenges by PBL are also rejected [81 86]. Finally, a different approach suggested in Emmet and Farrand on Title whereby the transfer of the Chelsea barracks to MAR in the Ijara transaction should be viewed in English law as a mortgage such that MAR should have been registered as the proprietor of a charge (which is exempt from SDLT) would be contrary to the legislative scheme in FA 2003 [87 91]. In Lord Briggs view, the transfer from PBL to MAR was not exempt under s71A(2) because PBL was not the vendor under the relevant land transaction within the combined meaning of sections 45(5A)(b) and 71A(2). The vendor was the MoD [101]. Lord Briggs considers that this analysis achieves rather than wholly frustrates the underlying purpose of the relevant provisions, namely to charge land transactions involving sub sales or Islamic finance to a single charge to SDLT, rather than there being no charge at all. The contrary result cannot be what Parliament intended [109], at a time when there was no recourse to s75A [129]. In response, Lord Hodge notes that Lord Briggs approach results in different interpretations of vendor under s71A(2) and s73(2). He finds HMRCs explanation of a patchwork of provisions and a lacuna (remedied by s75A) more persuasive [36 38].

The central question in this appeal is whether the appellants have suffered actionable personal injury on which they can found claims for negligence/breach of statutory duty. I will refer to the appellants hereafter as the claimants as they were at first instance. The claimants worked for the respondent company, Johnson Matthey Plc (hereafter either Johnson Matthey or the company), in factories making catalytic converters. Platinum salts are used in the production process. In breach of its duty under the health and safety regulations and at common law, the company failed to ensure that the factories were properly cleaned and, as a result, the claimants were exposed to platinum salts, which led them to develop platinum salt sensitisation. Platinum salt sensitisation is, in itself, an asymptomatic condition. However, further exposure to chlorinated platinum salts is likely to cause someone with platinum salt sensitisation to develop an allergic reaction involving physical symptoms such as running eyes or nose, skin irritation, and bronchial problems. When the claimants sensitisation was detected, through routine screening by means of a skin test, they were no longer permitted by the company to work in areas where they might be further exposed to platinum salts and develop allergic symptoms. One has taken up a different role with the company but, he claims, at a significantly reduced rate of pay. The other two had their employment terminated. Each claimant therefore asserts that he has suffered financially as a result of his sensitisation to platinum salts, being unable to take work in any environment (whether with Johnson Matthey or with any other employer) where further exposure might occur. Does the platinum salt sensitisation which each of the claimants has developed qualify as an actionable personal injury, in which case the claimants have viable claims against the company for damages for personal injuries caused by the companys negligence and/or breach of statutory duty? Alternatively, if the platinum salt sensitisation is not properly categorised as an actionable personal injury, can they recover damages for economic loss under an implied contractual term and/or in negligence? The claimants lost at first instance, following a trial of the question of liability, before Mr Justice Jay. Jay J concluded [2014] EWHC 3957 (QB) that they had sustained no actionable personal injury and that their claim was for pure economic loss, for which they were not entitled to recover in tort. He also rejected their alternative claim in contract. That had been put on the basis that there was an implied term in the claimants contracts of employment which obliged the company to provide and maintain a safe place and system of work, and to take reasonable care for their safety, and that they were entitled to damages for pure financial loss for breach of that implied term. The judge, however, considered that the companys implied contractual duty was to protect employees from personal injury, not from economic or financial loss in the absence of personal injury. The Court of Appeal dismissed the claimants appeals ([2016] EWCA Civ 408; [2016] 1 WLR 4487). Lord Justice Sales, with whom the other members of the court agreed, endorsed Jay Js view that the claimants had suffered no actionable personal injury and were claiming for pure economic loss. He saw the physiological change of platinum salt sensitisation as not harmful in itself in any relevant sense (para 30) and concluded that it was not converted into actionable injury by the resulting removal of the claimants from their jobs, with detrimental financial consequences. As for the alternative claim for damages for economic loss under an implied contractual term and/or in negligence, there is, of course, no general duty of care in tort to protect against pure economic loss, and Sales LJ did not consider that a duty of care arose here from the particular circumstances of the case. His reasoning in relation to this was closely tied in with his reasoning in relation to the claim based on contract. That contractual claim failed because Sales LJ was in agreement with Jay J that there was no implied term in the claimants contracts of employment to the effect that the employer would protect them from pure economic loss, whether on the basis of this being a standard implied term in employment contracts or on the basis of features particular to the employment of the claimants. In Sales LJs view, the claimants could not succeed in a tortious claim for pure economic loss when the employer assumed no such responsibility in the employment contract. The medical position It is necessary to understand the medical evidence about the claimants condition for the purposes of the appeal. Sensitisation is a complicated process which has been explained in simplified terms for the purposes of the litigation. It involves the bodys immune system. The immune system reacts to the presence of molecules which are not normally found in the body (antigens) by producing antibodies, in the form of large molecules called immunoglobulins. In many cases, the antibody performs a useful purpose by combining with the antigen and rendering it harmless. However, in some cases, the combination of the antigen and the antibody results in adverse consequences by provoking particular cells within the body (mast cells) to release histamine. In this situation, asthma, rhinitis, eye symptoms or skin rashes may result. A person who is sensitised to platinum salts will have a particular type of antibody in their immune system (IgE antibodies). Although they may not yet have developed any physical symptoms of the sensitisation, it can be demonstrated by a skin prick test in which a minute amount of a solution containing the salts is introduced into the body. A sensitised individual reacts by developing a small raised red, sometimes itchy, lump in the skin. If exposure to platinum salts continues after sensitisation has occurred, the medical evidence is that most (but not all) people will develop physical symptoms relating to one or more of the eyes, nose, chest and skin. At this point, they are said to have developed an allergy. On the other hand, physical symptoms will not develop if there is no further exposure. A person who has been sensitised but has not yet developed symptoms is not limited in any way in their life, except that they must avoid circumstances in which they are exposed to platinum salts. Platinum salts are not encountered in everyday life, only in certain specialised workplaces. Sensitised people cannot work in jobs which involve the potential for further exposure. One of the central authorities which must be considered in determining this appeal is the House of Lords decision in Rothwell v Chemical & Insulating Co Ltd [2008] AC 281, which concerned the development of pleural plaques as a result of exposure to asbestos fibres. The doctors who provided expert medical evidence in the present case were asked to consider whether platinum salt sensitisation could be said to be akin to pleural plaques, and it is convenient to set out their response here. They were agreed that there are important distinctions between the two, namely: i) Slight further exposure to asbestos will not materially worsen pleural plaques, but slight further exposure to platinum salts is likely to increase the degree of sensitisation and may result in asymptomatic sensitisation becoming symptomatic; ii) Pleural plaques do not, themselves, turn into any other injury attributable to asbestos whereas asymptomatic sensitisation may turn into symptomatic sensitisation (allergy); iii) The presence of pleural plaques does not prevent a person from engaging in particular types of work that would otherwise be open to him or her, asbestos exposure being restricted by law in any event. In contrast, a person who has asymptomatic sensitisation to platinum salts is restricted in the work that he or she can do. Collective agreement Employees of Johnson Matthey working in factory areas in which they could be exposed to platinum salts were paid an additional shift allowance. In addition, the claimants trade union had negotiated a collective agreement with the company to address the issue of platinum salt sensitisation and allergy. The agreement provided for regular skin prick tests to take place and for employees who became sensitised to be redeployed away from platinum salt areas if possible. If an employee could no longer continue to work in a factory because of platinum allergy, the agreement provided for the company to dismiss him under special termination conditions, including what was termed an ex gratia payment of a lump sum. The collective agreement expressly acknowledged that an employee dismissed with platinum allergy would normally file a compensation claim against the company. It provided that the termination arrangements were not meant to be an alternative to such claims, and that no waiver of claim was implied in accepting the termination payment. Personal injury/harm Negligence and breach of statutory duty are not actionable per se. It is common ground between the parties that (leaving to one side claims for pure economic loss), in order to make out their claims in tort for negligence or breach of statutory duty, it is necessary for the claimants to establish that there has been damage, in the form of actionable personal injury. The terms physical injury and personal injury tend to be used interchangeably in the authorities, and in the documentation in this case, and this is reflected in this judgment, there being no psychiatric injury to complicate the matter. An exploration of the ambit of personal injury is fundamental to the appeal and depends largely on case law, in particular the two House of Lords cases of Cartledge v E Jopling & Sons Ltd [1963] AC 758 and Rothwell v Chemical & Insulating Co Ltd (supra). It is worth noting from the outset that nowhere in the authorities is there a definition of actionable personal injury, although there is some guidance as to the attributes of it. Personal injury features as a concept in various legislative provisions, again without definition, although in some of the legislation, it is expressly said to include any disease and any impairment of a persons physical or mental condition, see for example section 38 of the Limitation Act 1980. The parties are agreed that if a person were to develop a platinum salt allergy as a result of improper exposure to platinum salts at work, as opposed to mere sensitisation, he or she would have suffered personal injury of a type which would give rise to a cause of action in tort. What divides them is whether or not sensitisation on its own is actionable personal injury. The claimants rely upon Cartledge v E Jopling & Sons Ltd [1963] AC 758 as supporting their case that it is, and Johnson Matthey rely upon Rothwell v Chemical and Insulating Co Ltd [2008] AC 281 as supporting their case that it is not. In Cartledge v E Jopling & Sons Ltd, the claims were brought by steel dressers who had contracted pneumoconiosis whilst working in the defendants factory. The issue was whether their claims were statute barred and the House of Lords therefore had to consider when their cause of action first accrued. This required their Lordships to determine when the steel dressers had suffered actionable personal injury. The problem was that, in pneumoconiosis, substantial injury could occur to the lungs without the sufferer being aware of the disease, as had occurred with the plaintiffs. Amongst the arguments advanced unsuccessfully on their behalf was the argument that actionable injury did not occur until the man became aware of his disease, since a man who does not feel any symptoms or have any knowledge of his disease has suffered no injury. Addressing this argument, Lord Pearce, with whom there was unanimous agreement, gave consideration to the attributes of actionable personal injury. He observed (p 778) that no case had sought to define its borders but, in the following passage, drew what he could from the authorities to which the House had been referred: There is no case that seeks to define the borders of actionable physical injury. Your Lordships have been referred to words used in various cases. In Fair v London & North Western Railway Co [(1869) 21 LT 326, 327 DC] Cockburn CJ said: in assessing that compensation the jury should take into account two things; first, the pecuniary loss he sustains by the accident; secondly, the injury he sustains in his person, or his physical capacity of enjoying life. Again, in Haygarth v Grayson Rollo & Clover Docks Ltd [[1951] 1 Lloyds Rep 49, 52] Asquith LJ said: General damage, while usually assessed in a single global sum, ought to include loss referable to at least three factors, where all three factors are present, namely, the respective loss of earnings, pain and suffering and loss of amenity. Such observations naturally proceed on the normal basis that personal injury involves some pain or patent loss of amenity, but the unusual question before your Lordships is whether a hidden, painless injury or latent loss of amenity sounds in damages. And in no case is it laid down that hidden physical injury of which a man is ignorant cannot, by reason of his ignorance, constitute damage. Lord Pearce went on to hold that actionable harm can be suffered despite the fact that a man has no knowledge of the secret onset of pneumoconiosis and suffers no present inconvenience from it (p 778). In Lord Pearces view, as will be seen from the following quotation from p 779 of the report, the question was whether a man has suffered material damage by any physical changes in his body, and this was a question of fact in each case: It is for a judge or jury to decide whether a man has suffered any actionable harm and in borderline cases it is a question of degree It is a question of fact in each case whether a man has suffered material damage by any physical changes in his body. Evidence that those changes are not felt by him and may never be felt tells in favour of the damage coming within the principle of de minimis non curat lex. On the other hand, evidence that in unusual exertion or at the onslaught of disease he may suffer from his hidden impairment tells in favour of the damage being substantial. There is no legal principle that lack of knowledge in the plaintiff must reduce the damage to nothing or make it minimal. Although symptomless, and not causing any present physical inconvenience, the physical injury to the lungs of the steel dressers was held to constitute actionable damage and, by virtue of the terms of the Limitation Act 1939, their Lordships felt compelled therefore to find that their claims were statute barred. Rothwell v Chemical and Insulating Co Ltd involved employees who had been exposed to asbestos dust and had developed pleural plaques as a result. They were at risk of developing asbestos related diseases and suffered anxiety at that prospect; one of them had developed a depressive illness, brought on by the diagnosis of the plaques. A convenient summary of the medical position about the plaques can be found at the start of Lord Hoffmanns speech in Rothwell. He said, in para 1: These are areas of fibrous thickening of the pleural membrane which surrounds the lungs. Save in very exceptional cases, they cause no symptoms. Nor do they cause other asbestos related diseases. But they signal the presence in the lungs and pleura of asbestos fibres which may independently cause life threatening or fatal diseases such as asbestosis or mesothelioma. In consequence, a diagnosis of pleural plaques may cause the patient to contemplate his future with anxiety or even suffer clinical depression. The unanimous view of the House of Lords was that the claimants had suffered no actionable damage. As Lord Hoffmann put it, in para 2, compensatable physical injury was required to establish a cause of action and the plaques did not constitute such injury. The claimant who had developed clinical depression was in a different position, since psychiatric illness can constitute damage. However, his claim also failed, essentially because it was not reasonably foreseeable that a person of reasonable fortitude would develop a psychiatric illness in his circumstances. In considering the implications of the decision in Rothwell, it is important to have an appreciation of the attributes of the pleural plaques and of how they differ from the damage sustained by the steel dressers in Cartledge. In Cartledge, the inhalation of silica particles had damaged the lung tissue, causing minute scars and reducing the efficiency of the lung tissue. As Lord Hoffmann summarised the position in Rothwell (para 8): their lungs had suffered damage which would have been visible upon an x ray examination, reduced their lung capacity in a way which would show itself in cases of unusual exertion, might advance without further inhalation, made them more vulnerable to tuberculosis or bronchitis and reduced their expectation of life. But in normal life the damage produced no symptoms and they were unaware of it. In contrast, the pleural plaques were not in any way harmful to a sufferers health or physical condition. They were evidence that the lungs had been penetrated by asbestos fibres but they did not, themselves, give rise to actual or prospective disability. Save in the most exceptional cases (which it appears did not include any of the claimants), they would not have any effect upon health at all. They were described, for example, as symptomless bodily changes with no foreseeable consequences (para 17), as not harmful and not giving rise to any symptoms or leading to anything else which constitutes damage (para 49), and as asymptomatic and not the first stage of any asbestos related disease (para 68). In so far as the sufferer faced a risk of deterioration in his health in future, that risk arose from the exposure to the asbestos fibres, not from the plaques, which neither posed nor contributed to any risk. Similarly, it was the exposure to asbestos which caused the anxiety felt by the claimants about their future health, following the discovery that they had pleural plaques, not the plaques themselves. The speeches in Rothwell possibly shed a little further light on the identifying features of actionable personal injury. I will refer to the relevant passages here, and they contribute to my conclusions later. First, it seems to have been accepted that the concept of personal injuries includes a disease or an impairment of a persons physical condition. The term impairment is to be found in certain statutes (see above) and is used by Lord Pearce in Cartledge who referred, at p 779, to the scarring to the lungs in that case as a hidden impairment. The trial judge in Rothwell looked for a disease or impairment of physical condition and, considering the judges finding that there was nothing that could be categorised in that way, Lord Hoffmann made no suggestion that the judge had been wrong to focus on impairment (para 11). Secondly, it was underlined that to be actionable, the damage had to be more than negligible. This is expressed in various ways, including that it must be more than trivial (Lord Hoffmann, at para 8), that it must be real damage (Lord Hope of Craighead, at para 39), and that it must be material (Lord Rodger of Earlsferry, at para 87). Thirdly, following on from that, it was made clear that the mere fact that a particular physical condition might properly be described as an injury does not necessarily mean that it constitutes damage of the requisite kind. Lord Hope countenanced that the plaques could be called an injury (see, for example, at para 39), but the claimants still did not recover because, as he said: the use of these descriptions does not address the question of law, which is whether a physical change of this kind is actionable. There must be real damage, as distinct from damage which is purely minimal: Lord Evershed, at p 774 [of Cartledge]. Where that element is lacking, as it plainly is in the case of pleural plaques, the physical change which they represent is not by itself actionable. Returning to the subject at para 47, he said: It is well settled in cases where a wrongful act has caused personal injury there is no cause of action if the damage suffered was negligible. In strict legal theory a wrong has been done whenever a breach of the duty of care results in a demonstrable physical injury, however slight. But the policy of the law is not to entertain a claim for damages where the physical effects of the injury are no more than negligible. Otherwise the smallest cut, or the lightest bruise, might give rise to litigation the costs of which were out of all proportion to what was in issue. The policy does not provide clear guidance as to where the line is to be drawn between effects which are and are not negligible. But it can at least be said that an injury which is without any symptoms at all because it cannot be seen or felt and which will not lead to some other event that is harmful has no consequences that will attract an award of damages. Damages are given for injuries that cause harm, not for injuries that are harmless. Lord Hoffmann had some comments to make about the nature of damage. He said, at para 7: a claim in tort based on negligence is incomplete without proof of damage. Damage in this sense is an abstract concept of being worse off, physically or economically, so that compensation is an appropriate remedy. It does not mean simply a physical change, which is consistent with making one better, as in the case of a successful operation, or with being neutral, having no perceptible effect upon ones health or capability. Putting this formulation together with the requirement that the damage be more than minimal, he saw the relevant question, on the facts of the Rothwell case, as being (para 19), is [the claimant] appreciably worse off on account of having plaques? Although he had referred at para 7 to damage in the sense of being economically worse off, the context makes it plain that the question he was posing in para 19 was whether the claimant was physically worse off. It can be seen from the passages referred to above that, as well as the usual reference to pain, suffering and loss of amenity, personal injury has been seen as a physical change which makes the claimant appreciably worse off in respect of his health or capability (Lord Hoffmann at para 7 of Rothwell) and as including an injury sustained to a persons physical capacity of enjoying life (Fair v London & North Western Railway Co (1869) 21 LT 326, 327, quoted by Lord Pearce in Cartledge, at p 778), and also an impairment. Furthermore, it has been established that it can be hidden and symptomless (Cartledge). How Jay J and the Court of Appeal saw matters Jay J saw it as key (paras 27 and 31 of his judgment) that the scarring to the lungs in Cartledge was not neutral as to its health impacts and constituted a disease process which is real and present. He contrasted this with the situation in the Rothwell case in that the pleural plaques would never cause symptoms or increase the susceptibility of the individual to other diseases or conditions, and did not reduce life expectancy. He agreed (para 30) that there were factual differences between Rothwell and the instant case, including that the progression from sensitisation to allergy can be envisaged as being along a direct causal pathway [whereas] the pleural plaques were a biological cul de sac. But he thought it critical that the progression would not occur if an employee was removed from the source of the sensitisation and, because the claimants had all been removed from exposure to platinum salts, would not occur in their cases. The correct approach in his view (para 32) was to analyse the sensitisation in terms of the physical or physiological harm that it may be causing. The antibodies in the claimants bodies were not harmful in themselves and he considered that something more has to happen before actionable injury may be sustained. He discarded financial loss consequent upon the changes as irrelevant, and took the view that one cannot define the actionable injury by the steps which are taken to prevent it (by which he must have meant the steps taken to prevent the claimants developing an allergy). It seems to have been his view that, on the facts of this case, nothing short of actual symptoms could amount to actionable injury. In the Court of Appeal, there was a close analysis of Cartledge and Rothwell. Setting out his conclusions, between paras 30 and 32 of his judgment, Sales LJ (with whom the other members of the court agreed) concluded that the claimants have suffered no physical injury. He considered that the platinum salt sensitisation that they have developed is not harmful in any relevant sense. He saw it as analogous to the pleural plaques in Rothwell, and said that it was not a hidden impairment which has the potential by itself to give rise to detrimental physical effects in the course of ordinary life, and was therefore not like the lung scarring in Cartledge. He observed that, like the plaques, platinum salt sensitisation does not reduce life expectancy and, provided the worker is removed from an environment in which he may be exposed to platinum salts (para 27), will not cause symptoms, or increase the susceptibility of the individual to other diseases or conditions. In Sales LJs view (para 30), it did not therefore constitute actionable damage or injury. Sales LJ agreed with Jay J that the steps taken to prevent the allergy developing (removing the employee from work in an environment where further exposure may occur) should not be seen as a component of the injury and that the sensitisation had to be looked at in terms of the physical or physiological harm which it may be causing, which, without further exposure, was none. He acknowledged that the removal of the claimants from their jobs might be seen as an extra element, present in this case and not in Rothwell, but, whilst he accepted that this was detrimental to the claimants financially, Sales LJ did not consider that it converted the physiological change into an actionable injury, because he took the view that the financial detriment should be viewed separately, as a form of pure economic loss. Indeed, he was disposed to view the removal of the claimants from their jobs as a sort of mitigation of loss in advance of injury (para 32), the restriction on their work being to protect them from suffering the physical injury which would otherwise have developed. On his reasoning, as damages can only be claimed for the expenses of mitigation where there is a right to sue for a wrong in the first place, and there was no such right here, damages for the financial loss could not be recovered. The arguments in this court In summary, the claimants argue that platinum salt sensitisation constituted a physical change to their bodies which amounted to material damage in that they were worse off than they would have been but for their employers breach of duty. By virtue of their sensitisation, they were likely to develop an allergy if further exposed to platinum salts. Their bodies were now in a state that made them unfit for further work in areas where they may be exposed to salts (red zones), and this constituted a real loss of amenity and qualified as an actionable personal injury. The company supports the reasoning of Jay J and the Court of Appeal. It argues that platinum salt sensitisation is not an actionable personal injury and that the claim is in reality one for pure economic loss for which the claimants are not entitled to recover, either in tort or through the medium of a term implied into their employment contracts. The claimants cannot establish actionable personal injury, say Johnson Matthey, by adding the financial consequences of the sensitisation to the physiological changes in their bodies. The company argues that the changes in the claimants bodies do not amount to physical damage to bodily tissue or an impediment to the proper working of bodily tissues or organs, and seeks to categorise the molecular change that has occurred as entirely normal and benign in character, as a person will naturally develop antibodies in everyday life and antibodies are not themselves harmful. In the companys view, it would seem perverse and an abuse of language to describe as injured someone who merely acquired a new antibody. The companys argument seeks to align the claimants condition with that of the claimants with pleural plaques in the Rothwell case, and to distance it from the situation in Cartledge, it being asserted that sensitisation is merely an indicator of past exposure to platinum salts as the plaques were an indicator of exposure to asbestos. In addition, it is emphasised that the claimants are not limited in living their lives, except that they should avoid exposure to platinum salts. An important element in the companys argument is that platinum salts are not encountered in ordinary everyday life, only in certain specialist workplace environments. I interpose to observe that an employee should not be exposed to the salts even in the specialist workplace, but it is clear from the existence of the testing regime and the practice of not allowing sensitised individuals to work in the red zones, that exposure does take place, and of course it is admitted that the claimants in this case were in fact exposed to the salts by virtue of the companys breach of its duty under various health and safety regulations. The company says that these claimants almost certainly will not go on to develop platinum salts allergy, now that they are not permitted to work in the red zones, and are aware of the need to avoid contact in other working environments. Furthermore, the company observes that if the claimants were at any stage to develop initial allergy symptoms (which in themselves may be too minor to constitute actionable personal injury), that would be a warning to remove themselves from the source of exposure, thus avoiding significant injury. Encapsulating these elements of their argument in their written case, the company says that the claimants have molecular changes without symptoms and a theoretical but no practical risk of symptoms developing. The company also argues that it is not, in fact, the sensitisation itself that prevents the claimants from working at their old jobs, but the terms of the collective agreement which led to the employer removing them from risky areas. This is demonstrated, it is said, by the fact that the claimants must have been sensitised before the skin prick test revealed that they were, but they continued to do their jobs until the test results were known. Discussion I am not persuaded by the companys attempt to class the claimants condition as just the development of another benign antibody in the body, not a true departure from the normal, and not damaging the claimants health or physical capability. Some antibodies may do their job in the body without producing any adverse consequences. What matters, however, is the behaviour of the particular antibody which is produced in an individual who has been sensitised to platinum salts. If such an individual is subsequently exposed again to the salts, the IgE antibody involved in platinum salt sensitisation is likely, in most people, to react in a way which produces allergic symptoms of a type which, it is common ground, would be of sufficient significance to constitute an actionable personal injury. Whilst possibly simplistic, I do not think it is inappropriate to view the development of a platinum salts allergy in a person who does not, at the outset, have a sensitivity to platinum salts as having two stages: first comes sensitisation, next comes allergy. Before initial employment in the red zones, a medical screening procedure is undertaken so as to avoid employing people who have a genetic disposition to allergy. When commencing work in the red zones, the claimants were people who had the capacity to work there. At that point, their bodies were fitted for that task, still having a safety net to protect them from allergy, in the form of the sensitisation stage, which would enhance the prospect of removing them from further exposure before allergy developed. When they became sensitised, through the companys negligence and/or breach of statutory duty, that change to their bodies meant that they lost this safety net and therefore their capacity to work around platinum salts. But, on the companys argument, this bodily change which leaves the claimants worse off than they were before they became sensitised, is not actionable personal injury. From discussion in the course of argument, it became clear that Johnson Mattheys argument was not that sensitisation can never amount to actionable injury. Mr Kent QC acknowledged, on behalf of the company, that if the claimants had developed a sensitivity to something in everyday life, such as sunlight, as opposed to platinum salts, they would have sustained actionable damage because they would not be able to carry on with their ordinary life and would suffer, as he put it, a deficit which would undoubtedly be characterised as personal injury. It follows from this acknowledgment that there is no dispute that the physiological changes involved in sensitivity can constitute sufficient personal injury, sufficient damage, to found an action for negligence or breach of statutory duty. However, Mr Kent contrasts the person who develops a sensitivity to sun with the situation here because, he says, the sufferer is not sensitive to something in everyday life, but only to a dangerous chemical to which people should not be exposed, given the health and safety regulations. Certain aspects of this argument ring rather hollow in this case, given that the claimants were exposed to the salts by the company, and the risk of further exposure is considered sufficiently significant for the collective agreement to require that they be prevented from working in red zones. However, I will set that objection to one side for present purposes and consider the simple proposition that the claimants have not become sensitised to something in everyday life, like the sun. It is a proposition to which I cannot subscribe. Ordinary everyday life is infinitely variable. For these claimants, their ordinary everyday life involved doing jobs of a type which, by virtue of their sensitisation, they can no longer do. In those circumstance, I do not see how their situation can be validly distinguished from the person who has developed a sensitivity to the sun. The physiological changes to the claimants bodies may not be as obviously harmful as, say, the loss of a limb, or asthma or dermatitis, but harmful they undoubtedly are. Cartledge establishes that the absence of symptoms does not prevent a condition amounting to actionable personal injury, and an acceptance of that is also implicit in the sun sensitivity example, in which the symptoms would only be felt upon exposure to sunshine, just as the symptoms here would only be felt upon exposure to platinum salts. What has happened to the claimants is that their bodily capacity for work has been impaired and they are therefore significantly worse off. They have, in my view, suffered actionable bodily damage, or personal injury, which, given its impact on their lives, is certainly more than negligible. It can be helpful to test an approach by applying it to slightly different facts, albeit that they are not an exact parallel with the present case. Suppose that the claimants were coffee tasters, employed because they had the ability to distinguish different flavours and qualities of coffee, by smell and taste. Suppose further that, through negligence, their sense of smell or taste became impaired in a way which would be of absolutely no consequence to anyone who was not employed in this particular role, but meant that they could no longer do their jobs and had to seek other employment. I venture to suggest that there would be little difficulty in accepting that the changes to their bodies were actionable personal injury. Another example might be of claimants working in the fragrance industry, whose highly developed sense of smell was damaged. It might be that the coffee tasters, or the expert perfumers, would be able to show something which looks more like a physical bodily injury of a conventional kind, but I can see no essential difference between their situation and the present case, where bodily changes have led to the claimants, who were formerly people who could and did work around platinum salts, no longer being able to do so. I should address specifically some of the arguments which featured in the companys case. First, there is the argument that the claimants are attempting to claim for something, an allergy, that will never happen because they will not now work around platinum salts. This goes along with what might be described as the timing argument, namely that the deficit which the claimants rely upon (their inability to do their chosen jobs) did not exist prior to the positive skin tests, and was not the product of the negligent exposure to platinum salts and resulting sensitisation, but of the protective provisions of the collective agreement which required that they be removed from the red zones. Another strand of the argument is the assertion that the claimants are seeking to make what is, in reality, only a risk (the risk of developing an allergy) into an actionable injury. These arguments could only prosper, it seems to me, if the sensitisation itself is not seen as an actionable personal injury, but only as a benign and symptom free molecular change. For the reasons I have given at paras 37 to 40 above, I do not see it in that way. If the sensitisation is viewed as an injury, as in my view it should be, then it did exist before the skin test revealed it. The restrictions on the work that can be done by claimants who have tested positive are attributable to the sensitisation, to which the protective provisions of the collective agreement were a response. Those provisions reflect the fact that, because of the negligence and/or breach of statutory duty of their employers, these claimants bodies are now in such a state that they need to avoid further exposure to platinum salts which, according to the evidence, would be likely to provoke allergy in most people. But the need for sensitised individuals to avoid exposure would apply whether or not there was a collective agreement such as that which was in force in this case, and no matter whether the employer was Johnson Matthey or another employer who imposed no comparable restrictions. As for the fact that the claimants must have worked for a period after they became sensitised, but before their positive skin prick tests demonstrated that fact, I do not see that that advances the argument in any way, given that they did so in ignorance of their condition. They were lucky enough not to have gone on to develop allergic symptoms during that period of unknown sensitisation, but that does not mean that they would be safe to continue to work in red zones (or the equivalent area in another company) if not prevented from doing so by the collective agreement. Once the sensitisation is identified as an actionable injury in its own right, the companys argument that the claimants are, in reality, claiming only for their lost earnings and therefore for pure economic loss also falls away. But, the company asks, what about a claimant who was about to retire when he or she became sensitised, or no longer wanted to work in the same type of employment, and upon whom the sensitisation would therefore have no impact? This, to my mind, does not go to the question of whether actionable personal injury has been suffered, but to the quantum of damages flowing from that, which it could be expected would be reduced by this feature of the particular case. I return to the cases of Rothwell and Cartledge. Although other authorities were cited, including some relating to claims for damage to property, I have found them of little direct, or even indirect, assistance and therefore, like Jay J and the Court of Appeal, my focus has been upon these two central cases. I would distinguish this case from Rothwell. I set out earlier how the doctors saw the distinction between pleural plaques and sensitisation to platinum salts but it is, of course, ultimately a lawyers question whether the two conditions are distinguishable. As I see it, it is material that the pleural plaques were nothing more than a marker of exposure to asbestos dust, being symptomless in themselves and not leading to or contributing to any condition which would produce symptoms, even if the sufferer were to be exposed to further asbestos dust. Similarly, the sensitisation of the claimants in this case marks that they have already been exposed to platinum salts, but unlike the plaques, it constitutes a change to their physiological make up which means that further exposure now carries with it the risk of an allergic reaction, and for that reason they must change their everyday lives so as to avoid such exposure. Putting it another way, they have lost part of their capacity to work or, as the claimants put it in argument, they have suffered a loss of bodily function by virtue of the physiological change caused by the companys negligence. As Lord Pearce said in Cartledge (supra para 15), it is a question of fact in each case whether a man has suffered material damage by any physical changes in his body. It is a question of fact that must be determined in the light of the legal principles applicable to personal injury actions, and this case has provided a useful opportunity to clarify some of those principles. The process has led me, for all the reasons I have set out, to differ from Jay J and the Court of Appeal and to conclude that the concept of actionable personal injury is sufficiently broad to include the damage suffered by these claimants, which is far from negligible. In these circumstances, it is unnecessary to say anything further about the claimants alternative argument that they should be able to recover for pure financial loss. I would allow the appeal on the claimants first ground, having concluded that they do have a cause of action in negligence/statutory duty against the company.

UK-Abs

The Appellants worked for the Respondent in factories making catalytic converters. In breach of its duty, under the health and safety regulations and at common law, the Respondent failed to ensure that the factories were properly cleaned and, as a result, the Appellants were exposed to platinum salts. This exposure led them to develop platinum salt sensitisation (immune system production of IgE antibodies). Platinum salt sensitisation is a condition producing or showing no symptoms. Further exposure to chlorinated platinum salts is likely to cause someone with platinum salt sensitisation to develop an allergic reaction with physical symptoms such as asthma, rhinitis or skin rashes. When the Appellants sensitisation was detected, the Respondent no longer permitted them to work in areas where they might be exposed to platinum salts and develop allergic symptoms. Each Appellant claims they have suffered financially because of their sensitisation to platinum salts because they had to take up a different role with the Respondent at a reduced rate of pay or because they had their employment terminated. The questions that arose in the courts below and on appeal to the Supreme Court of the United Kingdom were as follows: (1) Does platinum salt sensitisation qualify as an actionable personal injury? (2) Alternatively, can the Appellants recover damages for economic loss under an implied contractual term and/or in negligence? The Appellants lost at first instance and in the Court of Appeal. At first instance, Mr Justice Jay concluded that they had sustained no actionable personal injury and that their claim was for pure economic loss, for which they were not entitled to recover in tort. He also rejected their alternative claim in contract. The Court of Appeal upheld Mr Justice Jays ruling. The Supreme Court unanimously allows the appeal. Lady Black gives the sole judgment with which the other justices agree. Negligence and breach of statutory duty are not actionable in and of themselves. It is necessary for claimants to establish that there has been damage in the form of actionable personal injury. No decided case provides a definition of actionable personal injury, but there is some guidance as to its attributes. [11 12] Personal injury has been seen as: a physical change which makes the claimant appreciably worse off in respect of his health or capability; as including an injury sustained to a persons physical capacity of enjoying life; and as an impairment. It can also be hidden and symptomless. [27] What matters in this case is the behaviour of the IgE antibody, which is produced by an individual who has developed platinum salt sensitisation. If such an individual is exposed again to platinum salts, the IgE antibody is likely to react in a way which produces allergic symptoms. When an individual becomes sensitised, this change to their body means that they lose their capacity to work around platinum salts. [37] Respondents counsel acknowledged that if the Appellants had developed a sensitivity to something encountered in everyday life, such as sunlight, they would have sustained actionable damage because they would not be able to carry on with their ordinary life. The Appellants ordinary lives involved doing jobs of a type which, by virtue of their sensitisation, they can no longer do. This cannot be distinguished from the person who developed a sensitivity to sunlight. [39] The physiological changes to the Appellants bodies are undoubtedly harmful. Cartledge v Jopling establishes that the absence of symptoms does not prevent a condition amounting to actionable personal injury. What has happened to the claimants is that their bodily capacity for work has been impaired and they are therefore significantly worse off. [40] Once the sensitisation is identified as an actionable injury in its own right, the Respondents argument that the Appellants are claiming only for their lost earnings and therefore for pure economic loss also falls away. [44] This case is distinguishable from Rothwell v Chemical and Insulating Co Ltd. In that case, the pleural plaques the claimants developed were nothing more than a symptomless marker of exposure to asbestos dust and would not lead to or contribute to any condition which would produce symptoms, even with further exposure to asbestos dust. In this case, the Appellants sensitisation carries the risk of an allergic reaction in the event of further exposure to platinum salts and they must change their lives to avoid such exposure. [47] In these circumstances, it is unnecessary to consider the Appellants alternative argument that they should be able to recover for pure financial loss. [49]

When the law extinguishes obligations as a result of the effluxion of time it is important that there is certainty as to when the clock is started. Yet many within the legal profession in Scotland have been unsure about this important matter. This is another appeal about the meaning of the provisions of the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) concerning the short negative prescription. Counsel for the appellants informed the court that several cases have been sisted in the Court of Session to await the outcome of this appeal. This appeal proceeds on facts which the parties have agreed solely for the purpose of determining the question of prescription and which may be summarised briefly. The appellants (the trustees) are the trustees of the inter vivos trust of the late William Strathdee Gordon (the trust). The trust owns farmland, comprising three fields near the village of Killearn, which the trustees acquired because of its long term potential for residential development. The three fields are a grazing field, a field of about 40 acres and a field of about 50 acres. The grazing field was originally let out by the trust by a series of seasonal grazing lets to a farming partnership of Messrs A & J C Craig (the farming partnership) which had two partners. This lease continued by tacit relocation from about 1983. The 40 acre and 50 acre fields were let out to the farming partnership under separate leases in 1981 and 1983 respectively. After the expiry of the original terms of let of those fields the trust entered into various minutes of agreement, which were prepared by their solicitors, who were the predecessor firm to the respondents in this appeal. Those minutes of agreement purported to continue the original leases of those fields. In about August 1992 the solicitors became aware that Mr Andrew Craig, one of the two partners, had retired from the farming partnership. Notwithstanding that knowledge, the minutes of agreement in 1992 and 1998 described the tenant as the farming partnership and John Campbell Craig the sole proprietor and trustee for the firm. Under the 1998 agreements the ish (expiry date) of the lease of each of the two fields was 10 November 2003. It is a matter of agreement that by 2003 the leases for all three fields were agricultural holdings for the purposes of the Agricultural Holdings (Scotland) Act 1991 (the 1991 Act). In 2003 the trustees instructed Mr McGill, who was both a trustee of the trust and a partner in the firm of solicitors, to serve on the tenant notices to quit the three fields at the term of 10 November 2003. The tenant served counter notices under the 1991 Act. After receiving advice from counsel that the notices to quit the 40 acre field and 50 acre field were ineffective as they did not give the period of notice which the 1991 Act required, the solicitors served further notices to quit in respect of the three fields dated 8 November 2004 requiring the tenant to remove on 10 November 2005. In each of those notices to quit the tenant was identified as the firm of Messrs A & J C Craig and John C Craig, sole proprietor of and trustee for said firm. The notice to quit the 40 acre field described it as being subject to a lease dated 22 September and 7 and 8 October 1981 as amended by subsequent agreements. Similarly the notice to quit the 50 acre field described it as being subject to a lease dated 5 January and 14 February 1983 as so amended. On 1 December 2004 Mr Richard Leggett, a partner of the solicitors, wrote a long letter to Mr William Gordon, one of the trustees, in which he explained that the solicitors had to withdraw from acting for the trust because of a conflict of interest caused by difficulties which might result from a failure to terminate the leases of the fields before their expiry dates which had allowed the tenant to continue to occupy the fields by tacit relocation. The solicitors suggested that those difficulties might require the payment of money to Mr John Craig to get him to cede possession of the fields. In response, the trustees did not require the solicitors to cease acting for them and continued to instruct them. But, after the tenant did not cede possession of the fields on 10 November 2005, the solicitors wrote to the trustees on the same day to withdraw from acting for the trust in relation to the leases at Killearn, again citing the difficulties which they foresaw would arise from their earlier failure to prevent tacit relocation. Thereafter Mr McGill resigned as a trustee. The trustees then instructed Anderson Strathern LLP, who on 9 February 2006 applied to the Scottish Land Court seeking the removal of the tenant from each of the three fields. It is an agreed fact that by 17 February 2006, at the latest, the trustees had incurred material expense in instructing Anderson Strathern to pursue those applications. The tenant defended the applications. In a decision dated 24 July 2008 the Scottish Land Court gave effect to the notice to quit in relation to the grazing field but refused to give effect to the notices to quit relating to the other two fields, because the notices were inaccurate in their description of both the tenant and the relevant lease. As a result, the 40 acre field and the 50 acre field remain subject to leases that are agricultural holdings, thus preventing the trustees from developing them. The legislation As is well known, section 6 of the 1973 Act, when read with sections 9 and 10 of that Act, creates the short negative prescription by providing that if an obligation has subsisted for a continuous period of five years after the appropriate date without the creditor or someone on his behalf having made a relevant claim or the debtor or someone on his behalf having relevantly acknowledged the subsistence of the obligation, the obligation is extinguished at the expiration of that period. Section 6(3) provides that the appropriate date in relation to an obligation arising from a breach of contract is a reference to the date when the obligation became enforceable. This appeal is concerned with section 11 of the 1973 Act, which defines when an obligation to make reparation becomes enforceable. It provides: (1) Subject to subsections (2) and (3) below, any obligation (whether arising from any enactment, or from any rule of law or from, or by reason of any breach of, contract or promise) to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred. (2) Where as a result of a continuing act, neglect or default loss, injury or damage has occurred before the cessation of the act, neglect or default the loss, injury or damage shall be deemed for the purposes of subsection (1) above to have occurred on the date when the act, neglect or default ceased. (3) In relation to a case where on the date referred to in subsection (1) above (or as the case may be, that subsection as modified by subsection (2) above) the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware. (Emphasis added) The court proceedings On 17 May 2012 the trustees commenced a legal action against the respondents by serving on them a summons seeking damages for breach of an implied term of the contract between the trustees and the solicitors, that the latter would exercise the degree of knowledge, skill and care expected of a reasonably competent solicitor. The breach which the trustees allege is that the solicitors failed to identify correctly both the tenant and the applicable lease in the notices to quit dated 8 November 2004 relating to the 40 acre field and the 50 acre field. Among the sums claimed by the trustees in this action are the fees and outlays paid to the solicitors and to Anderson Strathern relating to the attempt to obtain vacant possession of the two fields and damages for the enhanced value of the land and the opportunity for the trust to exploit the fields potential for development both of which were lost through the failure to recover possession of them. The respondents pleaded that any obligation on them to make reparation had prescribed because the trustees had not raised the action within five years of the date when they had suffered loss, which, the respondents submitted, was when the solicitors served the defective notice to quit in November 2004 or in any event when the tenant failed to remove from the fields on 10 November 2005. They submitted that the trustees had had knowledge of having suffered loss when they learned that the tenant would not voluntarily cede possession of the fields. After hearing evidence in a preliminary proof on prescription at which the parties had agreed that the averments of breach of contract and loss were to be treated as proven, Lord Jones upheld the plea of prescription in an opinion dated 25 March 2015 ([2015] CSOH 31). In so doing, he rejected the trustees argument that the prescriptive period did not begin until the Scottish Land Court issued its decision (ie 24 July 2008), which, according to the trustees, was the date on which they first knew that they had suffered loss. He held that the prescriptive period began when the trustees knowingly became liable for legal fees and outlays in pursuit of vacant possession of the fields. As it was agreed that the trustees had incurred material expense in relation to the Scottish Land Court application by 17 February 2006, the five year prescriptive period had run its course before they commenced the legal proceedings against the respondents (on 17 May 2012). Lord Jones therefore absolved the respondents from the trustees claims. On 8 March 2016 an Extra Division of the Inner House (Lady Paton, Lord Bracadale and Lord Malcolm) refused the trustees appeal. Lord Malcolm wrote the leading opinion and the other judges wrote concurring opinions ([2016] CSIH 16; 2016 SC 548). In his opinion, Lord Malcolm analysed the judgment of the Supreme Court in David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd 2014 SC (UKSC) 222; [2014] UKSC 48 (Morrison v ICL) which I discuss below. He concluded that section 11(3) of the 1973 Act postponed the start of the prescriptive period only when the damage was latent by requiring that the creditor should have actual or constructive knowledge of the occurrence of damage or expenditure, which was viewed as an objective fact. He held that the prescriptive period ran from the time the trustees incurred liability for legal fees notwithstanding that they did not then know that their application to the Scottish Land Court would fail. In a short judgment with which Lord Bracadale agreed, Lady Paton added that the trustees had gained sufficient knowledge that they had suffered loss when they received the solicitors letter of 10 November 2005. The trustees appeal to this court with the permission of the Inner House, which it granted on 1 June 2016. Discussion (i) The legislation It is clear from the opening phrase of section 11(1) (Subject to subsections (2) and (3) below) that that subsection sets out the general rule that an obligation to make reparation becomes enforceable when the loss, injury or damage occurred. Subsections (2) and (3) modify the general rule in the circumstances in which they apply. It is also clear that in each of the subsections Parliament has chosen to use the same words loss, injury or damage to describe the detriment suffered by the creditor. The House of Lords and this court have considered those words in their statutory context in ascertaining the appropriate date for the commencement of the five year prescription in two cases. First, in Dunlop v McGowans 1980 SC (HL) 73, which concerned the failure by solicitors timeously to serve a notice to quit on a tenant, Lord Keith of Kinkel in the leading speech (p 81) explained that the obligation to make reparation for loss, injury or damage is a single and indivisible obligation and that that obligation arose as soon as there was the concurrence of a legal wrong and loss resulting from that wrong. In that case the obligation to make reparation became enforceable on the date when, but for the solicitors omission, the client landlord would have obtained vacant possession of his premises. The prescriptive period under section 11(1) of the 1973 Act began to run then although the landlords losses, which resulted from the failure to get vacant possession, could only be estimated at that date. Secondly, in Morrison v ICL, which concerned observable physical damage to Morrisons shop caused by an explosion in the neighbouring business premises of ICL, this court held that, for the prescriptive period to begin under section 11(3) of the 1973 Act, the creditor needed to be aware (actually or constructively, if the creditor could with reasonable diligence have been aware) only of the occurrence of the loss or damage and not of its cause. In other words, section 11(3) applies in the case of latent damage, by postponing the start of the prescriptive period until the creditor is aware of the physical damage to his property. The focus of the courts judgment in that case was on the words caused as aforesaid in subsection (3). They are a reference back to subsection (1) which speaks of loss, injury or damage caused by an act, neglect or default. The phrase caused as aforesaid thus connects the loss to the cause of action. But the phrase is adjectival; it does not require additional knowledge on the part of the creditor. The subsection falls to be read as if it said: the creditor was not aware that loss, injury and damage, which had been caused as aforesaid, had occurred; thus it, like subsections (1) and (2), focuses on the occurrence and timing of loss (viz Lord Reed paras 16 and 25, Lord Neuberger para 47). In Morrison v ICL this court did not have to address the question which this appeal raises, namely whether in section 11(3) the creditor must be able to recognise that he has suffered some form of detriment before the prescriptive period begins. In Morrison v ICL the property damage was manifest on the date of the explosion. But where a client of a professional adviser suffers financial loss by incurring expenditure in reliance on negligent professional advice, the client, when spending the money, will often be unaware that that expenditure amounts to loss or damage because of circumstances, existing at the date he or she spends the money, of which the client has no knowledge. A question which the current appeal raises is whether section 11(3) starts the prescriptive clock when the creditor of the obligation is aware that he or she has spent money but does not know that that expenditure will be ineffective. The answer to that question lies in interpreting the words loss, injury or damage in subsection (3) in the context of section 11 as a whole. In section 11(1) the phrase loss, injury or damage, which I have emphasised in para 9 above, is a reference to the existence of physical damage or financial loss as an objective fact. Thus if a persons building is damaged in an explosion, or a garden wall is damaged as a result of subsidence, there is physical damage which is enough to start the clock under that subsection, unless either or both of subsections (2) or (3) apply. No question arises under subsection (1) as to the creditors knowledge of that objective fact. As Lord Keith stated in Dunlop v McGowans (p 81): The words loss, injury or damage in the last line of the subsection refer back to the same words in the earlier part and indicate nothing more than the subject matter of the single and indivisible obligation to make reparation. Thus if, as a result of a breach of contract, a person purchases defective goods, incurs expenditure or fails to regain possession of his property when he or she wished to do so, the section 11(1) clock starts when the person acquires the goods, the expenditure is incurred or when the person fails to obtain vacant possession of the property. Section 11(3), which postpones the start of the prescriptive period, is concerned with the awareness of the creditor. But that which the creditor must actually or constructively be aware of before the prescriptive period begins is the same loss, injury or damage of which section 11(1) speaks, because subsection (3) uses the same language and also refers back to subsection (1) when it speaks of loss, injury or damage caused as aforesaid. The phrase loss, injury or damage must have the same meaning in each of the subsections of section 11. There is therefore no scope for reading any additional meaning into those words in subsection (3). It follows that section 11(3) does not postpone the start of the prescriptive period until a creditor of an obligation is aware actually or constructively that he or she has suffered a detriment in the sense that something has gone awry rendering the creditor poorer or otherwise at a disadvantage. The creditor does not have to know that he or she has a head of loss. It is sufficient that a creditor is aware that he or she has not obtained something which the creditor had sought or that he or she has incurred expenditure. This approach is harsh on the creditor of the obligation, where the creditor has incurred expenditure which turns out to be wasted or fails to achieve its purpose, because the circumstances when the prescriptive period begins may not prompt an enquiry into the existence or likelihood of such loss. Thus a person may begin a legal action and incur expenditure on legal fees on the basis of negligent legal advice or he or she may purchase a house at an over value as a result of the negligent advice of a surveyor. In each case the person may be aware of the expenditure but not that it entails the loss. But it offers certainty, at least with the benefit of hindsight. The trustees formulation by contrast would create uncertainty. If it were necessary in order for the prescriptive period to begin that the creditor be aware that something had gone awry and that he or she has suffered a detriment in the form of wasted expenditure, would an adverse judgment at first instance be sufficient to establish such an awareness of detriment if there were strong grounds for an appeal? The result might be prolonged uncertainty. Further, a requirement that there be an awareness of a head of loss would involve knowledge of the factual cause of the loss, which is an interpretation that this court has rejected in Morrison v ICL. It is not clear that the interpretation set out in para 21 above is what the Scottish Law Commission envisaged in its Report on the Reform of the Law Relating to Prescription and Limitation of Actions (1970) (Scot Law Com No 15), which led to the 1973 Act and in which it recommended (para 97) that: the [prescriptive] period should commence (c) if the fact that pecuniary loss or damage to property has been caused by the delict or quasi delict is not immediately ascertainable, from the date when the fact that the aggrieved party has suffered pecuniary loss or damage is, or could with reasonable diligence have been, ascertained by him. In its Report on Prescription and Limitation of Actions (Latent Damage and Other Related Issues) (1989) (Scot Law Com No 122) the Commission at para 2.7 described its policy in the 1970 Report as being that the starting point for the running of prescription should be the date when that damage is or could with reasonable diligence have been discovered by the claimant. This courts decision in Morrison v ICL is consistent with that policy because the physical damage to property was manifest but it is questionable whether section 11(3) is so consistent in circumstances where the claimant suffers financial loss rather than observable damage to his physical property. As I state in para 25 below, the Commission has revisited the topic since this court decided Morrison v ICL and has made further recommendations for reform. (ii) Application to the facts I am not able to accept the submission of Mr Howie QC, who appears for the trustees, that time did not begin to run against the trustees until they received the decision of the Scottish Land Court which demonstrated both that the sums which they had spent on pursuing the application to gain vacant possession of the 40 acre field and the 50 acre field could not be recovered from the tenant and that they had lost the opportunity to develop those fields. Before they received that decision, the trustees may have regarded the tenants refusal to remove from those fields on 10 November 2005 as unjustified and may have pursued the application to the Scottish Land Court to remove him in the belief that it was likely to succeed. They may, as a result, have believed that the expenditure on legal fees and outlays, which they incurred in so doing, would ultimately be recovered from the tenant in large measure when their application succeeded. But any such understanding on their part is irrelevant. On an objective assessment, the trustees suffered loss on 10 November 2005 when they did not obtain vacant possession of those fields and therefore could not realise their development value. It does not matter whether the loss resulted from the tenants intransigence, as the trustees may have believed, or from someone elses acts or omissions. It was also possible that the defects in the notices to quit would not have caused loss if the tenant had later waived his right to challenge them or had otherwise surrendered possession of the fields. But he did neither, and with the benefit of hindsight the failure to obtain vacant possession on 10 November 2005 can be seen as having caused loss to the trustees. At that moment, as in Dunlop v McGowans, the prescriptive period began to run under section 11(1), unless it was postponed by subsection (3). But there was no postponement under the latter subsection: the trustees were aware on 10 November 2005 that they had not obtained vacant possession of those fields. That was a detriment. They were in any event actually or constructively aware by 17 February 2006 that they had incurred expense in legal proceedings to obtain such possession. As the trustees did not commence legal proceedings against the respondents until 17 May 2012, it follows that the respondents obligation to make reparation to them has prescribed. (iii) The future This conclusion, as Lord Malcolm recognised in the concluding paragraph of his opinion, may suggest that hard cases may be more common than it was previously thought. But there are live proposals for law reform. The Scottish Law Commission has published its Report on Prescription (Scot Law Com No 247) in July 2017, following its Discussion Paper (No 160) in which it invited views on, among other things, the discoverability test in section 11(3) of the 1973 Act in the light of Morrison v ICL decision. In its report the Commission recommends (para 3.21) that in relation to the obligation to pay damages section 11(3) should be amended so that, before the five year prescriptive period begins to run, the creditor must be aware, as a matter of fact, (i) that loss, injury or damage has occurred, (ii) that the loss, injury or damage was caused by a persons act or omission, and (iii) of the identity of that person. Whether the creditor is aware that the act or omission that caused the loss, injury or damage is actionable in law should be irrelevant. This formula is included in the draft Bill annexed to the Report in section 5(1), (4) and (5). As the Commission has observed, it is an approach which is well represented in both civil law and common law jurisdictions (Discussion Paper No 160, para 4.8). The First Minister has announced on 5 September 2017 that the Scottish Government intends to bring forward a Bill to reform the law of prescription as part of its legislative programme. It will be the task of the Members of the Scottish Parliament to decide whether they agree with the Scottish Law Commissions recommendation for the reform of the discoverability test achieves a fair balance between the interests of the creditor and the debtor in the obligation to make reparation. Conclusion I would dismiss the appeal.

UK-Abs

The appellants (the trustees) are the trustees of the Inter Vivos Trust of the late William Strathdee Gordon (the trust). The trust owns farmland comprising three fields (a grazing field, a 40 acre field and a 50 acre field) which were acquired due to their long term development potential. Each field was let out under separate leases at various times to a farming partnership. By 2003, the leases for all three fields were agricultural holdings for the purposes of the Agricultural Holdings (Scotland) Act 1991. In 2003, the trustees instructed a firm of solicitors (the predecessor firm to the respondents) to serve on the farming partnership notices to quit the three fields at the term of 10 November 2003. Thereafter, due to defects in the notices relating to the 40 acre field and the 50 acre field, the solicitors served further notices to quit in respect of the three fields dated 8 November 2004 requiring removal by 10 November 2005. The tenant did not give up possession of the fields on 10 November 2005. On the same day, the solicitors wrote to the trustees to withdraw from acting for the trust. The trustees then instructed another firm of solicitors who applied to the Scottish Land Court to seek removal of the tenant. By 17 February 2006, at the latest, the trustees had incurred material expense in instructing the new firm. On 24 July 2008, the Scottish Land Court gave judgment which refused to give effect to the notices to quit relating to the 40 acre and 50 acre field as the notices were inaccurate in their description of both the tenant and the relevant lease. As a result, both the 40 acre and the 50 acre field remain subject to leases which are agricultural holdings, thus preventing development. Under the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act), where an obligation has subsisted for a continuous period of five years after the appropriate date, and no claim is made, the obligation ceases. Section 6(3) of the 1973 Act provides that, in cases of contractual breach, the appropriate date is the date when the obligation became enforceable. Under s11(1) of the 1973 Act, an obligation arising from a breach of contract becomes enforceable on the date when loss, injury or damage occurred. Section 11(3) qualifies this by specifying that where the creditor is not aware, or could not with reasonable diligence have been aware, that loss, injury or damage has been caused, an obligation becomes enforceable when the creditor first became so aware. On 17 May 2012, the trustees commenced legal action against the respondents. The respondents contended that any obligation on them to make reparation to the trustees as a result of the defective notices had expired because the trustees had not raised the action within five years of the date when the trustees had suffered loss which was upon service of the notices on 8 November 2004 or, alternatively, when the tenant failed to quit the land on 10 November 2005. The trustees argued that they were first aware of their loss when the Scottish Land Court issued its decision on 24 July 2008. The Outer House upheld the respondents plea of prescription. The Inner House refused the trustees appeal. It held that s11(3) of the 1973 Act postponed the start of the prescriptive period only when the damage was latent by requiring that the creditor should have actual or constructive knowledge of the occurrence of damage or expenditure, which was viewed as an objective fact. The prescriptive period ran from the time the trustees incurred liability for legal fees notwithstanding that they didnt then know that their application to the Scottish Land Court would fail. The Supreme Court unanimously dismisses the trustees appeal. Lord Hodge gives the lead judgment with which the other Justices agree. In Morrison v ICL [2014] UKSC 48, the Supreme Court determined that, in terms of s11(3) of the 1973 Act, the creditor needed to be aware only of the occurrence of the loss or damage and not of its cause [17] but in that case the Court was not required to address the question raised by this appeal i.e. whether under s11(3) the creditor must be able to recognise that he or she has suffered some form of detriment before the prescriptive period begins. This appeal raises the question of whether s11(3) starts the prescriptive clock when the creditor is aware that he or she has spent money (e.g. on a professional advisor) but does not know that that expenditure will be ineffective [18]. The phrase loss, injury or damage must be interpreted consistently throughout s11 of the 1973 Act. [19 20]. It therefore follows that s11(3) does not postpone the start of the prescriptive period until a creditor of an obligation is aware, actually or constructively, that he or she has suffered a detriment in the sense that something has gone awry which renders the creditor poorer or otherwise at a disadvantage [21]. This approach may be harsh to a creditor where he or she is aware of incurred expenditure but not that it entails the loss. However, the alternative approach suggested by the trustees would create uncertainty and a requirement for awareness of a head of loss would involve knowledge of the factual cause of the loss, which is an interpretation rejected in Morrison [22]. Any understanding on the part of the trustees that the expenditure they incurred in pursuing the claim in the Scottish Land Court would ultimately be recovered from the tenant when their claim was successful was irrelevant. On an objective assessment, the trustees suffered loss on 10 November 2005 when they did not obtain vacant possession. At that moment, the prescriptive period began to run under s11(1) unless it could be postponed by s11(3). There was no postponement under s11(3) because the trustees were aware that they had suffered detriment when they did not obtain vacant possession on 10 November 2005. In any event, they were actually or constructively aware that they had incurred legal expenses to obtain such possession by 17 February 2006. The trustees did not begin proceedings until 17 May 2012. It follows that the respondents obligation to make reparation had by that time prescribed [24]. Whilst this conclusion may lead to hard cases being common, there are live proposals for law reform. Following a Scottish Law Commission report, the First Minister of Scotland announced on 5 September 2017 that the Scottish Government intended to bring forward a Bill to reform the law of prescription in Scotland. It will be for the Scottish Parliament to decide whether the Commissions proposals for reform of the discoverability test in s11(3) of the 1973 Act should be adopted [25].

This appeal concerns the legality under the Human Rights Act 1998 and the European Convention on Human Rights and Fundamental Freedoms (Human Rights Convention or the Convention) of an Enhanced Criminal Record Certificate (ECRC) issued in respect of the appellant (AR) under section 113B of the Police Act 1997. The certificate gave details of a criminal charge for which he had been tried and acquitted. The Court of Appeal held that the information contained in the certificate involved no breach of his rights under either article 6.2 (presumption of innocence) or article 8 (right to respect for private and family life). Permission to appeal was given solely in respect of article 8. The main issue in short is whether the admitted interference with his private life involved in the disclosure was justified, having regard in particular to what is said to be the limited utility to its recipients of the information so disclosed. The appeal also raises questions as to the proper role of the appellate courts in reviewing the judges finding of proportionality under the Convention. The legislation Part V of the Police Act 1997 provides a legislative framework for the disclosure of criminal records, for example where required in connection with applications for employment or licences. It has been subject to a number of amendments since then. The following references are to the Act as it was in the period material to the certificates issued in this case, that is, between March 2011 and August 2012. Significant amendments made to the scheme under the Protection of Freedoms Act 2012 (the 2012 Act) came into effect in September 2012. These followed a report by Sunita Mason, the Independent Advisor for Criminality Information Management: A Common Sense Approach A review of the criminal records regime in England and Wales (the Mason review). In her Preface she spoke of a degree of dissatisfaction with a system that has evolved with the laudable aim of protecting vulnerable people but is now viewed by some as intrusive and an unnecessary bar to employment. There is also concern that some people may be treated as guilty until proven innocent. She recommended a number of common sense actions to rebalance the system. Although not directly applicable to the case before us, the changes throw some light on the perceived weaknesses of the system at the time, and will need to be taken into account in considering references to our judgment in the future. Also in September 2012 (again in line with the Mason recommendations) there came into force provisions enabling a person dissatisfied with the content of an ECRC to apply for its review by the Independent Monitor established under the Police Act 1997 (sections 117A, 119B). A further important change occurred on 1 December 2012 when the functions of the Secretary of State, formerly carried out by the Criminal Records Bureau, were transferred to the Disclosure and Barring Service (DBS) by an order made under section 88 of the 2012 Act. The 1997 Act as amended provides for three forms of certificate, only the third of which is in issue in the appeal. Section 112 provides for the issue of criminal conviction certificates (CCCs), giving prescribed details of every conviction held in central records, not including spent convictions (section 112(3)); or stating that there is no such conviction (section 112(2)). CCCs are available to any applicant over 16 on payment of a fee. Section 113A provides for the issue on a more restricted basis of criminal record certificates (CRCs) which differ from CRCs in particular in that they include details of spent convictions and cautions (section 113A(6)). Under section 113A(2) an application for a CRC must be countersigned by a registered person with a statement by the registered person that the CRC is required for the purposes of an exempted question. By section 113A(6) exempted questions are ones in respect of which certain provisions of the Rehabilitation of Offenders Act 1974 are disapplied. Typically, they include questions to assess the suitability for admission to certain professions, or for certain offices or employments; or to hold certain licences or permits, or to work with children or vulnerable adults. A registered person is a person listed in the register maintained by the Secretary of State under section 120(1) as likely to ask such questions, such as employers or prospective employers, or bodies responsible for appointment to certain voluntary roles, or for granting certain types of licences. Section 113B, which is in issue in this case, deals with a third category enhanced criminal record certificates (ECRCs). Like CRCs they are issued again on an application countersigned by a registered person for the purposes of an exempted question, but can contain additional information. The relevant definition is in section 113B(3) and (4): (3) An enhanced criminal record certificate is a certificate which (a) gives the prescribed details of every relevant matter relating to the applicant which is recorded in central records and any information provided in accordance with subsection (4), or (b) states that there is no such matter or information. (4) Before issuing an enhanced criminal record certificate the Secretary of State must request the chief officer of every relevant police force to provide any information which, in the chief officers opinion (a) might be relevant for the purpose described in the statement under subsection (2), and (b) ought to be included in the certificate. (In September 2012, following a recommendation of the Mason review, section 4(a) was amended to refer to information which the chief officer reasonably believes to be relevant: 2012 Act section 82(1)(c).) Thus, there is an important difference between the contents of CRCs and ECRCs. The information included in a CRC is limited to the facts of convictions or cautions or their absence. By contrast, an ECRC includes information on the basis simply of the chief officers opinion as to its relevance, and whether it ought to be included in the certificate. In the case of an ECRC, it must further be shown that the exempted question is being asked for a particular prescribed purpose. The Police Act 1997 (Criminal Records) Regulations 2002 (SI 2002/233) prescribed the purposes for which an ECRC might be required (regulation 5A). They included a range of matters, starting with various categories of work with children (defined in regulation 5C) and with adults (regulation 5B), and extending to such matters as obtaining licences under the Gambling Act 2005 or the National Lottery etc Act 1993, and assessing suitability for employment related to national security, and suitability to obtain a taxi driver licence (regulation 5A(c) (zf)). The present case the facts On 21 January 2011 the appellant (AR), then aged nearly 33, was acquitted of rape by the Crown Court sitting at Bolton. He was a married man with children, of previous good character, and a qualified teacher, but was working at the time as a taxi driver. It had been alleged that, shortly after 1.00 am on 4 November 2009, he had raped a 17 year old woman, who was a passenger in a taxi driven by him. His defence was that there had never been sexual contact with the alleged victim. Both he and the complainant gave evidence and were cross examined at the trial. There was no scientific evidence to support or undermine the allegation. Following his acquittal, he applied for an ECRC in connection with an application for a job as a lecturer. On 22 March 2011 an ECRC (the first ECRC) was issued which, under the heading other relevant information disclosed at the Chief Police Officers discretion, contained the following statement about the charge and acquittal: On 4/11/09 police were informed of an allegation of rape. A 17 year old female alleged that whilst she had been intoxicated and travelling in a taxi, the driver had conveyed her to a secluded location where he forcibly had sex with her without her consent. AR was identified as the driver and was arrested. Upon interview he stated that the female had been a passenger in his taxi, but denied having sex with her, claiming that she had made sexual advances towards him which he had rejected. Following consideration by the Crown Prosecution Service, he was charged with rape of female aged 16 years or over, and appeared before Bolton Crown Court on 21/01/11 where he was found not guilty and the case was discharged. On 20 April 2011 AR submitted an objection to the contents of the certificate, stating: There is no conviction. The jury rejected the complainants evidence and the disclosure of the allegation is so prejudicial as to prevent me from being fairly considered for employment. Even if the disclosure of the allegation was possibly appropriate the disclosure fails to provide a full account of the evidence given and how the jury came to its conclusion. It is wrong, unfair and grossly prejudicial [that] I should have to defend myself every time I apply for employment after the jury have ruled I am an innocent man. The disclosure was upheld on 16 May 2011 by Inspector Kynaston (the officer responsible for the initial decision). AR then appealed to the Information Governance Unit (IGU) of the Greater Manchester Police in a letter dated 2 June 2011. His letter pointed out that he was a qualified teacher and wanted to pursue that career, but that now, when I apply for jobs, this rape allegation is disclosed on my CRB and therefore employers will not consider me. The appeal was rejected. The panel took account of a Memorandum dated 20 March 2012, on a standard form, prepared by a Ms Wilson, and signed also by Inspector Kynaston. (I understand that the form was part of the so called QAF documents, to which I will refer below: para 34.) She noted ARs application for the post of lecturer, and stated her view that the information was relevant to the post applied for and ought to be disclosed. In answer to a question as to the relevance of the information, she noted that the position of lecturer would give the opportunity for the applicant to befriend vulnerable females of a similar age to the victim, with the risk that he might use his role to abuse his trust and authority and commit similar offences. quality to pass the test, she said: In answer to the question Do you believe the information to be of sufficient I believe the information is of sufficient quality to pass the required test because: There was sufficient evidence for the CPS to authorise the applicant being charged with Rape, indicating that they believed there to be a realistic prospect of conviction. If the CPS had not believed the allegation, they would not have authorised the charge. This indicates that on the balance of probabilities the allegation was more likely to be true than false. Although the applicant was found not guilty by the jury, the test for criminal conviction is beyond all reasonable doubt, which is higher than that required for CRB disclosure purposes. Therefore the applicants acquittal does not prove that he was innocent, or even that the jury thought he was innocent, just that he could not be proved guilty beyond all reasonable doubt She then reviewed the details of the case at trial, referring for example to the trial judges comment on the inconsistencies in the complainants account, which she thought could plausibly be attributed to her admitted intoxication. Ms Wilson concluded this section: Although the IGU review has raised that the acquittal indicates that the allegation might not be true, the legislation and guidance is clear that allegations that might not be true can be disclosed, as the test required for CRB disclosure purposes is lower than this. Due to the above, I believe that the information is more likely to be true than false and is not lacking in substance, and it is reasonable to believe that the information might be true, and therefore it passes the required test. In answer to the question do you consider the information is both reasonable and proportionate to disclose, she said that it was. It was relatively recent, and although isolated was very serious as it relates to an alleged rape using force, by a stranger. She added: If the applicant repeats this alleged behaviour in the [position applied for], vulnerable people could be caused serious emotional and physical harm. She recognised that disclosure would have an impact on ARs human rights as he may fail to gain employment in his chosen profession, but this would not prevent him gaining employment in another profession which does not require an enhanced CRB check. She thought it important that the potential employer was made aware of this allegation in order that they can make an informed recruitment decision and act to safeguard vulnerable people; and that the potential risk to vulnerable people outweighed the effect of disclosure on his human rights. The Memorandum ended with a comment that the disclosure text was accurate, balanced, and not excessive There is no intimation of the applicants guilt or otherwise in the text. On 28 March 2012 a second ECRC was issued, this time in connection with an application by AR for a licence to work as a private hire driver. The ECRC contained the same information as before. AR wrote to the Criminal Records Bureau (CRB), in similar terms to his earlier letter, with further information about his academic qualifications, and his family, and commenting: This will affect the rest of my life and future as nobody will employ me to teach with this disclosed on my CRB. The disclosure was confirmed by the CRB on 7 August 2012. An internal note indicated that the letter was treated as offering no new information, and as covered by the previous consideration. The proceedings The present proceedings for judicial review were issued on 21 December 2012. They came before HH Judge Raynor QC (sitting as a Deputy High Court judge), who dismissed the claim in a judgment given on 5 September 2013 ([2013] EWHC 2721 (Admin)). He identified three issues (para 1): (a) whether the disclosure was a breach of the presumption of innocence under article 6.2 of the European Convention on Human Rights; (b) whether the disclosure was procedurally unfair because it was inconsistent with the claimants acquittal and/or occurred without consultation, and (c) whether the retention and disclosure of data regarding the acquittal is and was a breach of article 8 of ECHR. As to article 6.2, he held, having regard in particular to the guidance of the European Court of Human Rights in Allen v United Kingdom (2013) 36 BHRC 1; (2016) 63 EHRR 10, that the disclosure involved no breach of that article. The disclosure did not suggest that AR should have been convicted, or that he in fact committed the acts complained of (para 55). Nor was there any procedural unfairness in respect of the decision under challenge in March 2012: When making that decision, account was taken of his previous complaints regarding the March 2011 disclosure, there had been no legal challenge to that disclosure and the Chief Constable in my view was entitled to proceed upon the basis that the claimants complaints were as previously stated. In the event it is plain that the police in the March 2012 review anticipated and considered the matters that the claimant later raised in his letter of 22 June 2012 and, as submitted by the defendants, no suggestion has been made in these proceedings of any further substantive matters that the claimant would have wished to raise. (para 40(e)) The judge also rejected the suggestion that the police, as part of the decision making process, should have obtained a full trial transcript; a transcript of the summing up was sufficient (para 40(b)). In relation to article 8, he referred in some detail (para 30) to the leading authority of R (L) v Comr of Police of the Metropolis [2009] UKSC 3; [2010] 1 AC 410; (Ls case). He concluded (paras 39 40) that the disclosure was reasonable, proportionate and no more than necessary to secure the objective of protecting young and vulnerable persons. He accepted that the review had proceeded on the false premise that the CPS decision to charge itself indicated that the allegation was more likely to be true than false, but considered that the review was carefully considered and fair. On the substance of the allegation he said: The fact of acquittal was recognised, and in my view it was right to comment that nothing could be assumed from the fact of acquittal other than that the jury was not satisfied beyond reasonable doubt of guilt. Whilst I do not consider that a firm or reliable conclusion as to whether the complainants account is more likely to be true than false can be gathered from the transcript alone, I am quite satisfied that the Chief Constable was fully entitled to conclude that it was not lacking in substance, and that it [was] reasonable to believe that the information might be true. In my judgment that is a sufficient basis for disclosure (subject to the issue of proportionality), given the other factors reasonably relied upon by the Chief Constable as justifying disclosure as stated in the review, such as the seriousness of the alleged offence, its relevance to the position applied for and its comparatively recent occurrence. (paras 40(c) (d)) On the question of proportionality, having noted that the claimants employment difficulties had been taken into account, he said: In my judgment, the Chief Constable was justified in concluding that the potential risk to the vulnerable if the claimant obtained a private hire drivers licence and had acted as alleged by the complainant outweighed the detriments that would be caused to him by the disclosure and the interference with his article 8 rights and that disclosure were both justified and proportionate. I am satisfied that the disclosure in the March 2012 ECRC Certificate was no more than was necessary to meet the pressing social need for children and vulnerable adults to be protected and that the balance between that need and respect for the claimants article 8 rights was struck in the right place. (para 40(f)) In the Court of Appeal, McCombe LJ (with whom Lord Dyson MR, and David Richards LJ agreed) dealt at some length with the article 6.2 issue. He reviewed the authorities, domestic and European, including in particular the decisions of the Supreme Court in R (Adams) v Secretary of State for Justice [2011] UKSC 18; [2012] 1 AC 48, and of the Grand Chamber in Allen v United Kingdom (above). He summarised the effect of those authorities (by reference to the words of Lord Hope at para 111 of Adams): that it is not open to the state to undermine the effect of an acquittal (para 54). He accepted that there was some unfortunate language in the reviewing officers reasoning: He concluded: I have in mind here in particular the suggestion that the decision to prosecute indicated that on a balance of probabilities the allegations were more likely to be true than false and the statement of the officers own conclusion at the end that the information might be true. Nonetheless, a statement that the allegations were more likely to be true on the balance of probabilities does not cast doubt on an acquittal in view of the different, and more exacting, standard of proof in criminal proceeding (para 58) Taken as a whole, it seems to me that the issue of the certificate did not undermine the appellants acquittal. Nowhere is it said that he was in truth guilty of the offence. The purport of the certificate is to state the fact of the allegation and of the acquittal. It is no doubt implicit that this is an alert to the potential employer of those facts as to a possible risk to the vulnerable. However, that does not, to my mind, undermine the effect of the acquittal. The effect of the acquittal is that the jury was not satisfied, so that they were sure, that the appellant was guilty. The effect of indicating facts from which others may perceive a risk from a particular individual does not contradict the effect of that verdict. (para 60) He dealt more shortly with article 8, relying on the guidance of the Supreme Court in Ls case. He dismissed the complaint of procedural unfairness, for substantially the same reasons as the judge (para 66). On the roles respectively of the judicial review judge, and the Court of Appeal, he followed the judgment of Beatson LJ in R (A) v Chief Constable of Kent [2013] EWCA Civ 1706; 135 BMLR 22 (R (A)), to which I will need to return. Applying this approach McCombe LJ concluded that the appellate court should only consider the issue of proportionality for itself if it finds that the judge has made a significant error of principle. He found no such error in Judge Raynors judgment (paras 75 76). R (L) v Comr of Police of the Metropolis As already noted, the leading authority on the operation of the ECRC regime (as it appeared in its original form in section 115(6) (7) of the 1997 Act), and on its relationship to article 8, is the decision of the Supreme Court in Ls case. In the first judgment, Lord Hope described the background to the legislation, which had given effect, following consultation, to proposals in a Government White Paper, On the Record: The Governments Proposals for Access to Criminal Records for Employment and Related Purposes in England and Wales (1996) (Cm 3308). He referred (paras 4 5) to paras 29 and 30 of the White Paper, where it was explained that local records held by police forces contained a range of information about individuals, including convictions and cautions for minor offences as well as information going beyond the formal particulars of convictions, which might be of legitimate interest to those considering employing individuals for particularly sensitive posts; and that it was thought right for such information to be disclosed where there are particularly strong grounds for it, such as to combat the risk of paedophile infiltration of child care organisations; but that stricter guidelines on what may be disclosed would provide reassurance to those subject to checking . Before Ls case the leading authority had been the decision of the Court of Appeal in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1068; [2005] 1 WLR 65 (Xs case). That case, like the present, involved a failed criminal charge; but not an actual acquittal following trial. The applicant had applied for a job as a social worker. Although he had no previous convictions, he had once been charged with indecent exposure, but the proceedings had been discontinued when the alleged victim failed to identify him. The ECRC issued by the Chief Constable contained details of the allegations of indecent exposure under the heading of other relevant information. The applicants challenge was rejected by the Court of Appeal. Lord Woolf CJ (paras 36 37) thought that the Act imposed on the Chief Constable a duty to disclose if the information might be relevant, unless there was some good reason for not making such a disclosure. He inferred that, in the view of Parliament, it was important for the protection of children and vulnerable adults that information be disclosed even if it only might be true. Given the statutory underpinning of the certificate, he saw little prospect of a successful challenge under article 8(2) of the Human Rights Convention, absent any untoward circumstance , adding: I accept that it is possible that there could be cases where the information should not be included in the certificate because it is disproportionate to do so; the information might be as to some trifling matter; it may be that the evidence made it so unlikely that the information was correct, that it again would be disproportionate to disclose it (para 41) In Ls case Lord Hope saw this passage as a significant departure from the way the White Paper envisaged the scheme would be operated (para 38). Its effect had been to tilt the balance against the applicant too far: It has encouraged the idea that priority must be given to the social need to protect the vulnerable as against the right to respect for private life of the applicant. The words ought to be included in section 115(7)(b) require to be given much greater attention. They must be read and given effect in a way that is compatible with the applicants Convention right and that of any third party who may be affected by the disclosure: Human Rights Act 1998, section 3(1). But in my opinion there is no need for those words to be read down or for words to be added in that are not there. All that is needed is to give those words their full weight, so that proper consideration is given to the applicants right to respect for her private life. (para 44) Ls case itself did not involve a criminal charge. The claimant had been employed by an agency providing staff for schools, which required her to apply for an ECRC. The certificate disclosed that she herself had no criminal convictions, but gave details about her child, who had been included on the child protection register on the ground inter alia of alleged inadequate parental supervision by her. It also referred to allegations that she had refused to co operate with social services. The agency ended her employment. She brought judicial review proceedings, claiming that the disclosure was in breach of her right to respect for private life under article 8 of the Convention. Her claim failed. It was held in summary that, although article 8 was engaged, the essential issue was whether the disclosure was a proportionate interference with her private life; that in cases of doubt, the applicant should be consulted before making the disclosure; but that, in the particular circumstances of the case, the significance of the information in respect of risk to children outweighed the prejudicial effect which disclosure had on her employment prospects. As Lord Hope said (para 48): there is no doubt that the facts that were narrated were true. It was also information that bore directly on the question whether she was a person who could safely be entrusted with the job of supervising children in a school canteen or in the playground. It was for the employer to decide what to make of this information, but it is not at all surprising that the decision was that her employment should be terminated. In a concurring judgment, Lord Neuberger thought it realistic to assume that in the majority of cases an adverse ECRC was likely to represent a killer blow to the hopes of a person aspiring to a post within the scope of the section (para 75). He observed that disclosable information under section 115 may frequently extend to allegations of matters which are disputed by the applicant, or even to mere suspicions or hints of matters which are disputed by the applicant; and that, taken on its own, the statutory test of relevance set too low a hurdle to satisfy article 8. The qualifying requirement to consider whether it ought to be included provided the requisite balancing exercise necessary to avoid breach of article 8 (paras 77 80). He gave examples of the factors likely to be relevant: the legislation, through the medium of section 115(7)(b), rightly acknowledges that the relevant public authority, namely the chief officer, must balance the need to protect those vulnerable people whom an ECRC is designed to assist with the article 8 rights of those in respect of whom an ECRC is issued. Having decided that information might be relevant under section 115(7)(a), the chief officer then has to decide under section 115(7)(b) whether it ought to be included, and, in making that decision, there will often be a number of different, sometimes competing, factors to weigh up. Examples of factors which could often be relevant are the gravity of the material involved, the reliability of the information on which it is based, whether the applicant has had a chance to rebut the information, the relevance of the material to the particular job application, the period that has elapsed since the relevant events occurred, and the impact on the applicant of including the material in the ECRC, both in terms of her prospects of obtaining the post in question and more generally. In many cases, other factors may also come into play, and in other cases, it may be unnecessary or inappropriate to consider one or more of the factors I have mentioned. Thus, the material may be so obviously reliable, relevant and grave as to be disclosable however detrimental the consequential effect on the applicant. (paras 80 81) Guidance statutory and non statutory Following the initial hearing the court sought more detailed information about the guidance available both to chief officers and to potential employers as to the operation of the ECRC system, and also any evidence about its impact in practice on those affected. We were interested in particular to see what advice was or is given as to the test for the reliability of information, and what if anything is said about disclosures following a trial and acquittal. The resulting picture is not entirely clear or consistent. As has been seen (para 6 above), the Mason review recommended a stricter test of relevance, but it contained no discussion of the test of reliability. It contained some discussion of the ECRC system, with examples, but no reference was made to the issue of disclosure following trial and acquittal. At the time of the decisions with which this appeal is concerned there was no statutory guidance regarding the application of the ECRC regime. Section 113B(4A), which came into force on 10 September 2012, requires the chief officer to have regard to guidance published by the Secretary of State. The current guidance is the Statutory Disclosure Guidance (2nd ed, August 2015). Under the heading Information should be sufficiently credible, it states: This will always be a matter of judgement, but the starting point will be to consider whether the information is from a credible source. In particular, allegations should not be included without taking reasonable steps to ascertain whether they are more likely than not to be true. (para 18, emphasis added) The same wording appeared in a version available in some form in July 2012: see R (A) at para 12. It seems likely, as Mr Southey QC suggests, that Ms Wilsons use of the expression more likely to be true than not reflected some equivalent guidance available at the time, but the actual source has not been identified. The 2015 guidance (like the 2012 version) also addresses the issue whether the information ought to be included in the certificate, and that of proportionality: whether disclosure pursues a legitimate aim, and if so whether it is proportionate, weighing factors underpinning relevancy, such as seriousness, currency and credibility against any potential interference with privacy (para 22). Nowhere does the statutory guidance address the question of disclosure of criminal allegations following a trial and acquittal. There was at the material time non statutory guidance in the form of a so called Quality Assurance Framework (QAF). This was described by Mr Moffett QC, for the Secretary of State, as a non statutory suite of documents and processes, including specific documents concerning all aspects of the process. Ms Richards QC for the Chief Constable told the court that it had been originally developed between ACPO (the Association of Chief Police Officers) and the CRB (Criminal Records Bureau) to provide a standardised framework under which to process, consider and disclose police information for Enhanced Criminal Records and ISA registration checks. She told us that the standard forms used in the present case were part of the then current QAF (Version 7). She referred us, for example, to one of the QAF documents, GD2 Disclosure Text Good Practice Guidance, in which the purposes of disclosure were said to be to convey non conviction information that may identify a potential risk to the vulnerable. Among the listed criteria were: 3. information; only relay the relevant facts. 4. The disclosure text should be balanced and neutral in tone, offering no opinion, assumption or supposition It should not include any unnecessary detail or Again we were not referred to any specific reference to the treatment of acquittals. Mr Moffett referred us to a more recent document issued by the DBS: Quality Assurance Framework an applicants introduction to the decision making process for Enhanced Disclosure and Barring Service checks (March 2014). It discusses the three primary tests, described as tests of Relevance, Truth/Substantiation and Proportionality. Under the heading Substantiation (p 9): The weight of evidence required is set at a reasonably low level. Some have argued that a higher test, one of a balance of probabilities should be used. Case law, however, asks for consideration of whether there are untoward circumstances that lead the decision maker to believe that it is unlikely that the information is true or that the information is so without substance as to make it unlikely to be true. A reasonable decision maker would not disclose the existence of allegations without first taking reasonable steps to ascertain whether they might be true (Emphasis added) This, it will be seen, is a rather different emphasis from the statutory guidance: reasonable steps to ascertain whether the allegations might be true, rather than whether they are more likely to be true than not. The document goes on to make clear that the disclosure may include information of matters that did not result in a conviction, a prosecution or even a charge as long as they pass the tests within QAF. One reason is said to be the need to protect from harm children and vulnerable adults, both of whom, sadly, are the least likely to make good witnesses, and less likely to present themselves as credible or believable when set against their abusers. Accordingly, it is said: So, there may not be sufficient evidence to secure a prosecution or even get a case to court (remember, the tests in court are far higher than those required for disclosure) but there may be enough for police to believe that someone may pose a real risk. (Emphasis added) This document is also of interest since it contains what appears to be the only specific reference to disclosures following a not guilty verdict in a criminal trial. Under the heading What kind of information can be considered for disclosure?, it includes incidents for which individuals were found Not Guilty in a court of law (in certain circumstances). That is supported by a quotation from the judgment of Wyn Williams J in R (S) v Chief Constable of West Mercia Constabulary [2008] EWHC 2811 (Admin): I do not suggest for one minute that allegations should not be disclosed in an ECRC simply because the alleged offender has been acquitted. The circumstances surrounding the acquittal are all important. There will be instances where an alleged offender is acquitted but only because the Magistrates (or Jury) entertain a reasonable doubt about the alleged offenders guilt. The tribunal of fact may harbour substantial doubts. In such circumstances, however, it might well be perfectly reasonable and rational for a Chief Constable to conclude that the alleged offender might have committed the alleged offence. (para 70) The commentary notes that, in that particular case, the decision making was found wanting and the challenge against disclosure was upheld, but no further explanation is given. Reference to the judgment of Wyn Williams J shows that the certificate was quashed because the chief officer had failed to take account of the Magistrates express indication that they regarded it as a case of mistaken identity. It is clear also that the judge (understandably at the time) was guided by the approach of the Court of Appeal in Xs case, before the reservations expressed in Ls case. As regards guidance to employers on the use of information disclosed in ECRCs, Mr Moffett drew attention to the Secretary of States statutory duty to publish a Code of Practice in connection with the use of information provided to registered persons (Police Act 1997 section 122(2)). The Code of Practice in force at the relevant time was prepared in 2009. The current version is dated November 2015. The Code (in both versions) requires the registered body to have a written policy on the suitability of ex offenders for employment and to make it available to applicants; and to notify potential applicants of the potential effect of a criminal record history on the recruitment and selection process. There is no specific reference to the handling of information in ECRCs, or of information about acquittals, other than a general requirement to discuss the content of the Disclosure with the applicant before withdrawing the offer of employment. There appears to be no formal evidence as to how ECRCs are used in practice by employers. A recent investigation into DBS by the National Audit Office (February 2018) records: There is no check on what employers have done with the information provided by DBS. Government does not know how many people this information prevented from working with children or vulnerable adults. (para 4.15) There is some evidence that employers are encouraged to treat police disclosures with care. Mr Moffett referred to a document published by Nacro (with the support of DBS) entitled Recruiting Safely and Fairly: A Practical Guide to Employing Ex Offenders (2015). This is directed principally at the employment of those with criminal convictions, said to constitute over 20% of the working age population, and accordingly a significant talent pool that organisations cannot afford to ignore. Although there is no specific advice on the handling of information in ECRCs relating to acquittals, emphasis is given to the need to adapt procedures to avoid inadvertent discrimination against those with criminal records, and for the need for a careful and sensitive risk assessment interview where concerns arise from a criminal record check. Mr Moffett also asked the court to note evidence from a report by a company called Working Links (Tagged for Life: A research report into employer attitudes towards ex offenders) that only 5% of employers surveyed would automatically reject a candidate with a criminal record. The same report indicates that only 18% had actually employed someone they knew to have convictions. For more specific advice on the use of non conviction information, he referred us to a Local Government Association publication (Taxi and PHV Licensing: Councillors Handbook; pp 13 16). Responding to anecdotal evidence that some authorities have been reluctant to attach weight to such information, it is noted that such information can and should be taken into account and may sometimes be the sole basis for a refusal. The following advice is given: When dealing with allegations rather than convictions and cautions, a decision maker must not start with any assumptions about them. Allegations will have been disclosed because they reasonably might be true, not because they definitely are true. It is good practice for the decision makers, with the help of their legal adviser, to go through the contents of an enhanced disclosure certificate with an applicant/driver and see what they say about it. If, as sometimes happens in practice, admissions are made about the facts, that provides a firm basis for a decision. (p 15) Finally, at its request, the court was given some information about the numbers of ECRCs relating to acquittals as a proportion of the whole. Ms Richards gave us the following information for the period 1 April 2017 to 31 March 2018: During that period there were 128,154 applications for Enhanced Criminal Record Certificates (ECRCs) processed by Greater Manchester Police (GMP). In relation to 80 of the 128,154 ECRC applications, GMP provided information pursuant to section 113B(4) of the Police Act 1997. 11 of the 80 cases in which information was provided pursuant to section 113B(4) included acquittal information (some may have contained other, non acquittal information as well, eg allegations which did not result in a trial). In eight of those 80 cases, the individual disputed the inclusion of such information. Only one of the eight disputes involved the inclusion of acquittal information. The submissions Mr Southey submits first that the Court of Appeal erred in failing to carry out their own assessment of proportionality. I will deal with that issue in the next section of this judgment. He submits in any event that the treatment of the issue of proportionality by the courts below in the present case was defective. The disclosure in the ECRC should have been found to be in breach of both the substantive and procedural obligations under article 8. As to the latter, it is said, AR was not given an opportunity to make representations before the first ECRC was issued, and accordingly no weight was given to his views, for example on the possibility of alternative employment. The principal dispute has related to the substantive obligation under article 8. There is no dispute that the disclosure involved an interference with ARs rights under the article. The issue is whether, in terms of article 8.2, it was necessary . for the protection of the rights and freedoms of others in other words, whether it was proportionate. That issue had to be addressed, in short, (in Lord Neubergers words: para 29 above) by balancing the need to protect those vulnerable people whom an ECRC is designed to assist with the article 8 rights of those in respect of whom an ECRC is issued. Mr Southey did not suggest that an ECRC might not sometimes be appropriate following an acquittal. But in his submission, the starting point must be the reliability of the allegations. That could only be assessed by a detailed analysis of the evidence, by reference so far as necessary to the transcript of oral evidence (as indicated by Coulson J in R (RK) v Chief Constable of South Yorkshire Police [2013] EWHC 1555 (Admin), para 57). Further, given the potential harm of disclosure to ARs prospects, and the gravity of the allegations, they should not have been disclosed unless they could be established on the balance of probabilities. The judge had been correct to hold that it was not possible to extract from the available material a firm or reliable conclusion that the complainants account is more likely to be true than false. However, neither he nor the Court of Appeal had understood its significance. In his submission, it inevitably undermined the weight which the police had given to the value of the disclosed information in the proportionality balance. That had expressly proceeded on the basis that the complainants account was likely to be true. Reducing the weight to be given to that side of the balance implied that greater, indeed decisive, weight should have been given to the highly damaging effect of the disclosure on AR and his family. Ms Richards for the Chief Constable did not accept that it was either necessary or practicable to conduct a mini trial of the allegations, or of their probability. As shown by the case law, the decision was one of balance taking into account a range of factors, including the gravity of the alleged conduct and its circumstances, the reliability and relevance of the information, the period that has elapsed since the events in question, and the impact on the applicant. In the present case, the majority of these factors weighed in favour of disclosure: the alleged offence was of the most serious nature, the circumstances were directly related to the employment sought, and the alleged offence was recent. The acquittal indicated only that the jury was not satisfied beyond reasonable doubt that AR was guilty of rape. His acquittal and continuing denial of the offence, and the potential impact of disclosure, were important factors in the balance, but not determinative. Her general approach to the legislation was supported by Mr Moffett for the Secretary of State, although he abstained from comments on the facts of this case. Following the conclusion of the oral hearing, the court asked for further submissions on the relationship of articles 6.2 and article 8 in the present context: in short, if disclosable information was limited by the former to the bare facts of the charge and acquittal, how should that be taken into account in assessing its practical utility to employers under the article 8 balance? Mr Southey submitted that merely informing an employer of the fact of charge and acquittal could not be proportionate, because it would lead them to speculate, rather than make an informed decision, and it risked giving them the impression that the information is more reliable than it really is. Ms Richards did not accept that article 6.2 would preclude a statement that the allegations were more likely to be true than not. However, in her submission, such a statement was not necessary to make disclosure proportionate. The purpose of disclosure is to draw to the attention of the registered body matters which may indicate a potential risk; it is then for the registered body to decide what (if any) further inquiries to make and to undertake its own assessment of any potential risk that the applicant might pose. The disclosure of information in an ECRC forms only part of a recruitment process. Mr Moffett supported that position, adopting the words of the Court of Appeal in this case (para 60): The purport of the certificate is to state the fact of the allegation and of the acquittal. It is no doubt implicit that this is an alert to the potential employer of those facts as to the possible risk to the vulnerable . (His emphasis) He also gives examples of cases where further information had been accepted by the courts as properly included: i) R (A) v Chief Constable of Kent Constabulary (2013) 135 BMLR 22 in which the ECRC recorded that the applicant was found not guilty of four charges of ill treatment or neglect of a person without capacity, no evidence being offered (para 16). ii) R (LG) v Independent Monitor [2017] EWHC 3327 (Admin) in which the ECRC recorded the acquittal of a nurse on charges of theft from a patient, noting that her earlier admission of theft had been ruled inadmissible at trial, and the jury directed to acquit (para 14). iii) R (BW) v Independent Monitor [2015] EWHC 4095 (Admin) in which the ECRC had included the reasons given by a District Judge in the Youth Court for acquitting the applicant of a charge of common assault, including his view that the burden of proof was not to the required standard and that the benefit of the doubt had to be given to the [applicant]. He reminds us that, for prosecutions in the Magistrates Court, the rules envisage that reasons may be given for an acquittal: Criminal Procedure Rules rule 24.3(6). Proportionality in the appellate court Before turning to the issues arising under article 8 itself, it is necessary to address the dispute as to the correct role of the appellate court in such cases. There was no disagreement as to the correctness of the approach adopted by the HH Judge Raynor: that is, to make his own assessment of proportionality, but giving weight to the views of the primary decision maker, as the person with relevant statutory or other authority, and institutional competence (Huang v Secretary of State for the Home Department [2007] 2 AC 167; R (SB) v Governors of Denbigh High School [2007] 1 AC 100, paras 30, 34; Pham v Secretary of State for the Home Department [2015] UKSC 19; [2015] 1 WLR 1591, para 108). There is however an issue about the approach of the Court of Appeal, taking account of the guidance given by the Supreme Court in In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911 (In re B). The relevant rule at the time, CPR rule 52.11(3), provided simply [The rule is now in CPR rule 52.21.] that the court will allow the appeal where the decision of the lower court was wrong. judgments of the Supreme Court in In re B: In R (A) Beatson LJ had sought to summarise the effect of the majority The majority judgments stated that the correct approach for an appellate court is to treat the exercise as an appellate exercise and not as a fresh determination of necessity or proportionality. Their reasoning was based on the requirement for a fair hearing before an independent tribunal under ECHR article 6. They considered that, because there is no obligation under article 6 to provide a right of appeal at all, it is open to domestic law to fashion the scope of any right given. In England and Wales CPR Part 52 limits this to a review of the decision of the lower court: see Lord Wilson at para 36, Lord Neuberger at paras 83 and 85, and Lord Clarke at para 136. It was recognised (see Lord Neuberger at para 88) that if, after such a review, the appellate court considered that the judge had made a significant error of principle the appellate court is able to reconsider the issue for itself if it can properly do so because remitting the issue results in expense and delay, and is often pointless. (para 87, emphasis added) Mr Southey submits that a test which depends on the court finding a significant error of principle is too narrow, and not supported by the reasoning of the Supreme Court. In re B was, he says, a different type of case. The appeal was from the judges decision on a care order. The judge had had to decide for himself whether the proposed order satisfied the statutory test, on the basis of the oral and other evidence before him. By contrast, in the present case, the judge was not the initial decision maker, but was reviewing the decision of the Chief of Police, and he heard no oral evidence. The Court of Appeal was in as good a position as the trial judge to make its own assessment of proportionality, whether or not it found an error of principle in the judges reasoning. In In re B Lord Neuberger identified two main issues for the judge (para 49), the first being whether the threshold in section 31(2) of the Children Act 1989 was satisfied; the second whether, if so, it was appropriate to make a care order. The first issue does not arise in this case. It was in the context of the second main issue (para 72ff) that Lord Neuberger considered the approach to be adopted by an appellate court on an appeal against a decision on issue of proportionality under the Convention. He thought that there should be no departure from the ordinary approach of an appellate court: that of reviewing the trial judges decision, rather than reconsidering the issue afresh (para 86). He described the approach as follows (para 88, emphasis added): If, after reviewing the judges judgment and any relevant evidence, the appellate court considers that the judge approached the question of proportionality correctly as a matter of law and reached a decision which he was entitled to reach, then the appellate court will not interfere. If, on the other hand, after such a review, the appellate court considers that the judge made a significant error of principle in reaching his conclusion or reached a conclusion he should not have reached, then, and only then, will the appellate court reconsider the issue for itself if it can properly do so (as remitting the issue results in expense and delay, and is often pointless). The contrary view of the minority was that the appellate court, while taking account of the decision of the court below, must make its own assessment of proportionality (paras 116 119 per Lord Kerr; paras 204 205 per Lady Hale). Their view was clearly rejected by the majority. I would observe that this rejection was not simply directed to cases where the first court enjoys the advantage of hearing oral evidence. It also reflected the general policy consideration that the purpose of the appeal is to enable the reasoning of the lower court to be reviewed and errors corrected, not to provide an opportunity for the parties to reargue the same case (see also McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477, para 3 per Lord Reed). Lord Neuberger dealt separately with the standard to be applied in deciding whether the judge was entitled to reach his conclusion on proportionality, once satisfied that it was based on justifiable primary facts. He rejected the view suggested in some authorities that the conclusion must be plainly wrong, before the appellate court could interfere: at least where Convention questions such as proportionality are being considered on an appeal, I consider that, if after reviewing the trial judges decision, an appeal court considers that he was wrong, then the appeal should be allowed. Thus, a finding that he was wrong is a sufficient condition for allowing an appeal against the trial judges conclusion on proportionality, and, indeed, it is a necessary condition (save, conceivably, in very rare cases). (paras 91 92) Lord Wilson agreed with the main substance of Lord Neubergers reasoning on this aspect (para 37, approving paras 83 90; and para 46, citing paras 90 91). Lord Clarke, while agreeing generally with Lord Neubergers reasoning (para 134), added his own comments on this aspect (para 137). Of CPR rule 52.11, he said: The rule does not require that the decision be plainly wrong. However, the courts have traditionally required that the appeal court must hold that the judge was plainly wrong before it can interfere with his or her decision in a number of different classes of case. I referred to some of them in Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577, to which Lord Neuberger refers at para 57, at my paras 9 to 23. It seemed to me then and it seems to me now that the correct approach of an appellate court in a particular case may depend upon all the circumstances of that case. So, for example, it has traditionally been held that, absent an error of principle, the Court of Appeal will not interfere with the exercise of a discretion unless the judge was plainly wrong. On the other hand, where the process involves a consideration of a number of different factors, all will depend on the circumstances. As Hoffmann LJ put it in In re Grayan Building Services Ltd [1995] Ch 241 at 254, generally speaking, the vaguer the standard and the greater the number of factors which the court has to weigh up in deciding whether or not the standards have been met, the more reluctant an appellate court will be to interfere with the trial judges decision. In the present context, it seems to me, in agreement with Lord Neuberger at para 58, that the court should have particular regard to the principles stated by Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360, 1372, which are quoted by Lord Wilson at para 41. In Abela v Baadarani [2013] UKSC 44; [2013] 1 WLR 2043 (a decision given a few days after In re B), Lord Clarke, with the agreement of the rest of the court (including Lord Neuberger), expressed the position more succinctly. The issue in that case was whether there was good reason (under CPR rule 6.15(1)) to treat as valid service the steps taken by the claimant to bring the claim form to the attention of the defendant. He said: The judge held that there was. In doing so, he was not exercising a discretion but was reaching a value judgment based on the evaluation of a number of different factors. In such a case, the readiness of an appellate court to interfere with the evaluation of the judge will depend upon all the circumstances of the case. The greater the number of factors to be taken into account, the more reluctant an appellate court should be to interfere with the decision of the judge. As I see it, in such circumstances an appellate court should only interfere with that decision if satisfied that the judge erred in principle or was wrong in reaching the conclusion which he did. (para 23) In the light of that review, I agree with Mr Southey that the Court of Appeal applied too narrow a test, by asking simply whether the judges reasoning disclosed a significant error of principle. That expression was indeed used by Lord Neuberger, but he linked it to the question of whether the judge had reached a conclusion he should not have reached (In re B, para 88). That passage preceded and was separate from his consideration of the standard of review (para 91). As Lord Clarke said in Abela the question in relation to the standard of review is whether the judge erred in principle or was wrong in reaching the conclusion which he did (para 23, emphasis added). So far I have omitted any reference to one passage in Lord Neubergers judgment. After his discussion of the standard of review, while acknowledging the danger in over analysis, he added the following by way of further explanation: An appellate judge may conclude that the trial judges conclusion on proportionality was (i) the only possible view, (ii) a view which she considers was right, (iii) a view on which she has doubts, but on balance considers was right, (iv) a view which she cannot say was right or wrong, (v) a view on which she has doubts, but on balance considers was wrong, (vi) a view which she considers was wrong, or (vii) a view which is unsupportable. The appeal must be dismissed if the appellate judges view is in category (i) to (iv) and allowed if it is in category (vi) or (vii). (para 93) He added further comments on categories (iv) and (v) of this analysis (para 94). With hindsight, and with great respect, I think Lord Neubergers warning about the danger of over analysis was well made. The passage risks adding an unnecessary layer of complication. Further, it seems to focus too much attention on the subjective view of the appellate judges and their degrees of certainty or doubt, rather than on an objective view of the nature and materiality of any perceived error in the reasoning of the trial judge. The passage has not been without its critics. Professor Zuckerman (Civil Procedure: Principles and Practice 3rd ed, paras 24.209 210) has described it as puzzling, and saw the difference between categories (iv) and (v) as so fine as hardly to matter. In any event, I do not understand this passage to have been essential to Lord Neubergers reasoning or that of the majority. (As already noted, Lord Wilson limited his agreement to paras 83 91). In conclusion, the references cited above show clearly in my view that to limit intervention to a significant error of principle is too narrow an approach, at least if it is taken as implying that the appellate court has to point to a specific principle whether of law, policy or practice which has been infringed by the judgment of the court below. The decision may be wrong, not because of some specific error of principle in that narrow sense, but because of an identifiable flaw in the judges reasoning, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion. However, it is equally clear that, for the decision to be wrong under CPR 52.11(3), it is not enough that the appellate court might have arrived at a different evaluation. As Elias LJ said (R (C) v Secretary of State for Work and Pensions [2016] EWCA Civ 47; [2016] PTSR 1344, para 34): the appeal court does not second guess the first instance judge. It does not carry out the balancing task afresh as though it were rehearing the case but must adopt a traditional function of review, asking whether the decision of the judge below was wrong. It follows that in the present case it was sufficient for the Court of Appeal to consider whether there was any such error or flaw in the judges treatment of proportionality. If there was not, there was no obligation (contrary to Mr Southeys submission) for the Court of Appeal to make its own assessment. Article 8 Discussion I turn to the disputes relating to article 8. Was the Court of Appeal correct to find no material error or flaw in the judges reasoning? I need not dwell long on the procedural aspects. It makes no difference whether this is looked at by reference to article 8, or to common law principles of fairness. The complaint in essence is of lack of consultation, and was rightly rejected for the reasons given by the judge (para 16 above) as endorsed by the Court of Appeal. The officers were fully aware from the evidence at trial of the nature of ARs defence, and his personal circumstances, and they were aware and took account of the potential impact on his employment prospects. As the judge said, there was no indication of any further information he would have wished to advance. Turning to the substantive effect of article 8, Mr Southeys principal submission is that the interference involved in the disclosure could not be justified unless the officers (or the judge) were in a position to form a positive view of likely guilt. This could not be done without a full appraisal of the evidence in the trial. He relies on R (RK) v Chief Constable of South Yorkshire Police (above). There Coulson J accepted that the mere fact of acquittal did not render disclosure of the alleged offence disproportionate, but he thought it a matter of significance in assessing proportionality. In the case before him the police had failed to give it proper weight; on one reading of the documents, they seemed to have grudgingly noted the acquittal and then gone on to address the allegations as if they had been proved (para 37). Mr Southey relies particularly on a later passage in which the judge criticised the failure of the police to make any detailed analysis of the critical evidence at the trial, which had been provided in transcript form: If the ECRC is going to disclose information in relation to allegations that have been rejected by the jury, on the grounds that the allegations could still be substantiated, then at the very least that requires a detailed analysis of those allegations by reference to the evidence. (para 57) While I do not question the actual decision in that case, I cannot accept that, as a matter of domestic law or under article 8, it is necessary or appropriate for those responsible for an ECRC to conduct a detailed analysis of the evidence at the trial, such as envisaged by Coulson J. That is the task of the judge and jury, who have the advantage of seeing and hearing the witnesses. Whether or not it would be compatible with article 6.2 for the chief officer to express a view on the merits of the case following an acquittal, it is not the proper function of an officer to attempt to replicate the role of the court, or (in Ms Richards words) to conduct a mini trial. Nor can that be read into the language of the statute. His task under section 113B is to identify and disclose relevant information, not to make a separate assessment of the evidence at trial. As Mr Moffetts examples show (para 52 above), additional information may in some cases be available about the circumstances of the acquittal, including possibly the courts own statements about it, which may give reasons for treating the courts disposal as less than decisive. By contrast in the case considered by Wyn Williams J (para 36 above) the available information should have been taken as a positive indication of innocence. However, in the absence of information of that kind, it is not the officers job to fill the gap. To the extent that Ms Wilson in the present case saw it as part of her task to assess whether, in the light of the evidence at trial, the allegation was more likely to be true than false, she was in error. The judge did not make the same error. He went no further than to accept, as he was entitled to do, the Chief Constables view that the information was not lacking substance and that the allegations might be true. However, that in itself did not mean that disclosure was disproportionate. It was a matter for him to assess whether the information, albeit in the limited form contained in the ECRC, was of sufficient weight in the article 8 balance. It is to be borne in mind that the information about the charge and acquittal was in no way secret. It was a matter of public record, and might have come to a potential employers knowledge from other sources. If so, a reasonable employer would have been expected to want to ask further questions and make further inquiries before proceeding with an offer of employment. Its potential significance was as the judge found underlined by the seriousness of the alleged offence, its relevance to the position applied for, and its comparatively recent occurrence (para 40(d)). These were matters envisaged by Lord Neuberger in Ls case as potentially justifying disclosure (para 29 above). On the other side, the judge took full account of the possible employment difficulties for AR, but regarded those as no more than necessary to meet the pressing social need for which the ECRC process was enacted (para 40(f)). In my view Mr Southey has failed to identify any error in the judges reasoning. Accordingly, in agreement with the Court of Appeal I would dismiss the appeal. Postscript Although I have reached a clear conclusion on the limited issues raised by the appeal before us, it gives rise to more general concerns about the ECRC procedure in similar circumstances. I bear in mind that the case preceded the improvements made in 2012 following the Mason report. However, so far as can be judged from the material before us, little attention has been given to the conceptual and practical issues arising from the relationship of the procedure to criminal proceedings. The issue did not arise in Ls case itself, which did not involve a criminal charge, and where in any event there was no significant dispute as to the correctness of the allegations. Nor was it a subject considered in the Mason review. It seems to have been assumed, at least since the Court of Appeal decision in Xs case, that a failed prosecution is no bar to the inclusion of the same allegations in an ECRC. This understanding is reflected in the 2014 QAF document, to which Mr Moffett referred, supported by reference to a 2008 judgment of Wyn Williams J (para 36 above). But that passage gives no clear guidance as what weight should be given to an acquittal in different circumstances. As already noted, it makes no reference to the Supreme Courts criticisms of the balance struck in Xs case. Given that Parliament has clearly authorised the inclusion in ECRCs of soft information, including disputed allegations, there may be no logical reason to exclude information about serious allegations of criminal conduct, merely because a prosecution has not been pursued or has failed. In principle, even acquittal by a criminal court following a full trial can be said to imply no more than that the charge has not been proved beyond reasonable doubt. In principle, it leaves open the possibility that the allegation was true, and the risks associated with that. However, I am concerned at the lack of information about how an ECRC is likely to be treated by a potential employer in such a case. Ms Richards was at pains to emphasise that the ECRC is only part of the information available, and will be not necessarily lead to failure. On the other hand, Lord Neuberger assumed that an adverse ECRC would be a killer blow for an application for a sensitive post (para 29 above). That view was adopted without question by the Strasbourg court in MM v United Kingdom (2013) (Application No 24029/07), but it is not at all clear with respect that it was on based on any objective information or empirical evidence of what happens in practice. We have been shown reports which emphasise the importance of not excluding the convicted from consideration for employment, but they say nothing about the acquitted, who surely deserve greater protection from unfair stigmatisation. Nor does there appear to be any guidance to employers as to how to handle such issues. Even if the ECRC is expressed in entirely neutral terms, there must be a danger that the employer will infer that the disclosure would not have been made unless the chief officer had formed a view of likely guilt. These issues require further consideration outside the scope of this appeal. Careful thought needs to be given to the value in practice of disclosing allegations which have been tested in court and have led to acquittal. The figures noted above show that the number of ECRCs relating to acquittals represent a very small proportion of the whole. This may suggest that in many cases chief officers find no cause for disclosure of risk in cases following acquittals.

UK-Abs

This appeal concerns the legality under the Human Rights Act 1998 of an Enhanced Criminal Record Certificate (ECRC) issued in respect of the appellant (AR) under section 113B of the Police Act 1997. An ordinary Criminal Records Certificate is limited to the facts of convictions or cautions or their absence. By contrast, an ECRC includes information on the basis simply of the Chief Officers opinion as to its relevance, and whether it ought to be included in the certificate. In January 2011, AR was acquitted of rape by the Crown Court. He was a married man with children, of previous good character, and a qualified teacher, but was working at the time as a taxi driver. It was alleged that he had raped a woman who was a passenger in a taxi driven by him. His defence was that there had never been sexual contact with the victim. Following his acquittal, he applied for an ECRC in the course of an application for a job as a lecturer. The ECRC was issued with details of the rape charge for which he had been tried and acquitted. AR objected to this disclosure on the basis that there had been no actual conviction and it failed to give a full account of the evidence given and how the jury came to its conclusion. The judge and the Court of Appeal dismissed ARs appeal against the disclosure, holding that it was reasonable, proportionate and no more than necessary to secure the objective of protecting young and vulnerable persons. The main issue before the Supreme Court was whether the admitted interference with ARs rights under article 8 of the European Convention of Human Rights (ECHR) due to the disclosure was justified. There was also a question as to the proper role of an appellate court in reviewing the judges finding of proportionality under the ECHR. The Supreme Court unanimously dismisses the appeal. Lord Carnwath gives the judgment with which all the other justices agree. The leading authority on the operation of the ECRC regime is the Supreme Court decision in R (L) v Comr of Police of the Metropolis [2010] 1 AC 410 (Ls case). In Ls case, the ECRC disclosed details of alleged inadequate parental supervision by the applicant of her child. It was held that although article 8 was engaged, the essential issue was whether the disclosure was a proportionate interference with her private life, and that in the particular circumstances of the case, the significance of the information in respect of risk to children outweighed the prejudicial effect of the disclosure on the applicants employment prospects [22 29]. Following the initial hearing before the Supreme Court in the present case, the court sought more detailed information about the guidance available to chief officers and potential employers as to the operation of the ECRC system, and also any evidence about its impact on those affected. The resulting picture was not entirely clear or consistent [30 41]. On the issue of the proper role of the appellate court in approaching proportionality, Lord Carnwath noted that the purpose of the appeal is to enable the reasoning of the lower court to be reviewed and errors corrected, not to provide an opportunity for parties to reargue the same case [57]. The question in relation to the standard of review is whether the judge erred in principle or was wrong in reaching the conclusion which he did [61]. To limit intervention to a significant error of principle, as the Court of Appeal did, is too narrow an approach if it is taken as implying that the appellate court has to point to a specific principle which has been infringed by the judgment of the court below. The decision may be wrong because of an identifiable flaw in the judges reasoning which undermines the cogency of the conclusion. It is equally clear, however, that it is not enough that the appellate court might have arrived at a different evaluation. In the present case, it was sufficient for the Court of Appeal to consider whether there was any such error or flaw in the judges treatment of proportionality, and if there was not, there was no obligation for it to make its own assessment [64 65]. The procedural aspect of the complaint under article 8 is essentially that there was a lack of consultation, and this was rightly rejected for the reasons given by the judge as endorsed by the Court of Appeal. The officers were fully aware from the evidence at trial of the nature of ARs defence, and his personal circumstances, and they were aware and took account of the potential impact on his employment prospects. As the judge said, there was no indication of any further information he would have wished to advance [66]. On the substantive effect of article 8, Lord Carnwath rejected the submission that the interference involved in the disclosure could not be justified unless the officers were in a position to form a positive view of likely guilt, which could not be done without a full appraisal of the evidence at trial. He did not accept that, as a matter of domestic law or under article 8, it is necessary or appropriate for those responsible for an ECRC to conduct a detailed analysis of the evidence at the trial [67 68]. The judge went no further than to accept, as he was entitled to do, the Chief Constables view that the information was not lacking substance and that the allegations might be true. It was a matter for him to assess whether the information was of a sufficient wright in the article 8 balance. It should be borne in mind that the information about the charge and acquittal was a matter of public record, and might have come to the potential employers knowledge from other sources. The judge took full account of the possible employment difficulties for AR, but regarded them as no more than necessary to meet the pressing social need for which the ECRC process was enacted [69 70]. Lord Carnwath notes in a postscript to his judgment that although he has reached a clear conclusion on the limited issues raised by this appeal, it gives rise to more general concerns about the ECRC procedure in similar circumstances. There is no clear guidance as to what weight should be given to an acquittal in different circumstances, and there is a lack of information about how an ECRC is likely to be treated by a potential employer in such a case. Careful thought needs to be given to the value in practice of disclosing allegations which have been tested in court and have led to an acquittal [72 76].

This appeal concerns the legality under the European Convention on Human Rights of licensing conditions imposed by the Environment Agency (the Agency) restricting certain forms of salmon fishing in the Severn Estuary. Mr Motts interest The respondent, Mr Mott, has a leasehold interest in a so called putcher rank fishery at Lydney on the north bank of the Severn Estuary. A putcher rank is an old fishing technique, involving the use of conical baskets or putchers to trap adult salmon as they attempt to return from the open sea to their river of origin to spawn. Mr Mott has operated the putcher rank under successive leases since 1975. Since 1979, according to his evidence, it has been his full time occupation. He claims that, before the limits introduced by the Agency in 2011, his average catch using the rank was some 600 salmon per year, at a value of about 100 each, giving him a gross annual income in the order of 60,000. The right to operate the rank is derived from a Certificate of Privilege dated 14 May 1866, issued by the Special Commissioners for English Fisheries, and owned by the Lydney Park Estate. The current 20 year lease was granted jointly to Mr Mott and a Mr David Merrett, and will expire on 31 March 2018. It gives them the right to fish two stop nets and 650 putchers, in return for payment of an annual rent in two parts: a fish rent equivalent to 65 pounds in weight of salmon, and a monetary rent of (since the last review date) 276. The tenants are required to operate the putcher rank during each fishing season unless circumstances make it impossible. Further they may not assign, let or part with the fishery during the term of the lease, save upon death or disability, when they may with the written consent of the landlord assign to another family member. To operate the putcher rank Mr Mott has required an annual licence from the Environment Agency (the Agency), under section 25 of the Salmon and Freshwater Fisheries Act 1975 (the 1975 Act). The salmon season runs from 1 June to 15 August. Licences are usually issued by the Agency in late April or early May, shortly before the season opens. Until recently a licence for use of an historic installation such as the putcher rank (unlike other methods of fishing) could not be made subject to conditions limiting the number of fish taken (catch limitations). However, with effect from 1 January 2011, the 1975 Act was amended to enable the Agency to impose such conditions where considered necessary for the protection of any fishery (paragraph 14A of Schedule 2 to the 1975 Act, inserted by Marine and Coastal Access Act 2009 section 217(7)). Measures to protect salmon stock It has been government policy, as implemented by the Agency and its predecessors, supported by government, that in the interests of effective management mixed stock fisheries should be gradually phased out, and exploitation limited, as far as possible, to places where the stock of salmon is from a single river. The Agency considers that all the fisheries in the Severn Estuary exploit a mixed salmon stock, with fish destined to return to the rivers Severn, Wye, Usk, Rhymney, Taff and Ely and other rivers. The rivers Wye and Usk are designated as Special Areas of Conservation (SAC) under the European Habitats Directive (Council Directive 92/44/EEC), transposed into domestic law by the Conservation of Habitats and Species Regulations 2017 (the Habitats Regulations). One of the main reasons for the designation of these rivers is the need to conserve their salmon stocks. The Severn Estuary itself is designated as a SAC, a Special Protection Area (under the Council Directive on the Conservation of Wild Birds (Council Directive 79/409/EEC)), and a Ramsar site. Together, these areas constitute the Severn Estuary European Marine Site, for which salmon is a qualifying feature. For some years the status of salmon stock in the Wye and Usk has been categorised by the responsible authorities as unfavourable or at risk, because of failure to achieve stock conservation targets or the objectives set under the Habitats Directive. Dealings between the Agency and the Tenants In late 2003, the Agency attempted to purchase the Certificate of Privilege to operate the putcher rank. It agreed terms with the Estate, subject to contract, and (as the Estate required) subject to agreement with the tenants for termination of the lease. Negotiations between the Agency and the tenants took place in 2004. By an agreement in 2004, the Agency paid the tenants 30,000 compensation not to operate the putcher rank fishery during the 2004 fishing season. The agreement also provided a further payment of 10,000, if agreement were reached before 1 June 2005 for permanent cessation. In the event negotiations for permanent cessation were unsuccessful. It was agreed in principle that compensation should be paid, but the parties failed to agree the basis of valuation. During the 2005 to 2009 seasons the tenants continued to operate the fishery. In 2010 an agreement was again reached for payment of 30,000 compensation not to operate the fishery during that season. In February 2011, the Agency offered to purchase the then remaining term of the lease (seven years), but negotiations were unsuccessful. However, in response to the application for a licence for the 2011 season, the Agency agreed to pay the tenants 35,000 compensation not to operate the putcher rank fishery during that season. Another historic installation fishery was also paid not to seek a licence in the 2011 season. The only historic installation fishery that was licensed in 2011 operated under the terms of a catch condition, imposed under the new powers in paragraph 14A of Schedule 2 to the 1975 Act which had by then come into effect. The catch condition was determined following an appropriate assessment under the Habitats Regulations (the 2011 HRA). The dispute The events leading to the present dispute began with a letter from the Agency dated 16 April 2012, informing Mr Mott of a report by the University of Exeter (the Exeter Report), which, it was said, provided clear evidence of the mixed stock nature of the catch in the Severn Estuary. He was informed of the intention to set a catch limit of 30 fish for that year, and of the power under the amended 1975 Act to impose a catch limit without compensation. The Exeter Report was followed in May 2012 by a Habitats Regulations Assessment (the 2012 HRA) to the effect that unconstrained catches of salmon in the estuary were threatening the integrity of the River Wye SAC, and that it was necessary to limit the use of the historic installation fisheries. As HHJ Cooke, sitting as a judge of the High Court noted (para 13), the contemporary documents showed that the controlling factor was consideration of the numbers of salmon returning to the Wye to spawn, the stock in that river being considered to be the most vulnerable; and the impact of the claimants fishery was considered therefore in terms of its potential effect on salmon destined to spawn in the Wye. Mr Mott did not accept the Exeter Reports findings. Having failed to persuade its authors at a meeting in May 2012, he commissioned his own expert report from a Professor Fewster of University of Auckland, New Zealand. The disagreements between the experts were the subject of detailed study in the courts below but are not relevant to the remaining issue in this appeal. In the meantime, Mr Mott was served with a notice under the 1975 Act on 1 June 2012, the first day of the new fishing season, limiting his catch to 30 fish. This figure was fixed by reference to the lowest catch by any of the historic installation fisheries that had sought a licence in the preceding ten year period, with some increase to mitigate the risk of reduction in licence uptake and failure to maintain possible heritage. A further reduction to 23 salmon was proposed for 2013, and 24 for the 2014 season. The judge referred to a sentence in the Habitats Regulations Assessment for 2013 which explained that under the new regime the catch by the most productive estuary fisheries will be restricted to the approximate long term de minimus (sic) catch.: [2015] EWHC 314 (Admin); [2016] Env LR 27 (para 31). He commented on the effect on Mr Mott: 33. The final sentence quoted above was explained as meaning that the number of fish allowed per licence was set as being approximately the ten year average catch of the least productive of all the fisheries licensed. The practical result for the claimant is that his fishery of 650 putchers is given the same catch allocation as the smallest and least effective of the other putcher fisheries, which may operate 50 baskets or less. These he says are not commercially viable but operated only as a hobby. Plainly, the heaviest impact of this policy falls on the claimant who relies on the fishery for his living rather than the smaller operators. The proceedings In the present judicial review proceedings Mr Mott challenged the decisions of the Agency to impose conditions on the licences for 2012, 2013 and 2014, limiting catches respectively to 30, 23, and 24 salmon per season. He alleged irrationality, and breach of his rights under the Convention. It was Mr Motts case that the catch limit conditions have made the putcher rank fishery wholly uneconomic and the lease worthless. The judge upheld both claims and concluded that the decisions to impose the catch conditions were irrational, as the Exeter Report did not provide a reasonable basis for the view that the putcher installations were having a material effect on the salmon fishery in the river Wye. He held further that the Agency could not under Article 1 of Protocol 1 of the ECHR (A1P1) properly have imposed the conditions, if otherwise lawful, without payment of compensation. In a judgment dated 17 June 2016, the Court of Appeal (Beatson LJ, with whom Lord Dyson MR and McFarlane LJ agreed) allowed the Agencys appeal on the issue of irrationality, but dismissed the appeal under A1P1. It made a declaration that all three decisions amounted to an unlawful interference with his A1P1 rights in the absence of compensation: [2016] EWCA Civ 564; [2016] 1 WLR 4338. Only the latter issue arises on the appeal to this court. A1P1 Principles Article 1 of the first Protocol (A1P1) to the Convention provides: (1) Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. (2) The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. It is accepted that the right to fish granted to Mr Mott by lease is a possession for these purposes. The general principles governing the interpretation of A1P1 are well established in European and domestic authorities. In Back v Finland (2004) 40 EHRR 48 the Strasbourg court explained that it comprises three distinct rules: the first (in the first sentence of para 52) is of a general nature and enunciates the principle of peaceful enjoyment of property; the second (in the second sentence of the same paragraph) covers deprivation of possessions and makes it subject to certain conditions; the third (in the second paragraph) concerns the right of the state to control the use of property in accordance with the general interest. The court added: The three rules are not distinct in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule. Each of the two forms of interference defined must comply with the principle of lawfulness and pursue a legitimate aim by means reasonably proportionate to the aim sought to be realised. The principles were summarised by Lord Reed in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46; [2012] 1 AC 868, paras 107 108. The application of A1P1, in circumstances comparable in some respects to the present, was considered by the Court of Appeal in R (Trailer and Marina (Leven) Ltd) v Secretary of State for the Environment, Food and Rural Affairs [2005] 1 WLR 1267; [2004] EWCA Civ 1580. The claimant company owned a stretch of canal designated a Site of Special Scientific Interest (SSSI) under the Wildlife and Countryside Act 1981 (the 1981 Act). The company entered into a management agreement with English Nature, under which it agreed not to develop fishing and boating activities in return for annual compensation of 19,000. The agreement expired at the end of 2000. In January 2001, amendments to the 1981 Act (under the Countryside and Rights of Way Act 2000), imposed a new regulatory regime under which compensation was no longer payable. The company claimed that the amended legislation involved a breach of their rights under A1P1, and sought a declaration of incompatibility under the Human Rights Act 1998. The claim failed. Neuberger LJ, giving the judgment of the court, reviewed the authorities dealing with the distinction between the taking or deprivation of property and mere control of use. As he noted, the former normally requires payment of compensation to avoid a breach of the article; the latter does not, even if the control result in serious financial loss. He noted that the division drawn by the Strasbourg jurisprudence is not clear cut. He referred in particular to the Grand Chamber decision in Sporrong & Lnnroth v Sweden (1982) 5 EHRR 85, for the propositions, first, that under the second rule the court may need to investigate the realities of the situation complained of to determine whether it amounts to de facto expropriation and thus deprivation (para 63); and that even where the interference does not fall clearly within the ambit of either the second or third rule, it may be necessary to consider the application of the first more general rule, and for that purpose to determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights (para 69) On the facts of Trailer & Marina, the court held: We accept, of course, that the consequence of the amendments effected by the 2000 Act must have been to diminish, sometimes substantially, the scope of the uses to which an SSSI could be put, and accordingly to reduce, sometimes substantially, the income which could be obtained from activities on an SSSI, and consequently its market value. It can fairly be said that, in those circumstances, the public benefit enjoyed as a result of the amendments effected by the 2000 Act will, in the absence of any compensation provisions, have been at the expense of the owners and occupiers of SSSIs. However, given the purpose and genesis of the legislation, and the jurisprudence of the [ECtHR], that cannot of itself justify an argument that there has been an infringement of the Article 1 of the first Protocol rights of the owner of an SSSI whose value has been substantially diminished as a result of the amendments effected by the 2000 Act. (para 65) As Neuberger LJ noted, the challenge was directed to the compatibility of the legislation with the Convention. It had not been argued that the restrictions in the particular case amounted to de facto expropriation, or a disproportionate burden on the owner of the land concerned (para 68). An authoritative summary of the principles is found in the Grand Chamber decision in Hutten Czapska v Poland (2007) 45 EHRR 4, para 167: Not only must an interference with the right of property pursue, on the facts as well as in principle, a legitimate aim in the general interest, but there must also be a reasonable relation of proportionality between the means employed and the aim sought to be realised by any measures applied by the state, including measures designed to control the use of the individuals property. That requirement is expressed by the notion of a fair balance that must be struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 of Protocol No 1 as a whole. In each case involving an alleged violation of that article the court must therefore ascertain whether by reason of the states interference the person concerned had to bear a disproportionate and excessive burden The judgments below In the present case, the judge distinguished the Trailer and Marina case, as a challenge to the legislation as a whole, rather than a particular executive decision made under it. Thus the question of infringement of A1P1 had had to be considered in principle, and not in relation to the specific circumstances of the claimant. The court had recognised that there were powers available to compensate an owner in an extreme case. The decision did not therefore support a conclusion that any restriction on property on environmental grounds can be made without a requirement for compensation (para 93). His own conclusion that there was no reasonable basis for the restrictions inevitably meant that the restrictions were not proportionate, however categorised. However, he went on to consider the position apart from that finding: 96. In my judgment this case, like that in Back v Finland, has elements both of deprivation and of control. The claimants right is largely but not entirely extinguished. It could be exploited and would presumably have some small value if sold for leisure interest rather than commercial use. It should be considered under the general statement of principle with which A1P1 commences. Given the extent of the restriction imposed, which eliminated at least 95% of the benefit of the right, it is to be considered as closer to deprivation than mere control, and that balance is relevant when considering the proportionality of the measure challenged. 97. In adopting the measure decided on, there is no evidence that the Agency considered the extent of the effect on the claimant and his livelihood in any meaningful way at all. Though the HRAs refer to the desirability of permitting the continuation of historic fishing methods to an extent described as residual they did not address what the consequences would be for the rights holders affected at all, looking no further than their own statement of the conservation objective. 98. There is thus no evidence that any balanced consideration took place at all. It would have been relevant to that consideration that the claimants rights were of a commercial nature, so that by making them uneconomic to exercise he was being deprived of his livelihood and not merely of a pleasurable leisure activity or the opportunity to maintain an ancient tradition. So far as the claimant is concerned the position is exacerbated because the method chosen of levelling all permitted catches down to the previous lowest meant that by far the greatest impact fell on him whereas others who may only have used their rights for leisure or hobby purposes would be less affected, and possibly scarcely affected at all. In my judgment, the effect is that even if the Agency 99. could properly have imposed the total catch limit that it did, the size of that limit and the way in which it was apportioned would still have meant that the claimant has been required to shoulder an excessive and disproportionate burden, such that a breach of A1P1 could only be prevented by payment of compensation. It is to be noted (in particular from para 96) that the judge did not feel able, or find it necessary, to categorise the action under A1P1 as either deprivation (second rule) or control (first rule). He considered it under the first general rule, as identified in Back v Finland, while regarding it as closer to deprivation for the purpose of the proportionality balance. In the Court of Appeal Beatson LJ agreed with this assessment. It is unnecessary to set out his reasoning, which in substance followed that of the judge (paras 87 89). It was sufficient in any event that the court found no error in the judges reasoning, without needing to conduct their own independent assessment of proportionality (see In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] 1 WLR 1911). The appeal The issues identified by the parties as arising in the appeal are in short (i) whether the conditions imposed by the Agency amounted to control or de facto expropriation under A1P1? (ii) if the former, did the fair balance require compensation to be paid? (iii) if the latter, were there any exceptional circumstances justifying absence of compensation? Mr Maurici QC for the Agency submitted that the restrictions clearly constituted a control, rather than expropriation, in spite of the adverse effects on Mr Mott. He referred for example to Mellacher v Austria (1990) 12 EHRR 391 concerning a new Austrian Rent Act which had the effect of greatly reducing the rents to which certain landlords were entitled under existing tenancy agreements. The court held that there had been no de facto expropriation of their property, since they retained the right to use it even if they had been deprived of a large part of their income. Indeed the only example in the decided cases of de facto expropriation was the exceptional case of Papamichalopoulos v Greece (1993) 16 EHRR 440, in which the applicants were owners of a large area of valuable land in Greece, of which the military dictatorship had assumed control and transferred to the Navy to build a naval base and holiday resort for officers. Although the land was not formally expropriated, the applicants had been deprived of the entirety of the use and value of the land in question. As to whether a fair balance had been drawn, Mr Maurici drew attention to the emphasis given by European and domestic law to the protection of the environment, and the important responsibilities imposed on the Agency in that regard. The responsibility was particularly strict in respect of sites designated under the Habitats Directive (citing Sweetman v An Bord Pleanla (Galway County Council intervening) (Case C 258/11) [2014] PTSR 1092, paras 40 41). He submitted further that it would be contrary to public policy, and inconsistent with the polluter pays principle, for public funds to be used to pay compensation to individuals such as Mr Mott, whose activities were found to have caused environmental damage. As an example of the emphasis given to the environment in the Strasbourg case law, he cited Hamer v Belgium (2008) (Application No 21861/03). The court under A1P1 upheld an order for the demolition of a house in a woodland area, which was unpermitted, but had existed as a holiday home for 37 years with the full knowledge of the authorities. The court held that the order was a control, rather than expropriation; and that it struck a fair balance, having regard to the wide margin of appreciation enjoyed by authorities in the field of environmental protection: . The environment is a cause whose defence arouses the constant and sustained interest of the public, and consequently the public authorities. Financial imperatives and even certain fundamental rights, such as ownership, should not be afforded priority over environmental protection considerations, in particular where the state has legislated in this regard. The public authorities therefore assume a responsibility which should in practice result in their intervention at the appropriate time in order to ensure that the statutory provisions enacted with the purpose of protecting the environment are not entirely ineffective. (para 79) For Mr Mott, Mr Hockman QC supported the reasoning of the courts below. He submitted that the effect of the conditions was to nullify the practical use of Mr Motts lease, and thus amounted to expropriation. But even if they were regarded as a control, the courts below were entitled to find that they required Mr Mott to shoulder an excessive and disproportionate burden, such that breach of A1P1 could only be prevented by payment of compensation. It was accepted that the Agency had power to pay compensation, and it had done so in the past. The 1975 Act itself (even following the amendments made by the 2009 Act), recognised that compensation might be necessary in certain cases. Thus, section 26 dealing with limitation of licences for fishing with nets provides that where an order under the section would prevent a person from fishing in circumstances where that person is wholly dependent on the fishing for his livelihood, the Agency may pay that person such amount by way of compensation as it considers appropriate. Discussion The Strasbourg cases show that the distinction between expropriation and control is neither clear cut, nor crucial to the analysis. Viewed from the Agencys point of view, and that of the public, the restrictions imposed in the present case were (as found by the Court of Appeal) a proper exercise of the Agencys powers to control fishing activity in the interests of the protection of the environment. We were not referred to any case in which such action has been treated as amounting to expropriation merely because of the extreme effects on particular individuals or their businesses. However, it was still necessary to consider whether the effect on the particular claimant was excessive and disproportionate. Mr Maurici is right to emphasise the special importance to be attached to the protection of the environment. However, this does not detract from the need to draw a fair balance, nor from the potential relevance of compensation in that context. As Mr Hockman pointed out, the potential need for compensation is recognised in other parts of the 1975 Act itself. Compensation played a part in a Strasbourg case close to the present on the facts. Posti v Finland (2003) 37 EHRR 6 concerned a claim by two fishermen who operated under leases granted by the Finnish state. They complained that restrictions imposed by the government to safeguard fish stocks had failed to strike a fair balance under A1P1. The court held that the fishing restrictions were a control, rather than deprivation of property, and that the interference was justified and proportionate; the interference did not completely extinguish the applicants right to fish salmon and saltwater trout in the relevant waters, and they had received compensation for losses suffered (para 77). By contrast in Pindstrup Mosebrug A/S v Denmark (2008) (Application No 34943/06), absence of compensation did not prevent the court ruling inadmissible a claim in respect of restrictions on the commercial exploitation of a peat bog, regarded as geologically and biologically unique. The court upheld the assessment of the domestic courts that the effect on the claimants was not unduly severe, having regard to the findings that they had not invested in production facilities for the purpose of exercising their extraction rights at the bog and that they had access to the extraction of considerable amounts of peat elsewhere. Against that background I am unable to fault the judges analysis of the applicable legal principles in this case. As already noted, he did not find it necessary to categorise the measure as either expropriation or control. It was enough that it eliminated at least 95% of the benefit of the right, thus making it closer to deprivation than mere control. This was clearly relevant to the fair balance. Yet the Agency had given no consideration to the particular impact on his livelihood. The impact was exacerbated because the method chosen meant that by far the greatest impact fell on him, as compared to others whose use may have been only for leisure purposes. Indeed the judge might have gone further. He thought that the lease might have retained some small value if sold for leisure rather than commercial use. However, as Mr Hockman pointed out, even that is doubtful given the strict limits in the lease on the power to assign. I would therefore uphold the decision of the courts below. In doing so, I would emphasise that this was an exceptional case on the facts, because of the severity and the disproportion (as compared to others) of the impact on Mr Mott. As the Strasbourg cases show, the national authorities have a wide margin of discretion in the imposition of necessary environmental controls, and A1P1 gives no general expectation of compensation for adverse effects. Furthermore, where (unlike this case) the authorities have given proper consideration to the issues of fair balance, the courts should give weight to their assessment. I would dismiss the appeal.

UK-Abs

The Respondent, Mr Mott, has a leasehold interest in a putcher rank fishery on the banks of the Severn Estuary. A putcher rank is an old fishing technique, involving the use of conical baskets to trap adult salmon as they attempt to return from the open sea to their river of origin to spawn. According to Mr Motts evidence, the operation of the putcher rank has been his full time occupation since 1979. The Appellant, the Environment Agency (the Agency), has a long standing policy of reducing exploitation of salmon stocks in the area. For some years, the status of salmon stock in the Wye and Usk rivers, to which mixed salmon stock in the Severn Estuary are destined to return, has been categorised as unfavourable or at risk. These rivers are designated as Special Areas of Conservation (SAC) under European law and are part of the wider Severn Estuary European Marine Site. To operate the putcher rank during salmon season, Mr Mott has needed an annual licence from the Agency under section 25 of the Salmon Freshwater Fisheries Act 1975 (the 1975 Act). With effect from 1 January 2011, the 1975 Act was amended to enable the Agency to grant a licence subject to conditions which limit the number of fish taken as the Agency considered necessary for the protection of any fishery. On 1 June 2012, after negotiations between the parties for termination of the lease and permanent cessation of the putcher rank fishery failed, the Agency served notice on Mr Mott under the amended 1975 Act limiting his catch to 30 fish for the 2012 season. Further limits of 23 salmon and 24 salmon were imposed in 2013 and 2014, respectively. Whilst Mr Mott was paid compensation on various occasions between 2004 and 2011 not to operate the fishery during particular seasons, no compensation was paid to him in relation to the restrictions imposed between 2012 and 2014. Mr Mott began judicial review proceedings against the Agencys decision to impose conditions. He claimed that the catch limit conditions made his fishery wholly uneconomic to operate. He also claimed that the decisions were irrational and in breach of his property rights under Article 1 of Protocol 1 (A1P1) of the European Convention on Human Rights (ECHR). The judge held that the decisions were irrational and that, under A1P1, the Agency could not properly have imposed the conditions, if otherwise lawful, without payment of compensation. The Court of Appeal allowed the Agencys appeal on the issue of irrationality, but dismissed the appeal under A1P1. Only the A1P1 issue arises on appeal to the Supreme Court. The Supreme Court unanimously dismisses the Agencys appeal. Lord Carnwath gives the lead judgment with which the other justices agree. The application of A1P1, in circumstances comparable in some respects to the present, was considered by the Court of Appeal in R (Trailer and Marina (Leven) Ltd) v Secretary of State for the Environment, Food and Rural Affairs [2005] 1 WLR 1267 [19]. In Trailer and Marina, Neuberger LJ referred to the decision of the Grand Chamber of the European Court of Human Rights (ECtHR) in Sporrong & Lonnroth v Sweden (1982) 5 EHRR 85 for the proposition that, irrespective of whether an interference with property rights can be classified as a deprivation or a control of use under A1P1, it may be necessary to consider whether a fair balance was struck between the demands of the general interests of the community and the requirements of the protection of the individuals fundamental rights [20]. An authoritative summary of the principles is found in the Grand Chamber ECtHR decision of Hutten Czapska v Poland (2007) 45 EHRR 4 which held that in each case involving an alleged violation of A1P1 the court must ascertain whether by reason of the states interference the person concerned had to bear a disproportionate and excessive burden [22]. The issues arising in this appeal were: (i) whether the conditions imposed by the Agency amounted to control or de facto expropriation under A1P1, (ii) if the former, did the fair balance require compensation to be paid, and (iii) if the latter, were there any exceptional circumstances justifying the absence of compensation [27]. The Agency submitted that the restrictions in question were clearly a control of use of Mr Motts property. As to whether a fair balance had been struck, the Agency referred to its important responsibilities with respect to protection of the environment, a factor emphasised in the ECtHR case law [28 30]. Mr Mott submitted that the effect of the conditions was to nullify the practical use of his lease, and thus amounted to expropriation. Even if the conditions were regarded as a control of use, the courts below were entitled to find that they required Mr Mott to shoulder an excessive and disproportionate burden, such that breach of A1P1 could only be prevented by payment of compensation [31]. The Court found that that the distinction between expropriation and control under ECtHR case law is neither clear cut nor crucial to the present analysis. It is necessary to consider whether the effect on the particular claimant was excessive and disproportionate [32]. The Agency was correct to emphasise the special importance of environmental protection but this does not detract from the need to draw a fair balance, nor from the potential relevance of compensation [33]. Against the background of the ECtHR case law, the Court was unable to fault the judges analysis of the applicable legal principles in this case [34 36]. The fact that the conditions imposed by the Agency were closer to deprivation than mere control was clearly relevant to the fair balance. The Agency gave no consideration to the particular impact on Mr Motts livelihood, which was severe. The judge suggested that the lease retained some small value if sold for leisure rather than commercial use but this was doubtful and did not consider restrictions on Mr Motts ability to transfer his interest in the lease [36]. In upholding the decision of the courts below, the Court emphasised that this was an exceptional case on the facts, because of the severity and the disproportion (as compared to others) of the impact on Mr Mott. The national authorities have a wide margin of discretion in the imposition of necessary environmental controls, and A1P1 gives no general expectation of compensation for adverse effects. Furthermore, where (unlike this case) the authorities have given proper consideration to the issues of fair balance, the courts should give weight to their assessment [37].

This appeal raises a well formulated issue as to the construction of section 21 of the Limitation Act 1980, and a rather more diffuse question as to the meaning and application of section 32 of the Act, in both cases in relation to what is assumed to have been (although this is hotly contested in the proceedings) an unlawful distribution in specie by the Claimant company of its shareholding in a trading subsidiary by the directors of the Claimant (including the two defendants), six years and three days before the issue of the claim form in these proceedings. The Defendants sought summary judgment dismissing the claim on the ground that it was statute barred, and succeeded at first instance, before HHJ Hodge QC, sitting as a judge of the High Court. The Court of Appeal (Arden, Tomlinson and David Richards LJJ) held, first, that time did not run against the Claimant company because of section 21(1)(b) of the Act and that, in any event, there was a triable issue as to whether, within the meaning of section 32 of the Act, there had been deliberate concealment of the facts involved in the breach of duty constituted by the unlawful distribution. Whatever the conclusion of this court as to the construction of sections 21 and 32, there could not now be summary judgment for the Defendant directors. This is because the Claimant has since amended its claim to include the allegation that the claimed unlawful distribution amounted to a fraudulent breach of trust to which the Defendants were party, within the meaning of section 21(1)(a). Nonetheless the issue as to the meaning of section 21(1)(b) is of sufficient importance to have made it appropriate for this appeal (for which permission had been sought prior to the amendment pleading fraud) to proceed. The Assumed Facts At all material times before October 2007, the Claimant was a holding company with a number of trading subsidiaries. The subsidiaries operated in two business areas, the supply and construction of conservatories and a combined heat and power business. Two trading subsidiaries in the conservatory business are referred to in the particulars of claim, K2 Conservatory Systems Ltd (K2) and Cestrum Conservatories Ltd (Cestcon). The combined heat and power business was carried on by Vital Energi Utilities Ltd (Vital). The directors of the Claimant were at all material times the Defendants, Mr and Mrs Fielding, and three other executive directors, Mr Beckett, Mr Whitelock and Mr Kavanagh. The issued share capital of the Claimant comprised three classes of shares: 50,000 A ordinary shares, 50,000 B ordinary shares, and 50,000 D ordinary shares. The A and B ordinary shares were held by Mr and Mrs Fielding in equal parts, while the D ordinary shares were held by Mr Beckett, Mr Whitelock and The Burnden Group Trustee Limited (TBGT), the trustee of an employee share scheme. The controlling shareholders were Mr and Mrs Fielding. In or about July 2007, Scottish & Southern Energy plc (SSE) offered to purchase a 30% shareholding in Vital for 6m, subject to a significant number of conditions including, in particular, the complete separation of Vital from the conservatory business. In October 2007, the following pre arranged transactions were carried out: a. On 4 October 2007, the shareholders of the Claimant exchanged their shares for shares in a new holding company for the group, BHU Holdings Ltd (BHUH), with the shareholdings in that company precisely mirroring the former shareholdings in the Claimant. b. On 12 October 2007, a distribution in specie of the Claimants shareholding in Vital was approved by a unanimous resolution of the directors of the Claimant and by a resolution in writing of BHUH as the sole member of the Claimant. The distribution was effected on 12 October 2007, with the transfer of the only issued share in Vital from the Claimant to BHUH being registered in the register of members of Vital on that day. Although it is pleaded in the particulars of claim that Vital was a subsidiary of the Claimant until 15 October 2007, it is accepted by the Claimant for present purposes that the share in Vital was distributed in specie on 12 October 2007. c. On 15 October 2007, BHUH went into members voluntary liquidation. A special resolution to that effect was passed on that day by the members of BHUH, and the directors of BHUH made a statutory declaration as to its solvency. Also on 15 October 2007, pursuant to reconstruction agreements made on that day under section 110 of the Insolvency Act 1986, the liquidator of BHUH transferred the share in Vital to a new company, Vital Holdings Limited (VHL) and the shares in the Claimant to a new company, Burnden Group Holdings Limited (BGHL). The two new holding companies issued shares to the former shareholders in BHUH, again precisely mirroring their shareholdings in BHUH and, previously, in the Claimant. d. On 19 October 2007, Mrs Fielding sold a 30% shareholding in VHL to SSE for 6m. Of that sum, 3m was lent to the Claimant and the balance was, according to the Claimants case, put towards the purchase of a property for 8.3m by Mr and Mrs Fielding in May 2008. Subsequently, on 2 October 2008, the Claimant, K2 and Cestcon all went into administration. In December 2009, the Claimant went into liquidation and the present liquidator was appointed in December 2012. It is alleged by the Claimant that the distribution in specie of the Claimants shareholding in Vital to BHUH was unlawful, and it is claimed that the Defendants breached their duties to the Claimant in making the distribution. The basis of the claim that the distribution was unlawful, at least when the matter was before the Court of Appeal, was that the Claimant company did not have sufficient accumulated, realised profits to enable the distribution of its shareholding in Vital to be lawfully made. The detailed basis of that allegation has changed over time and has, throughout, been firmly challenged by the Defendants. The detail is irrelevant to the limitation issues before this court. It is simply to be assumed that the distribution was unlawful, that the Defendants participation in it amounted to a breach of their fiduciary duties to the Claimant and that, because the distribution was made to a company, BHUH, in which they were majority shareholders and directors, the distribution was one from which they derived a substantial benefit. Section 21 Section 21 of the Limitation Act 1980 provides, so far as is relevant, as follows: 21. Time limit for actions in respect of trust property. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action in respect of any fraud or fraudulent (a) breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use. (2) Where a trustee who is also a beneficiary under the trust receives or retains trust property or its proceeds as his share on a distribution of trust property under the trust, his liability in any action brought by virtue of subsection (1)(b) above to recover that property or its proceeds after the expiration of the period of limitation prescribed by this Act for bringing an action to recover trust property shall be limited to the excess over his proper share. This subsection only applies if the trustee acted honestly and reasonably in making the distribution. (3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued. For the purposes of this subsection, the right of action shall not be treated as having accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession. It is common ground (and clear beyond argument) that, as directors of an English company who are assumed to have participated in a misappropriation of an asset of the company, the Defendants are to be regarded for all purposes connected with section 21 as trustees. This is because they are entrusted with the stewardship of the companys property and owe fiduciary duties to the company in respect of that stewardship: see Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400; JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162, in particular per Chadwick LJ at paras 25 29; Williams v Central Bank of Nigeria [2014] AC 1189, per Lord Sumption at para 28 and, most recently, First Subsea Ltd (formerly BSW Ltd) v Balltec Ltd [2018] Ch 25, per Patten LJ at para 50. By the same token, the company is the beneficiary of the trust for all purposes connected with section 21. Complications have arisen where, although a director, the Defendants breach of duty did not involve the misapplication of company property: see for example Gwembe Valley Development Co Ltd v Koshy (No 3) [2004] 1 BCLC 131, but those difficulties (if indeed they survive the decision of the Court of Appeal in the First Subsea case) do not arise on this appeal. It is also now common ground that, unless section 21(1) applies, the Defendants have the benefit of the six year period of limitation laid down by section 21(3), because the relevant breach of duty arising from the distribution of the shareholding in Vital occurred on 12 October 2007, and these proceedings were issued more than six years later. At the time of the hearing before the Court of Appeal there was no relevant allegation of fraud: see para 32 of the judgment of David Richards LJ [2017] 1 WLR 39. Although such an allegation has since been pleaded, this appeal has been argued upon the basis that the only question to be decided is whether the Defendants ability to rely upon a six year period of limitation under section 21(3) is denied to them by reason of section 21(1)(b). Section 21(1)(b) is about actions to recover from the trustee trust property or the proceeds of trust property A preliminary objection was taken in the Court of Appeal by Mr David Chivers QC (who appears also on this appeal for the Defendants) that a claim such as the present, for an account of profits or alternatively equitable compensation, did not fall within section 21(1)(b) at all. This was rejected by the Court of Appeal (at para 38), upon the basis that a claim for equitable compensation, in a case where the trustees indirect interest in the trust asset had been converted to the use of the trustee, was an appropriate remedy to seek in an action falling within section 21(1)(b). That analysis of David Richards LJ has not been challenged on this appeal. Rather, Mr Chivers focus has been on the remaining part of section 21(1)(b), by way of submissions that the relevant trust property (namely the shareholding in Vital) was never in the possession of the Defendants, or previously received by them and converted to their use. The gist of his submission, both here and below, was that from start to finish the shareholding in Vital had been in the legal and beneficial ownership and therefore possession of a succession of corporate entities, namely the Claimant company, then BHUH, to which the shareholding was unlawfully distributed, and later VHL, to which the shareholding was later transferred as part of the corporate reconstruction which led to these proceedings, and where it ultimately remained. Although the Defendants were from time to time shareholders and directors in all those corporate entities, the shareholding in Vital was never in their possession, nor previously received by them and converted to their use. To hold otherwise would, he submitted, involve the lifting of one or more corporate veils, or ignoring the separate legal personality of the companies concerned, all of which are prohibited, save in circumstances which do not apply to this case, by the reasoning of this court in Prest v Petrodel Resources Ltd [2013] 2 AC 415. In the Court of Appeal, David Richards LJ acknowledged (at para 35) that this submission responded well to a literal reading of section 21(1)(b) but that such an interpretation would be a recipe for avoidance by trustees because, in the modern world, it is commonplace for companies to be used to hold assets, where the beneficial ownership is vested in the company but the entire economic benefit is available for the shareholders. Relying upon and approving the analysis of Mr Richard Field QC in In re Pantone 485 Ltd; Miller v Bain [2002] 1 BCLC 266, David Richards LJ concluded that, in order to achieve its purpose, section 21(1)(b) had to be construed so as to include within its terms a transfer (in breach of trust) to a company directly or indirectly controlled by the defaulting trustee. which may be summarised as follows: In this court, Mr Chivers made a detailed and thorough attack on that analysis, i) There was no need to be concerned with anti avoidance when construing section 21(1)(b). If trustees deliberately inserted a company between them and the misappropriated assets this would be a recognised ground for lifting the corporate veil: see the Prest case, at paras 34 35. It would be an abuse of corporate legal personality. ii) In any event, the deliberate use of a corporate vehicle to insulate trustees from liability, after six years, for breach of trust would in most cases give rise to a claim in fraud within section 21(1)(a). iii) It was wrong in principle to equate control of a company with possession of its assets save, perhaps, where the company was a pure nominee. For that purpose, he relied upon the analysis of possession for the purposes of section 8 of the Trustee Act 1888 (the distant predecessor of section 21) by Lindley LJ in Thorne v Heard [1894] 1 Ch 599, at 605 606. In practical terms, he submitted that majority shareholders had much less than absolute control over a companys property, because of the requirement to have regard to the interests of other stakeholders, such as minority shareholders and creditors. iv) As to the Pantone case, he submitted that the deputy judges analysis had been based upon the Harrison case (cited above), in which Chadwick LJs conclusion was grounded on facts which included the acquisition (in breach of duty) by a director of the company by a purchase at an undervalue, followed by an on sale of it to a third party. In that type of case, Mr Chivers submitted, the companys property had indeed been previously received by the director/trustee before being converted to his use by its on sale. v) In response to a question from the court as to whether an unlawful distribution in specie could itself be said to be a conversion of trust property Mr Chivers submitted that a distribution, even if unlawful, affirmed rather than denied the companys title to that which was distributed. vi) Finally, in response to the question whether a director could not be said to have previously received company property by virtue of his office as director, in advance of any misapplication of it in breach of trust, Mr Chivers submitted that this would render the requirement of previous receipt otiose, since it would apply in every case. These carefully constructed submissions were of real force, to the extent that they demonstrated that there was no need to have regard to anti avoidance in construing section 21(1)(b). The deliberate use of a corporate vehicle to distance a defaulting trustee from the receipt or possession of misappropriated trust property might justify lifting the corporate veil. In any event it would in most cases justify a finding of fraud, within the meaning of section 21(1)(a). Furthermore, the submission that control of a company afforded by being a majority shareholder and director is not so absolute as to confer de facto possession of its property is persuasive: see eg Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627. But taken as a whole, Mr Chivers submissions do not lead to the conclusion that section 21(1)(b) is inapplicable to the assumed facts with which this appeal is concerned, merely because the misappropriated property has remained legally and beneficially owned by corporate vehicles throughout, rather than becoming vested in law or in equity in the defaulting directors. The starting point in the construction of section 21(1)(b) is to pay due regard to its purpose. This was laid down, in relation to its predecessor, in In re Timmis, Nixon v Smith [1902] 1 Ch 176 at 186 by Kekewich J as follows: The intention of the statute was to give a trustee the benefit of the lapse of time when, although he had done something legally or technically wrong, he had done nothing morally wrong or dishonest, but it was not intended to protect him where, if he pleaded the statute, he would come off with something he ought not to have, ie, money of the trust received by him and converted to his own use. That this is the purpose of what is now section 21 was confirmed by Chadwick LJ in the Harrison case at para 40. Mr Chivers did not, when it was put to him, challenge it in any way. It is necessary to bear in mind that section 21 is primarily aimed at express trustees, and applicable to company directors by what may fairly be described as a process of analogy. An express trustee, such as a trustee of a strict settlement, might or might not from time to time, or indeed at all, be in possession or receipt of the trust property. The property might consist of land in the possession of a tenant for life. By contrast, in the context of company property, directors are to be treated as being in possession of the trust property from the outset. It is precisely because, under the typical constitution of an English company, the directors are the fiduciary stewards of the companys property, that they are trustees within the meaning of section 21 at all. Of course, if they have misappropriated the property before action is brought by the company (the beneficiary for this purpose) to recover it they may or may not by that time still be in possession of it. But if their misappropriation of the companys property amounts to a conversion of it to their own use, they will still necessarily have previously received it, by virtue of being the fiduciary stewards of it as directors. It may well be that, in relation to trustees who are company directors, the requirement in section 21(1)(b) that the property be previously received by them before its conversion adds little or nothing to the conditions for the disapplication of any limitation period which would otherwise have operated in their favour. But that requirement is not otiose in relation to trustees generally, for the reason already given. Thus, for example, the trustee of a strict settlement who had, without dishonesty, committed a breach of trust by neglecting to exercise available powers to prevent dissipation of the trust property by the tenant for life, would not be deprived of the benefit of the trustees six year limitation period by virtue of section 21(1)(b). He would neither be in possession of the trust property, nor would he ever have received it nor, incidentally, would he have converted it to his own use. There is nothing in Mr Chivers objection that to treat individual directors as being in possession, or in previous receipt, of company property by virtue of their office would unfairly assume a level of control over it which they might in practice lack, for example by being in a minority on the Board. Trustees of an express trust in whom the trust property is vested in law are each treated as being in possession or receipt of the trust property, notwithstanding that they hold title to it jointly with all the other trustees. In the present case, (of course only on the assumed facts), the Defendant directors converted the companys shareholding in Vital when they procured or participated in the unlawful distribution of it to BHUH. It was a conversion because, if the distribution was unlawful, it was a taking of the companys property in defiance of the companys rights of ownership of it. It was a conversion of the shareholding to their own use because of the economic benefit which they stood to derive from being the majority shareholders in the company to which the distribution was made. By the time of that conversion the Defendants had previously received the property because, as directors of the Claimant company, they had been its fiduciary stewards from the outset. For those reasons, although they differ to some extent from the Court of Appeals analysis, I would dismiss this appeal so far as it relates to section 21. Section 32 Section 32 of the Limitation Act 1980, as amended by section 6(6) of, and paragraph 5 of Schedule 1 to, the Consumer Protection Act 1987, provides, so far as relevant for present purposes, as follows: 32. Postponement of limitation period in case of fraud, concealment or mistake. (1) Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either the action is based upon the fraud of the (a) Defendant; or (b) any fact relevant to the plaintiffs right of action has been deliberately concealed from him by the Defendant; or (c) consequences of a mistake; the action is for relief from the the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. References in this subsection to the Defendant include references to the Defendants agent and to any person through whom the Defendant claims and his agent. (2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty. The Court of Appeal reversed the judges order by way of Defendants summary judgment in relation to section 32, mainly because they regarded the issues as to its applicability as being too fact sensitive to be suitable for summary judgment: see per David Richards LJ at paras 51 and 55. On the way to that conclusion David Richards LJ adopted an interpretation of section 32(2) which has, on this appeal, been subjected to significant, albeit commendably brief, criticism by Mr Chivers, both orally and in writing, centred around issues as to the meaning of the phrase some time in subsection (2), and the interpretation placed upon it by Lewison J in JD Wetherspoon plc v Van de Berg & Co Ltd [2007] EWHC 1044 (Ch); [2007] PNLR 28, at para 40. The in depth analysis of this difficult question would take the court into a potential minefield of difficulties which surround section 32 and, in this corporate context, would also involve a consideration of questions of attribution. There cannot be summary judgment in favour of the Defendants in this case, both because of the recent plea of fraud and because of this courts decision about the meaning of section 21. Whatever the correct interpretation of section 32(2), there would still be fact intensive issues calling for a trial. In view of the relatively summary way in which this issue has been addressed by counsel (about which I express no criticism at all), I have not therefore considered it appropriate to reach any final view about it. It is sufficient for present purposes for me to conclude that the appeal in relation to section 32 should be dismissed because the issue is unsuitable for summary judgment. I express no view one way or the other on the correctness or otherwise of the interpretation of section 32(2) adopted en passant by the Court of Appeal.

UK-Abs

Prior to 4 October 2007, Mr and Mrs Fielding, (the Defendants) were directors and controlling shareholders of Burnden Holdings (UK) Limited (the Claimant). The Claimant was the holding company of a number of trading subsidiaries, including Vital Energi Utilities Ltd (Vital). On 4 October 2007, the shareholders of the Claimant exchanged their shares for shares in a new holding company for the group, BHU Holdings Ltd (BHUH). On 12 October 20071, in an approved transaction, the Claimant effected a distribution in specie of its shareholding in Vital to BHUH. Subsequently, the shareholding in Vital was transferred to another new holding company (VHL). Mrs Fielding later sold her shareholding in VHL, and the Claimant went into liquidation. On 15 October 2013, more than six years after the 12 October 2007 distribution, the Claimant, by its liquidator, issued proceedings against the Defendants for the unlawful distribution in specie of the Claimants shareholding in Vital. This was outside of the six year limitation period set out in section 21(3) of the Limitation Act 1980 in respect of an action by a beneficiary for breach of trust. The Defendants applied to the High Court for summary judgment on the basis that the claim was time barred. For the purposes of the present appeal, it is assumed that the distribution was unlawful, because this appeal concerns only the limitation issues; however, the unlawfulness of the distribution is contested by the Defendants in the main proceedings. The High Court granted summary judgment in favour of the Defendants on the ground that the claim was time barred. The Court of Appeal set aside the judges order for summary judgment on the basis that the limitation period did not run against the Claimant, because section 21(1)(b) of the Limitation Act 1980 (section 21(1)(b)) provides that no limitation period applies to an action by a beneficiary under a trust to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use. The Court of Appeal further held that, in any event, there was a triable issue as to whether section 32 of the Limitation Act 1980 (section 32) applied. Section 32 provides that where any relevant fact has been deliberately concealed by the Defendant, the period of limitation does not begin to run until the plaintiff has, or could have, discovered the concealment. The Defendants appealed to the Supreme Court on the proper construction of section 21(1)(b) (in particular whether company directors are in possession of or have previously received trust property within the meaning of that section), and section 32.2 1 The date of this transaction is in issue in the main proceedings, but for the purposes of this appeal, 12 October 2007 is accepted as the relevant date. 2 Since the Court of Appeal judgment, the Claimant has amended its claim to include an allegation of fraud. Under section 21(1)(a) of the Limitation Act, this means there could not now be summary judgment for the Defendants. Nonetheless the issue as to the meaning of section 21(1)(b) is of sufficient importance to have made it appropriate for this appeal (for which permission had been obtained prior to the amendment pleading fraud) to proceed. The Supreme Court unanimously dismisses the appeal, finding that section 21(1)(b) applies to trustees who are company directors, who are to be treated as being in possession of the trust property from the outset. The Court declines to express a final view on section 32. Lord Briggs gives the judgment, with which the rest of the Court agrees. Section 21 For the purposes of section 21, the Defendants are regarded as trustees, because they are entrusted with the stewardship of the companys property and owe fiduciary duties to the company in respect of that stewardship. The company is regarded as the beneficiary of the trust under section 21 [11]. Contrary to the Defendants submissions, section 21(1)(b) does not become inapplicable merely because the misappropriated property has remained legally and beneficially owned by corporate vehicles, rather than having become vested in law or in equity in the defaulting directors [16]. The purpose of section 21(1)(b), as laid down in In re Timmis, Nixon v Smith [1902] 1 Ch 176 and JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162, is to give a trustee the benefit of the lapse of time when, although he had done something legally or technically wrong, he had done nothing morally wrong or dishonest. It is not intended to protect him where, if he pleaded the statute, he would come off with something he ought not to have [17]. Section 21 is primarily aimed at express trustees and is applicable to company directors by a process of analogy. An express trustee might or might not from time to time be in possession or receipt of the trust property [18]. By contrast, in the context of company property, directors are to be treated as being in possession of the trust property from the outset. It is precisely because, under the typical constitution of an English company, the directors are the fiduciary stewards of the companys property, that they are trustees within the meaning of section 21. If their misappropriation of the companys property amounts to a conversion of it to their own use, they will necessarily have previously received it, by virtue of being the fiduciary stewards of it as directors [19]. In relation to trustees who are company directors, it may be that the requirement in section 21(1)(b) that the property be previously received by them adds little or nothing to the other conditions for the disapplication of the limitation period. However, that requirement is not redundant in relation to trustees generally [20]. On the assumed facts of the present case, the Defendants converted the companys shareholding in Vital when they procured or participated in the unlawful distribution of it to BHUH. By the time of that conversion the defendants had previously received the property because, as directors of the Claimant, they had been its fiduciary stewards from the outset [22]. Section 32 In depth analysis of the section 32 issue would take the court into a minefield of difficulties. It is not necessary to decide this point because of the recent plea of fraud, and because of this courts decision about the meaning of section 21, which mean the issue is unsuitable for summary judgment. Accordingly the court expresses no view on the correctness of the Court of Appeals approach to section 32(2) [26].

Modern litigation rarely raises truly fundamental issues in the law of contract. This appeal is exceptional. It raises two of them. The first is whether a contractual term prescribing that an agreement may not be amended save in writing signed on behalf of the parties (commonly called a No Oral Modification clause) is legally effective. The second is whether an agreement whose sole effect is to vary a contract to pay money by substituting an obligation to pay less money or the same money later, is supported by consideration. MWB Business Exchange Centres Ltd operates serviced offices in central London. On 12 August 2011, Rock Advertising Ltd entered into a contractual licence with MWB to occupy office space at Marble Arch Tower in Bryanston Street, London W1, for a fixed term of 12 months commencing on 1 November 2011. The licence fee was 3,500 per month for the first three months and 4,333.34 per month for the rest of the term. Clause 7.6 of the agreement provided: This Licence sets out all of the terms as agreed between MWB and Licensee. No other representations or terms shall apply or form part of this Licence. All variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect. On 27 February 2012, Rock Advertising had accumulated arrears of licence fees amounting to more than 12,000. Mr Idehen, the companys sole director, proposed a revised schedule of payments to Natasha Evans, a credit controller employed by MWB. The effect of the revised schedule was to defer part of the February and March payments, and to spread the accumulated arrears over the remainder of the licence term. Account being taken of the implicit interest cost of the deferral, Rocks covenant to pay would be worth slightly less to MWB under Mr Idehens proposal. There was then a discussion between them on the telephone, in the course of which Mr Idehen contended that Ms Evans had agreed to vary the licence agreement in accordance with the revised schedule. Ms Evans denied this. She proceeded to treat the revised schedule as a proposal in a continuing negotiation, and took it to her boss. He rejected it. On 30 March 2012, MWB locked Rock Advertising out of the premises on account of its failure to pay the arrears, and terminated the licence with effect from 4 May 2012. They then sued for the arrears. Rock Advertising counterclaimed damages for wrongful exclusion from the premises. The fate of the counterclaim, and therefore of the claim, turned on whether the variation agreement was effective in law. The case came before Judge Moloney QC, in the Central London County Court, who decided it in favour of MWB. He found that an oral agreement had been made with Ms Evans to vary the licence in accordance with the revised schedule, and that she had ostensible authority to make such an agreement. He held (i) that the variation agreement was supported by consideration, because it brought practical advantages to MWB, in that the prospect of being paid eventually was enhanced; but (ii) that the variation was ineffective because it was not recorded in writing signed on behalf of both parties, as required by clause 7.6. MWB were therefore entitled to claim the arrears without regard to it. The Court of Appeal (Arden, Kitchin and McCombe LJJ) overturned him: [2017] QB 604. They agreed that the variation was supported by consideration, but they considered that the oral agreement to revise the schedule of payments also amounted to an agreement to dispense with clause 7.6. It followed that MWB were bound by the variation and were not entitled to claim the arrears at the time when they did. disagreed, namely the legal effect of clause 7.6. At common law there are no formal requirements for the validity of a simple contract. The only exception was the rule that a corporation could bind itself only under seal, and what remained of that rule was abolished by the Corporate Bodies Contracts Act 1960. The other exceptions are all statutory, and none of them applies to the variation in issue here. The reasons which are almost invariably given for treating No Oral Modification clauses as ineffective are (i) that a variation of an existing contract is itself a contract; (ii) that precisely because the common law imposes no requirements of form on the making of contracts, the parties may agree informally to dispense with an existing clause which imposes requirements of form; and (iii) they must be taken to have intended to do this by the mere act of agreeing a variation informally when the principal agreement required writing. All of these points were made by Cardozo J in a well known passage from his judgment in the New York Court of Appeals in Beatty v Guggenheim Exploration Co (1919) 225 NY 380, 387 388: It is convenient to start with the question on which the courts below Those who make a contract, may unmake it. The clause which forbids a change, may be changed like any other. The prohibition of oral waiver, may itself be waived. Every such agreement is ended by the new one which contradicts it (Westchester F Ins Co v Earle 33 Mich 143, 153). What is excluded by one act, is restored by another. You may put it out by the door; it is back through the window. Whenever two men contract, no limitation self imposed can destroy their power to contract again . Part 2 of the United States Uniform Commercial Code introduced a general requirement of writing for contracts of sale above a specified value, coupled with a conditional provision giving effect to No Oral Modification clauses: see sections 2 201, 2 209. But before that there was long standing authority in support of the rule stated by Cardozo J in New York and other jurisdictions of the United States. It has also been applied in Australia: Liebe v Molloy (1906) 4 CLR 347 (High Court); Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 54 FLR 439, 447 et seq; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1. And in Canada: Shelanu Inc v Print Three Franchising Corpn (2003) 226 DLR (4th) 577, para 54 per Weiler JA, citing Colautti Construction Ltd v City of Ottawa (1984) 9 DLR (4th) 265 (CA) per Cory JA. A corresponding principle is applied in Germany: A Mller, Protecting the Integrity of a Written Agreement (2013), 300 305. The English cases are more recent, and more equivocal. In United Bank Ltd v Asif (CA, unreported, 11 Feb 2000), Sedley LJ refused leave to appeal from a summary judgment on the ground that it was incontestably right that in the face of a No Oral Modification clause no oral variation of the written terms could have any legal effect. The Court of Appeal at an inter partes hearing cited his view and endorsed it. Two years later, in World Online Telecom Ltd v I Way Ltd [2002] EWCA Civ 413, Sedley LJs view had softened. He held (para 12) that it was a sufficient reason for refusing summary judgment that the law on the topic is not settled. In Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2013] EWHC 2118 (Comm), para 273 Gloster LJ declined to decide the point but incline[d] to the view that such clauses were ineffective. The same view was expressed, more firmly, but obiter, by Beatson LJ in Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd [2016] 1 CLC 712, paras 101 107, with the support of Moore Bick and Underhill LJJ. On the other side of this debate, there is a substantial body of recent academic writing in support of a rule which would give effect to No Oral Modification clauses according to their terms: see Jonathan Morgan, Contracting for self denial: on enforcing No oral modification clauses (2017) 76 CLJ 589; E McKendrick, The legal effect of an Anti oral Variation Clause, (2017) 32 Journal of International Banking Law and Regulation, 439; Janet OSullivan, Unconsidered Modifications (2017) 133 LQR 191. requiring specified formalities to be observed for a variation. In my opinion the law should and does give effect to a contractual provision The starting point is that the effect of the rule applied by the Court of Appeal in the present case is to override the parties intentions. They cannot validly bind themselves as to the manner in which future changes in their legal relations are to be achieved, however clearly they express their intention to do so. In the Court of Appeal, Kitchin LJ observed that the most powerful consideration in favour of this view is party autonomy: para 34. I think that this is a fallacy. Party autonomy operates up to the point when the contract is made, but thereafter only to the extent that the contract allows. Nearly all contracts bind the parties to some course of action, and to that extent restrict their autonomy. The real offence against party autonomy is the suggestion that they cannot bind themselves as to the form of any variation, even if that is what they have agreed. There are many cases in which a particular form of agreement is prescribed by statute: contracts for the sale of land, certain regulated consumer contracts, and so on. There is no principled reason why the parties should not adopt the same principle by agreement. The advantages of the common laws flexibility about formal validity are that it enables agreements to be made quickly, informally and without the intervention of lawyers or legally drafted documents. Nevertheless, No Oral Modification clauses like clause 7.6 are very commonly included in written agreements. This suggests that the common laws flexibility has been found a mixed blessing by businessmen and is not always welcome. There are at least three reasons for including such clauses. The first is that it prevents attempts to undermine written agreements by informal means, a possibility which is open to abuse, for example in raising defences to summary judgment. Secondly, in circumstances where oral discussions can easily give rise to misunderstandings and crossed purposes, it avoids disputes not just about whether a variation was intended but also about its exact terms. Thirdly, a measure of formality in recording variations makes it easier for corporations to police internal rules restricting the authority to agree them. These are all legitimate commercial reasons for agreeing a clause like clause 7.6. I make these points because the law of contract does not normally obstruct the legitimate intentions of businessmen, except for overriding reasons of public policy. Yet there is no mischief in No Oral Modification clauses, nor do they frustrate or contravene any policy of the law. The reasons advanced in the case law for disregarding them are entirely conceptual. The argument is that it is conceptually impossible for the parties to agree not to vary their contract by word of mouth because any such agreement would automatically be destroyed upon their doing so. The difficulty about this is that if it is conceptually impossible, then it cannot be done, short of an overriding rule of law (presumably statutory) requiring writing as a condition of formal validity. Yet it is plain that it can. There are legal systems which have squared this particular circle. They impose no formal requirements for the validity of a commercial contract, and yet give effect to No Oral Modification clauses. The Vienna Convention on Contracts for the International Sale of Goods (1980) has been ratified by 89 states, not including the United Kingdom. It provides by article 11 that a contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. Nonetheless, article 29(2) provides: A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct. Similarly, article 1.2 of the UNIDROIT Principles of International Commercial Contracts, 4th ed (2016), provides that nothing in these Principles requires a contract, statement or any other act to be made in or evidenced by a particular form. Yet article 2.1.18 provides that A contract in writing which contains a clause requiring any modification or termination by agreement to be in a particular form may not be otherwise modified or terminated. However, a party may be precluded by its conduct from asserting such a clause to the extent that the other party has reasonably acted in reliance on that conduct. These widely used codes suggest that there is no conceptual inconsistency between a general rule allowing contracts to be made informally and a specific rule that effect will be given to a contract requiring writing for a variation. The same point may be made in a purely English context by reference to the treatment of entire agreement clauses, which give rise to very similar issues. Entire agreement clauses generally provide that they set out the entire agreement between the parties and supersede all proposals and prior agreements, arrangements and understandings between the parties. An abbreviated form of the clause is contained in the first two sentences of clause 7.6 of the agreement in issue in this case. Such clauses are commonly coupled (as they are here) with No Oral Modification clauses addressing the position after the contract is made. Both are intended to achieve contractual certainty about the terms agreed, in the case of entire agreement clauses by nullifying prior collateral agreements relating to the same subject matter. As Lightman J put it in Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 Lloyds Rep 611, para 7: The purpose of an entire agreement clause is to preclude a party to a written agreement from threshing through the undergrowth and finding in the course of negotiations some (chance) remark or statement (often long forgotten or difficult to recall or explain) on which to found a claim such as the present to the existence of a collateral warranty. The entire agreement clause obviates the occasion for any such search and the peril to the contracting parties posed by the need which may arise in its absence to conduct such a search. For such a clause constitutes a binding agreement between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere, and that accordingly any promises or assurances made in the course of the negotiations (which in the absence of such a clause might have effect as a collateral warranty) shall have no contractual force, save insofar as they are reflected and given effect in that document. The operation of the clause is not to render evidence of the collateral warranty inadmissible in evidence as is suggested in Chitty on Contract 28th ed Vol 1 para 12 102: it is to denude what would otherwise constitute a collateral warranty of legal effect. But what if the parties make a collateral agreement anyway, and it would otherwise have bound them? In Brikom Investments Ltd v Carr [1979] QB 467, 480, Lord Denning MR brushed aside an entire agreement clause, observing that the cases are legion in which such a clause is of no effect in the face of an express promise or representation on which the other side has relied. In fact there were at that time no cases in which the courts had declined to give effect to such clauses, and the one case which Lord Denning cited (J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078) was really a case of estoppel and concerned a different sort of clause altogether. In Ryanair Ltd v SR Technics Ireland Ltd [2007] EWHC 3089 (QB), at paras 137 143, Gray J treated Lord Dennings dictum as a general statement of the law. But in my view it cannot be supported save possibly in relation to estoppel. The true position is that if the collateral agreement is capable of operating as an independent agreement, and is supported by its own consideration, then most standard forms of entire agreement clause will not prevent its enforcement: see Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2007] L & TR 26 (CA), at para 43, and North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715 at paras 57 (Briggs J), 82 83 (Longmore LJ). But if the clause is relied upon as modifying what would otherwise be the effect of the agreement which contains it, the courts will apply it according to its terms and decline to give effect to the collateral agreement. As Longmore LJ observed in the North Eastern Properties Ltd case, at para 82: if the parties agree that the written contract is to be the entire contract, it is no business of the courts to tell them that they do not mean what they have said. Thus in McGrath v Shah (1989) 57 P & CR 452, 459, John Chadwick QC (sitting as a Deputy Judge of the Chancery Division) applied an entire agreement clause in a contract for the sale of land, where the clause served the important function of ensuring that the contract was not avoided under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 on the ground that the terms were not all contained on one document. Outside the domain, in some ways rather special, of contracts for the sale of land, in Deepak Fertilisers and Petrochemical Corpn v ICI Chemicals & Polymers Ltd [1998] 2 Lloyds Rep 139, 168 (Rix J) and (1999) 1 Lloyds Rep 387, para 34 (CA), both Rix J and the Court of Appeal treated the question as one of construction and gave effect to the clause according to its terms. Lightman J did the same in the Inntrepreneur case. Since then, entire agreement clauses have been routinely applied: see Matchbet Ltd v Openbet Retail Ltd [2013] EWHC 3067 (Ch), para 112; Mileform Ltd v Interserve Security Ltd [2013] EWHC 3386 (QB), paras 93 101; Moran Yacht & Ship Inc v Pisarev [2016] 1 Lloyds Rep 625 (CA), para 18; First Tower Trustees Ltd v CDS (Superstores International) Ltd [2017] 4 WLR 73, paras 17, 26; Adibe v National Westminster Bank Plc [2017] EWHC 1655 (Ch), para 29; Triple Point Technology Inc v PTT Public Co Ltd [2017] EWHC 2178 (TCC), para 68; ZCCM Investments Holdings Plc v Konkola Copper Mines Plc [2017] EWHC 3288 (Comm), para 21. If, as I conclude, there is no conceptual inconsistency between a general rule allowing contracts to be made informally and a specific rule that effect will be given to a contract requiring writing for a variation, then what of the theory that parties who agree an oral variation in spite of a No Oral Modification clause must have intended to dispense with the clause? This does not seem to me to follow. What the parties to such a clause have agreed is not that oral variations are forbidden, but that they will be invalid. The mere fact of agreeing to an oral variation is not therefore a contravention of the clause. It is simply the situation to which the clause applies. It is not difficult to record a variation in writing, except perhaps in cases where the variation is so complex that no sensible businessman would do anything else. The natural inference from the parties failure to observe the formal requirements of a No Oral Modification clause is not that they intended to dispense with it but that they overlooked it. If, on the other hand, they had it in mind, then they were courting invalidity with their eyes open. The enforcement of No Oral Modification clauses carries with it the risk that a party may act on the contract as varied, for example by performing it, and then find itself unable to enforce it. It will be recalled that both the Vienna Convention and the UNIDROIT model code qualify the principle that effect is given to No Oral Modification clauses, by stating that a party may be precluded by his conduct from relying on such a provision to the extent that the other party has relied (or reasonably relied) on that conduct. In some legal systems this result would follow from the concepts of contractual good faith or abuse of rights. In England, the safeguard against injustice lies in the various doctrines of estoppel. This is not the place to explore the circumstances in which a person can be estopped from relying on a contractual provision laying down conditions for the formal validity of a variation. The courts below rightly held that the minimal steps taken by Rock Advertising were not enough to support any estoppel defences. I would merely point out that the scope of estoppel cannot be so broad as to destroy the whole advantage of certainty for which the parties stipulated when they agreed upon terms including the No Oral Modification clause. At the very least, (i) there would have to be some words or conduct unequivocally representing that the variation was valid notwithstanding its informality; and (ii) something more would be required for this purpose than the informal promise itself: see Actionstrength Ltd v International Glass Engineering In Gl En SpA [2003] 2 AC 541, paras 9 (Lord Bingham), 51 (Lord Walker). I conclude that the oral variation which Judge Moloney found to have been agreed in the present case was invalid for the reason that he gave, namely want of the writing and signatures prescribed by clause 7.6 of the licence agreement. That makes it unnecessary to deal with consideration. It is also, I think, undesirable to do so. The issue is a difficult one. The only consideration which MWB can be said to have been given for accepting a less advantageous schedule of payments was (i) the prospect that the payments were more likely to be made if they were loaded onto the back end of the contract term, and (ii) the fact that MWB would be less likely to have the premises left vacant on its hands while it sought a new licensee. These were both expectations of practical value, but neither was a contractual entitlement. In Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, the Court of Appeal held that an expectation of commercial advantage was good consideration. The problem about this was that practical expectation of benefit was the very thing which the House of Lords held not to be adequate consideration in Foakes v Beer (1884) 9 App Cas 605: see in particular p 622 per Lord Blackburn. There are arguable points of distinction, although the arguments are somewhat forced. A differently constituted Court of Appeal made these points in In re Selectmove Ltd [1995] 1 WLR 474, and declined to follow Williams v Roffey. The reality is that any decision on this point is likely to involve a re examination of the decision in Foakes v Beer. It is probably ripe for re examination. But if it is to be overruled or its effect substantially modified, it should be before an enlarged panel of the court and in a case where the decision would be more than obiter dictum. I would allow the present appeal and restore the order of Judge Moloney. LORD BRIGGS: I agree with Lord Sumption that this appeal should be allowed, on the ground that the No Oral Modification (NOM) provision in clause 7.6 of the Licence Agreement deprived the alleged oral agreement asserted by Rock Advertising of any binding force as a contractual variation. I also agree that, in those circumstances, it would not be desirable for this court to address the issue of consideration, for the reasons which he gives. I have however reached my conclusion about the NOM issue on different and rather narrower grounds than his, although I do not think that our differences in reasoning would have any significant consequences for the application of the common law, save perhaps on very unlikely facts. The starting point, as Lord Sumption says, is that NOM clauses are a frequently encountered, sensible provision in business agreements, which are recognised as effective in many legal codes around the world, such that the common law should give effect to them if it can. I need say nothing more than he does about their advantages. I also agree that the obstacle which has thus far stood in the way of their recognition in this and many other common law jurisdictions is mainly conceptual. Two (or more) persons may of course bind themselves contractually as to their future conduct, and that will prevail for as long as one of them desires that this regime should remain in place. But if they both (or all) agree, in some form recognised by the law, that they should no longer be bound, why should their previous agreement to the contrary stand in their way? While statute may, in the public interest, require certain formalities for the making of certain types of contract, the common law leaves the parties to choose their own, so long as the essential elements of offer, acceptance and consideration are observed. These matters are as applicable to the variation of an existing contract as they are to the making of a contract in the first place. This basic concept, that parties to a contract have complete freedom by further agreement to unbind themselves as to their future conduct, is in principle applicable not merely to their substantive mutual obligations, but also to any procedural restraints upon which they may agree, including restraints as to how they may vary their existing contractual relationship. It is therefore fully applicable to the constraint upon their future conduct imposed by a NOM clause. No one doubts that parties to a contract containing a NOM clause are at liberty thereafter to remove it from their bargain, temporarily or permanently, by a compliant written variation, following which it will not inhibit them from agreeing further variations purely orally. The critical questions for present purposes are, first: whether the parties can agree to remove a NOM clause from their bargain orally and, second: whether, if so, such an agreement will be implied where they agree orally upon a variation of the substance of their relationship (which the NOM clause would require to be in writing) without saying anything at all about the NOM clause. Must they be taken so to have agreed by the very fact that they have made the substantive variation orally? Lord Sumption would answer the first question in the negative, so that, for him, the second question would not arise. For the reasons which follow, I would answer the first question in the affirmative, but not (generally at least) the second. The outcome on the present facts is the same. In this case the alleged oral agreement to vary the Licence said nothing whatsoever about the NOM clause (of which both Mr Idehen and Ms Evans were probably entirely unaware), and I would not treat it as having been done away with by necessary implication. The result is that their alleged agreement as to the terms of a variation had no immediately binding force, any more than an agreement made subject to contract. This will probably be the outcome on any comparable or likely fact set since, leaving aside emergencies, once the parties focus on the obstacle presented by the NOM clause, they would almost certainly remove it by a simple written variation, or indeed make the whole of the substantive variation itself in writing. I must start by explaining why I have not been persuaded by Lord Sumptions analysis that I can surmount the conceptual problem that has thus far proved insuperable in most common law jurisdictions, as enunciated in the celebrated dictum of Cardozo J in Beatty v Guggenheim which Lord Sumption cites at para 7. His starting point is that to refuse to recognise the effect of a NOM clause is to override the parties intentions, so as to make it impossible for them validly to bind themselves as to the manner in which a change in their legal relations is to be achieved in the future. I respectfully disagree. For as long as either (or any) party to a contract containing a NOM clause wishes the NOM clause to remain in force, that party may so insist, and nothing less than a written variation of the substance will suffice to vary the rest of the contract (leaving aside estoppel). The NOM clause will remain in force until they both (or all) agree to do away with it. In particular it will deprive any oral terms for a variation of the substance of their obligations of any immediately binding force, unless and until they are reduced to writing, or the NOM clause is itself removed or suspended by agreement. That fully reflects the autonomy of parties to bind themselves as to their future conduct, while preserving their autonomy to agree to release themselves from that inhibition. There are of course statutes which require particular formalities for the making of certain types of contract, but they are binding because they are imposed by the legislature as part of the law of the land, and may only be released by the legislature. Of course private parties may agree upon a scheme of local law by which they (and even their successors in title) are in future to be bound, as in the case of certain types of covenants affecting the use of land, but that scheme of local law may be varied or abandoned by the same parties, by agreement. What is to my mind conceptually impossible is for the parties to a contract to impose upon themselves such a scheme, but not to be free, by unanimous further agreement, to vary or abandon it by any method, whether writing, spoken words or conduct, permitted by the general law. I recognise that there are a number of widely used codes of law, by which parties may be, or agree to be, bound, that do recognise NOM clauses as effective to deny any legal effect from subsequent oral variations of the contract incorporating such a code. If they form part of a national law, then they bind parties to a contract governed by that law in the same way as would an English statute. If they are simply part of a code chosen by the parties to govern their contractual relationship, they do not prevent the parties from expressly agreeing to depart from those codal restrictions, either generally or for a specific purpose. But such an agreed departure will not lightly be inferred, where the parties merely conduct themselves in a non compliant manner, for example by discussing and even reaching a consensus about a variation of the substance of their obligations purely orally, without express reference to the NOM clause. The effect of contracting in terms which incorporate such a code, where the code includes or recognises the effect of a NOM clause, is at least at the conceptual level no more or less effective than simply including a NOM clause in the contract. Nor have I found the entire agreement clause a useful analogy. It may well serve the same objective of promoting legal certainty as to what the agreement is but, as Lord Sumption explains, these clauses do not purport to bind the parties as to their future conduct. They leave the scope and the procedure for subsequent variation entirely unaffected. They therefore give rise to no conceptual difficulty of the type which affects a NOM clause. By contrast I fully agree with Lord Sumptions proposition that parties who orally agree the terms of a variation of the substance of their contractual relationship do not thereby (and without more) impliedly agree to dispense with the NOM clause. There is to my mind a powerful analogy with the way in which the law treats negotiations subject to contract. Where parties agree to negotiate (or declare that they are negotiating) under the subject to contract umbrella and, at the end of those negotiations, reach consensus ad idem supported by consideration sufficient (but for the umbrella) to give rise to a contract, no binding obligations thereby ensue unless or until they have made a formal written contract, or expressly agreed to dispense with that umbrella. Its abandonment will not be implied merely because they have reached full agreement, unless such an implication was necessary. Cumming Bruce LJ provides a concise summary of this principle in Cohen v Nessdale Ltd [1982] 2 All ER 97, 103 104 by reference (via a citation from Sherbrooke v Dipple (1980) 41 P & CR 173) to embedded dicta of Brightman J in Tevanon v Norman Brett (Builders) Ltd (1972) 223 EG 1945, 1947 in the following terms: Brightman J said that parties could get rid of the qualification of subject to contract only if they both expressly agreed that it should be expunged or if such an agreement was to be necessarily implied. [W]hen parties started their negotiations under the umbrella of the subject to contract formula, or some similar expression of intention, it was really hopeless for one side or the other to say that a contract came into existence because the parties became of one mind notwithstanding that no formal contracts had been exchanged. Where formal contracts were exchanged, it was true that the parties were inevitably of one mind at the moment before the exchange was made. But they were only of one mind on the footing that all the terms and conditions of the sale and purchase had been settled between them, and even then the original intention still remained intact that there should be no formal contract in existence until the written contracts had been exchanged. Cumming Bruce LJ then quoted Templeman LJ in Sherbrooke as saying: Brightman J thought parties could get rid of the qualification of subject to contract only if they both expressly agreed that it should be expunged or if such an agreement was to be necessarily implied. Necessity is in this context a strict test. It will, perhaps unfortunately, commonly be the case that the persons charged with the day to day performance of a business contract will, with full authority to do so, agree some variation in the manner in which it is to be performed, blissfully unaware that the governing contract has, buried away in the small print of standard terms, a NOM clause inserted by diligent lawyers anxious to minimise the risk of litigation about its terms. That will be arid ground for an implied term that the NOM clause, of which they were unaware, was agreed to be treated as done away with. Where however the orally agreed variation called for immediately different performance from that originally contracted for, before any written record of the variation could be made and signed, then necessity may lead to the implication of an agreed departure from the NOM clause, but the same facts would be equally likely to give rise to an estoppel, even if not. But that is far from the facts of this case, where there was no such urgency. In my view this more cautious recognition of the effect of a NOM clause, namely that it continues to bind until the parties have expressly (or by strictly necessary implication) agreed to do away with it, would give the parties most of the commercial benefits of certainty and the avoidance of abusive litigation about alleged oral variation for which its proponents contend. It would certainly do so in the present case. It would probably leave only those cases where the subject matter of the variation was to be, and was, immediately implemented, where estoppel and release of the NOM clause by necessary implication are likely to go hand in hand. While it might in theory also leave open the case where it is alleged that the parties did have the NOM clause in mind, and then agreed to do away with it orally, that seems to me to be so unlikely a story that a judge would usually have little difficulty in treating it as incredible (if denied), and therefore as presenting no obstacle to summary judgment on the contract in its unvaried form. In proposing this perhaps cautious solution to the problem thrown up by this case I am comforted by the perception that it represents an incremental development of the common law which accords more closely with the conceptual analysis adopted in most other common law jurisdictions, as Lord Sumption has described. By contrast the more radical solution which he proposes would involve a clean break with something approaching an international common law consensus, unsupported by any societal or other considerations peculiar to England and Wales. There may be cases where a pressing need to modernise the common law justifies such a break, perhaps in the expectation that other common law jurisdictions will in due course follow, but this case is not, in my opinion, one of them.

UK-Abs

MWB Business Exchanges Centres Ltd (MWB) operates offices in London. Rock Advertising (Rock) entered into a licence agreement with MWB to occupy office space for a fixed term of 12 months. Clause 7.6 of the agreement provided: This Licence sets out all the terms as agreed between MWB and [Rock]. No other representations or terms shall apply or form part of this Licence. All variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect. Rock accumulated licence fee arrears. Rocks director, Mr Idehen, proposed a revised schedule of payments to Ms Evans, a credit controller employed by MWB. Under his proposal, certain payments would be deferred and the accumulated arrears would be spread over the remainder of the licence term. This revised schedule was worth slightly less to MWB than the original terms, because of the interest cost of deferral. A dispute arose as to whether Ms Evans had accepted Mr Idehens proposal orally. MWB subsequently locked Rock out of the premises, terminated the licence and sued for the arrears. Rock counterclaimed, seeking damages for wrongful exclusion from the premises. In the County Court the judge found that the parties had agreed orally to Mr Idehens revised schedule; but the judge held that MWB could claim the arrears without regard to that oral variation, because the oral variation did not satisfy the formal requirements of Clause 7.6. Rock appealed successfully to the Court of Appeal, which held that the oral variation had also amounted to an agreement to dispense with Clause 7.6. It followed that MWB was bound by the oral variation. MWB appealed to the Supreme Court. The issues were: (i) whether a contractual term precluding amendment of an agreement other than in writing (a No Oral Modification or NOM clause) is legally effective; (ii) whether the variation of an agreement to pay money, by substituting an obligation to pay either less money or the same money later, is supported by the necessary consideration. The Supreme Court unanimously allows the appeal. Lord Sumption gives the lead judgment, with which Lady Hale, Lord Wilson and Lord Lloyd Jones agree. Lord Briggs gives a concurring judgment. NOM clauses are common, for at least three reasons: (i) they prevent attempts, including abusive attempts, to undermine written agreements by informal means; (ii) they avoid disputes not just about whether a variation was intended but also about its exact terms; (iii) they make it easier for corporations to police their own internal rules restricting the authority to agree variations. The law of contract does not normally obstruct the legitimate intentions of businessmen, except for overriding reasons of public policy. NOM clauses do not frustrate or contravene any policy of the law [12]. The argument for disregarding NOM clauses is that parties cannot agree not to vary a contract orally, because such an agreement would be destroyed automatically upon oral variation. However, there are legal systems, including widely used international codes, which impose no formal requirements for the validity of contracts and which yet give effect to NOM clauses. That suggests that there is no conceptual inconsistency between a general rule permitting informally created contracts and a specific rule requiring variation to be agreed in writing. The same point may be made by reference to the treatment of entire agreement clauses, which nullify prior collateral agreements relating to the same subject matter. Where such a clause is relied on to modify what would otherwise be the effect of the agreement which contains it, the courts will routinely apply the clause according to its terms and will decline to give effect to the collateral agreement [13 14]. Parties who agree an oral variation in spite of a NOM clause do not necessarily intend to dispense with that clause. What the parties agreed was that oral variations will be invalid, not that they are forbidden. The natural inference from a failure to observe a NOM clause is not that the parties intended to dispense with it, but that they overlooked it. On the other hand, if they had it in mind, then they were courting invalidity with their eyes open [15]. The approach of the Court of Appeal overrides the parties intentions to bind themselves as to the manner in which future changes in their legal relations are to be achieved. In many cases, statute prescribes a particular form of agreement. There is no principled reason why contracting parties should not adopt the same prescriptions by agreement [9 11]. The enforcement of NOM clauses involves the risk that a party may act on the varied contract but then find itself unable to enforce it. The safeguard against injustice lies in the various doctrines of estoppel. Reliance on an estoppel would require, at the very least: (i) some words or conduct unequivocally representing that the variation was valid notwithstanding its informality and (ii) for this purpose, something more than the informal promise itself [16]. The oral variation in the present case was invalid for want of the writing and signatures required by Clause 7.6. That makes it unnecessary to deal with the issue of consideration. That area of law is probably ripe for re examination. The order of the County Court is restored [17 18]. Lord Briggs agrees that the appeal should be allowed, but his reasons differ to those of Lord Sumption. To give effect to a NOM is not to override the parties intentions; the NOM clause will remain in force until both or all parties agree to do away with it. It is conceptually impossible for the contracting parties to impose upon themselves a particular scheme, but not to be free by further agreement to vary or abandon it by any method permitted by the general law. Although various international law codes give effect to NOMs, these either (i) form part of a national law, in which case they bind parties as would an English statute, or (ii) have been chosen by the parties, in which case the parties may agree to depart from those principles. Entire agreement clauses are not a useful analogy: they do not purport to bind the parties future conduct, so do not involve the same conceptual difficulties as NOM clauses. There is a powerful analogy with negotiations subject to contract, where the parties may abandon the requirement of a formal written agreement only expressly or by necessary implication. In Lord Briggs view, a NOM clause binds the parties until they expressly (or by necessary implication) agree to do away with it. This accords with the analysis adopted in most other common law jurisdictions [25 32]. In this case, the oral variation said nothing about the NOM clause, which has not been done away with by necessary implication [24].

This case is all about the meaning of the word regularly when describing the attendance of a child at school. Under section 444(1) of the Education Act 1996, if a child of compulsory school age fails to attend regularly at the school where he is a registered pupil, his parent is guilty of an offence. There are at least three possible meanings of regularly in that provision: (a) evenly spaced, as in he attends Church regularly every Sunday; (b) sufficiently often, as in he attends Church regularly, almost every week; or (c) in accordance with the rules, as in he attends Church when he is required to do so. When does a pupil fail to attend school regularly? Is it sufficient if she turns up regularly every Wednesday, or if she attends over 90% of the days when she is required to do so, or does she have to attend on every day when she is required to do so, unless she has permission to be absent or some other recognised excuse? This case The respondent is the father of a child whom I shall call Mary, who is now aged nearly eight and three quarters, but was aged nearly seven at the relevant time. Her parents are separated and she lives roughly half the time with each of them. She is a registered pupil at a primary school on the Isle of Wight. On 30 January 2015, her father sent her head teacher a form entitled Request to remove a child from education during term time, with a covering letter seeking permission to take Mary out of school for a holiday from 12 to 21 April 2015. On 9 February, the head teacher replied refusing the request and warning that a fixed penalty notice would be issued if Mary was taken on holiday. Coincidentally, Marys mother had taken her on a holiday which had not been authorised by the school for the week beginning the 9 February (five days, amounting to ten attendances). Neither, as it happens, had she sought the fathers permission to take the holiday (although we do not know whether she was required by law to do so). Marys mother was issued with a penalty notice by the school which she had paid. Despite the head teachers refusal of permission, Marys father took her out of school from 13 to 21 April (for seven school days, amounting to 14 attendances). On 29 April, the head teacher sent a Fixed Penalty Notice Referral Form to the Councils Education Welfare Officer (EWO). The reason given for believing that a penalty notice was appropriate was unauthorised family holiday during term time. The EWO checked that the Councils Code of Conduct had been complied with and authorised the issue of the notice, which was done on 14 May. This required the father to pay 60 by 4 June 2015. He did not do so. Accordingly, that day he was sent a further invoice requiring him to pay 120 by 10 June 2015. He did not do so. On 1 July, he was sent a letter before action, advising him that the EWO was preparing to prosecute him. He responded by email and telephone call to explain the reason for the absence. The EWO replied that the penalty notice had been correctly issued and the matter would now proceed to prosecution. Proceedings were duly brought in the Isle of Wight Magistrates Court, alleging that Mary had failed to attend school regularly between 13 and 21 April and that as her parent he was guilty of an offence under section 444(1) of the Education Act 1996. He pleaded not guilty. The trial took place on 12 October 2015. At the close of the prosecutions case, the magistrates ruled that there was no case to answer. As they explained, the question we have to ask ourselves is whether [M] was a regular attender. Before the holiday with Dad, her attendance was 95%. Afterwards it was 90.3%. The document supplied on refusal of leave stated that satisfactory attendance is 90 95%. The Council appealed by way of case stated. In their case stated, the Magistrates certified the following question for consideration by the High Court: Did we err in law in taking into account attendance outside of the offence dates (13th April to 21st April 2015) as particularised in the summons when determining the percentage attendance of the child? On 13 May 2016, a Divisional Court of the Queens Bench Division answered that question in the negative: the magistrates had not erred in taking into account the childs attendance outside the absent dates in determining the percentage attendance of the child. On 30 June 2016, the Divisional Court certified a slightly different point of law of general public importance, pursuant to section 1 of the Administration of Justice Act 1960: Whether, on an information alleging a failure by a parent over a specified period to secure that his child attends school regularly contrary to section 444(1) of the 1996 Act, the childs attendance outside the specified period is relevant to the question whether the offence has been committed. Thus the magistrates had assumed that they were required to determine the percentage attendance of the child. The question certified by the Divisional Court makes no such assumption. The essential question for this court is the meaning of fails to attend regularly in section 444(1) of the Education Act 1996. The law from 1870 to 1944 We have been given an account of the history of the law leading up to section 444(1) of the 1996 Act which is interesting as well as instructive. During the early 19th century, the Church of England, the Methodist Church and other Churches set up many elementary schools, but attendance was not compulsory and the state had no obligation to provide universal elementary education. The Elementary Education Act 1870 (Vict 33 & 34, c 75) by section 5 required there to be provided in every school district sufficient amount of accommodation in public elementary schools for all the children resident in the district for whose elementary education efficient and suitable provision is not otherwise made. However, the 1870 Act did not insist that attendance be made compulsory everywhere. This was politically controversial. There was concern about the practicality of compelling the attendance of children whose parents moved frequently in search of work and even more concern about the justice of depriving parents of the earnings of their children while imposing the costs of school attendance upon them. Instead, therefore, section 74 of the 1870 Act empowered each school board, with the approval of the Secretary of State, to make bye laws (1) requiring parents of children of specified ages (between five and 12 inclusive) to cause them to attend school, unless there was some reasonable excuse, (2) fixing the times when children were required to attend school, with two exceptions, one of which was for any day exclusively set apart for religious observance by the religious body to which his parent belongs, and (4) imposing penalties for breach. There was a list of reasonable excuses (held to be non exclusive in London County Council v Maher [1929] 2 KB 97): (1) that the child is under efficient instruction in some other manner; (2) that the child has been prevented from attending school by sickness or any unavoidable cause; and (3) that there was no public elementary school within what was thought to be a reasonable walking distance of the childs home, with a maximum of three miles. Only a minority of school boards made such bye laws. However, the climate of opinion soon changed. The Elementary Education Act 1876 (39 & 40 Vict, c 79) prohibited the employment of children under ten, and of children between ten and 13 who had not attained an appropriate standard of education (section 5), and for the first time imposed upon parents a duty to cause their children to receive efficient elementary instruction in reading, writing and arithmetic (section 4). If a parent habitually and without reasonable excuse neglected to do this, the local authority was under a duty to apply to court for an order requiring the childs attendance at a specified school. Thus such a parent might not only be prosecuted for a breach of the bye laws but also have the education of his child taken out of his hands. This was followed up by section 2 of the Elementary Education Act 1880 (43 & 44 Vict, 23), which required all school boards to introduce bye laws to compel attendance, although they could still set the times at which attendance was required. We have been shown a sample of these local byelaws. They made it a criminal offence for a parent to fail to cause his child of school age to attend school, unless there was a reasonable excuse. Many fixed the time when attendance was required at the whole time for which the school selected shall be open for the instruction of children of a similar age. Some fixed the number of days for which older children were required to attend, varying with the seasons, presumably in order to allow them to take time off for seasonal agricultural work. The school leaving age was raised to 14 by the Education Act 1918 (8 & 9 Geo 5, c 39). The Education Act 1921 consolidated the earlier legislation, with its three basic features: the parental duty to cause their children to be efficiently educated in reading, writing and arithmetic; the duty of the local education authority (as school boards had become) to apply for a school attendance order where a parent habitually and without reasonable excuse neglected to do this; and the duty to make bye laws requiring the parents to cause their children to attend school at the times required by the bye laws unless there was a reasonable excuse. The 1921 Act was passed in the knowledge of the case law under the earlier legislation. In Ex p the School Board of London, In re Murphy (1877) LR 2 QBD 397, at 400, Cockburn CJ had said that an occasional omission might suffice to constitute the offence under the bye laws, contrasting it with the graver sanction of a school attendance order which might result from an habitual failure. In other cases, convictions on informations alleging a single days absence had been upheld, the argument being about whether there was a reasonable excuse: examples are Hares v Curtin [1913] 2 KB 328; and Bunt v Kent [1914] 1 KB 207. And in Marshall v Graham [1907] 2 KB 112, parents were prosecuted for failing to send their children to school on Ascension Day; the argument was about whether Ascension Day was a day exclusively set aside for religious observance by the Church of England. No one suggested that the offence could not be committed by a single days absence if the childs attendance were otherwise satisfactory. The principle that the parent had to cause the child to attend school at all times when required to do so by the bye laws was affirmed in Osborne v Martin (1927) 91 JP 197, where the Divisional Court held that a parent who withdrew his child from school every week for piano lessons should have been convicted. Lord Hewart CJ observed, at p 197: It was never intended that a child attending the school might be withdrawn for this or that hour to attend a lesson thought by the parent to be more useful or possibly in the long run more remunerative. The time table and discipline of a school could be reduced to chaos if that were permissible. Salter J pointed out, at p 198, that parents were not obliged to take advantage of the free education provided by the state, but if they did, they had to take it as a whole. The law since 1944 The modern law of school attendance dates back to the Education Act 1944, generally known as Rab Butlers Act. This was the Act which provided, not only for compulsory elementary, or primary, education, but also for compulsory secondary education of a sort thought suitable for the particular child. The general shape of the school attendance regime remained the same, but there were some changes. First, the parents duty was no longer limited to causing the child be efficiently educated in the three rs. Instead, the duty was to cause him to receive efficient full time education suitable to his age, ability and aptitude, either by regular attendance at school or otherwise (section 36). Second, if a parent failed to satisfy the local education authority of this, the authority could issue a school attendance order requiring him to register the child at a particular school; failure to comply was an offence (section 37). Third, the duty of LEAs to make byelaws was replaced by a statutory offence: if a child of compulsory school age who is a registered pupil at a school fails to attend regularly thereat, the parent was guilty of an offence (section 39(1)). The child was not to be deemed to have failed to attend regularly: if he was absent with leave, or when prevented by sickness or any unavoidable cause, or on any day exclusively set aside for religious observance, or if the school was not within walking distance and no suitable transport arrangements had been made (section 39(2)). These were all derived from the earlier legislation. Thus the concept of reasonable excuse was replaced by a closed list of circumstances in which absence was permitted: see Spiers v Warrington Corpn [1954] 1 QB 61, holding that Parliament had decided to depart from London County Council v Maher, above. Unavoidable cause had to be something affecting the child rather than the parents: see Jenkins v Howells [1949] 2 KB 218. But the circumstances now included absence with leave. And the requirement that parents cause their children to attend school was replaced by an offence committed if the child failed to attend school regularly. These provisions were replaced by provisions in materially identical terms in the Education Act 1993. These were then consolidated in the Education Act 1996. Section 7 reproduces the parents duty in section 36 of the 1944 Act, with the addition that the education has also to be suitable to any special educational needs he may have. Sections 437 to 443 deal with school attendance orders, which may be made where a parent, having been notified, fails to satisfy the local authority that the child is receiving suitable education and the authority are of the opinion that it is expedient that the child attend school (section 437(3)). The school attendance requirement is now contained in section 444, which (as amended) now provides: (1) If a child of compulsory school age who is a registered pupil at a school fails to attend regularly at the school, his parent is guilty of an offence. (1A) If in the circumstances mentioned in subsection (1) the parent knows that his child is failing to attend regularly at the school and fails to cause him to do so, he is guilty of an offence. (1B) It is a defence for a person charged with an offence under subsection (1A) to prove that he had a reasonable justification for his failure to cause the child to attend regularly at the school. (2) Subsections (2A) to (6) below apply in proceedings for an offence under this section in respect of a child who is not a boarder at the school at which he is a registered pupil. (2A) The child shall not be taken to have failed to attend regularly at the school by reason of his absence from the school at any time if the parent proves that at that time the child was prevented from attending by reason of sickness or any unavoidable cause. (3) The child shall not be taken to have failed to attend regularly at the school by reason of his absence from the school (a) with leave, or [repealed] (b) (c) on any day exclusively set apart for religious observance by the religious body to which his parent belongs. [Subsections (3A) to (5) deal with the circumstances in which a child is not to be taken to have failed to attend regularly because of a failure to make the required travel arrangements for him.] (6) If it is proved that the child has no fixed abode subsections (3B), (3D) and (4) shall not apply, but it is a defence for the parent to prove (a) that he is engaged in a trade or business of such a nature as to require him to travel from place to place, (b) that the child has attended at a school as a registered pupil as regularly as the nature of that trade or business permits, and (c) if the child has attained the age of six, that he has made at least 200 attendances during the period of 12 months ending with the date on which the proceedings were instituted. (7) In proceedings for an offence under this section in respect of a child who is a boarder at the school at which he is a registered pupil, the child shall be taken to have failed to attend regularly at the school if he is absent from it without leave during any part of the school term unless the parent proves that at that time the child was prevented from being present by reason of sickness or any unavoidable cause. (7A) Where (a) a child of compulsory school age has been excluded for a fixed period on disciplinary grounds from a school in England which is a maintained school, (i) (ii) a pupil referral unit, (iii) an Academy school, (iiia) an alternative provision Academy, (iv) a city technology college, or (v) arts, a city college for the technology of the (b) he remains for the time being a registered pupil at the school, the appropriate authority make arrangements for (c) the provision of full time education for him at the school during the period of exclusion, and (d) notice in writing of the arrangements has been given to the childs parent, the exclusion does not affect the application of subsections (1) to (7) to the childs attendance at the school on any day to which the arrangements relate. (7B) In subsection (7A)(c) the appropriate authority means in relation to a maintained school, the governing (a) body of the school, in relation to a pupil referral unit, the local (b) authority, and (c) (7A)(a)(iii) to (v), the proprietor of the school. in relation to any school mentioned in subsection (8) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 3 on the standard scale. (8A) A person guilty of an offence under subsection (1A) is liable on summary conviction to a fine not exceeding level 4 on the standard (a) scale, or (b) months, or both. to imprisonment for a term not exceeding three (8B) If, on the trial of an offence under subsection (1A), the court finds the defendant not guilty of that offence but is satisfied that he is guilty of an offence under subsection (1), the court may find him guilty of that offence. In this section leave, in relation to a school, means (9) leave granted by any person authorised to do so by the governing body or proprietor of the school. It will be seen that this now distinguishes between the less serious offence in section 444(1), where the local authority do not have to prove that the parent was at fault, and the more serious (but still summary) offence in section 444(1A), where the parent knows that his child is failing to attend regularly and has no reasonable justification for his own failure to cause the child to do so. It will also be seen that, as before, the circumstances in which a childs absence is not to be treated as a failure to attend regularly are limited to sickness or other unavoidable cause, where the burden lies on the parent (section 444(2A); when he has leave or the day is set aside for religious observance; and when there is a failure to make appropriate travel arrangements. Unavoidable cause has been strictly construed: it did not cover the decision of a 15 year old child to leave home to live with her boyfriend (in Bath and North East Somerset District Council v Warman [1999] ELR 81) or where a 15 year old girl did not go to school because she was bullied there and her mother kept her away (in R (R) v Leeds Magistrates Court [2005] ELR 589). The penalty notice regime, as an alternative to immediate prosecution, is contained in sections 444A and 444B, introduced by section 23 of the Anti social Behaviour Act 2003. The details need not concern us, but the broad shape is that an authorised officer may issue such a notice where he has reason to believe that a person has committed an offence under section 444. The notice offers that person the opportunity of escaping liability to conviction for the offence by paying the prescribed penalty. If he does so within the prescribed time he cannot be prosecuted for the offence. The current penalty prescribed by the Education (Penalty Notices) (England) Regulations 2007 (SI 2007/1867) (as amended by SI 2012/1046 and SI 2013/757) is 60 if paid within 21 days or 120 if paid within seven days after that. If the person does not pay, he can of course be prosecuted for the original offence, as happened here. The Regulations also require each local authority to publish a Code of Conduct for issuing penalty notices, after consultation with governing bodies, head teachers and the police. Guidance from the Secretary of State states that this should set out the criteria that will be used to trigger the use of a penalty notice. Among the examples given where this might be done was one off instances of irregular attendance, such as holidays taken during term time without the schools permission. Regulation 7(1A) of the Education (Pupil Registration) (England) Regulations (SI 2006/1751) (as amended by SI 2013/756) provides that leave of absence for any purpose may only be given where there are exceptional circumstances. The Isle of Wights Code of Conduct stated, among other things, that It is for Headteachers to determine whether or not such a request is exceptional; and to state the number of days granted. Each request can only be judged on a case by case basis but it is usual that Headteachers will be sparing in their use of this discretion. Only if they feel obliged to categorise as unauthorised any holiday absence should a warning letter be issued and the penalty notice procedure invoked. Regularly There is no doubt that, before the 1944 Act, a parent was liable to conviction if his child failed to attend for a single day or half day when required to do so. Most of the case law, both before and after that Act, was concerned with the scope of the statutory exceptions or excuses. But the introduction, in 1944, of the phrase fails to attend regularly raised the possibility that this was no longer the law. The question arose, but was not fully explored, in London Borough of Bromley v C [2006] EWHC 1110 (Admin), [2006] ELR 358. A mother was prosecuted for failing to secure the regular attendance of her three daughters at their school between specified dates. The magistrates appear not to have decided exactly how many attendances, out of the possible 114 (that is, 57 days) between those dates, had been missed. They found that there were good and cogent reasons for some of the absences; the Divisional Court generously regarded this as the magistrates way of saying that there had been an unavoidable cause for each of them. That left the 18 attendances or nine days during which each girl had been absent from school on holidays for which the school had not given leave. The magistrates found that the mother ought to have exercised more care regarding absences for holidays during school term but the absences were, in our view, justified. Overall, they found that the mother had not failed to secure regular attendance. On the local authoritys appeal by way of case stated, one of the questions asked was does the taking of an unauthorised holiday of itself amount to failing to secure regular school attendance?. In an extempore judgment, Sullivan LJ held that this was the wrong question: The real question is whether any reasonable bench of magistrates could have concluded that there was regular attendance by these three children if 18 out of a possible 114 attendances had been missed because of two unauthorised holidays. There could be no suggestion that the holidays were with leave or that they fell within the description of an unavoidable cause (para 15) He went on to say this: I would readily accept the submission that it does not automatically follow that there will not have been regular attendance merely because there has been an unauthorised holiday. The question will be very much one of fact and degree in each case, but in the present case the holidays amounted to some 16% of possible attendances. (para 19) The magistrates had to have regard to all the circumstances, including the extent to which the children had attended school. Against the background of their attending for 40 days (out of a possible 57), their absence for nine days on unauthorised holidays could lead to only one conclusion. There had not been regular attendance. He repeated that the question was one of fact and degree for the magistrates but there was only one answer on these facts (para 21). Auld LJ agreed that on the facts found, the magistrates did exceed the generous ambit of judgment available to them in determining whether there was regular school attendance (para 28). No authorities were cited to the court in the Bromley case and it would appear that no argument was addressed to the court on the meaning of regularly. It seems to have been assumed that regularly meant sufficiently frequently. Some support from that view might have been gleaned from the case of Crump v Gilmore (1969) 68 LGR 56, where the magistrates had acquitted the parents because they had not known that their daughter was bunking off secondary school and took immediate steps to ensure her 100% attendance when they did know. The Divisional Court sent the case back with a direction to convict, because this is an absolute offence. But in the course of doing so, Lord Parker of Waddington CJ said, at p 59: The real and only question here is whether the 12 occasions out of a possible 114 when this little [sic] girl was not attending school and had no reasonable excuse for not attending, amount to a failure to attend regularly. But he went on to hold that they did and that the magistrates must have been of the same opinion. The assumption may have been that regularly meant sufficiently frequently but the matter was not addressed. Bromley was cited to the Divisional Court in this case. In another extempore judgment, the Court adopted the same approach, which it considered correct. The question of regular attendance was one of fact and degree and the magistrates were entitled to take the attendance record over the whole school year into account. The local authority could not pre empt that enquiry by limiting the period charged to the period of absence on holiday. Taken to its logical conclusion, this would mean that the offence could be committed by a single days absence (para 16). The question whether attendance had been regular could not be ascertained solely by reference to the period of absence. It was necessary to have regard to the period of absence in the wider context of attendance (para 20). Hence the answer to the question posed was yes. The assumption that regularly means sufficiently frequently seems also to have been made in this case, because counsel for the father argued that, without a definition, regular was far too vague to be the basis of a criminal offence (see para 21); but the Divisional Court found it unnecessary to reach a view. The answer to that problem could, of course, have been that regularly does not mean what everyone seems to have assumed that it means. I turn, therefore, to the three possible meanings of regularly mentioned in para 1 above and ask which was the meaning intended by Parliament when enacting section 444(1). (a) At regular intervals We speak of a person going regularly to church or to Sunday school when he goes every Sunday or almost every Sunday. But this cannot have been the intended meaning in the case of school attendance. It would enable attendance every Monday to count as regular even though attendance every day of the week is required. It would enable a childs attendance to be regular even if he was regularly late, yet in Hinchley v Rankin [1961] 1 WLR 421, the Divisional Court held that a father had been rightly convicted when his son had been recorded as absent because he had not been at school when the register was closed, for it must be regular attendance for the period prescribed by the person upon whom the duty to provide the education is laid (at p 425). (b) Sufficiently frequently This might well be the meaning assumed by many people at first reading, as it was by the Divisional Court in Bromley and in this case. This is what we mean when we talk about a person being a regular at the pub or a regular at church services. But there are many reasons to think that this was not what Parliament intended, either in 1944 or in 1996. First, attendance at the pub or at church is not compulsory. There are no rules about when a customer should attend the pub. Such rules as there are about church attendance are not rules of law. School attendance is compulsory and there are rules about when it is required. Second, the purpose of the Education Act 1944 was to increase the scope and character of compulsory state education. Parents were required to cause their children to receive efficient full time education suitable to their age, ability and aptitude, no longer just efficient education in the three rs. The compulsory school age was to be raised and a wider range of educational opportunities provided free of charge. It is implausible to suggest that Parliament intended to relax the previous obligations placed on parents to secure their childrens attendance to take advantage of those opportunities. Third, other features of the 1944 Act indicated an intention to tighten rather than to relax the parental liability. The open ended defence of reasonable excuse was replaced in such a way as to make it clear that only the statutory excuses were acceptable. Allowing parents the flexibility inherent in this interpretation would mean that their excuses did not even have to be reasonable. Taking a child to football or failing to get up in time to get the child to school would do, provided that it did not happen too often. Fourth, section 444(3), in providing that a child is not to be taken to have failed to attend regularly by reason of his absence on any day exclusively set apart for religious observance suggests that otherwise his absence on a single day would be a failure to attend regularly. Fifth, in section 444(6), dealing with children of no fixed abode, the parent has a defence if he can show that he has an itinerant trade or business, that his child had attended as regularly as the nature of that trade or business permits, and in any event for the minimum number of attendances prescribed during the previous school year. Regularly in this provision does not suggest a matter of fact and degree; rather that the child has attended as often as he can. The provision also illustrates that when Parliament wishes to indicate what, in its view, is sufficiently frequent, it can and does do so. Sixth, by section 444(7) of the 1996 Act, a boarder is taken to have failed to attend regularly at the school if he is absent from it without leave during any part of the school term, unless the parent proves that he was prevented by sickness or any unavoidable cause. If 100% attendance is expected of boarders, why should it not also be expected of day pupils? Both the school and the parents are in loco parentis. Seventh, although subsequent amendments should not be used to assist in interpreting what was already there, it is not without interest that section 444(7A), dealing with excluded children for whom alternative provision has been made, proceeds on the basis that absences are to be counted by the day. Eighth, and above all, this interpretation is far too uncertain to found a criminal offence. Over what period is the sufficiency of attendance to be judged? How much is sufficient? Does one take into account how good or bad the reasons for any previous absences were? If attendance over the whole school year, or over the period before the information is laid, is taken into account, how can the parent know whether taking the child out of school on any particular day will be an offence? How is a parent like Mrs C, contemplating taking her children on holiday, to know whether the local authority and the magistrates will consider that it was (a) acceptable because there were no other absences, (b) acceptable because the other absences were for good cause, or (c) unacceptable because of the length of the holiday, or (d) unacceptable because, given the number of days the child had already missed for good reasons, he should not have been taken on holiday too? (No doubt other permutations are available.) The point is that, on this interpretation, the parent will not know on any given day whether taking his child out of school is a criminal offence. Ninth, and this is the reason why the local authority have appealed and the Secretary of State has intervened in support, there are very good policy reasons why this interpretation simply will not do. It is not just that there is a clear statistical link between school attendance and educational achievement. It is more the disruptive effect of unauthorised absences. These disrupt the education of the individual child. Work missed has to be made up, requiring extra work by the teacher who has already covered and marked this subject matter with the other pupils. Having to make up for one pupils absence may also disrupt the work of other pupils. Group learning will be diminished by the absence of individual members of the group. Most of all, if one pupil can be taken out whenever it suits the parent, then so can others. Different pupils may be taken out at different times, thus increasing the disruptive effect exponentially. Finally, given the strictness of the previous law, Parliament is unlikely to have found it acceptable that parents could take their children out of school in blatant disregard of the school rules, either without having asked for permission at all or, having asked for it, been refused. This is not an approach to rule keeping which any educational system can be expected to find acceptable. It is a slap in the face to those obedient parents who do keep the rules, whatever the cost or inconvenience to themselves. In accordance with the rules All the reasons why sufficiently frequently cannot be right also point towards this being the correct interpretation. The Divisional Court was clearly worried about the consequence that a single missed attendance without leave or unavoidable cause could lead to criminal liability. However, there are several answers to this concern. First, there are many examples where a very minor or trivial breach of the law can lead to criminal liability. It is an offence to steal a milk bottle, to drive at 31 miles per hour where the limit is 30, or to fail to declare imported goods which are just over the permitted limit. The answer in such cases is a sensible prosecution policy. In some cases, of which this is one, this can involve the use of fixed penalty notices, which recognise that a person should not have behaved in this way but spare him a criminal conviction. If such cases are prosecuted, the court can deal with them by an absolute or conditional discharge if appropriate. Second, this had not been thought an objection under the pre 1944 law. It was recognised that this sometimes produced harsh results, but the aim was to bring home to parents how important it was that they ensured that their children went to school. The offence in section 444(1) is an offence of strict liability, whereas the offence in section 444(1A) is not. Third, while the general rule is that statutes imposing criminal liability should be construed strictly, so as not to impose it in cases of doubt, it is an even more important rule that statutes imposing criminal liability should do so in a way which enables everyone to know where they stand, to know what is and is not an offence. The alternative interpretations discussed above do not do this, whereas this interpretation does. This interpretation is also consistent with the provision in section 444(3)(a) and (9) that a child is not to be taken to have failed to attend regularly if he is absent with the leave of a person authorised by the governing body or proprietor of the school to give it. Unlike sickness or unavoidable cause, leave is not a defence. It is part of the definition of the offence. Your child is required to attend in accordance with the normal rules laid down by the school authorities for attendance but the school can make an exception in your case. As noted above, it is also consistent with section 444(3)(b). There is another pointer in the link between the parents obligation in section 7, to cause the child to receive full time education, and the offence committed under section 444(1), if the child fails to attend school regularly. Full time indicates for the whole of the time when education is being offered to children like the child in question. Conclusion I conclude, therefore, that in section 444(1) of the Education Act 1996, regularly means in accordance with the rules prescribed by the school. I would therefore make a declaration to that effect. To the extent that earlier cases, in particular Crump v Gilmore and London Borough of Bromley v C, adopted a different interpretation, they should not be followed. The question remains what should be done with this case. The father asks us to content ourselves with making such a declaration and the local authority take a neutral position. They and the Secretary of State are interested in the point of principle and not in the outcome of this particular prosecution. Nevertheless, the father did have a case to answer. On the agreed facts, the penalty notice was properly issued and, having failed to pay it, he should have been convicted of the offence with which he was charged unless he can establish one of the statutory exceptions. The case will be returned to the magistrates with a direction to proceed as if his submission of no case to answer had been rejected. I am particularly mindful of the fact that the mother did exactly the same thing, was issued with a penalty notice and paid it. She might well feel a sense of injustice if, it now having been held that the penalty notice to the father was properly issued, the case did not proceed.

UK-Abs

Section 444(1) of the Education Act 1996 provides that if a child of compulsory school age fails to attend regularly at the school where he is a registered pupil, his parent is guilty of an offence. The issue in this appeal is the meaning of regularly. Regularly has at least three possible meanings in this provision: it could mean (a) evenly spaced; (b) sufficiently often; or (c) in accordance with the rules. Mr Platt sought permission from his daughters head teacher to remove her from school during term time for a holiday. The head teacher refused the request but Mr Platt took his daughter on holiday as planned, causing her to miss seven school days in April 2015. Mr Platt was issued with a penalty notice on her return. He did not pay the fixed penalty and was prosecuted in the Isle of Wight Magistrates Court. The magistrates ruled that Mr Platt had no case to answer. They held that his daughter had attended school regularly because, even after the holiday, she had attended 90.3% of the time up to that point in the academic year. The Council appealed on the issue of whether the magistrates had been entitled to take into account attendance at school outside the period of the absence. The Divisional Court held that the magistrates had not erred in doing so, but certified a point of law of general public importance on the meaning of the words fails to attend regularly in section 444(1). The Supreme Court unanimously allows the Councils appeal, declaring that the word regularly means in accordance with the rules prescribed by the school. Lady Hale, with whom the other Justices agree, gives the only judgment. The history of the law preceding section 444(1) of the Education Act 1996 shows that before 1944 it was well established that the offence of failing to cause a child to attend school without a reasonable excuse could be committed by a single days absence [8 14]. The Education Act 1944 replaced the concept of reasonable excuse with a closed list of circumstances in which absence was permitted, and provided that the offence would be committed if the child failed to attend school regularly. This provision was reproduced in the Education Act 1993 and is now found in s 444(1) of the 1996 Act [15 19]. The penalty notice regime is an alternative to immediate prosecution and offers a parent the opportunity of escaping liability to conviction by paying the penalty [21]. The question for the Supreme Court is which meaning of the word regularly was intended by Parliament when enacting s 444(1). It plainly is not at regular intervals as this would mean attendance at school once a week is regular even though attendance every day is required by the rules. Sufficiently frequently was the meaning assumed in some earlier cases, and in the lower courts in this case, but there are many reasons to think that this was not what Parliament intended in 1944 or in 1996: School attendance is compulsory and there are rules about when it is required [32]. The purpose of the 1944 act was to increase the scope and character of compulsory state education and it is implausible to suggest that it was intended to relax the previous obligation on parents to secure their childrens attendance [33]. The defences were tightened in 1944 and the flexibility inherent in a reasonable excuse was removed [34]. The exception for absence on a single day for religious observance in s 444(3) would not be needed unless it would otherwise amount to a failure to attend regularly [35]. Provisions for parents with an itinerant trade or business did not suggest that regularly was a matter of fact and degree [36]. A boarder fails to attend regularly under s 444(7) if he is absent without leave during any part of the school term, and there is no reason why 100% attendance should be required of boarders but not of day pupils [37]. This interpretation is far too uncertain to found a criminal offence. A parent would not know on any given day whether removing the child from school is a criminal offence [39]. There are sound policy reasons for rejecting this interpretation because of the disruptive impact of the absence for the education of the individual child and of the other pupils [40]. It permits an approach to rule keeping which no educational system can be expected to find acceptable [41]. These reasons also point towards the correct interpretation of regularly being in accordance with the rules. A sensible prosecution policy will allow minor or trivial breaches to be dealt with appropriately [43]. This was not thought to be a problem under the pre 1944 law [44]. The rule that statutes imposing criminal liability must enable everyone to know what is and is not an offence is important [45]. This interpretation is consistent with the provisions excepting from the scope of the offence a child absent with the leave of the school [46], and with the obligation on parents to cause their child to receive full time education under section 7 of the 1996 act [47]. Accordingly, the penalty notice was properly issued to Mr Platt and, having not paid the penalty fine, he should have been convicted of the offence unless he can establish one of the statutory exceptions. The case is therefore returned to the magistrates with a direction to proceed as if his submission of no case to answer had been rejected [49].

The claimant, Tiuta International, was a specialist lender of short term business finance, until it went into administration on 5 July 2012. These proceedings were brought by Tiuta in support of a claim against the defendant surveyors for negligently valuing a partially completed residential development over which it proposed to take a charge to secure a loan. The present appeal raises a question of principle concerning the quantum of damages. Since it arises out of an application for summary judgment, it has to be determined on facts some of which are admitted but others of which must be assumed for the purposes of the appeal. They are as follows. On 4 April 2011, Tiuta entered into a loan facility agreement with Mr Richard Wawman in the sum of 2,475,000 for a term of nine months from initial drawdown, in connection with a development in Sunningdale by a company called Drummond House Construction and Developments Ltd, with which Mr Wawman was associated. Advances under the facility were to be secured by a legal charge over the development. The facility agreement was made on the basis of a valuation of the development by De Villiers. They had reported that the development was worth 2,300,000 in its current state and that if completed in accordance with all current consents and to a standard commensurate with its location it would be worth about 4,500,000. The initial advance was drawn down on 8 April 2011 as soon as the charge had been executed. Other advances under the facility followed. On 19 December 2011, shortly before the facility was due to expire, Tiuta entered into a second facility agreement with Mr Wawman in the sum of 3,088,252 for a term of six months in connection with the same development. Of this sum, 2,799,252 was for the refinancing of the indebtedness under the first facility and 289,000 was new money advanced for the completion of the development. A fresh charge was taken over the development to secure sums due under the second facility agreement. On 19 January 2012, Tiuta advanced 2,560,268.45, which was paid into Mr Wawmans existing loan account, thereby discharging the whole of the outstanding indebtedness under the first facility. Between that date and 8 June 2012 further sums were drawn down under the second facility amounting to 281,590 and presumably spent on the development. The advances under the second facility were made on the basis of a further valuation of the development by De Villiers. There were three iterations of the further valuation. On 8 November 2011, De Villiers had valued the development in its current state at 3,250,000 and upon completion at 4,900,000. The current state valuation was subsequently revised on 22 December 2011 to 3,400,000 and on 23 December 2011 to 3,500,000. The second facility agreement expired on 19 July 2012, a few weeks after Tiuta went into administration. None of the indebtedness outstanding under it has been repaid. It is common ground that there can be no liability in damages in respect of the advances made under the first facility. This is because (i) there is no allegation of negligence in the making of the valuation on which the first facility agreement was based; and (ii) even if there had been, the advances made under that facility were discharged out of the advances under the second facility, leaving the lender with no recoverable loss. This last point is based on the decisions of the Court of Appeal in Preferred Mortgages Ltd v Bradford & Bingley Estate Agencies Ltd [2002] EWCA Civ 336 and of this court in Swynson Ltd v Lowick Rose LLP (in liquidation) [2017] 2 WLR 1161. It is not challenged on this appeal. The present claim is concerned only with the liabilities arising out of the valuation which De Villiers made for the purposes of the second facility. It is alleged, and for present purposes must be assumed, that the valuations given for the purposes of the second facility were negligent, and that but for that negligence the advances under the second facility would not have been made. In those circumstances, the valuers contend that the most that they can be liable for by way of damages is the new money advanced under the second facility. They cannot, they say, be liable for that part of the loss which arises from the advance made under the second facility and applied in discharge of the indebtedness under the first. If (as has to be assumed) Tiuta would not have made the advances under the second facility but for the valuers negligence, the advances under the first facility would have remained outstanding and would have remained unpaid. That part of their loss would therefore have been suffered in any event, irrespective of the care, or lack of it, which went into the valuations prepared for the purposes of the second facility. On that ground, the valuers applied for a summary order dismissing that part of the claim which arose out of the refinancing element of the advances under the second facility. In my opinion the result of the facts as I have set them out is perfectly straightforward and turns on ordinary principles of the law of damages. The basic measure of damages is that which is required to restore the claimant as nearly as possible to the position that he would have been in if he had not sustained the wrong. This principle is qualified by a number of others which serve to limit the recoverable losses to those which bear a sufficiently close causal relationship to the wrong, could not have been avoided by reasonable steps in mitigation, were reasonably foreseeable by the wrongdoer and are within the scope of the latters duty. In the present case, we are concerned only with the basic measure. In a case of negligent valuation where but for the negligence the lender would not have lent, this involves what Lord Nicholls in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627, 1631 called the basic comparison: It is axiomatic that in assessing loss caused by the defendants negligence the basic measure is the comparison between (a) what the plaintiffs position would have been if the defendant had fulfilled his duty of care and (b) the plaintiffs actual position. Frequently, but not always, the plaintiff would not have entered into the relevant transaction had the defendant fulfilled his duty of care and advised the plaintiff, for instance, of the true value of the property. When this is so, a professional negligence claim calls for a comparison between the plaintiffs position had he not entered into the transaction in question and his position under the transaction. That is the basic comparison. Thus, typically in the case of a negligent valuation of an intended loan security, the basic comparison called for is between (a) the amount of money lent by the plaintiff, which he would still have had in the absence of the loan transaction, plus interest at a proper rate, and (b) the value of the rights acquired, namely the borrowers covenant and the true value of the overvalued property. If the valuers had not been negligent in reporting the value of the property for the purpose of the second facility, the lenders would not have entered into the second facility, but they would still have entered into the first. On that hypothesis, therefore, the lenders would have been better off in two respects. First, they would not have lost the new money lent under the second facility, but would still have lost the original loans made under the first. Secondly, the loans made under the first facility would not have been discharged with the money advanced under the second facility, so that if the valuation prepared for the first facility had been negligent, the irrecoverable loans made under that facility would in principle have been recoverable as damages. There being no allegation of negligence in relation to the first facility, this last point does not arise. Accordingly, the lenders loss is limited to the new money advanced under the second facility. This is what Timothy Fancourt QC, sitting as a Deputy High Court Judge, held. But the Court of Appeal disagreed. By a majority (Moore Bick and King LJJ, McCombe LJ dissenting), they allowed the appeal. The leading judgment was delivered by Moore Bick LJ. He criticised the deputy judges reasoning on the ground that it failed to take into account the fact that the second facility was structured as a refinancing so that the advance was used to pay off the pre existing debt, thereby releasing the valuers from any potential liability in respect of the first valuation. From this, he concluded that the advance under the second facility stands apart from the first and the basic comparison for ascertaining the appellants loss is between the amount of that second loan and the value of the security. He explained this as follows: The appellant entered into the second transaction in reliance on the respondents valuation. If the valuation had not been negligent, the appellant would not have entered into the second transaction, and would have suffered no loss on that transaction as a result. It would have been left with the first loan and the security for it, together with any claim it might have had against the valuer. However, that is of no relevance to the respondent in its capacity as valuer for the purposes of the second loan. The loss which the appellant sustained as a result of entering into the second transaction was the advance of the second loan, less the developers covenant and the true value of the security. If the value of the property was negligently overstated, the respondent will be liable to the extent that the appellant's loss was caused by its over valuation. Moore Bick LJ went on to say that his conclusion would have been the same even if a different valuer had prepared the original valuation on which the first facility was based. This was because the valuer valued the property itself in the expectation that the appellant would advance funds up to its full reported value in reliance on its valuation. There is nothing unfair in holding the respondent liable in accordance with its own valuation for the purposes of the second transaction. I regret that I cannot agree. It does not follow from the fact that the advance under the second facility was applied in discharge of the advances under the first, that the court is obliged to ignore the fact that the lender would have lost the advances under the first facility in any event. Lord Nicholls statement in Nykredit assumes, as he points out in the passage that I have quoted, that but for the negligent valuation, he would still have had the money which it induced him to lend. In the present case, Tiuta would not still have had it, because it had already lent it under the first facility. Moore Bick LJ appears to have thought that this was irrelevant because the effect was to release the valuer from any potential liability in respect of the first facility. I would agree that if the valuers had incurred a liability in respect of the first facility, the lenders loss in relation to the second facility might at least arguably include the loss attributable to the extinction of that liability which resulted from the refinancing of the existing indebtedness. But the premise on which this matter comes before the court is that there was no potential liability in respect of the first facility because that was entered into on the basis of another valuation which is not said to have been negligent. Moore Bick LJs view appears to have been that none of this mattered because the valuer would have contemplated that he might be liable for the full amount of the advances under the second facility, so that it was a windfall for him that part of the advances was used to repay a pre existing debt rather than to fund the development. A similar argument was advanced before us. The difficulty about it is that while the reasonable contemplation of the valuer might be relevant in determining what responsibility he assumed or what loss might be regarded as foreseeable, it cannot be relevant to Lord Nicholls basic comparison. That involves asking by how much the lender would have been better off if he had not lent the money which he was negligently induced to lend. This is a purely factual inquiry. There are, as I have pointed out, legal filters which may result in the valuer being liable for less than the difference. For example, part of it may be too remote or is not within the scope of the relevant duty. But the valuer cannot be liable for more than the difference which his negligence has made, simply because he contemplated that on hypothetical facts different from those which actually obtained, he might have been. There are many cases in which the internal arrangements of a claimant mean that his financial loss is smaller than it might have been. That may be fortunate for the defendant, but it cannot make him liable for more than the claimants actual financial loss. Ms Joanna Smith QC, who appeared for the lenders, was realistic enough to perceive these difficulties, and adopted a rather different approach. She submitted that the court should disregard the fact that the advance under the second facility was applied in discharge of the outstanding indebtedness under the first, because that application of the funds was a collateral benefit to the lender, which they were not obliged to take into account in computing their loss. The argument is that if the discharge of the outstanding indebtedness under the first facility is disregarded, damages can be assessed as if the whole of the loan under the second facility was an additional advance. Since that additional advance would not have been made or lost but for the negligent valuations of November and December 2011 the whole of it is recoverable as damages. I am not persuaded that this was what the Court of Appeal had in mind, but her point is none the worse for that. The real objection to it is more fundamental. This court has recently had to deal with collateral benefits in a context not far removed from the present one. The general rule is that where the claimant has received some benefit attributable to the events which caused his loss, it must be taken into account in assessing damages, unless it is collateral. In Swynson Ltd v Lowick Rose LLP (in liquidation) [2017] 2 WLR 1161, para 11, it was held that as a general rule collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Leaving aside purely benevolent benefits, the paradigm cases are benefits under distinct agreements for which the claimant has given consideration independent of the relevant legal relationship with the defendant, for example insurance receipts or disability benefits under contributory pension schemes. These are not necessarily the only circumstances in which a benefit arising from a breach of duty will be treated as collateral, for there may be analogous cases which do not exactly fit into the traditional categories. But they are a valuable guide to the kind of benefits that may properly be left out of account on this basis. The discharge of the existing indebtedness out of the advance made under the second facility was plainly not a collateral benefit in this sense. In the first place, it did not confer a benefit on the lenders and so no question arises of either taking it into account or leaving it out of account. Lord Nicholls basic comparison requires one to look at the whole of the transaction which was caused by the negligent valuation. In this case, that means that one must have regard to the fact that the refinancing element of the second facility both (i) increased the lenders exposure and ultimate loss under the second facility by 2,560,268.45, and (ii) reduced its loss under the first facility by the same amount. Its net effect on the lenders exposure and ultimate loss was therefore neutral. Only the new money advanced under the second facility made a difference. It is true that the refinancing element might not have been neutral if the discharge of the indebtedness under the first facility had also extinguished a liability of the valuers under the first facility. But on the assumptions that we must make on this appeal there was no such liability. Secondly, even on the footing that there was such a liability, the benefit arising from the discharge of the indebtedness under the first facility was not collateral because it was required by the terms of the second facility. The lenders did not intend to advance the whole of the second facility in addition to the whole of the first, something which would have involved lending a total amount substantially in excess of any of the successive valuations. They never intended to lend more than 289,000 of new money. The concept of collateral benefits is concerned with collateral matters. It cannot be deployed so as to deem the very transaction which gave rise to the loss to be other than it was. This is why the decision of Toulson J in Komercni Banka AS v Stone and Rolls Ltd [2003] 1 Lloyds Rep 383, which was pressed on us as an analogy, was ultimately unhelpful. Toulson J was concerned with a complex series of frauds against a bank under which part of the proceeds of one fraud found its way back to the bank via a third party to serve as pump priming for distinct, further frauds. He declined to reduce the damages by the amount of these circular payments, because they were not an intrinsic part of the relevant venture or transaction but were simply the result of [the fraudsters] independent choice how to use the opportunity created by his fraud (para 171). I doubt whether much is to be gained by analogies with other cases decided on their own peculiar facts, but Komercni Banka does not even offer a relevant analogy. For these reasons, which correspond to those given by the Deputy Judge and by McCombe LJ in his dissenting judgment, I would allow the appeal. The reasons are of course sensitive to the facts, including those facts which are disputed and have been assumed for the purposes of this appeal. In particular, different considerations might arise were it to be alleged that the valuers were negligent in relation to both facilities. The Deputy Judges order was carefully drawn so as to address the point of principle while leaving these matters open. Subject to any submissions that may be made about the exact form of relief, I would restore his order.

UK-Abs

The appellant company, De Villiers, is a surveyor. The respondent, Tiuta International, was a lender of short term business finance until it went into administration in July 2012. This appeal arises out of De Villiers application for summary judgment on part of a claim which Tiuta brought against De Villiers. As a result, the following facts have been either admitted or assumed to be correct. In April 2011 Tiuta entered into a nine month loan facility agreement (the First Facility) with a Mr Wawman in connection with a residential property development. Advances under the First Facility were to be secured by a charge over the development. The First Facility was agreed on the basis of De Villiers valuation of the development. Tiuta advanced various sums under the First Facility. In December 2011, shortly before the expiry of the First Facility, Tiuta entered into a second loan facility agreement (the Second Facility) with Mr Wawman in the sum of 3,088,252 in connection with the same development. Of that sum, 2,799,252 was to be used to discharge the outstanding indebtedness under the First Facility; the remaining 289,000 was new money, advanced to fund the development. The sums advanced under the Second Facility were secured by a further charge over the development. In January 2012 Tiuta advanced 2,799,252 to Mr Wawmans existing loan account, thereby discharging his outstanding indebtedness under the First Facility in full. Tiuta then advanced further sums as new money for the development. The advances under the Second Facility were made on the basis of De Villiers further valuation of the development in November 2012, which it revised twice in December 2012. None of the sums advanced under the Second Facility have been repaid. It is assumed for the purposes of the appeal that the valuations given for the purposes of the Second Facility were negligent, as Tiuta alleges. It is also assumed that, but for that negligence, Tiuta would not have advanced the sums under the Second Facility. Tiuta does not allege negligence in respect of the First Valuation, under which all the advanced sums were repaid in full. De Villiers application for summary judgment argued that Tiuta would have suffered some loss in any event because, but for the allegedly negligent undervaluation in respect of the Second Facility, no sums would have been advanced under the Second Facility. As a result, sums owed to Tiuta under the First Facility would have remained unpaid. The Deputy High Court Judge accepted that argument and held that Tiutas loss was limited to the new money advanced under the Second Facility. The Court of Appeal disagreed and allowed Tiutas appeal. The Supreme Court unanimously allows the appeal. Lord Sumption gives the judgment with which Lady Hale, Lord Kerr, Lord Lloyd Jones and Lord Briggs agree. The basic measure of damages is the sum which restores the claimant as closely as possible to the position that he would have been in if he had not been wronged. That principle is qualified by various rules which limit recoverable losses. Where a claimant lends money, and but for a negligent valuation would not have done so, the basic measure of damages is the difference between: (a) the position the claimant would have been in, had the defendant not been negligent and (b) the claimants actual position. This is the basic comparison discussed by Lord Nicholls in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627. The basic comparison is typically between: (a) the amount of money lent by the claimant, plus interest on that money and (b) the value of the rights acquired under the loan agreement plus the true value of the overvalued property [6]. It is assumed in this appeal that Tiuta would not have entered into the Second Facility, had De Villiers not negligently undervalued the security property. Tiuta would have still entered into the First Facility, but would not have lost the new money advanced under the Second Facility. Whereas the Deputy High Court Judge held that Tiutas losses were limited to that new money, the majority of the Court of Appeal held that the judge failed to take into account that the Second Facility was structured so as to pay off the indebtedness under the First Facility. The majority consequently held that the basic measure of Tiutas loss was: (a) the sums advanced under the Second Facility, less (b) the value of Tiutas rights under the Second Facility plus the true value of the security [7 8]. The Supreme Court disagrees with that approach. The fact that the advance under the Second Facility was used to pay off indebtedness under the First Facility does not require the Court to ignore the fact that Tiuta would have lost the sums which had been outstanding under the First Facility in any event. The basic comparison envisaged in Nykredit assumes that, but for the negligent valuation, the claimant would still have had the money which the negligent valuation caused him to lend. In this case Tiuta would not have had that money, because it had already lent it under the First Facility [9]. It is irrelevant, for the purposes of the basic comparison discussed in Nykredit, that the valuer might have contemplated being liable for the full amount of the advances under the Second Facility. The foreseeability of loss is not relevant to the basic comparison. Various legal filters may result in the valuer being liable for less than the difference calculated under the basic comparison. However, the valuer cannot be liable for more than the difference which his negligence has made simply because he contemplated that he might be liable in circumstances other than those which actually came about [10]. Tiuta argued that the use of the advance under the Second Facility to discharge the indebtedness under the First Facility was a collateral benefit to Tiuta, which need not be taken into account when calculating Tiutas loss [11]. The Supreme Court rejects that argument. Generally, where a claimant has received some benefit attributable to the events which caused his loss, it must be taken into account in assessing damages unless the benefit is collateral. Collateral benefits are generally those whose receipt arose independently of the circumstances giving rise to the loss [12]. The discharge of the existing indebtedness was not a collateral benefit. First, the refinancing part of the Second Facility was neutral in its effect, rather than beneficial: it both increased Tituas exposure and reduced its loss under the First Facility by the same amount. Secondly, the terms of the Second Facility required the indebtedness under the First Facility to be discharged, so that outcome was not collateral to the Second Facility [13]. The appeal is therefore allowed. These reasons are sensitive to these facts, including those which have been assumed for the purposes of the appeal. Subject to any submissions that may be made about the exact form of relief, the order of the Deputy High Court Judge will be restored [15].

This appeal raises an important question of planning law. A planning authority foresees and plans for significant growth in its area. Major investment in transport infrastructure is required to accommodate the aggregate of the planned development. The planning authority seeks to achieve this investment by adopting a policy in its development plan which in substance requires developers to enter into planning obligations with it to make financial contributions to the pooled fund to be spent on the infrastructure, including interventions at places where a particular development has only a trivial impact. Is such a policy within the existing powers of the planning authority under current planning legislation? Factual background The Aberdeen City and Shire Strategic Development Planning Authority (the Authority) has the responsibility for preparing a strategic development plan for its area. The Authority foresaw the need for significant new and improved infrastructure to accommodate the cumulative impact of new development for which it planned. There were already proposals for transport infrastructure which involved major public sector investment, including the Aberdeen Western Peripheral Route (AWPR), new bridges, park and ride sites, making the A96 into a dual carriageway road and the creation of twin tracks on significant parts of the Aberdeen Inverness railway line, all of which was to be paid for out of public funds. In 2010 the North East of Scotland Transport Partnership (Nestrans) commissioned a cumulative transport appraisal for the area (the CTA), in which it estimated that 86.6m was required on top of already committed public sector investment in order to fund a package of infrastructure developments, which it identified, to address the cumulative impact of the proposed new development in the area. In December 2011 the Authority approved non statutory supplementary planning guidance which proposed the establishment of a Strategic Transport Fund (the Fund). In February 2013 the Authority published its proposed strategic development plan. In that plan the Authority stated that it intended to prepare supplementary guidance in support of the plan. This guidance would allow for the Fund to deliver the transport projects which were needed to deal with the combined effect of new development in four identified strategic growth areas within the Aberdeen Housing Market Area. The Authority stated that it would need to secure a higher percentage of the increase in land values, which resulted from the grant of planning permission, than it had in the past in order to be able to create sustainable mixed communities. Elsick Development Ltd (Elsick) proposes to develop approximately 4,000 houses together with commercial, retail and community facilities at Elsick, near Stonehaven. Elsicks site is located within the southerly of the four strategic growth areas. In November 2011 Elsick objected to the draft supplementary planning guidance while it was subject to consultation. Elsick also objected to the proposed strategic development plan and sought to have the reference to the Fund removed from that plan on the ground that it was contrary to the guidance of the Scottish Ministers on planning obligations which is set out in circular 3/2012, Planning Obligations and Good Neighbour Agreements (the Circular). The Circular advised planning authorities to seek to have developers enter into planning obligations only if the obligations met specified tests. These tests were that the obligations (i) were necessary to make the proposed development acceptable in planning terms (para 15), (ii) served a planning purpose (para 16), (iii) related to the proposed development either as a direct consequence of the development or arising from the cumulative impact of development in the area (paras 17 19), (iv) fairly and reasonably related in scale and kind to the proposed development (paras 20 23), and (v) were reasonable in all other respects. Elsicks principal concern was with (iv); Elsick asserted that the contribution to the Fund which the proposed plan envisaged was out of all proportion to the demands which its development would make on the infrastructure which expenditure from the Fund was to improve. In the meantime, on 30 September 2013 Elsick entered into a planning obligation under section 75 of the Town and Country Planning (Scotland) Act 1997 (as amended) (the 1997 Act) with Aberdeenshire Council (the Council) to contribute to the Fund in terms of the draft non statutory supplementary planning guidance or any revision or replacement of it in the proposed strategic development plan, but the agreement also provided that no contributions to the Fund needed to be paid if the supplementary planning guidance were found to be invalid. On 2 October 2013 the Council granted outline planning permission for the development and detailed planning permission for a first phase of 802 houses and other facilities. The proposed strategic development plan was examined by a reporter appointed by the Scottish Ministers. In his report dated 21 January 2014 the reporter stated that it was right that the principle of the Fund should be established in the development plan and concluded that the CTA had demonstrated that the overall traffic growth, which the development promoted in the plan would create, would have harmful effects unless there were mitigation measures. He expressed concern that the mechanism for raising contributions to the Fund did not comply with national policy in the Circular because there was not a sufficiently clear and direct relationship between the development supplying the contribution and the infrastructure to be delivered. He advised that para 5.9 of the proposed plan be amended to establish that the Fund will only be used to gather contributions towards infrastructure improvements that are related to the developments concerned and strictly necessary in order to make any individual development acceptable in planning terms. The Strategic Development Plan was amended to take account of the reporters comments. As so amended the relevant paragraphs of the Plan stated: 5.8 Developers will have to accept the need for contributions towards necessary infrastructure, services and facilities within their own site. However, in cases where development has wider effects, we will have to secure contributions to deal with these as well, although the public sector will also need to make an important contribution. 5.9 We will prepare supplementary guidance in support of this plan. This will allow (through a Strategic Transport Fund) transport projects which are needed as a result of the combined effect of new development to be funded and delivered. We will look for contributions from housing, business, leisure developments in the strategic growth areas within the Aberdeen Housing Market Area, (detailed criteria will be set out in the supplementary guidance). We will only use contributions to support projects that are related to the developments concerned and that are necessary to make those developments acceptable in planning terms. retail and commercial industrial, The Authority then resolved to convert the non statutory supplementary planning guidance into statutory guidance. On 12 December 2014 the Authority issued a consultation draft of the proposed statutory guidance. In a report to the meeting of the Authority which approved the consultation draft it was explained that the consultants who had prepared the CTA had re presented table 7.2 of the study, which I discuss in more detail in para 16 below, to show a clear and direct link between the development providing a contribution to the Fund and the infrastructure improvement to be delivered. The report also stated that the supplementary guidance was based on a strategic level evidence base and uses this to derive appropriate contribution levels for individual developments. The main driving force behind the preparation of the existing non statutory guidance was the need to facilitate development rather than leave it to individual developers to try to satisfy Transport Scotland and the two councils that they had adequately mitigated all their cumulative impacts on the transport network. Elsick and others objected to the consultation draft on several grounds, including that it failed to comply with the Circular. The Authority responded to Elsicks representations by stating that all but one of the transport interventions were within a three mile radius of Aberdeen City centre and had strong inter relationships and that the modelling of the CTA had demonstrated that there was a cumulative impact from all development areas to all of the interventions. The Authority approved the draft supplementary guidance on 24 April 2015 and sent it to the Scottish Ministers for ratification. The Scottish Ministers advised that the Authority could adopt the draft supplementary guidance if they added a statement that the use of any planning obligation shall follow the guidance in the Circular. The Authority made that amendment and adopted the supplementary guidance (SG) on 25 June 2015. As I explain below when I discuss the legislative background, the SG forms part of the development plan for the purpose of determining planning applications. The Supplementary Guidance After setting out the purpose of and background to the SG and who would be expected to contribute, the SG explained that the purpose of the Fund was to mitigate the cumulative impact of developments at specific hotspots in the network which the CTA had identified. It continued (in para 4.8): [t]here will still be a requirement to mitigate impacts specific to the development (defined as local impacts) whether they are on the local or strategic network. In section 5 the SG set out the contributions which were required to deliver the proposed interventions at an estimated cost of 86.6m. In Table 1 in that section the SG set out contribution levels which for residential developments were fixed by reference to unit size, ranging from 1,350 per unit for a one bedroom unit to 3,148 per unit for a unit of five bedrooms or more. The table also provided for contributions from non residential developments. Because the Authority has argued that contribution to the Fund was voluntary (para 20 below), I set out para 5.4 so far as relevant. It provided: Developers can elect to assess and mitigate their cumulative impact outwith the [Fund], although this will require a considerably more comprehensive Transport Assessment and the design and delivery of the mitigation measures shown to be necessary. This will definitely be more time consuming and almost certainly more expensive, if it can be achieved at all. (emphasis added) Section 6 of the SG addressed how and when contributions would be payable. Para 6.1 stated that a planning obligation or other legal agreement would normally be used to secure contributions. In accordance with the advice of the Scottish Ministers, the paragraph also stated that the use of any planning obligation shall follow the guidance in the Circular. Section 7 of the SG explained that the contributions would be used only to fund the transport interventions which it listed. Para 7.3 stated: No contributions from development sites will be used to support projects where the development in question is predicted to gain no mitigation benefit from the infrastructure being provided and therefore is un related to the development making the contribution. The CTA has shown that the delivery of each of the projects identified above is necessary to make all developments acceptable in planning terms (see appendix 2). (emphasis added) Appendix 2 summarised the CTA and listed the cumulative infrastructure requirements which it had identified. It reproduced as Table 3 the revised table 7.2 of the CTA, which had been prepared in response to the reporters criticism (para 7 above) that it had not been demonstrated that there was a clear and direct relationship between the development contributing to the Fund and the infrastructure which would be delivered. But that table showed the traffic generated by each development which would use the infrastructure at the identified hotspots as a percentage of the total traffic generated by that development. For example, the table showed the following in relation to the Elsick site: A944 New A947 A96 Development Zone East of Bridge of Dee AWPR 0.79% 8.39% 0.10% 0.76% Kingswells North Persley Bridge 1.46% 3.45% Elsick Thus, taking the columns on the left, the table showed that 3.45% of the traffic which the Elsick development would generate would use Persley Bridge and 0.10% of that traffic would use the A947. The previous table 7.2 in the CTA was more informative about the impact of the proposed developments on the infrastructure. It showed the percentage of the total traffic using the new infrastructure at the identified hotspots which the traffic generated by each proposed development was estimated to create. For example, in relation to the Elsick development, it had shown that the percentage of the total traffic predicted to use the same infrastructure as the following: Kingswells Development Zone North Persley Bridge A947 A96 East of AWPR 1% 0% A944 New Bridge of Dee 7% 1% Elsick 1% 2% It also showed that 2% of the traffic on the Loirston Link would be generated by the Elsick development and 79% of the traffic on the Elsick Fastlink. In relation to a separate development at Blackdog the original table 7.2 of the CTA showed that 1% of the traffic on the A947 would be attributable to that site and 0% of the traffic on all of the other listed infrastructure. Paragraph 7.4 explained that the contributions would be used to deliver the specified transport interventions. It stated: Nestrans as the Regional Transport Partnership will hold and administer contributions in a strategic transport fund. As contributions are received they will be placed into a ring fenced account. The monies in this account will only be available for delivering the strategic transport projects listed above, including detailed assessment, development and design work. The challenge Elsick appealed against the adoption of the SG to the Inner House of the Court of Session under section 238 of the 1997 Act. On 29 April 2016 the First Division of the Inner House (The Lord President (Lord Carloway), Lord Menzies and Lord Drummond Young) allowed the appeal and quashed the SG: [2016] CSIH 28. The First Division upheld three of the four grounds of appeal which Elsick advanced. First, the court upheld the submission that the Authority had failed to comply with national policy on the use of planning obligations, holding that it was a fundamental principle of planning law, which was reflected in the Circular, that a condition attached to the grant of a planning permission, whether contained in a planning obligation or otherwise, must fairly and reasonably relate to the permitted development. The First Division accepted the distinction, which the reporter had drawn, between the sharing of costs among developments which had cumulatively required a particular investment in transport infrastructure on the one hand and the funding of a basket of measures, not all of which were relevant to every development. The court referred (in para 35 of its opinion) to the original Table 7.2 and held that many of the planned developments had no impact at all on several of the proposed infrastructure interventions. It added: [t]his applies to both Elsick and Blackdog relative to a number of the interventions. In respect of others the impact is de minimis. The result was that the additional sentence in the SG about complying with the guidance in the Circular, which was added at the request of the Scottish Ministers (para 11 above), could not prevent the obligation to contribute to the Fund, in which contributions were pooled, from breaching the Circular. The First Division also upheld Elsicks submission that there was no rational basis for relying on Table 3 of Appendix 2 of the SG (ie the revised table 7.2 of the CTA) to support the contention that a particular intervention was made necessary by reason of either a particular development or the cumulative effect of it along with other developments. The Authority applied for and was given permission to appeal to this court arguing that the policy tests in the Circular were not part of the legal tests for the validity of a planning obligation, that the Inner House had taken an unduly restrictive approach to policy, and that the Authority had substantially complied with the Circular when the SG afforded the opportunity to a developer to make mitigation contributions to infrastructure wholly outside the Fund (para 5.4 of the SG, which is set out in para 13 above). This court refused to allow the Authority to argue that the Inner House had erred in law and fact in finding that many of the planned developments, such as Elsick and Blackdog, have no impact on some of the proposed interventions and, in the case of Elsick and Blackdog, the impact on some other interventions is de minimis, because that was a finding of fact, based on the original table 7.2 of the CTA, the contents of which were not disputed. Discussion The central issue in this appeal is the lawfulness of the planning obligation which Elsick has entered into in conformity with the requirements of the SG. The Authority challenges the First Divisions conclusion that the tests applicable to a planning condition are properly to be applied to a planning obligation. To address this challenge I examine (i) the correct legal test as to the lawfulness of a planning condition, (ii) the correct legal test as to the lawfulness of a planning obligation, (iii) the role of a planning obligation in the decision to grant or refuse planning permission, and (iv) the boundary between questions of legality and questions of policy. I set out the legislative background before turning to each of the four questions. Finally, I will apply the answers to those questions to the facts in this appeal. The legislative background The 1997 Act was amended extensively by the Planning etc (Scotland) Act 2006 to provide in Part 2 for strategic development planning: see section 2 of the 2006 Act. Section 4 of the amended 1997 Act empowers the Scottish Ministers to designate a group of planning authorities as authorities which are jointly to prepare a strategic development plan for the area which the Scottish Ministers determine (section 5(3)). Section 7 provides that a strategic development plan is to include a vision statement, which is to be a broad statement setting out the strategic development planning authoritys views on how development could and should occur in its area and the matters, including infrastructure, which might affect that development. The 1997 Act provides for the preparation and publication of a proposed strategic development plan (section 10), the appointment by the Scottish Ministers of a reporter to examine the proposed plan (section 12), the approval or rejection of the proposed plan by the Scottish Ministers (section 13), and, on such approval, the publication of the constituted strategic development plan. Section 22 empowers a strategic development planning authority to adopt and issue supplementary guidance in connection with a strategic development plan, which guidance has to be submitted to the Scottish Ministers who can by notice require the authority to modify it. The Town and Country Planning (Development Planning) (Scotland) Regulations 2008 (SSI 2008/426) provide (in regulation 27(2)) that such supplementary guidance may only deal with the provision of further information or detail in respect of the policies or proposals set out in [the] plan and then only provided that those are matters which are expressly identified in a statement contained in the plan as matters which are to be dealt with in supplementary guidance. Section 24 defines the development plan, which is an important concept in relation to decisions taken under the planning Acts, as including the provisions of the approved strategic development plan for the time being in force for the area and also the supplementary guidance issued in connection with that plan. The central importance of the development plan to planning decisions can be seen in two provisions of the 1997 Act. First, section 25(1) provides: Where, in making any determination under the planning Acts, regard is to be had to the development plan, the determination is, unless material considerations indicate otherwise (a) to be made in accordance with that plan Secondly, section 37(2) provides: In dealing with [an application for planning permission] the authority shall have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations. Sections 25(1) and 37(2) in combination set up what has been called a presumption that the development plan is to govern the decision on an application for planning permission: City of Edinburgh Council v Secretary of State for Scotland 1998 SC (HL) 33, 43G; [1997] 1 WLR 1447, 1458 per Lord Clyde. I will return to these two provisions when I consider question (ii) below. to section 37(1) which provides: In order to address question (i) (the lawfulness of a planning condition) I refer Where an application is made to a planning authority for planning permission (a) they may grant planning permission, either unconditionally or subject to such conditions as they think fit, and section 41(1) which provides so far as relevant: Without prejudice to the generality of section 37(1) to (3), conditions may be imposed on the grant of planning permission under that section a) for regulating the development or use of any land under the control of the applicant (whether or not it is land in respect of which the application was made) or requiring the carrying out of works on any such land, so far as appears to the planning authority to be expedient for the purposes of or in connection with the development authorised by the permission; for requiring the removal of any buildings or b) works authorised by the permission, or the discontinuance of any use of land so authorised, at the end of a specified period, and the carrying out of any works required for the reinstatement of land at the end of that period. Of direct relevance to question (ii) (the lawfulness of a planning obligation) is section 75 (as substituted by section 23 of the 2006 Act) which, so far as relevant, provides: (1) A person may, in respect of land in the district of a planning authority (a) by agreement with that authority, or (b) unilaterally, enter into an obligation (referred to in this section and in sections 75A to 75C as a planning obligation) restricting or regulating the development or use of the land, either permanently or during such period as may be specified in the instrument by which the obligation is entered into (referred to in this section and in those sections as the relevant instrument) (2) Without prejudice to the generality of subsection (1), the reference in that subsection to restricting or regulating the development or use of land includes (a) requiring operations or activities specified in the relevant instrument to be carried out in, on, under or over the land, or (b) requiring the land to be used in a way so specified. (3) A planning obligation may (b) require the payment (i) of a specified amount or an amount determined in accordance with the relevant instrument. Section 75(5) provides that a relevant instrument, to which the owner of the land is a party, may be recorded in the Register of Sasines or registered in the Land Register of Scotland so that the planning authority may enforce certain obligations in the instrument against both the owner and his successors in title. Sections 75A and 75B provide for the modification and discharge of planning obligations by agreement with the planning authority or by the determination of the Scottish Ministers on an appeal. Question (i): the lawfulness of a planning condition A planning condition is a statutory creation. Section 37(1) of the 1997 Act (para 26 above) and similar legislative provisions in England and Wales (section 70(1) of the Town and Country Planning Act 1990 (the 1990 Act)) authorise a planning authority to impose planning conditions when it grants a planning permission. The apparently unlimited power (subject to such conditions as they think fit) has long been interpreted restrictively by the courts to prevent its abuse. The courts have formulated three principal constraints. First, the conditions must be imposed for a planning purpose and not solely to achieve some ulterior object, however desirable in the public interest that object may be. Secondly, the conditions must fairly and reasonably relate to the permitted development. Thirdly, the conditions must not be unreasonable in the Wednesbury sense (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223, 233 234). The first constraint arises from the statutory origin of the power of a planning authority to impose conditions: administrative law provides that it must be exercised for the purposes of the 1997 Act, namely planning purposes. The second constraint was first articulated by Lord Denning in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554, 575. His statement has been endorsed on several occasions by the House of Lords in Fawcett Properties Ltd v Buckingham County Council [1961] AC 636, Mixnams Properties Ltd v Chertsey Urban District Council [1965] AC 735, and Newbury District Council v Secretary of State for the Environment [1981] AC 578. It arises from the statutory context of the power in section 37: a planning authority is tasked with determining an application for planning permission on its merits having regard to the development plan so far as relevant and other material considerations; the power to attach conditions to the permission is an inherent part of the power to grant permission for the development of land; therefore the conditions imposed on the grant of that permission must relate to the development for which permission is given. The third constraint is a feature of our administrative law. The second legal requirement that a condition must fairly and reasonably relate to the development requires there to be a reasonably close relationship between the development and the condition which governs it. In British Airports Authority v Secretary of State for Scotland 1979 SC 200 the Inner House looked for a clear relationship between the condition and the permitted development (218 per the Lord President (Emslie)) or a recognised and real relationship that is fair and reasonable (220 per Lord Cameron). Such a relationship between a condition and the permitted development existed where a planning authority imposed a negative suspensive condition, that development of a site should not commence until an event had occurred which the developer alone did not have power to bring about. In Grampian Regional Council v Secretary of State for Scotland and City of Aberdeen District Council 1984 SC (HL) 58 the House of Lords upheld the validity of such a condition which overcame an objection to a proposed industrial development on the ground of road traffic safety. The condition was that the development of the site could not commence until the road on the western boundary of the site had been closed by a road closure order which the Secretary of State would have to confirm. In the leading speech, Lord Keith of Kinkel (pp 66 67) accepted the three tests which I have stated in para 28 above and which have come to be associated with the Newbury case and held that the condition met the third test because it was not unreasonable to impose such a condition which was in the public interest and where there were reasonable prospects that a road closure order would be confirmed. The three fold legal test for validity, having been repeatedly approved by judges at the highest level, is an established part of planning law. Other rules of administrative law, such as the requirement to take account of all relevant considerations and not to take account of irrelevant considerations in decision making, apply to a decision to impose a particular condition. Question (ii): the lawfulness of a planning obligation A planning obligation also is a statutory creation. As with a particular planning condition, the lawfulness of a particular obligation depends upon (i) the wording of the statute, and (ii) the rules of our administrative law. Section 75 of the 1997 Act, like its predecessor legislation (section 50 of the Town and Country Planning (Scotland) Act 1972), requires that the obligation restricts or regulates the development or use of the land to which it relates. As section 75(3)(b) shows, the planning obligation can include the payment of money. Prima facie the planning authority is given a wide discretion as to the circumstances in which it can seek a planning obligation and the nature of that obligation. While it is not uncommon for planning authorities to duplicate some planning conditions in a section 75 agreement and thereby obtain an alternative means of enforcement, planning obligations also enable a planning authority to control matters which it might otherwise have no power to control by the imposition of planning conditions. Planning obligations are most commonly required in the context of an application for planning permission, but they are not confined to such circumstances and are available as a means of keeping land free from any development. It is not surprising therefore that there is no general legal requirement that there be a relationship to a permitted development. In Good v Epping Forest District Council [1994] 1 WLR 376, in which Ralph Gibson LJ delivered the leading judgment, the Court of Appeal addressed the question whether a planning authority could validly achieve by agreement any purpose which it could not validly achieve by planning condition or whether the test for validity was the same in each case. In substance, the Court held that the powers of a planning authority to bring about a planning obligation were not controlled by the nature and extent of its statutory powers to grant planning permission subject to conditions (p 387C). A planning obligation did not have to relate to a permitted development. In Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759, which I discuss more fully when addressing question (iii) below, both Lord Keith of Kinkel (769B C) and Lord Hoffmann (779C D) referred with approval to the judgment of the Court of Appeal in Good v Epping Forest District Council (above). Lord Hoffmann (779D) summarised the case thus: the only tests for the validity of a planning obligation outside the express terms of section 106 [of the 1990 Act] are that it must be for a planning purpose and not Wednesbury unreasonable. Thus beyond the restrictions implicit in the words of the section there are only the constraints of administrative law, which requires the planning authority to exercise its power to seek a planning obligation for a planning purpose: its exercise solely for a purpose unrelated to land use planning would be an abuse of power. Similarly, if a local planning authority acts unreasonably in the Wednesbury sense in requiring the undertaking of a planning obligation, the obligation may be reduced (nullified). Other rules of administrative law, such as the requirement to take into account all relevant considerations, also apply. The express words of section 75 require a relationship between the planning obligation and the land to be burdened by the obligation because the obligation must in some way restrict or regulate the development or the use of that land. But those restrictions or regulation do not necessarily relate to a particular permitted development on the burdened land. A planning obligation may prohibit the development of the land in a particular way or the use of the land for particular purposes. A planning obligation may keep the burdened land free from any development and may be entered into in circumstances which are not connected with any planning application. Restrictions may validly be imposed in the context of the development of another site. Thus, to take an example discussed in Good v Epping Forest District Council, the owner of two farms, A and B, within the area of a planning authority might apply for planning permission to develop and operate an intensive breeding establishment on farm A. The owner of the farms might offer, or the planning authority might require, a section 75 planning obligation preventing the use of farm B for that purpose. The restriction would relate to farm B and would be justified for the planning purpose of preventing an undesirable number of such establishments in the same area. A planning obligation may also regulate the development or use of the burdened site. An example, in the context of a planning application, is where a planning obligation requires the developer to provide affordable housing as a component of a development on its site or to create specified infrastructure on its land to meet the needs of that development. Similarly, a planning authority may contract for the payment of financial contributions towards, for example, educational facilities, healthcare facilities, sewerage or waste and re cycling: requiring a development to contribute to, or meet, its own external costs in terms of infrastructure involves regulating the development of the land which is burdened by the obligation. The financial contribution can be applied towards infrastructure necessitated by the cumulative effects of various developments, so long as the land which is subject to the planning obligation contributes to that cumulative effect and thereby creates a sufficient relationship between the obligation in question and the land so that one can fairly speak of the obligation as regulating the development of the land. In each of the examples in paras 38 41 above the restriction or regulation serves a purpose in relation to the development or use of the burdened site. In this appeal a question of principle arises: can a restriction or regulation of a site be imposed in the form of a negative suspensive planning obligation, analogous to the negative suspensive planning condition in the Grampian Regional Council case, for a purpose which does not relate to the development or use of the site? In particular, is it lawful by planning obligation to restrict the commencement of the development of a site until the developer undertakes to make a financial contribution towards infrastructure which is unconnected to the development of the site? Alternatively, is it lawful to require contributions towards such infrastructure in a planning obligation which does not restrict the development of the site by means of a negative suspensive obligation? The answer to each question is no. Dealing first with the latter question, a planning obligation which required a developer to contribute to infrastructure unconnected with its development but did not make the payment of the contribution a pre condition of development of the site would not fall within section 75 as it would neither restrict nor regulate the development or use of the site. In Tesco Stores Ltd v Secretary of State for the Environment (1994) 68 P & CR 219, Beldam LJ (pp 234 235) stated: In section 106(1) [of the 1990 Act] the obligations referred to in subsections (a), (b) and (c) clearly relate to the land in which the person entering into the obligation is interested. The obligation entered into by a person interested in land under subsection (d) to pay money to the authority is not expressed to be restricted to the payment of money for any particular purpose or object. But all the planning obligations are, by section 106(3), enforceable not only against the person entering into the obligation but also against his successors in title to the land. Against the background that it is a fundamental principle that planning permission cannot be bought or sold, it does not seem unreasonable to interpret subsection (1)(d) so that a planning obligation requiring a sum or sums to be paid to the planning authority should be for a planning purpose or objective which should be in some way connected with or relate to the land in which the person entering into the obligation is interested. In my view, this analysis is equally applicable to section 75 of the 1997 Act which, in so far as is relevant, is in substantially similar terms as section 106 of the 1990 Act (as substituted by section 12(1) of the Planning and Compensation Act 1991) as the obligations in section 106(1)(a) (d) are reflected in section 75(1)(2) and (3)(b). A planning obligation, which required as a pre condition for commencing development that a developer pay a financial contribution for a purpose which did not relate to the burdened land, could be said to restrict the development of the site, but it would also be unlawful. Were such a restriction lawful, a planning authority could use a planning obligation in the context of an application for planning permission to extract from a developer benefits for the community which were wholly unconnected with the proposed development, thereby undermining the obligation on the planning authority to determine the application on its merits. Similarly, a developer could seek to obtain a planning permission by unilaterally undertaking a planning obligation not to develop its site until it had funded extraneous infrastructure or other community facilities unconnected with its development. This could amount to the buying and selling of a planning permission. Section 75, when interpreted in its statutory context, contains an implicit limitation on the purposes of a negative suspensive planning obligation, namely that the restriction must serve a purpose in relation to the development or use of the burdened site. An ulterior purpose, even if it could be categorised as a planning purpose in a broad sense, will not suffice. It is that implicit restriction which makes it both ultra vires and also unreasonable in the Wednesbury sense for a planning authority to use planning obligations for such an ulterior purpose. It is, perhaps, surprising that the legal boundaries of a planning obligation have not been the subject of more extensive judicial comment, beyond the cases discussed in Good v Epping Forest District Council, the comment by Beldam LJ in the Court of Appeal in Tesco (para 43 above), and the opinion of Lord MacLean in McIntosh v Aberdeenshire Council 1999 SLT 93 (which upheld the validity of a planning obligation to build an estate road to serve the owners development of his land and also to facilitate the development of neighbouring land in third party ownership) when the risk of misuse of planning obligations has long been recognised as a matter of policy. There were concerns that some planning authorities were tempted to make exorbitant demands for what has been called planning gain, to confer benefits on the community which were not part of the developers original proposal. A developer in order to obtain a planning permission might be forced to incur disproportionate costs in providing such gains which were unrelated or insufficiently related to its development or otherwise suffer the delay and expense of an appeal to the Scottish Ministers. This practice risked bringing the planning system into disrepute. In 1981, in a report to the Secretary of State for the Environment called Planning Gain, the Property Advisory Group advised that planning obligations be used only to overcome legitimate planning objections to an application for planning permission and that the practice of bargaining with developers for planning gain was unacceptable. The report, which was criticised for taking too narrow an approach to the planning process, advocated that the Secretary of State should issue guidance. The Department of the Environment and the Welsh Office produced such guidance in 1983 in circular 22/83, which sought to control rather than exclude the pursuit of planning gain. In Scotland, the Scottish Development Department issued a circular in 1984, entitled Section 50 Agreements (SDD circular 22/1984). Current guidance on the use of planning obligations in Scotland is contained in the Circular (para 5 above). As I explain when addressing question (iv) below, this guidance, while an important statement of national policy, does not have the force of law. There was also a perceived risk that developers, who were each promoting a different site in a competition for what might be an exclusive permission to develop one of the sites, would offer to enter into an obligation with the planning authority to fund infrastructure or other community facilities which were unrelated or only marginally related to their developments. This practice similarly threatened to bring the planning system into disrepute, by creating the impression that they were buying planning permissions. In the heady days of the store wars, major supermarket chains competed with each other before planning authorities and in planning appeals to obtain permission to develop rival sites up and down the United Kingdom. This competition, which often involved offers to provide planning gain, led to authoritative judicial guidance on the relevance of a planning obligation to the grant or refusal of a planning permission, which I now consider under question (iii). Question (iii): the role of the planning obligation in the grant or refusal of planning permission What is the role of a planning obligation in the decision to grant or refuse planning permission? In Scotland that decision is governed by section 37(2) of the 1997 Act which requires that the planning authority have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations (para 25 above). In Tesco Stores Ltd v Secretary of State for the Environment (above) the House of Lords, when considering a legislative provision in identical terms (section 70(2) of the 1990 Act), gave guidance on the relevance of a planning obligation to the grant or refusal of planning permission. That guidance is not challenged in this appeal. In the leading speech, which Lord Keith of Kinkel delivered, the House held that for a planning obligation to be a material consideration, which it interpreted as a relevant consideration (764G), in the decision whether to grant planning permission, the obligation must have some connection with the proposed development which is not de minimis (ie too trifling for the law to be concerned with it). In what follows, I paraphrase the Latin phrase as trivial. Lord Keith described the relevance of a planning obligation in these terms (770A B): An offered planning obligation which has nothing to do with the proposed development, apart from the fact that it is offered by the developer, will plainly not be a material consideration and could be regarded only as an attempt to buy planning permission. If it has some connection with the proposed development which is not de minimis, then regard must be had to it. In that case, developers, including Tesco and Tarmac, which was associated with Sainsburys, competed to obtain planning permission for their sites for a superstore outside the centre of Witney in Oxfordshire. The Witney local plan proposed a new link road, including a new river crossing, to relieve traffic congestion. Tesco entered into a planning obligation with the planning authority under section 106 of the 1990 Act to fund that road. The Secretary of State on appeal favoured the Tarmac site and refused permission to the Tesco application, holding that the link road was not needed to enable any of the food stores to be developed or so directly related to any of the developments or the use of the land after completion that any of the developments should not be permitted without it. Tesco appealed under section 288 of the 1990 Act, arguing that the Secretary of State had erred in law in not treating the offer to fund in the planning obligation as a material consideration. The House held that the Secretary of State had correctly had regard to the offer but had chosen in the exercise of his planning judgement to attach little weight to it and so had not erred in law. No challenge was made in Tesco, in the House of Lords or in the courts below it, to the validity of the planning obligation: the question whether the obligation regulated the development of Tescos site was not put in issue and only Beldam LJ commented on the legality of an obligation to contribute money (para 43 above). The inclusion of a policy in the development plan, that the planning authority will seek such a planning obligation from developers, would not make relevant what otherwise would be irrelevant. Section 37(2) (para 25 above) requires the planning authority to have regard to the provisions of the development plan so far as material to the application and treats its provisions as a relevant consideration only to that extent. Thus, a green belt policy will be relevant to an application if the site of the application falls within the specified green belt and a requirement that a certain amount of open space is provided in a proposal for residential development will be relevant to an application for residential development. Similarly, a requirement in the plan that an applicant should agree to contribute to the cost of offsite infrastructure, which is related to its development, will be relevant to the application. But the words, which I have emphasised, mean that if a planning obligation, which is otherwise irrelevant to the planning application, is sought as a policy in the development plan, the policy seeking to impose such an obligation is an irrelevant consideration when the planning authority considers the application for planning permission. It is important to recall that the question whether a benefit conferred by a planning obligation is a material consideration in the determination of an application for planning permission is quite separate from the question whether a planning obligation restricts or regulates the development or use of a particular piece of land. Thus, to use the example of the farmer with two farms, A and B. He wishes to develop farm A and is prepared to enter into a planning obligation to restrict the development or use of farm B in the context of his negotiation of a permission for farm A. The legality of the planning obligation in relation to farm B will depend, among other things, on whether it restricts or regulates the development or use of farm B. The relevance of the planning obligation to the determination of the application in relation to farm A depends upon there being a more than trivial connection between the benefit conferred by controlling farm B and the development of farm A, as the Tesco case decided. Question (iv): The boundary between questions of legality and questions of policy Relevant ministerial guidance which sets out national planning policy is unquestionably a material consideration for any planning authority when it determines applications for planning permission. A failure by a planning authority to take into consideration national guidance, such as that in the Circular (para 5 above) on the tests which a planning authority should apply when deciding whether to seek a planning obligation, would be unlawful. Further, if a planning authority were to depart from national planning guidance when refusing an application for planning permission, it might risk an appeal by the disappointed applicant to the Scottish Ministers. But a decision by the planning authority is not illegal if it departs from ministerial guidance in a planning circular, provided that the authority has treated that guidance as a relevant consideration when it reached its decision. In Tesco (above) Lord Hoffmann pointed out (780F G) that the law has always made a clear distinction between the question of whether something is a material consideration and the weight which it should be given. The former is a question of law; the latter is a matter for the planning judgement of the planning authority. Accordingly, a failure by a planning authority to have regard to relevant guidance as a material planning consideration would be an error of law. A decision, after considering the guidance, not to follow it, would (absent another ground of challenge in administrative law) be a matter of planning judgement, in which the courts have no role. The legality of Elsicks planning obligation What is the nature of the scheme which the SG has established? First, it involves the payment by developers of financial contributions towards the funding of specified transport infrastructure in and around Aberdeen, principally through the mechanism of planning obligations. It involves the pooling of the contributions and no one developer is liable for the costs of any of the specified interventions (paras 1.5 and 3.3 and Appendix 2). Secondly, the obligation to contribute to the Fund is in addition to the requirement that a developer mitigate impacts specific to its development (para 4.8). Thirdly, the contributions from residential developers are fixed at a sum per unit (Table 1 summarised in para 12 above). Fourthly, those payments are not tied to the impact of a particular development on the transport network. The original table 7.2 in the CTA suggested that there was no connection between traffic generated by certain developments and the need to intervene at particular hotspots. The revised table 7.2 which is referred to in para 7.3 of the SG and reproduced in Appendix 2 shows that some vehicles from each of the developments will use the proposed infrastructure but in many cases such use is at a very low level. Fifthly, the opt out which para 5.4 of the SG offers (para 13 above) does not make the scheme voluntary in any real sense. The developer is still expected to provide a contribution towards the cumulative impact of the developments on infrastructure over and above the impact of its individual development and the paragraph understandably expresses doubt whether a developer could create the needed assessment, design and provide for the necessary mitigation measures. Unless a developer were able to perform this daunting task and persuade the planning authority that it was robust, it is clear that the scheme envisages that it would not obtain planning permission for its development. Sixthly, the statement in para 6.1 that the use of any planning obligation shall follow the guidance in the Circular is inconsistent with the nature of the scheme. This is because the pooling of fixed per unit contributions towards the funding of infrastructure interventions, which include many on which a particular developments impact is minimal, does not meet the criterion in the Circular that the obligation is fairly and reasonably related in scale and kind to the proposed development. The statement which the Scottish Ministers inserted into the SG therefore is no safeguard. As the Lord President has observed, there appears to be much that can be said in favour of such a scheme. It enables a planning authority to facilitate development within its area. Inclusion of such a scheme in a development plan allows a public debate during the statutory process of the approval of the plan. The scheme allows developers in the area to assess the viability of their proposed developments knowing the extent of their liability to the Fund before they spend large sums pursuing their applications. In England and Wales Part 11 of the Planning Act 2008, which provided for a community infrastructure levy, was enacted to achieve similar ends. But the 1997 Act does not allow for such a scheme. The Inner House has found that the connection between certain developments, including the development at Elsick, and some of the interventions which the pooled Fund is intended to finance is at best trivial. The illegality of the scheme is not because it does not comply with the Circular. The guidance in the Circular is simply a material consideration which the planning authority must take into account when deciding whether to grant planning permission. The weight which the planning authority attaches to such guidance is a matter of planning judgement. The scheme of the SG and the planning obligations which it promotes are unlawful for two separate reasons. First, the requirement imposed on a developer to contribute to the pooled Fund, which is to finance the transport infrastructure needed to make acceptable all of the developments which the development plan promotes, entails the use of a developers contribution on infrastructure with which its development has no more than a trivial connection and thus is not imposed for a purpose in relation to the development and use of the burdened site as section 75 requires. Further, the Council did not include any provision in the planning obligation restricting the development of the Elsick site until a contribution was made. Instead it resolved to grant planning permission for the development but to issue that permission only once Elsick had entered into the obligation. The planning obligation was therefore neither restricting nor regulating the development of the Elsick site and so was outside the ambit of section 75. Secondly, Tesco (above) establishes that for a planning obligation, which is to contribute funding, to be a material consideration in the decision to grant planning permission, there must be more than a trivial connection between the development and the intervention or interventions which the proposed contribution will fund. The planning obligation which Elsick entered into could not be a relevant consideration in the grant of the planning permission. In my view, it was not within the power of the planning authority to require a developer to enter into such an obligation which would be irrelevant to its application for permission as a precondition of the grant of that permission. If planning authorities in Scotland wish to establish a local development land levy in order to facilitate development, legislation is needed to empower them to do so. Conclusion I would dismiss the appeal.

UK-Abs

The Appellant is a strategic development planning authority for the Aberdeen region. In February 2013, it produced draft supplementary planning guidance in support of its proposed strategic development plan for its area. This guidance allowed for a Strategic Transport Fund (the Fund) to deliver infrastructure needed because of proposed development in four strategic growth areas. In substance, the guidance required developers to enter into planning obligations under the Town and Country Planning (Scotland) Act 1997 (the 1997 Act) with the Appellant to make financial contributions to the Fund. Such contributions were to be pooled and spent on required infrastructure. The Respondent property developer objected to the draft supplementary planning guidance. It sought removal of reference to the Fund from the proposed strategic development plan on the basis that it was contrary to Scottish Government guidance on planning obligations (The Circular). The Respondent asserted that the contribution it was required to pay to the Fund was disproportionate to the infrastructure demands created by its development. In the meantime, the Respondent voluntarily entered into a planning obligation under s75 of the 1997 Act to contribute to the Fund in terms of the draft supplementary guidance but on the basis that no contributions would be paid if the guidance was found to be invalid. The Appellant adopted the supplementary guidance after making an amendment advised by the Scottish Ministers to the effect that the use of any planning obligation should follow the advice in the Circular. As adopted, the supplementary guidance listed the cumulative infrastructure requirements identified by the cumulative transport appraisal (CTA) for the area. These requirements had been revised following criticism by the Reporter appointed by the Scottish Ministers that it had not been demonstrated that there was a clear and direct relationship between the development contributing to the Fund and the infrastructure which would be delivered. Upon appeal by the Respondent, the Inner House of the Court of Session quashed the supplementary guidance on the basis that, notwithstanding the amendments made thereto, the obligation to contribute to the pooled Fund breached the Circular and such a planning obligation must fairly and reasonably relate to the permitted development. The Appellant appealed to the UKSC and argued, amongst other things, that the policy tests in the Circular were not part of the legal tests for the validity of a planning obligation. The Supreme Court unanimously dismisses the Appellants appeal. Lord Hodge gives the lead judgment with which the other Justices agree. An approved strategic development plan is of central importance to planning decisions under the 1997 Act [25]. Supplementary guidance deals with the provision of further information in respect of proposals set out in the plan [24]. Planning obligations in terms of s75 of the 1997 Act do not necessarily need to relate to a particular permitted development on the burdened land. A planning obligation may be entered into in circumstances which are not connected with any planning application [38]. For instance, a planning authority may contract for the payment of financial contributions towards certain infrastructure necessitated by the cumulative effect of various developments, so long as the land which is subject to the obligation contributes to that cumulative effect [41]. However, it is not lawful to restrict the commencement of development by planning obligation until the developer undertakes to make a financial contribution towards infrastructure which is unconnected with the development of the site [42 43]. If such a planning obligation were lawful, an authority could use an application to extract benefits which are unrelated to the proposed development [44]. Moreover, it is not lawful to require contributions towards such infrastructure in a planning obligation which does not restrict the development of the site by means of a negative suspensive condition, as such a planning obligation would neither restrict nor regulate the development of the site in terms of s75 [43]. In determining a planning application, the authority must take into consideration material provisions of the development plan and other material considerations. For a planning obligation to be material it must have some connection with the proposed development which is not trivial [47 48]. If a planning obligation, which is otherwise irrelevant to the application, is sought as a policy in the development plan, the policy seeking to impose such an obligation is an irrelevant consideration for determination of the planning application [51]. In the instant case, the scheme established in the supplementary guidance involved the pooling of payments which were not tied to a particular development [56]. The opt out did not make the scheme voluntary in any real sense [57]. The 1997 Act does not allow for such a scheme. The supplementary guidance and the planning obligations which it promotes are unlawful for two reasons [60]. Firstly, the use of the developers contribution to the pooled Fund on infrastructure with which its development has no more than a trivial connection means that the planning obligation is not imposed for a purpose related to the development and use of the burdened site as required by s75, [61] nor did the planning obligation restrict or regulate the development within the meaning of s75 [62]. Secondly, the planning obligation entered into by the Respondent was an irrelevant consideration in terms of a planning application because there was only a trivial connection between the development and the infrastructure intervention(s) which the proposed contribution would fund. An authority is not empowered to require a developer to enter into an obligation which would be irrelevant to an application for permission as a precondition of the grant of that permission [63]. The scheme was not unlawful because it did not comply with the Circular. The Circular was simply a material consideration which was required to be taken into account but not necessarily followed [53 54; 60].

When an injunction is obtained against an innocent intermediary to prevent the use of his facilities by wrongdoers for unlawful purposes, who should pay the cost of complying with the order? The respondents are three Swiss or German companies belonging to the Richemont Group. They design, manufacture and sell luxury branded goods such as jewellery, watches and pens under well known trade marks including Cartier, Montblanc and IWC. The internet has provided infringers with a powerful tool for selling counterfeit copies of branded luxury goods, generally of lower quality than the genuine article and at lower prices. It allows them access to a world wide market, as well as a simple way of concluding sales and collecting the price with practically complete anonymity. This illicit business is carried out on a large scale. The evidence is that at the outset of this litigation the respondents alone had identified some 46,000 websites offering infringing copies of their branded goods. The two appellants and three other defendants in the proceedings below (who did not participate in this appeal) are the five largest internet service providers (or ISPs) serving the United Kingdom, with a combined market share exceeding 90%. They provide networks by which subscribers are able to access content on the internet. But they do not provide or store content. They are not even in a position to monitor it, for even if that was technically feasible given the volume of internet traffic, they are forbidden to do so by law. They have no contractual relationship with the operators of websites accessed through their networks, and are not necessarily in a position even to identify them. They do not therefore themselves use or infringe the marks or aid or abet others to do so. Nonetheless, the facilities which they provide for their subscribers are a critical means by which the sellers of infringing goods are able to reach their customers. On 17 October and 26 November 2014 the respondents obtained injunctions from Arnold J requiring the appellant ISPs to block or attempt to block access to specified target websites, their domains and sub domains and any other IP address or URL notified to them whose purpose is to enable access to a target website. Website blocking injunctions have become a familiar weapon in the continuing battle between the holders of intellectual property rights and infringers. There is an express statutory power to make such orders to protect copyrights under section 97A of the Copyright, Designs and Patents Act 1988. In Twentieth Century Fox Film Corpn v British Telecommunications plc [2012] 1 All ER 806 and Twentieth Century Fox Film Corpn v British Telecommunications plc (No 2) [2012] 1 All ER 869, Arnold J dealt with a number of issues concerning website blocking injunctions in copyright cases. Since then similar injunctions have been granted on 17 occasions against the appellant ISPs on the application of copyright owners, and they have achieved a high degree of standardisation. Their use seems likely to increase. This is the first case in which a website blocking injunction has been granted to protect a trade mark. There is no specific statutory provision relating to trade marks corresponding to section 97A of the Copyright, Designs and Patents Act 1988. There was a major issue in the courts below about the jurisdiction of the court to make such an injunction under the general power conferred on the court by section 37(1) of the Senior Courts Act 1981. There were also issues about some of the criteria for granting them. The Court of Appeal upheld the decision of Arnold J on these points, and they are no longer in issue. This appeal is concerned with costs, and in particular with the costs to the ISPs of implementing website blocking orders. Implementation costs vary according to the technology employed and the ISPs business model. But they fall, broadly speaking, under five heads: (i) the cost of acquiring and upgrading the hardware and software required to block the target sites; (ii) the cost of managing the blocking system, including customer service, and network and systems management; (iii) the marginal cost of the initial implementation of the order, which involves processing the application and configuring the ISPs blocking systems; (iv) the cost of updating the block over the lifetime of the orders in response to notifications from the rights holders, which involves reconfiguring the blocking system to accommodate the migration of websites from blocked internet locations; and (v) the costs and liabilities that may be incurred if blocking malfunctions through no fault of the ISP, for example as a result of over blocking because of errors in notifications or malicious attacks provoked by the blocking. The ISPs do not complain about having to bear the costs under heads (i) and (ii). Most if not all of those would be incurred in any event for other reasons, for example to block access to child abuse images or to provide facilities for parental controls. The main question at issue on the present appeal is whether the rights holders should have been required as a term of the order to indemnify the ISPs for implementation costs under heads (iii), (iv) and (v). The practice since Twentieth Century Fox Film Corpn v British Telecommunications plc (No 2) [2012] 1 All ER 869 has been to order the rights holders to bear their costs of the unopposed proceedings to obtain website blocking orders but to leave the ISPs to bear the costs of implementing the orders. In his judgment in that case, at para 32, Arnold J justified leaving the ISPs to pay the costs of implementation on two grounds. The first was essentially a consideration of commercial equity: The studios are enforcing their legal and proprietary rights as copyright owners and exclusive licensees BT is a commercial enterprise which makes a profit from the provision of the services which the operators and users of [the target website] use to infringe the studios copyright. As such, the costs of implementing the order can be regarded as a cost of carrying on that business. Arnold Js second ground was that it was implicit in the EU Directives which require member states to make website blocking injunctions available. I shall return to this point when I come to deal with the Directives. At any rate, the practice proposed by Arnold J in 2011 has been followed ever since, and it was followed by Arnold J himself in this case. The majority of the Court of Appeal (Jackson and Kitchin LJJ, Briggs LJ dissenting) upheld him on this point also: [2017] Bus LR 1. Although the terms on which an injunction is granted are discretionary, the current practice has been adopted as a matter of principle and routinely applied. It is therefore necessary on this appeal for us to decide whether the principle is sound. That requires us to examine the legal basis on which website blocking injunctions are made. It is founded partly on domestic and partly on EU law. Domestic law For much longer than there has been an internet or EU Directives about it, the English courts have had jurisdiction in certain circumstances to order parties to assist those whose rights have been invaded by a wrongdoer. The historical origin of this jurisdiction is the bill of discovery in equity. The bill of discovery originated at a time when law and equity were separately administered. It was a proceeding in Chancery ancillary to proceedings against the wrongdoer at law, in which the sole relief sought was an order for disclosure for use in the principal proceedings. In Orr v Diaper (1876) 4 Ch D 92, the power to order disclosure was extended to a case where proceedings were not yet pending in another court, but the plaintiff wanted to know the names of those whom he might sue. Hall V C ordered the innocent carrier of cotton thread bearing the plaintiffs counterfeit trade mark to disclose the name of the shipper which was as yet unknown to the rights holder. This was a limited departure from the original principle. A more significant departure occurred with the decision of Lord Romilly MR in Upmann v Elkan (1871) LR 12 Eq 140. This decision marked the point at which the power to order a party to assist the plaintiff against a wrongdoer acquired a life of its own, independent of its origins in the bill of discovery. The facts were that the defendant freight forwarding agent was innocently in possession of consignments of counterfeit cigars in transit to Germany through a London dock. The action was not for discovery, but for an order restraining the forwarder from releasing the goods and an account of damages, on the footing that he had himself infringed the mark. The forwarder volunteered the names of the consignors and agreed to submit to whatever order the court should make. That left only the question of the costs of the action. Lord Romilly MR accepted that the forwarder was not an infringer, but thought that he would have been if after being told of the infringement he had not performed his duty. His duty in Lord Romillys view (p 145) was at once to give all the information required, and to undertake that the goods shall not be removed or dealt with until the spurious brand has been removed, and to offer to give all facilities to the person injured for that purpose. The decision was affirmed on appeal by Lord Hatherley LC: (1871) LR 7 Ch App 130. A century later, Lord Romillys judgment was the main basis in authority for the seminal decision of the House of Lords in Norwich Pharmacal Co v Customs and Excise Comrs [1974] AC 133. Norwich Pharmacal was an action against the Customs and Excise for an order that they disclose the identity of those who, by importing drugs the subject of the plaintiffs patent, had infringed it. The Customs and Excise, although they were not themselves infringers or in any other way culpable, had control over the goods at the point of importation. They were therefore unwittingly involved in the infringement although not party to it. The House of Lords held that disclosure should be ordered. The mere fact that the Commissioners possessed the relevant information was not enough to justify this result. The decisive factor was that they had themselves facilitated the tort, albeit innocently. Lord Reid stated the principle as follows at p 175B C: if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co operate in righting the wrong if he unwittingly facilitated its perpetration. The Norwich Pharmacal jurisdiction is commonly exercised for the purpose of assisting the claimant to bring or maintain proceedings against the wrongdoers, generally by providing information. But it is not limited to cases where proceedings against the wrongdoers are anticipated, or indeed to the provision of information. As Lord Fraser observed in British Steel Corpn v Granada Television Ltd [1981] AC 1096, 1200C G, the injunction is sought for the vindication of BSCs rights, and I do not think it matters whether separate proceedings are required for that purpose or not. This was confirmed by the House of Lords in Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033, para 3, and by the Supreme Court in Rugby Football Union v Consolidated Information Services Ltd (formerly Viagogo Ltd) [2012] 1 WLR 3333, para 15. The true basis of the courts intervention is that once the intermediary has been given notice of the infringement of the plaintiffs rights, his duty is to stop placing his facilities at the disposal of the wrongdoer. This is why it is critical that the intermediary should have been mixed up in the tortious acts of others. As it happened, the Commissioners of Customs and Excise were mixed up in the importation pursuant to a statutory duty. They could not therefore be required to do more than provide information so as to allow direct proceedings against the infringers to stop the importation. But an intermediary who was free to terminate his involvement in the infringing trade, like the freight forwarder in Upmann v Elkan, could have been required to do so. I suggested in Singularis Holdings Ltd v PricewaterhouseCoopers [2015] AC 1675, para 22, that the duty to assist identified by Lord Reid was not a legal duty in the ordinary sense of the term. As Lord Reid himself put it in Norwich Pharmacal, the intermediary came under the duty without incurring personal liability. This is really only another way of saying that the court had an equitable jurisdiction to intervene. Lord Kilbrandon put the point very clearly in his own speech. Citing the South African decision in Colonial Government v Tatham (1902) 23 Natal LR 153, 158, he said that the duty is said to lie rather on the court to make an order necessary to the administration of justice than on the respondent to satisfy some right existing in the plaintiff (p 205D E). It is not clear how the costs of compliance were dealt with in Norwich Pharmacal itself. The only member of the Appellate Committee to express a firm view in his speech was Lord Cross. The full costs of the respondent of the application and any expense incurred in providing the information, he observed at p 199G, would have to be borne by the applicant. Lord Reid, in the passage which I have quoted, tended to that view but more equivocally. The other members of the Appellate Committee agreed with the order proposed by Lord Reid, but without saying anything about compliance costs. Subsequent practice has, however, been consistent. The ordinary rule, absent exceptional circumstances, is that the intermediary is entitled to the costs of compliance. The reason was explained by Aldous LJ, delivering the judgment of the Court of Appeal in Totalise Plc v The Motley Fool Ltd [2002] 1 WLR 1233, para 29. The defendant operated an internet bulletin board for investors, on which account holders could post opinions and information. Totalise complained that one account holder was posting defamatory messages under a pseudonym, and obtained a Norwich Pharmacal injunction requiring disclosure of his name. The Court of Appeal, overruling the judge, held that the defendant should have both the costs of the proceedings and the costs of implementation. Aldous LJ said: Norwich Pharmacal applications are not ordinary adversarial proceedings, where the general rule is that the unsuccessful party pays the costs of the successful party. They are akin to proceedings for pre action disclosure where costs are governed by CPR r 48.3. That rule, we believe, reflects the just outcome and is consistent with the views of Lord Reid and Lord Cross in the Norwich Pharmacal case [1974] AC 133, 176, 199. In general, the costs incurred should be recovered from the wrongdoer rather than from an innocent party Each case will depend on its facts In a normal case the applicant should be ordered to pay the costs of the party making the disclosure including the costs of making the disclosure. A similar practice applies to the expense incurred by banks in complying with orders to disclose information for the purpose of enabling a party to trace the proceeds of fraud: Bankers Trust Co v Shapira [1980] 1 WLR 1274, 1281 1282 (CA). And to those incurred in complying with freezing orders: Z Ltd v A Z and AA LL [1982] QB 558, 575 (Lord Denning MR) and 586 (Kerr LJ). The latter practice is now embodied in the model wording in PD 25A of the Civil Procedure Rules. Other innocent third parties, such as port authorities required by a freezing order to detain a vessel in port, are entitled to the same indemnity: Clipper Maritime Co Ltd of Monrovia v Mineralimportexport [1981] 1 WLR 1262, 1263 1264. In Miller Brewing Co v Mersey Docks and Harbour Co [2004] FSR 5 an order for delivery up of goods bearing an infringing mark was made under sections 16 and 19 of the Trade Marks Act 1994. The goods were in the physical custody of the dock authority, which had no responsibility for the infringement. It was conceded that the dock authority should be indemnified against its costs of compliance, but there was an issue as to the costs of the litigation. This was not, of course, a Norwich Pharmacal application. But Neuberger J ordered that the trade mark proprietor should pay both, by analogy with the general rule on such applications. At para 30, he said: The logic behind that general rule is that, where an innocent third party has reasonably incurred legal costs to enable a claimant to obtain relief, then, as between the innocent third party and the innocent claimant, it is more unjust if the innocent third party has to bear his own legal cost than it is for the innocent claimant to pay them. After all, it is the claimant who is invoking the legal process to obtain a benefit, and the fact that the benefit is one to which he is legally entitled is not enough to justify an innocent third party having to be out of pocket. Website blocking orders clearly require more than the mere disclosure of information. But I think that it is clear from the authorities and correct in principle that orders for the disclosure of information are only one, admittedly common, category of order which a court may make against a third party to prevent the use of his facilities to commit or facilitate a wrong. I therefore agree with the view expressed by Briggs LJ in his dissenting judgment in the Court of Appeal that the website blocking order made in this case could have been made quite apart from the power derived from European law, on ordinary principles of equity. The Directives National laws concerning intellectual property rights, notably copyrights and trade marks, are partially harmonised by a series of EU Directives. In particular, the protection of intellectual property rights infringed through the internet has important implications for the free movement of goods and services and is for that reason the subject of an elaborate scheme of European legislation. It is contained in a number of Directives, of which three are relevant to the present issue. They are Parliament and Council Directives 2000/31/EC (the E Commerce Directive), 2001/29/EC (the Information Society Directive) and 2004/48/EC (the Enforcement Directive). The first two of these Directives were conceived as a coherent whole and should be read together. The third extended and strengthened the provisions for their enforcement. The E Commerce Directive is primarily concerned with the regulation of information society services. The definition of these services is borrowed from article 1(2) of Directive 98/34/EC as amended by article 1(2) of Directive 98/48/EC, which regulates the provision of information relating to technical standards and regulation in member states. They are services of a kind that are normally remunerated, and provided at a distance by means of electronic equipment for the processing and storage of data at the individual request of a recipient of the service. The definition includes ISPs, which merely provide a communications network, as well as a variety of other services such as web hosting, internet search engines, portals and internet payment systems. The purpose of the Directive is to enable the providers of information society services to operate across the European Union on a common legal basis. One of the main challenges in this field is the prospect of diverse national laws dealing with the use of the internet for illegal activities. The scheme of the Directive is that intellectual property rights continue to be governed by national law, as modified by the various harmonisation Directives, but the E Commerce Directive (i) restricts the ability of member states to impose licensing requirements on internet intermediaries and (ii) requires them to provide immunity from liability under their national laws in respect of a wide range of normal internet operations. At the same time, the Directive (iii) requires those who carry on certain operations to co operate in removing access to illegal material and provides, at this stage in very general terms, for ad hoc judicial intervention to stop illegal activity. The Directive recites: (40) Both existing and emerging disparities in member states legislation and case law concerning liability of service providers acting as intermediaries prevent the smooth functioning of the internal market, in particular by impairing the development of cross border services and producing distortions of competition; service providers have a duty to act, under certain circumstances, with a view to preventing or stopping illegal activities; this Directive should constitute the appropriate basis for the development of rapid and reliable procedures for removing and disabling access to illegal information; such mechanisms could be developed on the basis of voluntary agreements between all parties concerned and should be encouraged by member states; it is in the interest of all parties involved in the provision of information society services to adopt and implement such procedures (42) The exemptions from liability established in this Directive cover only cases where the activity of the information society service provider is limited to the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the information society service provider has neither knowledge of nor control over the information which is transmitted or stored. (43) A service provider can benefit from the exemptions for mere conduit and for caching when he is in no way involved with the information transmitted; this requires among other things that he does not modify the information that he transmits; this requirement does not cover manipulations of a technical nature which take place in the course of the transmission as they do not alter the integrity of the information contained in the transmission. (44) A service provider who deliberately collaborates with one of the recipients of his service in order to undertake illegal acts goes beyond the activities of mere conduit or caching and as a result cannot benefit from the liability exemptions established for these activities. (45) The limitations of the liability of intermediary service providers established in this Directive do not affect the possibility of injunctions of different kinds; such injunctions can in particular consist of orders by courts or administrative authorities requiring the termination or prevention of any infringement, including the removal of illegal information or the disabling of access to it. (46) In order to benefit from a limitation of liability, the provider of an information society service, consisting of the storage of information, upon obtaining actual knowledge or awareness of illegal activities has to act expeditiously to remove or to disable access to the information concerned; the removal or disabling of access has to be undertaken in the observance of the principle of freedom of expression and of procedures established for this purpose at national level; this Directive does not affect member states possibility of establishing specific requirements which must be fulfilled expeditiously prior to the removal or disabling of information. (47) Member states are prevented from imposing a monitoring obligation on service providers only with respect to obligations of a general nature; this does not concern monitoring obligations in a specific case and, in particular, does not affect orders by national authorities in accordance with national legislation. Articles 12 to 14 contain the limitations of liability referred to in recitals (46) and (47). These are the so called safe harbours. They provide that specified operations characteristic of the different kinds of information society service are not to give rise to liability. They are in the following terms: Article 12 Mere Conduit 1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, member states shall ensure that the service provider is not liable for the information transmitted, on condition that the provider: (a) does not initiate the transmission; (b) does not select the receiver of the transmission; and (c) does not select or modify the information contained in the transmission. 2. The acts of transmission and of provision of access referred to in paragraph 1 include the automatic, intermediate and transient storage of the information transmitted in so far as this takes place for the sole purpose of carrying out the transmission in the communication network, and provided that the information is not stored for any period longer than is reasonably necessary for the transmission. 3. This article shall not affect the possibility for a court or administrative authority, in accordance with member states legal systems, of requiring the service provider to terminate or prevent an infringement. Article 13 Caching 1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, member states shall ensure that the service provider is not liable for the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the informations onward transmission to other recipients of the service upon their request, on condition that: the provider does not modify the information; the provider complies with conditions on access (a) (b) to the information; (c) the provider complies with rules regarding the updating of the information, specified in a manner widely recognised and used by industry; the provider does not interfere with the lawful (d) use of technology, widely recognised and used by industry, to obtain data on the use of the information; and (e) the provider acts expeditiously to remove or to disable access to the information it has stored upon obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or an administrative authority has ordered such removal or disablement. 2. This article shall not affect the possibility for a court or administrative authority, in accordance with member states legal systems, of requiring the service provider to terminate or prevent an infringement. Article 14 Hosting 1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, member states shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that: (a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information. Paragraph 1 shall not apply when the recipient of the 2. service is acting under the authority or the control of the provider. 3. This article shall not affect the possibility for a court or administrative authority, in accordance with member states legal systems, of requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility for member states of establishing procedures governing the removal or disabling of access to information. Article 15(1) seeks to close an alternative route by which liability for content might be imposed on information society services. It provides: 1. Member states shall not impose a general obligation on providers, when providing the services covered by articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity. Article 18(1) foreshadows the more detailed provisions for judicial intervention in the following Directives. It provides: Article 18 Court actions 1. Member states shall ensure that court actions available under national law concerning information society services activities allow for the rapid adoption of measures, including interim measures, designed to terminate any alleged infringement and to prevent any further impairment of the interests involved. Articles 12 to 14 require member states to confer on information society services immunity from liability under their national laws for certain designated operations. Articles 12(1), 13(1) and 14(1) require that immunity to be conditional. The differences between the conditions in the three provisions reflect the different degrees of responsibility on the part of the information society service for the content of what is transmitted. The mere provision of a communications network (article 12) and caching (article 13) are to be immune for the reasons explained in recitals (42) and (43). They are passive, technical services involving no editorial function. The restriction on monitoring in article 15 means that they are unlikely to know and have no duty to discover the content of what is transmitted. By comparison, the corresponding immunity for hosting in article 14 is more strictly conditional because there is an editorial function, however minimal. The provider of the service holds selected content for distribution and has a direct relationship with the content provider. It is not a mere passive actor. It should be noted that the duty to stop illegal activities which is referred to in recital (40) applies only to caching and hosting. The immunity for caching is conditional on the service provider expeditiously removing or disabling access to information temporarily stored in the course of transmission once it knows that the information has been removed from the network or that access to it there has been disabled or that a relevant authority has required these measures: article 13(1)(e). The immunity for hosting requires the service provider to take the same steps as soon as it becomes aware of any illegality or of facts from which it is apparent: article 14(1)(b). The assistance to rights holders which is required of information society services engaging in caching or hosting under articles 13(1)(e) and 14(1)(b) respectively are not free standing obligations. They are conditions of the relevant immunity. The consequence of breach of those requirements is that the immunity is lost, but whether that results in liability will depend on the provisions of national law: see Google France SARL v Centre national de recherche en relations humaines (CNRRH) SARL (Joined Cases C 236/08 to C 238/08) [2011] Bus LR 1, para 107, and LOral SA v eBay International AG (Case C 324/09) [2012] Bus LR 1369, para 107. For present purposes, the important point is that there is no corresponding condition attached to acting as a mere conduit, which is the operation characteristic of an ISP. The immunity attached to that operation is not conditional on any active steps being taken other than compliance with court orders. I turn to the Information Society Directive, which is concerned with the protection of intellectual property rights. The Directive recites: (4) A harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure, and lead in turn to growth and increased competitiveness of European industry, both in the area of content provision and information technology and more generally across a wide range of industrial and cultural sectors. This will safeguard employment and encourage new job creation. (58) Member states should provide for effective sanctions and remedies for infringements of rights and obligations as set out in this Directive. They should take all the measures necessary to ensure that those sanctions and remedies are applied. The sanctions thus provided for should be effective, proportionate and dissuasive and should include the possibility of seeking damages and/or injunctive relief and, where appropriate, of applying for seizure of infringing material. (59) In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice to any other sanctions and remedies available, right holders should have the possibility of applying for an injunction against an intermediary who carries a third partys infringement of a protected work or other subject matter in a network. This possibility should be available even where the acts carried out by the intermediary are exempted under article 5. The conditions and modalities relating to such injunctions should be left to the national law of the member states. The relevant substantive provision for present purposes is article 8. Article 8(1) requires member states to provide in their national law appropriate sanctions and remedies for infringements of intellectual property rights. Article 8(2) deals in general terms with remedies by way of damages, injunctions and seizure of infringing articles. Article 8(3) provides: Member states shall ensure that right holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right. This provision depends on the third party being an infringer. It is immaterial whether the intermediary against whom an injunction is sought is also an infringer. He may or may not be, depending on the nature of the right infringed and the character of the intermediarys operations. The same point may be made about the Enforcement Directive, which lays down more detailed standards for the availability of remedies to protect intellectual property rights. In particular, it extends the requirement that there should be power to grant injunctions against intermediaries from copyrights and related rights to all intellectual property rights. Recitals (23) and (24) declare: (23) Without prejudice to any other measures, procedures and remedies available, right holders should have the possibility of applying for an injunction against an intermediary whose services are being used by a third party to infringe the right holders industrial property right. The conditions and procedures relating to such injunctions should be left to the national law of the member states. As far as infringements of copyright and related rights are concerned, a comprehensive level of harmonisation is already provided for in [the Information Society] Directive 2001/29/EC. Article 8(3) of Directive 2001/29/EC should therefore not be affected by this Directive. (24) Depending on the particular case, and if justified by the circumstances, the measures, procedures and remedies to be provided for should include prohibitory measures aimed at preventing further infringements of intellectual property rights. Moreover there should be corrective measures, where appropriate at the expense of the infringer, such as the recall and definitive removal from the channels of commerce, or destruction, of the infringing goods and, in appropriate cases, of the materials and implements principally used in the creation or manufacture of these goods. These corrective measures should take account of the interests of third parties including, in particular, consumers and private parties acting in good faith. The relevant substantive provisions are articles 3, 8 and 11. They provide: Article 3 General Obligation 1. Member states shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time limits or unwarranted delays. 2. Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. Article 8 Right of Information 1. Member states shall ensure that, in the context of proceedings concerning an infringement of an intellectual property right and in response to a justified and proportionate request of the claimant, the competent judicial authorities may order that information on the origin and distribution networks of the goods or services which infringe an intellectual property right be provided by the infringer and/or any other person who: (a) was found in possession of the infringing goods on a commercial scale; (b) was found to be using the infringing services on a commercial scale; (c) was found to be providing on a commercial scale services used in infringing activities; or (d) was indicated by the person referred to in point (a), (b) or (c) as being involved in the production, manufacture or distribution of the goods or the provision of the services. Article 11 Injunctions Member states shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Where provided for by national law, non compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance. Member states shall also ensure that right holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to article 8(3) of Directive 2001/29/EC. The E Commerce Directive was transposed into the United Kingdoms domestic law by the Electronic Commerce (EC Directive) Regulations (SI 2002/2013) and the Information Society Directive by the Copyright and Related Rights Regulations 2003 (SI 2003/2498). The latter instrument provides for injunctions in support of copyrights and performers rights. There has been no legislative transposition of the Enforcement Directive into domestic law. It was presumably considered that the right to apply for injunctions covered by article 11 of the Enforcement Directive in cases concerning intellectual property rights other than copyright and performers rights was already sufficiently provided for by the English case law. If that was the thinking then, as I have observed (para 15), I think that it was correct. Compliance costs Of the three Directives, only the Enforcement Directive makes any direct provision for the expense associated with the enforcement of judicial remedies, and even there the provision is limited. Article 10(2) imposes an obligation on member states to provide for courts to direct the destruction or the recall or removal from commerce of infringing goods at the expense of the infringer, unless particular reasons are invoked for not doing so. Article 15 provides for the publication of judicial decisions at the expense of the infringer. These provisions appear to reflect a general assumption that the infringer will be party to any litigation and will bear the costs of enforcing the rights holders rights against him. But although recital (59) of the Information Society Directive contemplates that the most effective way of putting an end to a course of infringement may be an injunction against an intermediary, none of the Directives deal in terms with the position on costs as between the rights holder and an information society service provider. The starting point for any analysis of that question is that the incidence of costs, whether of compliance or of the litigation, is a matter for national law. The general principle of EU law is that national courts apply EU law to issues before them in accordance with their own procedural rules. EU law may require particular remedies to be made available in national law, as the three Directives do. Otherwise it prescribes minimum standards which the available national law remedies must satisfy. These are embodied in the principle of effectiveness, which requires that remedies must be sufficient to ensure that a Directive and any directly applicable rules of EU law are fully effective; and the principle of equivalence, which requires that remedies for infringements of EU law are at least equivalent to those which would be available for infringements of corresponding rules of national law. In addition, and partly overlapping with the principle of effectiveness, article 3 of the Enforcement Directive requires that remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, and that they must be effective and proportionate. Within these broad limits, the terms on which an injunction is available in the High Court against an intermediary are a matter for English law and procedural practice. This is reflected in recital (59) of the Information Society Directive that the conditions and modalities of injunctions against intermediaries should be left to the national law of the member states, and the corresponding statement in recital (23) of the Enforcement Directive about the conditions and procedures relating to such injunctions. As the Court of Justice observed in LOral SA v eBay International AG (Case C 324/09) [2012] Bus LR 1369, paras 135 138, subject to the overriding requirement that the remedies ordered in the national court must be effective to achieve the objects of the Directive and consistent with its specific provisions, the rules for the operation of the injunctions for which the member states must provide under the third sentence of article 11 of the Directive, such as those relating to the conditions to be met and to the procedure to be followed, are a matter for national law. Cf Scarlet Extended SA v Socit belge des auteurs, compositeurs et editeurs SCRL (SABAM) (Case C 70/10) (2011) ECR I 11959, paras 32 33; Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA (SABAM) v Netlog NV (Case C 360/10) [2012] 2 CMLR 577, paras 30 31; Tommy Hilfiger Licensing LLC v Delta Center as (Case C 494/15) [2016] Bus LR 1008, para 32. In the Court of Appeal, Kitchin LJ considered that it was implicit in Recital (59) of the Information Society Directive and Recital (23) of the Enforcement Directive that it would be entirely appropriate for a national court to order that the costs of implementation of any such injunction should be borne by the intermediary (para 144). He suggested that the scheme of the Directives was that liability to bear the costs of compliance was the quid pro quo for the immunities in the safe harbour provisions and the exclusion of a general monitoring obligation in articles 12 to 15 of the E Commerce Directive. As Jackson LJ put it in his short concurring judgment, the compliance costs are part of the price which the ISPs must pay for the immunities which they enjoy under the directives (para 214). Finally, Kitchen LJ found support for this analysis in the reasoning of the Court of Justice in LOral and in UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH (Case C 314/12) [2014] Bus LR 541. With respect, I cannot agree with any of this. My reasons are as follows: (1) The two recitals refer the terms of an injunction against an intermediary to national law without any indication one way or the other of what it would be appropriate for national law to say about them. The mere fact of referring them to national law indicates that a diversity of national solutions may be equally consistent with EU law. (2) The main problem about the quid pro quo argument is that it assumes what it seeks to prove. If the Directives required intermediaries to bear the costs of complying with injunctions against them, that might at least arguably be regarded as the quid pro quo for the immunities in articles 12 to 15. But since the Directives do not deal at all with the incidence of compliance costs when an injunction is obtained against an intermediary, there is nothing from which such an inference could be drawn. (3) The true rationale of the immunities is explained in the recitals. It is that disparities between national laws on liability are apt to distort the functioning of the single market, and that the intermediaries have little or no control over content. It has nothing to do with the incidence of compliance costs when an injunction is granted. Even without the immunities, a mere conduit such as an ISP, whose operations are limited to the provision of a communications network, would not have been liable for infringing a trade mark, although without the immunities caching might give rise to liability for breach of copyright. The only context in which it might make sense to speak of a quid pro quo is the condition relating to removing or disabling access to illegal content in the case of caching and hosting under articles 13 and 14. But the quid pro quo in those cases is the removal of the offending content, not the bearing of the associated cost. (4) The judgment in LOral has nothing to do with this issue. The trade mark proprietor was claiming (among other things) that an injunction should issue against eBay under article 11 of the Enforcement Directive requiring it to stop people selling infringing goods on its website. All that the Court of Justice said about costs (at para 139) was that to impose a general monitoring obligation on an on line market place like eBay would be inconsistent with article 15(1) of the E Commerce Directive (which forbids member states to impose such an obligation) and with article 3(1) of the Enforcement Directive (which requires that national measures shall not be unnecessarily complicated or costly). This means that any injunction granted under article 11 could not impose such an obligation. But I am unable to deduce from this, as Kitchin LJ seems to have done, that costs of compliance are in principle for the intermediary to bear. The Court said nothing about the incidence of compliance costs but only that so far as they are to be borne by the intermediary they must not be excessive. (5) The same point may be made about UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH (Case C 314/12) [2014] Bus LR 541. The issue in that case was whether a website blocking injunction should have been granted against the intermediary to block the streaming of films which infringed the claimants copyrights. There was no issue about the costs of compliance. The Court of Justice observed (para 50) that in deciding whether to grant an injunction, the national court must bear in mind that it constrains its addressee in a manner which restricts the free use of the resources at his disposal because it obliges him to take measures which may represent a significant cost for him. This certainly assumed that the compliance costs would be for the intermediarys account. In the case of Austria, from which the reference had come, that assumption was correct. It appears from the material placed before us that the Austrian statute empowering the courts to grant website blocking injunctions is interpreted as requiring the intermediary the costs of compliance: see Allegro Filmverwertungsgesellschaft mbH v A1 Telekom Austria AG (Austrian Supreme Court, 19 May 2015), para 3.2. The Court of Justice was not suggesting that the same incidence of compliance costs would necessarily be the appropriate rule in other national jurisdictions. It could hardly have done so consistently with the assignment of such questions to national law. The effect of the decision as far as compliance costs are concerned is not that they must be borne by the intermediaries, but that if they are, then they must not be excessive. to bear In my opinion the incidence of compliance costs is a matter for English law, within the broad limits set by the EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair, proportionate and not unnecessarily costly. As a matter of English law, the ordinary principle is that unless there are good reasons for a different order an innocent intermediary is entitled to be indemnified by the rights holder against the costs of complying with a website blocking order. The position in relation to website blocking orders is no different in principle from the established position in domestic law in the case of Norwich Pharmacal orders, freezing orders and other injunctions granted to require an innocent party to assist the claimant in the assertion of its rights against a wrongdoer. Like other common law systems (with the significant exception of the United States), English practice on the incidence of costs generally depends on the legal distribution of risk as found by the court. In this respect it differs from many civil law systems, in which losses arising from litigation lie where they fall, absent some specific legal entitlement. In jurisdictions where that is the basic principle, the question is whether there is anything in the Directives to require an intermediary to be indemnified against compliance costs when nothing in domestic law requires them to do so. This was, for example, how the matter was approached by the Cour de Cassation of France in a recent decision on compliance costs associated with website blocking injunctions. Having established that the provisions of the E Commerce Directive do not preclude the cost of the measures strictly necessary for preserving the rights in question from being borne by the technical intermediaries, they then inquired whether there was any specific provision of French law entitling the intermediaries to their costs. There being none, they left the ISPs to bear that burden: Socit Franaise du Radiotlphone v Union des Producteurs de Cinema, 1e Civ, 6 July 2017. Much depends on ones starting point. In English law, the starting point is the intermediarys legal innocence. An ISP would not incur liability for trade mark infringement under English law, even in the absence of the safe harbour provisions of the E Commerce Directive. National law could not attach liability to the intermediarys involvement consistently with those provisions. An ISP serving as a mere conduit has no means of knowing what use is being made of his network by third parties to distribute illegal content. Even when it is informed of this, it does not have the limited duty to take proactive steps to stop access to illegal content which is implicit in the conditions governing the immunities for caching and hosting. Its only duty is to comply with an order of the Court. There is no legal basis for requiring a party to shoulder the burden of remedying an injustice if he has no legal responsibility for the infringement and is not a volunteer but is acting under the compulsion of an order of the court. It has sometimes been suggested that because ISPs benefit financially from the volume and appeal of the content available on the internet, including content which infringes intellectual property rights, it is fair to make them contribute to the cost of enforcement. This appears to have been the view of Arnold J in Twentieth Century Fox Film Corpn v British Telecommunications plc (No 2) [2012] 1 All ER 869, para 32. It was certainly a significant part of the reasoning of the Irish Court of Appeal (endorsing the judgment of Cregan J [2015] IEHC 317) in Sony Music Entertainment (Ireland) Ltd v Universal Music Ireland [2016] IECA 231, paras 77 80. The difficulty that I have with it as a matter of English law is that it assumes a degree of responsibility on the part of the intermediary which does not correspond to any legal standard. The suggestion appears to be that there is a moral or commercial responsibility in the absence of a legal one. But the law is not generally concerned with moral or commercial responsibilities except as an arguable basis for legal ones. Even if a moral or commercial responsibility were relevant, I would find it hard to discern one in a case like this. Website blocking injunctions are sought by rights holders in their own commercial interest. They are wholly directed to the protection of the claimants legal rights, and the entire benefit of compliance with the order inures to the rights holder. The protection of intellectual property rights is ordinarily and naturally a cost of the business which owns those rights and has the relevant interest in asserting them. It is not ordinarily or naturally a cost of the business of an ISP which has nothing to do with the rights in question but is merely providing a network which has been abused by others. There is therefore no reason why the rights holder should be entitled to look for contribution to the cost of defending his rights to any one other than the infringers. It is true that there is a public interest in the enforcement of intellectual property rights just as there is, in varying degrees, in the enforcement of any legal rights. Intellectual property rights are created by law as a reward for innovation and enterprise which confer wider public benefits. But I cannot see that this makes any difference to the analysis. It supplies the reason why the rights exist, but the public interest in their enforcement is not wider or different from the private interest of the rights holders. It follows that in principle the rights holders should indemnify the ISPs against their compliance costs. That is subject to the bounds which EU law sets on the power to grant relief. But there is no reason to believe that these bounds would be exceeded by such an indemnity. The indemnity must be limited to reasonable compliance costs. The evidence is that the compliance costs resulting from any one order are in fact modest. It is not suggested, nor is there any basis for suggesting that they are excessive, disproportionate or such as to impair the respondents practical ability to enforce their trade marks. Nor have any other grounds been proposed for withholding the indemnity on discretionary grounds. It is critical to these conclusions that the intermediary in question is legally innocent. The appellants in this case are legally innocent because they are mere conduits. Different considerations may apply to intermediaries engaging in caching or hosting governed by articles 13 and 14 of the E Commerce Directive, because these operations involve a greater degree of participation in the infringement, which is more likely to infringe national laws protecting intellectual property rights if the conditions of immunity are not satisfied. That must, however, depend on the precise facts and on the relevant provisions of national law. For my part, I would not accept that the mere fact, without more, that the immunities of intermediaries under articles 13 or 14 of the E Commerce Directive are conditional on active steps being taken against the infringer in certain circumstances, is enough to require a court to make intermediaries covered by those articles pay the costs of compliance. Costs of the litigation Intermediaries very rarely resist website blocking orders, although they do insist that the claimant should obtain an order in order to protect themselves against regulatory restrictions on interfering in network communications, and complaints by third parties on various grounds. The practice in such cases should normally be to award them their costs of the action. In this case, Arnold J awarded costs against the ISPs because they had made the litigation a test case for the jurisdiction to make the order at all and had strenuously resisted the application. In the circumstances, he was plainly entitled to exercise his discretion concerning the costs of the litigation in the way that he did. Disposal I would allow the appeal so far as concerns the costs of complying with Arnold Js orders dated 11 November and 5 December 2014 and would vary para 12 of the orders so as to provide that the respondents shall indemnify the appellants in respect of the appellants reasonable costs of processing and implementing paras 1 10 of the orders in categories (iii), (iv) and (v) mentioned in para 5 above. The parties should endeavour to agree the exact form of order.

UK-Abs

The respondents are three Swiss or German companies which design, manufacture and sell luxury goods under well known trade marks. The appellants are the five largest internet service providers (ISPs) serving the UK. The respondents sought injunctions requiring the ISPs to block or attempt to block access to specified target websites, which were advertising and selling counterfeit copies of the respondents goods, in addition to various other internet addresses whose purpose is to enable access to a target website. The ISPs provide networks by which subscribers access content, but they neither provide nor store content. They do not themselves infringe the relevant trade marks. The judge granted the injunction and ordered the ISPs to pay the costs, including the costs of implementing the website blocking order. The Court of Appeal dismissed the ISPs appeal. This appeal to the Supreme Court is concerned only with costs. The main issue whether the respondents should have been required to bear various costs of implementing the website blocking order. The Supreme Court unanimously allows the appeal, so far as concerns the cost of complying with the injunction. The respondents will be ordered to indemnify the ISPs for the disputed implementation costs, but the judge was entitled to order the ISPs to pay the litigation costs. Lord Sumption gives the judgment, with which the other Justices agree. The English courts have long had jurisdiction in certain circumstances to order innocent parties to assist those whose rights have been invaded by a wrongdoer. That includes the jurisdiction exercised in Norwich Pharmacal Co v Customs and Excise Coms [1974] AC 133 which is commonly exercised for the purpose of assisting claimants to bring or maintain proceedings against wrongdoers, generally by ordering innocent intermediaries to provide information. The ordinary rule is that the intermediary is entitled to the costs of compliance with a Norwich Pharmacal order. Orders for the disclosure of information are only one category of order which can be made against a third party to prevent the use of his facilities for wrongdoing [8 12]. National laws concerning intellectual property rights are partially harmonised by a series of EU Directives, of which three are relevant: the E Commerce Directive 2000/31/EC, the Information Security Directive 2001/29/EC and the Enforcement Directive 2004/48/EC. The E Commerce Directive requires Member States to introduce limitations of liability (safe harbours) in respect of certain activities undertaken by information society services, which include ISPs [16 17]. None of the Directives deals expressly with the costs of enforcing a judicial remedy, as between the rights holder and an information society service [28]. In the Court of Appeal, Kitchen LJ viewed the recitals to the E Commerce Directive as implicitly supporting an order for the intermediary to bear the implementation costs. He suggested that, under the Directives, liability for the costs of compliance was the quid pro quo of the immunities and the absence of any general obligation owed by ISPs to monitor information which they transmit or store. Kitchen LJ found support for his analysis in the reasons of the Court of Justice of the EU (CJEU) in LOral SA v eBay International AG (Case C 324/09) [2012] Bus LR 1369 and UPC Telekabel Wien GmbH v Constantin Film Verleigh GmbH (Case C 314/12) [2014] Bus LR 541 [28 29]. The Supreme Court disagrees. First, the recitals refer the terms of an injunction against an intermediary to national law, without any further guidance [30(1)]. Second, the quid pro quo argument assumes what it seeks to prove: the Directives do not deal at all with the costs of complying with an injunction against an intermediary, so there is nothing from which such an inference could be drawn [30(2)]. Third, the rationale of the immunities, as explained in the recitals, is that disparities between national laws on liability can distort the functioning of the single market, and that the intermediaries have little or no control over content. It has nothing to do with the incidence of compliance costs when an injunction is granted [30(3)]. Fourth, the CJEU authorities say nothing about the incidence of compliance costs but only that, so far as they are to be borne by the intermediary, they must not be excessive [30(4), (5)]. The incidence of compliance costs is a matter for English law, within the broad limits set by the EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair proportionate and not unnecessarily costly. In English law, the incidence of costs generally depends on the legal distribution of risk as found by the court. An innocent intermediary is ordinarily entitled to be indemnified by the rights holder against the costs of complying with a website blocking order. That is no different in principle from the established position in domestic law in the case of other orders granted to require an innocent party to assist the claimant against a wrongdoer. An ISP serving as a mere conduit would not incur liability for trade mark infringement under English law even in the absence of the safe harbour provisions. There is no legal basis for requiring a party to shoulder the burden of remedying an injustice if he has no legal responsibility and is acting under the compulsion of an order of the court [31 33]. It has sometimes been suggested that because ISPs benefit financially from the volume and appeal of the content available on the internet, including content which infringes intellectual property rights, it is fair to make them contribute to the cost of enforcement. That assumes a degree of responsibility on the part of the intermediary which does not correspond to any legal standard. The law is not generally concerned with moral or commercial responsibilities except as an arguable basis for legal ones. Even if a moral or commercial responsibility were relevant, it would be hard to discern one in a case like this. Website blocking injunctions are sought by rights holders in their own commercial interest. There is no reason why the rights holder should be entitled to look for a contribution to the cost of defending his rights from anyone other than the infringers [34 35]. It follows that in principle the rights holders should indemnify the ISPs for the compliance costs, subject to the limits on relief set by EU law. There is no reason to believe that such an indemnity, which must be limited to reasonable costs, would exceed those limits. The costs are not excessive, disproportionate or such as to impair the respondents ability to enforce their rights. Critically, the intermediary in this case is legally innocent. Different considerations may apply to those engaging in caching or hosting, which involve greater participation in the infringement and which are more likely to infringe national intellectual property laws if safe harbour immunity is unavailable [36 37]. As to the costs of the litigation, the judge awarded them against the ISPs because, unusually, they had made the litigation a test case and had strenuously resisted the application. He was plainly entitled to do so [38].

This appeal raises the issue whether the daily vessel operating expenses of shipowners incurred while they were negotiating to reduce the ransom demands of pirates should be allowed in general average ie whether those expenses should be shared proportionately between all those whose property and entitlements were imperilled as a result of that seizure or whether they must be borne by the shipowner alone. General average and the York Antwerp Rules General average refers to the system of maritime law by which sacrifices of property made, and loss and expenditure incurred, as a direct result of actions taken for the purpose of preserving a common maritime adventure from peril are rateably shared between all those whose property is at risk in the adventure. The principle of rateable sharing of such losses between parties to a maritime adventure appears to date back at least to the law of the Rhodians. Having been adopted by the Romans, it passed on a customary basis into European sea laws of the Middle Ages, and thence into modern European Codes. It appears that the expression general average started to be used in English judgments around the end of the 18th century and was first authoritatively discussed judicially in this country by Lawrence J in Birkley v Presgrave (1801) 1 East 220, 228 229. It was first recognised statutorily in section 66 of the Marine Insurance Act 1906. The York Antwerp Rules are an internationally agreed sets of rules, the first set (under that name) propounded in 1877, since when they have gone through a number of versions. The latest version was agreed in 2016. The Rules are designed to achieve uniformity in ascertaining which losses fall within the principle, in determining the method of calculating those losses, and in deciding how they are to be shared. Although internationally agreed between relevant expert and interested bodies, the Rules are not the subject of English legislation or international convention, and they derive legal force only through contractual incorporation. In the present case the 1974 version of the Rules was contractually incorporated into the relevant carriage contract. I will refer to that version as the Rules. The Rules are in English and French, and for the most part I shall confine myself to the English version. The Rules are introduced by a Rule of Interpretation, which states that: In the adjustment of general average the following lettered and numbered Rules shall apply to the exclusion of any Law and Practice inconsistent therewith. Except as provided by the numbered Rules, general average shall be adjusted according to the lettered Rules. The seven lettered Rules are shortly expressed and are plainly intended to be of general application, whereas most of the 22 numbered Rules are lengthier, a few of them much lengthier. Three of the lettered Rules are of particular relevance to this appeal, namely Rules A, C, and F. Rule A is in these terms: There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure. Rule C provides: Rule F states: Only such losses, damages or expenses which are the direct consequence of the general average act shall be allowed as general average. Loss or damage sustained by the ship or cargo through delay, whether on the voyage or subsequently, such as demurrage, and any indirect loss whatsoever, such as loss of market, shall not be admitted as general average. Any extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided. The numbered Rules play no part in these proceedings, save that some reliance has been placed on Rule XI. That Rule is concerned with Wages and Maintenance of Crew and other expenses bearing up for and in a Port of Refuge etc, and is the second longest of the Rules. It provides among other things for crew wages and maintenance to be recoverable in general average where Rule XI applies. The factual background On 29 January 2009 the chemical carrier MV Longchamp (the vessel) was transiting the Gulf of Aden on a voyage from Rafnes, Norway, to Go Dau, Vietnam, laden with a cargo of 2,728.732 metric tons of Vinyl Chloride Monomer in bulk (the cargo). The cargo was carried under a bill of lading dated 6 January 2009 which stated on its face that General Average, if any, shall be settled in accordance with the York Antwerp Rules 1974. At 06.40, seven heavily armed pirates boarded the vessel. The pirates commanded the master to alter course towards the bay of Eyl, Somalia, where she arrived and dropped anchor at 10.36 on 31 January 2009. At 14.05 on 30 January 2009 a negotiator for the pirates boarded the vessel and demanded a ransom of US$6m. The vessels owners (the owners) had meanwhile formed a crisis management team who had set a target settlement figure of US$1.5m. On 2 February 2009 an initial offer of US$373,000 was put to the pirates. Negotiations between the pirates negotiators and the owners crisis management team continued over the following seven weeks with various offers and counter offers being made. Eventually on 22 March 2009, after a negotiation period of 51 days, a ransom was agreed in the amount of US$1.85m. On 27 March 2009 the ransom sum was delivered by being dropped at sea. At 07.36 on 28 March 2009 the pirates disembarked and at 08.00 that day the vessel continued her voyage. It is accepted that the US$1.85m ransom payment itself can be allowed under Rule A. It is also accepted that the costs and expenses of the negotiator in relation to the ransom, Captain Ganz, and the costs and expenses of his special advisers, NYA International, are allowable. There was a dispute about the allowability of a sum of around US$20,640 in respect of media expenses but that is no longer challenged by the cargo interests. The essential issue on this appeal is whether the vessel operating expenses incurred during the period of negotiation (the negotiation period expenses) are allowable in general average under Rule F. Those sums are: (1) US$75,724.80 for crew wages paid to the crew. (2) US$70,058.70 for high risk area bonus paid to the crew by reason of the fact that the vessel was detained within the Gulf of Aden. These are additional wages which the crew were entitled to under their contract of employment whilst at sea within a high risk area. (3) US$3,315 for crew maintenance (ie food and supplies). (4) US$11,115.45 for bunkers consumed. In this judgment, I shall treat the aggregate sum as being US$160,000. The procedural history The average adjuster, Mr Robin Aggersbury of Stichling Hahn Hilbrich, considered that the negotiation period expenses were allowable under Rule F on the basis that they were incurred during a negotiation period of about 51 days which enabled an amount of US$4,150,000 [to be] saved in the common interest of all property owners concerned, which would otherwise have been recoverable as per Rule A. The 51 day period to which he referred was, as explained above, from 30 January to 22 March 2009. The cargo was valued at destination at US$787,186 and the value of the vessel was assessed at US$3,947,096; so cargo interests were liable for 14.44% of the total general average expenditure. Following publication of the adjustment, the cargo interests requested and obtained a report (the Report) from the Advisory Committee of the Association of Average Adjusters. The Report set out the facts in considerable detail, and concluded, by a majority of four members to one, that the negotiation period expenses did not fall within Rule F. The cargo interests had previously made payments on an account of general average, but following the publication of the adjustment they issued proceedings challenging (in accordance with the Report) the adjusters conclusion that the negotiation period expenses fell within Rule F, and seeking an appropriate repayment. The arguments of the parties The owners argument involves the following steps. First, it is rightly common ground that the US$1.85m ransom paid to the pirates for the release of the vessel was expenditure which was a general average act within Rule A. Secondly, the negotiation period expenses claimed fell within the expression expense incurred by the owners within Rule F. Thirdly, those expenses were incurred in place of another expense, namely the US$4.15m saved as a result of the negotiations. Fourthly, those expenses, being US$160,000, are less than the general average expense avoided, namely the US$4.15m (and for the sake of simplicity I will treat this as the saving, although the actual saving was somewhat less by virtue of expenses such as those paid to Captain Ganz and NYA). Fifthly, it follows from this that the negotiation period expenses are properly allowable under Rule F. The cargo interests raise a number of points in answer to this argument, and those points (which I shall take in a slightly different order from that in which they were argued in this court or discussed by Hamblen LJ in his judgment) are as follows: a) The ransom saved was not allowable. b) The ransom saved was not another expense. c) The negotiation period expenses were not incurred with the necessary intention. d) The negotiation period expenses are not extra expense. e) The negotiation period expenses would or may have been incurred anyway. f) The negotiation period expenses are irrecoverable by virtue of Rule C or (by implication) Rule XI. I shall consider those arguments in turn, although it is the first and second arguments which justify particular consideration partly because they are the most difficult points and partly they are issues on which my view differs from that of the Court of Appeal. It would not have been reasonable to accept the initial ransom demand The cargo interests first contention is based on the proposition that it would not have been reasonable for the owners to have accepted the pirates initial ransom demand for US$6m. On that basis, it is said that a payment of US$6m (or, more accurately, the saving of US$4.15m) would not have been expenditure reasonably incurred within Rule A, and therefore cannot qualify as an expense which would have been allowable as general average in Rule F. The judge accepted that, in order to succeed in its claim under Rule F, the owners would have to establish that it would have been reasonable for them to have accepted the pirates initial demand, but decided that, in all the circumstances, it would have been reasonable for the owners to have paid US$6m ransom. The Court of Appeal agreed with the judges analysis of the legal position, and declined to interfere with his conclusion that it would have been reasonable of the owners to have met the pirates initial demand. It is a difficult question whether the Court of Appeal ought to have concluded that the judge was entitled to conclude that it would have been reasonable for the ship owner to have paid the pirates the US$6m which they initially demanded. While an appellate court should be slow to interfere with a trial judges finding of fact, this was not a finding of primary fact. And, at least on the face of it, one would have thought that it would have required very unusual circumstances for a ship owner not to try and negotiate with pirates who had made such a very high demand. Further, the evidence suggests that no ship owner accepted an initial demand made by Somali pirates and that their demands were generally pitched on the basis that they would be substantially reduced by negotiation. On the other hand, one must beware of the perils of wisdom of hindsight, and it is right to bear in mind that there was a wounded sailor on the vessel and that the cargo was perishable. In my opinion, it is not necessary to resolve this difficult issue, because I do not consider that the judge or the Court of Appeal were correct in assuming that the owners had to establish that it would have been reasonable to accept the pirates initial demand in order to justify the contention that the negotiation period expenses were allowable under Rule F. One does not need to examine the wording of the Rules to appreciate that the assumption made by the courts below would lead to very odd results, as explained by Hamblen LJ at [2016] Bus LR 1285, paras 62 to 64. It would mean that, if a ship owner incurs an expense to avoid paying a reasonable sum, he can in principle recover under Rule F, whereas if he incurs expense to avoid paying an unreasonable sum (ie a larger sum), he cannot recover. The more obvious his duty to mitigate, and the greater the likely benefits of such mitigation, the less likely he would be to be able to recover. Such a state of affairs (apparently known to cognoscenti as the Hudson conundrum, after the writer who first described it) would be a remarkable result. Fortunately, examination of the wording of Rules A, C and F shows that it does not arise. Where I part company with the judge and the Court of Appeal is in relation to their view that the reference in Rule F to another expense which would have been allowable as general average is to an expense whose quantum is such that it would have qualified as a claim under Rule A. In my opinion, the reference to an expense which would have been allowable is to an expense of a nature which would have been allowable. First, the word allowable in Rule F naturally takes one to Rule C, where the similar word allowed is used, rather than Rule A, where there is no reference to anything being allowed (the same point applies to the French version admissible in Rule F and admis in Rule C). Unlike Rule A, Rule C is concerned purely with the type of expense, and not with quantum. Secondly, the opening part of Rule F is unlikely to be concerned with quantum, as that is dealt with in the closing part, which imposes a cap on a sum recoverable under Rule F, namely only up to the amount of the general average expense avoided. Thirdly, the interpretation assumed in the courts below imposes an unnecessary fetter on the allowability of an extra expense, as there is already a reasonable fetter in the concluding part of Rule F. Fourthly, the interpretation I favour produces an entirely rational outcome: whenever an expense is incurred to avoid a sum of a type which would be allowable, that expense would be allowable, but only to the extent that it does not exceed the sum avoided. Applying that reasoning to this case, and subject to the discussion below as to the cargo interests other arguments, the US$160,000 falls within Rule F. The US$160,000 was incurred in order to avoid paying a US$6m ransom (or, more accurately, a ransom of around US$4m more than the ransom actually paid), and as the ransom was an allowable expense in principle, the US$160,000 therefore falls within Rule F, subject to the appellant establishing that it would have been reasonable to have paid a ransom of around US$2.4m (ie the ransom it did pay plus the US$160,000 together with the further expenses such as those paid to Captain Ganz and NYA). If the judge was even arguably entitled to reach the conclusion that paying a US$6m ransom was reasonable, it must have been reasonable to pay a ransom well under half that figure. Even if the analysis in para 19 above were not right, I would have reached the same conclusion. As pointed out by Lord Sumption in the course of the argument, where an unreasonably high sum is expended, there would be no reason not to hold that Rule F applied, albeit only to the extent of a reasonable sum, on the basis that the greater includes the less. Thus, if (contrary to the analysis in para 19 above), Rule F only applied where a sum was reasonably incurred, and in this case the judge had concluded that the maximum reasonable ransom would have been US$4m, then Rule F would have applied to US$4m of the US$6m ransom. The reduction in ransom was not an alternative course of action I turn then to the second contention raised by cargo interests, which was the ground on which they succeeded in the Court of Appeal. That contention is that the negotiation period expenses do not fall within Rule F, because the payment of a reduced ransom of US$1.85m was not an alternative course of action to the payment of the ransom originally demanded, namely US$6m: it was merely a variant. This contention involves arguing that to trigger Rule F, it is not enough for a claimant to incur expense in achieving a result which costs less than what an allowable item would otherwise have cost: the expense must be incurred to achieve a result which involves replacing that allowable item with a different and cheaper item. As Lord Mance expressed it during the argument, this argument involves saying that Rule F applies only where some means is adopted to complete the adventure, and that means is different from that which might normally be expected. The notion that Rule F is only engaged in a case where the claimant achieves an alternative course of action in that sense was said by Hamblen LJ at [2016] Bus LR 1285, paras 38 to 40 to be supported by passages in the two leading books in English on general average. In paras F.01 and F.29, the editors of Lowndes & Rudolf, The Law of General Average and the York Antwerp Rules, 14th ed (2013) write: As the name implies, substituted expenses are the expenses incurred in respect of a course of action undertaken as an alternative to or in substitution for the expense that would be allowable as general average. For this rule to have any application there must have been an alternative course which, if adopted, would have involved expenditure which could properly be charged to general average. In Hudson & Harvey, The York Antwerp Rules: The Principles and Practice of General Average Adjustment, 3rd ed (2010), para 11.33, there is this: Although Rule F is phrased in terms which refer to the incurring of the expense, its application in practice presupposes a choice between two (and sometimes more) different courses of action. I am not convinced that, as a matter of language, those passages support the conclusion that Rule F can only be invoked when the claimant has taken an alternative course of action, but I accept that the prevailing view among the writers on the subject, and among those who work in the field, of general average may well be as Hamblen LJ suggested. Thus, it certainly seems to have been assumed to be the generally accepted position by Hoffmann LJ in his striking dissenting judgment in Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyds Rep 411, where, at p 423 he quotes with approval a passage from the 11th ed (1990) of Lowndes & Rudolf which is identical to that quoted by Hamblen LJ from the 14th ed. However, the law cannot be decided by what is understood among writers and practitioners in the relevant field (or even by views expressed by Hoffmann LJ in a dissenting judgment, especially in a case where the point did not strictly arise and does not appear to have been argued). Experience shows that in many areas of practical and professional endeavour generally accepted points of principle and practice, when tested in court, sometimes turn out to be unsustainable. I accept that it may be right for a court to have regard to practices which have developed and principles which have been adopted by practitioners, but they cannot determine the outcome when the issue is ultimately one of law. Further, as the opinions of the average adjuster and of the majority of the Advisory Committee of the Association of Average Adjusters in this case demonstrate, there is certainly no question of there being a universal view on the issue. Turning to the language of Rule F, I consider that this alternative course of action contention goes nowhere. Even if one accepts that the extra expense must involve an alternative course of action, it seems to me that the owners claim satisfies that requirement. It appears to me that (ignoring other sums for present purposes) the right analysis of the owners claim is that it is for (i) US$1.85m under Rule A and (ii) US$160,000 under Rule F, on the basis that (i) the US$1.85m, as a reasonable sum paid to ransom the vessel and the cargo, is admittedly within Rule A, and (ii) the US$160,000, as negotiation period expenses, represents extra expense incurred in place of the US$4.15m, the amount by which the ransom was reduced. On that basis, as I see it, the incurring of the US$160,000 did represent an alternative course of action, in the sense that the cargo interests use that expression, from the payment of the US$4.15m: the former involved incurring vessel operating expenses whereas the latter involved paying a ransom. There is an alternative analysis of the owners claim, which is that it should be treated as being for a single sum of US$2.01m, namely the US$1.85m ransom actually paid plus the US$160,000 negotiation period expenses, under Rule F on the basis that this combined sum was extra expense incurred in place of the US$6m originally demanded. However, I do not see how that helps the cargo interests. Logically, their argument on this basis should be that the US$1.85m is disallowable under Rule F as it was not an alternative course of action from paying the originally demanded US$6m ransom, but the negotiation period expenses are recoverable under Rule F, as they did involve an alternative course of action which is precisely the opposite of the cargo interests actual case, and indeed a nonsensical result. Accordingly, the cargo interests second contention cannot simply be based on the wording of Rule F. Their contention, as I see it, must be that the expenses incurred in negotiating a reduction in the cost of an allowable item do not fall within Rule F because the reduction in the cost of an allowable item which would be paid for anyway, and which falls within Rule A, cannot be within the scope of Rule F. I do not find it easy to see how one can get that out of the words of Rule A or Rule F. I suppose that one could take the analysis in para 27 above and argue that it works perfectly well where, as a result of the negotiation, an alternative course of action, within the restrictive use of that expression as urged by the cargo interests, was taken. However, given the problem identified in para 27 above with such an approach where the reduced sum is not such an alternative course of action, I am very dubious whether the approach can be justified anyway. Given that the Rules represent an international arrangement, it is particularly inappropriate to adopt an approach to their interpretation which involves reading in any words or qualification. As already mentioned, it appears to me that, as a matter of ordinary language, Rule F applies to the negotiation period expenses for the reasons given in para 26 above. To imply some qualification such as the requirement that those expenses must have been incurred so as to achieve an alternative course of action appears to me to be very dangerous. In the same way as an international convention or treaty, the Rules should be interpreted by a United Kingdom court unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation, to quote Lord Wilberforce in James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141, 152. As Lord Hobhouse said in King v Bristow Helicopters Ltd [2002] 2 AC 628, para 148, in relation to an article in the Warsaw Convention, it is the unadorned language of the article to which attention must be directed. Quite apart from this, the cargo interests second contention appears to me to lead to difficulties and potential anomalies in practice. Thus, there would be difficulties about deciding whether a particular variant was an alternative course of action. Towage to destination, extra costs of arranging dry docking with cargo on board, overtime worked on repair or cargo operations (at least sometimes), and (historically) air freight instead of sea freight for spare parts were examples given by the respondents of alternative courses of action (mostly taken from Lowndes & Rudolf, op cit). But it is hard to see where the line is to be drawn. The difficulties about deciding whether overtime payments qualify is plain from reading Lowndes & Rudolf, op cit, para F.25; in addition, overtime payments are enhanced payments for the same work whose cost would have been recoverable under Rule A in any event. And if air freight can qualify if it is incurred instead of sea freight, it is hard to see much logic in disqualifying sea freight at a lower rate negotiated with a new party on a different type of vessel. Further, given that, on the cargo interests case, negotiation period expenses could not be claimed if they were incurred as a result of negotiating a reduction in the cost of repair with one shipyard, what would the position be if the negotiations were with a competing shipyard and/or in respect of a novel and different way of effecting the repairs? It also appears to me to be somewhat inconsistent in terms of logic that (as has been agreed between the parties in this case) the costs and expenses of Captain Ganz and NYA are subject to general average whereas the negotiation period expenses are not. It is clear that the costs and expenses claimed by and paid to Captain Ganz and NYA included costs and expenses attributable to the negotiations with the pirates (for instance, hotel bills for most of the 51 day period). They can only be justified on the basis that they were referable to the negotiations to reduce the ransom, in the sense that they were incurred solely because of the negotiations taking place. Accordingly, if they are claimable, it is hard to understand why the negotiation period expenses should not also be claimable. At [2016] Bus LR 1285, para 47, Hamblen LJ suggested that there were a number of anomalies if the negotiation period expenses were allowable. First, he mentioned the difficulty of establishing that the expenses would not have been incurred even if the initial demand for US$6m ransom had been accepted. I doubt that that problem would arise in most cases where the vessel operating costs are said to fall within Rule F, and it may well arise in some cases where it would be common ground that Rule F would apply. In any event, it is for the claimant in each case to establish, on the balance of probabilities, that the delay caused by the negotiation would not have occurred if there had been no negotiation. Secondly, he said that, in a case such as this there could be no entitlement to claim vessel operating costs as Rule F expenses until a demand had been made. I agree, but fail to see why it is an anomaly. Thirdly, Hamblen LJ pointed out that, in the absence of a demand, eg if there were simply negotiations, it might be hard to say when, or even whether, Rule F was engaged. I accept that there may be ransom cases where it is hard to determine at what precise point Rule F is engaged, but it would, I think, be a rare case where at some point early in the negotiations the pirates did not come up with a figure. Anyway, I suspect that point could apply to cases where Rule F is undoubtedly engaged. Quite apart from that, I do not accept that the fact that there may be difficulties for claimants in a few other ransom cases is a reason for holding that Rule F is not engaged in this case. More broadly, if (as appears to me to be appropriate) one views Rule F simply as entitling a claimant to claim in respect of an expense successfully incurred for the purpose of mitigating a loss, it seems to me that none of these points should give rise to concerns. The cargo interests other arguments The cargo interests third contention is that, in order to be recoverable under Rule F, the negotiation period expenses must be shown to have been consciously and intentionally incurred by the owners, and there was no evidence that the owners or their agent had consciously decided to incur those expenses in order to reduce the ransom payable to the pirates. Indeed, Hamblen LJ said at [2016] Bus LR 1285, para 43 that it does not appear that the owners ever considered that they faced a choice and that there was no evidence to suggest that they ever considered choosing between paying the ransom on demand and paying a lesser sum following negotiation. Accordingly, runs the argument, the owners cannot recover under Rule F as they never made a conscious choice between paying the US$6m ransom initially demanded by the pirates or negotiating with the pirates. I do not accept that contention. The question whether one expense has been incurred in place of another expense must be assessed objectively. In this case, it is clear (and must have been clear at the time) that negotiations were (and would be) needed if the ransom was to be reduced, that such negotiations took (and would take) time, and that the passage of time resulted in the negotiation period expenses (and would result in expenses of that nature) being incurred. As the negotiations resulted in the ransom being reduced, it seems to me that, subject to any other argument, it must follow that the expenses incurred as a result of those negotiations were incurred in place of the US$4.15m saved (or that the expenses incurred plus the US$1.85m actual ransom were incurred in place of the original US$6m ransom demand). The cargo interests further contend that the negotiation period expenses were not extra expense within the meaning of that word in Rule F. This contention is based on the proposition that, in order to qualify as extra expense, an expense would have to be of a nature which would not normally have been incurred in response to the peril threatening the adventure. I can see no reason for giving the word extra such a restrictive meaning. First, it is not its natural contextual meaning, which, in my view, is simply an expense which would not otherwise have been incurred (but for the saving of the other expense). Secondly, such a meaning is supported by the contrast with the word extraordinary in Rule A. Thirdly, such a restrictive meaning lies unhappily with the French equivalent adjective, which is supplmentaire. I take some comfort from, but do not rely on, the fact that the word extra in Rule F has now been replaced, in later versions of the Rules, by the word additional. The cargo interests next contention is that the delay which led to the negotiation period expenses may well have occurred even if the owners had agreed to the pirates initial demand of US$6m. For instance, if the owners had accepted the US$6m, the pirates may have thought that they had pitched their initial demand too low, and would have increased it, leading to further negotiations and consequent delay. That is of course a possibility. However, it is inherent in the judges conclusion that he considered it more likely than not that the vessel and cargo would have been released promptly if the US$6m ransom demand had been accepted and paid. That was the sort of finding (albeit an implied finding, but necessarily so, in his conclusion) with which an appellate court should be very slow to interfere. And in this case it appears to me that we should clearly not question it: it was an eminently defensible finding. It is clear that a delay of some period would be inevitable as a result of the negotiations, and it is clear that the 51 days (between the initial demand of US$6m and the final agreement at US$1.85m) was inevitable as a result of the negotiations; on the other hand, to put it at its very lowest, it is not unlikely that none of the 51 days delay would have been suffered if the US$6m demand had been met. The cargo interests final contention is that, as Rule C excludes from general average expenditure which is an indirect loss including demurrage, and/or because Rule XI includes crew wages and maintenance where it applies, the claim in the present case must fail. In my opinion, there is nothing in that point. I accept that the negotiation period expenses, if consequential on a general average act, would have fallen within the exclusion in Rule C of loss sustained through delay, but I do not accept that it follows that they must therefore fall outside Rule F. Rule C applies to expenses and other sums claimed by way of general average as consequences of a general average act (as defined by Rule A). It does not apply to expenses covered by Rule F, which is concerned with sums which are expended or lost in mitigating or avoiding the sums which would otherwise be claimable as general average. By definition, sums recoverable under Rule F are not themselves allowable in general average, but are alternatives to sums which would be allowable. One can understand why, as a matter of policy, demurrage and similar indirect liabilities are not recoverable as general average, but it does not follow that such indirect liabilities should be irrecoverable if they are expended in order to mitigate what would otherwise be a larger general average claim. As for the cargo interests reliance on Rule XI, I find it hard to see why the fact that vessel operating expenses are specifically allowed in one specific type of case, means that it should be presumed that they are excluded from every other type of case. In any event, the Rules start by saying that the lettered Rules apply save where the numbered Rules apply, and that makes it particularly difficult to justify the notion that a specific allowance in a numbered Rule should impliedly rule out such an allowance in a lettered Rule. Indeed, I understood the cargo interests in this case to accept that vessel operating costs would be recoverable in a case where Rule F did apply (subject to their Rule C argument considered in para 37 above), and that seems to be consistent with what is said in the two books on general average to which I have referred. I agree with the judgment of Lord Neuberger. Conclusion For these reasons, I would allow this appeal and restore the decision of the deputy judge. LORD SUMPTION: (with whom Lord Hodge and Lord Clarke agree) The York Antwerp Rules have a status in shipping law similar to that of the Uniform Customs and Practices in the law relating to documentary credits. They depend wholly on contractual incorporation for their binding force. But they are designed to create a body of principle applicable internationally in a uniform way, although incorporated in shipping agreements of different kinds, governed by different laws. It will therefore rarely if ever be appropriate to imply matter into them which is not apparent from the natural meaning of the words, unless the implication is necessary to make them workable or intelligible or to avoid absurdity. Rule F is simplicity itself. It provides for the allowance of expenditure which is not allowable as general average expenditure but has successfully mitigated expenditure or sacrifice which would have been allowable as general average. The cost of maintaining the ship and crew during a period of delay which would not have occurred but for the peril but was necessary to enable the ransom to be reduced, is deemed to be general average up to the amount of the reduction. I appreciate that the practice of most average adjusters has been to disallow such expenditure. In the absence of a comprehensive body of case law (general average rarely reaches the courts), adjusters have adopted a variety of practices or rules of thumb to supplement the Rules. This is perhaps inevitable, but such practices are not law and there is a tendency in this field for them to lose sight of the basic concepts expressed in the Rules themselves. I suspect that this particular practice has been influenced by the second paragraph of Rule C and the limited scope of application of Rule XI. But the second paragraph of Rule C serves to limit the permissible heads of general average expenditure so as to exclude delay. There is no textual, indeed no rational reason why it should be taken to limit the permissible heads of expenditure which although not general average expenditure successfully mitigates something else that is. As for Rule XI, like the other numbered rules, that is a specific rule relating to ships entering a port or place of refuge, which does not impinge upon the general principles set out in the lettered rules, as applied to other situations. In my opinion, the appeal should be allowed. I agree that the appeal should be allowed for the reasons given by Lord LORD CLARKE: Neuberger and Lord Sumption. LORD MANCE: (dissenting) Although a general average case was the origin of the English Commercial Court, general average cases are few and far between. The correct resolution of the present case has divided both general average practitioners and the courts, and the number of issues raised has tended to multiply as the case has progressed. The core question is simple. Where a vessel with its cargo has been seized by pirates, and the owners over a period succeed in negotiating down an initial ransom demand, can the owners include in general average not merely the ransom payment ultimately made, but also vessel and crew costs totalling US$160,213.95 incurred during the period of negotiation (the negotiation period expenses). The vessel MV Longchamp was boarded by pirates at 06.40 hours on 29 January 2009. A ransom demand of US$6m was made by the pirates at 14.05 on 30 January 2009 and was rejected by the owners as too high on 31 January 2009. The vessel had by then been taken to a position off Eyl on the coast of Somalia. Thereafter, negotiations took place lasting until 18.25 on 22 March 2009, when the pirates accepted the owners last offer of US$1.85m. The ransom was dropped at sea off Eyl on 27 March and the vessel was released to proceed on her voyage at 07.36 on 28 March 2009. The negotiation was in practice conducted by the owners. The negotiation period to which the relevant expenses relate runs from 14.05 on 30 January to 08.25 on 22 March 2009. The relevant bill of lading provided for any general average to be adjusted according to the York Antwerp Rules 1974. The ransom payment and the costs of specialist negotiators are accepted as direct general average costs, falling within Rule A of those Rules. The question is whether the negotiation period expenses fall to be included in general average under Rule F, reading: Any extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided. The owners case is that: (i) if they had paid the US$6m ransom initially demanded, that would have been allowable as general average within the meaning of Rule F; (ii) instead of doing this, they entered into successful negotiations; (iii) the resulting reduction in the ransom payable from US$6m to US$1.85m avoided general average expense of US$4.15m; and (iv) the negotiation period expenses totalling US$160,213.95 can and should be treated as an extra expense incurred in place of the general average expense of US$4.15m avoided. Before the deputy judge, Mr Stephen Hofmeyr QC [2015] 1 Lloyds Rep 76, the focus was on point (i), whether the US$6m would, if paid, have been allowable as general average. He held that it would have been. The Court of Appeal agreed with the judge on this point. But it focused on a different aspect, whether Rule F was in principle applicable when all that had occurred was negotiation, in the event a long, rather than a short negotiation, but not an alternative course of action by which expenditure different in kind was incurred. In the Court of Appeals view, this was not a case of extra expense being incurred in place of another expense, but a case where the owners had no real choice or true alternative to pursue (per Hamblen LJ [2016] Bus LR 1285, paras 51 53) and there was only one course of action open namely to treat with the pirates however long that might take (per Sir Timothy Lloyd, para 99). I have considerable sympathy with the Court of Appeals instinct that Rule F was not designed with the present situation in mind. The classic circumstances in which it is treated as applying are cases where there is one obvious or natural course of action open to the owners following a general average event, but there is also some different action, which might if taken lead to a more generally beneficial outcome overall. This, it is common ground that Rule F in the 1974 Rules embraces situations where, instead of undergoing repairs in a port of refuge, the vessel is towed as is to destination, or the cargo is forwarded on another vessel, or, where, instead of discharging cargo in order to undertake dry docking and repair, extra equipment is obtained to enable dry docking and repair without such discharging. In the Canadian case of Western Canada Steamship Co Ltd v Canadian Commercial Corp [1960] 2 Lloyds Rep 313, decided in an era when sea transport was the norm, the cost of airfreighting a new propeller shaft from Wales to Singapore was allowed on the same basis. However, it is also clear that Rule F can apply in situations where the general average expense avoided would have been allowable under one of the numbered rules, setting out various specific situations in which various types of vessel or crewing costs are in principle recoverable as general average. In short, the focus of Rule F seems to me to have been correctly identified by Hoffmann LJ in Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyds Rep 411, 421, when he quoted with approval the then most recent edition of Lowndes & Rudolf on General Average and the York Antwerp Rules (11th ed (1990), p 144), as saying that the substituted expenses must be: an alternative to, or in substitution for what might prima facie be thought of as being the normal or standard means of dealing with a given situation. Hoffmann LJ went on (p 422) to leave open the question whether under Rule F the course of conduct giving rise to the substituted expense should have fallen outside the obligations contained in the contract of affreightment or whether it is sufficient that the expenditure was a less usual and more [sic] expensive way by which the owner complied with his contractual obligation, eg to repair the ship. He concluded by noting that Lowndes & Rudolf suggest that expenditure of the latter kind could fall within the Rule, but that Rule F certainly contemplates that there was a practical alternative by which the adventure could have been completed. The cargo interests conceded in their written case, and I am prepared for present purposes to accept, that this does not exclude all possibility that Rule F might cover a situation in which, by some unusual or non standard step, the owners are able to replace or reduce in amount an expense of one kind by incurring a lesser expense of the same kind. It does not however seem to me necessary to go even that far in the present case, since what is submitted is that the owners have, by incurring negotiation period expenses, consisting of vessel and crew costs, avoided a different kind of expense, namely extra ransom costs. What is however clear on any view is that Rule F is not intended to cover general average situations in which owners simply do what would in the ordinary course be expected of them in the interests of the common adventure. Where this is the position, the expenses incurred will be admissible, potentially, as the direct consequence of the general average act, allowable as general average under the first paragraph of Rule C, unless they are excluded as loss or damage incurred through delay under the second paragraph of Rule C. One qualification to this is however significant. Even if expenses would otherwise be excluded as loss or damage incurred through delay, they may nevertheless be admitted if they fall within one of the numbered heads. Rule XI(a) in particular covers costs of crew and vessels fuel and stores during the prolongation of a voyage occasioned by a vessel entering a port or place of refuge or returning to her loading port or place in circumstances falling within Rule X(a). Rule XI(b) covers, broadly, crew costs when a vessel has entered or been detained in any port of place in consequence of, or for repairs following, a general average event. It is unnecessary to examine the precise ambit of these provisions. What matters is that they constitute very specific qualifications of the exclusion by the second paragraph of Rule C of loss or damage through delay. There is no equivalent qualification which could cover the present case. Hence the owners reliance on Rule F. In order to bring the case within Rule F, the owners have to show and the onus is on them both as a matter of general principle and specifically under Rule E that they incurred extra expense, that this was in place of another expense and that that other expense would have been allowable as general average; and, once they have done that, the extra expense is only allowable up to the amount of the general average expense avoided. I have little difficulty with accepting the negotiation period expenses as an extra expense in the sense that they were over and above anything that would, taking Mr Hofmeyr QCs words ([2015] 1 Lloyds Rep 76, para 89), ordinarily have been incurred on such a voyage. I have already covered what may have been contemplated in Rule F by the use of the phrase in place of another expense. Rule F only applies if the other expense would have been allowable as general average and subject to the condition that the extra or substituted expense is allowable only up to the amount of the general average expense avoided by not incurring that other expense. Viewing Rule F as a whole, it is clear that the owners must show that, had they incurred the other expense, the costs it would have involved could validly have been treated as general average their right to include extra or substituted expenses as general average being limited under Rule F by the extent to which the hypothetical other expense could have been so treated. The last sentence of para 19 of Lord Neubergers judgment accepts this. It seems therefore of only academic interest to debate whether the same conclusion would flow from the words would have been allowable as general average by themselves. For my part, however, I consider that it would have done. The word allowable must take one back to the requirements of Rule A as well as Rule C. Rule A apart, there would be no indication what is meant by general average or an expense allowable in general average. The onus placed under Rule E on any party claiming in general average to show that the loss or expense claimed is properly allowable as general average must carry one back to Rule A as well as C. In this connection, it is also notable that the French word used throughout Rules C, E and F (admis, admise, admission or admissible) has in each case the same root. The Hudson conundrum, to which Lord Neuberger refers (para 18 above), does not lead to any different conclusion. In most, if not all, circumstances in which Rule F applies, there will be a prima facie or standard course of action to be taken in the face of the general average event, but the owners will, by adopting some unusual means, have arrived at an alternative solution to further the common adventure. In such cases, the other paying parties will be hard pressed to suggest that the prima facie or standard reaction would have been unreasonable. There is a parallel here with the duty to mitigate, which is not lightly to be imposed or treated as broken. The Court of Appeal ([2016] Bus LR 1285, paras 73 74) was in this respect right in my view to agree with the deputy judges general conclusion of principle ([2015] 1 Lloyds Rep 73, para 77) that the hypothetical other expense must be one which would have been reasonably incurred in a sense interpreted and applied with a sufficient degree of latitude to give rule F practical effect. In many cases, the differences between the two courses (the standard and that adopted) may not be large, and both may easily be reconciled as reasonable reactions. Rule F is also careful, by its concluding words, to recognise that the extra expense may not be less than that which would have resulted from taking the standard course. In such a case, Rule F performs the valuable function of allowing recovery up to the amount which would have been recoverable had the standard course been adopted. Turning specifically to an unusual situation like the present: if there is no course at all open to take, the expenses of which would have been allowable as general average, then matters must run their course. If a ransom is demanded and paid in an amount which is unreasonable to pay, the only amount allowable in general average will be whatever lesser amount it would have been reasonable, after negotiation, to pay. If the negotiation period expenses are regarded as an extra expense incurred in place of the amount of the ransom avoided by the negotiation, they can be recoverable at most only so far as the negotiation avoided the making of a ransom payment which it would have been reasonable to pay. On no view is there any basis for reading into the clear language of Rule F an entirely artificial assumption that, when judging whether the other expense would have been allowable as general average, the possibility of incurring the extra expense in place of that other expense must be ignored. To do so would be flatly contrary to the language and evident intent of Rule F. The reasoning and decision of the House of Lords in Marida Ltd v Oswal Steel (The Bijela) [1994] 1 WLR 615 turned on the very different wording of Rules X(b) and XIV, under which the express assumption in Rule XIV that such [temporary] repairs had not been effected there could be, and fell to be, read into Rule X(b) when considering what repair expenses would have been necessary and allowed in general average for the purposes of Rules X(b) and XIV, read together. Both the courts below have in this case concluded that it would have been reasonable for the owners to accept and pay the first ransom demand of US$6m. The Court of Appeal has however decided the case against the owners on the basis that they faced no real choice but to negotiate, however long the negotiation might take. There is to my mind a tension between the two strands of the Court of Appeals reasoning. If it would have been reasonable to accept and pay the first demand, then the owners were on the face of it taking a stand by seeking an even more reasonable deal in the interests of all concerned in the common adventure. It is not apparent that Rule F could not extend to such a course, if, as here, it involved the owners in some expense in the form of additional crew and vessel expenses. But I find even more difficult the joint conclusion of both courts below that it would have been reasonable for the owners to meet the first ransom demand. The deputy judge found difficulty in seeing how any ransom payment could be described as reasonable: [2015] 1 Lloyds Rep 76, para 98. He said: At least in one sense, no ransom payment could ever be described as reasonable. Pirates are criminals engaged in extortion and their demands are unlawful and deplorable. How can a payment extorted by pirates be described as reasonable? In my view, it cannot. The idea of a reasonable ransom is radically misconceived and the term an oxymoron. That is however to look at the point from only one direction. The relevant viewpoint is that of the unfortunate victims involved in a common adventure. From their viewpoint, there must be some ransom demands to which it is reasonable and others to which it is unreasonable to respond. Even the deputy judge appeared prepared to accept that the latter would include a ransom demand well in excess of the value of the vessel and cargo. However, this was as far as the deputy judge was prepared to go. Leaving aside exceptional circumstances, where the value of the ransom demanded clearly exceeded the value of the property involved in the venture, he thought it obvious that it would not be reasonable to say that an owner under an obligation to proceed with due despatch had not reasonably incurred a ransom paid. He went on, at para 99: Even if it may be said that, by January 2009, a pattern of dealing between Somali pirates and shipowners had developed, as described by David Steel J in Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2010] 2 All ER 593 [2010] 1 Lloyds Rep 509 at paras 19, 23, 25 and 26 (affirmed on appeal: [2011] 1 Lloyds Rep 630; [2011] 1 WLR 2012), such a pattern would not remove the potential for unreasonable, irrational and illogical behaviour. In support, the deputy judge said that negotiation was an uncertain process and it was not possible to state with reasonable certainty when the ransom demand was made that the amount of the ransom would inevitably be significantly reduced by the process of negotiation (para 100). Whether or not it is possible to state with reasonable certainty that a negotiation will achieve significant success cannot however be the test of whether or not negotiation should reasonably be essayed. The deputy judge also derived comfort from his conclusion on this point from the consideration that natural justice requires that all should contribute to the substituted expenses incurred (para 103). A difficulty about this observation is that nothing in Rule F could enable cargo interests to recover any matching loss or damage that they might suffer from the delay during negotiations. The cargo was in fact perishable, even though in the event it survived the rigours it underwent without apparent deterioration. As the Court of Appeal correctly recognised in this connection (para 51), whether or not an item falls within general average depends on the proper interpretation of the York Antwerp Rules. They represent a balanced framework, negotiated over time between all interests involved. As I have already observed, the Court of Appeals reasoning involves a potential tension between the approaches taken to the scope of Rule F and to the issue of the reasonableness of paying the initial ransom demand. In the former context, Hamblen LJ said this [2016] Bus LR 1285, paras 43 46: 43. Some support for the cargo interests approach is to be found in the evidence. Thus, it does not appear that the owners ever considered that they faced a choice. The owners crisis management and negotiation team were set up before any ransom demand had been made. From the outset the goal was to negotiate to obtain release of the vessel upon payment of a ransom, but in a reduced amount. There is no evidence to suggest that they ever considered choosing between paying the ransom on demand and paying a lesser sum following negotiation. 44. This is also borne out by the advisory committees stated experience, which is that in all Somali piracy cases the same course of action is taken, namely to negotiate and pay a reduced ransom leading to release of the vessel. Again it does not appear that there is considered to be a choice of payment on demand. 45. In my judgment this failure to recognise that there is a choice reflects the reality, which is that payment on demand is simply a different way of going about the same course of action and not a true alternative course of action. Whether or not the ransom is paid on demand there will still be a negotiation, there will still be delay, there will still be the incurring of vessel and crew running costs during the period of delay. In either case the same expenses will be incurred; the difference is only in their extent. 46. In this case, for example, there was a period of delay between the hijacking and the first ransom demand. Even if that first demand had been accepted, it does not follow that it would have been agreed. As the majority of the advisory committee state, the unprecedented acceptance of the ransom on demand may well have been met by a demand from the pirates for a still higher figure. Even if that was not the case, it would still have been necessary to negotiate and agree matters relating to place and method of payment and to the release of vessel and crew. Thus in this case it is to be noted that there was a period of six days between the agreement of the ransom and the release of the vessel. In the latter context, however, Hamblen LJ said, at paras 77 84: 77. The cargo interests contend that the judge was wrong to conclude that payment on demand would have been reasonable and that account should have been taken (but was not) of the following matters: (1) The established modus operandi for Somali pirates as at the date of the hijacking, namely invariably to negotiate down the amount of the ransom demanded over a period of time with little or no risk to cargo or crew. (2) In the experience of the majority of the advisory committee, the negotiation period is common in all piracy cases and there is always a period of negotiation before a vessel is released and it is the normal means of dealing with such situations. (3) The minority member accepted that there was a reasonable period of customary negotiation and that clearly, the ransom amount initially demanded cannot automatically be allowed in general average. (4) The position adopted by the owners in their skeleton argument at trial, That is not to say that paying the first demanded ransom is ever likely in fact to be a reasonable course of action. In reality, where there is the option of entering into negotiations with pirates, it will almost always be the right thing to do. 78. They submit that if proper regard is had to these matters it should be concluded that it would be unreasonable to pay the originally demanded ransom without even attempting to negotiate the amount of the ransom payment, contrary to the established practice, and that the judge was wrong to conclude otherwise. They further submit that payment on demand would be an artificial invention. 79. The owners do not accept that there is satisfactory evidence to establish the matters sought to be relied upon by the cargo interests, but that in any event they do not render payment of the full ransom demand unreasonable. 80. The owners accept that the evidence at that time was that Somali pirates would release a vessel upon payment of a ransom. As they point out, that being so, the sooner the ransom was paid, the quicker the vessel would be released and the vessel, cargo and crew removed from danger. 81. In my judgment, if, as stated in the Masefield case [2010] 2 All ER 593, the safest, most timely and effective means to secure the release of a ship and crew was to pay a ransom, it follows that the most safe, timely and effective means of so doing is to pay as soon as possible. It may be that the general practice was to try to negotiate the ransom down, but that does not mean that it would be unreasonable to pay the ransom straight away so as to avert the very real danger to vessel, cargo and crew as quickly and effectively as possible. Nor can a course of action which procures such real and tangible benefits be regarded as an artificial invention. 82. Further, in my judgment the reasons given by the judge are all cogent and compelling reasons for concluding that payment of the initial ransom sum would have been reasonable. 83. Further reasons for supporting that conclusion include the following: (1) The effect of the delay involved in seeking to negotiate a lower ransom is to keep the vessel, cargo and crew in peril, with all the risks of saying no to pirates, who are violent, armed criminals. (2) The vessel and cargo were under the control of the pirates. As such, there were obvious dangers should there be a storm or other peril of the sea. (3) The owners knew that there had been a firefight during the capture of the vessel and that a crew member had been wounded. (4) Although, as matters turned out, the pirates main negotiator was said to be a calm, rational communicator who never resorted to threats or other coercive tactics, the owners had no reason to assume that. (5) This was just one of many known unknowns facing the owners. 84. For all these reasons I conclude that it cannot be shown that the judge was wrong to find that payment of the initial ransom demand would have been reasonable. It follows that I would dismiss the appeal on this issue. I note that, after the quotation from the Masefield case [2010] 2 All ER 593 in para 81 of Hamblen LJs judgment, the words to pay a ransom are not a correct citation. The actual words in the Masefield judgment were to negotiate and subsequently pay a ransom. The cargo interests rely on the apparent acceptance both by the deputy judge ([2015] 1 Lloyds Rep 76, para 99, quoted in para 61 above) and by the Court of Appeal ([2016] Bus LR 1285, paras 43, 44, 46 and 81) of a general practice to negotiate any ransom demand down over a period. The owners object that there is no evidence justifying any such conclusion. But their own skeleton argument for the trial stated that: This is not to say that paying the first demanded ransom is ever likely in fact to be a reasonable course of action. In reality, where there is the option of entering into negotiations with pirates, it will almost always be the right thing to do. But when considering the allowability in GA of the costs of the negotiation, the relevant alternative scenario to be considered is the one in which there is no negotiation possible/available. The last sentence reflects the owners then case, which relied on a suggested analogy with the reasoning of the House of Lords in The Bijela, discussed in para 58 above. The trial in the present case was a Commercial Court trial on the documents. It seems clear that the deputy judge treated himself as entitled to rely on all the material before him when considering the factual position, including the statements in the Masefield case and the Report of the Advisory Committee of the Association of Average Adjusters on the present case, which he summarised at some length, while recording that it was common ground that it was not binding on the court. I see no reason to regard either the deputy judge or the Court of Appeal as having erred in this respect. David Steel Js judgment in the Masefield case noted ([2010] 2 All ER 593, para 14) that the initial ransom demand in that case of US$2m in August 2008 was all of a piece with the process of Somali hijacking. Fortunately the process of negotiating such a demand and making an agreed payment had invariably led to the release of all vessels involved. Against that background, I did not understand it to be controversial that the actual prospects of recovery of the cargo as at 18 September 2008 were good. Other relevant factors on the issue of reasonableness are that the range of potential values as assessed at the time was between US$5m and US$7m (with US$5.4m being later established as the correct figure). A demand of US$6m self evidently exhausted or very nearly exhausted all interests involved. Further, any indication of agreement to pay anything like the initial demand would almost inevitably have fed a suspicion on the pirates part that they had demanded far too little, and would have complicated matters then and for the future. In contrast, and in the light of the past experience of other shipowners whose vessels had been seized by Somalian pirates, there was on the face of it every reason to give effect to what was evidently the present owners immediate reaction, that is to hire experienced negotiators and engage on a time consuming and painstaking process of negotiation. In reaching a conclusion that it would have been reasonable for the owners to capitulate in response to the very first demand, the courts below were making an evaluative judgment on the basis of documentary evidence and material. This is not a situation in which their evaluation commands a large inherent advantage, compared with that which the Supreme Court is in a position to make, although of course it merits weight and it is for the cargo interests to show that it was wrong. In the light of all the circumstances, the cargo interests have satisfied me that it was wrong. I am unable to accept the evaluative judgment reached by both courts below to the effect that it would have been reasonable for the owners to pay the initial ransom, and that, had they done so, they could have required the full US$6m to be treated as general average. The reasoning of the courts below appears to me contrary to all the relevant indications as to how the owners actually acted and would have been expected to act. It is clear that the owners never contemplated the sort of remarkable capitulation that payment of the initial ransom would have involved, and that it would have taken them and other shipowners into uncharted territory, as opposed to a relatively familiar negotiation process, had they ever done so. They would in my opinion clearly have been acting unreasonably in the circumstances had they done so. The case has been fought and decided on the basis that this is the critical issue. No alternative case has been advanced to the effect that negotiations would or might have led to a settlement at some lesser figure which might have covered some, no doubt lesser figure of negotiation period expenses. Lord Neuberger notes (para 20 above) that the actual negotiation period expenses claimed of US$160,000 would have been covered (together with the negotiators expenses) by a ransom payment of around US$2.4m. That is mathematically correct. But it does not reflect the reality which has to be addressed. It postulates immediate agreement on or about 30 January 2009 on a ransom of US$2.4m. Yet, even in early March 2009 the pirates were still looking for a ransom of US$3m, reduced on 2 March 2009 to US$2m. Depending on where one dates and places a reasonable settlement at a reasonable settlement figure, it is clear that, on this basis, any recoverable negotiation period expenses would be considerably reduced below the US$160,000 odd claimed. The case has not been put on a basis which required or allows now for any such hypothetical exercise (of assessing when and at what figure below US$6m a reasonable settlement could have been achieved) to be undertaken. The owners have established that Rule F is in principle capable of applying to negotiation period expenses, which may well be the principle which this litigation is about. But I do not think that they have established on the facts that they have any claim on the only factual basis on which the case has been put. I would therefore dismiss this appeal, albeit for reasons different from those given by the Court of Appeal.

UK-Abs

On 29 January 2009, the chemical carrier mv LONGCHAMP (the vessel) was transiting the Gulf of Aden. Pirates boarded the vessel and ordered its course to be altered towards the Bay of Eyl, Somalia. After seven weeks of negotiations, the crisis management team formed by the vessels owners (the Appellants) agreed a ransom in the amount of US $1.85m (the initial demand had been for US$6m). The cargo on the vessel was carried by the cargo interests (the Respondents) under a bill of lading which stated on its face that General Average, if any, shall be settled in accordance with the York Antwerp Rules 1974 (the Rules). General Average refers to the system of maritime law by which sacrifices of property made, and loss and expenditure incurred, as a direct result of actions taken for preserving a common maritime adventure from peril, are rateably shared between all those whose property is at risk. The Rules are internationally agreed and derive legal force through contractual incorporation. They aim to achieve uniformity in ascertaining whether losses fall within the principle of general average, the method of calculating those losses and deciding how they are to be shared. The essential issue in this appeal was whether the vessel operating expenses incurred during the period of negotiation (the negotiation period expenses) were allowable in general average under Rule F of the Rules which provides that any extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided. An adjudicator found that the negotiation period expenses fell within Rule F. The Respondents challenge to the adjudicators decision was dismissed in the Commercial Court. The Court of Appeal allowed the Respondents subsequent appeal. The Appeal is allowed. Lord Neuberger gives the lead judgment with which Lord Clarke, Lord Sumption and Lord Hodge agree. Lord Sumption gives a concurring judgment. Lord Mance dissents on the facts. The Appellants submitted that the negotiation period expenses fell within the expression expense incurred by the owners within Rule F and those expenses were incurred in place of another expense (i.e. the $4.15m saved as a result of the negotiations with the pirates). Further, the negotiation period expenses were less than the general average expense avoided and it thereby followed that they were properly allowable under Rule F [14]. The Court found that the Judge and Court of Appeal incorrectly assumed that the owners had to establish that it would have been reasonable to accept the pirates initial demand in order to justify the contention that the negotiation period expenses were allowable under Rule F. Such an assumption would lead to very odd results. It would mean that, if a ship owner incurs an expense to avoid paying a reasonable sum, he can in principle recover under Rule F, whereas if he incurs expense to avoid paying an unreasonable sum (i.e. a larger sum), he cannot recover [18]. Further, the reference in Rule F to another expense which would have been allowable as general average does not mean an expense whose quantum is such that it would have qualified as a claim under Rule A of the Rules (which refers to extraordinary sacrifice or expenditure) [19]. Therefore, subject to the Respondents other arguments, the negotiation period expenses fell under Rule F as they were incurred to avoid paying $6m [20]. The Respondents submitted that the negotiation period expenses did not fall within Rule F because the payment of reduced ransom of $1.85m was not an alternative course of action to the payment of the ransom originally demanded but was merely a variant [22]. The Court found that the incurring of the negotiation period expenses did represent an alternative course of action from the payment of the $4.15m (the amount by which the ransom was reduced). The former involved incurring vessel operating expenses and the latter involved paying a ransom [26]. To imply some qualification such as the requirement that the negotiation period expenses must be incurred so as to achieve an alternative course of action was very dangerous [29]. The Rules are an international arrangement and should be interpreted in the same way as an international convention or treaty, unconstrained by technical rules of English law or by English legal precedent, on broadly accepted general principles [29]. The Respondents raised four further points. Firstly, they contended that the Appellants could not recover under Rule F as they had never made a conscious and intentional choice between paying the $6m ransom initially demanded or negotiating [33]. The Court held that the question of whether one expense has been incurred in the place of another expense must be assessed objectively [34]. Secondly, the Respondents contended that the negotiation period expenses were not extra expenses within the meaning of Rule F. The Court found that there was no reason for restrictively interpreting the word extra so as to require an expense to be of a nature which would not normally have been incurred in response to the peril threatening the adventure [35]. Thirdly, the Respondents contended that the negotiation period expenses may have been incurred even if the owners had agreed to the pirates initial demand. However, the Judge considered that it was more likely than not that the vessel would have been released promptly if the $6m demand had been accepted. It was not appropriate for the Supreme Court to interfere with this finding of the Judge [36]. Finally, the Respondents contended that because Rule C of the Rules excludes indirect loss from general average expenditure and/or because Rule IX includes crew wages and maintenance where it applies, the claim in the present case must fail. The Court held that even though negotiation period expenses fall within Rule C it does not follow that they fall outside Rule F. By definition, sums recoverable under Rule F are not themselves allowable in general average, but are alternatives to sums which would be allowable [37]. Further, in terms of Rule IX, the Court did not agree that because vessel operating expenses were specifically allowed in one type of case that it should be presumed that they are excluded from every other type of case [38]. Both the lead judgment by Lord Neuberger [25] and the concurring judgment by Lord Sumption [42] observed that a variety of practices have been developed by practitioners in relation to the Rules but that the law cannot be determined by reference to these practices. In his dissenting judgment [45 68], Lord Mance concluded that whilst the Appellants had established that Rule F is in principle capable of applying to negotiation period expenses, they had not established on the only factual basis on which their case had been put that they had a claim under Rule F [68].

For some four centuries, the United Kingdom and its component nations have been a major source of emigration. As a result, schemes for defining the right to British nationality have been complicated by the need to accommodate those born abroad but having significant connections with the United Kingdom by descent. Until 1983, the basic principle was that British nationality by descent was available to any person whose father was a citizen of the United Kingdom and Colonies. But if his father was himself a citizen by descent only, then unless the child was born in a British controlled territory or the father was in Crown service at the time of the birth, it was normally a condition that the birth should be registered at a British consulate within a year. In no case could citizenship by descent be transmitted through the female line. Regulations governing the registration of births by British consuls restricted registration to those eligible for British citizenship. The respondent, Shelley Elizabeth Romein, was born in the United States on 16 June 1978. Her father was a US citizen with no personal connection to the United Kingdom. Her mother had been born in South Africa and was a citizen of the United Kingdom and Colonies by descent because her father (Ms Romeins grandfather) had been born in the United Kingdom on 1 November 1905. Ms Romeins mother swore an affidavit in which she said that while pregnant with her she spent some time in South Africa and contacted the British consulate in Johannesburg to enquire about British citizenship for her unborn child. She was told, correctly, that the child would not be eligible because her only claim by descent was through her mother. With effect from 1 January 1983, the restriction to descent in the male line was abrogated by legislation for those born after that date, and 20 years later in 2003 the legislation was retrospectively amended so as to allow those born before 1983 to acquire citizenship through the female line. However, when Ms Romein, who had been born under the old regime, sought to take advantage of the change in 2013, her application for citizenship was rejected on the ground that she was unable to satisfy the statutory condition of registration within a year. The reason why she was unable to do so was that although the law was now deemed at all material times to have allowed claims to citizenship by descent through the female line, the staff of British consulates, acting entirely properly under the law as it actually was, would have refused to register her birth because she was ineligible. A result so paradoxical clearly calls for scrutiny. Legislative history The exclusion of claims to British citizenship by descent through the female line is a curious survivor of redundant social and political priorities. At common law, English nationality was based on allegiance. It was acquired by birth within the Kings realm or by marriage to an Englishman. Nationality by descent was wholly statutory and available under a statute of 1351 only where the child was born outside the realm to parents both of whom were English: see 25 Ed III, cap 1. It followed that an English woman who married an alien could not transmit her English nationality to her child born outside the realm. The Naturalization Act 1870 abolished the common law principle that allegiance was indelible, and provided for a woman to lose her British nationality upon marriage to an alien. From this it followed that no question could arise of transmission of British citizenship by descent through the female line alone. The position was formalised by the British Nationality and Status of Aliens Act 1914, which was the first statute comprehensively regulating eligibility for British nationality. A valuable account of the historical background to this legislation will be found in M P Baldwin, Subject to Empire: Married Women and the British Nationality and Status of Aliens Act, Journal of British Studies, xl (2001), 522. The Act arose from the Imperial Conference of 1911, in which the United Kingdom and the Dominions had agreed upon the principle of a common imperial nationality. A number of its provisions reflected concern among the Dominions that a common imperial nationality would undermine their attempts to restrict the right of entry by undesirables. The common nationality was therefore restricted with a view to meeting these concerns. The 1914 Act repealed the statute of 1351. Section 10 reproduced the effect of the Naturalization Act 1870 by providing that the British wife of an alien would become an alien on her marriage. Consistently with these provisions, section 1(1) of the 1914 Act as originally enacted defined a British subject as (a) any person born within His Majestys dominions and allegiance, and (b) any person born elsewhere whose father was a British subject. This provision was amended by the British Nationality and Status of Aliens Acts of 1918 and 1922. In its final form, the Act made (b) dependent on the father satisfying any one of five conditions, the most significant of which was condition (v), which was that the birth of a child born outside His Majestys dominions must be registered at a British consulate within a year or in special circumstances and with the consent of the Secretary of State within two years. Section 1 of the British Nationality and Status of Aliens Act 1943, repealed condition (v) and replaced it with a provision to substantially the same effect but authorising the Secretary of State to permit registration at any time. The Report of the Joint Select Committee on the Nationality of Married Women (24 July 1923) recorded the main reasons advanced by the Foreign Office in support of these measures: the dominant role of the husband in shaping the cultural affiliation of the family, the problems under British diplomatic practice of affording consular protection to British citizens with dual nationality, the need to maintain commonalty with the Dominions and the desirability of deterring certain mixed marriages which were in the womens case nearly always most undesirable. The Act of 1914 was superseded with effect from 1 January 1949 by the British Nationality Act 1948, which was the statute in force at the time of Ms Romeins birth. The occasion for the new Act was the Commonwealth Conference of 1947 on nationality and citizenship, which agreed that each of the Dominions should in future legislate for its own citizenship instead of sharing in a common British citizenship. This made it possible for the new Act to abrogate the rule that British women who married aliens lost their nationality. But it did not alter the basic principles on which citizenship by descent was available. Section 5 provided: 5.(1) Subject to the provisions of this section, a person born after the commencement of this Act shall be a citizen of the United Kingdom and Colonies by descent if his father is a citizen of the United Kingdom and Colonies at the time of the birth: Provided that if the father of such a person is a citizen of the United Kingdom and Colonies by descent only, that person shall not be a citizen of the United Kingdom and Colonies by virtue of this section unless (a) that person is born or his father was born in a protectorate, protected state, mandated territory or trust territory or any place in a foreign country where by treaty, capitulation, grant, usage, sufferance, or other lawful means, His Majesty then has or had jurisdiction over British subjects; or (b) that persons birth having occurred in a place in a foreign country other than a place such as is mentioned in the last foregoing paragraph, the birth is registered at a United Kingdom consulate within one year of its occurrence, or, with the permission of the Secretary of State, later; or (c) that persons father is, at the time of the birth, in Crown service under His Majestys government in the United Kingdom; or that person is born in any country (d) mentioned in subsection (3) of section one of this Act in which a citizenship law has then taken effect and does not become a citizen thereof on birth. If the Secretary of State so directs, a birth shall be (2) deemed for the purposes of this section to have been registered with his permission notwithstanding that his permission was not obtained before the registration. Nothing was done to remedy the inability of women to transmit British nationality by descent until 1979. Under section 7(1) of the Act of 1948 the Secretary of State had a discretion to cause a minor child of a British citizen to be registered as a British subject on the application of his or her parent or guardian. On 7 February 1979, Mr Merlyn Rees, the then Home Secretary, made a written statement in the House of Commons that he would in future exercise this discretion in favour any minor child of a woman who was herself born in the United Kingdom. He added that in due course legislation would be introduced to address more generally the transmission of citizenship in the female line: Hansard HC vol 962, cols 203 204W. Since Ms Romeins mother had not been born in the United Kingdom, this change of policy made no difference to her situation. Neither did the promised legislation, when it was eventually enacted. The British Nationality Act 1981, which came into force on 1 January 1983, removed the limitation to descent through the male line for the future. It also abolished acquisition of nationality by children of British nationals by descent by the registration of their births at a consulate. For a five year transitional period nationality could still be acquired in similar circumstances by registration with the Secretary of State (but still restricted, as before 1983, to descent through the male line). In April 1986, the United Kingdom ratified the United Nations Convention on the Elimination of All Forms of Discrimination Against Women. Article 9.2 of the Convention required state parties to grant equal rights to men and women with respect to the nationality of their children. However, the United Kingdoms ratification was subject to a reservation that it would continue to apply the five year transitional provision in the Act of 1981. Those born before the commencement of the 1981 Act continued to benefit from the Rees policy until the end of 2000, when the last person born while the 1948 Act was in force ceased to be a minor. There was then a hiatus of some two years until 30 April 2003, when section 13 of the Nationality, Immigration and Asylum Act 2002 came into force. This retrospectively amended the Act of 1981 by inserting a new section 4C. Section 4C was subsequently replaced by a revised section 4C to similar but not identical effect, which was introduced into the 1981 Act by section 45(3) of the Borders, Citizenship and Immigration Act 2009. In this form it was in force at the time of Ms Romeins application, and indeed still is. It provides as follows: 4C Acquisition by registration: certain persons born before 1983 (1) A person is entitled to be registered as a British citizen if (a) he applies for registration under this section, and (b) he satisfies each of the following conditions. (2) The first condition is that the applicant was born before 1 January 1983. (3) The second condition is that the applicant would at some time before 1 January 1983 have become a citizen of the United Kingdom and Colonies (a) under section 5 of, or paragraph 3 of Schedule 3 to, the 1948 Act if assumption A had applied, (b) under section 12(3), (4) or (5) of that Act if assumption B had applied and as a result of its application the applicant would have been a British subject immediately before 1 January 1949, or (c) under section 12(2) of that Act if one or both of the following had applied (i) assumption A had applied; (ii) assumption B had applied and as a result of its application the applicant would have been a British subject immediately before 1 January 1949. (3A) Assumption A is that (a) section 5 or 12(2) of, or paragraph 3 of Schedule 3 to, the 1948 Act (as the case may be) provided for citizenship by descent from a mother in the same terms as it provided for citizenship by descent from a father, and (b) references to the applicants mother. references in that provision to a father were (3B) Assumption B is that (a) a provision of the law at some time before 1 January 1949 which provided for a nationality status to be acquired by descent from a father provided in the same terms for its acquisition by descent from a mother, and (b) references to the applicants mother. references in that provision to a father were (3C) For the purposes of subsection (3B), a nationality status is acquired by a person (P) by descent where its acquisition (a) depends, amongst other things, on the nationality status of one or both of Ps parents, and (b) does not depend upon an application being made for Ps registration as a person who has the status in question. (3D) For the purposes of subsection (3), it is not to be assumed that any registration or other requirements of the provisions mentioned in that subsection or in subsection (3B) were met. (4) The third condition is that immediately before 1st January 1983 the applicant would have had the right of abode in the United Kingdom by virtue of section 2 of the Immigration Act 1971 (c 77) had he become a citizen of the United Kingdom and Colonies as described in subsection (3) above. (5) For the purposes of the interpretation of section 5 of the 1948 Act in its application in the case of assumption A to a case of descent from a mother, the reference in the proviso to subsection (1) of that section to a citizen of the United Kingdom and Colonies by descent only includes a reference to a female person who became a citizen of the United Kingdom and Colonies by virtue of section 12(2), (4) or (6) only of the 1948 Act, section 13(2) of that Act, (a) (b) (c) paragraph 3 of Schedule 3 to that Act, or (d) (No 2) Act 1964. section 1(1)(a) or (c) of the British Nationality In other words, applications for citizenship by descent through the female line are now to be dealt with on the assumption that the law had always provided for citizenship by descent from the mother on the same terms as it provided for citizenship by descent from the father. Application to Ms Romeins case The paradox of the Secretary of States decision in the present case is that although section 4C(3)(a) of the 1981 Act (as amended) and the associated Assumption A require her to assume that section 5 of the 1948 Act had always provided for citizenship by descent from a mother in the same terms as it provided for citizenship by descent from a father, nevertheless an application for citizenship on that basis must fail because no such assumption would or could have been made by the officials responsible for registration at the time. To this conundrum there are logically only three possible solutions: (1) Section 4C requires one to assume not only that section 5 of the 1948 Act had always provided for citizenship by descent in the female line, but that the historic facts were different, ie that consular officials in fact acted on that basis. The argument is that in terms of subsection (3) Ms Romein would have become a citizen under section 5 of the 1948 Act if Assumption A had applied, because on that hypothesis consular officials would have registered her. This is Ms Romeins case, which was substantially adopted by the Inner House. (2) Section 4C requires one to assume only that section 5 of the 1948 Act had always provided for citizenship by descent, but not to make any assumption that the facts were other than they were. The result is that applications based on descent through the female line must fail in every case where citizenship was dependent on the fact of registration under section 5(1)(b). This is the case which the Advocate General makes in support of the Secretary of States decision, and which was substantially accepted by the Lord Ordinary. (3) Effect cannot be given to the registration condition in section 5(1)(b) of the 1948 Act at all, as applied to applications for citizenship by descent through the female line, because insisting on that condition would nullify the practical effect of making Assumption A. This possibility was raised with Counsel in the course of argument before us, but does not appear to have been considered below. I start with the first hypothesis, which is the one that found favour with the Inner House. There are formidable difficulties about the counterfactual assumption on which this hypothesis depends. In the first place, Ms Romeins contention is that on the assumption made about the law in Assumption A, she would have acquired citizenship under section 5(1)(b) of the 1948 Act. No other provision of that Act could be relevant to her case. The registration condition is an integral part of section 5(1)(b). If any effect is to be given to it, the only counterfactual assumption that would enable her application to succeed is that consular officials not only made Assumption A but actually registered the applicant as a British citizen. But that assumption cannot be made consistently with subsection (3D), because registration is one of the requirements of section 5 of the 1948 Act, which is one of the provisions mentioned in subsection (3). It follows that the decision maker cannot assume that the registration condition was met. Since without such an assumption, one is left with the fact that she was not registered, she would not have become a citizen. I cannot accept the view of the Inner House that subsection (3D) is concerned only to cast on the applicant the burden of proving his or her claim, without the assistance of any presumption of fact. It does not say this. Moreover, she would have that burden anyway. Secondly, on the present hypothesis the question whether an applicant would have acquired citizenship under section 5(1)(b) of the 1948 Act if Assumption A is made, depends not just on what action consular registrars would have taken if the law had been in accordance with Assumption A, but on what steps the childs parents would have taken to have her registered on that assumption. It so happens that in Ms Romeins case the answer is reasonably clear if her mothers affidavit is accepted. Her mother would have received a different answer to her enquiry of the Johannesburg consulate and would have sought to register the birth. If consular officials had made Assumption A in 1978, that attempt would have succeeded. It is clear that Ms Romeins mother not only attached a high value to her unborn childs future nationality, but not realising the legal impediments, took some steps towards registering her. Someone who knew about the legal impediments would have done nothing and generated no evidence of this kind. Yet it is not obvious why that should make any difference. There is a conceptual problem about making the operation of section 4C dependent on an enquiry conducted years later into the question whether a parent would before 1983 have wished or intended or attempted to avail herself of a right which did not then exist. Thirdly, that problem is immeasurably increased when one examines the other implications of this approach. Subsection (3D) applies to all the provisions mentioned in section 5 of the 1948 Act, including sections 5(1)(a) and (c). There is nothing to suggest that claims under these provisions fall to be treated differently from those made under section 5(1)(b). If the counterfactual assumption to be made includes the steps which the parents would have taken, then it would be open to an applicant to say that had the law allowed citizenship by descent in the female line the mother would have moved to a British controlled territory for the birth so as to qualify under section 5(1)(a), or one or other parent would have entered or continued in Crown service in time for the birth so as to qualify under section 5(1)(c). It seems extremely unlikely that Parliament envisaged in 2002 or 2009 that the operation of this provision would depend on the practically unanswerable question what adjustments parents would hypothetically have made to their lives with a view to obtaining British citizenship for their children. Subsection (3D) appears to have been added precisely to rule out any such unrealistic enquiries. In my view the only counter historical assumptions authorised by the Act are Assumptions A and B. However, the Advocate Generals case faces, as it seems to me, equally formidable objections. He submits that Assumption A requires section 5 of the 1948 Act to be read as providing for citizenship by descent from a mother in the same terms as it provided for citizenship by descent from a father. Since those terms included the registration condition in section 5(1)(b), effect must be given to that condition. Subsection (3D) then provides that it is not to be assumed that these terms, including the registration condition, have been met. In the absence of a statutory assumption to that effect, he submits, the applicant must demonstrate that the terms, including the registration condition, have in fact been met, just as a claimant to citizenship by descent from a father would have to do. This accords with the literal words of section 4C. The difficulty about it is that while purporting to give effect to section 5(1)(b), its actual result is to make section 4C inapplicable to substantially all claims based on it. Section 4C(3)(a) assumes that by making Assumption A it will in principle be possible to claim citizenship by descent under section 5 of the 1948 Act, including section 5(1)(b). But if (as the Advocate General submits) effect must be given to the registration condition in section 5(1)(b) of the 1948 Act, then citizenship by descent through the female line would be available under section 5(1)(b) only in those anomalous cases where persons claiming descent through the female line were registered at a British consulate by mistake or in defiance of the regulations. There were apparently a few such cases. It is difficult to discern any rational reason why the legislature should have intended to help only them. Yet, except in cases where the birth of an ineligible child was registered unlawfully, the effect of the Advocate Generals reading is to close off section 5(1)(b) as a route to citizenship by descent from a mother. Mr Johnston QC, who appeared for the Advocate General, suggested at one point that the intention was to allow claims to citizenship by descent from a woman only in the cases covered by section 5(1)(a), (c) or (d) of the 1948 Act where citizenship followed automatically from a specified state of affairs and was not dependent on steps being taken by any human actor. But the problem about this argument, apart from being inconsistent with his primary argument (that the registration condition in section 5(1)(b) must be given effect), is that if it was intended to rule out all applications under section 4C based on section 5(1)(b) of the 1948 Act, the provision as drafted would be a most extraordinary way of doing it. The obvious course would have been to limit the reference to section 5 of the 1948 Act in section 4C of the 1981 Act (as amended) to section 5(1)(a), (c) and (d). In fact, it must be in the highest degree unlikely that Parliament entertained any such intention. Since section 5(1)(b) of the 1948 Act seems likely to be the basis of a large proportion of applications under section 4C of the 1981 Act (as amended), it would have significantly undermined the purpose of the provision, for no reason that can readily be imagined. I think that the solution to the paradox is more straightforward than either of these hypotheses. Because section 4C requires one to assume that section 5 of the 1948 Act had always provided for citizenship by descent in the female line, it is not possible to apply the registration condition in section 5(1)(b) of the 1948 Act to those claiming on that basis, because its application would make nonsense of that assumption. The past is done, and cannot be undone. For nearly 70 years, British consuls have declined to register the births of those claiming by descent through the female line. Throughout that period any purported registration of a person claiming citizenship only through the female line would have been legally ineffective. Given that we are forbidden by section 4C(3D) to assume contrary to the facts that the birth was in fact registered, the only way in which effect can be given to section 4C(3) is I should, finally, notice two objections urged against this analysis, neither of to treat the registration condition in section 5(1)(b) as being inapplicable in cases where citizenship is claimed by descent from a mother. which I would accept. The first objection is that it leads to unacceptable discrimination between those born before and after the 1948 Act came into force on 1 January 1949. This is because claims to citizenship by descent from a mother by persons born before 1 January 1949 are governed by section 4C(3)(b) and (c) of the 1981 Act (as amended). These provisions deal with claims based on section 12(2) (5) of the 1948 Act, which provide subject to certain conditions for persons who were British subjects immediately before the commencement of the 1948 Act to become Citizens of the United Kingdom and Colonies on the commencement date. The status of British subjects immediately before 1 January 1949 was governed by the 1914 Act, which contained provisions for citizenship by descent similar to those of the 1948 Act. Section 4C(3)(b) and (c) of the 1981 Act (as amended) provides for Assumption B to be made where an applicant was born before 1 January 1949. Assumption B is that the law in force before 1 January 1949, ie section 1 of the Act of 1914, provided for a nationality status to be acquired by descent from the mother on the same terms as from a father. For this purpose, section 4C(3C) of the 1981 Act (as amended) provides that a nationality status is acquired by descent where its acquisition depends on the nationality status of one or both parents and does not depend upon an application being made for registration as a person who has that status. The Advocate General submits that in the case of persons born before 1 January 1949 this rules out claims to citizenship by descent through the female line based on reading section 1(1)(b)(v) of the 1914 Act (which applied a condition of registration for any person born outside His Majestys dominions) in accordance with Assumption B. The Inner House rejected this argument because section 1(1)(b)(v) of the 1914 Act did not require anything that could properly be described as an application for registration. An application, they thought, suggested an appeal to discretion whereas registration of the birth of an eligible child was a right. They concluded that subsection (3C) must be taken to refer to the registration of a person as having British nationality by naturalisation under regulations envisaged by section 19(1) of the 1914 Act. This may be so, although it is right to point out that section 1(1)(b)(v) of the 1914 Act is the only statutory provision in force before 1 January 1949 which referred to registration as a requirement for British nationality by descent. I should, however, prefer not to decide this point. It does not affect Ms Romeins case. For the purposes of this appeal, it is enough to point out that the provisions of subsection (3C) referring to the claims of those born before 1 January 1949 and those of subsection (3D) referring to the claims of those born after that date are in different terms. If there is any difference between the treatment of the two categories under section 4C of the 1981 Act (as amended), it arises from differences in the language of the two subsections. It is not anomalous. The second objection is that failing to apply the registration condition to those claiming under section 4C would lead to a different form of gender discrimination, because claimants through the female line would be free of the registration condition whereas claimants through the male line under the previous law were not. In other words there would be a difference of treatment between (i) persons who could have been registered as citizens because their fathers were citizens, but for whatever reason were not, and can do nothing about it, and (ii) persons who could not have been registered because their only claim was through their mother, in relation to whom no registration condition arises. I do not regard this as anomalous either. There is no discrimination between applicants, whether by gender or otherwise. There was historic discrimination between their parents, since a father was held to transmit his citizenship to his children while a mother was not. Section 4C simply corrects the subsisting consequences for their children of this historic discrimination. There is no question of current discrimination. Disposal I would dismiss the appeal and affirm the decision of the Inner House, albeit for the rather different reasons which I have given.

UK-Abs

Under section 5(1) of the British Nationality Act 1948 the general rule was that British citizenship was available to a person by descent if his or her father was a citizen of the United Kingdom and Colonies at the time of the persons birth. But, if the persons father was himself a citizen by descent only, then unless either the person was born in a British controlled territory or the father was in Crown service at the time of the birth, it was normally a condition under section 5(1)(b) that the persons birth should be registered at a British consulate within a year. Citizenship by descent could not be transmitted through the female line. Regulations permitted a British consul to register a birth only if the child was eligible for British citizenship. The Respondent, Shelley Elizabeth Romein, was born in the USA in 1978. The 1948 Act was in force at that time. Ms Romeins father was a US citizen with no personal connection to the UK. Her mother had been born in South Africa and was a citizen of the United Kingdom and Colonies by descent, because her father (Ms Romeins grandfather) had been born in the UK. Ms Romeins mother swore an affidavit in which she said that, while pregnant with her and in South Africa, she contacted the British consulate in Johannesburg to enquire about British citizenship for her unborn child. She was correctly told that the child was ineligible because her only claim by descent was through her mother. The British Nationality Act 1981 removed the restriction to descent through the male line for those born after 1 January 1983 (subject to a five year transitional period). The 1981 Act was amended retrospectively in 2003 and 2009. Section 4C of the amended 1981 Act, as it stood when Ms Romein applied for citizenship and as it now stands, requires applications for citizenship to be dealt with on the assumption that the law had always provided for citizenship by descent from the mother on the same terms as it provided for citizenship by descent from the father. However, in 2013 when Ms Romein sought to take advantage of the change, her application for citizenship was rejected because she was unable to satisfy the condition of registration within a year. The reason why she was unable to do so was that although the law was now deemed at all material times to have allowed claims to citizenship by descent through the female line, at the time of Ms Romeins birth in 1978 the staff of British consulate, acting entirely properly under the law as it actually was, would have refused to register her birth because she was ineligible for citizenship. Ms Romein applied for judicial review of the decision refusing her citizenship application. The Lord Ordinary dismissed that application for judicial review. Ms Romein appealed to the Inner House of the Court of Session which allowed her appeal, quashed the refusal of her citizenship application, and remitted her citizenship application for reconsideration. The Supreme Court unanimously dismisses the appeal, although for reasons other than those given by the Inner House. Lord Sumption gives the judgment, with which Lady Hale, Lord Reed, Lord Hodge and Lady Black agree. The refusal of Ms Romeins citizenship application, notwithstanding the assumption in section 4C, on the ground that the consular staff would have properly refused to register her birth is a paradoxical result, calling for scrutiny [3]. There are logically only three possible solutions to this conundrum [9]. The first approach is that Section 4C requires one to assume not only that the law had always provided for citizenship by descent through the female line, but that consular officials at the time in fact acted on that basis. This is Ms Romeins case, which the Inner House substantially adopted [9(1)]. This involves formidable difficulties. First, the counterfactual assumption that the consular officials would have registered the birth is inconsistent with section 4C(3D), according to which it is not to be assumed that the registration requirement was met. The Court cannot accept the view of the Inner House that section 4C(3D) serves only to cast on the applicant the burden of proving his her of claim without the assistance of any presumption of fact. Subsection (3D) does not say that. Moreover, the applicant would bear the burden of proving his or her claim anyway. Second, there is a conceptual problem about making the operation of section 4C dependent on an enquiry conducted years later into the question of whether a parent would have wished or intended or attempted to take advantage of a then non existent right. Third, if the counterfactual assumption includes an assumption about the steps which the parents would have taken with a view to obtaining British citizenship for their children, then it would be open to an applicant to seek citizenship by descent on the basis that the mother would have moved to a British controlled territory for the birth, or that a parent would have entered or continued in Crown service in time for the birth. It seems extremely unlikely that Parliament expected the operation of section 4C to depend on that practically unanswerable question. Subsection (3D) appears to have been added precisely to rule out such unrealistic enquiries [10]. The second approach is that section 4C requires one to assume only that the law had always provided for citizenship by descent, but not to make any assumption that the facts were other than they actually were. This is the Advocate Generals case, which the Lord Ordinary substantially adopted. This accords with the literal words of section 4C, but its result is that citizenship by descent through the female line would be available under section 5(1)(b) of the 1948 Act only where persons were registered by mistake or in defiance of the regulations. It is difficult to see why Parliament should have intended to help only them. The Court cannot accept the suggestion that the intention behind section 4C was to allow claims to citizenship by descent from a woman only in cases where citizenship followed automatically from certain specified circumstances and was not dependent on a person taking steps, such as registering a birth. Section 4C as drafted would be an extraordinary way of doing that. Parliament is highly unlikely to have had any such intention. It would have significantly undermined the purpose of section 5(1)(b) of the 1948 Act for no discernible reason [9(2) 11]. The solution is to treat the registration condition in section 5(1)(b) as inapplicable in applications for citizenship by descent from the mother. This is the only way to give effect to section 4C(3), given that section 4C(3D) precludes any counterfactual assumption that the birth was registered [9(3) 12]. There are two objections to this solution. The Court accepts neither. The first is that it is said to lead to unacceptable discrimination between those born before and after the 1948 Act came into force. The Court prefers not to decide this point. It does not affect Ms Romeins case. It is enough to point out that, if there is any difference between the treatment of those two categories of people, it arises from the wording of the 1981 Act (as amended) [13 14]. The second objection is that this solution leads to a different form of gender discrimination, because claimants through the female line would be free of the registration condition whereas claimants through the male line under the previous law were not. This is not anomalous either: there is no current discrimination between applicants. There was historic discrimination between their parents. Section 4C simply corrects the remaining consequences [13, 15].

Chevron North Sea Ltd operates an offshore installation in the North Sea (the installation). In April 2013, the installation was inspected by Mr Conner in his capacity as one of Her Majestys Inspectors of Health and Safety. Mr Conner was accompanied by three colleagues with specialist expertise of particular relevance to the inspection. A vital part of the installation is the helideck, the principal means of reaching the installation being by helicopter. The inspectors examined the condition of the stairways and stagings providing access to the helideck and formed the view that corrosion had rendered them unsafe so that there was a risk of serious personal injury from falling through them. Mr Conner therefore served a prohibition notice on Chevron under section 22 of the Health and Safety at Work etc Act 1974 (the 1974 Act). Chevron appealed against the prohibition notice to an employment tribunal under section 24 of the 1974 Act. The question for us to determine is what approach a tribunal hearing such an appeal should take. In particular, in reaching its decision whether to affirm, modify or cancel the notice, is the tribunal confined, as the appellant contends, to the material which was, or could reasonably have been, known to the inspector at the time the notice was served, or can it, as the respondent contends and the First Division of the Inner House of the Court of Session held, take into account additional evidence which has since become available? The relevant provisions of the 1974 Act Section 22 of the 1974 Act provides: 22. Prohibition notices (1) This section applies to any activities which are being or are likely to be carried on by or under the control of any person, being activities to or in relation to which any of the relevant statutory provisions apply or will, if the activities are so carried on, apply. (2) If as regards any activities to which this section applies an inspector is of the opinion that, as carried on or likely to be carried on by or under the control of the person in question, the activities involve or, as the case may be, will involve a risk of serious personal injury, the inspector may serve on that person a notice (in this Part referred to as a prohibition notice). (3) A prohibition notice shall state that the inspector is of the said opinion; specify the matters which in his opinion give or, (a) (b) as the case may be, will give rise to the said risk; (c) where in his opinion any of those matters involves or, as the case may be, will involve a contravention of any of the relevant statutory provisions, state that he is of that opinion, specify the provision or provisions as to which he is of that opinion, and give particulars of the reasons why he is of that opinion; and (d) direct that the activities to which the notice relates shall not be carried on by or under the control of the person on whom the notice is served unless the matters specified in the notice in pursuance of paragraph (b) above and any associated contraventions of provisions so specified in pursuance of paragraph (c) above have been remedied. (4) A direction contained in a prohibition notice in pursuance of subsection (3)(d) above shall take effect at the end of the period specified in the notice; or if the notice so declares, immediately. (a) (b) Section 24 provides: 24. Appeal against improvement or prohibition notice In this section a notice means an improvement notice (1) or a prohibition notice. (2) A person on whom a notice is served may within such period from the date of its service as may be prescribed appeal to an employment tribunal; and on such an appeal the tribunal may either cancel or affirm the notice and, if it affirms it, may do so either in its original form or with such modifications as the tribunal may in the circumstances think fit. (3) Where an appeal under this section is brought against a notice within the period allowed under the preceding subsection, then (a) in the case of an improvement notice, the bringing of the appeal shall have the effect of suspending the operation of the notice until the appeal is finally disposed of or, if the appeal is withdrawn, until the withdrawal of the appeal; (b) in the case of a prohibition notice, the bringing of the appeal shall have the like effect if, but only if, on the application of the appellant the tribunal so directs (and then only from the giving of the direction). (4) One or more assessors may be appointed for the purposes of any proceedings brought before an employment tribunal under this section. Also material to a consideration of the question at issue in this appeal is section 33 which provides: 33. Offences (1) It is an offence for a person (g) to contravene any requirement or prohibition imposed by an improvement notice or a prohibition notice (including any such notice as modified on appeal) . The central facts The prohibition notice served on Chevron stated that the inspector was of the opinion that there was a risk of serious personal injury because: The steel grating of the stagings and the stairway treads are in a weakened condition because of corrosion which compromises safe evacuation. Having launched an appeal in May 2013, Chevron arranged in July 2013 for the metalwork which had been of concern to the inspector to be removed from the installation and tested. The results of the testing were set out in an expert report dated March 2014. In short, with the exception of a panel which had been damaged during the inspection by an inspector striking it with a fire fighting axe in order to test the extent to which it was corroded, all the metalwork passed the British Standard strength test, and there was no risk of personnel being injured by falling through it. Without the damage, the damaged panel may well also have passed the test, but the damage made it impossible to determine its safety. Chevron sought to rely upon the expert report as part of their appeal to the tribunal. The inspector opposed that on the basis that the tribunal must focus on the information that was available, or ought reasonably to have been available, to an inspector at the time of the service of the notice. The results of the expert testing could not have been available to the inspector when he decided to serve the notice and so, in his submission, no regard could be had to them by the tribunal. The tribunal prudently approached the matter in two alternative ways. First, it looked at the position on the basis of the information that was or ought to have been available to the inspector, without having regard to the subsequent testing and analysis. On that basis, it would have affirmed the prohibition notice, albeit in a modified form. It then looked at the matter again, taking into account the expert evidence that came into existence later. Approaching things in that way, it concluded that at the time of the service of the notice, there was not, in fact, a risk of serious personal injury. As it decided that it was entitled to look at the later material, it cancelled the notice. The inspector appealed unsuccessfully to the First Division of the Inner House against both of the alternative conclusions of the tribunal. I can confine my attention to the second of the two alternatives, in relation to which the Inner House held that the tribunal had been correct to have regard to the subsequent testing and analysis, and entitled to accept that evidence. In the light of the fact that the Court of Appeal in England and Wales had taken a different view on the proper approach to an appeal under section 24 of the 1974 Act, in the case of Hague (One of Her Majestys Inspectors of Health and Safety) v Rotary Yorkshire Ltd [2015] EWCA Civ 696, the Inner House gave the inspector leave to appeal to this court on the point. The framework of the relevant provisions of the 1974 Act A prohibition notice directs that the activities to which it relates shall not be carried on unless the matters that, in the opinion of the inspector, gave rise to the risk of serious personal injury have been remedied (section 22(3)(d)). The notice can be drawn up to take effect immediately or at the end of a specified period (section 22(4)). Where the notice is not one with immediate effect, section 23(5) enables an inspector to withdraw it at any time before the date on which it is to take effect. There is no provision for an immediate notice to be withdrawn; it appears that the only way, under the statutory scheme, in which such a notice can be dislodged is by an appeal. A prohibition notice is not automatically suspended by an appeal. However, the appellant may apply to the tribunal for a direction suspending it from the date of the direction until the appeal is finally disposed of or withdrawn (section 24(3)). A public database of notices is kept by the Health and Safety Executive. Notices are entered on the database by virtue of statutory requirements in some cases, and otherwise as a matter of policy. However, registration is deferred to allow for the appeal process and, in the event of a successful appeal, does not take place. It is an offence to contravene a prohibition imposed by a prohibition notice (section 33 of the 1974 Act). This applies in full force to activity during the appeal period except in relation to a period during which the tribunal has directed that the notice is suspended. The practical effect of a prohibition notice Understandably, the appellant is at pains to emphasise, as an important part of his argument in support of his appeal to this court, that it is vital for inspectors to be able to take prompt and effective action to ensure compliance with the provisions of the 1974 Act. A prohibition notice is a powerful tool in the inspectors hands. It not only enables him to step in when he is of the opinion that a particular activity will involve a risk of serious personal injury, it also improves public safety by encouraging employers to have good systems in place so that they can demonstrate to the inspector that there is no material risk and thereby avoid the disruption of a prohibition notice. The service of a prohibition notice on a business has the potential to do considerable harm to it. Having to cease the activity in question will inevitably result in disruption and is likely also to have a financial cost, but there may be other serious consequences as well, including significant damage to the businesss reputation and its ability to tender for contracts. This is reflected in the fact that, according to the appellant, a very common motivation for an appeal against a notice is to avoid registration of the notice on the Health and Safety Executives public database. The issue It is common ground between the parties that a section 24 appeal is not limited to a review of the genuineness and/or reasonableness of the inspectors opinion, but requires the tribunal to form its own view of the facts, paying due regard to the inspectors expertise. It is also common ground that the tribunal should be focussing on the risk existing at the time when the notice was served. These agreed propositions still leave room, however, for the debate about what material the tribunal is entitled to take into account when forming its view of the facts as they were at the material time. The appellant invites us to adopt the reasoning of the Court of Appeal in the Rotary Yorkshire case (supra). Rotary Yorkshire were arguing for the broad interpretation of section 24 supported by Chevron in the present case and the inspector for the more limited interpretation for which the appellant contends. Laws LJ (with whom the other members of the court agreed) said: 31. the question for the inspector is whether there is a risk of serious personal injury. In reason such a question must surely be determined by an appraisal of the facts which were known or ought to have been known to the inspector at the time of the decision. He or she is concerned with the prevention of injury at that time, that is the focus of the provision, which, it should be remembered, contemplates action in a possible emergency. The employment tribunal on appeal are and are only concerned to see whether the facts which were known or ought to have been known justify the inspectors action. 34. To accede to [Rotary Yorkshires] argument would, I think, risk distorting the section 22 function. The primary question for the employment tribunal is whether the issue of the notice was justified when it was done. An inspector may rightly apprehend a risk and be justified in acting on his or her apprehension even though later necessarily unknown events may demonstrate that, in fact, there was no danger. Section 24 is not, in my judgment, to be construed so that it may appear to call in question the propriety of a notice which it may well have been the inspector's duty to issue at the time. This reasoning did not commend itself to the Inner House in the present case. Lord Carloway said, with the agreement of the other two members of the court who also added helpful reasoning of their own: 28. The fundamental problem with the approach of Laws LJ is that it prohibits an appeal on the facts in a situation where it can be demonstrated that the facts or information upon which the inspector proceeded were wrong. That is the essence or purpose of many appeals on the facts. In short, there is no sound basis for restricting appeals under section 24 to what would in essence be a form of judicial review of the inspectors opinion. An appeal on the facts is a much wider concept and it enables an appellant to prove, using whatever competent information is available at the time of the tribunals hearing on the appeal, that the factual content of the notice was wrong and that, accordingly, however reasonable the inspectors opinion was at the time, had the true facts been known, he would not have reached it. The answer to the issue which has divided the Court of Appeal and the Inner House does not jump out from the wording of section 24, and the matter must therefore be considered in the light of the statutory scheme as a whole. This leads me to conclude that the Inner House was correct in its interpretation of the section. When the inspector serves the notice, section 22 makes clear that what matters is that he is of the opinion that the activities in question involve a risk of serious personal injury. If he is of that opinion, the notice comes into existence. However, as it seems to me, when it comes to an appeal, the focus shifts. The appeal is not against the inspectors opinion but against the notice itself, as the heading of section 24 indicates. Everyone agrees that it involves the tribunal looking at the facts on which the notice was based. Here, as the inspector spelled out in the notice, the risk that he perceived arose by virtue of corrosion of stairways and gratings giving access to the helideck, and the focus was therefore on the state of that metalwork at the time when the notice was served. The tribunal had to decide whether, at that time, it was so weakened by corrosion as to give rise to a risk of serious personal injury. The inspectors opinion about the risk, and the reasons why he formed it and served the notice, could be relevant as part of the evidence shedding light on whether the risk existed, but I can see no good reason for confining the tribunals consideration to the material that was, or should have been, available to the inspector. It must, in my view, be entitled to have regard to other evidence which assists in ascertaining what the risk in fact was. If, as in this case, the evidence shows that there was no risk at the material time, then, notwithstanding that the inspector was fully justified in serving the notice, it will be modified or cancelled as the situation requires. It is important to recognise that it is no criticism of the inspector when new material leads to a different conclusion about risk from the one he reached. His decision often has to be taken as a matter of urgency and without the luxury of comprehensive information. There is no reason for him to be deterred from serving the notice by the possibility that, should more information become available at a later stage, his concerns may turn out to be groundless. Indeed, he might just as well feel less inhibited about serving it, confident that if it turns out that there is in fact no material risk, the position can be corrected on appeal. The effectiveness of a prohibition notice is in no way reduced by an appeal process which enables the realities of the situation to be examined by a tribunal with the benefit of additional information. Once served, the notice provides immediate protection, reinforced by the existence of criminal sanctions. It is common ground between the parties that, even if ultimately cancelled by a tribunal, any contravention of the notice prior to cancellation would still be a criminal offence. Furthermore, there does not seem to me to be any reason to suppose that the wider interpretation of section 24 would undermine the role that prohibition and improvement notices play in encouraging employers to have robust systems in place with a view to demonstrating easily, when an inspection takes place, that no risk exists. A prohibition notice remains in force during the appeal process, unless suspended by the tribunal, and such is the disruption and financial loss that this may cause that employers have plenty of encouragement to do what they can to avoid getting into such a situation in the first place. The appellant argues that permitting the tribunal to look beyond the material available to the inspector will introduce into the appeal process undesirable delay and cost, both financial and in terms of the Health and Safety Executives human resources, when the aim should be that any appeal is concluded speedily. This does not deflect me from my view as to the correct interpretation of section 24. The appeal must be launched within 21 days and its progress thereafter will be under the control of the tribunal. In any event, the continuing impact of the prohibition notice may well be an incentive for the employer to marshal his case speedily so as to free himself from the notice as quickly as possible. Turning to the situation of an employer in receipt of a prohibition notice, it is clear that there are potent considerations in favour of the wider interpretation of section 24. As the inspector cannot withdraw an immediate prohibition notice, even if he is completely convinced by material produced subsequently by the employer, the only means by which the notice can be cancelled under the statutory scheme is an appeal. Yet if the appellants interpretation is right, in such a case the appeal process would not dislodge the notice, which would remain in force, with all the attendant disadvantages for the business, even though the perceived risk never in fact existed. Indeed, it is even possible that in some cases, in order to be able to restart the activity named in the notice, an employer might have to carry out works which have been demonstrated to be unnecessary. The appellant argues that, in practice, confining the tribunals role narrowly would not cause any problems because, provided with convincing evidence that there was in fact no risk, the inspector would recognise that and not seek to enforce the notice, although the notice would still be registered on the public database because, the appellant argues, that is appropriate to reflect the fact that it was correctly served on the basis of the information then available to the inspector. This suggested solution does not, in my view, address the problem. The notice would still have the capacity to damage the reputation of the employer and his ability to do business. Furthermore, it cannot be right, in circumstances such as these, that the employer continues, after his appeal is concluded, to be exposed to the possibility of criminal proceedings, however improbable it is that proceedings would actually be taken. In addition, the appellants proposal proceeds upon the basis that the inspector is able to accept the evidence put forward subsequently by the employer, but he may not be able to do so. In those circumstances, a forum is required in which to determine the continuing dispute between the inspector and the employer or, putting it more constructively and in the spirit of the health and safety legislation, to determine whether the circumstances that concerned the inspector did in fact give rise to a relevant risk. The appeal process provides that necessary forum. I would therefore interpret section 24 of the 1974 Act as the Inner House did. In my view, on an appeal under section 24, the tribunal is not limited to considering the matter on the basis of the material which was or should have been available to the inspector. It is entitled to take into account all the available evidence relevant to the state of affairs at the time of the service of the prohibition notice, including information coming to light after it was served. I would accordingly dismiss the appeal.

UK-Abs

The Respondent operates an offshore installation in the North Sea. In April 2013, the installation was inspected by Her Majestys Inspectors of Health and Safety. The inspectors formed the view corrosion had rendered the stairways and stagings to the helideck (a helicopter landing platform) unsafe and served a prohibition notice on the Respondent under s.22 of the Health and Safety at Work Act 1974 (the 1974 Act). In May 2013, the Respondent appealed against the prohibition notice to an employment tribunal under s.24 of the 1974 Act. In July 2013, the Respondent arranged for the metalwork which had been of concern to the inspector to be removed from the installation and tested. The results of the testing showed that all the metalwork passed the British Standard strength test with the exception of a panel which had been damaged during the inspection and could not be tested reliably. There was no risk of personnel being injured by falling through it. The Respondent sought to rely upon the expert report as part of their appeal to the tribunal. The issue in the appeal is whether a tribunal is confined to the material which was, or could reasonably have been, known to the inspector at the time the notice was served or whether it can take into account additional evidence which has since become available. The Supreme Court unanimously dismisses the appeal. Lady Black gives the sole judgment with which the other Justices agree. On an appeal under s.24 of the 1974 Act, the tribunal is entitled to take into account all the available evidence relevant to the state of affairs at the time of the service of the prohibition notice, including information coming to light after it was served. [24] It is vital for inspectors to be able to take prompt and effective action to ensure compliance with the provisions of the 1974 Act. A prohibition notice is a powerful tool in the inspectors hands. It not only allows an inspector to step in when he is of the opinion that a particular activity will involve a risk of serious personal injury, it also encourages employers to have good systems in place to improve public safety. [12] However, the service of a prohibition notice on a business has the potential to do financial and reputational harm to it. [13] The answer to the issue of what information the tribunal is entitled to take into account when forming its view of the facts at the material time is not clear from the wording of s.24 and must be considered in the light of the statutory scheme as a whole. [17] An appeal against an inspectors notice is not against the inspectors opinion but against the notice itself. The tribunal in the present case had to decide whether the stairways to the helideck were so weakened by corrosion as to give rise to a risk of serious personal injury. There is no good reason for confining the tribunals consideration to the material that was, or should have been, available to the inspector. The tribunal must be entitled to have regard to other evidence which assists in ascertaining what the risk in fact was. If the evidence shows that there was no risk at the material time, then the notice will be modified or cancelled as the situation requires. [18] It is no criticism of the inspector when new material leads to a different conclusion about risk from the one he reached. His decision is often taken as a matter of urgency and without the luxury of comprehensive information. [19] The effectiveness of a notice is in no way reduced by an appeal process which enables the realities of the situation to be examined by a tribunal with the benefit of additional information. [20] This wider interpretation of s.24 does not undermine the role of prohibition and improvement notices in encouraging employers to have robust systems in place to demonstrate easily that no risk exists and therefore avoid the disruption of a prohibition notice which remains in force during the appeal process unless suspended by the tribunal. [21] The appellants arguments, that permitting the tribunal to look beyond the material available to the inspector will create delay and cost, do not change the conclusion on the wider interpretation of s.24. The appeal must be started within 21 days and will thereafter be under the control of the tribunal. [22] There are potent considerations in favour of the wider interpretation of s.24. The only means by which a notice can be cancelled under the statutory scheme is an appeal. However, if the appellants interpretation were correct a notice could not be dislodged even if the perceived risk of injury never in fact existed. In some cases, an employer might have to carry out unnecessary works. Further, even if, upon receipt of convincing evidence there was no risk the inspector would not seek to enforce the notice, the notice would still have the capacity to damage the reputation of the employer and his ability to do business. Furthermore, it cannot be right in those circumstances that an employer should be exposed to the possibility of criminal proceedings after his appeal is concluded. [23]

Ms Reilly, the head teacher of a primary school, is in a close relationship with Mr Selwood but it is not sexual and they do not live together. Mr Selwood is convicted of making indecent images of children. Ms Reilly has previously been unaware of his criminal activities. She fails to inform the schools governing body of his conviction with the result that, when it learns of it, her employer summarily dismisses her. The Employment Tribunal (the tribunal) decides that, save in an irrelevant procedural respect, her dismissal has not been unfair. Should the tribunals decision stand? The school is now an academy but at the relevant time it was maintained by Sandwell Metropolitan District Council (Sandwell), which is the respondent to Ms Reillys appeal to this court. Before the tribunal the schools governing body was a second respondent to her claim but, when it became an academy, the governing body ceased to exist and its liabilities were transferred to Sandwell. This court orders an end to its ghostly presence as a second respondent to the appeal. Ms Reilly appeals against an order of the Court of Appeal dated 19 July 2016, [2016] EWCA Civ 766, [2016] IRLR 779, in which she was referred to as A and Sandwell was referred to as B local authority. By a majority (Black and Floyd LJJ, the dissentient being Elias LJ), the court dismissed Ms Reillys appeal against an order of the Employment Appeal Tribunal (the EAT) dated 20 February 2014. The EAT (Wilkie J presiding) had dismissed Ms Reillys appeal against the order of the tribunal disseminated on 2 November 2012 that, save in the irrelevant procedural respect, her dismissal had not been unfair. Ms Reilly qualified as a teacher in 1987 and, prior to becoming the head teacher of the school, she had been a deputy head teacher in two other primary schools and an acting head teacher in two others. Her disciplinary record was exemplary. Ms Reilly met Mr Selwood in 1998 and they became close friends. In 2003 they bought a property as an investment in their joint names and set up a joint bank account out of which to pay the mortgage instalments. Mr Selwood lived there without making any payment to Ms Reilly. She never lived there with him but she sometimes stayed there overnight. One such night was 24 February 2009. Thus it was that, early the following morning, she was witness to the arrival at the property of the police, to their search of it and to their arrest of Mr Selwood on suspicion of having downloaded indecent images of children online. One month previously Ms Reilly had applied for the post of head teacher at the school. During the progress of her application in the following months Ms Reilly never disclosed Mr Selwoods arrest to Sandwell. It is possible that at first she considered him to be innocent of the allegations against him. But there clearly came a time, not identified in the evidence, when she realised that he was guilty and likely to be convicted; and nothing turns on when that time came. Ms Reilly was duly appointed to be head teacher of the school and she took up the position on 1 September 2009. On 1 February 2010 Mr Selwood was convicted of making indecent images of children by downloading them onto his computer. On a rating system under which level 5 is the maximum, the images were graded at levels 1 to 4. He was made the subject of a three year community order; and of a sexual offences prevention order, which included a prohibition on his having unsupervised access to minors and a requirement to participate in a sex offender programme. Ms Reilly became immediately aware of Mr Selwoods conviction but in the following months she decided not to disclose it to the governing body of the school or indeed to Sandwell. Her close friendship with him continued. In April 2010 they went on holiday together. He named her as an authorised driver on his motor insurance policy. In June 2010 Sandwell learnt of Mr Selwoods conviction and of Ms Reillys close relationship with him. It suspended her on full pay and in due course it summoned her to attend a disciplinary hearing to answer an allegation that, in having failed to disclose her relationship with a man convicted of sexual offences towards children, she had committed a serious breach of an implied term of her contract of employment, which amounted to gross misconduct. In May 2011 the disciplinary hearing took place. The panel consisted of the chair of the governors of another primary school and two governors of the school. Ms Reilly was represented by a solicitor. The panel upheld the allegation to which I have referred and, particularly in the light of her continuing refusal to accept that her relationship with Mr Selwood might pose a risk to pupils at the school and that her failure to disclose it had been wrong, it decided that she should be summarily dismissed. On 11 May 2011 Sandwell confirmed her dismissal with immediate effect. She appealed to an appeal panel which, in July 2011, dismissed her appeal. In August 2011 Ms Reilly presented a claim to the tribunal that her dismissal had been unfair. The substantive hearing of her claim took place over four days in September 2012, at which Ms Reilly had the benefit (which she has continued to have) of representation by Mr Palmer. In its written judgment the tribunal analysed with care the evidence placed before the disciplinary panel. It noted that in her written statement to the panel Ms Reilly had said that in 2009 and 2010 she had asked numerous people, including a police officer, probation officers and officers of other local authorities, whether she had a duty to disclose her relationship with Mr Selwood to the governing body and that their answer had been that she had no duty to do so. The tribunal found, however, that her evidence to it in this regard had been unclear; it noted that two of the probation officers identified in her statement had given statements in which they had denied that their advice to her had been as she had alleged; and it observed that, shortly after Mr Selwoods conviction, a third probation officer had, by letter, advised her that it would be wise to disclose her relationship with him. The tribunal found that the reason for Sandwells dismissal of Ms Reilly was that she had that Sandwell genuinely believed that the non disclosure amounted to a) failed to disclose her relationship with a convicted sex offender; b) misconduct; c) that there were reasonable grounds for Sandwells belief in that it was obvious that for a head teacher to have failed to disclose such information to her governing body whether it is expressed in her contract of employment or not is a matter of misconduct; and that, notwithstanding Ms Reillys exemplary disciplinary record but d) in the light, among other things, of her continuing refusal to accept that her non disclosure had been wrong, her dismissal had been within the range of reasonable responses open to Sandwell. Nevertheless the tribunal proceeded to find that the hearing of Ms Reillys appeal by the appeal panel had been so unsatisfactory as to render her dismissal procedurally unfair. In the light, however, of its conclusion that, even had the hearing been satisfactory, there was a 90% chance that her appeal would still have been dismissed, it directed that her compensation be reduced by 90% in accordance with the approach indorsed in Polkey v A E Dayton Services Ltd [1988] 1 AC 344. But the tribunal went further: pursuant to section 123(6) of the Employment Rights Act 1996 (the Act), it also concluded that she had contributed to her dismissal by blameworthy conduct and it assessed her contribution at 100%. Although, including in her appeal to this court, she has challenged the tribunals conclusions in both these respects, Ms Reilly accepts that the challenge would become live only if the court were to set aside the tribunals decision that, substantively, her dismissal was not unfair. A tribunals inquiry into whether a dismissal is unfair is governed by section 98 of the Act. The first part of the inquiry, governed by subsections (1) to (3), is whether the employer has shown both the reason for the dismissal and that the reason relates to the employees conduct or falls within another part of subsection (2) or otherwise justifies dismissal. In this case the employer showed the reason for the dismissal, namely the non disclosure, and that it related to Ms Reillys conduct. The case turns on the second part of the inquiry, governed by subsection (4) of section 98 of the Act. It provides that the tribunals determination of whether a dismissal is unfair (a) depends on whether in the circumstances the employer acted reasonably or unreasonably in treating [the reason shown by it] as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case. A tribunals inquiry into whether the employer acted unreasonably in treating the reason as sufficient for dismissal seems simple enough in principle, albeit no doubt often difficult in application. The later reference to a determination in accordance with the merits of the case might have suggested that the tribunal somehow had a more direct function in appraising the dismissal; but any such suggestion was dispelled in the judgments of the Court of Appeal in Orr v Milton Keynes Council [2011] EWCA Civ 62, [2011] ICR 704, at paras 62 to 64 and 91 to 98. At all events the proper approach to the inquiry under subsection (4) is now firmly established at the level of the Court of Appeal; and the parties to this appeal do not invite this court to review it. The proper approach to the inquiry under what is now subsection (4) has long been regarded to have been set out in the judgment of the EAT (Arnold J presiding) in British Home Stores Ltd v Burchell (Note) [1980] ICR 303. In the present case Elias LJ described it as the classic formulation of the employers obligation in misconduct cases. In the passage of the judgment at p 304 frequently cited, the EAT, through Arnold J, held that the tribunal had to be satisfied first that the employer believed that the employee was guilty of misconduct; second that it had reasonable grounds to sustain its belief; and third that, prior to forming its belief, it had carried out a reasonable amount of investigation into the matter. It is at once apparent that the three requirements identified by Arnold J do not well fit the inquiry mandated by what is now section 98(4). It is indeed clear that, on the contrary, they were directed to the first part of the inquiry under what is now section 98(1) to (3). Unlike in the present case, in which the conduct the non disclosure is an agreed fact, the employees alleged conduct is often disputed. So it was in the British Home Stores case. The issue there was whether, which she denied, the employee in the store had dishonestly abused her right to buy its goods at a discount. To the tribunals resolution of that disputed issue relating to her conduct, Arnold Js three requirements, which all related to belief in the employees guilt, fitted perfectly. Applying them, the EAT held that the store had reasonable grounds for its belief that the employee had conducted herself dishonestly and which was not separately considered because it followed so obviously that therefore, under a precursor to section 98(4), it had been reasonable for the store to treat her conduct as a sufficient reason for her dismissal. But, although the judgment of Arnold J on behalf of the EAT in the British Home Stores case did not relate to the inquiry mandated by what is now section 98(4) of the Act, the Court of Appeal has for long applied it to that inquiry. Thus, in Foley v Post Office [2000] ICR 1283 Mummery LJ, with whom the other members of the court agreed, stated at 1287 1288 that the tripartite approach there explained by Arnold J governed not only the reason for a dismissal but its reasonableness or unreasonableness. Since then the Court of Appeal has consistently adopted the same view of the breadth of Arnold Js judgment: see for example Turner v East Midlands Trains Ltd [2012] EWCA Civ 1470, [2013] ICR 525, para 1. Nevertheless, so far as I can see albeit in the absence of full argument, no harm has been done by the extravagant view taken of the reach of the judgment of Arnold J in the British Home Stores case. In effect it has been considered only to require the tribunal to inquire whether the dismissal was within a range of reasonable responses to the reason shown for it and whether it had been preceded by a reasonable amount of investigation. Such requirements seem to me to be entirely consonant with the obligation under section 98(4) to determine whether, in dismissing the employee, the employer acted reasonably or unreasonably. On any view it is clear that the tribunal is at one remove from answering the direct question: was the dismissal unfair? Instead it must answer the question: was the dismissal within the range of reasonable responses to the reason shown for it by the employer? Indeed all appellate bodies, namely the EAT and, in this case, also the Court of Appeal and this court, are at two removes from answering the direct question. For, under section 21(1) of the Employment Tribunals Act 1996, an appeal against the tribunals decision lies only on a point of law and therefore, in the absence of procedural error, can succeed only if for some reason the tribunals decision was not open to it or, in other words, only if the tribunal had not been entitled to reach it. Thus, in the present case, the EAT correctly identified the question to be whether the tribunal had been entitled to conclude that this was a case in which dismissal did fall within the range of reasonable responses. The exercise required of an appellate body is not always easy. It might, for example, be an intellectual struggle for it to conclude: left to ourselves, we would not have considered that the dismissal fell within the range of reasonable responses but the tribunal was entitled to conclude that it did so. But those of us required to determine these appeals must conduct the exercise as best we can. Ms Reillys challenge to the tribunals decision rests primarily upon a challenge to its acceptance of the panels conclusion that she was under a duty to disclose her relationship with Mr Selwood. Sandwell responds that the tribunal was correct to accept that she was under that duty. It seems that an employees conduct within the meaning of section 98(2)(b) of the Act can precipitate a fair dismissal even if it does not constitute a breach of her contract of employment: see the observation of Phillips J on behalf of the EAT in Redbridge London Borough Council v Fishman [1978] ICR 569, 574, adopted by the EAT in Weston Recovery Services v Fisher UKEAT/0062/10/ZT at para 13. But in the present case Sandwell contends that the duty of disclosure did arise under Ms Reillys contract of employment. Section 175(2) of the Education Act 2002 provides: The governing body of a maintained school shall make arrangements for ensuring that their functions relating to the conduct of the school are exercised with a view to safeguarding and promoting the welfare of children who are pupils at the school. Ms Reillys job description included a requirement to advise, assist and inform the Governing Body in the fulfilment of its responsibilities and to be accountable to the Governing Body for the maintenance of the safety of all pupils. She was therefore, as she accepts, under a contractual duty to assist the governing body in discharging its duty to exercise its functions with a view to safeguarding the pupils. Indeed the disciplinary provisions in her contract of employment identified a failure to report something which it was her duty to report as being an example of conduct which might lead to disciplinary action. But (asks Ms Reilly) where was the evidence which suggested that her particular relationship with Mr Selwood engaged the governing bodys safeguarding functions? The panel proceeded on the basis that the evidence existed. The tribunal observed that it was obvious that her relationship engaged its functions. The EAT held that the tribunals view was open to it, as did Black and Floyd LJJ. Elias LJ, on the other hand, held that the answer to Ms Reillys question was that there was no such evidence. As it happens, Parliament has itself recognised that sexual offenders towards children can represent a danger to children not only directly but indirectly by operating through those with whom they associate. The Childcare Act 2006 and regulations made under it contain a good example, albeit not cited to the tribunal. Sections 34(1) and 53(1) require those providing childcare in specified circumstances for children aged under eight to be registered. Regulation 4 of the Children (Disqualification) Regulations 2009 (SI 2009/1547), made under section 75(2) of that Act, would, subject to waiver, disqualify Mr Selwood from registration. But what is significant for present purposes is regulation 9, which disqualifies from registration a person who lives in the same household as a disqualified person or in a household in which a disqualified person is employed. Although the registration provisions do not apply to maintained schools and, even if they did apply, would not have led to the disqualification of Ms Reilly, who did not live in the same household as Mr Selwood, they illumine the democratic judgement about the danger posed to children by such an offender in operating through his close associates. Although no doubt in some cases the offender can persuade his associates consciously to assist him to gain access to children, they can, as in her judgment Black LJ observed, be quite unaware of the use which he makes of them in order to gain access. The particular case of Ms Reilly is that of a head teacher, likely to know more than any other member of staff about the pupils, their circumstances at home, their personalities, their routines at school and their whereabouts from day to day; and indeed likely to be more able than any other member of staff to authorise visitors freely to enter school premises. The tribunal found that Ms Reilly herself knew that she was subject to a duty to disclose because she would not otherwise have made enquiries as to the circumstances in which disclosure was triggered. The proposition is, with respect, illogical. Nevertheless her wide ranging inquiries show how near to the border line even she, with understandable reluctance, recognised her case to be. The objective decision makers on the panel, all school governors, ruled that the case fell on the side of the line which required disclosure. Mr Selwood was the subject of a serious, recent conviction. The basis of his sentence was that he represented a danger to children. His relationship with the head of the school created, to put it at its lowest, a potential risk to the children. The risk required assessment. It was not for Ms Reilly to conduct the assessment; it was a function of the governors. As head teacher, she represented, as Ms Hannett on behalf of Sandwell submits, the eyes and ears of the governors in the school. Had she disclosed her relationship to them, it is highly unlikely that she would have been dismissed, still less that the tribunal would have upheld any dismissal as fair. Far more likely would have been the extraction by the governors of promises by Ms Reilly that she would not allow Mr Selwood to enter the school premises and perhaps, for example, that outside the school she would not leave information about pupils, for example stored electronically, in places where he might be able to gain access to it. In my opinion the tribunal was entitled to conclude that it was a reasonable response for the panel to have concluded that Ms Reillys non disclosure not only amounted to a breach of duty but also merited her dismissal. For her refusal to accept that she had been in breach of duty suggested a continuing lack of insight which, as it was reasonable to conclude, rendered it inappropriate for her to continue to run the school. So I would dismiss the appeal. LADY HALE: I agree entirely, for the reasons given by Lord Wilson, that Ms Reilly was in breach of her contract of employment by not informing her employers of her connection with Mr Selwood. Ms Reilly had a duty to advise, assist and inform the Governing Body in the fulfilment of its safeguarding responsibilities towards the schools pupils. Those who are guilty of sexual offences against children pose a risk to the safety of other children both directly and indirectly. There are many ways in which Mr Selwood, should he choose to do so, might have used his friendship with Ms Reilly to gain access to the schools pupils: not only through being allowed to visit the school but also through finding out information about the pupils. Reporting the connection would have enabled a serious discussion to take place about how those risks might be avoided. There is no reason to think that it would have been a resigning matter. Issues could have been identified and solutions found. It is the absence of that full and frank disclosure and discussion which was the cause for serious concern. And it is the absence of any acknowledgement of what she should have done which makes the decision to dismiss her reasonable, indeed some might think it inevitable. The case might have presented an opportunity for this court to consider two points of law of general public importance which have not been raised at this level before. The first is whether a dismissal based on an employees conduct can ever be fair if that conduct is not in breach of the employees contract of employment. Can there be conduct within the meaning of section 98(2)(b) which is not contractual misconduct? Can conduct which is not contractual misconduct be some other substantial reason of a kind such as to justify the dismissal within the meaning of section 98(1)(b)? It is not difficult to think of arguments on either side of this question but we have not heard them we were only asked to decide whether there was a duty to disclose and there clearly was. Nor have we heard any argument on whether the approach to be taken by a tribunal to an employers decisions, both as to the facts under section 98(1) to (3) of the Employment Rights Act 1996 and as to whether the decision to dismiss was reasonable or unreasonable under section 98(4), first laid down by the Employment Appeal Tribunal in British Homes Stores Ltd v Burchell (Note) [1978] ICR 303 and definitively endorsed by the Court of Appeal in Foley v Post Office [2000] ICR 1283, is correct. As Lord Wilson points out, in para 20 above, the three requirements set out in Burchell are directed to the first part of the inquiry, under section 98(1) to (3), and do not fit well into the inquiry mandated by section 98(4). The meaning of section 98(4) was rightly described by Sedley LJ, in Orr v Milton Keynes Council [2011] ICR 704, at para 11, as both problematical and contentious. He referred to the cogently reasoned decision of the Employment Appeal Tribunal (Morison J presiding) in Haddon v Van den Burgh Foods [1999] ICR 1150, which was overruled by the Court of Appeal in Foley. Even in relation to the first part of the inquiry, as to the reason for the dismissal, the Burchell approach can lead to dismissals which were in fact fair being treated as unfair and dismissals which were in fact unfair being treated as fair. Once again, it is not difficult to think of arguments on either side of this question but we have not heard them. There may be very good reasons why no one has challenged the Burchell test before us. First, it has been applied by Employment Tribunals, in the thousands of cases which come before them, for 40 years now. It remains binding upon them and on the Employment Appeal Tribunal and Court of Appeal. Destabilising the position without a very good reason would be irresponsible. Second, Parliament has had the opportunity to clarify the approach which is intended, should it consider that Burchell is wrong, and it has not done so. Third, those who are experienced in the field, whether acting for employees or employers, may consider that the approach is correct and does not lead to injustice in practice. It follows that the law remains as it has been for the last 40 years and I express no view about whether that is correct.

UK-Abs

The Appellant, Ms Caroline Reilly, is the former head teacher of a primary school which was, at the relevant time, maintained by the Respondent, Sandwell MBC (the local authority). Approximately ten years before Ms Reilly became the head teacher of the school, she met a man named Ian Selwood, who became her close friend. They were not, however, in a sexual or romantic relationship. In 2003 they bought a property as an investment in their joint names and set up a joint bank account to pay the mortgage instalments. Mr Selwood lived in the property and Ms Reilly sometimes stayed there overnight. In January 2009 Ms Reilly applied for the position of head teacher at the school. On 25 February 2009, having just stayed overnight at their jointly owned property, she witnessed Mr Selwoods arrest by the police on suspicion of having downloaded indecent images of children. Ms Reilly was subsequently appointed to be head teacher and took up the position on 1 September 2009. Mr Selwood was convicted on 1 February 2010 of making indecent images of children by downloading them onto his computer. Although Ms Reilly became immediately aware of Mr Selwoods conviction, she decided not to disclose it to the governing body of the school. Her close friendship with Mr Selwood continued, and in April 2010 they went on holiday together. In June 2010 the local authority learnt of Mr Selwoods conviction, and of Ms Reillys friendship with him. It suspended Ms Reilly and subsequently summoned her to a disciplinary hearing in May 2011. At that hearing, the panel upheld the allegation that, by having failed to disclose her relationship with a man convicted of sexual offences towards children, Ms Reilly had committed a serious breach of an implied term of her contract of employment which amounted to gross misconduct. The panel were particularly concerned by Ms Reillys continuing refusal to accept that her relationship with Mr Selwood might pose a risk to pupils and the school, and that she should therefore have disclosed it to the governors. Ms Reilly was, as a result, summarily dismissed. Ms Reilly subsequently brought proceedings for unfair dismissal and sex discrimination in the Employment Tribunal, maintaining that she had been under no obligation to disclose the information. The Tribunal held that, save for an irrelevant procedural element, the decision to dismiss her had not been unfair. Her sex discrimination claim was also dismissed. Ms Reilly thereafter appealed to both the Employment Appeal Tribunal and the Court of Appeal on the unfair dismissal point, but was unsuccessful on both occasions. The Supreme Court unanimously dismisses the appeal. Lord Wilson gives the judgment with which Lord Carnwath, Lord Hughes and Lord Hodge agree. Lady Hale gives a concurring judgment. An inquiry into whether a dismissal is unfair is governed by s.98 of the Employment Rights Act 1996. In summary, this requires that the employer show (i) that there is a reason for the dismissal, (ii) that that reason relates to the employees conduct or is similarly justifiable, and (iii) that they acted reasonably in treating the reason as sufficient for the dismissal [16 18]. On this latter point, i.e. the reasonableness of the employers conduct, the courts have for many years employed the test set out in the case of British Home Stores Ltd v Burchell [1980] ICR 303 [19]. This has been considered, in effect, to require the tribunal to inquire whether the dismissal was within a range of reasonable responses to the reason shown for it, and whether it had been preceded by a reasonable amount of investigation [22]. In this case, Ms Reilly was under a contractual obligation to assist the governing body in discharging its duty to safeguard the pupils, and the question was whether her relationship with Mr Selwood engaged the governing bodys safeguarding functions [25 26]. Parliament has previously recognised (for example via the Childcare Act 2006 and the regulations made under it) that sexual offenders towards children can represent a danger to children not only directly but also indirectly by operating through those with whom the children associate. Mr Selwood was the subject of a serious, recent conviction and the basis of his sentence was that he represented a danger to children. As head teacher, Ms Reilly was likely to know important information about her pupils, including their whereabouts, their routine and their circumstances at home. She was also likely to be able to authorise visitors to enter the school premises. Mr Selwoods relationship with Ms Reilly therefore created a potential risk to the children at the school. This risk required the assessment of the governors [27 28]. In these circumstances, the employment tribunal was entitled to conclude that it was a reasonable response for the disciplinary panel to have concluded that Ms Reillys non disclosure of her relationship with Mr Selwood not only amounted to a breach of duty, but also merited her dismissal. Ms Reillys continuing refusal to accept that she had been in breach of her duty suggested a lack of insight which, it was reasonable to conclude, rendered it inappropriate for her to continue to run the school [29]. Lady Hales Concurring Judgment Lady Hale agrees, and for the reasons given by Lord Wilson, that Ms Reilly breached her contract of employment by not informing her employers of her connection with Mr Selwood. She also agrees that Ms Reillys continuing failure to acknowledge that this information should have been disclosed made the decision to dismiss her reasonable [31]. Notwithstanding this, Lady Hale wishes to note that this case might, if argued differently, have presented an opportunity for the Supreme Court to consider two points of law of general public importance which have not been raised at this level before. Namely, (1) whether a dismissal based on an employees conduct can ever be fair if that conduct is not in breach of the employees contract of employment [32], and (2) whether the approach laid down by the Employment Appeal Tribunal in British Homes Stores Ltd v Burchell is correct [33]. In the absence of any such argument, however, the law remains unchanged, and Lady Hale expresses no view as to whether that is correct [35].

In these proceedings the appellant, Ms OConnor, a practising barrister, claims damages under the Human Rights Act 1998 against the respondent, the Bar Standards Board (the BSB), alleging discrimination in her enjoyment of the right to a fair trial, in breach of article 14 of the European Convention on Human Rights (ECHR) considered in conjunction with article 6 ECHR. The appellant, who is black, alleges that the BSB discriminated against her on grounds of her race in bringing disciplinary proceedings which ended in her acquittal on appeal in August 2012. On 9 June 2010 the BSB Complaints Committee brought 6 disciplinary charges against the appellant. Charges 1 3 each alleged professional misconduct in that she had conducted litigation by signing a statement of truth on behalf of a party to litigation. Charge 4 alleged professional misconduct in that, in conducting litigation by signing a statement of truth on behalf of a party to litigation, she failed to have regard to Public Access Work Guidance for Barristers, issued by the General Council of the Bar. Charge 5 alleged professional misconduct in that she engaged in conduct discreditable to a barrister by committing an offence under section 70(8) of the Courts and Legal Services Act 1990 as a member of an unregulated limited liability partnership which filed a defence and counterclaim with the claimants solicitor, thereby unlawfully conducting litigation. Charge 6 alleged professional misconduct in that she engaged in conduct likely to diminish public confidence in the legal profession or the administration of justice or otherwise bring the legal profession into disrepute by committing the offence contrary to section 70(8) of the Courts and Legal Services Act 1990 referred to in Charge 5. On 23 May 2011 a Disciplinary Tribunal found Charges 1 5 proved. Charge 6 was dismissed. The appellant appealed to the Visitors to the Inns of Court (the Visitors). (It should be noted that the procedure for an appeal to the Visitors with which we are concerned in this case is no longer in force, having been replaced by an appeal to the High Court. See section 24(1) of the Crime and Courts Act 2013 which came into force on 7 January 2014; Tariq Rehman v The Bar Standards Board [2016] EWHC 1199 (Admin), at para 22, Hickinbottom J.) On 17 August 2012 her appeal was allowed. The Visitors found that none of the conduct alleged against the appellant involved any breach of the Code of Conduct of the Bar of England and Wales. Sir Andrew Collins, delivering the judgment of the Visitors, observed that they had no doubt that none of these charges should stand. In the light of this conclusion it was not necessary for the Visitors to rule on two further submissions, namely that there had been procedural unfairness in the course of the hearing and that there was a lack of reasons in the decision of the tribunal. The Visitors observed, however, that there was in their view considerable force in those submissions. The appellant issued the present proceedings against the BSB on 21 February 2013. The appellant relied on various causes of action including allegations of violation of articles 6 and 14 ECHR, contrary to section 6 of the Human Rights Act 1998. By its defence the BSB denied the appellants allegations and also maintained that the claims under the 1998 Act were time barred. On 9 October 2013 the appellant issued an application for directions. These included an application for permission to amend her particulars of claim and directions for the service of a reply. The draft amended pleading did not answer the BSBs plea that the claim was time barred. The appellant did not serve a reply. On 3 January 2014 the BSB issued an application seeking an order that the statement of case be struck out pursuant to CPR rule 3.4(2) on the grounds that it disclosed no reasonable grounds for bringing the claim or that summary judgment be given in its favour pursuant to CPR Part 24. On 28 March 2014 Deputy Master Eyre heard the application. The BSB maintained that none of the claims had a real prospect of success and that, in any event, the limitation defence was bound to succeed. Deputy Master Eyre granted the application with costs. He held: (1) The allegation is on its face time barred and there is no application to extend the time limits; and (2) So far as the allegation rests on the allegations supporting misfeasance it must fail. (3) The allegation rests also on a general assertion that the defendant is habitually or systematically unfair to black barristers, an allegation which is demurrable. (4) The evidence is quite to the contrary. The appellants appeal was heard by Warby J [2014] EWHC 4324 (QB) who on 18 December 2014 held that there was sufficiently pleaded a case that the BSB indirectly discriminated against the appellant on racial or ethnic grounds by bringing the disciplinary proceedings against her. He did not consider that it was possible for the court to determine that the appellant had no real prospect of establishing that the statistics on which she relied were significant (at paras 63, 65). However, he held (at para 79) that the claim was time barred by section 7(5) of the 1998 Act. Here, the act complained of in the one human rights claim that I have held to be both adequately pleaded and sustainable for the purposes of a summary judgment application is the BSBs prosecution of the appellant. The decision to bring proceedings was taken on 9 June 2010 or at the latest in late July 2010 when the charges were served on the appellant. If time runs from either of those dates then the one year time limit expired some 17 or 18 months before the issue of these proceedings in February 2013. If the BSBs prosecution of the appellant is considered to be a continuing state of affairs up to the tribunal decision, time under section 7 expired in May 2012. Warby J also rejected (at para 81) the submission on behalf of the appellant that the deputy master had been wrong not to grant her an extension of time under section 7(5)(b) of the 1998 Act. The appellant appealed to the Court of Appeal. In its judgment of 25 July 2016 the Court of Appeal (Lord Dyson MR, Elias and Sharp LJJ) [2016] 1 WLR 4085 held that the one year time limit under section 7(5)(a) of the 1998 Act had started to run when the Disciplinary Tribunal had found the charges against the claimant proved and so had expired before she had issued her claim. The Court of Appeal refused a renewed application for permission to appeal on the ground that the limitation period should have been extended pursuant to section 7(5)(b) of the 1998 Act. On 8 December 2016 the Supreme Court granted permission to appeal only in respect of the issue under section 7(5)(a) of the 1998 Act. The following issues arise on this appeal. (1) Are the disciplinary proceedings brought by the BSB against the appellant to be considered a series of discrete acts or a single continuing act for the purposes of section 6(1)(a) of the 1998 Act? (2) Tribunal or with the verdict of the Visitors? If the latter, does that act end with the verdict of the Disciplinary Furthermore, by a respondents notice, the BSB contends that the decision of the Court of Appeal should be affirmed on grounds other than those relied on by that court, namely that Warby J erred in holding that the article 14 claim had a real prospect of success. In this regard, the BSB also seeks permission to adduce new evidence of fact, thereby replicating a respondents notice and related application to adduce new evidence which were before the Court of Appeal. Relevant Provisions Article 6(1) ECHR provides in relevant part: (1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Article 14 ECHR provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. Section 6 of the 1998 Act provides in relevant part: (1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. (6) An act includes a failure to act Section 7 of the 1998 Act provides in relevant part: (1) A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may (a) bring proceedings against the authority under this Act in the appropriate court or tribunal; or (b) in any legal proceedings, rely on the Convention right or rights concerned but only if he is (or would be) a victim of the unlawful act. (5) Proceedings under subsection (1)(a) must be brought before the end of the period of one year beginning with the date on (a) which the act complained of took place; or (b) considers equitable having regard circumstances, such longer period as the court or tribunal to all the but that is subject to any rule imposing a stricter time limit in relation to the procedure in question. The nature of the discrimination claim Before addressing the application of section 7(5)(a) to the present proceedings, it is necessary to consider the precise nature of the discrimination claim which the appellant wishes to make. In particular it is necessary to establish whether the complaint is directed at the conduct of the BSB in bringing and pursuing the prosecution against this appellant or, more generally, at alleged systemic discrimination against BME barristers. The discrimination claim is pleaded in the Particulars of Claim in very general terms which are vague and unclear. The relevant paragraphs provide: 22. The defendant infringed the claimants right to a fair trial on grounds of her race, in breach of article 14 of the Convention. 23. The refusal to allow sufficient time to prepare is in line with the defendants general complaints process which impacts disproportionately on black and ethnic Barristers. Black and ethnic Barristers are more likely to have a complaint referred for disciplinary action, are more likely to be convicted, and are more likely to have those convictions upheld. The claimant avers that the fact that every element of the defendants disciplinary system impacts on black and ethnic Barristers more adversely indicates that there is a systemic bias against black and ethnic Barristers. 24. There is no objective or reasonable reason why, given that black and ethnic Barrister make up such a small proportion of the Bar, they are more likely to be investigated following a complaint, more likely to have a complaint referred for prosecution, more likely to be prosecuted, more likely to be convicted and more likely to have those convictions upheld. There is no objective reason why the defendant ignored its own rules and prosecuted the claimant. 29. The defendant discriminated against the claimant indirectly in breach of section 53(2), 53(3) of the Equality Act 2010, section 1 of the Race Relations Act 1976 and article 14 of the Convention. The defendants rules are applied in such a way that although the Code of Conduct of the Bar applies to all Barristers in England and Wales it particularly disadvantages ethnic Barristers who make up only a small proportion of the membership of the Bar. The claimant again repeats para 20 of these Particulars. The reference in para 23 to refusal to allow sufficient time to prepare is no longer relevant as that basis of claim did not survive the hearing before Warby J. Para 20 of the pleading had alleged, inter alia, that the BSB had acted knowing that it had no power to act because its actions were in breach of its own rules and knowing that its action would injure the claimant. Warby J had this to say about the pleaded case: 63. The relevant parts of the appellants particulars of claim could be more clearly formulated and do contain some surplus wording. In my judgment however she has, within paras 22 24 and 29, sufficiently pleaded a case that the BSB indirectly discriminated against her on racial or ethnic grounds by bringing the disciplinary prosecution against her. At 23 and 24 she alleges that in practice the complaints process impacts disproportionately on BME barristers in particular ways. These include the allegation that BME barristers are more likely to have a complaint referred for prosecution. She also alleges, though it may not be necessary for her to do so, that there is no objective reason to justify this different treatment. At 29 she expressly alleges indirect discrimination in that the relevant rules are applied in such a way by the BSB that it particularly disadvantages black barristers. At para 79 he concluded that the act complained of in the one human rights claim that he held to be both adequately pleaded and sustainable for the purposes of a summary judgment application was the BSBs prosecution of the appellant. However, he also considered (at para 62) that the decision of the Grand Chamber of the European Court of Human Rights in DH v Czech Republic (2008) 47 EHRR 3 showed that in an appropriate case statistics may be relied on to establish that an applicant is a member of a group which has been treated differently in practice from others in a comparable situation in a way which is disproportionately prejudicial to members of that group, and thereby shift the onus to the public body concerned to provide evidence of an objective and reasonable justification for the difference. In the Court of Appeal Lord Dyson MR (at para 21) approached the issue of limitation on the basis that the complaint was that the proceedings against the appellant were in breach of article 14. Elias LJ (at paras 38 and 39) suggested that some confusion had arisen over the article 14 claim. He distinguished between an allegation of discriminatory treatment of the appellant herself and a distinct, wider allegation that there is systemic discrimination against BME barristers. In the former case the focus had to be on the act or acts directed against the appellant and the limitation period fell to be determined by reference to that act or those acts. In that regard the disproportionate treatment of BME barristers was potentially evidence of discrimination against the appellant herself. In the latter case each BME barrister subjected to the disciplinary process would, on the analysis of DH, be a victim with the right to take action to challenge the wider systemic discrimination. The remedy for such a claim would, however, be different and it was highly arguable that the limitation period would run from a different time. In his view the operation of the limitation period had at all points in the present proceedings been argued on the assumption that it ran by reference to acts directed against the appellant. Accordingly, that gave rise to the question whether the decision to bring disciplinary proceedings against her, as an alleged act of discrimination, was a continuous act or not and if so, whether it ran until the appeal was determined. On this appeal counsel for the appellant, Mr Mark Anderson QC and Mr S Chelvan, neither of whom appeared below, have made clear in their written case and in the oral submissions of Mr Anderson that the appellants complaint is that the disciplinary proceedings were brought against her for reasons which infringe her Convention rights. The BSBs written case states that the only act complained of which survived the hearing before Warby J is the alleged violation of article 14 by indirect discrimination pursuant to the DH v Czech Republic line of Strasbourg case law. However, it later states that the only surviving allegation of discrimination is that by bringing disciplinary proceedings against the appellant, the respondent indirectly discriminated against her contrary to article 14 pursuant to the DH v Czech Republic line of Strasbourg case law. I agree with Elias LJ as to the basis on which the claim has been presented and I gratefully adopt his analysis. The appellants challenge is to the conduct of the BSB in bringing and pursuing disciplinary proceedings against her, not to an alleged state of affairs in which BME lawyers were more likely to be the subject of such proceedings. The appellants reliance on DH is intended to demonstrate that the disciplinary proceedings against her were discriminatory. This has an important impact on the issue of limitation. The bringing and pursuit of disciplinary proceedings must be the focus of the investigation into the date on which the act complained of took place. Section 7(5)(a): A series of acts or a single act? The question which then arises in relation to the application of section 7(5)(a) to the present proceedings is whether the bringing of disciplinary proceedings by the BSB is to be considered a series of discrete acts or a single continuous act. The expression the date on which the act complained of took place is apt to address a single event. However, the provision should not be read narrowly. There will be many situations in which the conduct which gives rise to the infringement of a Convention right will not be an instantaneous act but a course of conduct. The words of section 7(5)(a) should be given a meaning which enables them to apply to a continuing act of alleged incompatibility. While it is correct that section 7(5)(b) may often empower a court to grant an extension of time to bring proceedings in respect of a course of conduct which has extended over a period of longer than a year, leaving a claimant to have recourse to such a discretionary remedy is inappropriate. It cannot justify limiting the scope of section 7(5)(a). The primary provision in 7(5)(a) must be capable of providing an effective and workable rule for situations where the infringement arises from a course of conduct. It is then necessary to consider whether the alleged infringement of Convention rights in the present case arises from a course of conduct as opposed to a single act. On behalf of the appellant, Mr Anderson submits that where a barrister complains that she was prosecuted for reasons which infringe her Convention rights, she is not complaining about each of the individual steps which comprise the prosecution but about the fact that the BSB prosecuted her, a state of affairs which lasted until the prosecution came to an end. He also draws attention to section 6(6) of the 1998 Act which provides that an act includes a failure to act. He submits that the BSB had the power to decide at any moment after preferring the charges and before the verdict of the Visitors that it would offer no evidence and, in certain circumstances, a duty to offer no evidence. However, he accepts that the Court of Appeal was correct to conclude that a failure to act does not arise in this case, provided that it is accepted that the prosecution is a single continuous act. On behalf of the BSB, Ms Padfield submits that the decision to refer the appellant to a disciplinary tribunal, even if indirectly discriminatory, was a one off act with potentially continuing consequences rather than a continuing violation. She submits that this is a case of alleged indirect discrimination and that any unlawfulness does not automatically continue for as long as the prosecution continues. She accepts that there is evidence of disproportionate impact in relation to the decision to refer BME barristers to disciplinary tribunals but submits that there is no evidence of disproportionate impact in relation to the continuation of disciplinary prosecutions or the failure to bring them to an end. The only authority to which we were referred on this issue is Somerville v Scottish Ministers [2007] UKHL 44; [2007] 1 WLR 2734. This decision is, however, not particularly illuminating on this point because of the variety of views expressed. The petitioners were serving sentences of imprisonment and were at various times segregated from other prisoners by monthly orders and authorisations that were made over a period of time. They sought judicial review of the decisions to segregate them on the ground that their Convention rights had been infringed. Several of the periods of segregation had concluded more than one year before the proceedings were brought. The House held that the time limit in section 7(5) did not apply to the proceedings and the observations on its operation were therefore obiter. Lord Hope of Craighead stated (at paras 51 52) that he would hold that the phrase the date on which the act complained of took place in section 7(5)(a) means, in the case of what may properly be regarded as a continuing act of alleged incompatibility, that time runs from the date when the continuing act ceased, not when it began. Otherwise it would not be open to a person who was subjected to a continuing act or failure to act which was made unlawful by section 6(1) to take proceedings to bring it to an end without relying on section 7(5)(b) while it was still continuing after the expiry of one year after its commencement. He also considered that, so long as the proceedings were brought within the time permitted by section 7(5)(a) and any longer period allowed under section 7(5)(b), damages may be awarded as just satisfaction for the whole of the period over which the continuing act extends, including any part of it that commenced before the period of one year prior to the date when the proceedings were brought. The question whether the acts complained of in that case were continuing acts or one off acts with continuing consequences was not easy to determine on the pleadings and he preferred to reserve his opinion on that point. Lord Mance, by contrast, (at para 197), considered that each monthly order and authorisation constituted for the purpose of section 7(5) a separate act in respect of which separate one year limitation periods would run. If a period of segregation has lasted for more than a year the claimant would be left to seek an extension of time under section 7(5)(b). Lord Rodger of Earlsferry (at paras 145 146) preferred to express no view on the point but considered Lord Mances approach at least arguable. Lord Walker of Gestingthorpe (at para 167) did not expressly address the point but said he agreed on all other issues with Lord Hope and Lord Rodger. Lord Scott of Foscote (at para 81) observed that act includes a failure to act. In his view it therefore followed that the one year beginning with the date on which the act complained of took place should simply be calculated back from the date on which the section 7(1)(a) proceedings were commenced. I consider that the alleged infringement of Convention rights in the present case arises from a single continuous course of conduct. Although disciplinary proceedings brought by the BSB necessarily involve a series of steps, the essence of the complaint made here is the initiation and pursuit of the proceedings to their conclusion, ie the entirety of the course of conduct as opposed to any component steps. As Lord Dyson MR observed in the Court of Appeal (at para 21) without expressing a concluded view on this issue, prosecution is a single process in which the prosecutor takes many steps. It cannot have been the intention of Parliament that each step should be an act to which the one year limitation period should apply. I also note in this regard that, were it otherwise, a prosecution which lasted longer than one year could not be relied on in its entirety as a basis of complaint unless proceedings were commenced before the conclusion of the disciplinary proceedings or relief were granted under section 7(5)(b). A claimant would be placed in the difficult position of having to bring a human rights claim within one year of the commencement of what might be lengthy proceedings, without knowing the outcome which might be very material to the claim. On the basis that we are concerned here with a single continuing act of alleged incompatibility, I agree with Lord Hope in Somerville (at para 51) that time runs from the date when the continuing act ceased, not when it began. In view of my conclusion on this issue, it is not necessary to consider the appellants alternative argument based on a failure to act. I would, however, suggest that it may, in certain other circumstances, be necessary to guard against reliance on a failure to reverse an out of time decision which would have the potential to subvert the limitation scheme of the Act. When did the continuing act cease? On the basis that the conduct challenged in these proceedings is the single continuing act of bringing and pursuing disciplinary proceedings against the appellant, it is necessary to consider when that continuing act ceased. In the Court of Appeal Lord Dyson MR, with whom the other members of that court agreed, considered, at para 22, that the question for consideration here was whether opposing an appeal by a convicted defendant should be regarded as a continuation of the prosecution. His view was that it should not be so regarded. He considered that a prosecution comes to an end with the verdict when the prosecution has run its course. In opposing an appeal by a convicted defendant a prosecutor is not continuing the prosecution but is seeking to uphold the decision of the court or tribunal that has convicted the defendant. In his view, seeking to uphold a conviction is a categorically different act from that of prosecuting. It appears that throughout the current proceedings the disciplinary proceedings brought by the BSB against the appellant have been described as a prosecution. This is, perhaps, an understandable analogy but it is imprecise and may tend to obscure the fact that the complaint is of discrimination in bringing disciplinary proceedings not a criminal prosecution. There is a danger that this characterisation may influence the outcome on the current issue. Whatever may be the position in relation to an appeal against a criminal conviction, in considering whether in the present case the BSBs conduct in proceedings before the Visitors should be considered as forming part of the same continuing act as its conduct in proceedings before the Disciplinary Tribunal for the purpose of the rules on limitation, it is necessary to have regard to the nature of the regulatory scheme and the precise features of such conduct. Several features of the regulatory scheme and the Visitors jurisdiction, as applicable to the disciplinary proceedings against this appellant lead me to the conclusion that the BSBs part in proceedings before the Disciplinary Tribunal and those before the Visitors should be regarded for this purpose as part of a single continuing act. (1) In In re S (A Barrister) [1970] 1 QB 160 five judges sitting as Visitors of the Inns of Court stated (at p 166G H), that [t]he judges as visitors have always had supervisory powers and their decision, upon an appeal by a barrister or student to them, has always been the final determination of such matter. The precise origins of the long established visitorial jurisdiction of the judges to hear disciplinary appeals from the Inns of Court are obscure. (See J H Baker, Judicial Review of the judges as Visitors to the Inns of Court, (1992) Public Law 411.) For present purposes it is sufficient to record that in 1886 the Council of Judges resolved that the jurisdiction as to appeals from decisions of the benchers of the several Inns of Court is now vested in the judges of the High Court. (See R v Visitors to the Inns of Court, Ex p Calder [1994] QB 1 per Sir Donald Nicholls V C at pp 35D E). This arrangement continued notwithstanding the transfer by the Inns of Court of their disciplinary function (other than the power to pronounce and carry into effect any sentence) to the Senate of the Inns of Court in 1966 and to the Council of the Inns of Court in 1986. The first Hearings before the Visitors Rules were issued in 1980. (2) One aspect of the continuing supervisory jurisdiction of the Visitors was apparent in their role in hearing applications and giving directions for the conduct of the disciplinary proceedings. Regulation 9(1) of The Disciplinary Tribunals Regulations 2009 (Annexe K to the Code of Conduct of the Bar of England and Wales) required the President of a Disciplinary Tribunal to designate a judge or judges to perform this function. The directions to be given by a designated judge might concern (inter alia) the severance or strike out of charges, the attendance of witnesses, the admission of documents, the admission of facts and such other matters as the judge deemed expedient for the efficient conduct of the hearing. In the proceedings against this appellant Field J heard the appellants application to strike out the proceedings and gave directions for their conduct. (3) The function of the Visitors in hearing appeals from Disciplinary Tribunals was a further aspect of this supervisory jurisdiction. The appeal brought by this appellant was governed by the Hearings before the Visitors Rules 2010 (Annexe M to the Code of Conduct). (4) In cases where one or more charges of professional misconduct had been proved, an appeal against conviction or sentence could be lodged by the barrister as of right (Regulation 25(1) of The Disciplinary Tribunals Regulations 2009). (5) In certain circumstances (which did not arise in this case) the BSB could appeal against the dismissal of a charge of professional misconduct with the consent of the Chairman of the BSB or the Chairman of the Complaints Committee or the permission of the visitors (Regulation 25(1)(c), 25(5) of The Disciplinary Tribunals Regulations 2009). (6) On an appeal the Visitors were required to look afresh at the matters in dispute and to form their own views. They were required to consider whether the charge had been made out to their satisfaction, to the requisite standard of proof. The proper approach was that of an appellate court rehearing the case on its merits. (R v Visitors to the Inns of Court, Ex p Calder [1994] QB 1 per Sir Donald Nicholls V C at pp 42D F, 42H; per Stuart Smith LJ at pp 61H 62D. See also Lincoln v Daniels [1962] 1 QB 237, per Devlin LJ at p 256.) (7) It was open to the Visitors to correct procedural defects and to remedy procedural unfairness before the Disciplinary Tribunal. As Sir Andrew Collins observed in delivering the judgment of the Visitors in the present case, the Visitors were able to hear the matter entirely on its merits. They would give the necessary protection to an appellant and it was not necessary for the matter to be remitted for further consideration by the Tribunal. (8) Following a finding or sentence of the Tribunal on a charge of professional misconduct, the Treasurer of a defendants Inn was required to pronounce and implement the sentence. However, the Treasurer was required first to wait for 21 days to allow a notice of appeal to be lodged. Where a defendant had given notice of appeal to the Visitors against a finding or sentence of the Tribunal on a charge of professional misconduct, the pronouncement and implementation of the sentence by the Treasurer of the defendants Inn were automatically deferred (Regulation 27, The Disciplinary Tribunals Regulations 2009). The verdict of the Tribunal could not be put into effect until after the decision of the Visitors on the appeal. These features, considered cumulatively, persuade me that the role of the BSB in initiating and pursuing these proceedings before the Tribunal and before the Visitors is essentially one continuing act. In these circumstances it is not necessary to express any view as to whether the same conclusion should be drawn in relation to an appeal against a criminal conviction. Before leaving this issue, I should refer to a further submission of Mr Anderson based on Delcourt v Belgium (1970) 1 EHRR 355 where the Strasbourg court, in rejecting a submission that article 6 had no application to the Belgian Court of Cassation because it was concerned not with the merits of the case but with the validity of the judgment, observed: Thus, a criminal charge is not really determined as long as the verdict of acquittal or conviction has not become final. Criminal proceedings form an entity and must, in the ordinary way, terminate in an enforceable decision. Proceedings in cassation are one special stage of the criminal proceedings and their consequences may prove decisive for the accused. It would therefore be hard to imagine that proceedings in cassation fall outside the scope of article 6(1). (at para 25) I do not find this passage of any assistance, even by way of analogy. The Strasbourg court was there concerned with the distinct question as to the scope of application of article 6. As Lord Dyson MR observed in the Court of Appeal (at para 23) in relation to a similar submission based on Eckle v Federal Republic of Germany (1982) 5 EHRR 1, this does not touch on the question whether the role of a prosecutor in appeal proceedings is to be considered as a continuation of the act of prosecuting the defendant in the first place. I would therefore allow the appeal. I consider that the conduct of the BSB in bringing and pursuing the disciplinary proceedings was, for the purposes of section 7(5)(a), a single continuing act which continued until the Visitors to the Inns of Court allowed the appeal on 17 August 2012. The present proceedings against the BSB, which were commenced on 21 February 2013, were therefore commenced within a period of one year beginning with the date on which the act complained of took place. The respondents notice By its Notice of Objection dated 12 January 2017 the BSB asks this court to uphold the Court of Appeals decision on the alternative ground that Warby J was wrong to hold that the article 14 claim had real prospects of success. In addition, it seeks permission to adduce new evidence of fact to counter the conclusion of Warby J on this point. The Notice of Objection and the application to adduce new evidence replicate a respondents notice and related application that were before the Court of Appeal. Warby J had concluded that the particulars of claim both in their unamended and draft amended forms adequately stated a case, which was not fanciful, that by bringing disciplinary proceedings against the appellant, the BSB indirectly discriminated against her contrary to article 14. In the light of its conclusion as to the limitation period under section 7(5)(a) the Court of Appeal did not address these matters in any detail or express any concluded view. However, Lord Dyson did refer to the main submission made by Ms Padfield for the BSB in this regard which, as before us, was, essentially that the discrimination claim founded on Strasbourg decisions such as DH v Czech Republic could have no real prospect of success without statistics sufficient to raise a prima facie case of discrimination, general statements of disproportionate impact being unlikely to be sufficient. In this regard Ms Padfield relied on Oru v Croatia (2011) 52 EHRR 7. Lord Dyson MR observed (at para 35) that, in his view, there was considerable force in these points and that, at best, the appellants case, on the basis of the evidence she had adduced so far, was very thin. Had this point been raised in isolation by BSB on an application for permission to appeal to the Court of Appeal, it seems most unlikely that permission would have been granted. It would have been a second appeal and it would not have satisfied the second appeal criteria in that it does not raise an important point of principle or practice and there is no other compelling reason why an appeal should be heard (CPR 52.7 and 52.13). The point is now before this court only because BSB took a limitation point which in my view should fail. It is adventitious that it is before the court at all. Moreover, it cannot be said that the respondents notice raises a point of law of general public importance. In these circumstances, it would certainly be open to this court to decline to entertain the ground in the respondents notice. Nevertheless, in the light of the history of these proceedings, I consider it appropriate to address the merits of the respondents notice. I can do so briefly. I consider that Warby J was correct to conclude on the basis of the evidence before him that there were reasonable grounds for bringing the claim and that it had a real prospect of success. The appellants case is based, in part, on a 2013 report by Inclusive Employers into the BSBs complaints system. That report analysed data from the period 2007 11 and concluded that (i) BME barristers were disproportionately over represented in the complaints process in relation to the outcomes of external complaints; (ii) BME barristers were more likely to have a complaint referred to disciplinary action; and (iii) BME barristers were more likely to have complaints upheld. The report went on to find that although there were steps the BSB could take to improve the complaints process from an equality and diversity perspective in particular the provision of more prompt training for tribunal members which included training in unconscious bias the procedure itself was not discriminatory and that other factors, as yet unidentified, were causing the disproportions shown in the data. Ms Padfield for the BSB objects that the mere fact of a statistical difference in treatment between two groups is not sufficient to establish that there is prima facie evidence that the effect of a measure or practice is discriminatory. I accept that in DH and in Sampanis v Greece (Application No 32526/05), 5 June 2008, the difference in treatment between different groups was so striking as to amount, of itself, to prima facie evidence that the effect was discriminatory and to require explanation. That may not be the position in the present case. Nevertheless, I consider that the appellant is entitled to rely on this evidence, so far as it goes, in conjunction with the unhappy history of the proceedings against her, as supporting her case that she has been the victim of discrimination. The BSBs submission in the present case rests on the fallacious assumption that an inference from statistical difference in treatment is the only way in which a claimant can establish an infringement of article 14. As the Strasbourg court has made clear, indirect discrimination can be proved without statistical evidence (DH at para 188; Oru at para 153). Finally, Ms Padfield seeks, by her application to adduce new evidence, to produce a further report by the BSBs research department dated January 2016 and entitled Complaints at the Bar: An Analysis of ethnicity and gender 2012 2014, in order to counter the 2013 report. I would refuse the application. It is not appropriate for this court to address, for the first time in the course of these proceedings, competing submissions of fact on a strike out application.

UK-Abs

The Appellant is a practising barrister and is black. She alleges that the Respondent discriminated against her on grounds of her race by bringing disciplinary proceedings which ended in her acquittal on appeal. On 9 June 2010, the Respondents Complaints Committee brought 6 disciplinary charges against the Appellant. On 23 May 2011, the Disciplinary Tribunal found 5 of these charges proved. The Appellant appealed to the Visitors of the Inns of Court (the Visitors). On 17 August 2012, her appeal was allowed on the basis that none of the alleged conduct involved any breach of the Bar Code of Conduct. On 21 February 2013, the Appellant issued the present proceedings, which included an allegation of violation of Article 14 of the European Convention on Human Rights (ECHR) read in conjunction with Article 6 ECHR, contrary to section 6 of the Human Rights Act 1998 (the 1998 Act). In its defence, the Respondent maintained that this claim was time barred under section 7(5)(a) of the 1998 Act which provides that proceedings must be brought before the end of the period of one year beginning with the date on which the act complained of took place. On 3 January 2014, the Respondent issued an application seeking an order that the statement of case be struck out on the basis that none of the Appellants claims had a real prospect of success and, in any event, there was a complete defence under section 7(5)(a). On 2 April 2014, the Respondents application for strike out was granted. The Appellant appealed. On 18 December 2014, Warby J held that there was a sufficiently pleaded case that the Respondent indirectly discriminated against the Appellant. However, he also held that the claim was time barred under section 7(5)(a) of the 1998 Act. The Appellant appealed to the Court of Appeal. The Court of Appeal held that the limitation period under section 7(5)(a) had started to run when the Disciplinary Tribunal had found the charges against the Appellant proved and so had expired before she had issued her claim. The Appellant was granted permission to appeal to the Supreme Court on the time limit issue under section 7(5)(a). The issues arising before the Supreme Court were: (i) whether the disciplinary proceedings against the Appellant were to be considered a series of discrete acts or a single continuing act and (ii) if the latter, did that act end with the verdict of the Disciplinary Tribunal or with the verdict of the Visitors? The Supreme Court unanimously allows the appeal. Lord Lloyd Jones gives the lead judgment with which the other Justices agree. As a preliminary issue, the Court was required to determine the precise nature of the discrimination claim which the Appellant wished to make [15]. In this regard, the Court concluded that the Appellants challenge was to the conduct of the Respondent in bringing and pursuing disciplinary proceedings against her, not to an alleged state of affairs in which BME lawyers were more likely to be the subject of such proceedings. Therefore, the bringing and pursuit of the disciplinary proceedings must be the focus of the investigation in terms of section 7(5)(a) of the 1998 Act [16 21]. The question which then arose in relation to the application of section 7(5)(a) was whether the bringing of disciplinary proceedings by the Respondent was to be considered a series of discrete acts or a single continuous act [22]. Section 7(5)(a) should not be read narrowly and must be capable of providing an effective and workable rule for situations where the infringement of a Convention right arises from a course of conduct. Leaving a claimant to have recourse only to the discretionary remedy in section 7(5)(b) is inappropriate [23]. The alleged infringement of Convention rights in this case arose from a single continuous course of conduct. The essence of the complaint made by the Appellant was the initiation and pursuit of the proceedings to their conclusion. It cannot have been the intention of Parliament that each step should be an act to which the one year limitation period should apply [29]. Under section 7(5)(a) time begins to run from the date when the continuing act ceased, not when it began [30]. In determining when the continuing act ceased, it was necessary to consider whether the Respondents conduct in proceedings before the Visitors should be considered as forming part of the same continuing act as its conduct in proceedings before the Disciplinary Tribunal. In order to answer this question, it was necessary to consider the nature of the regulatory scheme and the precise features of the Respondents conduct [32 34]. Several features of the regulatory scheme and the Visitors jurisdiction, as applicable to the disciplinary proceedings against the Appellant, led to the conclusion that the Respondents part in the proceedings before the Disciplinary Tribunal and those before the Visitors should be regarded as part of a single continuing act [35]. Therefore, the single continuing act in this case continued until the Visitors allowed the Appellants appeal on 17 August 2012. The Appellant commenced the present proceedings on 21 February 2013, within the period of one year beginning with the date on which the act complained of took place, as required by section 7(5)(a) and the appeal should accordingly be allowed [39]. The Respondent asked the Court to uphold the Court of Appeals decision on the alternative ground that Warby J was wrong to hold that the Article 14 ECHR claim of indirect discrimination had real prospects of success. The Respondent argued that this claim could have no real prospect of success without statistics sufficient to raise a potential case of discrimination, general statements of disproportionate impact being unlikely to be sufficient [41]. The Court observed that it was adventitious that this point was before the Court [42]. However, the Appellant was entitled to rely upon a 2013 report into the Respondents complaint system which analysed data from 2007 11, in conjunction with the unhappy history of the proceedings against her, as supporting her case that she had been the victim of indirect discrimination. The European Court of Human Rights had made clear that indirect discrimination can be proved without statistical evidence [43].

This appeal is concerned with the extent and consequences of duties of equal treatment or fairness, said to have been owed by the Office of Fair Trading (OFT) to those subject to investigation under the Competition Act 1998 (the Act). Since the events in question the OFT has been replaced by the Competition and Markets Authority (CMA), but it will be convenient in this judgment to refer throughout to the OFT. The facts The investigation In March 2003 the OFT began an investigation into alleged price-fixing arrangements in the tobacco market, contrary to section 2(1) of the Act. On 24 April 2008, it issued a Statement of Objections (SO) under section 31 of the Act, addressed to 13 parties, including two manufacturers and 11 retailers. The first respondents (Gallaher) were involved as manufacturers; the second respondents (Somerfield) as retailers. On 15 April 2010 the OFT issued its decision (the Tobacco decision) upholding the finding of infringement against both respondents, and all but one of the other parties. Six of those affected appealed to the Competition Appeal Tribunal. The respondents did not appeal, having each reached settlements with the OFT under the so-called Early resolution process (or ER process). The ER process The letters accompanying the SOs sent to the parties in April 2008 had offered the possibility of obtaining a reduction in the financial penalty through co- operation with the OFTs investigation. The parties were invited to indicate by 9 May 2008 whether they wished to enter into without prejudice discussion with the OFT for this purpose. Both the respondents responded positively within the time- limit. Following negotiations they, along with four other parties, entered into Early Resolution Agreements (ERAs). The ERAs required the signatories admission of involvement in the infringements, set out a series of terms for further co-operation, and indicated the penalties to be imposed subject to a possible reduction of up to 20% for procedural co-operation. Entry into an ERA did not prevent a party from terminating that agreement at any time up to publication of the OFTs final decision. If a party did terminate an ERA, it would forgo any discounted penalty negotiated as part of the ERA. In that event, the OFT would continue with its case against that party in accordance with the usual administrative procedure. A party to an ERA could also, upon receiving the final decision, decide to appeal against it if it wished to do so, notwithstanding the admissions in the ERA. In that event, the OFT reserved the right to make an application to the Tribunal to increase the penalty and to require the party to the ERA to pay the OFTs full costs of the appeal regardless of the outcome. The ER process was not subject to any statutory rules, nor at the material time described in any published document. The clearest contemporary description of the ER process (though not by that name) came in an internal document of the OFT dated 28 January 2008, and entitled A principled approach to Settlements in Competition Act cases. This paper was designed to draw out a number of principles from the OFTs experience to date, and emerging thinking, on settlements in Competition Act 1998 cases, and to provide a policy framework for teams who may be considering the possibility of settlement. Ten principles were identified and discussed. Particular attention in the present case has been directed to Principle Three: Fairness, transparency and consistency are integral to an effective settlements process. This was explained as follows: 16. The overriding principles of fairness, transparency and consistency must always be taken into account. When engaged in settlement discussions, for example, it is important to ensure that the process is consensual and as transparent as possible throughout, in order to avoid any subsequent allegations of undue pressure having been applied to force parties to sign up to settlement. 17. Consistency is a particularly key consideration, given parties sensitivity to equality of treatment issues. Whether or not the details of an individual case have been made public, particular approaches in one case will inevitably leak out during the settlement process (and be set out in the infringement decision) and inform parties strategies in others. Consistency of approach (or, alternatively, the formulation of strong arguments to justify taking a different approach in similar circumstances) is therefore vital. Although this is useful as indicating the adopted policy approach of the OFT itself, it is not suggested that the contents were known to or in terms relied on by the respondents when entering into their agreements. However, the OFT had a separate speaking note for use in discussions with parties. This summarised the main features of the ER process, and ended with the following commitment to equal treatment: Once first party signed up, the OFT will inform other parties of the terms agreed in terms of the Step 1 to 5 penalty calculation - these terms will be the benchmark for dealing with other parties (as the OFT will observe equal treatment principles). Both the respondents concluded ERAs with the OFT in early July 2008, involving substantial reductions in the anticipated penalties. In due course, when the OFT decision was issued in April 2010 the respondents did not appeal, but instead elected to pay the penalties imposed in the ERAs, taking the benefit of the reductions. TMR Martin McColl Retail Group Ltd and TM Retail Group Ltd (together, TMR) was another party subject to the investigation, which also entered into an ERA. In the course of the negotiations for the ERA, at a meeting on 8 July 2008, TMRs representatives asked about the OFTs likely attitude to those who entered ERAs in the event of a successful appeal by one of the other parties to the investigation. The effect of the exchange was recorded in an email from TMR to OFT after the meeting in the following terms (which were not contradicted): Should another manufacturer or retailer appeal any OFT decision against that manufacturer or retailer to the CAT (or subsequently appeal to a higher court) and overturn, on appeal, part or all of the OFTs decision against that manufacturer or retailer in relation to either liability or fines, then, to the extent the principles determined in the appeal decision are contrary to or otherwise undermine the OFT's decision against [TMR], the OFT will apply the same principles to [TMR] (and therefore presumably withdraw or vary its decision against [TMR] as required). (Emphasis added) In the course of 2009 and 2010, and before the expiry of the time for appealing the OFT decision, two other parties (Party A and Asda) made similar inquiries about the effect of a successful appeal by other parties, but received non-committal answers. The Tribunals decision and its aftermath On 12 December 2011 the Tribunal gave judgment allowing all six appeals: [2011] CAT 41. Following the Tribunals judgment, TMR wrote to the OFT inviting it to withdraw the OFTs decision as against it, and threatening legal action if it failed to do so. In the course of further discussions TMR relied on the OFTs earlier assurances about its position in the event of a successful appeal by another party, stating that this had been a key factor in its own decision-making. As to what followed I take the following from the agreed statement of facts (para 50): The OFT considered that the statements which it had made to TMR in 2008 might have given rise to an understanding on the part of TMR that the OFT would withdraw or vary its decision against TMR in the event of a successful third party appeal. In light of this, the OFT considered that there was a real risk that TMR would, as a result of this reliance on those statements, be permitted to appeal out of time to the Tribunal and would succeed in that appeal. The OFT reached a settlement agreement with TMR, by which the OFT agreed to pay to TMR an amount equal to the penalty TMR had paid together with a contribution to interest and legal costs. The Tobacco Decision was not withdrawn against TMR. The agreed terms were set out in a settlement agreement dated 9 August 2012. The OFT then published a statement about the TMR settlement on its website, in which it said that in the light of the particular assurances provided to TM Retail it had agreed to pay the amount of its penalty (2,668,991) and a contribution to costs. In the meantime, following the Tribunals decision, in February 2012 each of the respondents had written to the OFT calling upon it to withdraw the decision as against them, and to refund the penalties. This was refused. In August 2012, after the publication of the information about the settlement between the OFT and TMR, they sent the OFT letters before claim, arguing that they also should be given the benefit of the assurances made to TMR. In October 2012 they issued the present claims for judicial review. The out-of-time appeals The claims were initially stayed by consent to allow the respondents to pursue applications, made in July 2012, for permission to appeal the Tobacco Decision out of time. By rule 8(2) of the Competition Appeal Tribunal Rules 2003 (SI 1372/2003), the Tribunal may not extend the time limit for appeal unless satisfied that the circumstances are exceptional. The applications succeeded before the Tribunal, but its decision was reversed by the Court of Appeal on 7 April 2014: Office of Fair Trading v Somerfield Stores Ltd [2014] EWCA Civ 400. The court held that there were no exceptional circumstances. In the leading judgment Vos LJ referred (paras 35-36) to the principle of finality, exemplified by the CJEUs decision in Commission of the European Communities v AssiDoman Kraft Products AB (Case C-310/97P) [1999] All ER (EC) 737 (the Wood Pulp II case). That principle was said to be based on the consideration that the purpose of such time-limits is to ensure legal certainty by preventing Community measures which produce legal effects from being called in question indefinitely. Although the Wood Pulp II decision was no more than analogous, it pointed the way to the need for finality in competition cases. In the present case, in Vos LJs view, the respondents had entered the ERAs with their eyes open and made a deliberate decision not to appeal. He added: It is true that the OFT has the role of a prosecutor and has wide powers to impose penalties, and that those powers must be exercised on a proper basis, but that does not stop commercial parties from taking a commercial view as to whether or not to sign up to an ERA after a long investigatory process and the publication of a lengthy Statement of Objections. The addressee knows precisely the terms that are being offered. It knows what it has done in relation to the alleged infringements, and what it is being asked to admit, and the terms requiring its co-operation and the fetters on its rights of defence to which it is being asked to agree. It can take it or leave it (para 45) The courts below In a judgment dated 26 January 2015, Collins J rejected the claims: [2015] EWHC 84 (Admin). He started from the proposition that the OFTs powers in relation to infringement of the 1998 Act were subject to public law requirements of fairness and equal treatment, so that it was essential that in negotiations in relation to ERAs one party is not given an advantage denied to another (para 38). However, the assurance given to TMR had been given in error, without regard to the finality principle. Citing Customs and Excise Comrs v National Westminster Bank plc [2003] STC 1072 para 66, he agreed with Jacob J that as a general rule a mistake should not be replicated where public funds are concerned. That consideration provided an objective justification for the refusal by the OFT to make payment to the claimants (para 50). The Court of Appeal took a different view [2016] EWCA Civ 719; [2016] Bus LR 1200. In the leading judgment, Lord Dyson MR (para 34) noted it as common ground that (in the words of Cranston J, Crest Nicholson plc v Office of Fair Trading [2009] EWHC 1875 (Admin)) the OFT must comply with the principle of equal treatment in all steps leading up to the imposition of a penalty. He agreed that the assurance given to TMR was a mistake: a decision which no- one who had the finality and legal certainty principles in mind could reasonably have taken (para 58). The failure to offer a similar assurance to the claimants or others in the same position, or even to inform them, involved unequal treatment which was stark and manifest (para 59). Under the heading Objective justification (paras 53-54), he agreed with counsel for the OFT that a mistake was not a trump card which will always carry the day The question as he saw it was - whether there has been unfairness on the part of the authority having regard to all the circumstances. The fact that there has been a mistake may be an important circumstance. It may be decisive. It all depends. He found assistance in the law relating to legitimate expectation, citing R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115, 1127B-D, per Peter Gibson LJ, to the effect that whether an authority should be permitted to resile from a mistaken statement depends on whether that would give rise to unfairness amounting to an abuse of power. In the same way, as he saw it, the question in the present case was whether the OFT should be permitted to resile from a mistake where to do so results in unfair and unequal treatment of the claimants. He concluded that it should not. It is necessary to quote the concluding paragraph in full, to indicate the sequence of events and combination of circumstances, which appear to have led Lord Dyson MR ultimately to the view that the OFTs action was unlawful: 60. But the real focus must be on the question whether the 2012 Decision was objectively justified. That is when the OFT decided that it would act on the 2008 decision in relation to TMR and honour the assurances that it had mistakenly given at that time, and to treat the claimants differently. The result was that it agreed with TMR to repay the whole of its penalty plus a contribution of 250,000 in relation to costs and interest. But it refused to pay anything to the claimants. The only difference between the positions of TMR on the one hand and that of the claimants on the other hand was that the OFT had given the assurances to TMR in 2008, but not to the claimants. The effect of that manifestly unfair and unequal treatment in 2008 could have been reversed after the issue had been raised by Asda and party A and the OFTs eyes had been opened to the significance of its earlier mistake in giving the assurances to TMR. That would have put all the companies which had been the subject of the Tobacco Decision and to which the [Statement of Objections] has been addressed on an equal footing. The OFT could have withdrawn the assurances. It would not have been too late for TMR to appeal at that time. Even if TMR had been out of time, it would have had a very powerful case for arguing that the withdrawal of the assurances was an exceptional circumstance which justified an extension of time for appealing. Instead, the OFT acted on the assurances it had given to TMR, made the 2012 decision and repaid the penalty previously levied and made further payments too. In all the circumstances, this was a plain breach of the principle of equal treatment and unfair. The Court of Appeals order declared that the OFT had acted unlawfully by - (a) not offering the appellants in 2008 the assurance given to [TMR] that in the event of a successful appeal by other parties, it would benefit from that appeal decision even if it did not appeal; and (b) refusing in 2012 to make payment to the appellants of the amount of the penalty imposed on them even though it had made such a payment to TMR. It ordered that the respondents should each be entitled to payment of a sum equal to the penalties they had paid to the OFT, together with an amount in interest and costs. Equal treatment and fairness The submissions It was central to the reasoning of both courts below that the OFT was subject (as Collins J put it) to public law requirements of fairness and equal treatment. That analysis was not seriously challenged by counsel for the appellant in this court. They accepted that the principle of equal treatment applied to the OFT, but submitted that it did not require it to replicate a mistake, at least in the absence of conspicuous unfairness. They rely on the approach of Lord Bingham in R (OBrien) v Independent Assessor [2007] 2 AC 312, para 30: It is generally desirable that decision-makers, whether administrative or judicial, should act in a broadly consistent manner. If they do, reasonable hopes will not be disappointed. But the assessors task in this case was to assess fair compensation for each of the appellants. He was not entitled to award more or less than, in his considered judgment, they deserved. He was not bound, and in my opinion was not entitled, to follow a previous decision which he considered erroneous and which would yield what he judged to be an excessive award. The respondents similarly adopt the language of equal treatment and fairness. Thus Miss Jessica Boyd, counsel for the second respondent, formulated the issue in these terms: The issue before the Court is whether it was conspicuously unfair and/or a breach of the principle of equal treatment, amounting to a breach of public law, for the OFT, on the successful appeal of its decision in the Tobacco Decision, to repay one non-appellant addressee of that decision (namely, TM Retail) the penalty it had paid pursuant to that decision, while refusing to do the same for the respondents. The equal treatment principle was said to be well-established in domestic law, by reference for example to R (Middlebrook Mushrooms Ltd) v Agricultural Wages Board of England and Wales [2004] EWHC 1447 (Admin) at para 74. The expression conspicuous unfairness was derived from the judgment of Simon Brown LJ in R v Inland Revenue Comrs, Ex p Unilever plc [1996] STC 681, as applied by Richards J in R v National Lottery Commission, Ex p Camelot Group plc [2001] EMLR 3, para 72. To those authorities Lord Pannick QC for the first respondent added Bank Mellat v HM Treasury (No 2) [2014] AC 700, 773 para 25 per Lord Sumption; and Paponette v Attorney General of Trinidad and Tobago [2012] 1 AC 1, 12 paras 28 and 30 per Lord Dyson. He relied also on the formulation of the principle of equal treatment in European Union law: The principle of equal treatment, as a general principle of EU law, requires that comparable situations must not be treated differently and that different situations must not be treated in the same way, unless such treatment is objectively justified. (Case C-510/11, Kone OYJ and others v European Commission (Elevators and Escalators Cartel Appeal) [2014] 4 CMLR 10, para 97). This was said to apply to the relevant functions of the OFT, by virtue of section 60(1) of the Competition Act 1998, the purpose of which is to ensure that as far as possible questions arising under this Part in relation to competition within the United Kingdom were dealt with in a manner consistent with the treatment of corresponding questions arising in Community law However, I say at once that I find no assistance in this respect in section 60, which seems to me directed to questions arising specifically under the statute, rather than as here under general principles of administrative law. Notwithstanding the degree of common ground on these points, it is important in this court to be clear as to the precise content and attributes of the relevant legal principles, and their practical consequences in terms of remedies. Equal treatment Whatever the position in European law or under other constitutions or jurisdictions, the domestic law of this country does not recognise equal treatment as a distinct principle of administrative law. Consistency, as Lord Bingham said in the passage relied on by the appellant (para 19 above), is a generally desirable objective, but not an absolute rule. The need for clear dividing lines in this context has been highlighted in the Privy Councils consideration of various forms of equal treatment clauses in common law constitutions. Thus for example in Webster v Attorney General of Trinidad and Tobago [2015] UKPC 10; [2015] ICR 1048 the Board was concerned with section 4(d) of the Constitution of that country, which recognises the right of the individual to equality of treatment from any public authority in the exercise of any functions. Lady Hale commented (para 14) that open-ended constitutional guarantees of equal treatment by public authorities, such as that in section 4(d), are few and far between. She contrasted such provisions with the Constitution of Mauritius, section 16 of which prohibits discrimination both by the laws and by public authorities, but only on defined grounds, and under which, as the Board had held in Matadeen v Pointu [1999] 1 AC 98 there was no general constitutional right to equal treatment by the law or by the executive. In the latter case, in an important passage under the heading Democracy and Equality ([1999] AC 98, para 9), Lord Hoffmann had emphasised the need to distinguish between equal treatment as a democratic principle and as a justiciable rule of law: 9. Their Lordships do not doubt that such a principle is one of the building blocks of democracy and necessarily permeates any democratic constitution. Indeed, their Lordships would go further and say that treating like cases alike and unlike cases differently is a general axiom of rational behaviour. It is, for example, frequently invoked by the courts in proceedings for judicial review as a ground for holding some administrative act to have been irrational: see Professor Jeffrey Jowell QC, Is Equality a Constitutional Principle? (1994) 7 CLP 1, 12-14 and de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed (1995), pp 576-582, paras 13- 036 to 13-045. Of course persons should be uniformly treated, unless there is some valid reason to treat them differently. But what counts as a valid reason for treating them differently? And, perhaps more important, who is to decide whether the reason is valid or not? Must it always be the courts? The reasons for not treating people uniformly often involve, as they do in this case, questions of social policy on which views may differ. These are questions which the elected representatives of the people have some claim to decide for themselves. The fact that equality of treatment is a general principle of rational behaviour does not entail that it should necessarily be a justiciable principle - that it should always be the judges who have the last word on whether the principle has been observed. In this, as in other areas of constitutional law, sonorous judicial statements of uncontroversial principle often conceal the real problem, which is to mark out the boundary between the powers of the judiciary, the legislature and the executive in deciding how that principle is to be applied. (see now the current edition of De Smiths Judicial Review 8th ed (2018) paras 11.061ff) As that passage makes clear, in domestic administrative law issues of consistency may arise, but generally as aspects of rationality, under Lord Diplocks familiar tripartite categorisation. The authorities cited by the respondents provide illustrations. The passage cited by Lord Pannick from Lord Sumptions judgment in Bank Mellat (No 2) (above) at para 25 was concerned directly with the question of proportionality under the European Convention on Human Rights, but it was expressed in terms which could be applied equally to common law rationality. Lord Sumption spoke of a measure which, while responding to a real problem, may nevertheless be irrational or disproportionate by reason of its being discriminatory in some respect that is incapable of objective justification. He gave as the classic illustration A v Secretary of State for the Home Department [2005] 2 AC 68, in which it was held by the House of Lords that a derogation from the Human Rights Convention permitting the detention of non-nationals considered a risk to national security, was neither a proportionate nor a rational response to the terrorist threat, because it applied only to foreign nationals; it was not explained why, if the threat from UK nationals could be adequately addressed without depriving them of their liberty, the same should not be true of foreign nationals. He quoted Lord Hope (para 132): the distinction raises an issue of discrimination. ... But, as the distinction is irrational, it goes to the heart of the issue about proportionality also. At a more mundane level, R (Middlebrook Mushrooms Ltd) v Agricultural Wages Board of England and Wales [2004] EWHC 1447 (Admin) (cited by Miss Boyd) concerned a statutory order under the Agricultural Wages Act 1948, which established a new category of worker, the Manual Harvest Worker (MHW), whose minimum wage was lower than that of a Standard Worker, but the order uniquely excluded mushrooms from the definition of produce the harvesters of which might be paid at the lower rate. This was challenged successfully by the mushroom growers. Having rejected as baseless the various reasons put forward for the distinction, the judge (Stanley Burnton J) concluded that there was no lawful justification for the exclusion of mushroom pickers from the lower rate. He cited inter alia Lord Donaldsons reference to the cardinal principle of public administration that all persons in a similar position should be treated similarly (para 74) (R (Cheung) v Hertfordshire County Council, The Times, 4 April 1986). He concluded that the exclusion of manual harvesters of mushrooms from the MHW category was Wednesbury unreasonable and unlawful, or in other words irrational. In the present context, however, it is not necessary in my view to look for some general public law principle of equal treatment. It is not difficult to hold that the OFT owed a general duty during the negotiations in 2008 to offer equal treatment to those subject to the Tobacco investigation. There was no logical reason to do otherwise, since it was applying a single set of legal and policy criteria to a limited group of parties within a single area of business activity. In addition, its commitment to equal treatment had been expressed in terms to those parties (assuming, as I do, that the speaking note fairly reflects what they were told). To that extent, it may be said, they had in public law terms a legitimate expectation that they would be treated equally. However, that in itself does not provide an answer to the present problem. It tells one nothing about the legal consequences of such an expectation, in terms of rights and remedies in public law, in the events as they developed up to 2012. Before returning to that critical question, it is necessary to consider what if anything is added by the concept of fairness, as invoked by Lord Dyson in his concluding paragraph, albeit without direct reference to authority. It is that gap which the respondents counsel have sought to fill by the authorities noted above, in particular the Unilever case. Fairness Fairness, like equal treatment, can readily be seen as a fundamental principle of democratic society; but not necessarily one directly translatable into a justiciable rule of law. Addition of the word conspicuous does not obviously improve the precision of the concept. Legal rights and remedies are not usually defined by reference to the visibility of the misconduct. Simple unfairness as such is not a ground for judicial review. This was made clear by Lord Diplock in R v Inland Revenue Comrs, Ex p National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617, 637: judicial review is available only as a remedy for conduct of a public officer or authority which is ultra vires or unlawful, but not for acts done lawfully in the exercise of an administrative discretion which are complained of only as being unfair or unwise, (Emphasis added) Procedural fairness or propriety is of course well-established within Lord Diplocks trilogy. R v National Lottery Commission, Ex p Camelot Group plc [2001] EMLR 3, relied on by the respondents, is a good example. It concerned unequal treatment between two rival bidders for the lottery, one of whom was given an unfair procedural advantage over the other. That was rightly seen by Richards J as amounting to a breach of procedural fairness (see paras 69-70). Although he used the judgment to discuss principles of fairness in a wider context, that was not essential to his decision, which ultimately turned on the proposition that the Commission had decided on a procedure that results in conspicuous unfairness to Camelot - such unfairness as to render the decision unlawful (para 84, emphasis added). A broader concept of unfairness amounting to excess or abuse of power emerged in a series of cases in the 1980s, under the influence principally of Lord Scarman. In the National Federation case (above at p 652) he had been alone in holding that a legal duty of fairness (was) owed by the revenue to the general body of taxpayers. However, in R v Inland Revenue Commission, Ex p Preston [1985] AC 835, in which he presided, he was able with the support of Lord Templeman (who gave the leading speech) to develop the same idea in terms of a duty of fairness to an individual taxpayer, arising from a written assurance given by the Revenue as to his tax treatment. Lord Scarman himself said no more than that unfairness in the purported exercise of a power can be such that it is an abuse or excess of power, but he referred to Lord Templemans speech for illustrations (p 851H-852C). Lord Templeman dealt with this subject in an extended passage, starting from a citation of various statements in the National Federation case. In particular he took the words of Lord Scarman about the Revenues general duty of fairness (without noting that it had been a minority view) as supporting a duty of fairness owed to each individual taxpayer; but subject to the caveat that the court could not in the absence of exceptional circumstances decide to be unfair that which the commissioners had determined to be fair. Judicial review, he said, is only available if the court is satisfied that - the unfairness of which the applicant complains renders the insistence by the commissioners on performing their duties or exercise of powers an abuse of power by the commissioners. (p 864G) There followed a passage citing various authorities, in which judicial review was said to have been granted on the grounds of unfairness amounting to abuse of power, either due to some proven element of improper motive (p 864H, citing Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997), or due to an error of law whereby the Price Commission misconstrued the code they were intending to enforce (p 866F, citing HTV Ltd v Price Commission [1976] ICR 170). These authorities, he thought, supported the suggestion that the commissioners would be guilty of unfairness amounting to an abuse of power if their conduct would in a private context entitle the appellant to an injunction or damages based on breach of contract or estoppel by representation (p 866H-867C). This part of Lord Templemans speech was obiter, since the claim of abuse of power failed on the facts. It is not without difficulty. It seems that in all the examples given by Lord Templeman there was a conventional ground of review, such as improper motive or illegality. It is not clear what he saw the word unfairness (always in inverted commas) as adding to the legal reasoning. With hindsight the case is best understood by reference to principles of legitimate expectation derived from an express or implied promise (see de Smith op cit para 12-019; R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213, paras 61ff)). It had not been argued on that basis, perhaps because of the uncertain application at that time of legitimate expectation to substantive rather than procedural benefits (see United Policyholders Group v Attorney General of Trinidad and Tobago [2016] 1 WLR 3383 at paras 83ff). The authority is not relied on directly in the present appeal, but is of some relevance as providing the background to the references to unfairness or conspicuous unfairness in the judgments in the Unilever case, on which the respondents rely, and to which I now turn. In Unilever the Court of Appeal held that the Revenue should not be permitted without warning to apply a strict time-limit for submission of claims to loss relief, when to do so departed from a practice accepted by them without objection for some 20 years. The judge (Macpherson of Cluny J) had held that the Revenues conduct amounted to a representation in Preston terms, or, if not, had led to unfairness and an abuse of power (p 689f). In the Court of Appeal the main issue seems to have been whether the taxpayer could succeed in the absence of a representation by the Revenue which was clear, unambiguous, and devoid of relevant qualification, as stated in previous Court of Appeal authority (p 690a). Sir Thomas Bingham MR held that, on the unique facts of the case, to reject the claims was so unfair as to amount to an abuse of power (p 691h), and so unreasonable as to be, in public law terms, irrational (p 692f). In a concurring judgment, Simon Brown LJ, under the heading Legitimate expectation or nothing? (pp 693-695), sought to relate the case more directly to Lord Diplocks famous definition of irrationality as a decision so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it (Council of Civil Service Unions v Minister for the Civil Service [1985] 1 AC 374, 410). It was in that context that he introduced the idea of conspicuous unfairness: He said: Unfairness amounting to an abuse of power as envisaged in Preston and the other Revenue cases is unlawful not because it involves conduct such as would offend some equivalent private law principle, not principally indeed because it breaches a legitimate expectation that some different substantive decision will be taken, but rather because either it is illogical or immoral or both for a public authority to act with conspicuous unfairness and in that sense abuse its power. In short, he regarded the MFK category of legitimate expectation as essentially but a head of Wednesbury unreasonableness (p 695a-b). On the facts of the case, he held that the test was satisfied, observing that he could think of no surer guide than Macpherson of Cluny J in determining - the border between on the one hand mere unfairness - conduct which may be characterised as a bit rich but nevertheless understandable - and on the other hand a decision so outrageously unfair that it should not be allowed to stand. (p 697C) I have quoted at some length from these judgments to show how misleading it can be to take out of context a single expression, such as conspicuous unfairness, and attempt to elevate it into a free-standing principle of law. The decision in Unilever was unremarkable on its unusual facts, but the reasoning reflects the case law as it then stood. Surprisingly, it does not seem to have been strongly argued (as it surely would be today) that a sufficient representation could be implied from the Revenues consistent practice over 20 years (see eg de Smith para 12-021). It seems clear in any event from the context that Simon Brown LJ was not proposing conspicuous unfairness as a definitive test of illegality, any more than his contrast with conduct characterised as a bit rich. They were simply expressions used to emphasise the extreme nature of the Revenues conduct, as related to Lord Diplocks test. In modern terms, and with respect to Lord Diplock, irrationality as a ground of review can surely hold its own without the underpinning of such elusive and subjective concepts as judicial outrage (whether by reference to logical or moral standards). In summary, procedural unfairness is well-established and well-understood. Substantive unfairness on the other hand - or, in Lord Dysons words at para 53, whether there has been unfairness on the part of the authority having regard to all the circumstances - is not a distinct legal criterion. Nor is it made so by the addition of terms such as conspicuous or abuse of power. Such language adds nothing to the ordinary principles of judicial review, notably in the present context irrationality and legitimate expectation. It is by reference to those principles that cases such as the present must be judged. The present case Against that background I can turn to the analysis of the present case. The respondents no doubt have grounds to complain of the administrative failure to inform them of the assurance given to TMR in 2008. Had they known of it, they might have sought similar assurances. We do not know whether, if the request had been pressed, the assurance would have been replicated, or whether (more probably) the OFT would have reviewed the assurance to TMR in time to leave open the possibility of appeal. In any event, grounds for administrative complaint do not necessarily add up to a cause of action in law. Even accepting that there was a breach of a legitimate expectation of equal treatment in the failure to replicate the assurances given to TMR in 2008, that would not in itself provide a basis for financial remedy in relation to the events of 2012, nor the reversal of financial penalties which had by then been lawfully imposed on the respondents and accepted by them. Lord Dyson identified the critical issue as whether the 2012 decision - that is, to honour the assurances given to TMR but not to do likewise for the respondents - was objectively justified. In my view it makes no difference to the result whether one applies a test of objective justification or of rationality. I see this question as depending, not so much on whether the giving of the assurance to TMR had been a mistake, but on the reality of the position as reasonably perceived by the OFT in 2012. It is not entirely clear what it was about the combination of circumstances, summarised in Lord Dysons concluding paragraph, which led the court to the view that a critical boundary of unfairness had been crossed. Lord Dyson noted that the only difference between the respective positions of TMR and of the respondents was that the OFT had given the assurances to TMR in 2008, but not to the (respondents). But that was a potentially crucial difference. All those who entered ER agreements were aware of the possibility that other parties would appeal and might be successful. That was a risk the respondents took. As Vos LJ said, they knew what they were doing and accepted it with their eyes open. TMR did not. They sought and obtained an assurance on which they claimed to have relied. In 2012 the OFT could reasonably take the view that, if the assurance were not honoured, TMR would have had a strong case for permission to appeal out of time, whereas the respondents did not (as the Court of Appeal has since held). If objective justification were needed for the OFT taking a different approach to TMR, that in my view was sufficient; nor was it irrational for them to do so. For these reasons, I would allow the appeal and restore the order of Collins J. Cartel investigations are notoriously difficult without inside information or the active co-operation of at least one participant and are not necessarily straightforward even then. Early Resolution Agreements are a standard tool at the disposal of competition authorities for settling them by consent at an early stage after the investigation has been notified to those under investigation. A party under investigation is offered the prospect of settling the allegation on the basis of a negotiated admission and a discount on the penalty which would otherwise have been imposed. Properly used, they enable an investigation to be conducted expeditiously, economically and fairly and are in principle in the public interest. The practice, however, raises questions of some delicacy. A competition authority is not an ordinary litigant, but a public authority charged with enforcing the law. It therefore has wider responsibilities than the extraction of the maximum of penalties for the minimum of effort. A party under investigation must not be subjected to undue pressure to make admissions. Nor can it be deprived of any statutory right of appeal against the ultimate decision. The terms of the Early Resolution Agreements made with TMR, Gallaher, Somerfield and Asda in this case followed the internal procedures laid down within the OFT. They sought to balance these considerations by providing (i) that the party under investigation would be entitled to terminate the agreement at any time before receipt of the final decision, in which case it would forgo the discount; and (ii) that notwithstanding its admission it would be entitled to exercise its statutory right of appeal against the decision to the Competition Appeal Tribunal, in which case the OFT would be at liberty to apply to the Tribunal to increase the penalty and order the party under investigation to pay the costs of the appeal in any event. It is fundamental to the efficacy of such an agreement that subject to its terms it cuts short the investigation of the counterparty by finally resolving the issues as between it and the OFT. Where an Early Resolution Agreement is made with one party but the investigation proceeds against others, the former is entitled to the benefit of the discount or to the benefit of the continuing investigation and/or an appeal. He is not entitled to both. This carefully drawn balance was disturbed by the oral assurance unwisely given by the responsible OFT officer Ms Branch to TMR, but not Gallaher or Somerfield. The assurance was that a successful appeal by other parties on liability would result in no finding against [TMR] and that in the event of a successful appeal on penalty, then OFT would apply any reduction to TMR. There was a successful appeal to the CAT by the parties who had not entered into Early Resolution Agreements, and also by Asda, which had entered into one but exercised its right to appeal. The appeal succeeded on the ground that the OFT decision did not show that there was any anti-competitive object or effect. That is a ground on which TMR, Gallaher and Somerfield would also have been entitled to succeed if they had appealed. Therefore the effect of the assurance was that TMR obtained the benefit of a successful appeal without itself having to appeal and therefore without being exposed to the risk of losing the discount if the appeal failed. The result was to put them in a better position than Gallaher or Somerfield. Moreover, although Gallaher and Somerfield were notified of the Early Resolution Agreement with TMR they were not told about the oral assurance. Consequently, they were not prompted to ask for a similar assurance. The Court of Appeal held that the OFTs failure to repay the penalties to Gallaher and Somerfield, as they had to TMR, was a breach of a public law duty to treat all those under investigation equally in the absence of some objective ground for treating them differently. They considered that there was no such ground. I agree with Lord Carnwaths analysis of the relevant legal principles. In public law, as in most other areas of law, it is important not unnecessarily to multiply categories. It tends to undermine the coherence of the law by generating a mass of disparate special rules distinct from those applying in public law generally or those which apply to neighbouring categories. To say that a decision-maker must treat persons equally unless there is a reason for treating them differently begs the question what counts as a valid reason for treating them differently. Consistency of treatment is, as Lord Hoffmann observed in Matedeen v Pointu [1999] 1 AC 98, at para 9 a general axiom of rational behaviour. The common law principle of equality is usually no more than a particular application of the ordinary requirement of rationality imposed on public authorities. Likewise, to say that the result of the decision must be substantively fair, or at least not conspicuously unfair, begs the question by what legal standard the fairness of the decision is to be assessed. Absent a legitimate expectation of a different result arising from the decision-makers statements or conduct, a decision which is rationally based on relevant considerations is most unlikely to be unfair in any legally cognisable sense. In the present case nothing that the OFT said or did could have given rise to any other expectation than that it would act rationally. The questions which this appeal poses are (i) whether the OFT acted rationally in giving the assurance to TMR alone in 2008 and in repaying the penalty to TMR alone in 2012; and (ii) if not what are the consequences for Gallaher and Somerfield. I start with the decision of 2008. As a statement of the ordinary legal consequences of a successful appeal by other parties, the assurance given by Ms Branch was wrong. An appeal by one party from a decision of the OFT on a cartel investigation is a distinct legal proceeding whose outcome affects that party only: Deutsche Bahn AG v Morgan Advanced Materials plc (formerly Morgan Crucible Co plc) (European Commission intervening) [2014] 2 All ER 785, para 21, Commission of the European Communities v Assidomn Kraft Products AB (Case C-310/97P) at paras 2-14, 4 CMLR 10 (Wood Pulp II), para 63. The assurance could therefore be relevant only as a collateral undertaking to TMR that they would be treated otherwise than in accordance with the general law. This was a mistake, as both courts below have recognised. It was a mistake not because Ms Branch did not intend to give the assurance or did not know what she was doing. It was a mistake because it was inconsistent with the OFTs policy of non-discrimination, as well as with the terms of the Early Resolution Agreement under discussion, and more generally with the purpose of the early resolution procedure. That, however, cannot affect the position of Gallaher or Somerfield, for substantially the reason given by the Court of Appeal when they held that Gallaher and Somerfield were not entitled to appeal the OFTs decision out of time after the other appeals had succeeded. Save in exceptional circumstances, such an appeal must be brought within two months of the OFTs final decision. The Court of Appeal held that there were no exceptional circumstances. This was because each of them had entered into a distinct agreement which was intended finally to resolve the issues the subject of the appeals, subject only to the right conferred by the agreement to terminate the agreement before a final decision or to appeal afterwards. They had invoked neither condition, thus accepting the risk that they would not benefit if the appeal succeeded but ensuring that they would retain the benefit of the discount if it failed. Finality and certainty required that they should live with the consequences: see Office of Fair Trading v Somerfield Stores Ltd [2014] EWCA Civ 400, esp at paras 33, 38, 41 and 45. The fact that no corresponding assurance was given to Gallaher or Somerfield makes no difference to this analysis. This was not a zero sum game, like the tender process considered in R v National Lottery Commission, Ex p Camelot Group Plc [2001] EMLR 3. The benefit to TMR was in no sense given at their expense. Nor does it make any difference that the oral assurance was not disclosed to them. If it had been, they might well have asked for a similar assurance for themselves. But they would have had no right to one. As a matter of principle, the OFTs mistake was that they gave the assurance to TMR, not that they failed to give it to Gallaher and Somerfield. As a matter of fact, if Gallaher and Somerfield had asked for a similar assurance, there is no reason to suppose that the OFT would have made the same mistake again. It is at least as likely that such a request would have provoked a reassessment of the assurance given to TMR, followed by its withdrawal. Against that background, I turn to the 2012 decision which the Court of Appeal, correctly as I think, regarded as the relevant one. Was it irrational to repay the penalty to TMR after the appeal but not to Gallaher or Somerfield? In my opinion it was not, because although the decision to repay TMR also was discriminatory, the discrimination was objectively justified. To see why this is so, it is necessary to look more carefully at the basis on which the OFT agreed to repay the penalty to TMR in 2012. The OFTs assurance had been that in the event of a successful appeal by another party on liability they would withdraw as against TMR the finding of unlawfulness made in their decision. However, they refused to do that. It would have been contrary to the terms of the Early Resolution Agreement. Instead, they recognised that they had slipped up in giving the assurance. As a result, first, TMR would be certain to get permission to appeal out of time, because the assurance had made it unnecessary for them to appeal in time; and, secondly, their appeal would have been bound to succeed, because the ground on which the other appeals had succeeded applied equally to them. Accordingly, the OFT settled with TMR on the only realistic basis. Gallaher and Somerfield were not in the same position. The OFT had not slipped up in their case. They had no basis for a late appeal, as indeed the Court of Appeal subsequently held. There was nothing as between them and the OFT to be settled. Because TMR had received the oral assurance and on that basis foregone an appeal which would certainly have succeeded, the repayment of the penalty to them was in no sense a windfall. But it would be a windfall if a corresponding repayment were now to be made to Gallaher and Somerfield, who forewent their appeal by their own decision on an entirely different basis. For these reasons, I would allow the appeal. I agree that this appeal should be allowed, and with Lord Carnwaths analysis of the relevant legal principles. As he concludes, the OFTs decision to honour the assurance given to TMR, but not to replicate it in favour of the respondents, was both objectively justified and a rational response to the predicament which it faced. In 2008 the OFT gave an assurance to TMR about extending to it the benefit of any successful appeal by another party which the evidence shows (and the courts below rightly held) was the result of a mistake. It had been intended as a statement of what the OFT then thought, without proper consideration of the question, and in particular the finality principle, would be the legal consequence for TMR of a successful appeal by another party. It had not been intended to confer some special benefit upon TMR, and might have been unthinkingly replicated in favour of other parties negotiating ERAs if any had asked the same question, but none did. In 2012, when the consequences of the mistaken assurance came home to roost, the OFT was faced, at least in theory, with three unpalatable alternatives: It could go back on the assurance to TMR, and refuse any similar It could honour the assurance to TMR, and extend it to the respondents (a) benefit to any other party. (b) and any other party in a similar position. (c) to any other party. It could honour all or part of the assurance to TMR but not extend it. Option (a) was unsatisfactory because it would almost certainly have led to TMR (but not the respondents) obtaining permission to appeal out of time, and to a wholly successful appeal. This would have been an even better outcome for TMR than that which the OFT provided by agreement, because the agreement did not abandon the finding of unlawfulness against TMR in the decision. Furthermore the complaint by the respondents of having been treated differently in 2008 would have remained. Option (b) would have involved the replication of a mistake at very large cost to the public purse, in favour of parties who neither received nor relied upon a similar assurance. Option (c) would involve treating the respondents differently, but would at least not involve the replication of a mistake. These claims seek judicial review of the OFTs choice of option (c). Where a public authority has a choice of this kind, and one of the options avoids replicating an earlier mistake, but at some cost to equal treatment, the choice is one for the authority, not for the court, for the reasons which Lord Carnwath gives, subject to the usual constraints of lawfulness and rationality. If, but only if, the authority acts outside those constraints will its choice be subject to judicial review. In the present case I do not consider that the OFTs response to its predicament transgressed those boundaries. The fact that the giving of the assurance to TMR in 2008 was a mistake, that its withdrawal in 2012 would be likely to leave TMR even better off than if the assurance was honoured, and that the respondents had neither received or relied upon any similar assurance seem to me, taken in combination, to amount to a powerful objective justification for unequal treatment, as between TMR and the respondents. On any view the OFT made a rational choice between unpalatable alternatives, with which the court should not interfere.

UK-Abs

The Competition and Markets Authority (CMA) is the successor in title to the Office of Fair Trading (OFT). In April 2008 the OFT identified 13 parties, including the respondents, as having infringed the Competition Act 1998. In early June 2008 both respondents, along with four other parties, entered into Early Resolution Agreements (ERAs) with the OFT. The ERAs involved the parties admitting infringement and co operating with the OFT in exchange for substantial reductions in the anticipated penalties. A party to an ERA could also appeal against that final decision, notwithstanding the admissions in the ERA, but in that case was liable to have his penalty increased by the Competition Appeal Tribunal (CAT). The Early Resolution process was neither subject to statutory rules nor, at the material time, described in any published document. An internal OFT document nonetheless emphasised Fairness, transparency and consistency as integral to an effective settlement process. An OFT speaking note for use in discussions with parties also included a commitment to equal treatment principles. TM Retail (TMR) was one of the parties which had entered into an ERA. In 2008 the OFT responded to a query from TMR with an assurance that, if it did not appeal, it would get the benefit of any successful appeal made by any of the other parties to the decision. In April 2010 the OFT issued its final decision which made findings of infringement against parties under investigation, including the respondents. Six of those parties appealed to the CAT. Neither the respondents not TMR appealed, but instead chose to pay the reduced penalties imposed in the ERAs. The CAT allowed the appeals of all six appellants. TMR then wrote to the OFT, citing the 2008 assurance and inviting the OFT to withdraw the decision against it. The OFT reached a settlement agreement with TMR whereby the penalty which had been imposed on TMR was repaid with a contribution to interest. The respondents invited the OFT to withdraw the decisions against them, arguing that they should also be given the benefit of the assurances given to TMR. The OFT refused. The respondents ultimately brought judicial review claims. These failed in the High Court but succeeded in the Court of Appeal, which held that the OFTs failure to repay the penalties to the respondents was, in the absence of some objective justification for the difference in treatment compared to TMR, a breach of a public law duty to treat all those under investigation equally. The CMA appealed to the Supreme Court. The Supreme Court unanimously allows the appeal. Lord Carnwath gives the lead judgment, with which the other Justices agree. Lord Sumption and Lord Briggs give concurring judgments. Domestic administrative law does not recognise a distinct principle of equal treatment. Consistency is a generally desirable objective, but not an absolute rule [24]. In this case the OFT was applying a single set of legal and policy criteria to a limited group of parties within a single area of business activity, and its commitment to equal treatment had been expressed in terms to those parties. To that extent, they had a legitimate expectation of equal treatment; but that tells one nothing about the legal consequences of such an expectation [29 30]. Although procedural unfairness or impropriety is a well established ground of judicial review, substantive unfairness as such is not. the case law add nothing to the ordinary principles of judicial review by which this case must be judged [31 42]. Even accepting that there was a breach of a legitimate expectation in the failure to replicate the assurances given to TMR in 2008, that would not in itself provide a basis for financial remedy in relation to the events of 2012, nor the reversal of financial penalties which had by then been lawfully imposed on, and accepted by, the respondents. It makes no difference to the result whether one applies a test of objective justification or one of rationality [43]. All those who entered ERAs knew of the possibility that other parties would appeal successfully. That was a risk the respondents took knowingly. TMR did not. TMR sought and obtained an assurance on which it claimed to have relied. In 2012 the OFT could reasonably take the view that, if the assurance were not honoured, TMR would have had a strong case for permission to appeal to the CAT out of time, whereas the respondents did not. If objective justification were needed for OFT taking a different approach to TMR, that was sufficient. [44 45]. Lord Sumption adds that the assurance given to TMR was a mistake because it was inconsistent with the OFTs policy of non discrimination, the terms of the ERA under discussion, and the purpose of the Early Resolution procedure [51 52]. That, however, cannot affect the position of the respondents, each of whom had entered into a distinct ERA which was intended finally to resolve the issues which were the subject of the CAT appeals, subject only to their right to either (i) terminate the ERA before the final OFT decision or (ii) appeal to the CAT after that decision. They invoked neither option, thus accepting the risk that they would not benefit from any other partys successful appeal but ensuring that they would retain the benefit of the discounted sanction if the appeals failed. Finality and certainty required that they should live with the consequences [53]. The assurance to TMR was in no sense given at their expense. They had no right to such an assurance. The OFTs mistake was that they gave the assurance to TMR, not that they failed to give it to the respondents. It was not irrational for the OFT in 2012 to repay the penalty to TMR after the appeal while not repaying the respondents, because having failed to appeal in reliance on the assurance, TMR would otherwise have been entitled to obtain leave to appeal out of time. Since they were in materially the same position as the six successful appellants, their appeal would have succeeded. Therefore, while the decision was discriminatory, the discrimination was objectively justified. Unlike TMR, the respondents had no basis for a late appeal to the CAT [54 56]. Lord Briggs adds that, where a public authority has the option to avoid replicating an earlier mistake but at some cost to equal treatment, the choice is one for the authority rather than the court, subject to the usual constrains of lawfulness and rationality. The OFTs conduct did not transgress those boundaries. The circumstances amount to a powerful objective justification for the unequal treatment: (i) the assurance to TMR was a mistake, (ii) its withdrawal in 2012 likely would have left TMR even better off than if the assurance were honoured, and (iii) the respondents had neither received nor relied upon any similar assurance. On any view the OFT made a rational choice between unpalatable alternatives, with which the court should not interfere [62 63].

When a local planning authority against the advice of its own professional advisers grants permission for a controversial development, what legal duty, if any, does it have to state the reasons for its decision, and in how much detail? Is such a duty to be found in statutory sources, European or domestic, or in the common law? And what are the legal consequences of a breach of the duty? Those issues are presented by this appeal in a particularly striking form. The context is a proposal for major development to the west of Dover, on two sites referred to as Western Heights and Farthingloe. The latter is within the Kent Downs Area of Outstanding Natural Beauty. Western Heights is a prominent hilltop overlooking Dover, dominated by a series of fortifications dating from the Napoleonic wars, including the so called Drop Redoubt. The site is a scheduled monument. Farthingloe is in a long valley between the A20 and the B2001 to the west of Western Heights, and comprises 155 hectares of agricultural and scrubland. The application The application for planning permission was submitted by the second appellant (CGI) to the local planning authority, the Dover District Council (the Council), on 13 May 2012. The principal elements were: 521 residential units and a 90 apartment retirement village at Farthingloe; 31 residential units and a hotel and conference centre at Western Heights; and conversion of the Drop Redoubt into a visitor centre and museum. A payment of 5m for the improvements to heritage assets, to be funded from the profits of the residential development, was to be secured by a planning agreement. The development was categorised as EIA development for the purpose of the relevant regulations (Town and Country Planning (Environmental Impact Assessment) Regulations 2011 (SI 2011/1824) regulation 2(1)), and was accordingly accompanied by an environmental statement. The proposal attracted strong support and strong opposition. Some saw it as offering a much needed boost to the local economy. Thus, for example, the South East Local Enterprise Partnership commented: The proposals represent a major opportunity for both Dover and the wider tourism and visitor economy of East Kent at a time of major challenges facing the local economy. In the absence of likely public sector funding to act as a catalyst for change it is essential that the private sector is encouraged to move forward with confidence and business can aid recovery. Approval of the application would be timely in demonstrating that Dover is open for business and investment. Refusal would send out all the wrong messages to investors. Others (including the present respondents, CPRE Kent) saw it as a serious and unjustified breach of national policy. Thus the AONB Executive said: The Farthingloe valley in the Kent Downs Area of Outstanding Natural Beauty is an enormous asset to Dover. This dry chalk valley provides a memorable approach to the town, with glimpses of Dover castle, as well as a green setting for both the town and the Western Heights available for all to enjoy. The proposed development of over 500 houses in a particularly prominent area of the valley would irreparably damage this nationally protected landscape. It would cause significant harm to the special character and the natural beauty of the AONB. No meaningful mitigation would be possible. The scheme is wholly contrary to national and local policy and is a major challenge to the Governments purposes for AONB designation. We have found no other housing development nationally on a similar scale which has been approved in an AONB The planning officers report These views along with many others on both sides were faithfully summarised in the officers report to the Planning Committee, circulated on 7 June 2013. The report, under the name of the Head of Regeneration and Development, is a remarkable document. It runs to some 135 pages with appendices. It contains a comprehensive exposition of the various elements of the proposed development, the responses to consultation public and private, and the applicable national and local policies, followed by a detailed appraisal of the relevant issues, and concluding with a recommendation for the grant of permission but in amended form. The principal change recommended by the officers was the exclusion from the development at Farthingloe of a safeguarded area of some 2ha in the south west (in the more prominent sector known as FL B), where officers consider the landscape harm most acute; and the consequent reduction of the number of houses at Farthingloe from 521 to 365. The Councils economic advisers, Smiths Gore, had advised that the reduction would not jeopardise the viability of the scheme or the intended financial contributions (officers report paras 2.216, 2.443, 2.445). One aspect of Smiths Gores advice was to suggest a reduction in the Code for Sustainable Homes (CSH) rating from Code 4 to Code 3, which would not only deliver a viable development but would also achieve a more marketable and higher quality housing scheme this being important to help diversify and improve the Dover housing offer (paras 2.217, 2.443). Among other recommended conditions, it was proposed that the provision of the hotel should be secured by requiring it to be commenced before one of the development phases (para 2.131(iii)). In a section of the report headed NPPF (para 116) review, reference was made to that paragraph of the National Planning Policy Framework (NPPF), which indicates that major development in an AONB should be permitted only in exceptional circumstances and where a public interest can be demonstrated. The officers regarded the level of harm to the AONB as significant, particularly to the south west of sector FL B where built development on the elevated and exposed terrain would seriously compromise the landscape character. They concluded: 2.447 Nevertheless it is your officers opinion that offsetting the landscape harm by the modifications outlined in this report would shift the planning balance in favour of the economic and other national benefits of the application. The local economic issues and specific circumstances of this case are considered to provide a finely balanced exceptional justification for this major AONB development, the benefits of which would be in the public interest. Essential to this conclusion would be seeking all the recommended conditions (changes) and ensuring (by condition / section 106 agreement) the deliverability of all the relevant application benefits. The rationale for the application is as a composite package, and any permission should therefore be framed to ensure the emergence of the proposals in a structured and comprehensive fashion. It was noted that the applicant had not yet been given an opportunity to comment on these proposed changes. If they were supported in principle by the Committee, it was suggested that they might delegate to officers to discuss with the applicant any minor variation of the proposed residential quantum, and the precise boundaries of the safeguarded area, although it was not envisaged that this should lead to any notable change in the recommended approach (para 2.448). On balance their conclusion in this case was that the application would, as a single comprehensive scheme, support rather than work against the overall objectives of sustainable development as defined by the NPPF (para 2.454). In a section headed Conclusion it was stated: the officer position is that the conditions / changes as set out in this report (informed by independent legal and financial viability advice) are well founded and that all are necessary to deliver the right composite package, including the economic benefits, so that an on balance recommendation of approval can reasonably be made. (para 2.457) The report ended with a recommendation for the grant of conditional planning permission (part outline, part full) for the various elements of the proposal, but with a limit of 365 residential units at Farthingloe, and subject to the completion of a planning agreement (under section 106 of the Town and Country Planning Act 1990) to secure the proposed benefits including the hotel and conference centre. The report was shown to the applicants. Their consultants, BNP Paribas, wrote on 11 September, expressing fundamental disagreement with Smiths Gores appraisal of viability. They commented on the proposed reduction to 365 houses: We have re run our appraisals to test the impact of the removal of 156 units, as suggested by Smiths Gore. The result is to turn a positive land value of 5.85m to a negative land value of 3.03m. On the basis of this result, the scheme would not secure funding and could not proceed. For the avoidance of doubt, we do not agree with the planning officers assessment that the benefits provided by the Application scheme could also be provided by the sensitivity analysis mooted by Smiths Gore. Indeed, our view is that such a scheme would not be capable of providing the benefits offered and could not proceed as it would be incapable of providing a competitive return to the landowner and developers, as required by the National Planning Policy Framework. They also disagreed with the suggestion that the proposed changes would make the scheme more marketable. Although the letter was not seen by the members of the committee (other than the chairman), its effect and Smiths Gores response were summarised at the meeting (see below). The Committee meeting The application was considered by the Planning Committee on 13 June 2013. The very full minutes record that the meeting started at 6.00 pm and ended at 9.38 pm, with a short break at 9.00 pm following the main vote for the officers to make amendments to their recommendation. (Also on the agenda was one other minor planning application which was dealt with first.) On the Farthingloe application there were contributions by four members of the public (two for and two against). There was a detailed presentation by the officers of the proposals and the issues, during which reference was made to the issue of viability and the BNP Paribas letter, the effect of which was summarised. The minute continued: The Principal Planner advised the Committee that, having considered the further views of BNP Paribas, Smiths Gore stood by their analysis that a lower density scheme would be viable and would deliver the same monetary benefits as currently on offer. Officers therefore recommended that a lower density scheme should be approved as it was viable, not excessive for the site and would be compliant with the Core Strategy. After the officers presentation, five members were recorded as speaking in favour of the proposal, and one against. Another expressed concern about the security of the proposed payment of 5m. The views of three named supporters were expressed collectively; they saw it as a rare opportunity for regeneration and investment, and a courageous step necessary to give Dovers young people a future; of the proposed amendments they said: , it was felt that the application should not be restricted in the way proposed in the recommendation as this could jeopardise the viability of the scheme, deter other developers and be less effective in delivering the economic benefits. The Committee had to assess whether the advantages outweighed the harm that would be caused to the AONB. When seen from the ground and with effective screening, it was believed that this could be minimised. In these exceptional circumstances it was considered that the advantages did outweigh the harmful impact on the AONB. At the end of the discussion a motion was proposed that the officers recommendation be approved but subject to amendment of the number of houses from 365 to 521 as proposed in the application. The motion was carried (the voting is not recorded). The meeting was adjourned for 25 minutes to enable the officers to re word their recommendation with consequential amendments. A vote was then taken on the amended recommendation, which was approved. On 11 July 2013, in response to requests by (among others) CPRE Kent, the Secretary of State declined to call in the application for his own determination. The section 106 agreement and the grant of permission On 18 December 2014 the application returned to the planning committee with an updated officers report. The introduction to the report made clear that its purpose was, not to revisit the decision to grant permission in the previous year, but to update the committee on the section 106 agreement, and to provide an assessment of planning considerations which have emerged since the resolution to grant planning permission (para 3). The report on the section 106 agreement confirmed that, contrary to the officers recommendation in June 2013, there was no obligation linking the provision of the hotel to the phasing of the residential development: The section 106 is drafted in accordance with the Committee resolution which places no obligation on the applicant to provide the hotel at any point in time and there is no obligation to provide the hotel at any stage during the build out of other development proposed in the application. Rather, the objective of the section 106 is to provide the opportunity for a quality hotel to come forward. (para 35) Although Mr Cameron drew our attention to some aspects of this report, it does not seem to have been relied on in the courts below. Mitting J (para 6) merely noted that the revisions were not material to the issues which arose in the case. The December meeting was not mentioned by the Court of Appeal. I can find nothing in the report or minutes to suggest an intention to revisit the substance of the decision of principle made in June 2013, nor which throws further light on the reasons for that decision. The committee resolved to grant permission subject to the completion of the section 106 agreement. The agreement was executed on 1 April 2015, and planning permission was granted on the same day. The notification of grant is a substantial document, running to more than 50 pages, including a long list of approved documents supporting the application, and detailing 183 conditions. It concludes with a note (for the avoidance of doubt) that the Environmental Statement accompanying the application has been taken into account. But it contains no reference to any obligation to give reasons under the EIA regulations (see below), nor any formal statement of the reasons for the grant. The proceedings The present proceedings for judicial review, on a number of grounds including lack of reasons, were heard by Mitting J at a rolled up hearing in December 2015, and were dismissed by him on 16 December: [2015] EWHC 3808 (Admin). Permission to appeal was granted solely on the issue of reasons. On 16 September 2016 the Court of Appeal (Laws and Simon LJJ) allowed the appeal and quashed the permission: [2016] EWCA Civ 936. Laws LJ noted the controversy at the Bar as to the standard of reasons required (para 18). He pointed to three particular factors as calling for clear reasons in this case: the pressing nature of the AONB policy as expressed in the NPPF para 115 6 (the highest status of protection); the departure from the officers recommendation; and the specific duty imposed by the EIA regulations (paras 21 23). Although he noted the relative thinness of the material available to the committee on the viability issue, he relied principally on the failure of the committee to assess and explain the degree of harm to the AONB, having regard to the strictness of the policy and the strong view of harm taken by the officers (paras 29 30). The only reference to this issue in the minutes spoke of the need to assess whether the advantages outweighed the harm to the AONB, wrongly implying that it was simply a question of striking a balance. Further the reference to minimising the harm by effective screening took no account of the officers view that the change of levels to the east would mean that over time, screening would be largely ineffective. In granting permission to appeal (on 2 March 2017), this court indicated that it would wish to consider generally the sources, nature and extent of a local planning authoritys duty to give reasons for the grant of planning permission. Duties to give reasons statutory sources The Town and Country Planning Act 1990 itself says nothing about the giving of reasons for planning decisions. The 1990 Act requires the decision (inter alia) to be made having regard to the development plan and other material considerations (section 70(2)). The Planning and Compulsory Purchase Act 2004 is more specific in requiring the decision to be made in accordance with the development plan unless material considerations indicate otherwise (section 38(6); see Hopkins Homes Ltd v Secretary of State for Communities and Local Government [2017] 1 WLR 1865, para 7). But it does not in terms require the decision maker to spell out the material circumstances which justify such a departure. The non statutory National Planning Policy Framework (NPPF) (itself treated as a material consideration for these purposes: ibid paras 10 21) provides comprehensive guidance to local planning authorities on the handling of individual planning applications. Paragraph 14 with footnote 9 notes, as an exception to the general presumption in favour of permission, specific policies by which development is restricted; including those relating to protected sites under the Birds and Habitats Directives, Green Belts, Areas of Outstanding Natural Beauty, and National Parks. In practice such policy designations are likely to be reflected also in the statutory development plan, so that section 38(6) will come into play. The statutory rules relating to the giving of reasons are all to be found in subordinate legislation. It is hard to detect a coherent approach in their development. The main categories are: Secretary of State decisions (including those delegated to inspectors) i) a) b) following an inquiry or hearing; on written representations. ii) Decisions by local planning authorities a) Refusing planning permission or imposing conditions; b) Granting permission; c) Officer decisions under delegated powers. iii) Decisions (at any level) on applications for EIA development. Secretary of State and inspector decisions Local objectors have no right to call for a public inquiry into a planning appeal. Section 79(2) provides that before determining an appeal the Secretary of State shall if either the appellant or the local planning authority so wish give them an opportunity of appearing before a person appointed by the Secretary of State. If an inquiry is held the right of other parties to appear is determined by the inquiries procedure rules (see, in respect of Secretary of State decisions, the Town and Country Planning (Inquiries Procedure) (England) Rules 2000 (SI 2000/1624) rule 11). Following an inquiry, the Secretary of State must notify his decision on an application or an appeal and his reasons for it in writing to all persons entitled to appear at the inquiry who did appear, . and any other person who, having appeared at the inquiry, has asked to be notified of the decision (ibid rule 18(1)). Equivalent duties are applied under the separate rules dealing with decisions by inspectors and decisions following hearings. Bridge said of the duty imposed by statute on the Secretary of State: In Save Britains Heritage v Number 1 Poultry Ltd [1991] 1 WLR 153, Lord That they should be required to state their reasons is a salutary safeguard to enable interested parties to know that the decision has been taken on relevant and rational grounds and that any applicable statutory criteria have been observed. It is the analogue in administrative law of the common laws requirement that justice should not only be done, but also be seen to be done. (p 170) There is no corresponding statutory rule applying to decisions following a written representations appeal. However, it is the practice for a fully reasoned decision to be given. It has been accepted (on behalf of the Secretary of State, and by the Administrative Court) that there is an enforceable duty, said to arise either from the principles of procedural fairness or from the legitimate expectation generated by the Secretary of States long established practice (Martin v Secretary of State for Communities and Local Government [2015] EWHC 3435 (Admin) para 51 per Lindblom LJ). Local authority decisions Refusals and conditions It has long been the case that local planning authorities must give reasons for refusing permission or imposing conditions. Historically this appears to have been the corollary of the fact that in those cases there is a statutory right of appeal against the refusal or the conditions. The current order (Town and Country Planning (Development Management Procedure) (England) Order 2015 (SI 2015/595) article 35(1)) provides that the authority in their decision notice must state clearly and precisely their full reasons. Grant of permission Until 2003 there was no statutory duty on local planning authorities to give reasons for the grant of permission as such. There was then a change of thinking, as Sullivan J explained (R (Wall) v Brighton and Hove City Council [2004] EWHC 2582 (Admin), para 52): Over the years the public was first enabled and then encouraged to participate in the decision making process. The fact that, having participated, the public was not entitled to be told what the local planning authoritys reasons were, if planning permission was granted, was increasingly perceived as a justifiable source of grievance, which undermined confidence in the planning system Accordingly, between 2003 and 2013, local planning authorities were required to include in the notice of the decision a summary of their reasons for the grant of permission and a summary of the policies and proposals in the development plan which are relevant to the decision (see Town and Country Planning (General Development Procedure) (England) (Amendment) Order 2003 (SI 2003/2047) article 5; Town and Country Planning (Development Management Procedure) (England) Order 2010 (SI 2010/2184) article 31). This duty was repealed as from 25 June 2013 (Town and Country Planning (Development Management Procedure) (England) (Amendment) Order 2013 (SI 2013/1238) article 7). The Explanatory Memorandum (paras 7.17 20) indicated that this was a response to suggestions that the duty had become burdensome and unnecessary, and having regard to the fact that officer reports typically provide far more detail on the logic and reasoning behind a particular decision than a decision notice, so that the requirement to provide a summary adds little to the transparency or the quality of the decision taking process; and also having regard to the greater level of transparency in the decision taking process, resulting from increased ease of access to information, both on line and through the Freedom of Information Act 2000. Officer decisions Since 2014 there has been a duty on a local authority officer making any decision involving the grant [of] a permission or licence to produce a written record of the decision along with the reasons for the decision, and details of alternative options, if any, considered and rejected (Openness of Local Government Bodies Regulations 2014 (SI 2014/2095) regulation 7(2) (3)). This covers, although it is not limited to, the grant of planning permission. EIA development Special duties arise where an application (as in this case) involves EIA development, at whatever level the decision is taken. EIA development is defined as development listed in Schedule 1 or 2 to the Regulations, in the latter case if the development is likely to have significant effects on the environment by virtue of factors such as its nature, size or location. Decision makers must not grant planning permission unless they have first taken the environmental information into consideration, and they shall state in their decision that they have done so (EIA regulations regulation 3(4)). Environmental information is defined as: the environmental statement, including any further information and any other information, any representations made by anybody required by these Regulations to be invited to make representations, and any representations duly made by any other person about the environmental effects of the development. (regulation 2(1)) Where an EIA application is determined by a local planning authority, the authority must inform the public of the decision and make available for public inspection a statement, containing the content of the decision and any conditions attached (i) to it; the main reasons and considerations on which the (ii) decision is based including, if relevant, information about the participation of the public; (iii) a description, where necessary, of the main measures to avoid, reduce and, if possible, offset the major adverse effects of the development; and information regarding the right to challenge the validity (iv) of the decision and the procedures for doing so. (regulation 24(1)(c)) This regulation is derived from article 9 of the EU Directive on environmental assessment (2011/92/EU) (the EA Directive), which expresses the duty in similar terms. Also relevant by way of background is the Aarhus Convention (Convention on Access to Information, Public Participation in Decision making and Access to Justice in Environmental Matters) to which this country is a party. The preamble to the Convention recognises the right of all people to live in a healthy environment and their duty both individually and in association with others to protect it for the benefit of present and future generations; and the consequent need for effective public participation, access to information, transparency in decision making and access to justice in environmental matters. Article 6, which is mentioned in the preamble to the EA Directive, is headed Public Participation in Decisions on Specific Activities. In addition to certain listed activities and others which may have a significant effect on the environment, it extends to any activities where public participation is provided for under national procedures for environmental impact assessment (article 6(1), annex I para 20). Article 6.9 provides: Each Party shall ensure that, when the decision has been taken by the public authority, the public is promptly informed of the decision in accordance with the appropriate procedures. Each Party shall make accessible to the public the text of the decision along with the reasons and considerations on which the decision is based. Standard of reasons A broad summary of the relevant authorities governing reasons challenges was given by Lord Brown in South Buckinghamshire District Council v Porter (No 2) [2004] 1 WLR 1953, para 36: The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the principal important controversial issues, disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration. They should enable disappointed developers to assess their prospects of obtaining some alternative development permission, or, as the case may be, their unsuccessful opponents to understand how the policy or approach underlying the grant of permission may impact upon future such applications. Decision letters must be read in a straightforward manner, recognising that they are addressed to parties well aware of the issues involved and the arguments advanced. A reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision. In the course of his review of the authorities he had referred with approval to the felicitous observation of Sir Thomas Bingham MR in Clarke Homes Ltd v Secretary of State for the Environment (1993) 66 P & CR 263, 271 272, identifying the central issue in the case as: whether the decision of the Secretary of State leaves room for genuine as opposed to forensic doubt as to what he has decided and why. This is an issue to be resolved as the parties agree on a straightforward down to earth reading of his decision letter without excessive legalism or exegetical sophistication. There has been some debate about whether Lord Browns words are applicable to a decision by a local planning authority, rather than the Secretary of State or an inspector. It is true that the case concerned a statutory challenge to the decision of the Secretary of State on a planning appeal. However, the authorities reviewed by Lord Brown were not confined to such cases. They included, for example, the decision of the House of Lords upholding the short reasons given by Westminster City Council explaining the office policies in its development plan (Westminster City Council v Great Portland Estates plc [1985] AC 661, 671 673). Lord Scarman adopted the guidance of earlier cases at first instance, not limited to planning cases (eg In re Poyser and Mills Arbitration [1964] 2 QB 467, 478), that the reasons must be proper, adequate and intelligible and can be briefly stated (p 673E G). Similarly local planning authorities are able to give relatively short reasons for refusals of planning permission without any suggestion that they are inadequate. In the context of the EIA regulations, Mr Reed QC (for CGI) relied on the fact that under Regulation 24(1)(c)(ii) the duty is limited to the main reasons. He drew an analogy with the former duty of local planning authorities to provide summary reasons for the grant of permission, which was treated as imposing a less onerous standard than that considered in Porter. Thus in R (Siraj) v Kirklees Metropolitan Council [2010] EWCA Civ 1286, Sullivan LJ said summary reasons in that context could not be equated with reasons in a Secretary of States decision letter: a decision letter is intended to be a stand alone document which contains a full explanation of the Secretary of States reasons for allowing or dismissing an appeal. By their very nature a local planning authoritys summary reasons for granting planning permission do not present a full account of the local planning authoritys decision making process. (para 14) Mr Reed sought to apply this thinking to the duty to give the main reasons under the EIA regulations. He referred to R (Cherkley Campaign Ltd) v Mole Valley District Council [2014] EWCA Civ 567, para 70, where counsel was recorded as conceding (apparently without demur from the court) that the duty under the EIA was no higher than the duty to give summary reasons under domestic planning legislation. I am unable to accept the analogy. I do not read the reference in the EIA regulations to the main reasons as materially limiting the ordinary duty in such cases. It is no different in substance from Lord Browns reference in Porter to the need to refer only to the main issues in the dispute. To my mind the guidance in Porter is equally relevant in the EIA context. Lang J in R (Hawksworth Securities plc v Peterborough City Council [2016] EWHC 1870 (Admin) made a more general point about what she saw as the difference between a planning inspector conducting an adversarial procedure, akin to court or tribunal proceedings, contrasted with a local planning authority as an administrative body, determining an individual application: Its reasons ought to state why planning permission was granted, usually by reference to the relevant planning policies. But it is not conducting a formal adjudication in a dispute between the applicant for planning permission and objectors, and so it is not required to give reasons for rejecting the representations made by those who object to the grant of planning permission. (para 87) I am not persuaded that the difference between the two processes bears such significance. In both the decision maker may have to take into account and deal fairly with a wide range of differing views and interests, and reach a reasoned conclusion on them. Where there is a legal requirement to give reasons, what is needed is an adequate explanation of the ultimate decision. The content of that duty should not in principle turn on differences in the procedures by which it is arrived at. Local planning authorities are under an unqualified statutory duty to give reasons for refusing permission. There is no reason in principle why the duty to give reasons for grant of permission should become any more onerous. There is of course the important difference that, as Sullivan J pointed out in Siraj, the decision letter of the Secretary of State or a planning inspector is designed as a stand alone document setting out all the relevant background material and policies, before reaching a reasoned conclusion. In the case of a decision of the local planning authority that function will normally be performed by the planning officers report. If their recommendation is accepted by the members, no further reasons may be needed. Even if it is not accepted, it may normally be enough for the committees statement of reasons to be limited to the points of difference. However the essence of the duty remains the same, as does the issue for the court: that is, in the words of Sir Thomas Bingham MR, whether the information so provided by the authority leaves room for genuine doubt as to what (it) has decided and why. Legal remedies In the case of a decision by the Secretary of State or a planning inspector, the 1990 Act provides for a statutory challenge under section 288, on the grounds that the decision was not within the powers of the Act, or that a relevant requirement (which includes a requirement under the inquiries procedure rules to give notice of the decision and the reasons for it) had not been complied with. In the latter case the court must be satisfied also that the interests of the applicant have been substantially prejudiced by the failure (section 288(5)(b)). I note that in the Save case, Lord Bridge identified a single question: There are in truth not two separate questions: (1) were the reasons adequate? (2) if not, were the interests of the applicant substantially prejudiced thereby? The single indivisible question, in my opinion, which the court must ask itself whenever a planning decision is challenged on the ground of a failure to give reasons is whether the interests of the applicant have been substantially prejudiced by the deficiency of the reasons given. (p 167D E) I am not convinced with respect that it is helpful so to conflate the two parts of the statutory formula. Until one has decided on the nature of the breach of the statutory requirements, it is difficult to determine the nature and extent of any prejudice. However, that passage needs to be read in the context of what follows (p 168), which makes clear that Lord Bridges principal concern was to emphasise, contrary to the apparent implication of the judgment of Woolf LJ in the Court of Appeal, that the burden lay on the applicant to establish both parts of the statutory test. In Save itself, the decision of the House ultimately turned on the adequacy of the reasons for departing from the policy, rather than lack of prejudice. Lord Bridge accepted that an opponent of development, whether the local planning authority or some unofficial body like Save, may be substantially prejudiced by a decision to grant permission in which the planning considerations on which the decision is based, particularly if they relate to planning policy, are not explained sufficiently clearly to indicate what, if any, impact they may have in relation to the decision of future applications. (p 167H) The same point is picked up in Lord Browns summary. Lord Bridge did not, as I understand him, dissent from the view of the Court of Appeal that, had Save been able to establish a material defect of reasoning, the appropriate remedy was to quash the permission. Mr Cameron QC (for the Council) argued that a different approach should apply to a breach of the EIA duty taken on its own. Relying on the decision of the Court of Appeal in R (Richardson) v North Yorkshire County Council [2004] 1 WLR 1920, he argued that in that context a mere declaration of the breach was sufficient. Indeed before Mitting J (para 22) this point was conceded by Mr Westaway for CPRE Kent. Although the point was raised in argument in the Court of Appeal, Laws LJ apparently found it unnecessary to address the issue, perhaps because he saw the EIA duty, not as a free standing duty, but as no more than one of the factors relevant to the obligation to give reasons in this case. In Richardson, notwithstanding a clear failure to provide a statement of reasons as required by regulation 21 of the EIA regulations then in force (Town and Country Planning (Environmental Impact Assessment) (England & Wales) Regulations 1999), the Court of Appeal held that the appropriate remedy was, not to quash the decision itself, but to make a mandatory order for the required statement to be provided. In the leading judgment, Simon Brown LJ (para 33) adopted the reasoning of Richards J (at first instance), who had said: 49. the first and most important point in the present case is that regulation 21(1) looks to the position after the grant of planning permission. It is concerned with making information available to the public as to what has been decided and why it has been decided, rather than laying down requirements for the decision making process itself. It implements the obligation in article 9(1) of the directive to make information available to the public when a decision to grant development consent has been taken (emphasis added). That is to be contrasted with article 2(1) of the Directive, which lays down requirements as to what must be done before the grant of planning permission (which may be granted only after a prior assessment of significant environmental effects). 50. The fact that the requirement focuses on the availability of information for public inspection after the decision has been made, rather than on the decision making process, leads me to the view that a breach of regulation 21(1) ought not to lead necessarily to the quashing of the decision itself. A breach should be capable in principle of being remedied, and the legislative purpose achieved, by a mandatory order requiring the authority to make available a statement at the place, and containing the information, specified in the regulation. With respect to the judges concerned, I would decline to follow that reasoning. I find the distinction drawn between notification of the decision, and of the reasons on which it is based, artificial and unconvincing. In the regulations (as in the Aarhus Convention, which is now expressly referred to in the Directive) the provision of reasons is an intrinsic part of the procedure, essential to ensure effective public participation. I would not necessarily disagree with the courts disposal of the appeal in Richardson. Although the committee had not given its own reasons, it had granted permission in accordance with the recommendation in the officers report, and could be taken to have adopted its reasoning. Simon Brown LJ (para 35) referred with approval to the comment of Sullivan J (R v Mendip District Council, Ex p Fabre (2000) 80 P & CR 500, 511) that in such a case the reasonable inference is that the members did so for the reasons advanced by the officer, unless of course there is some indication to the contrary. It is perhaps also relevant that the court was faced with a somewhat extreme submission (based on observations of Lord Hoffmann in Berkeley v Secretary of State for the Environment [2001] 2 AC 603, 616 617), that in respect of a breach of an EU directive the court had no choice in the matter; it was simply not permitted to regard a breach of the implementing regulations as curable other than by the outright quashing of the development permission granted. (para 38) Not surprisingly the court found that an unattractive proposition. However, it is now clear, following recent judgments of this court, that even in respect of a breach of an EU directive the powers of the court are not so restricted: the court retains a discretion to refuse relief if the applicant has been able in practice to enjoy the rights conferred by European legislation, and there has been no substantial prejudice (per Lord Carnwath, (R (Champion) v North Norfolk District Council & Anor [2015] UKSC 52; [2015] 1 WLR 3710, para 54, following Walton v Scottish Ministers [2012] UKSC 44; [2013] PTSR 51, paras 139, 155). In Champion itself it was held that this test was met: given that the environmental issues were of no particular complexity or novelty; there was only one issue of substance on which each of the statutory agencies had satisfied itself of the effectiveness of the proposed measures; the public had been fully involved; and Mr Champion himself having been given the opportunity to raise any specific points of concern but having been unable to do so (para 60). Duty to give reasons Common law Given the existence of a specific duty under the EIA regulations, and the views I have expressed on its effect, it is strictly unnecessary in the present appeal to decide what common law duty there may be on a local planning authority to give reasons for grant of a planning permission. However, since it has been a matter of some controversy in planning circles, and since we have heard full argument, it is right that we should consider it. Public authorities are under no general common law duty to give reasons for their decisions; but it is well established that fairness may in some circumstances require it, even in a statutory context in which no express duty is imposed (see R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531; R v Higher Education Funding Council, Ex p Institute of Dental Surgery [1994] 1 WLR 242, 263A D; De Smiths Judicial Review 7th ed, para 7 099). Doody concerned the power of the Home Secretary (under the Criminal Justice Act 1967 section 61(1)), in relation to a prisoner under a mandatory life sentence for murder, to fix the minimum period before consideration by the Parole Board for licence, taking account of the penal element as recommended by the trial judge. It was held that such a decision was subject to judicial review, and that the prisoner was entitled to be informed of the judges recommendation and of the reasons for the Home Secretarys decision: To mount an effective attack on the decision, given no more material than the facts of the offence and the length of the penal element, the prisoner has virtually no means of ascertaining whether this is an instance where the decision making process has gone astray. I think it important that there should be an effective means of detecting the kind of error which would entitle the court to intervene, and in practice I regard it as necessary for this purpose that the reasoning of the Home Secretary should be disclosed. If there is any difference between the penal element recommended by the judges and actually imposed by the Home Secretary, this reasoning is bound to include, either explicitly or implicitly, a reason why the Home Secretary has taken a different view (p 565G H per Lord Mustill) It is to be noted that a principal justification for imposing the duty was seen as the need to reveal any such error as would entitle the court to intervene, and so make effective the right to challenge the decision by judicial review. Similarly, in the planning context, the Court of Appeal has held that a local planning authority generally is under no common law duty to give reasons for the grant of planning permission (R v Aylesbury Vale District Council, Ex p Chaplin (1998) 76 P & CR 207, 211 212 per Pill LJ). Although this general principle was reaffirmed recently in Oakley v South Cambridgeshire District Council [2017] 2 P & CR 4, the court held that a duty did arise in the particular circumstances of that case: where the development would have a significant and lasting impact on the local community, and involved a substantial departure from Green Belt and development plan policies, and where the committee had disagreed with its officers recommendations. Of the last point, Elias LJ (giving the leading judgment, with which Patten LJ agreed) said: The significance of that fact is not simply that it will often leave the reasoning obscure. In addition, the fact that the committee is disagreeing with a careful and clear recommendation from a highly experienced officer on a matter of such potential significance to very many people suggests that some explanation is required the dictates of good administration and the need for transparency are particularly strong here, and they reinforce the justification for imposing the common law duty. (para 61) His conclusion was reinforced by reference to the United Kingdoms obligations under the Aarhus Convention (para 62; see to similar effect my own comments on the relevance of the Convention, in Walton v Scottish Ministers [2012] UKSC 44; [2013] PTSR 51, para 100). Sales LJ agreed with the result, but expressed concern that the imposition of such duties might deter otherwise public spirited volunteers from council duties, and might also introduce an unwelcome element of delay into the planning system (para 76). Mr Cameron QC (for the Council) submitted that this decision should be treated with care, against the background of the governments decision in 2013 to abrogate the statutory duty to give reasons for grant of permission, planning law being a creature of statute (see Hopkins Homes Ltd v Secretary of State for Communities and Local Government [2017] 1 WLR 1865, para 20). The factors identified by Elias LJ could arise in many cases, and lead to the common law duty becoming a general rule. He asked us to prefer the view of Lang J (R (Hawksworth Securities plc) v Peterborough City Council [2016] EWHC 1870 (Admin), para 81) that a common law duty to give reasons would arise only exceptionally and that generally, the requirements of fairness will be met by public access to the material available to the decision maker. The present case, he submitted, was not exceptional in that sense, either in principle or on its own facts. In my view Oakley was rightly decided, and consistent with the general law as established by the House of Lords in Doody. Although planning law is a creature of statute, the proper interpretation of the statute is underpinned by general principles, properly referred to as derived from the common law. Doody itself involved such an application of the common law principle of fairness in a statutory context, in which the giving of reasons was seen as essential to allow effective supervision by the courts. Fairness provided the link between the common law duty to give reasons for an administrative decision, and the right of the individual affected to bring proceedings to challenge the legality of that decision. Doody concerned fairness as between the state and an individual citizen. The same principle is relevant also to planning decisions, the legality of which may be of legitimate interest to a much wider range of parties, private and public (see Walton v Scottish Ministers [2012] UKSC 44; [2013] PTSR 51, paras 152 153 per Lord Hope). Here a further common law principle is in play. Lord Bridge saw the statutory duty to give reasons as the analogue of the common law principle that justice should not only be done, but also be seen to be done (see para 25 above). That principle of open justice or transparency extends as much to statutory inquiries and procedures as it does to the courts (see Kennedy v The Charity Commission [2014] UKSC 20; [2015] AC 455, para 47 per Lord Mance, para 127 per Lord Toulson). As applied to the environment it also underpins the Aarhus Convention, and the relevant parts of the EA Directive. In this respect the common law, and European law and practice, march together (compare Kennedy para 46 per Lord Mance). In the application of the principle to planning decisions, I see no reason to distinguish between a Ministerial inquiry, and the less formal, but equally public, decision making process of a local planning authority such as in this case. The existence of a common law duty to disclose the reasons for a decision, supplementing the statutory rules, is not inconsistent with the abrogation in 2013 of the specific duty imposed by the former rules to give reasons for the grant of permission. As the explanatory memorandum made clear, that was not intended to detract from the general principle of transparency (which was affirmed), but was a practical acknowledgement of the different ways in which that objective could normally be attained without adding unnecessarily to the administrative burden. In circumstances where the objective is not achieved by other means, there should be no objection to the common law filling the gap. Thus in Oakley the Court of Appeal were entitled in my view to hold that, in the special circumstances of that case, openness and fairness to objectors required the members reasons to be stated. Such circumstances were found in the widespread public controversy surrounding the proposal, and the departure from development plan and Green Belt policies; combined with the members disagreement with the officers recommendation, which made it impossible to infer the reasons from their report or other material available to the public. The same combination is found in the present case, and, in my view, would if necessary have justified the imposition of a common law duty to provide reasons for the decision. This endorsement of the Court of Appeals approach may be open to the criticism that it leaves some uncertainty about what particular factors are sufficient to trigger the common law duty, and indeed as to the justification for limiting the duty at all (see the perceptive analysis by Dr Joanna Bell: Kent and Oakley: A Re examination of the Common Law Duty to Give Reasons for Grants of Planning Permission and Beyond (2017) 22 Judicial Review 105 113). The answer to the latter must lie in the relationship of the common law and the statutory framework. The court should respect the exercise of Ministerial discretion, in designating certain categories of decision for a formal statement of reasons. But it may also take account of the fact that the present system of rules has developed piecemeal and without any apparent pretence of overall coherence. It is appropriate for the common law to fill the gaps, but to limit that intervention to circumstances where the legal policy reasons are particularly strong. As to the charge of uncertainty, it would be wrong to be over prescriptive, in a judgment on a single case and a single set of policies. However it should not be difficult for councils and their officers to identify cases which call for a formulated statement of reasons, beyond the statutory requirements. Typically they will be cases where, as in Oakley and the present case, permission has been granted in the face of substantial public opposition and against the advice of officers, for projects which involve major departures from the development plan, or from other policies of recognised importance (such as the specific policies identified in the NPPF para 22 above). Such decisions call for public explanation, not just because of their immediate impact; but also because, as Lord Bridge pointed out (para 45 above), they are likely to have lasting relevance for the application of policy in future cases. Finally, with regard to Sales LJs concerns about the burden on members, it is important to recognise that the debate is not about the necessity for a planning authority to make its decision on rational grounds, but about when it is required to disclose the reasons for those decisions, going beyond the documentation that already exists as part of the decision making process. Members are of course entitled to depart from their officers recommendation for good reasons, but their reasons for doing so need to be capable of articulation, and open to public scrutiny. There is nothing novel or unduly burdensome about this. The Lawyers in Local Government Model Council Planning Code and Protocol (2013 update) gives the following useful advice, under the heading Decision making: Do make sure that if you are proposing, seconding or supporting a decision contrary to officer recommendations or the development plan that you clearly identify and understand the planning reasons leading to this conclusion / decision. These reasons must be given prior to the vote and be recorded. Be aware that you may have to justify the resulting decision by giving evidence in the event of any challenge. (their emphasis) The decision in this case The members of the Dover planning committee on 13 June 2013 had an unenviable task. The meeting started at six in the evening, probably for most of them at the end of a hard working day. They were faced with probably the most significant planning application for their area for many years. It was no doubt seen as the culmination of an extended process of formal and informal consultation, triggered by the submission of the application over a year before, and they may have felt under some pressure to reach a conclusion. The officers report, admirable though it was, had arrived on their desks only a few days before the meeting. Not only was it long and detailed in itself, but it introduced into the debate a new element of potentially critical significance (the proposed reduction in the number of houses), on which there was a sharp difference of view between the expert advisers. The Model Council Planning Code and Protocol, already referred to (para 60 above) contains under the same heading the following advice: Do come to your decision only after due consideration of all of the information reasonably required upon which to base a decision. If you feel there is insufficient time to digest new information or that there is simply insufficient information before you, request that further information. If necessary, defer or refuse. This passage not only offers sound practical advice. It also reflects the important legal principle that a decision maker must not only ask himself the right question, but take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly (Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014, 1065B). That obligation, which applies to a planning committee as much as to the Secretary of State, includes the need to allow the time reasonably necessary, not only to obtain the relevant information, but also to understand and take it properly into account. Even if there was pressure for a decision on the principle of the development, it seems unfortunate that the members did not apparently consider deferring detailed discussion of the officers proposed modifications, including the contentious issue of viability. It is difficult to see how the members could have expected to reach a properly considered decision on the material then before them. With hindsight at least, given that the application did not come back to the committee for more than a year, nothing would have been lost. The issue of timing is not directly relevant to the reasons challenge before us, but it is an important part of the background. It is not in dispute that the Council was in breach of a specific requirement under the EIA regulations to make available a statement of the main reasons and considerations on which the decision was based. The only issue is the nature of the remedy. Mr Cameron submits that a declaration is sufficient and that the reasons can be supplied retrospectively. In so far as this submission is specific to the EIA duty, following the decision of the Court of Appeal in Richardson, I cannot accept it for the reasons already given. The report of Oakley does not indicate what order resulted in that case. In the present case, however, I am satisfied that that is not an appropriate or sufficient remedy. Indeed it is notable that in the three years since the permission was issued, no attempt has been made to formulate the reasons so as to make good the admitted breach. This perhaps underlines the difficulty of reconstructing the operative reasons of the committee on the basis simply of what is in the minutes. Mr Cameron relies on the views attributed to the three members who were recorded as supporting the proposal. That was against the background that the officers had recommended approval for a departure from the AONB policies, for reasons they had explained, and which the committee can be taken to have accepted. The only substantial difference was as to whether a reduced dwelling limit should be imposed. That was seen by the committee as turning on whether the risk to the viability of the scheme outweighed the harm to the AONB. That issue, he submits, was fully debated and the majoritys conclusion and reasoning were clearly reflected in the minutes. The restrictions proposed by the officers were not accepted because (in the words there recorded) this could jeopardise the viability of the scheme, deter other developments and be less effective in delivering the economic benefits. This submission rests on the uncertain assumption that the views of the three members quoted were shared by the majority. The required statement under the regulations is of the reasoning of the committee as a whole. Even making that assumption, there are serious gaps. There is no indication of how or why the members felt able, without further investigation, to reject the view of their own advisers that the viability of the scheme need not be threatened, and indeed could be enhanced. It was not enough to rely on the possibility of the scheme being jeopardised, simply on the say so of the applicants advisers without any reference to the expert view to the contrary. Another important issue was the officers insistence on the need for implementation as a single comprehensive scheme to secure the economic benefits, including in particular the hotel and conference centre, and for conditions or planning obligations to achieve that. Given that the members apparently shared their officers view of the importance of those benefits, their omission of any legal mechanism to secure it needed explanation. Furthermore, as Laws LJ pointed out, the economic argument was only one side of the picture. The other was the members view of the harm to the AONB. Assuming that they accepted their officers view as to the seriousness of the potential damage to the AONB, it became critical to understand the basis of their belief that it could be minimised by effective screening. This was of particular significance in the context of the EIA regulations which require the statement to include a description of the main measures to avoid, reduce and, if possible, offset the major adverse effects of the development. If the committee had reason to think that landscaping measures could reduce or offset the harm, they needed to be described. At the very least there needed to be an explanation of how the members reconciled this assertion with the view of their officers that landscaping would be largely ineffective. This point was left without any explanation. These points were not merely incidental, but were fundamental to the officers support for the amended scheme. The committees failure to address such points raises a substantial doubt (in Lord Browns words) as to whether they had properly understood the key issues or reached a rational conclusion on them on relevant grounds. This is a case where the defect in reasons goes to the heart of the justification for the permission, and undermines its validity. The only appropriate remedy is to quash the permission. Conclusion For the reasons indicated above, I would dismiss the appeal and affirm the order of the Court of Appeal.

UK-Abs

On 13 May 2012 China Gateway International Limited (CGI) submitted an application for planning permission to the local planning authority, Dover District Council (DDC). It sought permission for a large residential development within an area of outstanding natural beauty (AONB). The proposal was controversial. A planning officers report was circulated to the Planning Committee on 7 June 2013. It recommended the grant of permission with amendments to CGIs proposal, including a reduction in the number of planned houses at one site from 521 to 365. They also recommended ensuring, through an agreement with CGI (the Section 106 Agreement), various economic benefits including a planned hotel and conference centre. The planning officers report had regarded the level of harm to the AONB as significant but concluded that the suggested amendments created a finely balanced public interest. The Planning Committee met on 13 June 2013. Three members of the Committee expressly stated that harm to the AONB could be minimised by effective screening. The planning officers report had nonetheless expected that screening would be largely ineffective. After discussion, the Committee carried a motion approving the planning officers recommendation, but without the proposed reduction in the number of houses. On 18 December 2013 the application for planning permission returned to the Planning Committee with an updated planning officers report. The updated report confirmed that, contrary to the officers earlier recommendation, the Section 106 Agreement did not require CGI to provide the hotel but instead served to create an opportunity for a hotel. The Section 106 Agreement was executed on 1 April 2015. Planning permission was granted on the same day. Campaign to Protect Rural England Kent (CPRE Kent) sought a judicial review of that decision. Although it was unsuccessful at first instance, the Court of Appeal allowed the subsequent appeal and quashed the decision to grant permission. In this appeal to the Supreme Court it was not in dispute that the DDC was in breach of a specific requirement under the Town and County Planning (Environmental Impact Assessment) Regulations 2011 (the EIA Regulations) to provide a statement of the main reasons and considerations on which the decision was based. The issue is whether the Court of Appeal was right to quash the decision on that basis. The Supreme Court unanimously dismisses the appeal. Lord Carnwath gives the judgment, with which Lady Hale, Lord Wilson, Lady Black and Lord Lloyd Jones agree. The Court reviewed various statutory rules relating to the provision of reasons for planning decisions, observing that these rules are to be found in subordinate legislation and that it is hard to detect a coherent approach to their development. The three main categories of planning decision are: (i) decisions of Secretaries of State and inspectors, (ii) decisions by local planning authorities in connection with planning permission, and (iii) decisions, at any level, on applications for EIA development [21 23]. Special duties arise under the EIA Regulations where an application (as in this case) involves a development which is likely to have significant effects on the environment by virtue of factors such as its nature, size or location (an EIA development). Regulation 3(4) provides that decision makers shall not grant planning permission, where the application involves an EIA development, without first taking the environmental information into consideration, and that they must state in their decision that they have done so. Article 6.9 of the Aarhus Convention (Convention on Access to Information, Public Participation in Decision making and Access to Justice in Environmental Matters), to which the United Kingdom is a party, also requires each party to make accessible to the public the text of certain decisions involving an EIA, along with reasons and the considerations on which it is based [31 34]. Where there is a legal requirement to give reasons, what is needed is an adequate explanation of the ultimate decision. The content of that duty should not in principle turn on differences in the procedures by which the decision is arrived at. The essence of the duty, and the central issue, is whether the information so provided by the authority leaves room for genuine doubt as to what it has decided and why [35 42]. The Court rejects DDCs argument that a breach of the EIA duty alone should be remedied by a mere declaration of the breach. DDC relied on R (Richardson) v North Yorkshire County Council [2004] 1 WLR 1920 in which the Court of Appeal remedied a failure to provide a statement of reasons without quashing the decision, by ordering only that the statement be provided. However, in that case it was possible to take the planning committee as adopting the reasoning in the officers report which had recommended granting permission [46 49]. In view of the specific duty to give reasons under the EIA regulations, it is unnecessary to address the common law position. However, the particular circumstances of this case would, if necessary, have justified the imposition of a common law duty to provide reasons for the grant of permission. Planning law is a creature of statute, but the proper interpretation of the statute is underpinned by general common law principles, including fairness and transparency. It is appropriate for the common law to fill the gaps in the present system of rules, but its intervention should be limited to circumstances where legal policy reasons for it are strong [50 60]. The meeting on 13 June 2013 occurred only days after receipt of the planning officers detailed report, which proposed new and controversial amendments. A decision maker must not only ask himself the right question, but must take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly. Even if there was pressure to reach a decision in this case, it seems unfortunate that the committee members did not apparently consider deferring detailed discussion of the proposed amendments [62 63]. A mere declaration of the breach of the EIA duty is not an appropriate or sufficient remedy. In the three years since the permission was issued, no attempt has been made to formulate the reasons so as to make good the admitted breach, perhaps underlining the difficulty of reconstructing the reasons of the committee on the basis of its minutes alone. The recorded views of those members who supported the proposal do not indicate whether those views were shared by the majority, nor why the members felt able to reject the view of their own advisers without further investigation. Their omission of any legal mechanism to secure the proposed economic benefits, in particular the hotel and conference centre, required explanation. Furthermore, it was critical to understand the basis of the members belief that the harm to the AONB could be minimised, which conflicted with the planning officers view that screening would be largely ineffective. The quashing order of the Court of Appeal is consequently affirmed and the appeal is dismissed [61 69].

In August 2007, the vessel B Atlantic, owned by the appellant, was used by unknown third parties in an unsuccessful attempt to export drugs from Venezuela. After her consequent detention by the Venezuelan authorities and the expiry of a period of more than six months, the owners treated the vessel as a constructive total loss. The issue is whether the vessel sustained a loss by an insured peril, entitling the owners to recover the vessels insured value from the respondents, her war risks insurers. The war risks insurance policy was for a year commencing 1 July 2007. According to section A, it afforded hull and machinery cover including strikes, riots and civil commotions, malicious damage and vandalism, piracy and/or sabotage and/or terrorism and/or malicious mischief and/or malicious damage, including confiscation and expropriation. The cover afforded was on the terms of the Institute War and Strikes Clauses Hulls Time (1/10/83). These provide as follows: 1. PERILS Subject always to the exclusions hereinafter referred to, this insurance covers loss of or damage to the vessel caused by 1.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power 1.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat 1.3 derelict mines torpedoes bombs or other derelict weapons of war 1.4 strikers, locked out workmen, or persons taking part in labour disturbances, riots or civil commotions 1.5 any terrorist or any person acting maliciously or from a political motive 1.6 confiscation or expropriation. INCORPORATION 2. The Institute Time Clauses Hulls 1/10/83 (including 4/4ths Collision Clause) except Clauses 1.2, 2, 3, 4, 6,12, 21.1.8, 22, 23, 24, 25 and 26 are deemed to be incorporated in this insurance in so far as they do not conflict with the provisions of these clauses. DETAINMENT In the event that the Vessel shall have been the subject of capture seizure arrest restraint detainment confiscation or expropriation, and the Assured shall thereby have lost the free use and disposal of the Vessel for a continuous period of 12 months then for the purpose of ascertaining whether the Vessel is a constructive total loss the Assured shall be deemed to have been deprived of the possession of the Vessel without any likelihood of recovery. EXCLUSIONS This insurance excludes loss damage liability or expense arising from 4.1 4.1.2 the outbreak of war (whether there be a declaration of war or not) between any of the following countries: United Kingdom, United States of America, France, the Union of Soviet Socialist Republics, the Peoples Republic of China 4.1.3 requisition or pre emption 4.1.4 capture seizure arrest restraint detainment confiscation or expropriation by or under the order of the government or any public or local authority of the country in which the Vessel is owned or registered 4.1.5 arrest restraint detainment confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations 4.1.6 the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause 4.1.7 piracy (but this exclusion shall not affect cover under Clause 1.4), 4.2 loss damage liability or expense covered by the Institute Time Clauses Hulls 1/10/83 (including 4/4ths Collision Clause) or which would be recoverable thereunder but for Clause 12 thereof The period of 12 months in clause 3 was by agreement reduced to six months. 3. The appeal turns on the inter relationship of the perils identified in clauses 1.2, 1.5 and 1.6 with clause 3 and with the exclusions identified in clause 4.1.5. This was considered in the courts below in two stages. First, four preliminary issues were identified, three of which were determined by Hamblen J by a judgment given on 23 March 2012: [2012] EWHC 802 (Comm). There was then a trial before Flaux J of all other issues of fact and law extending over some 14 days in October 2014, leading to a judgment dated 8 December 2014: [2014] EWHC 4133 (Comm); [2015] All ER (Comm) 439. An appeal against aspects of Hamblen Js and Flaux Js judgments was heard on 14 15 June 2016 and determined on 1 August 2016 by the Court of Appeal (Laws LJ, Clarke LJ and Sir Timothy Lloyd): [2016] EWCA Civ 808; [2017] 1 WLR 1303. 4. Hamblen J determined that, in order to rely on clause 4.1.5, insurers did not need to show privity or complicity on the part of (a) the insured or (b) any servant or agent of the insured. There has been no challenge to these conclusions. He also answered in the negative a third issue whether the exclusion in clause 4.1.5 is only capable of applying to exclude claims for loss or damage to a vessel which would otherwise fall within insuring clause 1.2 or 1.6, and not the other perils insured against under clause 1 and/or Section A of the Conditions. On that basis, Flaux J determined that owners were entitled to recover from insurers. The cause of the vessels loss was the malicious act of unknown third parties in attaching the drugs to the hull, and the exclusion of detainment, etc by reason of infringement of any customs regulations in clause 4.1.5 was to be read as subject to an implied limitation where the only reason for such infringement was such an act. The Court of Appeal reached the opposite conclusion, holding that no basis existed for any such implied limitation, and that the vessels loss could both be attributed to a malicious third party act within clause 1.5 and be excluded as arising from detainment by reason of infringement of any customs regulations within clause 4.1.5. The Court of Appeal also dismissed owners cross appeal (in support of which owners had offered no submissions) against Hamblen Js determination of the third issue before him. Before the Supreme Court, owners have preserved their case that Hamblen J was wrong on this point as an alternative to their primary case that, assuming he was right, clause 4.1.5 still does not cover the present circumstances. As is evident from this summary, it has been common ground since at least the hearing before Flaux J that the attempted use by unknown third parties of the vessel for the purpose of smuggling involved the unknown third parties acting maliciously within the meaning of clause 1.5. Only on that basis can owners claim under clause 1.5 and argue that clause 4.1.5 is inapt to cut back the cover against malicious acts which clause 1.5 affords. However, during the course of the hearing before it, the Supreme Court concluded that it was necessary to re examine the resulting common ground, to avoid the risks attaching to any exercise of deriving conclusions from what might prove a false premise. The parties were therefore invited to make and after the hearing made further written submissions on the effect of clause 1.5. The owners continued to resist the proposed expansion of the issues on this appeal, but in my view it involves no real prejudice on a point which is one of pure construction and law. Events in detail The vessel had in early August 2007 loaded a cargo of coal in Lake Maracaibo, Venezuela for discharge in Italy. During an underwater inspection on 12 August 2007, divers discovered a loose underwater grille, in the space behind which were a grappling hook, a saw, a rope and other tools. The Master was told to have the grille rewelded because of the risk of drug smuggling, but declined as the vessel was due to sail that night. In fact, there had been a miscalculation of the vessels draft, which, when appreciated, enabled her to load a further 800 metric tons. Her sailing was thus delayed to 13 August 2007, enabling a second underwater inspection to take place, during which the divers now discovered three bags of cocaine weighing 132 kg strapped to the vessels hull, ten metres below the waterline and some 50 metres from the grille. Unknown third parties were responsible presumably associated with a drug cartel intent on smuggling drugs out of South America into Europe. It is not suggested in these proceedings that either the owners or their crew were in any way implicated (although, as will appear, a different conclusion was reached in Venezuela with regard to the master and second officer). The concealment of the drugs constituted an offence under article 31 of the Venezuelan Anti Drug Law 2005, which provides: Whoever illicitly traffics, distributes, conceals, transports by any means, stores, carries out brokering activities with the substances or their raw materials for the production of narcotic drugs and psychotropic substances, will be punished with a prison sentence of between eight and ten years. In case of an offence under article 31, article 63 authorised seizure of any ship involved as a precautionary measure until confiscation in a definitive judgment, with a proviso that the owner is exonerated from that measure when circumstances demonstrate its lack of intention. Article 66 further provides: The property ships and other items employed to commit the investigated offence, as well as property about which there is a reasonable suspicion that it originates from the offences envisaged in this Law or related offences will be in all cases seized as a preventive measure and, when there is a final and definitive judgment, an order will be given to confiscate and the property will be awarded to the decentralised agency in the The vessel was detained and the crew were arrested. On 25 September 2007 the master and second officer were charged with complicity in drug smuggling, and on 31 October 2007 they were sent for trial and the judge, Judge Villalobos, ordered the continued detention of the vessel under articles 63 and 66 of the Anti Drug Law. In August 2010, following a jury trial, both officers were convicted. They were sentenced to nine years imprisonment and the vessel was ordered to be confiscated. It is accepted that the arrest and detention of the officers and the detention and confiscation of the vessel were all lawful under Venezuelan law. Meanwhile, the owners had on 18 June 2008 served a notice of abandonment. Insurers accept that, if the peril which materialised fell within the scope of the insurance cover, this notice of abandonment was effective to constitute the vessel a constructive total loss under clause 3 of the Institute War Risks and Strikes Clauses. Analysis The premise of the case as advanced until now has been that unknown third parties acted maliciously within the meaning of clause 1.5, shifting the focus to the question whether in the circumstances the exclusion in clause 4.1.5 applies. If clause 1.5 does not apply, then owners would have to fall back on the perils of detainment, etc in clause 1.2, to which, in linguistic terms, clause 4.1.5 directly responds. If the peril relied on had been detainment, it would be difficult, indeed one might have thought impossible, to argue that the present was not a case of detainment by reason of infringement of any customs regulations within clause 4.1.5. An attempt to mount such an argument failed unequivocally in the Court of Appeal in a smuggling case with some similarities to the present: Sunport Shipping Ltd v Tryg Baltica International (UK) Ltd (The Kleovoulos of Rhodes) [2003] 1 Lloyds Law Rep 138. A large quantity of cocaine was there discovered by divers behind a grille in a sea chest at the vessels discharge port, Aliveri having been placed there by unknown third persons at the load port in Colombia, South America. The crew were ultimately acquitted of any involvement, but the vessels detainment lasted so long that she could be and was declared a constructive total loss under clause 3. Owners evidently did not think to advance a case based on clause 1.5, so the dispute turned solely on whether clause 4.1.5 applied. The Court of Appeal held that the phrase infringement of any customs regulations extended naturally to smuggling, citing in this respect Panamanian Oriental Steamship Corpn v Wright (The Anita) [1971] 1 WLR 882. Owners argued nevertheless that the detainment of the vessel as part of the proceedings against the crew and her subsequent constructive total loss was not by reason of the infringement of customs regulations by unknown persons in Colombia. The Court of Appeal held that the infringement was not simply the historical causa sine qua non of the detention but remained the proximate or operative cause of the detention for the whole relevant period (para 66). Owners claim therefore failed. It is to my mind inconceivable that the result could have been any different had the drugs been discovered and the vessel detained at the load port before setting out on her voyage. The present owners case thus turns on the fact that the Institute War and Strikes Clauses identify as perils insured, not merely detainment etc under clause 1.2, but also loss or damage to the vessel caused by any person acting maliciously under clause 1.5. Once relied on, the specific cover against malicious acts should not, owners submit, be undermined or cut back by an exception of detainment by reason of infringement of customs regulations which owners submit is most obviously addressing other situations or which, on owners alternative case, is not even addressing clause 1.5 at all. It is in the light of these submissions that the Supreme Court concluded that, despite the common ground between the parties, the necessary starting point is to examine the scope of the concept of any person acting maliciously in clause 1.5. This is a phrase which must be seen in context, appearing as it does in the middle of perils insured involving loss of or damage to the Vessel caused by [1.5] any terrorist or any person acting maliciously or from a political motive. Its companions in that context are terrorists and persons acting from a political motive, causing loss or damage to the vessel. What the drafters appear to have had in mind are persons whose actions are aimed at causing loss of or damage to the vessel, or, it may well be, other property or persons as a by product of which the vessel is lost or damaged. Applying a similar rationale to the central phrase any person acting maliciously, it can be said that the present circumstances involve no such aim. Foreseeable though the risk may be that drugs being smuggled may be detected, their detection and any consequent loss or damage to the vessel were the exact opposite of the unknown smugglers aim or, presumably, expectation. The Institute War and Strikes Clauses must also be read in the context of established authority, particularly at the time when they were drafted and, on 1 October 1983, issued. Here, the position is also instructive. The Clauses were part of a determined attempt by the London market to update its marine forms. This included the replacement of the old Lloyds SG policy which, however quaintly attractive to those initiated in the mystique, had with justification been criticised as to its form and content for some 200 years: see eg Brough v Whitmore (1791) 4 Term Rep 206, 210, per Buller J; Rickards v Forestal Land, Timber and Railways Co Ltd [1941] 1 KB 225, 246 247, per MacKinnon LJ; Panamanian Oriental Steamship Corpn v Wright (The Anita) [1970] 2 Lloyds Rep 365, 372, per Mocatta J; and Shell International Petroleum Co Ltd v Gibbs (The Salem) [1982] QB 946, 990D F, per Kerr LJ and 998F 999B, per May LJ. It also included the replacement of the Institute War and Strike Clauses Hulls Time (1/10/59) which had been used to insure, inter alia, risks excluded under the Lloyds SG form by the FC&S warranty (warranted free of capture, seizure, arrest, restraint or detainment, and the consequences thereof or of any attempt thereat), as well as the replacement of the Institute Strikes, Riots and Civil Commotions Clauses used to cover cargo. The attempt came to fruition with the issue of a series of freshly drafted Clauses on 1 October 1983, some 18 months after Kerr LJs and May LJs words in The Salem. While the clauses were freshly drafted, they did not abandon, but sought to bring fresh order and clarity to, many of the time honoured concepts used in the market. In the present context, prior authority on the concept of persons acting maliciously is therefore potentially relevant. By clause 1 of the Institute Strikes Riots and Civil Commotions Clauses (issued for use with cargo insurance), cover was granted in respect of loss or damage to the property hereby insured caused by (a) strikers, locked out workmen, or persons taking part in labour disturbances, riots or civil commotions; (b) persons acting maliciously. The scope of the cover provided by clause 1(b) in respect of persons acting maliciously had been recently considered in two important cases: Nishina Trading Co Ltd v Chiyoda Fire and Marine Insurance Co Ltd (The Mandarin Star) [1968] 1 WLR 1325 (Donaldson J); [1969] 2 QB 449 and The Salem in early 1982. Neither case would have escaped the knowledge of marine insurance practitioners and lawyers or of the specialist drafters of the revised Clauses and particularly not the sensational case of The Salem. In The Mandarin Star the vessels owners had, following a dispute about unpaid charter hire, directed the master to sail from off Kobe, the discharge port, to Hong Kong, where, in collusion with the charterers, they purported to mortgage the cargo. The insured cargo interests recovered the cargo, but (in a friendly test case) claimed under the insurance the expenses of doing so and of returning the cargo to Kobe. They alleged that there had been a taking at sea or theft under the SG form or loss caused by persons acting maliciously within the Institute Strikes, Riots and Civil Commotions Clauses. Their claim succeeded in the Court of Appeal on the basis that there had been a taking at sea, when the vessel sailed from off Kobe. (This conclusion was regarded as erroneous in The Salem by Lord Denning at pp 987E 988C and Kerr LJ at pp 989 993E, on the basis that a change in the character of the shipowners possession vis vis cargo interests without any dispossession from outside, was outside the policy cover.) The claim failed by a majority on theft, on the basis that the vessels owners may have thought that they had a lien justifying their conduct. It failed on malicious act both at first instance and in the Court of Appeal. Donaldson J said, at p 55, that: in the context in which the cover is afforded an element of spite towards someone, although not necessarily the cargo owners, is an essential element. Lord Denning MR said (p 462H) that: maliciously here means spite, or ill will, or the like. There is none such here. Edmund Davies LJ agreed at p 463D with Lord Denning on this point even though in his view the taking also amounted to theft. Phillmore LJ also agreed that the claim for malicious act failed, saying, less compellingly in my view, that (p 467G H): it seems to me that that claim ignores the terms of the policy, which under the Institute Strikes, Riots and Civil Commotions clauses is obviously intended to deal with damage effected in the course of some civil disturbance which has nothing whatever to do with the facts of this case. The Salem involved the audacious making away with a whole cargo of crude oil, in order to supply South Africa in breach of international sanctions. The conspirators purchased and manned a tanker, The Salem. They chartered her to an innocent charterer, Pontoil SA, for a voyage to Europe carrying a cargo of oil which Pontoil acquired from Kuwait Oil Co in Mina al Ahmadi and agreed to resell to Shell, whose interest was insured with the defendant and other insurers for some USD56m. Instead of performing the chartered voyage, the conspirators procured the tanker to enter Durban, where most of its cargo (some 180,000 mt) was discharged and delivered to the South African Strategic Fuel Fund Association in return for payment to the conspirators of a price of over USD32m. They then took the vessel to sea again with a residue of the cargo (some 15,000 mt), and had her scuttled to conceal what had happened. Shell as insured cargo owners claimed for barratry or taking at sea under the SG policy form and/or for persons acting maliciously under the Institute Strikes, Risks and Civil Commotions Clauses. In the event, it was held that there was no barratry, because the conspirators who owned the vessel were privy to its crews acts; there was no taking at sea in respect of the bulk of the cargo, because its effective taking was not at sea, but was in Durban (per Kerr LJ at pp 993F 996B, 997H 998D and May LJ at pp 1000H 1002A) or at the load port, Mina al Ahmadi (per Lord Denning MR at pp 986G 987D). Shells claim for the residue of the cargo succeeded as a loss by perils of the sea, under the language of a special clause introduced (following the House of Lords decision in F Samuel & Co Ltd v Dumas [1924] AC 431) to allow an innocent assured to recover for loss otherwise attributable to the wrongful act or misconduct of the shipowners or their servants. Shells claim for persons acting maliciously failed before Mustill J on the ground that, giving these words the meaning attributed to them in The Mandarin Star: they are plainly not appropriate to the present loss. The conspirators were not inspired by personal malice against Pontoil; they simply wished to steal the cargo, the identity of the owner being immaterial. The same is the case as regards the destruction of the cargo remaining on board when the vessel sank. Perhaps there may, consistently with the decision in The Mandarin Star, be a right to recover where the insured property is damaged by an act of wanton violence, the malice being directed, so to speak, at the goods rather than their owner. But it is unnecessary to decide this here, for the cargo was not lost because the conspirators desired to harm either the goods or their owner. The loss was simply a by product of an operation carried out for the purposes of gain. On the reasoning of the Court of Appeal this is not within the scope of the peril. (pp 965 966) In the Court of Appeal, Lord Denning referred to Mustill Js ruling on this point, and recorded that it was accepted by Shell. In June 1982, some four months after the Court of Appeals judgment in The Salem, Mr Hallgarten QC representing owners in Athens Maritime Enterprises Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd [1983] 1 QB 647 recited the effect of the statements in The Mandarin Star and The Salem on the meaning of any person acting maliciously. The context was cover in respect of persons acting maliciously afforded by the Association under old form rules covering war risks, which included cover in the same terms as those quoted from clause 1 of the Institute Strikes Riots and Civil Commotions Clauses in para 16 above. Mr Hallgarten did not suggest that the judge (Staughton J) could do anything but apply the statements in the two cases cited, but said merely that the position was reserved in case the matter goes further. Counsels precautionary reservation in this case cannot to any significant extent weaken the force of the two recent authorities of The Mandarin Star and The Salem as aids to understanding the meaning of clause 1.5. In my view, therefore, the concept of any person acting maliciously in clause 1.5 would have been understood in 1983 and should now be understood as relating to situations where a person acts in a way which involves an element of spite or ill will or the like in relation to the property insured or at least to other property or perhaps even a person, and consequential loss of, or damage to, the insured vessel or cargo. It is not designed to cater for situations where the state of mind of spite, ill will or the like is absent. In the present case, foreseeable though the vessels seizure and loss were if the smuggling attempt was discovered, the would be smugglers cannot have had any such state of mind. They were, on the contrary, intent on avoiding detection. If the commission of a wrongful act, coupled with the foreseeability of loss or damage affecting the insured property were sufficient, irrespective of motive or aim, then the claims for malicious acts should have succeeded in both The Mandarin Star and The Salem. (That said, I confess to some hesitation about the narrowness of Mustill Js decision in The Salem, excluding from the concept both theft of the majority of the cargo and deliberate destruction of the rest, on the ground that these were simply by products of a larger operation carried out for gain. I do not however suggest that, even if others were to share this hesitation, a different interpretation should, after so long a period, necessarily follow if a similar issue were now relitigated.) The contrary common ground in this case until the Supreme Court was based on two later judgments of Colman J. The first was in Strive Shipping Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Grecia Express) [2002] EWHC 203 (Comm); [2002] 2 Lloyds Rep 88, 96 and the second in North Star Shipping Ltd v Sphere Drake Insurance plc (The North Star) [2005] EWHC 665 (Comm); [2005] 2 Lloyds Rep 76 at para 83, where he reiterated what he had said in the former case. In The Grecia Express, it is important to note the submission which was being made by insurers to and was rejected by Colman J. The submission was that maliciousness required the owners to show that the sinking was directed at them, rather than, for example, the result of random vandalism: see pp 95 96. After considering The Mandarin Star and The Salem, Colman J said (p 96) that: Since the factual basis upon which the Court of Appeal reached its conclusion in both cases was such that the persons acting maliciously cover was inapplicable whether it had either of the meanings considered by Mr Justice Mustill in Shell Petroleum the point is at large in this Court. On the face of this passage, therefore, Colman J saw himself as operating within the parameters set by the previous two authorities. Colman Js ensuing discussion has nonetheless been seen by some as supporting a broader interpretation of the concept of persons acting maliciously. He said: Accordingly, when considering the meaning of persons acting maliciously it is necessary to ask whether it is necessary to adopt a meaning which is so limited that it will cover loss or damage caused for the purpose of injuring the particular insured but will not cover random vandalism. That the word maliciously is quite capable of covering wanton damage is clear from its use and the meaning accorded to it under the Malicious Damage Act 1861. Section 58 provides that where malice is an ingredient of an offence under that Act it is immaterial whether the offence was committed from malice conceived against the owner of the property in respect of which it shall be committed or otherwise. That opens up the meaning to cover any conduct whereby the property in question is intentionally caused to be lost or damaged or is lost or damaged in circumstances amounting to recklessness on the part of the same person. In my judgment, there is no reason why the meaning of person acting maliciously should be more narrowly confined than the meaning which would be given to the word maliciously under the Malicious Damage Act 1861. Provided that the evidence establishes that the vessel was lost or damaged due to the conduct of someone who was intending to cause it to be lost or damaged or was reckless as to whether such loss or damage would be caused, that is enough to engage the liability of war risks underwriters. The words therefore cover casual or random vandalism and do not require proof that the person concerned had the purpose of injuring the assured or even knew the identity of the assured. In this passage, I do not consider that Colman J was intending to do more than decide the narrow issue before him, which was, as indicated, whether spite, ill will or the like required conduct targeted specifically at the insured property or its owner, rather than casual or random vandalism. He had started by indicating that he was addressing the distinction between the possible meanings identified by Mustill J in The Salem. His references to recklessness must be read in the context of the issue before him, whether the cover extended to casual or random vandalism. He was focusing on conduct in relation to the vessel or other property in circumstances where the perpetrator was either aiming at the occurrence of loss or damage to the vessel or engaging in random vandalism. That, as I have already pointed out, is not the present case. Finally, both cases before Colman J concerned loss or damage which was due either to a deliberate attempt to write the ship off or to vandalism. So the question of a criminal act with a quite different intention but which might, however foreseeably, lead to seizure and detention of the vessel by public authorities did not actually arise or require to be addressed. In support of an interpretation of any person acting maliciously broad enough to embrace any wrongful act, however motivated, committed in circumstances where the actor could be said to foresee the possibility of loss or damage to property, owners rely not only on their interpretation of Colman Js judgments, but also on discussion in authority of the concept of malice in a tortious context. They point in this connection to the authority of Pesquerias y Secaderos de Bacalao de Espana SA v Beer (1946) 79 Lloyds Rep 417. In that case, at pp 431 432, Atkinson J cited Allen v Flood [1898] AC 1 to assist in the construction of the then Riots and Civil Commotions Clauses. These clauses covered loss or damage by persons taking part in riots and civil commotions or from any other malicious act whatsoever by any persons, but excluded war risks and all other risks ordinarily covered under the vessels marine policy. Atkinson J held on the facts that the vessels insured had been taken away by rioters, rather than combatants in the Spanish Civil War, and that this also amounted to a loss by a malicious act. In his judgment, Atkinson J cited passages from the speeches of Visc Halsbury LC and Lord Herschell in Allen v Flood. In Allen v Flood, Mr Flood had in the course of his duties as a trade union official told the employers of some ironworkers that the ironworkers would go on strike, unless the employers ceased employing some woodworkers, who the ironworkers believed had worked on iron for another firm. The employers discharged the woodworkers (without breach of contract). Two of the woodworkers sued Mr Flood for loss of their employment, arguing that mere malice, in the sense of doing that which was calculated in the ordinary course to damage, and which did damage, without just cause or excuse, sufficed to ground tortious liability. The majority of the House rejected this sense in this context, affirming that, although in a colloquial sense malice means simply ill will, in its legal sense it means a wrongful act done intentionally without just cause or excuse (per Lord Herschell at p 124). However, so wide a definition would appear to have been unnecessary for the actual decision in Pesquerias y Secaderos. The rioters who there made off with and caused the loss or damage of the vessels plainly intended to deprive the owners of the vessels in question. Their conduct would appear to have satisfied the tests indicated in The Mandarin Star and The Salem. But whether it would have or not, those tests constitute a sounder basis for a proper understanding of the intention of the drafters of the 1983 Institute Clauses than Atkinson Js shortly reasoned importation from an entirely different area of the law of the definition used in Allen v Flood. A similar observation applies to the meaning of malice in the criminal law context of the Malicious Damage Act 1861, to which Colman J referred. Apart from the fact that very few sections of the Malicious Damage Act remain on the statute book after the Criminal Damage Act 1971, there seems a negligible chance that either of the Acts was in the minds of the drafters of the Institute Clauses in 1983. However, Colman J was right to regard both the insurance and the criminal law concepts of a person acting maliciously as covering casual or random vandalism; and they each involve significant, if not necessarily identical, subjective mental elements. Some authors have suggested that the use of a criminal law test would offer practical benefits of simplicity and avoid the need to consider the state of mind of the actor: see Professor Bennett on The Law of Marine Insurance, 2nd ed (2006), para 14.24 and Michael D Millers work on Marine Insurance War Risks, 3rd ed (2005), pp 201 205, where reference is also made to the Offences against the Person Act 1861. But a long stream of authority under the 1861 statutes act established that the criminal law concept of malice involved a very significant mental element: see R v G [2003] UKHL 50; [2004] 1 AC 1034. However, this old criminal law definition (for which, see R v Cunningham [1957] 2 QB 396, quoted by Lord Bingham in R v G, para 11), was developed in a context and for a purpose very different from those applying to the Institute War and Strikes Clauses. For these reasons, neither Allen v Flood nor authority under Victorian criminal law statutes of 1861 appears to me a very helpful guide to the meaning of any person acting maliciously in clause 1.5 of the Institute Clauses. The more helpful approach is therefore to read the phrase in those Clauses in its immediate context and in the light of the recent marine insurance authorities to which I have referred which must have been in the drafters mind. What the context and authorities indicate is that an element of spite, ill will or the like is required. But I would not limit the concept to conduct directed towards the insured interest. An act directed with the relevant mental element towards causing the loss of or damage or injury to other property or towards a person could lead to consequential loss of or damage to an insured interest within clause 1.5, whether the actor was a terrorist, a person acting maliciously or a person acting from a political motive. On the basis of the above, what matters is that this is not a case where the attempted smuggling can be regarded as having been aimed at the detention or constructive total loss of or any loss or damage to the vessel or any property or person. Under Venezuelan law, the smuggling was no doubt itself a wrongful act done intentionally without just cause or excuse. But the smugglers were not intending that any act of theirs should cause the vessels detention or cause it any loss or damage at all. In my opinion, they were not acting maliciously within the meaning of clause 1.5. The conclusion is that clause 1.5 is not apt to cover the present circumstances, and that the premise on which this appeal reaches the Supreme Court is incorrect. That is sufficient to dismiss this appeal. The position if the premise adopted below were correct I have rejected the premise which was common ground between the parties. I will nevertheless address the position had it been accepted. For this purpose, the assumption is therefore that (contrary to my view) the attempted smugglers could and should be regarded as having caused the loss of the vessel acting maliciously. Two questions then arise. The question which is logically first arises from owners fall back challenge to Hamblen Js decision on the third issue before him. Can clause 4.1.5 be read as having any application at all to clause 1.5? The second question, if Hamblen Js affirmative answer to this first question was correct, is whether clause 4.1.5 applies in the particular circumstances, bearing in mind the apparent coincidence in this case of the malicious act insured under clause 1.5 and the infringement of customs regulations excluded under clause 4.1.5. As to the first question, the force of owners case is that clause 4.1.5 uses terminology which echoes relentlessly the terminology of clauses 1.2 and 1.6, and in no way that of clause 1.5. On the other hand, it would be surprising if, by putting a claim on the basis of a malicious act under clause 1.5, an insured could improve the position which would apply if it had invoked clause 1.2 or 1.6. Further, and even more significantly, owners themselves must, by relying on clause 3 to establish a constructive total loss, be accepting and asserting that the vessel has been the subject of seizure, arrest, restraint or detainment, and has been lost thereby, which is exactly the subject matter of the exclusion introduced by clause 4.1.5 (loss arising from arrest restraint detainment ). In these circumstances, owners were correct to regard their fall back case with a distinct lack of enthusiasm. The second question therefore arises whether clause 4.1.5 applies in the circumstances of this case, bearing in mind the apparent coincidence of the malicious act insured under clause 1.5 and the infringement of customs regulations excluded under clause 4.1.5. Flaux J saw this coincidence as necessitating an implied limitation to the effect that clause 4.1.5 would not apply where the only reason why there has been an infringement of the customs regulations by the vessel is because of the malicious acts of third parties (para 258). The problem about this is that no apparent basis exists for any such implied limitation. None of the criteria for implication of an implied term is satisfied. It is entirely understandable that clause 4.1.5 should cut back or define the limits of cover otherwise available under clause 1. That is its clear role in relation to clause 1.2 or 1.6 if relied on. (It is also an element of the role of, for example, clause 4.1.2 in relation to the cover otherwise provided by clause 1.1.) It makes sense that clause 4.1.5 should have a similar effect in relation to clause 1.5, if clause 1.5 is engaged at all. Flaux J thought the contrary. He referred to a concession made by insurers that clause 4.1.5 would not apply in the event of a put up job. That was a reference to a situation hypothesised by Lord Denning MR in The Anita [1971] 1 WLR 882. The Anita was decided under the Institute War and Strikes Clauses Hull Time (1/10/59), which, as noted in para 15 above, insured inter alia the risks excluded from the SG form by the FC&S warranty. Such insurance was subject in clause 4 to a precursor of the present clause 4.1.5. Clause 4 read: This insurance excludes (1) loss, damage or expense arising from requisition or pre emption (a) arrest, restraint or detainment under quarantine (b) regulations or by reason of infringement of any customs regulations; The Anita was a case of crew smuggling. The vessel was confiscated by order of a special court set up by decree in Vietnam. Mocatta J held that what occurred was not ordinary judicial process, but involved a seizure or restraint of princes within the FC&S clause. He went on to hold that insurers had also failed to discharge an onus on them to show that the confiscation arose by reason of infringement of customs regulations, rather than by a decision of the special court which was not only given outside its jurisdiction, but may well have been given with the knowledge of that fact and upon the orders of the executive (p 365). The Court of Appeal held that Mocatta J was wrong to place the onus on insurers to disprove political interference. As Lord Denning MR put it (p 888H): Suffice it for them to prove the breach of regulations and that the confiscation was the result of it. That they proved. Fenton Atkinson LJ said that he could for the purposes of this case . see no distinction between smuggling and infringement of customs regulations (p 889C) and that insurers showed a blatant case of smuggling, or, perhaps more correctly, a strong prima facie case of an infringement of customs regulations followed by a proper hearing by a lawfully constituted tribunal to whom this court should be slow indeed to attribute bad faith (p 889D E). The special court did not appear on the evidence to have acted outside its jurisdiction. There had been no plea that it had acted under executive orders and the evidence did not show this either. The discussion in The Anita indicates that there may be situations in which a loss is not attributable to infringement of customs regulations, but to the improper exercise of judicial or political power. Lord Dennings reference to a put up job postulated another situation in which there would be no loss by infringement of customs regulations, as follows (p 888A): Of course, if there were no goods smuggled and the seizure was a put up job, it would be quite different. However, that seems obvious. There would be no infringement of customs regulations at all. There would also be no goods smuggled, even if one assumes in this example that the authorities went to the length of planting drugs on board, or attaching them to the hull. Flaux J postulated two further scenarios which he suggested would fall outside clause 4.1.5: (a) a malicious third party plants drugs in order to blackmail the owners and when they refuse to pay informs the authorities about the drugs leading to the vessels seizure; and (b) the same scenario without the blackmail attempt, but with the malicious third party simply planting the drugs and informing the authorities in order to get the vessel detained. I note that both scenarios fall within the narrow concept of malicious act indicated in The Mandarin Star and The Salem. Even if the concept of malicious has a wider scope, capable of embracing the different scenario presented by the present appeal, these two scenarios are on this basis distinguishable. The centrality of the intentional motivation to the causation of a loss may well be capable as a matter of causation of taking the loss outside the scope of the exception in clause 4.1.5. That does not mean that any other malicious acts, such as that involved in this appeal, involve loss falling outside the scope of clause 4.1.5, as a matter of either construction or causation. Flaux J also found support for a confined interpretation of clause 4.1.5 in dicta of Toulson J approved by Potter LJ in Handelsbanken ASA v Dandridge (The Aliza Glacial) [2002] EWCA Civ 577; [2002] 2 Lloyds Rep 421, para 52, treating a vessels loss, following owners refusal to meet an outrageous ransom demand by a terrorist organisation, as outside the scope of a loss by any financial cause in clause 4.1.7: see also Melinda Holdings SA v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Silva) [2011] EWHC 181 (Comm); [2011] 2 Lloyds Rep 141, para 46(ii), per Burton J. I see little difficulty about this. Clause 4.1.7 is obviously aimed at ordinary financial vicissitudes, of one sort or another, not at the outrageous sequela of terrorist activity. The cause of the vessels loss would still be the terrorist activity. But that throws no light on the scope or application of clause 4.1.5 in the present case. Neither as a matter of construction nor as a matter of causation is there in my view any basis for treating clause 4.1.5 as inapplicable to the present loss. Mr Alistair Schaff QC for owners submitted that the malicious act, rather than the infringement of the customs regulations, fell to be regarded as the proximate, effective or real cause of the insured loss. This submission faces a number of problems. The first is that the malicious act is the infringement of the customs regulations. There is (as Fenton Atkinson LJ thought in the parallel circumstances of The Anita) no distinction between them. The role of clause 4.1.5 is, as I have said, to cut back on cover in respect of loss caused by perils otherwise insured under clauses 1.2 and 1.6. If clause 1.5 applies in the present circumstances, the role of clause 4.1.5 with regard to that clause appears on its face to be the same. Secondly, even if some meaningful distinction existed between the malicious act and the infringement of customs regulations, it does not follow that this gives rise to a binary choice between two competing proximate, real or effective causes of the insured loss. What is required is an exercise of construction of the particular wording, giving effect at each stage to the natural meaning of the words in their context. This is also how the House of Lords saw a somewhat similar issue in the famous case of John Cory & Sons v Burr (1883) 8 App Cas 393. The question there was whether a loss fell to be attributed (solely) to the insured peril of barratry or fell within the warranted FC&S exception. This was treated as a question as construction: see eg at pp 396 397 per the Earl of Selborne LC, pp 402 403 per Lord Blackburn, p 403 per Lord Bramwell and pp 405 and 406 per Lord Fitzgerald. As a matter of construction, the analysis of the present Clauses falls into three stages. The first stage, if clause 1.5 is capable of applying at all, is that there was a loss caused by a person acting maliciously. Assuming that there was, the second stage is that the means by which loss arose was the vessels consequent detainment and the fact that this lasted for a continuous period of six months. Only on this basis were the owners able to treat the vessel as a constructive total loss under clause 3. The third stage involves the question whether such detainment was by reason of any infringement of customs regulations within clause 4.1.5. At each stage, different factors are introduced, and are capable of shifting the focus of attention. In Royal Greek Government v Minister of Transport (The Ann Stathatos) (1949) 83 Lloyds Rep 228, 237 (as I noted in ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) (The Kos) [2012] 2 AC 164, para 43) Devlin J pointed out that the existence of an exceptions clause is itself likely to affect what falls to be regarded as dominant, proximate or relevant; and that this is because the whole of what one might call the area naturally appurtenant to the excepted event must be granted to it. In the present case, it makes it possible that a loss may both be caused by a person acting maliciously within clause 1.5 and at the same time arise from detainment by reason of infringement of customs regulations within clause 4.1.5. The scheme of the Clauses directs attention first to whether there was prima facie a loss by a specified peril and then to whether the same loss arises from an excepted peril. The transition from the question whether there was a loss caused by a malicious act to the question whether the loss arose from detainment by reason of infringement of customs regulations is furthermore inevitable, since owners have to rely on clause 3 to establish any case of constructive total loss at all. Thirdly, while the general aim in insurance law is to identify a single real, effective or proximate cause of any loss, the correct analysis is in some cases that there are two concurrent causes. This is particularly so where an exceptions clause takes certain perils out of the prima facie cover: ENE Kos, at paras 41 43 and International Energy Group Ltd v Zurich Insurance plc [2016] AC 509, para 73. The possibility of such an analysis is in the present case evident when detainment is, in terms, a peril insured against by clause 1.2, and, in order to claim at all, owners have to invoke a detainment under clause 3. It is only by refraining from relying on the most obviously applicable peril covered, that owners are able to seek to suggest any way at all round the otherwise obviously applicable exception in clause 4.1.5. Putting the matter the other way round, if the attempted smuggling constituted a malicious act within clause 1.5 at all, this was at best only one element in the causative events leading to the loss, which is relevant under the wording of this policy; detection, detainment and its continuation for a period of at least six continuous months were equally essential contributing causes of any loss. Owners submit that the detainment and its continuation can be regarded, and dismissed causatively, as no more than incidents of or sequela to the original malicious act. This is unreal in practical terms. They were by no means bound to occur. The unknown smugglers must have acted on the basis that there was a considerable prospect of their activity going undetected and being successful. Owners submission on this point is also inconsistent with authority. A very similar argument was run in Cory v Burr, where the master of a vessel took on board at Gibraltar eight tons of tobacco, for delivery to a smaller vessel for the purpose of being smuggled into Spain. Spanish revenue officers seized the vessel, and took it into Cadiz with a view to its confiscation, which was only avoided by heavy expense. It was argued that the masters barratrous smuggling was the cause of the vessels loss, rather than the capture or seizure or its consequences from which the vessel was warranted free by the FC&S clause. The argument was shortly dismissed. The Earl of Selborne viewed such a construction of the policy and the warranty taken together as leading to consequences altogether destructive of the whole operation of the warranty (p 397). Lord Blackburn said that it was true that the insurance had not been warranted free from barratry, but went on (pp 400 401): the barratry would itself occasion no loss at all to the parties insured. If it had not been that the Spanish revenue officers, doing their duty (they were quite right in that respect), had come and seized the ship, the barratry of the captain, in coasting along there, hovering as we should call it along the coast, in order that the small smuggling vessel might come and take the tobacco, would have done the assured no harm at all. The underwriters do undertake to indemnify against barratry; they do undertake to indemnify against any loss which is directly sustained in consequence of the barratry; and in this case, as I said before, I think the seizure was as direct a consequence of the barratry as could well be. But still, it was the seizure which brought the loss into existence it was a case of seizure. Then why should it not be protected by this warranty? Lord Bramwell noted the argument that the loss was not from the seizure but in truth from the barratry, and the ingeniously made suggestion that the seizure was an intermediate step, and responded: But it was the ultimate and final step which occasioned the loss (p 403). Finally, Lord Fitzgerald, after observing that barratry may be either harmless or effect but a small loss (p 406) put the question: By what was the loss occasioned? I apprehend that there can be but one answer to this question, namely, that the loss arose from the seizure. There was no loss occasioned by the act of barratry. The barratry created a liability to forfeiture or confiscation, but might in itself be quite harmless; but the seizure, which was the effective act towards confiscation, and the direct and immediate cause of the loss, was not because the act of the master was an act of barratry but that it was a violation of the revenue laws of Spain. Cory v Burr therefore makes clear that there is no question of dismissing a vessels capture and detainment in such circumstances as a mere incident of, or sequela to, an underlying cause such as barratry in that case, or a malicious act in the present. Similarly, in The Salem, the majority concluded that the relevant taking of the bulk of the cargo occurred on its discharge in Durban, rejecting submissions that it occurred when the vessel deviated from her voyage to put into Durban, or when she sailed from Mina al Ahmadi with the intention of discharging the cargo in Durban however much these events signalled the forthcoming appropriation. There are of course cases where one peril will dominate and exclude from relevance a later development which taken by itself might otherwise be seen as engaging an exception. The two scenarios hypothesised in para 37 above can be seen as examples. The case of In re Etherington and the Lancashire and Yorkshire Accident Co [1909] 1 KB 591 may be regarded as another. The insured there suffered a riding accident, inflicting a shock to his system and involving him in a severe wetting which he had to endure on his way home. He caught pneumonia within just over a day, from which he died. The policy contained an exception of disease or other intervening cause, but it also covered death occurring within three months of an accident, suggesting that the natural sequela to an accident were intended to be covered. The policy exception was in the circumstances read contra proferentem so as to be confined to situations where some new intervening disease was the cause of death, rather than a case like the actual one, where pneumonia afflicted the insured within a little over a day. The Court of Appeal understandably regarded the case as difficult and it was probably near the borderline. The courts readiness to apply the maxim contra proferentem in the way it did is also readily understandable in a personal injuries context, far removed from the present, which lies in an area well covered by authority. Fourthly, there are, in Cory v Burr, differences evident in the approaches of Lord Blackburn on the one hand and Lords Bramwell and Fitzgerald on the other. Lord Blackburn, whose speech has proved to have the greatest resonance in subsequent authority, saw the case as one where it made sense to speak of concurrent causes. Lord Bramwell and Lord Fitzgerald approached it as one where it was possible to identify a single real or effective cause of the loss. For my part, I prefer Lord Blackburns approach in the present case, where the perils insured include both detainment and malicious acts and the policy wording introduces different stages in an enquiry, at each of which different considerations may apply. Subsequent authority confirms Lord Blackburns conclusion that, where an insured loss arises from the combination of two causes, one insured, the other excluded, the exclusion prevents recovery: see eg P Samuel & Co Ltd v Dumas [1924] AC 431, 467, per Lord Sumner; Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57, per Lord Denning MR at p 67B F, per Cairns LJ at p 69B D and per Roskill LJ at pp 74E to 75D. Here, the two potential causes were the malicious act and the seizure and detainment. The malicious act would not have caused the loss, without the seizure and detainment. It was the combination of the two that was fatal. The seizure and detainment arose from the excluded peril of infringement of customs regulations, and the owners claim fails. In Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] UKSC 5; [2011] 1 Lloyds Rep 560, para 88, I expressed a reservation in the very different context of the inter relationship in the light of the Marine Insurance Act 1906 and of existing authority between hull cover against perils of the seas and inherent vice. That reservation does not on any view have traction in relation to the present careful exclusion of the peril of loss arising from detainment by reason of infringement of customs regulations from cover under the Institute War and Strikes Clauses Hulls Time. Fifthly, echoing the Earl of Selbornes words in Cory v Burr, owners construction would be at least significantly destructive of the purpose of clause 4.1.5. Clause 4.1.5 is unnecessary to cater for cases of smuggling by owners themselves. Cases of crew barratry are, at least generally, excluded by the conjunction of clause 4.2 of the Institute War and Strikes Clauses Hulls Time with clause 6.2.5 of the Institute Time Clauses Hulls, which covers barratry: see per Colman J in The Grecia Express at p 97 and in The North Star, para 82. It is true that clause 6.2.5 is subject to a proviso, which Colman J did not mention provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers. But it seems improbable that the Institute War and Strikes Clauses Hulls Time were intended to pick up a narrow band of barratrous conduct, to which owners were not privy, but against which they had failed to exercise due diligence to guard. It may of course be suggested that clause 4.1.5 was inserted simply in order to make the position express in relation to smuggling to which either the owners or the crew were privy. But there is no indication that it is limited to them, and there has, rightly in my view, been no appeal against Hamblen Js decision that it is not. There is nothing to suggest that insurers were willing to accept the risks of smuggling by third parties. A considerable risk of detainment and constructive total loss exists, whoever is responsible for the smuggling. Indeed, it will commonly be very difficult for customs authorities, insurers or anyone to know whether or not crew members were implicated. Owners point to various situations in which clause 4.1.5 could still bite, even if it does not apply to third party smuggling: the innocent importation or exportation of prohibited goods, or breaches of customs regulations not involving smuggling. No doubt such cases exist, but there is nothing to confine clause 4.1.5 to them, or to make it likely that anyone contemplated so narrow a confine to its operation. Owners also point to scenarios which would not be caught by clause 4.1.5, including the scenario, on which the drafters of the clause may perhaps be forgiven for not focusing, of purely domestic smuggling within a particular country. These too provide no reason for not giving clause 4.1.5 its ordinary meaning, in the relatively commonplace situations which its drafters were clearly addressing. Owners also submit that it would be surprising if barratrous smuggling (without any want of due diligence on owners part) was covered by clause 6.2.5 of the Institute Time Clauses Hulls (see para 49 above), whereas third party smuggling were not covered by the Institute War and Strikes Clauses Hulls Time. They point out, correctly, that the two sets of Clauses would, at least generally, be expected to mesh together to achieve a coherent picture. The inter relationship of the two sets of Clauses in this area is however specifically addressed by a clause in the Institute Time Clauses Hulls. This reads: 23. WAR EXCLUSION In no case shall this insurance cover loss damage liability or expense caused by 23.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power 23.2 capture seizure arrest restraint or detainment (barratry and piracy excepted), and the consequences thereof or any attempt thereat 23.3 derelict mines torpedoes bombs or other derelict weapons of war. Assuming, without having to decide, that the effect of clause 23.2 is that detainment following a barratrous smuggling attempt is covered by the Institute Time Clauses Hulls, it is clear that any other detainment is left to be addressed by other arrangement, most obviously by the Institute War and Strikes Clauses Hulls Time. The specific reference in clause 23 to capture seizure arrest restraint or detainment and the consequences thereof or any attempt thereat takes one straight to clause 1.2 of those Clauses, where loss by detainment is expressly covered. But the cover is subject to the exclusion in clause 4.1.5 in respect of loss by detainment by reason of infringement of customs Regulations. The natural inference from the interrelationship of the two sets of Clauses is not that third party smuggling was left by the Institute Time Clauses Hulls to be covered by the Institute War and Strikes Clauses Hulls Time. Rather it is that detainment by third party smuggling was not contemplated as covered by the latter Clauses at all. Instead, assuming detainment by barratrous smuggling to be covered by the combination of clauses 6.2.5 and 23.2 in the Institute Time Clauses Hulls, detainment by third party smuggling was understood to be excluded by both sets of Clauses. Whether that is commercially satisfactory or whether cover is available on the market for owners to fill any gap in respect of third party smuggling which may be perceived as a result is not a matter which we have the material to judge or upon which we can speculate. Conclusion i) First, (contrary to the common ground between the parties in the courts below) the vessels loss was not caused by any person acting maliciously within the meaning of clause 1.5 of the Institute Clauses. It was caused simply by detainment, which entitled the owners to invoke clauses 1.2 as well as clause 3, but which, since the detainment itself arose by reason of infringement of customs regulations, also brought the exception in clause 4.1.5 into operation. ii) Second, if it had been possible to view the loss as caused by a person acting maliciously within clause 1.5, it would still have been excluded by clause 4.1.5 as arising, at least concurrently, from detainment by reason of infringement of customs regulations. I arrive therefore at the same result as the Court of Appeal, though by different reasoning. The appeal should be dismissed. For these reasons, I would conclude:

UK-Abs

In August 2007 B Atlantic (the Vessel), owned by the Appellant, was used by unknown third parties in an unsuccessful attempt to export cocaine from Venezuela by strapping a parcel of drugs to the vessel underwater. The Vessel was detained by Venezuelan authorities. After a period of more than six months, the Appellant treated the Vessel as a constructive total loss. The issue raised by the present case is whether the owners are entitled to recover the Vessels insured value from the Respondents, the Vessels war risk insurers. This turns on the terms of the insurance policy. The cover afforded was on the terms of the Institute War Strikes Clauses Hulls Time (the Institute Clauses). The key provisions were: Clause 1: PERILS Subject always to the exclusions hereinafter referred to, this insurance covers loss of or damage to the Vessel caused by 1.2 capture seizure arrest restraint or detainment, and consequences thereof or any attempt thereat 1.5 any terrorist or any person acting maliciously or from a political motive 1.6 confiscation or expropriation. Clause 3: DETAINMENT In the event the Vessel shall have been the subject of capture seizure arrest detainment confiscation or expropriation, and the Assured shall thereby have lost the free use and disposal of the Vessel for a continuous period of [6] months then for the purpose of ascertaining whether the Vessel is a constructive total loss the Assured shall be deemed to have been deprived of the possession of the Vessel without any likelihood of recovery. Clause 4.1.5: EXCLUSIONS This insurance excludesarrest restraint detainment confiscation or expropriationby reason of infringement of any customs or trading regulations On a trial of preliminary issues Hamblen J held that Clause 4.1.5 was not confined to Clause 1.2 and 1.6, but left open whether it applied to Clause 1.5. At trial, Flaux J held that the owners were entitled to recover, because Clause 4.1.5 did not apply to an infringement of customs regulations occurring due to malicious acts of third parties falling within Clause 1.5, such as the attempted smugglers act in attaching the drugs to the hull. The Court of Appeal disagreed, holding that the Appellants claim was excluded under Clause 4.1.5 even if it fell within Clause 1.5. The owners appealed on the basis of common ground that the attempted smugglers were acting maliciously within the meaning of Clause 1.5. During the course of the hearing the Supreme Court considered that it was necessary to re examine that common ground. The parties made further written submissions on this point [6]. The Supreme Court unanimously upholds the Court of Appeals decision and dismisses the appeal. First, the Vessels loss was not caused by any person acting maliciously within the meaning of Clause 1.5 of the Institute Clauses. Second, even assuming that there was loss caused by a person acting maliciously, it was still excluded by Clause 4.1.5. Lord Mance writes the judgment. Acting Maliciously The attempted smugglers were not acting maliciously within Clause 1.5 [30]. An element of spite, ill will or the like is required, although this is not limited to conduct directed towards the insured interest. An act directed with the relevant mental element towards causing the loss of or damage or injury to other property or towards a person could lead to consequential loss of or damage to an insured interest within Clause 1.5 [28]. The attempted smuggling cannot here be regarded as aimed at the detention of or any loss or damage to the Vessel or any property or person [29]. Clause 1.5 must be read in its immediate context and in the light of the recent marine insurance authorities which would have been in the minds of the drafters of the Institute Clauses [28]. With regard to context, what the drafters appear to have had in mind are persons whose actions are aimed at causing loss of or damage to the vessel or other property or persons as a by product of which the vessel is lost or damaged. Detection of the smuggled drugs and any consequent loss or damage to the Vessel were the exact opposite of the unknown smugglers aim [14]. The Institute Clauses were issued on 1 October 1983 [15]. They were drafted to bring fresh order and clarity to many of the concepts used in the market. Prior authority on the concept of persons acting maliciously is therefore relevant [16]. The Mandarin Star [1968] 2 Lloyds Law Rep 47 and The Salem [1982] 1 QB 946 establish that for a person to be acting maliciously an element of spite or ill will towards someone is required. The (earlier) Institute Clauses were held to be obviously intended to deal with damage effected in the course of some civil disturbance [17]. Whether the malice had to be directed to the cargo owner as opposed to the goods themselves was left unclear [17 and 20]. Authorities dealing with malice in a tortious context and Victorian criminal law statutes from 1861 do not provide helpful guidance to the meaning of any person acting maliciously in Clause 1.5 [25 28]. The Operation of Clause 4.1.5 Even if the attempted smugglers had been acting maliciously within Clause 1.5, the Appellants claim was still excluded under Clause 4.1.5 as arising, at least concurrently, from detainment by reason of infringement of customs regulations [55]. First, Clause 4.1.5 is applicable to circumstances falling within Clause 1.5. It would be surprising if an insured could improve its position by invoking one particular sub clause of Clause 1, such as Clause 1.5, as opposed to Clauses 1.2 or 1.6. Further, the owners are relying on Clause 3 to establish constructive total loss which is exactly the subject matter of Clause 4.1.5 [32]. Second, neither as a matter of causation nor as a matter of construction, is it possible to treat Clause 4.1.5 as inapplicable by drawing some distinction between the malicious act and the infringement of customs regulations as the proximate, real or effective cause of the loss [39]. The two are here effectively the same. Even if some meaningful distinction could be drawn between them, it does not follow that there is a binary choice between two competing proximate, real or effective causes of the insured loss. What is required is a construction of the particular wording, giving effect at each stage to the natural meaning of the words in their context [40]. The general aim in insurance law is to identify a single real, effective or proximate cause of any loss, but in some cases there may be two concurrent causes of loss, particularly where an exception takes certain perils out of the prima facie cover [43]. Where an insured loss arises from the combination of two causes, one insured, the other excluded, the exclusion prevents recovery [49]. Here two potential causes can be identified viz the malicious act and the subsequent seizure and detainment. It was the combination of the two that was fatal. As the seizure and detainment arose from the excluded peril of infringement of customs regulations, the Appellants claim fails [49].

The four respondents to these appeals have all been convicted or received cautions or reprimands in respect of comparatively minor offending. The disclosure of their criminal records to potential employers has made it more difficult for them to obtain jobs, or may make it more difficult in future. In each case, the relevant convictions and cautions were spent under the legislation designed to enable ex offenders to put their past behind them. They had to be disclosed only if the respondents applied for employment involving contact with children or vulnerable adults. In all four of these appeals, the respondents challenge the statutory rules under which disclosure of their records was required as being incompatible with the European Human Rights Convention. Such cases raise problems of great difficulty and sensitivity. They turn on two competing public interests. One is the rehabilitation of ex offenders. The other is the protection of the public against people whose past record suggests that there may be unacceptable risks in appointing them to certain sensitive occupations. The importance of both public interests needs no emphasis. The ability of ex offenders to obtain employment is often an essential condition of their successful reintegration into law abiding society at what, especially in the case of young offenders, may be a critical period of their lives. On the other hand, in some employment sectors a more cautious approach is indispensable. The Bichard Inquiry (2004) (HC 653) into child protection procedures and vetting practices was a stark reminder of the importance of ensuring that the rehabilitation of offenders does not undermine proper standards of public protection when those with criminal records apply for jobs involving contact with children. The Inquiry had been set up after two young girls had been murdered by a caretaker employed at their school, about whom there had been substantial intelligence in police files, not retained or disclosed to the school, suggesting a pattern of sexual interference with women and young girls. The essential facts P received a caution on 26 July 1999 for the theft of a sandwich from a shop. Three months later, on 1 November 1999, she was convicted at Oxford Magistrates Court of the theft of a book worth 99p and of failing to surrender to the bail granted to her after her arrest for that offence. She received a conditional discharge for both offences. At the time of the offences she was 28 years old, homeless and suffering from undiagnosed schizophrenia which is now under control. She has committed no further offences. P is qualified to work as a teaching assistant but has not been able to find employment. She believes that this is because she has been obliged to disclose her convictions on each job application. W was convicted by Dewsbury Magistrates Court on 26 November 1982 of assault occasioning actual bodily harm contrary to section 47 of the Offences against the Person Act 1861. At the time of the offence he was 16 years old. The assault had occurred in the course of a fight between a number of boys on their way home from school. He received a conditional discharge, and has not offended since. In 2013, when he was 47, he began a course to obtain a certificate in teaching English to adults. His conviction has not been disclosed, but he believes that he would need to disclose it and obtain a criminal record certificate if he were to apply for a job as a teacher, and that this will prejudice his chances of obtaining employment. On 1 August 2006, when he was 13 years old, G was arrested for sexually assaulting two younger boys, contrary to section 13 of the Sexual Offences Act 2003. The offences involved sexual touching and attempted anal intercourse. These were potentially serious offences, but the mitigation was exceptional. The police record indicates that the sexual activity was consensual and seems to have been in the form of dares and is believed to have been a case of sexual curiosity and experimentation of the part of all three boys. The Crown Prosecution Service decided that it was not in the public interest to prosecute, but suggested a reprimand under section 65 of the Crime and Disorder Act 1998. On 5 September 2006 G received two police reprimands, one in respect of each of the younger boys. He has not offended since. In 2011, when he was working as a library assistant in a local college, he was required to apply for an enhanced criminal record check because his work involved contact with children. After the application was made, he was told by the police that they proposed to disclose the reprimand, together with an account of the mitigating circumstances. As a result, G withdrew the application and lost his job. He has since felt unable to apply for any job for which a standard or enhanced criminal record check would be required. Lorraine Gallagher was convicted on 24 July 1996 at Londonderry Magistrates Court of one count of driving without wearing a seatbelt, for which she was fined 10, and three counts of carrying a child under 14 years old without a seatbelt, for which she was fined 25 on each count. All four counts related to the same occasion. On 17 June 1998, she was convicted at the same court on two counts of carrying a child under 14 years old in a car without a seatbelt. She was fined 40 on each count. Again, both counts related to the same occasion. She had been carrying two of her children in the back of her car. Their seatbelts had been attached, but not properly because, unbeknown to her (she says), they had placed the shoulder straps under their arms. Ms Gallagher has no other convictions. In 2013, having qualified as a social carer, she was admitted to the Northern Ireland Social Care Council Register of Social Care Workers. In 2014, she applied for a permanent position at a day centre for adults with learning difficulties and received a conditional offer of employment. In response to a request to disclose whether she had been convicted at any time of a criminal offence she disclosed Yes and carrying child without seatbelt in 1996, but she did not disclose the conviction in relation to herself. She did not disclose the 1998 convictions at all. When the enhanced criminal record certificate disclosed all the convictions, the job offer was withdrawn on the ground that her failure to disclose them called her honesty and integrity into question. The statutory schemes The disclosure of criminal convictions, cautions and reprimands is governed by two related statutory schemes. Disclosure by the ex offender himself is governed by the Rehabilitation of Offenders Act 1974 in England and Wales and the corresponding provisions of the Rehabilitation of Offenders (Northern Ireland) Order 1978 (SI 1978/1908) in Northern Ireland. There is no material difference between the Act and the Northern Ireland Order. I shall therefore refer in this judgment to the provisions of the 1974 Act. Section 1 of that Act provides that, subject to conditions none of which is material, where a person has been convicted of an offence which is not excluded from rehabilitation, that person shall be treated as rehabilitated after the expiry of the rehabilitation period and the conviction shall be treated as spent. Sections 8A and 8AA make corresponding provision for cautions. The rehabilitation period is defined by section 5, and varies according to the sentence of the court and the age of the offender. Section 4 determines the effect of rehabilitation. By section 4(1), the ex offender is to be treated for all legal purposes as a person who has not committed or been charged or prosecuted or convicted of the offence. For present purposes, the critical provisions of the Act are sections 4(2) and (3). Their effect is that where a question is put to an ex offender about his previous convictions, offences, conduct or circumstances (other than in judicial proceedings), the question shall not be treated as relating to spent convictions and may be answered accordingly. In other words, the ex offender is under no obligation to disclose it, and indeed may lawfully deny it. He is not to be subjected to any liability or prejudice in consequence. Section 4(4) provides that the Secretary of State may by order provide for exceptions to sections 4(2) and (3). The Secretary of State exercised this power for England and Wales by the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (SI 1975/1023) (as amended); and for Northern Ireland by the Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979 (SR(NI) 1979/195). The effect of the Orders is that an ex offenders right not to disclose a conviction or caution does not apply if the question is asked in order to assess his or her suitability for any of 13 specified purposes. These include his or her suitability for admission to certain professions or certain kinds of employment; or for his or her assignment to work with children or vulnerable adults in specified circumstances; or for the provision of day care; or for the adoption of a child. Disclosure of criminal records by the Disclosure and Barring Service in England and Wales or AccessNI in Northern Ireland is governed in both jurisdictions by a distinct but closely related statutory scheme under Part V of the Police Act 1997 (as amended). Sections 113A and 113B of the 1997 Act (as inserted) deal, respectively, with criminal record certificates (CRCs) and enhanced criminal record certificates (ECRCs) recording a persons convictions and cautions, including spent convictions and cautions. Applications for a certificate are made by the ex offender himself and countersigned by a registered person, namely a person registered as having a proper interest in the information. In R (T) v Chief Constable of Greater Manchester Police (Liberty intervening) [2015] AC 49, paras 10 12, Lord Wilson concisely summarised the scheme of disclosure under the Police Act 1997, as it stood before the scheme was amended in March 2014: 10. Sections 113A and 113B of the 1997 Act identify the circumstances in which the DBS must issue a CRC and an ECRC respectively. The only substantive difference between the two certificates is that an ECRC must include not only, as must a CRC, relevant matters recorded on the Police National Computer but also, by way of enhancement, information about the person on local police records which they reasonably believe to be relevant and ought to be included (conveniently described as soft intelligence): contrast section 113A(3)(a) with section 113B(3)(a)(4). It is only where the certificate is required for the purposes of an exempted question asked for a prescribed purpose that an ECRC, rather than a CRC, is available 11. In summary, section 113B provides that an ECRC must be issued in the following circumstances: (a) The application for it is made by the person who is to be the subject of it: subsection (1)(a). (b) The application is countersigned by a person listed in a register, maintained by the DBS, of persons likely to ask exempted questions: subsection (2)(a), read with section 120. (c) The application is accompanied by a statement by the registered person that the certificate is required for the purposes of an exempted question asked for a prescribed purpose: subsection (2)(b). (d) An exempted question is a question to which exemption from protection arises under the 1975 Order: subsection (9) and section 113A(6). (e) A prescribed purpose is a purpose prescribed in regulation 5A of the Police Act 1997 (Criminal Records) Regulations 2002 (SI 2002/233) (as inserted by paragraph 1 of Schedule 1 to the Police Act 1997 (Criminal Records) (Amendment) Regulations 2006 (SI 2006/748)) which sets out a list overlapping with, but not co extensive with, the list in article 3 of the 1975 Order, of situations in which the registered person proposes to consider the applicants suitability for a specified position of trust or sensitivity. 12. [It is] convenient to regard both the exceptional obligation of a person to disclose a spent conviction or a caution under the 1975 Order and the obligation of the DBS to make disclosure of it by an ECRC under the 1997 Act as running in parallel. But the parallel is not exact. For the obligation of the DBS to make disclosure under an ECRC is, at the same time, both wider than the obligation of the person in terms of its inclusion of soft intelligence and yet narrower in that it arises only in circumstances in which the application is countersigned by a registered person who states that the certificate is required for a prescribed purpose. There will therefore be cases in which, although the questioned person is not exempt from a duty of disclosure, the questioner is not entitled to call for an ECRC. Nevertheless, the shape of the 1975 Order is certainly reflected in the 1997 Act: for, if the prescribed circumstances surrounding the application for the ECRC are present, the duty of the DBS is to disclose even spent convictions and cautions irrespective of the circumstances in which they arose. In summary, the 1997 Act provided for the mandatory disclosure of all convictions and cautions on a persons record if the conditions for the issue of a certificate were satisfied. Section 113A(7) empowered the Secretary of State to amend by Order the definition of relevant matters falling to be disclosed. With effect from March 2014, this power was exercised so as to introduce a more selective system for disclosure by the Disclosure and Barring Service: Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) (England and Wales) Order 2013 (SI 2013/1200). Similar changes were made in Northern Ireland with effect from April 2014 by the Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) Order (Northern Ireland) 2014 (SI 2014/100). The effect of the amendments was to limit the disclosure of convictions and cautions under sections 113A and 113B of the Police Act to (i) convictions and cautions for any of a list of more serious offences, generally violent or sexual, contained in section 113A(6D); (ii) convictions which resulted in a custodial sentence; (iii) other convictions or cautions if they were still current, ie had occurred within a specified period before the issue of the certificate, viz 11 years in the case of an adult and five and a half years in the case of a minor; and (iv) all convictions and cautions where the person has more than one conviction. Broadly corresponding limitations were imposed on the convictions and cautions which had to be disclosed under the Rehabilitation of Offenders Act 1974: see Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order 2013 (SI 2013/1198), and Rehabilitation of Offenders (Exceptions) (Amendment) Order (Northern Ireland) 2014 (SI 2014/27). Section 4(2) and (3) of the Rehabilitation of Offenders Act 1974 are not in terms confined to disclosures in the course of job applications. These are, however, much the most significant occasions on which the disclosure of a criminal record is likely to be required, and it is clear that it was primarily with that context in mind that Parliament enacted section 4. It follows that in conferring power on the Secretary of State, by section 4(4), to exclude the operation of sections 4(2) and 4(3) in specified circumstances, Parliament envisaged that there would be occupations in respect of which convictions should be disclosed to a potential employer, professional body or appointing authority notwithstanding that they were spent and notwithstanding that the convicted person might be prejudiced by their disclosure. The scheme for the disclosure of criminal records by the Disclosure and Barring Service (or AccessNI in Northern Ireland) under the Police Act 1997 is carefully tailored to match the disclosure obligations of the person whose record is in question. Under sections 113A(6) and 113B(9) of the Police Act 1997, where the question is asked in circumstances excluded from the operation of the Rehabilitation of Offenders Act 1974 under section 4(4) of the latter Act, it will fall to be disclosed by the Disclosure and Barring Service (or AccessNI in Northern Ireland) notwithstanding that it is spent. This is a coherent scheme of legislation which acknowledges both of the competing public interests to which I have referred, and seeks to achieve a balance between them. Those interests are not only competing but incommensurate. In the nature of things, wherever the line is drawn, it will not be satisfactory from every point of view. The whole issue raises classic policy dilemmas. The underlying policy is precautionary, in line with strong public expectations. The question is whether in adopting that approach the appellants contravened the European Convention on Human Rights. Article 8 of the Human Rights Convention Article 8 provides: Right to respect for private and family life (1) Everyone has the right to respect for his private and family life, his home and his correspondence. (2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. It is not disputed that article 8 is engaged. It confers a qualified right of privacy, subject to important exceptions for measures which are (i) in accordance with the law, and (ii) necessary in a democratic society in the interests of public safety for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights of others. Conditions (i) and (ii) impose tests of a very different character, with very different consequences. Condition (i) is concerned with the legal basis for any measure which interferes with the right of privacy. Any such measure must not only have some legal basis in domestic law, but must be authorised by something which can properly be characterised as law. This is an absolute requirement. In meeting it, Convention states have no margin of appreciation under the Convention, and the executive and the legislature have no margin of discretion or judgment under domestic public law. Only if the test of legality is satisfied does the question arise whether the measures in question are necessary for some legitimate purpose and represent a proportionate means of achieving that purpose. The Court of Appeal in England in R (P) v Secretary of State for Justice, R (G) v Chief Constable of Surrey Police and R (W) v Comr of Police of the Metropolis [2018] 1 WLR 3281, and the Court of Appeal in Northern Ireland in In re Gallaghers Application [2016] NICA 42, upheld the respondents cases. Although the reasons of both courts were substantially the same, the fullest analysis of the law is to be found in the judgment of Sir Brian Leveson P in the English cases. He rejected the submission that the Convention required a system of review that would enable each case to be assessed on its own facts. But he held, first, that the legislation was not in accordance with the law because, although it discriminated between different categories of offence and convictions, the categories were still too broad. They embraced offences of widely differing relevance, and were therefore liable to operate arbitrarily in a significant number of cases. In particular, he regarded as inconsistent with the legality test: (i) the rule which made all convictions disclosable if there was more than one, because it failed to distinguish between cases which disclosed a relevant pattern of offending and those which did not; and (ii) the rule that required the disclosure of specified serious offences, because it was insufficiently calibrated so as to ensure that the proportionality of the interference is adequately examined: [2018] 1 WLR 3281, para 45. Even if the legislation had passed the legality test, the scheme would have been disproportionate to its objective because it was insufficiently granular in distinguishing between convictions and cautions of varying degrees of relevance. It will be seen that the reasons why, in his view, the legislation failed the legality and proportionality tests were substantially the same. The scheme was more discriminating than its predecessor, but not discriminating enough. In accordance with the law The respondents submit that because the categories of disclosable conviction or caution are (they say) too wide, and not subject to individual review, the legislation does not have the quality of law. Before I examine this submission in the light of the authorities, it is right to draw attention to some of its more far reaching consequences if it is correct. In the first place, it means that the legislation is incompatible with article 8, however legitimate its purpose, and however necessary or proportionate it may be to deal with the problem in this particular way. That conclusion would plainly have significant implications for the protective functions of the state, especially in relation to children and vulnerable adults. Secondly, it must be remembered that the condition of legality is not a question of degree. The measure either has the quality of law or it does not. It is a binary test. This is because it relates to the characteristics of the legislation itself, and not just to its application in any particular case: see Kruslin v France (1990) 12 EHRR 547, paras 31 32. It follows that if the legislation fails the test of legality, it is incompatible with the Convention not just as applied to those convicted of minor offences like these respondents, but to the entire range of ex offenders including, for example, convicted child molesters, rapists and murderers. Thirdly, this consequence cannot be confined to the right of privacy. Most Convention rights are qualified by reference to various countervailing public interests. These qualifications are fundamental to the scheme of the Convention. They are what makes it possible to combine a high level of protection of human rights with legitimate measures for the protection of the public against real threats to their welfare and security. For that reason, exceptions corresponding to those in article 8 attach to a number of other Convention rights. They too must also have a proper basis in law. It is fair to say that the jurisprudence of the Strasbourg court has been especially sensitive to the keeping of files on individuals by the state, a practice which was gravely abused by the authoritarian regimes of the 20th century in most of continental Europe. This sensitivity explains why the right of privacy has been extended from covert and intrusive surveillance to the recording of things which would not be regarded as private in any other context, for example participation in demonstrations in public places (Segerstedt Wiberg v Sweden (2007) 44 EHRR 2, para 72) and even public acts of the state itself, such as criminal convictions in an open court of law (MM v United Kingdom (Application 24029/07), 29 April 2013, at para 188). But the question what constitutes law is the same whatever the subject matter. Neither the Strasbourg court nor the courts of the United Kingdom have ever suggested that the condition of legality applies in any different way in article 8 as compared with other articles. In principle, therefore, whatever conclusion we reach in this case about the scope of the condition of legality must apply equally to the exceptions to article 5 (right to liberty and security), article 9 (freedom of thought, conscience and religion), article 10 (freedom of expression), and article 11 (freedom of assembly and association). In none of these articles would there be any scope for distinctions based on judgment or discretion or weighing of broader public interests, even on the most compelling grounds, once the relevant measure failed the respondents exacting test of legality. Nonetheless, the respondents submit that the issue was resolved in their favour by the decision of this court in R (T) v Chief Constable of Greater Manchester Police [2015] AC 49, and that submission was accepted by the courts below. The argument is that, as applied to legislation which applies indiscriminately to a wide range of potentially very different circumstances, T is authority for the proposition that the test of legality requires that the legislation should include safeguards against its arbitrary application, by which is meant the disclosure of matters manifestly irrelevant to an ex offenders suitability for employment. T is a recent and considered decision of this court about an earlier version of the statutory scheme before us now. If it means what the respondents submit that it means, it is our duty to follow it unless (which is not suggested) Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 applies. The decision, however, needs to be properly understood in the light of the substantial body of Strasbourg case law on which it was expressly based and the particular domestic legislation with which it was concerned. It is well established that law in the Human Rights Convention has an extended meaning. In two judgments delivered on the same day, Huvig v France (1990) 12 EHRR 528, at para 26, and Kruslin v France (1990) 12 EHRR 547, para 27, the European Court of Human Rights set out what has become the classic definition of law in this context: The expression in accordance with the law, within the meaning of article 8.2, requires firstly that the impugned measure should have some basis in domestic law; it also refers to the quality of the law in question, requiring that it should be accessible to the person concerned, who must moreover be able to foresee its consequences for him, and compatible with the rule of law. Huvig and Kruslin established a dual test of accessibility and foreseeability for any measure which is required to have the quality of law. That test has continued to be cited by the Strasbourg court as the authoritative statement of the meaning of law in very many subsequent cases: see, for example, most recently, Catt v United Kingdom (Application No 43514/15, 24 January 2019). The accessibility test speaks for itself. For a measure to have the quality of law, it must be possible to discover, if necessary with the aid of professional advice, what its provisions are. In other words, it must be published and comprehensible. The requirement of foreseeability, so far as it adds to the requirement of accessibility, is essentially concerned with the principle summed up in the adage of the American founding father John Adams, a government of laws and not of men. A measure is not in accordance with the law if it purports to authorise an exercise of power unconstrained by law. The measure must not therefore confer a discretion so broad that its scope is in practice dependent on the will of those who apply it, rather than on the law itself. Nor should it be couched in terms so vague or so general as to produce substantially the same effect in practice. The breadth of a measure and the absence of safeguards for the rights of individuals are relevant to its quality as law where the measure confers discretions, in terms or in practice, which make its effects insufficiently foreseeable. Thus a power whose exercise is dependent on the judgment of an official as to when, in what circumstances or against whom to apply it, must be sufficiently constrained by some legal rule governing the principles on which that decision is to be made. But a legal rule imposing a duty to take some action in every case to which the rule applies does not necessarily give rise to the same problem. It may give rise to a different problem when it comes to necessity and proportionality, but that is another issue. If the question is how much discretion is too much, the only legal tool available for resolving it is a proportionality test which, unlike the test of legality, is a question of degree. This much is clear not only from the Huvig and Kruslin judgments themselves, but from the three leading decisions on the principle of legality on which the Strasbourg courts statement of principle in those cases was founded, namely Sunday Times v United Kingdom (1979 80) 2 EHRR 245, Silver v United Kingdom (1983) 5 EHRR 347 and Malone v United Kingdom (1985) 7 EHRR 14. Sunday Times v United Kingdom (1979 80) 2 EHRR 245 was the first occasion on which the Strasbourg court addressed the test of legality. It was not a privacy case, but a case about freedom of expression in the context of the English law of contempt of court. The requirement of foreseeability was summarised by the court as follows at para 49: A norm cannot be regarded as a law unless it is formulated with sufficient precision to enable the citizen to regulate his conduct: he must be able if need be with appropriate advice to foresee, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. In Silver v United Kingdom (1983) 5 EHRR 347, para 85, the Strasbourg court adopted this definition and applied it to a complaint of interference with prisoners correspondence, contrary to article 8. The court observed at para 88 that the need for precision in the Sunday Times case meant that a law which confers a discretion must indicate the scope of that discretion. It was in that context that the court addressed the question of safeguards, at para 90: The applicants further contended that the law itself must provide safeguards against abuse. The Government recognised that the correspondence control system must itself be subject to control and the court finds it evident that some form of safeguards must exist. One of the principles underlying the Convention is the rule of law, which implies that an interference by the authorities with an individuals rights should be subject to effective control. This is especially so where, as in the present case, the law bestows on the executive wide discretionary powers, the application whereof is a matter of practice which is susceptible to modification but not to any Parliamentary scrutiny. In Silver, interference with prisoners correspondence was authorised as a matter of domestic law by the Prison Rules, a statutory instrument which conferred an unlimited discretion on the Secretary of State to impose restrictions on prisoners correspondence for certain broadly stated purposes. It also required the Secretary of States consent to correspondence with anyone other than a close relative and empowered the prison governor to at his discretion, stop any letter or communication on the ground that its contents are objectionable or that it is of inordinate length. These discretions were regulated by internal administrative instructions which, however, were neither published nor available to prisoners. The relevant restrictions were held not to be in accordance with the law because in some cases the actual measure of interference complained of was not foreseeable and in others the rule under which the stopping was effected could not itself be foreseen. A fuller statement of the same principle appeared in the important judgment in Malone v United Kingdom (1985) 7 EHRR 14. The context was telephone tapping, which under the system then in operation in the United Kingdom was authorised by warrants of the Home Secretary under purely administrative powers with no statutory basis. The power exercisable by the Home Secretary was agreed to be lawful as a matter of domestic law, but no law constrained or limited his discretion. After reciting the Sunday Times test, the court continued at para 67: The court would reiterate its opinion that the phrase in accordance with the law does not merely refer back to domestic law but also relates to the quality of the law, requiring it to be compatible with the rule of law, which is expressly mentioned in the preamble to the Convention. The phrase thus implies and this follows from the object and purpose of article 8 that there must be a measure of legal protection in domestic law against arbitrary interferences by public authorities with the rights safeguarded by paragraph (1). Especially where a power of the executive is exercised in secret, the risks of arbitrariness are evident. the law must be sufficiently clear in its terms to give citizens an adequate indication as to the circumstances in which and the conditions on which public authorities are empowered to resort to this secret and potentially dangerous interference with the right to respect for private life and correspondence. The court then referred to its earlier observations in Silver about unconstrained discretion. At para 68, it observed: The degree of precision required of the law in this connection will depend upon the particular subject matter. Since the implementation in practice of measures of secret surveillance of communications is not open to scrutiny by the individuals concerned or the public at large, it would be contrary to the rule of law for the legal discretion granted to the executive to be expressed in terms of an unfettered power. Consequently, the law must indicate the scope of any such discretion conferred on the competent authorities and the manner of its exercise with sufficient clarity, having regard to the legitimate aim of the measure in question, to give the individual adequate protection against arbitrary interference. Accordingly, at para 70, the court identified the issue before them as being whether, under domestic law, the essential elements of the power to intercept communications were laid down with reasonable precision in accessible legal rules that sufficiently indicated the scope and manner of exercise of the discretion conferred on the relevant authorities. This issue was considered under two heads in the pleadings: firstly whether the law was such that a communication passing through the services of the Post Office might be intercepted, for police purposes, only pursuant to a valid warrant issued by the Secretary of State and, secondly, to what extent the circumstances in which a warrant might be issued and implemented were themselves circumscribed by law. The system was held not to be in accordance with the law because it failed the second of these tests. The circumstances in which the Home Secretary might issue a warrant were not sufficiently defined. The court summarised the reasons at para 79: in its present state the law in England and Wales governing interception of communications for police purposes is somewhat obscure and open to differing interpretations. it cannot be said with any reasonable certainty what elements of the powers to intercept are incorporated in legal rules and what elements remain within the discretion of the executive. In the opinion of the court, the law of England and Wales does not indicate with reasonable clarity the scope and manner of exercise of the relevant discretion conferred on the public authorities. To that extent, the minimum degree of legal protection to which citizens are entitled under the rule of law in a democratic society is lacking. Later, at para 87, the court made a similar criticism of the practice of metering, ie the recording of numbers dialled and the duration of calls, but not their content: there would appear to be no legal rules concerning the scope and manner of exercise of the discretion enjoyed by the public authorities. Consequently, although lawful in terms of domestic law, the interference resulting from the existence of the practice in question was not in accordance with the law, within the meaning of article 8(2). The French system for tapping telephones was criticised on broadly similar grounds in Huvig and Kruslin. In the latter case, at paras 35 36, the court observed: 35. Above all, the system does not for the time being afford adequate safeguards against various possible abuses. For example, the categories of people liable to have their telephones tapped by judicial order and the nature of the offences which may give rise to such an order are nowhere defined. Nothing obliges a judge to set a limit on the duration of telephone tapping. Similarly unspecified are the procedure for drawing up the summary reports containing intercepted conversations; the precautions to be taken in order to communicate the recordings intact and in their entirety for possible inspection by the judge (who can hardly verify the number and length of the original tapes on the spot) and by the defence; and the circumstances in which recordings may or must be erased or the tapes be destroyed, in particular where an accused has been discharged by an investigating judge or acquitted by a court. The information provided by the Government on these various points shows at best the existence of a practice, but a practice lacking the necessary regulatory control in the absence of legislation or case law. 36. In short, French law, written and unwritten, does not indicate with reasonable clarity the scope and manner of exercise of the relevant discretion conferred on the public authorities. This was truer still at the material time, so that Mr Kruslin did not enjoy the minimum degree of protection to which citizens are entitled under the rule of law in a democratic society (see the Malone judgment previously cited, Series A no 82, p 36, para 79). There has therefore been a breach of article 8 of the Convention. In three notable later cases, Amann v Switzerland (2000) 30 EHRR 843, Rotaru v Romania (2000) 8 BHRC 449 and S v United Kingdom (2009) 48 EHRR 50, the same principles were applied to the retention in police records of personal information. Amann was another case about phone tapping. The court held that the retention of the fruits of a tap in police files did not satisfy the legality test even on the footing that the tap itself was in accordance with law. The decision was expressed to be based on the statement of principle in Malone (para 56), and on a finding (para 62) that Swiss law does not indicate with sufficient clarity the scope and conditions of exercise of the authorities discretionary power in the area under consideration. In Rotaru, the applicant objected to the retention on the files of the Romanian state security service of information, some of it false, about his dissident activities in the early years of the post war communist regime nearly half a century before. His case (see para 50), which was upheld by the Grand Chamber, was that this was not in accordance with the law, since domestic law was not sufficiently precise to indicate to citizens in what circumstances and on what terms the public authorities were empowered to file information on their private life and make use of it. Furthermore, domestic law did not define with sufficient precision the manner of exercise of those powers and did not contain any safeguards against abuses. The judgment is of particular interest because it addresses the requirement that there should be safeguards established by law which apply to the supervision of the relevant services activities (para 59). After examining the relevant domestic law, which conferred broad discretionary powers on the security service, and concluding that there were no safeguards, the court stated its conclusion as follows at para 61: That being so, the court considers that domestic law does not indicate with reasonable clarity the scope and manner of exercise of the relevant discretion conferred on the public authorities. Finally, in S, the complaint was about the retention of DNA samples taken from suspects who had subsequently been acquitted. At para 95, the court observed: The court recalls its well established case law that the wording in accordance with the law requires the impugned measure both to have some basis in domestic law and to be compatible with the rule of law, which is expressly mentioned in the Preamble to the Convention and inherent in the object and purpose of article 8. The law must thus be adequately accessible and foreseeable, that is, formulated with sufficient precision to enable the individual if need be with appropriate advice to regulate his conduct. For domestic law to meet these requirements, it must afford adequate legal protection against arbitrariness and accordingly indicate with sufficient clarity the scope of discretion conferred on the competent authorities and the manner of its exercise (see Malone v United Kingdom (1985) 7 EHRR 14, paras 66 68; Rotaru v Romania (2000) 8 BHRR 449, para 55; and Amann v Switzerland (2000) 30 EHRR 843, para 56). (See also Kvasnica v Slovakia (Application No 72094/01), 9 June 2009, para 79 and Dragojevi v Croatia (Application No 68955/11), 15 Jan 2015, at paras 80 83.) As can be seen from these citations, from the outset the Strasbourg court has treated the need for safeguards as part of the requirement of foreseeability. It has applied it as part of the principle of legality in cases where a discretionary power would otherwise be unconstrained and lack certainty of application. This may be illustrated by reference to the subsequent decisions in Liberty v United Kingdom (2009) 48 EHRR 1 and Gillan v United Kingdom (2010) 50 EHRR 45. Liberty concerned the bulk interception of telephone communications passing through submarine cables terminating in the United Kingdom. There was statutory authority for the interception, but as the court pointed out at para 69, the legal framework did not have the quality of law. This was because the court does not consider that the domestic law at the relevant time indicated with sufficient clarity, so as to provide adequate protection against abuse of power, the scope or manner of exercise of the very wide discretion conferred on the state to intercept and examine external communications. In particular, it did not, as required by the courts case law, set out in a form accessible to the public any indication of the procedure to be followed for selecting for examination, sharing, storing and destroying intercepted material. Similarly, in Gillan, at para 77, the connection between the principle of legality and the existence of unconstrained discretion was reasserted in the context of stop and search powers. The court observed of the dual test of accessibility and foreseeability at para 77: For domestic law to meet these requirements it must afford a measure of legal protection against arbitrary interferences by public authorities with the rights safeguarded by the Convention. In matters affecting fundamental rights it would be contrary to the rule of law, one of the basic principles of a democratic society enshrined in the Convention, for a legal discretion granted to the executive to be expressed in terms of an unfettered power. Consequently, the law must indicate with sufficient clarity the scope of any such discretion conferred on the competent authorities and the manner of its exercise. The level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed. MM v United Kingdom It is against that background that one must approach the decision in MM v United Kingdom (Application No 24029/07), 29 April 2013. The case concerned the retention and disclosure by the police of records of cautions in Northern Ireland. The applicant had received a caution for child abduction in 2000 in unusual circumstances which provided very strong mitigation. Its disclosure had nevertheless resulted in the failure of two applications for jobs involving care work. She had accepted the caution on an assurance that it would be deleted from police records after five years, which was the practice at the time. But the practice subsequently changed, and her attempts in 2006 and 2007 to have the caution deleted were unsuccessful. The gravamen of her complaint was not about the past disclosures, but about the retention of the caution on police files, which exposed her to the risk of disclosure in future whenever she applied for a job requiring a criminal record certificate. Much of the analysis of the Strasbourg court needs to be understood in that light. The Strasbourg court examined in detail the complex and changing legal basis on which criminal records were handled in Northern Ireland. There were three stages of the process to be considered, namely (i) collection of data, (ii) its retention in the records of the authorities, and (iii) its disclosure to third parties. At the time when the caution was given, convictions in Northern Ireland were recorded under statutory regulations but the record was retained and disclosed under common law powers. The regime governing cautions was different. They were recorded as well as retained and disclosed under common law powers. The only legal limitation on the exercise of these powers was the Data Protection Act 1998. On 1 April 2008, the system was changed when Part V of the Police Act 1997 was brought into force in Northern Ireland by the Police Act 1997 (Commencement No 11) Order (SI 2008/692). This introduced to Northern Ireland the system (already in force in England and Wales) under which the disclosure of all recorded and retained convictions and cautions, including warnings and reprimands, was mandatory. It did not affect the recording or retention of cautions, which continued to be governed by common law powers. The new regime in Northern Ireland was relevant to MMs case because the Police Act would thereafter have applied to the disclosure of her caution in connection with any fresh job application after April 2008. The Strasbourg court was invited by the United Kingdom government to treat as part of the legal framework governing collection and retention of data the statutory Code of Practice for the Management of Police Information, issued by the Secretary of State in 2005 under section 39A of the Police Act 1996. This established general standards for the management of police information, and provided for the issue of Guidance by the Association of Chief Police Officers (ACPO) in 2006 and 2010 which police forces were required to comply with. These documents, however, applied directly only in England and Wales. As the court noted at para 33, although the statutory Code of Practice was available for adoption by police forces elsewhere, it was not clear that it had been adopted in Northern Ireland. (In any event, since section 39A of the Police Act 1996 did not extend to Northern Ireland, it could have had only administrative and not statutory force there.) The court held that the scheme did not have the quality of law, either before or after April 2008. The principle on which it proceeded was stated at the outset of its analysis, at para 193, by reference to the dual requirements of accessibility and foreseeability derived from its earlier case law, including Malone and Liberty: The law must thus be adequately accessible and foreseeable, that is, formulated with sufficient precision to enable the individual if need be with appropriate advice to regulate his conduct. For domestic law to meet these requirements, it must afford adequate legal protection against arbitrariness and accordingly indicate with sufficient clarity the scope of discretion conferred on the competent authorities and the manner of its exercise. The pre 2008 position in Northern Ireland as regards cautions was an obvious example of unconstrained discretionary power. For present purposes, however, the judgment is mainly of interest for its treatment of the position in Northern Ireland after April 2008 under the Police Act 1997. MM contended that the caution should have been deleted so as not to be available for disclosure under the new regime. The court recorded (para 195) its view that article 8 was engaged by the whole process of collection, retention, use and disclosure of data on police files. It recognised (para 199) that there may be a need for a comprehensive record of all cautions, conviction, warnings, reprimands, acquittals and even other information of the nature currently disclosed pursuant to section 113B(4) of the 1997 Act. However, as the court went on to observe at para 200: the greater the scope of the recording system, and thus the greater the amount and sensitivity of data held and available for disclosure, the more important the content of the safeguards to be applied at the various crucial stages in the subsequent processing of the data. In other words, the considerations that were relevant to each of the three stages were interrelated, because the greater the volume or significance of the data retained, the more important it was to restrict its disclosure. It followed that for the statutory scheme to have the quality of law, it was not enough that the circumstances in which disclosure was authorised were sufficiently defined by law. This merely pushed the issue back to the earlier stages of collection and storage of data. In R (Catt) v Association of Chief Police Officers of England and Wales and Northern Ireland [2015] AC 1065, para 15, I suggested that the Strasbourg court in MM had found disclosure of convictions under sections 113A and 113B not to be in accordance with law because it was mandatory. It would have been more accurate to say that it was because its mandatory disclosure meant that the scheme as a whole was not in accordance with law, which is the third point made at para 16. If collection and retention continued to be subject to an unconstrained discretion, the result was that the bank of data available for mandatory disclosure was variable according to the judgment of the police and did not have the necessary quality of foreseeability. In MM, the court regarded the system of recording and retention of criminal convictions in Northern Ireland as indiscriminate and open ended: see para 199. It went on to say that such a system is unlikely to comply with the requirements of article 8 in the absence of clear and detailed statutory regulations clarifying the safeguards applicable and setting out the rules governing, inter alia, the circumstances in which data can be collected, the duration of their storage, the use to which they can be put and the circumstances in which they may be destroyed. The problem, as the court pointed out at para 202, was that both before and after April 2008, there was no legislation, primary or secondary, governing the collection and retention of cautions, apart from the Data Protection Act. In the view of the court, the guidance of the ACPO, which had no statutory basis in Northern Ireland, did not sufficiently fill the gap. The courts conclusion was stated at paras 206 207: 206. In the present case, the court highlights the absence of a clear legislative framework for the collection and storage of data, and the lack of clarity as to the scope, extent and restrictions of the common law powers of the police to retain and disclose caution data. It further refers to the absence of any mechanism for independent review of a decision to retain or disclose data, either under common law police powers or pursuant to Part V of the 1997 Act. Finally, the court notes the limited filtering arrangements in respect of disclosures made under the provisions of the 1997 Act: as regards mandatory disclosure under section 113A, no distinction is made on the basis of the nature of the offence, the disposal in the case, the time which has elapsed since the offence took place or the relevance of the data to the employment sought. 207. The cumulative effect of these shortcomings is that the court is not satisfied that there were, and are, sufficient safeguards in the system for retention and disclosure of criminal record data to ensure that data relating to the applicants private life have not been, and will not be, disclosed in violation of her right to respect for her private life. The retention and disclosure of the applicants caution data accordingly cannot be regarded as being in accordance with the law. In the most recent decision of the Strasbourg court, Catt v United Kingdom (Application No 43514/15), MM was treated at para 94 as authority for the following proposition: 94. As the court has recalled the expression in accordance with the law not only requires the impugned measure to have some basis in domestic law, but also refers to the quality of the law in question, requiring that it should be accessible to the person concerned and foreseeable as to its effects. For domestic law to meet these requirements, it must afford adequate legal protection against arbitrariness and accordingly indicate with sufficient clarity the scope and discretion conferred on the competent authorities and the manner of its exercise (see, among other authorities, MM v United Kingdom, no 24029/07, para 193, 13 November 2012 with further references). In other words, an excessively broad discretion in the application of a measure infringing the right of privacy is likely to amount to an exercise of power unconstrained by law. It cannot therefore be in accordance with law unless there are sufficient safeguards, exercised on known legal principles, against the arbitrary exercise of that discretion, so as to make its application reasonably foreseeable. Domestic case law This is, moreover, the analysis which the English courts have given the Strasbourg case law. Lord Bingham put the matter in this way: In R (Gillan) v Comr of Police for the Metropolis [2006] 2 AC 307, para 34, The lawfulness requirement in the Convention addresses supremely important features of the rule of law. The exercise of power by public officials, as it affects members of the public, must be governed by clear and publicly accessible rules of law. The public must not be vulnerable to interference by public officials acting on any personal whim, caprice, malice, predilection or purpose other than that for which the power was conferred. This is what, in this context, is meant by arbitrariness, which is the antithesis of legality. Lord Hope observed that the Conventions concept of law In R (Purdy) v Director of Public Prosecutions [2010] 1 AC 345, at para 41, implies qualitative requirements, including those of accessibility and foreseeability. Accessibility means that an individual must know from the wording of the relevant provision and, if need be, with the assistance of the courts interpretation of it what acts and omissions will make him criminally liable: see also Glmez v Turkey (Application No 16330/02) (unreported) given 20 May 2008, para 49. The requirement of foreseeability will be satisfied where the person concerned is able to foresee, if need be with appropriate legal advice, the consequences which a given action may entail. A law which confers a discretion is not in itself inconsistent with this requirement, provided the scope of the discretion and the manner of its exercise are indicated with sufficient clarity to give the individual protection against interference which is arbitrary: Goodwin v United Kingdom (1996) 22 EHRR 123, para 31; Sorvisto v Finland, para 112. He went on to point out that by this test the Suicide Act 1961, which indiscriminately criminalised aiding and abetting, counselling or procuring the suicide of another in all circumstances without exception was in accordance with law because the statute sufficiently disclosed what a person had to do to comply with it. R (T) v Chief Constable of Greater Manchester Police R (T) v Chief Constable of Greater Manchester Police [2015] AC 49 concerned the regime governing disclosure of criminal records in England as it stood before the changes introduced with effect from March 2014. This court held that that regime lacked the quality of law. The leading judgment on this point was delivered by Lord Reed, with whom Lord Neuberger, Baroness Hale and Lord Clarke agreed. There was very little discussion of the Northern Ireland system for managing criminal records considered in MM, because Lord Reed proceeded on the basis that the English legislation under consideration was indistinguishable from it: see paras 100, 119. This was not entirely correct. As I have explained, the Code of Practice and associated ACPO Guidance governing the management of police information in England had statutory force in England but not in Northern Ireland. But for reasons which will appear, I do not think that that difference was critical to the outcome, either in MM or in T. The essence of Lord Reeds reasoning appears at paras 113, 114 and 119 of the judgment: 113. As long ago as 1984, the court said in Malone v United Kingdom 7 EHRR 14, in the context of surveillance measures, that the phrase in accordance with the law implies that the law must give the individual adequate protection against arbitrary interference: para 68. In Kopp v Switzerland (1998) 27 EHRR 91, para 72, it stated that since the surveillance constituted a serious interference with private life and correspondence, it must be based on a law that was particularly precise: It is essential to have clear, detailed rules on the subject, especially as the technology available for use is continually becoming more sophisticated. These statements were reiterated in Amann v Switzerland 30 EHRR 843. As I have explained, that approach to the question whether the measure provides sufficient protection against arbitrary interference was applied, in the context of criminal records and other intelligence, in Rotaru v Romania, where the finding that the interference was not in accordance with the law was based on the absence from the national law of adequate safeguards. The condemnation of Part V of the 1997 Act in MM v United Kingdom is based on an application of the same approach. Put shortly, legislation which requires the indiscriminate disclosure by the state of personal data which it has collected and stored does not contain adequate safeguards against arbitrary interferences with article 8 rights. 114. This issue may appear to overlap with the question whether the interference is necessary in a democratic society: a question which requires an assessment of the proportionality of the interference. These two issues are indeed inter linked, as I shall explain, but their focus is different. Determination of whether the collection and use by the state of personal data was necessary in a particular case involves an assessment of the relevancy and sufficiency of the reasons given by the national authorities. In making that assessment, in a context where the aim pursued is likely to be the protection of national security or public safety, or the prevention of disorder or crime, the court allows a margin of appreciation to the national authorities, recognising that they are often in the best position to determine the necessity for the interference. As I have explained, the courts focus tends to be on whether there were adequate safeguards against abuse, since the existence of such safeguards should ensure that the national authorities have addressed the issue of the necessity for the interference in a manner which is capable of satisfying the requirements of the Convention. In other words, in order for the interference to be in accordance with the law, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. Whether the interference in a given case was in fact proportionate is a separate question. 119. In the light of the judgment in MM v United Kingdom, it is plain that the disclosure of the data relating to the respondents cautions is an interference with the right protected by article 8.1. The legislation governing the disclosure of the data, in the version with which these appeals are concerned, is indistinguishable from the version of Part V of the 1997 Act which was considered in MM. That judgment establishes, in my opinion persuasively, that the legislation fails to meet the requirements for disclosure to constitute an interference in accordance with the law. That is so, as the court explained in MM, because of the cumulative effect of the failure to draw any distinction on the basis of the nature of the offence, the disposal in the case, the time which has elapsed since the offence took place or the relevance of the data to the employment sought, and the absence of any mechanism for independent review of a decision to disclose data under section 113A. This decision is treated by the respondents as authority for the proposition that a measure may lack the quality of law even where there is no relevant discretion and the relevant rules are precise and entirely clear, if the categories requiring to be disclosed are simply too broad or insufficiently filtered. I do not accept this submission. In the first place, it is hardly conceivable that Lord Reed intended to effect a revolution in this branch law the law, with such far reaching results, and without acknowledging the fact. On the contrary, it is clear that he did not. He regarded himself as applying the established case law of the Strasbourg court. All of the Strasbourg decisions on which he based his analysis, notably Kopp, Malone, Rotaru, Amann and MM, had been expressly based on the classic dual test of accessibility and foreseeability. In particular, Lord Reed regarded the decision in MM as reflecting the earlier jurisprudence. In all of these cases, safeguards were said to be required in order to constrain administrative discretions which, unless constrained, undermined the foreseeability of the relevant measures. Lord Reeds reference to the need for precision if something is to have the character of law shows that he had the foreseeability test well in mind. He is echoing the observations in Sunday Times, (para 49), Silver (para 88) and Malone (para 70), that a person must be able to discover from the law itself precisely what effect, in the circumstances of his case, its application will have upon him. Secondly, in distinguishing between the legality test and the proportionality test, Lord Reed pointed out at para 114 that: in order for the interference to be in accordance with the law, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. I agree. This paragraph is part of Lord Reeds defence of the decision in MM against the criticisms of counsel for the Secretary of State. The point which he is making is that the principle of legality is concerned with the quality of the domestic measure whereas the proportionality test is usually concerned with its application in particular cases. Unless the domestic measure has sufficient clarity and precision for its effect to be foreseeable from its terms, it is impossible for the court to assess its proportionality as applied to particular cases. But if the effect of the measure in particular cases is clear from its terms, there is no problem in assessing its proportionality. Thirdly, at para 119, where Lord Reed explains his disposal of the appeal, he is expressly applying MM. That decision, as I have pointed out, had been based on the perceived absence of a clear legislative framework for the collection and storage of data (emphasis supplied) which would fall to be mandatorily disclosed under sections 113A and 113B of the Police Act 1997. The absence of any clear legislative framework for the recording and retention of criminal records meant that the body of data falling to be mandatorily disclosed was of uncertain content. The uncertain character of the system for retaining criminal records affected the lawfulness of their disclosure. Hence the relevance of the indiscriminate character of the disclosure which Lord Reed criticises at para 119. In a precedent based system, the reasoning of judges has to be approached in the light of the particular problem which was before them. There is a danger in treating a judges analysis of that problem as a general statement of principle applicable to a whole area of law. Lord Reeds observations in T cannot in my opinion be applied generally to the whole relationship between legality and proportionality in the Convention, even in cases where the relevant domestic rule satisfied the tests of accessibility and foreseeability. It is noticeable that the principle of legality was stated in narrower terms by Baroness Hale, Lord Reed and Lord Hodge in their joint judgment in Christian Institute v Lord Advocate [2016] UKSC 51. They put it in this way at paras 79 80: 79. In order to be in accordance with the law under article 8(2) of the ECHR, the measure must not only have some basis in domestic law which it has in the provisions of the Act of the Scottish Parliament but also be accessible to the person concerned and foreseeable as to its effects. These qualitative requirements of accessibility and foreseeability have two elements. First, a rule must be formulated with sufficient precision to enable any individual if need be with appropriate advice to regulate his or her conduct (The Sunday Times v United Kingdom, para 49; Gillan v United Kingdom, para 76). Secondly, it must be sufficiently precise to give legal protection against arbitrariness: [I]t must afford a measure of legal protection against arbitrary interferences by public authorities with the rights safeguarded by the Convention. In matters affecting fundamental rights it would be contrary to the rule of law . for a legal discretion granted to the executive to be expressed in terms of an unfettered power. Consequently, the law must indicate with sufficient clarity the scope of any discretion conferred on the competent authorities and the manner of its exercise. The level of precision required of domestic legislation which cannot in any case provide for every eventuality depends to a considerable degree on the content of the instrument in question, the field it is designed to cover and the number and status of those to whom it is addressed. (Gillan, para 77; Peruzzo v Germany, para 35) 80. Recently, in R (T) v Chief Constable, Greater Manchester Police, this court has explained that the obligation to give protection against arbitrary interference requires that there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. This is an issue of the rule of law and is not a matter on which national authorities are given a margin of appreciation. On this analysis, with which I agree, the statements in T about the need for safeguards against arbitrary interference with Convention rights, are firmly placed in their proper context as referring to safeguards essential to the rule of law because they protect against the abuse of imprecise rules or unfettered discretionary powers. Application to the present appeals The rules governing the disclosure of criminal records, both by ex offenders themselves under the Rehabilitation of Offenders Act 1974 and by the Disclosure and Barring Service and AccessNI under the Police Act 1997, are highly prescriptive. The categories of disclosable convictions and cautions are exactly defined, and disclosure in these categories is mandatory. Within any category, there is no discretion governing what is disclosable. There is no difficulty at all in assessing the proportionality of these measures because, subject to one reservation (see the following paragraph), their impact on those affected is wholly foreseeable. The one reservation arises from a submission made to us that on an application for an enhanced criminal record certificate under section 113B of the Police Act, it would be open to a chief officer of police, if he thought that it ought to be included, to call for the inclusion in the certificate of a conviction or caution which was not a relevant matter because it did not fall within any of the defined categories of disclosable conviction under section 113A(6). I assume (without deciding) that this course was open to the chief officer. But it would not deprive the legislation of the quality of law, because section 113B(4A) requires chief officers to exercise this function having regard to statutory guidance published by the Secretary of State. This provision was inserted by the Protection of Freedoms Act 2012, which was shortly followed by the publication of detailed guidance in July of that year. It is well established that guidance provided for by statute may constitute law for the purpose of the Convention: R (Purdy) v Director of Public Prosecutions [2010] AC 345, para 47 (Lord Hope). The judgment of the chief officer is subjected to carefully drawn constraints that themselves have the quality of law. In these circumstances, the only basis on which it could be said that the legislation lacks the quality of law is that the content of the classes of criminal record available for mandatory disclosure is itself uncertain, because of the uncertain or discretionary character of the rules governing their retention in the Police National Computer, or the Causeway System which serves the same purpose in Northern Ireland. This was, as we have seen, the criticism made of the earlier version of the legislation as it applied in Northern Ireland, by the Strasbourg court in MM. In the three English cases it was argued in the Court of Appeal that the retention of their records on the Police National Computer was itself a breach of article 8 of the Convention. The argument was rejected and has not been repeated before us. It would not in any event have affected the legality of the system of disclosure for the following reason. As I have pointed out above (para 26), what is consistent with the legality test at the stages of collection and retention, may depend on how much of it is liable to be disclosed under the Police Act. The reason why the uncertain content of the criminal record database was so significant in MM was that at the relevant time any conviction or caution on the database was liable to indiscriminate disclosure, without exception. That has not been the case either in England and Wales or in Northern Ireland since 2014. It is no longer correct to say, as Lord Reed quite rightly did about the unamended scheme considered in T (para 119), that the statutory scheme fails to draw distinctions by reference to the nature of the offence, the disposal of the case or the time which has elapsed since the offence took place. It is still the case that it fails to draw distinctions based on the relevance of the conviction to a potential employer on more general grounds; and it still does not provide a mechanism for the independent review of disclosure. However, even on the most expansive view of what was decided in T, nothing in that case suggests that these two factors are on their own enough to deprive the legislation of the quality of law. The current legislation distinguishes, for the purpose of disclosure, between different categories of conviction or caution, depending on the gravity of the offence, the age of the offender at the time and the number of years which have passed. Of course, there may be arguments for more or fewer, or wider or narrower categories, but the legality test is a fundamentally unsuitable instrument for assessing differences of degree of this kind. A decision that the current regime governing retention and disclosure of criminal records lacked the quality of law would mean that it would be incompatible with the Convention even if, hypothetically, it could be shown that nothing short of it would sufficiently protect children and vulnerable adults from substantial risks of abuse or protect the public interest in the appointment of suitable people to highly sensitive positions. I decline to accept that proposition. It would have the practical effect of equating the right of privacy with such absolute provisions of the Convention as the prohibition of torture and slavery, when the terms of article 8 show that the right of privacy is qualified. I conclude that the current scheme of disclosure under the Rehabilitation of Offenders Act 1974 (as amended) and the Police Act 1997 (as amended), and the corresponding legislation in Northern Ireland, are in accordance with the law for the purposes of article 8 of the Convention. Proportionality There are, as it seems to me, only three ways in which the question of disclosing criminal records of candidates for sensitive occupations could have been addressed: (i) by legislating for disclosure by reference to the pre defined categories of offence, offender or sentence in the legislation as it stands; (ii) by legislating for disclosure by reference to some differently drawn categories of offence, offender or sentence; or (iii) by legislating for disclosure by reference to the circumstances of individual cases, as ascertained by some process of administrative review. Accordingly, two questions fall to be decided. The first is whether the legislation can legitimately require disclosure by reference to pre defined categories at all, as opposed to providing for a review of the circumstances of individual cases. If it can, then the second question is whether the boundaries of these categories are currently drawn in an acceptable place. It is common ground that, for the purpose of assessing the proportionality of the scheme, the legislature and ministers exercising statutory powers have a margin of judgment, within limits. I shall deal first with the question whether the legislation can legitimately require disclosure by reference to pre defined categories at all, rather than the circumstances of each case. If not, then manifestly the present legislative scheme will not pass muster. In principle, the legitimacy of legislating by reference to pre defined categories in appropriate cases has been recognised by the Strasbourg court for many years. The fullest modern statement of the law is to be found in its decision in Animal Defenders International v United Kingdom (2013) 57 EHRR 21, where the court summarised the effect of a substantial body of earlier case law. At paras 106 110, the court observed: 106. It is recalled that a state can, consistently with the Convention, adopt general measures which apply to pre defined situations regardless of the individual facts of each case even if this might result in individual hard cases 107. The necessity for a general measure has been examined by the court in a variety of contexts such as economic and social policy and welfare and pensions. It has also been examined in the context of electoral laws; prisoner voting; artificial insemination for prisoners; the destruction of frozen embryos; and assisted suicide; as well as in the context of a prohibition on religious advertising. 108. It emerges from that case law that, in order to determine the proportionality of a general measure, the court must primarily assess the legislative choices underlying it. The quality of the parliamentary and judicial review of the necessity of the measure is of particular importance in this respect, including to the operation of the relevant margin of appreciation. It is also relevant to take into account the risk of abuse if a general measure were to be relaxed, that being a risk which is primarily for the state to assess. A general measure has been found to be a more feasible means of achieving the legitimate aim than a provision allowing a case by case examination, when the latter would give rise to a risk of significant uncertainty, of litigation, expense and delay as well as of discrimination and arbitrariness. The application of the general measure to the facts of the case remains, however, illustrative of its impact in practice and is thus material to its proportionality. 109. It follows that the more convincing the general justifications for the general measure are, the less importance the court will attach to its impact in the particular case 110. The central question as regards such measures is not, as the applicant suggested, whether less restrictive rules should have been adopted or, indeed, whether the state could prove that, without the prohibition, the legitimate aim would not be achieved. Rather the core issue is whether, in adopting the general measure and striking the balance it did, the legislature acted within the margin of appreciation afforded to it. The courts reference in para 108 to the risk of uncertainty is supported by a footnote citation of its earlier decision in Evans v United Kingdom (2008) 46 EHRR 34. In that case, it held that the absence of any provision for individual scrutiny in legislation requiring the consent of both parties to the implantation of stored embryos was consistent with article 8 of the Convention. The Grand Chamber found (para 60) that strong policy considerations underlay the decision of the legislature to favour a clear or bright line rule which would serve both to produce legal certainty and to maintain public confidence in the law in a sensitive field. It went on to observe, at para 89: While the applicant criticised the national rules on consent for the fact that they could not be disapplied in any circumstances, the court does not find that the absolute nature of the law is, in itself, necessarily inconsistent with article 8. Respect for human dignity and free will, as well as a desire to ensure a fair balance between the parties to IVF treatment, underlay the legislatures decision to enact provisions permitting of no exception to ensure that every person donating gametes for the purpose of IVF treatment would know in advance that no use could be made of his or her genetic material without his or her continuing consent. In addition to the principle at stake, the absolute nature of the rule served to promote legal certainty and to avoid the problems of arbitrariness and inconsistency inherent in weighing, on a case by case basis, what the Court of Appeal described as entirely incommensurable interests. In the courts view, these general interests pursued by the legislation are legitimate and consistent with article 8. In those cases where legislation by pre defined categories is legitimate, two consequences follow. First, there will inevitably be hard cases which would be regarded as disproportionate in a system based on case by case examination. As Baroness Hale observed in R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] 1 WLR 3820, para 36, the Strasbourg courts jurisprudence recognises that sometimes lines have to be drawn, even though there may be hard cases which sit just on the wrong side of it. Secondly, the task of the court in such cases is to assess the proportionality of the categorisation and not of its impact on individual cases. The impact on individual cases is no more than illustrative of the impact of the scheme as a whole. Indeed, as the Strasbourg court pointed out at para 109 of Animal Defenders, the stronger the justification for legislating by reference to pre defined categories, the less the weight to be attached to any particular illustration of its prejudicial impact in individual cases. In my judgment, the legislative schemes governing the disclosure of criminal records in England and Wales and Northern Ireland provide as good an example as one could find of a case where legislation by reference to pre defined categories is justified. I reach that view for four main reasons. First, it is entirely appropriate that the final decision about the relevance of a conviction to an individuals suitability for some occupations should be that of the employer. Only the employer can judge whether the particular characteristics of the particular job make it inappropriate to employ the particular ex offender. Very often, this will be a judgment that the employer makes in the course of discussion with the candidate in the light of what is disclosed. The employer will bear the responsibility for the consequences of its choice, and in sensitive appointments the responsibility may be a heavy one. In order to discharge that responsibility with the thoroughness that the public interest requires, the employer must have access to potentially relevant information about a candidates past. He may end up by disregarding some or all of it as irrelevant or insufficiently weighty. But unless the decision is to be taken out of his hands, he must be told about any criminal record which might reasonably influence him, even if further consideration or discussion of the circumstances with the candidate may ultimately cause him to disregard or attach limited weight to it. By comparison, the administrative authorities responsible for disclosure know only (i) the job title, which usually gives only the most general notion of what the job entails; and (ii) the broad category of offence for which the candidate was convicted or cautioned, the implications of which may be affected by a wide variety of mitigating or aggravating circumstances that are not apparent from the criminal record database. A system of administrative review on the application of the candidate may be possible. It has existed in Northern Ireland since 2016. Such a system enables the disclosure authority to take into account the candidates representations. But it cannot enable the authority to take over the employers function of assessing the candidates suitability for the particular employment. It might be possible to design a system under which rather more information about the job was supplied to the disclosure authority than is provided for under the forms currently prescribed. It might be possible to design a system under which the disclosure authority could call for further information from the employer, but that would give the game away. The employer would know that there was something there, and the consequence for the candidate would in many cases be worse than disclosure of what might turn out to be a very minor offence. None of these possibilities can realistically be thought to displace the employers judgment of the candidates suitability. It follows that it cannot be right to say that as a matter of law the United Kingdom must have a scheme of disclosure which depends on an examination of the circumstances of individual cases by someone other the employer. Secondly, the objection to disclosure by category is based on the argument that employers cannot be trusted to take an objective view of the true relevance of a conviction. But the material available to support that objection is distinctly thin. There is some survey evidence which is said to support it, although the generality and hypothetical character of the questions and the very summary form of the answers make it hard to attach much weight to it. Lord Neuberger suggested in R (L) v Comr of Police of the Metropolis (Secretary of State for the Home Department intervening) [2010] 1 AC 410 at para 75 that in the majority of cases the disclosure of any criminal record would be something close to a killer blow. However, as this court recently pointed out in R (AR) v Chief Constable of Greater Manchester Police [2018] 1 WLR 4079, para 75, it is far from clear on what if any empirical evidence Lord Neubergers observation was made. Realistically, it must be assumed that some employers will take the line of least risk, and decline to employ ex offenders on principle, especially if there is an alternative candidate without a criminal record. But the evidence before us does not bear out the suggestion that this is the norm. Under sections 113A(2) and 113B(2), applications for criminal record certificates must be made or countersigned by a registered body. Employers and the registered bodies who sponsor their applications are required to comply with a Code of Practice issued by the Secretary of State under section 122 of the Police Act 1997. Registered bodies may lose their registration if they fail to do this themselves and to enforce the code on employers. The Code of Practice requires employers, among other things, to have a written policy, available to candidates on request, concerning the suitability of ex offenders, to notify candidates of the potential impact of a criminal record and to discuss with candidates the content of any disclosure before withdrawing an offer of employment. There is no evidence before us that the Code of Practice is ignored on a significant scale, either in letter or in spirit. A high proportion of employers in cases where criminal record certificates are required will in any event be in the public sector, and they are particularly likely to comply. But, be all that as it may, for as long as the employer has the ultimate right to decide and the legal responsibility to decide carefully, and is the only person in a practical position to do so, the risk that some employers may take too absolute a line is inescapable. Thirdly, in this context, the value of certainty is particularly high. The regimes governing disclosure by the candidate under the Rehabilitation of Offenders Act and by the Disclosure and Barring Service or AccessNI under the Police Act are carefully aligned. Any legislation governing disclosure under the Police Act must take account of the fact that the candidate for sensitive positions will generally have been asked to disclose past convictions and cautions voluntarily. Section 4 of the 1974 Act entitles the candidate to treat that request as not relating to spent convictions, subject to exceptions identified in subordinate legislation. Those spent convictions which are excluded from section 4 and therefore disclosable by the candidate himself must necessarily be identified by category. There is no room for a case by case review of the particular facts in that context, because candidates must know where they stand at the time when they complete the application form, ie before any application is made for disclosure under the Police Act. The offences falling to be disclosed under the Police Act must substantially correspond to those disclosable by the candidate under the Rehabilitation of Offenders Act. A regime for disclosure by the Disclosure and Barring Service or AccessNI which allowed for discretionary exceptions dependent on the facts of the case would not help the candidate if he has already had to disclose all convictions in the relevant category himself. What this suggests is that any advantages of an administrative review of the circumstances of individual cases will have been gained at the expense of foreseeability. This has a significant cost to the candidate himself. It will be apparent that the justification for legislating by reference to categories of offence or offender is much more than a question of administrative convenience or practicality. It goes to the whole purpose of the scheme, which is to enable employers properly to perform their function of vetting candidates for sensitive occupations, and to enable candidates themselves to know what is disclosable, in the first instance by themselves. There are, however, and this is the fourth reason, important issues of practicality involved. Some four million applications for criminal record certificates are made every year in England and Wales. They have to be dealt with promptly, because a conditional offer of employment will commonly have been made to the candidate. A system of individual assessment would require an assessment to be made or reviewed according to, among other things, the circumstances of the offence, the sentencing remarks of the judge, any relevant mitigating or aggravating factors, and presumably any representations of the candidate. The evidence on behalf of the Secretary of State is that this is not a practical proposition in the case of a volume of disclosure applications as large as that in England and Wales. The view taken by ministers was therefore that a mechanical process of disclosure by category was the only one consistent with basic levels of efficiency. Of course, beyond a certain point, administrative efficiency cannot justify visiting an injustice upon candidates. But it is particularly difficult for a court to determine where that point lies. It is true that any administrative problems appear to have been overcome in Northern Ireland. But Northern Ireland is a much smaller jurisdiction. Taking these considerations together, they suggest that although it may be possible to abandon category based disclosure in favour of a system which allowed for the examination of the facts of particular cases, there would be a cost in terms of protection of children and vulnerable adults, foreseeability of outcome by candidates, consistency of treatment, practicality of application, and delay and expense, without necessarily achieving much more for ex offenders than the current system. Once it is accepted that a category based scheme of disclosure is justifiable, it must inevitably follow that some candidates will find themselves in a category apparently more serious than the facts of their particular case really warrant. The cases which have given rise to these appeals illustrate the point. G was reprimanded at the age of 13 for offences of sexual activity with a child. P received a caution for theft and was convicted shortly afterwards of another offence of theft. W was convicted of assault occasioning actual bodily harm. These are all, in the generality of cases, serious offences which in a category based system would rightly be disclosable in connection with a sensitive occupation, especially one involving contact with children or vulnerable adults. In each case, it is only the detailed circumstances that show that the actual offence was very minor. Conversely, Ms Gallagher was convicted of carrying children under 14 without a seatbelt, and convicted again of the same offences two years later. This is a minor offence, but if the job for which Ms Gallagher had applied had involved driving children it would have been difficult to justify withholding these convictions from a potential employer. Some employers might legitimately be concerned that her record disclosed a more general lack of concern with safety which was unacceptable to them. Against that background, I turn to the next question, which is whether the legislation before us draws the boundaries of the relevant categories in an acceptable place. As it stood at the relevant time, the statutory schemes in both England and Wales and Northern Ireland substantially reflected the recommendations of Ms Sunita Mason. She was an experienced district judge, a former chair of the Law Societys Family Law Committee and the Governments Independent Adviser for Criminality Information Management. Ms Mason was asked in 2009 to conduct a review of the retention and disclosure of criminal records held on the Police National Computer. Her report, A Balanced Approach, was published in March 2010. It recommended that disclosures to employers should be filtered and that a panel representing the various interested parties should advise on the filtering rules. The Secretary of State subsequently established the Criminal Records Review to make proposals on the balance between respecting civil liberties and protecting the public. That review was also conducted by Ms Mason, in conjunction with the Independent Advisory Panel for the Disclosure of Criminal Records. Her two reports, published in February and December 2011, took account of the views of a broad range of experts and consultees drawn from the criminal justice system, the police and the judiciary, the teaching profession, and NGOs involved with children, vulnerable adults and ex offenders. It was also informed by summaries of the disclosure systems operating in 26 other countries. Ms Mason made proposals for removing old and minor offences from the scope of disclosable convictions and cautions. The Panel recommended that spent convictions and cautions should be filtered by category, according to the period of time which had elapsed, that particular care should be taken before considering any sexual, drug related or violent offence type for filtering, that where a person has received a conviction or caution for any offence which is not categorised as minor, all his convictions and cautions (including minor ones) should be disclosed, and that the filtering rules should be both simple and understandable to individuals who are users and/or customers of the disclosure service. The Panel thought that extra consideration should be given to minor offences committed by persons under the age of 18. Although agreed on the principles, however, the Independent Advisory Panel did not agree on the criteria. The recommendations concerning these were accordingly Ms Masons. She proposed the disclosure of all convictions categorised as not being minor, all convictions where there was more than one, and the filtering out of single minor spent convictions by adults after three years and by persons under the age of 18 after six months. She proposed that further consideration should be given to the problems of defining minor offences. The problems of defining minor offences are described in a witness statement of Mr John Woodcock, then Head of Criminal Records Policy within the Safeguarding and Public Protection Unit of the Home Office. In summary, the two main criteria available were the character of the offence as defined by law and the severity of the sentence, or some combination of the two. Each of these criteria was liable to produce capricious results at the margins, as Mr Woodcock demonstrates. I have already referred to those associated with the character of the offence. The use of sentencing as a criterion was also problematic. This was because mitigating factors affecting sentence will not necessarily be relevant to the assessment of the risks associated with sensitive employments. Moreover, every additional refinement added to the system to make it more accurate, was liable also to make it more complex and less easy for candidates to understand. The filtering criteria proposed by Ms Mason were adopted by ministers in framing the amendments to the scheme in 2013, except that the periods of currency adopted for single minor offences were longer. I have summarised the criteria on which minor offences were filtered out of criminal records at para 9 above. It was based on a combination of (i) the sentence (all offences resulting in a custodial sentence were disclosable), (ii) the legal definition of the offence (the sexual and violent offences listed in section 113A(6D) and in Schedule 15 to the Criminal Justice Act 2003 were disclosable in all cases), (iii) the period which had elapsed since the conviction or caution and (iv) the age of the offender at the time of the disposal. In this form, the statutory orders were approved by Parliament under the positive resolution procedure, with bipartisan support. As the Strasbourg court pointed out in Animal Defenders (para 108), the assessment of the defining factors in a category based scheme is a matter for the state, and the quality of the examination of the options is likely to be important. I have summarised the history of the process which led to the current legislative scheme in order to make two points. First the scheme is the result of substantial research and intensive consultation with a wide range of interested and expert groups and individuals. Secondly, it is apparent that while there is broad agreement on the need for a category based system of disclosure and the basic principles which should govern it, there is no consensus about where the lines should be drawn. This is not particularly surprising, because there is no solution which could satisfy all of the main desiderata in the design of such a system. No one suggests that the courts can or should design the system themselves in proceedings for judicial review. The function of the courts is an essentially negative one, namely to identify which schemes are incompatible with the Convention. At the same time, a court can only be satisfied that a particular scheme is incompatible with the Convention if it is in a position to say what is wrong with it. What is wrong with the design of the categories employed in the legislative scheme before us? On the footing that disclosure by categories is justified in principle, the respondents objections to the current system really amount to saying that the balance between the risk of blighting the prospects of ex offenders and the risk of appointing unsuitable persons to sensitive positions has been drawn in a place which puts too much emphasis on the latter and not enough on the former. They also say that the balance has been drawn in a different way in Northern Ireland and Scotland. Yet a balance of this kind necessarily involves a difficult value judgment. All that a judge can say is that he or she would have drawn it in a different place. But that, with respect, is not the test. We may think that a better scheme could have been devised or that the categories could have been differently drawn, or that too much weight has been given to the risk of unsuitable appointments and not enough to the rehabilitation of offenders. A more granular categorisation has been applied in Scotland to cases involving risks to vulnerable groups since 2007, and a system of administrative review on the application of an ex offender has existed in Northern Ireland since 2016. There may be lessons to learn from their experience. But none of this means that the scheme lies outside the margin of judgment properly allowed to the legislator or the Secretary of State on whom the legislator has laid the task of defining the exceptions to the rehabilitation regime. In my judgment it is not possible for us to say, consistently with the proper role of a court of review, that the carefully drawn categories employed in this scheme are disproportionate. To this analysis, I would make two exceptions. The first concerns the multiple conviction rule. Sections 113A(3) and (6)(b) and 113B(3) and (9)(b) of the Police Act 1997 provide that where a person has more than one conviction of whatever nature, any conviction of whatever nature is a relevant matter falling to be disclosed in a criminal record certificate. Unlike the other relevant matters calling for disclosure, the multiple conviction rule does not, properly speaking, define a category of offence or offender. It is in reality an aggravating factor affecting the significance of an offence. Its rationale is that the criminal record of a serial offender is more likely to be relevant to his suitability for a sensitive occupation, because the multiplicity of convictions may indicate a criminal propensity. In itself, that is an entirely legitimate objective of a legislative provision of this kind. The rule as framed is, however, a particularly perverse way of trying to achieve it. It applies irrespective of the nature of the offences, of their similarity, of the number of occasions involved or of the intervals of time separating them. As framed, therefore, the rule is incapable of indicating a propensity. It may coincidentally do so in some cases, but probably does not in a great many more. Its eccentric consequences may be illustrated by the facts of the two appeals in which the multiple conviction rule was the basis on which disclosure was required, those of P and Lorraine Gallagher. In Ps case the two minor thefts for which she received a caution and a conviction were only disclosable because she had also failed on the second occasion to surrender to her bail. These offences were not only too minor but too disparate to suggest a propensity to even the most suspicious mind. As to Ms Gallagher, I have already observed that her failure on two occasions to secure children in the back of her car might have been relevant to her proposed employment if it had involved driving children about. But, even if she had not committed a further offence in 1998, her convictions of 1996 would have been disclosable simply because there were four unsecured persons in the car at the time, each of whom gave rise to a distinct conviction. A rule whose impact on individuals is as capricious as this cannot be regarded as a necessary or proportionate way of disclosing to potential employers criminal records indicating a propensity to offend. The second exception concerns warnings and reprimands administered to young offenders under sections 65 and 66 of the Crime and Disorder Act 1998 replaced, since 2013, by youth cautions under section 66ZA. Warnings and reprimands were not a penal procedure. As Lord Bingham put it in relation to warnings in R (R) v Durham Constabulary [2005] 1 WLR 1184 (HL), although they required the offender to have admitted the offence, they constituted a preventative, curative, rehabilitative or welfare promoting disposal: see paras 14 15. A caution administered to an adult requires consent. However, a warning or reprimand given to a young offender whose moral bearings are still in the course of formation, requires no consent and does not involve the determination of a criminal charge. Its purpose is wholly instructive, and its use as an alternative to prosecution is designed to avoid any deleterious effect on his subsequent life. Its disclosure to a potential employer would be directly inconsistent with that purpose. In my view the inclusion of warnings and reprimands administered to a young offender among offences which must be disclosed is a category error, and as such an error of principle. I would expect the same to be true of the current regime governing youth cautions, but we were not addressed on that question and it is neither necessary nor appropriate to decide it on this appeal. Application to the present appeals and disposal Ps convictions and caution were disclosable only by virtue of the multiple conviction rule. In England and Wales, the rule requiring disclosure of the entire record where there are multiple convictions is embodied in primary legislation, namely section 113A(6)(b) of the Police Act 1997 (as amended). The Divisional Court made a declaration of incompatibility in respect of that provision, which was affirmed by the Court of Appeal. The Secretary of States appeal against that order must be dismissed, albeit on grounds narrower than those of the Court of Appeal. That leaves to be considered in the case of P the corresponding exclusion from section 4 of the Rehabilitation of Offenders Act 1974, which is contained in article 2A(3)(c) of the Rehabilitation of Offenders Act 1974 (Exceptions) Order (SI 1975/1023), as amended with effect from 2014. Since the multiple conviction rule depends on subordinate legislation, it was open to the Divisional Court to quash article 2A(3)(c) as an unlawful act, and it was invited to do so. The Divisional Court declined the invitation and contented themselves with a declaration that the amended 1975 Order could not be read down so as to be compatible with article 8. The Court of Appeal dismissed Ps cross appeal on that point. In both cases, the reason was that while the amendment was incompatible with article 8 so far as it was applied to P, it would not be so in all cases. Mr Southey QC, who appeared for P, has pursued his cross appeal before us. The reasoning of the Divisional Court and the Court of Appeal gives rise to difficulty on the footing (accepted by them) that the whole legislative scheme lacks the quality of law, for as I have explained that is an all or nothing question. However, I have concluded that it does have the quality of law, and that the only objection to article 2A(3)(c) of the amended 1975 Order is that it is disproportionate. In a case where legislation by category is appropriate, as I have held it to be in this case, the fact that the categorisation may bear disproportionately on the complainant is not decisive: see para 49 above. What is disproportionate is the creation by article 2A(3)(c) of the amended 1975 Order of a category of disclosable convictions and cautions which depends on the multiple conviction rule. On that footing it would be open to this court to quash that article. Nonetheless, the making of such an order is discretionary, and I would decline to make it in this case. The reason is that it would introduce a discrepancy between the disclosures required of the Disclosure and Barring Service under the Police Act 1997 (the relevant provisions of which must stand unless and until amended or repealed by Parliament) and the disclosure required of the ex offender under the Rehabilitation of Offenders Act 1974. This would authorise the ex offender to withhold disclosure of something that would then have to be disclosed in a certificate issued by the Disclosure and Barring Service. In the circumstances, the appropriate course would be simply to vary the order of the Divisional Court by adding a declaration that article 2A(3)(c) is incompatible with article 8 of the Convention. Lorraine Gallaghers case also turns on the multiple convictions rule. As it happens, the disclosure made no difference to the fate of her job application in 2014, because it is clear from the uncontentious facts that the job offer was withdrawn because of the concealment of the 1998 convictions and not because of the criminality disclosed in the certificate. She is, however, entitled to relief, because no disclosure would have been made but for section 113A(6)(b) of the Police Act 1997 (as amended) and article 1A(2)(c) of the Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979 (SR(NI) 1979/195) (as amended) (which corresponds to article 2A(3)(c) of the 1975 Order in England and Wales). Treacy J in the High Court in Northern Ireland made two orders. The first order dealt only with Ms Gallaghers application for judicial review of the automatic disclosure of her record under the Police Act 1997 (as amended). It simply allowed the application without any further relief. The second order dealt in addition with the position under the Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979 (as amended). It declared in paragraph (a) that the 1979 Order violated Ms Gallaghers rights under article 8 because it fails the test of necessity; and in paragraph (b) that both the 1979 Order (as amended) and Part V of the Police Act 1997 (as amended) violated Ms Gallaghers rights under article 8 for the additional reason that they lacked the quality of law. The Court of Appeal of Northern Ireland dismissed the Secretary of States appeal. There is no cross appeal in Ms Gallaghers case. It follows from the conclusions that I have reached that I would vary Treacy Js second order so as to limit paragraph (a) of his declaration to article 1A(2)(c) of the 1979 Order (the only provision relevant to her case); and to delete paragraph (b). In Gs case, Blake J declared (a) that Part V of the Police Act 1997 (as amended) was incompatible with article 8 of the Convention to the extent that it required the mandatory disclosure of his reprimand for offences contrary to section 13 of the Sexual Offences Act 2003; and (b) that regulations made under the Rehabilitation of Offenders Act 1974 required amendment in the light of (a). The Court of Appeal affirmed declaration (a) and set aside declaration (b). There is no cross appeal. For the reasons which I have given, which are narrower than those of the Court of Appeal, I would dismiss the Secretary of States appeal. In Ws case, his conviction for assault occasioning actual bodily harm has not been disclosed. His concern is with its prospective disclosure were he to apply for a teaching job. Assault occasioning actual bodily harm is an offence specified in Schedule 15 to the Criminal Justice Act 2003. As such it is excluded from section 4 of the Rehabilitation of Offenders Act 1974 (as amended), by article 2A(5)(d) of the 1979 Order, and falls to be disclosed in a Criminal Record Certificate under the corresponding provision of the Police Act 1997 (as amended). Simon J, who heard Ws application for judicial review in the High Court, dismissed it, but the Court of Appeal allowed the appeal on proportionality (as well as legality) on the ground that it was difficult to see how publication of this detail, 31 years on, is relevant to the risk to the public, or proportionate and necessary in a democratic society. I regret that I am unable to agree, essentially for the reason given by Simon J. Once it is accepted (as I have accepted) that disclosure may properly be required by categories, the question is whether the choice of category is proportionate, not whether it impacted disproportionately on particular cases. Disclosure by categories must inevitably produce a disproportionate impact in some cases. In my opinion, it was legitimate to include assault occasioning actual bodily harm among the offences which were sufficiently serious to require disclosure. It is a violent offence which may be extremely serious. As Simon J pointed out, it may attract an extended sentence of imprisonment. It was also legitimate not to include a temporal limit in the definition of the category of violent or sexual offences requiring disclosure. Any temporal limit would have risked the non disclosure of the worst cases in the category. The limit would presumably have had to vary with the offence. There would be complex additional problems of definition, thereby making the scheme notably more complex than it already is. For example, a provision imposing a temporal limit on serious offences would presumably have had to differentiate between cases where the offender went on to commit further such offences and cases where (like W) he did not. I cannot regard the existing categorisation as illegitimate, or as notably more problematical than any other categorisation. Hard cases like Ws must ultimately be left to the judgment of employers. I have given my reasons for believing that in the generality of cases they can and must be trusted to exercise that judgment responsibly and in accordance with the statutory guidance given to the registered persons who sponsor them. LADY HALE: (with whom Lord Carnwath agrees) This is a very troubling case. In R (T) v Chief Constable of Greater Manchester Police (Liberty intervening); R (B) v Secretary of State for the Home Department (Liberty intervening) [2014] UKSC 35; [2015] AC 49 (hereafter T), the majority of this court held that the statutory scheme for the disclosure of convictions, cautions and reprimands under sections 113A and 113B of the Police Act 1997 constituted an interference with the right to respect for private life, protected by article 8.1 of the European Convention on Human Rights, which was not in accordance with the law, as an interference is required to be before it can be justified under article 8.2 (set out in full in para 11 by Lord Sumption). It followed that those sections had to be declared incompatible with the Convention rights, under section 4 of the Human Rights Act 1998. The court was unanimously of the view that those sections were also incompatible because, in the cases before the court and in many other cases, the interference was disproportionate that is, not necessary in a democratic society, although its aims were legitimate. Both the Court of Appeal in Northern Ireland, in the case of Lorraine Gallagher, and the Court of Appeal of England and Wales, in the cases of P, G and W, took the view that it followed from this courts decision in T that the amended schemes (described by Lord Sumption in para 9) also failed the requirement that they be in accordance with the law in certain respects. No party to this appeal has invited this court to depart from the ratio of the decision in T: indeed, as Lord Sumption points out in para 15, it is our duty to follow it unless (which is not suggested) the Practice Direction of 1966 applies. There is no doubt that the ratio of T is that the scheme as it then stood was not in accordance with the law. The question which divides this court is whether it follows that the scheme as it now stands also fails that test. This is no easy question. The scheme as it stood in T gave the authorities responsible for providing criminal record certificates under section 113A and enhanced criminal record certificates under section 113B of the 1997 Act no discretion: all convictions, cautions, warnings and reprimands recorded on the Police National Computer had to be disclosed (there was and is a discretion as to the additional material which may be disclosed in an enhanced certificate). The schemes as they now stand also give the authorities no discretion as to what has to be disclosed: but they contain more nuanced rules, devised after a careful process described in detail by Lord Kerr in paras 117 to 142, as to what has to be disclosed, supplemented, in the case of Northern Ireland, by the possibility of independent review of the decision to disclose in individual cases, described by Lord Kerr in paras 143 to 146. Is this sufficient to invest the scheme with the quality of legality required by the Convention? I am persuaded that it is. The principles to be derived from the Strasbourg cases were to my mind accurately summarised in the joint judgment of Lord Reed, Lord Hodge and myself in Christian Institute v Lord Advocate [2016] UKSC 51; 2017 SC (UKSC) 29, at paras 79 80, cited and agreed with by Lord Sumption at para 41. The foundation of the principle of legality is the rule of law itself that people are to be governed by laws not men. They must not be subjected to the arbitrary that is, the unprincipled, whimsical or inconsistent decisions of those in power. This means, first, that the law must be adequately accessible and ascertainable, so that people can know what it is; and second, that it must be sufficiently precise to enable a person with legal advice if necessary to regulate his conduct accordingly. The law will not be sufficiently predictable if it is too broad, too imprecise or confers an unfettered discretion on those in power. This is a separate question from whether the law in question constitutes a disproportionate interference with a Convention right but the law in question must contain safeguards which enable the proportionality of the interference to be adequately examined. This does not mean that the law in question has to contain a mechanism for the review of decisions in every individual case: it means only that it has to be possible to examine both the law itself and the decisions made under it, to see whether they pass the test of being necessary in a democratic society. I do not believe that (cf Lord Kerr at para 153), when applying these principles in T, at para 119, quoted by Lord Sumption in para 36, Lord Reed was holding that for the disclosure rules to meet the requirement of legality they must always draw distinctions on the basis of the nature of the offence, the disposal in the case, the time which has elapsed since the offence took place or the relevance of the data to the employment sought and that there must always be a mechanism for independent review of a decision to disclose. He was pointing to the cumulative effect of all those deficiencies in the scheme as it then stood. Furthermore, he was relying on the judgment in MM v United Kingdom (Application No 24029/07), judgment of 29 April 2013, where, at para 206, the shortcomings whose cumulative effect led to the finding of a violation included the absence of a clear legislative framework for the collection and storage of data, and the lack of clarity as to the scope, extent and restrictions of the common law powers of the police to retain and disclose caution data, in addition to the absence of any mechanism for independent review of a decision to retain or disclose data and the limited filtering arrangements in respect of disclosures. He was drawing attention to the indiscriminate nature of the scheme as it then stood. The scheme as it now stands does not have that indiscriminate nature. It has been carefully devised with a view to balancing the important public interests involved. In my view there are at least three of these. There is, of course, the importance of enabling people who have committed offences, and suffered the consequences of doing so, to put their past behind them and lead happy, productive and law abiding lives. The full account of the facts of the four cases before us, given by Lord Kerr, is ample illustration of the importance of this aim, and of the devastating effect that disclosure of past offending can have upon it. There is, on the other hand, the importance of safeguarding children and vulnerable adults from people who might cause them harm, as well as ensuring the integrity of the practice of certain occupations and activities. No one who has read Sir Michael Bichards Report, prompted by the murder of two Soham school girls by their school caretaker (The Bichard Inquiry Report (2004) HC 653), can be in any doubt of that. There is also, in my view, a public interest in devising a scheme which is practicable and works well for the great majority of people seeking positions for which a criminal record certificate is required. Neither they nor their prospective employers should have to wait too long for the results of their enquiry. It is for that last reason that I am persuaded that it cannot be a pre requisite of any proportionate scheme that it seeks to assess the relevance of the data to be disclosed to the employment or activity in question. There may be other contexts involving interference with article 8 rights where this would be both practicable and necessary. But this is a scheme catering for a very large number of inquiries (four million a year in England and Wales) and a substantial number (nearly 300,000) of positive responses. Devising a coding mechanism for the type of position applied for and then a scheme for correlating the relevance of particular offending to each position would be extremely difficult, if not impossible. It must be borne in mind that we are by definition concerned with people who are applying for positions where such a certificate is required. No one has suggested to us that the categories of people required to get such certificates are over broad. Leaving it to the prospective employer to judge the relevance of the particular offending to the particular post is probably the only practicable solution, although of course I accept that employers are likely to take a precautionary approach if they have more applicants than posts available. I am also persuaded that the only practicable and proportionate solution is to legislate by reference to pre defined categories or, as these are sometimes pejoratively described, bright line rules. For me, the most important of the four reasons given by Lord Sumption is his third, the need for certainty (Lord Sumption at para 53). The scheme for disclosing data held on the Police National Computer mirrors closely the scheme for requiring applicants for particular positions to disclose their convictions, cautions, warnings and reprimands, although these would otherwise be spent under the Rehabilitation of Offenders Act. They have to know what they must disclose if they are asked. And as a general rule they will have to do this before any application for a Criminal Record Certificate is made. There is no room for case by case consideration unless this is open to the prospective employer at this stage. And it would make no sense for the applicant to have to make disclosure only to find that the authorities have decided that disclosure is not warranted. The question therefore becomes whether the categories which have in fact been chosen are themselves a proportionate response to the legitimate aims of the scheme. For the reasons given by Lord Sumption, at para 63, I agree that the rule relating to multiple convictions, at least as currently framed, is not apt to achieve its aim of detecting a relevant propensity to commit crimes. It is not rationally connected to the aim it is trying to achieve. For the reasons he gives, at para 64, I also agree the inclusion of reprimands or warnings given to young offenders, even where the offending is of some seriousness, is wrong in principle. appeals and of the cross appeal in Ps case. LORD KERR: (dissenting) Introduction P Lord Sumption has outlined what he has described as the essential facts in each of these appeals. I agree with his account but consider that some further detail of the predicament that each of the appellants has faced is necessary in order to I would therefore agree with Lord Sumptions proposed disposal of these demonstrate in a concrete way the considerable impact that the operation of the disclosure regimes in England and Wales and Northern Ireland has had and will continue to have, as a result of the decision of the majority in this case, on their lives. As Lord Sumption has said, the woman who has been referred to as P has had two encounters with the criminal law. Both occurred in 1999. Before considering the circumstances which gave rise to these, it is necessary to say something of Ps background. She has a degree in education studies and languages and has obtained a certificate to teach English as a foreign language. She has worked in Spain and Greece, teaching English. In 1997, while teaching in Spain, P began to feel unwell. She returned to the United Kingdom in March of that year. On her return to this country, Ps condition worsened. She began to hear voices and became delusional. At first, she lived in accommodation which she described as insecure. Over time she became homeless. Because of her condition, she found it difficult to keep medical appointments. While homeless, she was the victim of physical and sexual abuse and she often had money stolen from her. Eventually, in November 2000, she was admitted to hospital and there she was diagnosed as suffering from schizophrenia. In hospital P was prescribed medication for her condition. When she was discharged, she had a social worker assigned to her. She was helped to obtain self contained housing on a secure tenancy. The social worker ensured that P received the welfare benefits to which she was entitled. She had regular visits from a psychiatric nurse and attended appointments with a consultant psychiatrist. As a result of all this and of her own efforts, Ps condition has been under control since 2003. She does not need to attend a psychiatrist now. But she sees her general medical practitioner and continues to take her medication. She considers that she has a much greater awareness and understanding of [her] illness and treatment, and [is] able effectively to control it. Before her admission to hospital, P was involved in two episodes of criminal activity. On 26 July 1999, a caution was administered to her for the theft of a sandwich. On 13 August 1999, she was arrested on a charge of shoplifting. She had stolen a book. P now explains this as having been prompted by her deluded belief that the books title was sending her a message. The book, as Lord Sumption has said, cost 99p. P was charged with the offence of theft and was due to appear at Oxford Magistrates Court on 20 September. She did not appear and was arrested at emergency accommodation for the homeless on 1 November. On her subsequent appearance before the court, she pleaded guilty to theft and for failing to surrender to custody in answer to the bail that had been granted on the first court appearance. She was given a conditional discharge on each of the two offences, ordered to run concurrently for a period of six months. P has committed no further offences. But when she has applied for employment (paid or unpaid) she has had to produce an enhanced criminal record certificate (ECRC). She has also felt it necessary to disclose her medical history, in order to explain her circumstances at the time that the offences occurred. She is qualified to work as a teaching assistant but has not been able to secure a position. Not unreasonably, she is convinced that this is because she has had to reveal her convictions and her medical background. P is therefore a young woman who, but for the requirement that she disclose her criminal record, could be expected to contribute significantly to society and to enjoy a happy, fulfilled life. Those opportunities are now denied her. There is no reason to suppose that the requirement that she continue to disclose her criminal record when she applies for employment in the future will not lead to the same outcome for those applications as occurred in the past. She is thus condemned to an indefinite period quite possibly a lifetime of disadvantage. And for what? Because she was convicted of the most trivial of offences, committed at a time when she was seriously ill with an undiagnosed condition. Despite Ps concerted efforts to rehabilitate and to reintegrate into society, the fact that she must reveal her previous convictions will act as a perennial inhibition on the reward that she is due for the efforts that she has made. Her case is a classic example of the phenomenon described by Lord Wilson in para 45 of his judgment in R (T) v Chief Constable of Greater Manchester Police (Liberty intervening), R (B) v Secretary of State for the Home Department (Liberty intervening) [2015] AC 49 (hereafter referred to as T) see para 167 below. Thus, this young woman, with so much to offer and who has overcome grievous difficulties, may forever be shut out from achieving her potential or from making the valuable contribution to society that her talents and education so clearly equip her for. A disclosure scheme which has that effect faces significant questions as to its efficacy and proportionality. When he was 11 years old, G engaged in what was described by the Court of Appeal as consensual [sexual activity] appearing to be a form of dares with two younger boys. Specifically, this involved sexual touching and attempted anal intercourse. This happened over a period of months; the other boys were then nine and eight years old. After an inquiry by the Crown Prosecution Service and social services, G was reprimanded by Surrey police. In 2011 G was working in a local college as a library assistant. He was told by his employment agency that he had to undertake an enhanced Criminal Records Bureau (CRB) check because his work involved some contact with children. At that time, he believed that the reprimand was spent. (His mother had been given a Surrey police leaflet at the time that G was reprimanded which suggested that the reprimand would be expunged from his record after he reached the age of 18 or within five years of the reprimands issue. This was incorrect.) G proceeded to apply for the check. In February 2012 G received a letter from the Data Bureau Supervisor for Surrey Police. The letter informed him that the reprimand for two counts of sexual assault on a male under the age of 13 was to be disclosed as part of the enhanced CRB checking process. The data supervisor offered to include additional information on the enhanced CRB certificate. This would be to the effect that G was 12 at the time that the events which led to the reprimand took place (he was, in fact, 11); that the activity was consensual; that it was in the nature of dares; and was motivated by sexual curiosity and experimentation by the children. The data supervisor followed up this letter with a further communication which acknowledged that disclosure of the reprimand was likely to cause an employer unwarranted concern. It was hoped that the background information might allay that concern. G decided to withdraw his application for a CRB check. As a result, he lost his job. He appealed under the Surrey Polices exceptional case procedure to have the reprimand deleted for the purposes of any future CRB check. That appeal was unsuccessful. G decided therefore not to apply for employment which required such a check to be undertaken. It is clear that the data supervisor was fully alive to the likely impact that disclosure of Gs reprimand would have. Obviously, he was also aware of the iniquity of that situation. G lost a useful and fulfilling job as a result of episodes of juvenile misbehaviour. That is indeed iniquitous. The respondent known as W is 52 years old. When he was 16 he was convicted of assault occasioning actual bodily harm. He was given a conditional discharge for two years and bound over to keep the peace and be of good behaviour for a period of 12 months. The incident in which the offence was committed involved a fight with another boy after school. In the 32 years that have elapsed since then, W has not been convicted of any further offence and, according to the Court of Appeal, has made a success of his life. In 2013 W began a course to obtain a certificate in English language teaching to adults. He had to get a criminal record certificate. This disclosed his conviction. It did not prevent him from undertaking the course, but it is stated to be highly likely to prejudice his prospects of employment. This contention is not disputed by the appellants. Again, the prospect of his making a useful contribution to society has been blighted. The loss to his community and the frustration of his worthy ambition, having applied himself to the task of acquiring qualifications at the age of 47, must again raise questions about the operation of the scheme which has brought about this unfortunate state of affairs. This is particularly so because, as we shall see, modifications to the scheme could readily and relatively simply avoid the consequence that has accrued in his case. Indeed, Sir James Eadie QC, for the appellants, invited this court to give its opinion on how that might be achieved see para 165 below. For reasons that I will discuss, reasonably simple and straightforward amendments to the schemes, without in any way destroying their core purpose, can, and in my view, should be effected. Lorraine Gallagher Mrs Gallagher is 54 years old. On 4 May 1996 she was driving her car the short distance from her home to a post office. Her three children were also in the car. None of them was wearing a seatbelt. The car was stopped by police and Mrs Gallagher was prosecuted for her failure to wear a seatbelt and for failing to ensure that her children were wearing theirs. She was fined a total of 85. On 17 June 1998 Mrs Gallagher had collected her children from school and was driving home. According to her, she and one of her children were wearing their seatbelts in the correct fashion. Although her two sons in the rear of the car had attached their seatbelts, (unbeknownst to Mrs Gallagher, she claims) they had placed the shoulder straps of the seatbelts under their arms and this did not constitute a proper attachment. Mrs Gallagher was again prosecuted for allowing children to be carried without properly fastened seatbelts and was fined 80. In 2010 Mrs Gallagher started a course to obtain qualification in social care. She successfully completed the course. She was then employed in various capacities as an agency worker by the Western Health and Social Care Trust and registered with the Northern Ireland Social Care Council. With the encouragement of one of her supervisors she applied for a permanent position with the Trust. She was required to complete an application form which stipulated that she disclose all convictions and cautions that she had received. Mrs Gallagher revealed that she had been convicted of carrying a child without a seatbelt in 1996 and fined 25. She did not refer to the convictions in 1998, subsequently explaining that she had believed that they had been wiped and that it was not major. An offer of a position with the trust was made to Mrs Gallagher subject to pre employment checks. An Enhanced Disclosure Certificate (EDC) issued by AccessNI (a statutory body created to facilitate such disclosures) revealed the full extent of Mrs Gallaghers criminal convictions and the offer of employment was withdrawn by the trust in a letter dated 23 October 2014. This made it clear that the offer was withdrawn because Mrs Gallagher had failed fully to disclose her previous convictions. CRCs, ECRCs and EDCs before 2013/2014 The Disclosure and Barring Service (DBS) is the agency responsible for the issue of certificates under the Police Act 1997 (the 1997 Act). Part V of that Act, together with the Rehabilitation of Offenders Act 1974 (the 1974 Act) and the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (the 1975 Order), contains the criminal records disclosure scheme. According to the appellants, the Secretary of State for the Home Department (SSHD) and the Secretary of State for Justice (SSJ) (together the SoSs), the scheme seeks to safeguard the vulnerable and help ensure that employments, offices and licences which require a particularly high level of trust continue to command public confidence. These aims are achieved, it is said, by providing potentially relevant criminal conviction information to prospective employers and appointing bodies. It is a significant feature of the scheme, the SoSs claim, that it is then for those employers and appointing bodies to consider the relevance of the material by reference to the employment, licence or office that has been applied for. Section 4(2) (3)(b) of the 1974 Act applies to such convictions as are to be treated as spent under the Act; and paragraph 3(3) (5) of Schedule 2 to the Act applies in similar fashion to cautions. In broad summary they provide that, where a question is asked of a person about his or her criminal record, they are not required to disclose convictions which are spent and he or she is not liable for failure to do so. These provisions also stipulate that a persons spent conviction or his caution or a failure to disclose it, cannot justify his exclusion or dismissal from a profession or employment or any action prejudicial to him in the course of his employment. The 1975 Order created exceptions to these provisions. Article 3 of this Order, as amended by article 4 of the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) Order 2001 and article 4 of the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2008 provides that a persons entitlement not to disclose either spent convictions or cautions in answer to questions does not apply to situations in which the questions are asked in order to assess his or her suitability in any one of 13 specified respects. These include his or her suitability for admission to certain professions and for engagement on certain types of employment; his or her assignment to work with children in particular circumstances; his or her assignment to work which involves national security; or a proposed adoption of a child; and for assignment to the provision of day care. As Lord Wilson pointed out in para 9 of his judgment in In re T (see para 147 et seq below) the shape of the 1975 Order is clear. The circumstances in which information is sought dictate whether an exception from protection under the 1974 Act arises. When it arises, the duty to disclose in response to the request and the entitlement of the person who has made the request to act in reliance on the disclosure or on a failure to do so are both absolute. They are unrelated to the circumstances in which the spent conviction or the caution arose. As Lord Sumption has pointed out (in para 8), paras 10 to 12 of Lord Wilsons judgment contain a concise and useful summary of the effect of the 1997 Act on the disclosure regime. I do not repeat them here because they are fully quoted by Lord Sumption. Until 29 May 2013, therefore, the scheme for the disclosure of criminal records established by Part V of the 1997 Act provided that, where an individual requested a Criminal Record Certificate (CRC) under section 113A or an Enhanced Criminal Record Certificate (ECRC) under section 113B, so long as the requirements of the legislation were met, such certificates would contain details of all convictions and cautions held on the police national computer against an individual, including those that would otherwise be spent under the 1974 Act. As Lord Wilson pointed out, ECRCs are the subject of separate provision because they can contain what is described as non conviction information, described as soft intelligence section 113B(4) of the 1997 Act. In Northern Ireland, before April 2014, all convictions were recorded on an EDC. Those applying for employment for posts where an EDC was required had to self declare where an employer asked for that information. In other words, if you applied for a post where an EDC was compulsory, you had to make a declaration about all your convictions. Where an employer applied for information about the convictions of a prospective employee, details of all convictions and cautions were supplied. The position in Northern Ireland is helpfully set out by Gillen LJ in his judgment in that case ([2016] NICA 42). At para 7 he provided a short summary of the scheme that applied at the time Mrs Gallagher made her application for employment, with some passing allusions to reforms brought about in 2014: On 1 April 2008, a statutory scheme for disclosure of criminal record information had entered into force in Northern Ireland. In April 2014, shortly after the respondent applied to the Trust, this statutory scheme was amended in light of changes to the same scheme in England and Wales. Under the scheme, AccessNI, a branch within the appellant Department, is responsible for carrying out checks on criminal records and police information on individuals who wish to work in certain types of jobs to enable employers to make safer recruitment decisions. The checks are carried out under Part V of the Police Act 1997 and AccessNI will then produce a Disclosure Certificate. There are three levels of check: basic, standard and enhanced. Enhanced checks, required for those working closely with unsupervised children and vulnerable adults, make disclosure of the full criminal history including spent and unspent convictions (subject to the filtering scheme created by the 2014 statutory reform). In para 10, Gillen LJ observed that the parties were agreed that the key issue in the case was whether the statutory requirement that, in the case of an EDC and its parallel requirement for self disclosure, the existence of more than one conviction required the disclosure of all convictions, irrespective of their vintage or the circumstances in which they occurred, is lawful. As Gillen LJ explained in para 11, two statutory schemes were relevant in Mrs Gallaghers case. First, the provisions of Part V of the Police Act 1997 which (as in England and Wales) provided for the disclosure on a CRC of any conviction where the person concerned had more than one criminal conviction of any kind. Secondly, the self disclosure arrangements under the Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979 (SR(NI) 1979/195) (the equivalent of the 1975 Order in England and Wales) which enabled an employer to seek information from an applicant in respect of convictions that otherwise would be regarded as spent under the Rehabilitation of Offenders (Northern Ireland) Order 1978 (SI 1978/1908) (the equivalent of the 1974 Act). R (T) in the Court of Appeal On 29 January 2013 in R (T) v Chief Constable of Greater Manchester Police [2013] EWCA Civ 25; [2013] 1 WLR 2515 the Court of Appeal held that the statutory regime under section 113B of the 1997 Act was disproportionate to the general legitimate aim of protecting the rights of employers and of the children and vulnerable adults for whom they were responsible. It was also disproportionate to the particular legitimate aim of enabling employers to assess an individuals suitability for a particular kind of work. Blanket disclosure went beyond what was necessary to achieve those aims. It did not seek to control the disclosure of information by reference to whether it was relevant to the particular aim. Relevance in this context depended, the Court of Appeal held, on a number of factors. These included the seriousness of the offence, the offenders age at the time of the offence, the sentence imposed or other manner of disposal, the time lapse since the commission of the offence, whether the offender had subsequently reoffended and the nature of the work which he wished to do. The Court of Appeal further held that a blanket requirement of disclosure was inimical to the 1974 Act and its obvious aims. If previous convictions or cautions were irrelevant or only marginally relevant to an assessment of the suitability of an applicant for a particular post, the requirement that there be disclosure of all recordable convictions or cautions went against the interests of re integrating ex offenders into society to enable them to lead positive and law abiding lives. The court considered that it should be possible for the legislature to produce a proportionate scheme which did not insist on an examination of the facts of every case. In light of the failure to devise such a scheme, the regime which was then in force could not be saved merely because it provided a bright line rule which had the merit of simplicity and ease of administration. A number of themes can be detected in the Court of Appeals judgment. These include: (1) The disproportionality of the policy of blanket disclosure in relation to what are described as its general and particular aims; (2) The importance of connecting disclosure to the aim which the policy sought to achieve; (3) The need for the policy to be tailored to the realisation of the aim hence, the requirement to take into account factors such as the seriousness of the offence, the offenders age, the vintage of the offence, whether there had been further offences and the nature of the work applied for; (4) Regard must be had to the rehabilitative aims of the 1974 Act and the possibility that a too widely drawn system of disclosure might undermine these; and (5) The impact of a bright line rule on individual cases must be carefully assessed, notwithstanding its advantages of simplicity of application. The respondents in the T case appealed to this court. Before that appeal was heard, however, the SoSs laid draft orders before Parliament to amend the 1997 Act and the 1975 Order. They were passed by both Houses by affirmative resolution, following debates on the proposed amendments and became the Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) (England and Wales) Order 2013 (the 2013 Order) and the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order 2013. Before dealing with the content of the amendments, it is necessary to say something about the circumstances in which they came to be made. The background to the reforms in 2013 A review of the circumstances in which the reforms in 2013 took place must begin at a time well before the judgment of the Court of Appeal in the T case was given. Alison Foulds, a policy official in the Sentencing Unit in the Ministry of Justice, is what is described as the Policy Lead on the Rehabilitation of Offenders Act 1974, and the leader of policy on adult custodial sentencing policy. In witness statements produced in these proceedings, she acknowledged that the starting point was the protection which the 1974 Act provides to rehabilitated offenders from having to reveal certain past convictions and cautions once a specified period of time has passed. She accepted that the overall purpose of the Act was to assist the reintegration and resettlement of ex offenders into employment by not requiring them or any other person to answer questions regarding their spent convictions. As discussed above, the 1975 Order created exceptions to the Act so that, in some circumstances, spent, as well as unspent, convictions and cautions must be disclosed and may be taken into account when assessing a persons suitability for certain positions. This is said to reflect that, while it is generally desirable to help ex offenders to obtain employment, the public must remain adequately protected. As noted above, an application under section 113A or section 113B of the 1997 Act resulted in the issue of certificates containing details of all convictions and cautions held on the police national computer, including those that would otherwise be spent under the 1974 Act. It was against this background that on 7 September 2009 SSHD appointed Sunita Mason as the Independent Adviser for Criminality Information Management. As Lord Sumption has said (in para 57) she was asked to conduct a review of the retention and disclosure of records held on the police national computer. It is important to note that this was for the express purpose of providing an impartial perspective on whether a more proportionate approach could be taken. Her appointment had been prompted by a Court of Appeal judgment in the case of the Chief Constable of Humberside Police v Information Comr [2009] EWCA Civ 1079; [2010] 1 WLR 1136. As Lord Sumption has said (also in para 57) Mrs Masons first report, A Balanced Approach was published in March 2010. It recommended that information provided from the police national computer in relation to employment checks should be filtered, using specific business rules. Specifically, however, Mrs Mason stated that the purpose of this was to ensure that employers were not given every item of criminal record information. This advice was accepted, and Mrs Mason was appointed to chair an independent advisory panel for the disclosure of criminal records. The panel was to provide support and expert advice to Mrs Mason with a view to improving the arrangements for disclosing criminal records, with particular emphasis on the filtering of old and minor records. On 22 October 2010, SSHD established the Criminal Records Review whose terms of reference were to examine whether the criminal records regime strikes the right balance between respecting civil liberties and protecting the public. It is expected to make proposals to scale back the use of systems involving criminal records to common sense levels. Mrs Mason conducted the review. Her report on its first phase was published on 11 February 2011. In it she said that she was keen to ensure that the government implemented an appropriate form of filtering in the CRB process that removes conviction information that is undeniably minor, and which cannot be classed as anything other than old. She noted that the review team was considering a mechanism to prevent old and minor convictions from being disclosed through criminal record checks and recommended that the government should introduce a filter to remove old and minor conviction information (including caution, warning and reprimand information) from criminal records checks. She identified a number of what she described as conviction types which should always be disclosed and gave a list of examples of these. They included: (a) assault and violence against the person; (b) affray, riot and violent disorder; (c) aggravated criminal damage; (d) arson; (e) drink and drug driving; (f) drug offences; (g) robbery; and (h) sexual offences. In her report Mrs Mason also observed that there were a number of important opinions and views around what constitutes serious. She gave the example of possession of a quantity of cannabis which may be considered by some as not serious but more serious by others, where individuals have regular access to controlled drugs. She also said that it could be argued that low level convictions for violence such as common assault may become more important where the individual works with children or vulnerable adults. The report on the second phase of the review was published on 6 December 2011, at the same time as the governments response to the review teams recommendations. In that response, the government indicated that it would continue to consider whether to introduce a filter for old and minor conviction information from CRB checks. On 16 December 2011 Mrs Mason made a further report to the SoSs. She said that the review team had agreed a number of principles. These were: (1) Filtering should include convictions, cautions, warnings and reprimands, aligned to the conviction type; (2) There should be a consultation process before a particular conviction type can be subject to filtering; (3) Extra consideration should be given to convictions, cautions, warnings and reprimands defined as minor received by individuals before their 18th birthday; (4) There should be a defined period of time after which minor convictions, cautions, warnings and reprimands are not disclosed. This would cover the old element of the proposal; (5) The rules should ensure that no conviction is filtered out if it is not spent under the provisions of the Rehabilitation of Offenders Act; (6) Particular care should be taken before considering any sexual, drug related or violent offence type for filtering; (7) Where any conviction, caution, warning or reprimand recorded against an individual falls outside the minor definition then all convictions should be disclosed, even if they would otherwise be considered as minor; (8) The filtering rules should be both simple and understandable to individuals who are users and/or customers of the disclosure service. So far as the implementation of those principles was concerned, however, there was no consensus among the members of the review group. The recommendation as to the criteria to be used in applying the principles was that of Mrs Mason alone. The criteria were: Is the conviction defined as minor? If not, then disclose; (1) (2) Does the individual have a single minor conviction? If not, then disclose; (3) Was the single minor conviction received before the person was 18? If yes, then the conviction will not be disclosed if it is spent and more than six months old; (4) Was the single minor conviction received after the person was 18? If yes, the conviction can be filtered out if it is spent and it is more than three years old. Mrs Mason referred again to the debate as to what could properly be described as a minor offence and said this: The Group felt that any definition of minor should be set by the Government and [be] subject to a full consultation process. However, the following small number of [conviction] types are provided as working examples of what might constitute a minor offence (subject, of course to further debate and consultation): Drunk and disorderly Offence against property; Failing to report an accident. This rider to Mrs Masons advice was added: There will always be exceptional cases where a conviction filtered out using the standard rules is, nevertheless relevant for inclusion in a disclosure because of the particular circumstances of the post being applied for. For that reason, it would be important to retain the capacity for the police to add such convictions back into disclosures as part of local police information. Various possible approaches to the matter of filtering out old and minor convictions and cautions were discussed in the report. These included linking the filtering mechanism to the seriousness of the penalty imposed for a particular offence; placing the onus on the criminal courts to decide at the point of sentencing whether or not a conviction would fall to be disclosed in a criminal records check; and leaving the decision to the police in every case, thereby harmonising the position vis a vis convictions with that under section 113B(4) of the Police Act 1997 in relation to police intelligence information. The appellants assert that, after receiving this report, careful consideration was given to the question of how best to devise a mechanism for filtering out offences which were undeniably minor, and which could not be classified as other than old. It is claimed that this question gives rise to serious practical difficulties. Some of these difficulties were discussed in a witness statement of John Woodcock, then Head of Criminal Records Policy within the Safeguarding and Public Protection Unit of the Home Office, filed in the case of T. Lord Sumption has referred to this in para 58. Mr Woodcock made the unexceptionable claim that deciding which offences were minor was not easy. He accepted that there were good arguments in favour of recognising a connection between the vintage of the offence and its seriousness in deciding what to filter out. Minor offences could be weeded out after five years and intermediate offences after ten years, but the exercise which this would involve added an unwelcome layer of complexity. Mr Woodcock considered that disposal (ie the sentence imposed) rather than the type of offence committed could be used as a more reliable indicator as to whether a particular form of offending should be filtered out. A possible model was that all cautions could be filtered out after three years, fines after five years and sentences of up to three years after seven years. Operated inflexibly, however, such a scheme would give rise to difficulty. There were risks of filtering out specific cases, details of which ought to be disclosed. Mr Woodcock instanced some sexual or violent offences where, by reason of their particular circumstances, relatively light sentences might have been imposed. One solution, he suggested, might be to exclude all offences which had a sexual or violent element. Another option was to make the decision whether to disclose entirely discretionary. The police could be asked to decide on a case by case basis whether a specific conviction, caution, reprimand or warning was sufficiently relevant to include in a disclosure. In Mr Woodcocks estimation, this carried a risk of inconsistency and he thought that there would be significant resource implications for the police. Moreover, he said, it was important that any filtering system should be reasonably straightforward and easy to understand, both for applicants and for those using disclosures as part of recruitment processes. In one of her witness statements, Ms Foulds described the scale of the operation that would be required if police were required to deal with applications to disclose on a case by case basis. In the year ending in August 2014, of the almost four million applications for record certificates received, 329,891 involved data contained on the police computer. Almost 330,000 applications would have to be considered individually, therefore, if a case by case assessment of these was undertaken. The circumstances described in paras 113 to 126 above formed a crucial part of the background to the reforms of the scheme proposed in 2013. The other vital element of that background was, of course, the decision of the Court of Appeal in R (T). As I have said, judgment in that case was given on 29 January 2013 and Ms Foulds has said that it informed the final policy. The reforms effected by the 2013 Order The essence of the proposed reforms is perhaps best captured in the statement made by the minister for the Home Department in the House of Lords. The relevant parts of that statement are these: all cautions and convictions for serious violent and sexual offences and for certain other offences specified in the orders, such as those directly relevant to the safeguarding of vulnerable groups including children, will continue to be disclosed, as will all convictions resulting in a custodial sentence. For all other offences, the orders provide for the following filtering rules to be applied: cautions. and equivalents, administered to a young offender will not be disclosed after a period of two years; adult cautions will not be disclosed after a period of six years; a conviction received as a young offender resulting in a non custodial sentence will not be disclosed after a period of five and a half years; and an adult conviction resulting in a non custodial sentence will not be disclosed after a period of 11 years; but all convictions will continue to be disclosed where an individual has more than one conviction recorded. In her discussion of the impact of the proposed reforms Ms Foulds claimed that the draft Orders took into account the issues raised in the Court of Appeal judgment in T, instancing the following aspects: the disposal made; the offence committed; the age of the offenders; and the period which had elapsed between caution or conviction and the application for a CRC. The duty facing the SoSs in devising a scheme to accommodate the decision of the Court of Appeal in T was described by Ms Foulds in the following paragraphs of her first witness statement: 37. The task for the SSHD and the SSJ was to come up with a workable scheme, which was sufficiently nuanced and also sufficiently certain. The scheme had to be readily understood and certain so that individuals would know what was protected from disclosure, and so that the DBS system could be changed, and certificates could still be issued automatically. Any system has, of course, to have bright lines and it is not workable to have any discretion in relation to individual eases, or different disclosure criteria for different occupations, not least because of the sheer number of applications. I understand that the DBS system works by automatically recognising offence codes and other information provided from the PNC. The automated solution does not provide any mechanism to identify the specific circumstances of individual offences and this would require significant manual intervention. 38. In relation to the amount of time which has to elapse before a caution or conviction may be protected from disclosure, we had regard to the Court of Appeals judgment. The Court of Appeal found in one case that it was disproportionate to disclose a caution received as an adult after a period of seven years, although it did not specify what might be a reasonable period. The filtering policy therefore allows an adult caution (for a non specified offence) to be protected from disclosure after a period of six years and after two years for a caution received as a young offender. For convictions we added six years to the then longest rehabilitation period for a non custodial disposal which was five years, giving us a period of 11 years which had to elapse from the date of conviction before it could be protected from disclosure. This means that, as with a caution, a period of six years has to elapse after the disposal is spent before it can be filtered out. The period was halved for convictions received as a young offender in line with the general policy on rehabilitation periods. The technical detail of the reforms, as enacted in the 2013 Order, is well summarised in para 11 of the judgment ([2017] EWCA Civ 321; [2018] 1 WLR 3281) of Sir Brian Leveson, the President of the Queens Bench Division, in the Court of Appeal: The revised scheme no longer requires disclosure of every spent conviction and caution but, from 29 May 2013, requires disclosure only in the following circumstances. Any current conviction or caution, currency depending upon the period which has elapsed since the date of the conviction or caution and which differs, as a consequence of the operation of the 1974 and 1997 Acts, depending on whether, at the time of the conviction or caution, the person concerned was under 18 years of age or aged 18 or over: see the definition of relevant matter in section 113A(6)(a)(iii) and (d), a current conviction in section 113A(6E)(c) and a current caution in section 113A(6E)(d) of the 1997 Act and articles 2A(l) and 2A(2) of the 1975 Order. Any spent conviction or caution in respect of certain specified offences (including a number of identified offences but, of more significance, all offences specified in Schedule 15 [to] the Criminal Justice Act 2003 which includes, for example, assault occasioning actual bodily harm): see the definition of relevant matter in section 113A(6)(a)(i) and (c) and the list of specified offences in section 113A(6D) of the 1997 Act and articles 2A(l), (2) and (3)(a) read together with article 2A(5) of the 1975 Order (the serious offence rule). Any spent conviction in respect of which a custodial sentence or sentence of service detention was imposed: see the definition of relevant matter in section 113A(6)(a)(ii) of the 1997 Act, of conviction in section 113A(6E)(a), caution in section 113A(6E)(b) and custodial sentence and sentence of service detention in section 113A(6E)(e) and articles 2A(2), 2A(3)(b) and 2A(4) of the 1975 Order. Any spent conviction where the person has more than one conviction: see the definition of relevant matter in section 113A(6)(b) of the 1997 Act and articles 2A(2) and 2A(3)(c) of the 1975 Order (the multiple conviction rule). The operation of the changes was described by McCombe LJ in paras 14 16 of his judgment in the first of the cases under appeal to the Court of Appeal, R (P and A) v Secretary of State for Justice [2016] EWHC 89 (Admin); [2016] 1 WLR 2009. These paras were quoted by Sir Brian Leveson in para 12 of his judgment: 14. The effect is that where there are two or more convictions, they are always disclosable on a CRC or an ECRC. Further, where a conviction is of a specified kind or resulted in a custodial sentence or is current (ie for an adult within the last 11 years and for a minor within the last five years and six months), then it will always be disclosable. 15. The offences listed in subsection (6D) are extensive, and include murder and offences specified under Schedule 15 to the Criminal Justice Act 2003, ie more serious offences of violence (including assault occasioning actual bodily harm) and all sexual offences, but not, for example theft or common assault. 16. The primary feature of this new scheme which catches the claimants in the present case is that where there is more than one conviction all of them are disclosable throughout the subjects lifetime. However, in the case of one of the claimants (P) one matter is not disclosable; that is, the theft which resulted in a caution alone and no conviction. That flows from the fact that that offence is neither a subsection (6D) offence and is not current. The reforms in Northern Ireland The reforms in Northern Ireland are described by Gillen LJ in paras 16 18 of his judgment: 16. The Rehabilitation of Offenders (Exceptions) (Amendment) Order (NI) 2014 changed its predecessor the 1979 Order in that it re instated protection in the case of what it named as protected caution and protected conviction. A caution is protected if it was given otherwise than for any of 14 listed categories of offence and if at least six years have passed since the date of the caution (or two years if the person was then a minor): article 4. A conviction is protected if it was imposed otherwise than for any of the listed categories; if it did not result in a custodial sentence; if the person has not been convicted of any other offence; and if at least 11 years have passed since the date of the conviction (or five and a half years if he was then a minor). 17. The Police Act 1997 (Criminal Records Certificates: Relevant Matters) (Amendment) Order (Northern Ireland) 2014 amended its predecessor narrowing the content of the Criminal Record Certificate and the Enhanced Criminal Record Certificate analogously. The obligation is to include in the certificate details of every relevant matter. Whereas the definition of relevant matter originally included all convictions including all spent convictions, the new Order amends the definition so as to render the obligation to make disclosure of spent convictions and of cautions under the 1997 Act broadly co extensive with the new narrower obligation of the person to make disclosure under the amended 1979 Order. 18. These recent amended Orders therefore represent a departure from the former regime under which disclosure of all spent and unspent convictions and all cautions was required of the question that was put or the application for a certificate made, in the specified circumstances. Even in those circumstances certain spent convictions and cautions, identified by their subject matter and in the case of a conviction also by the sentence, and also by the number and age of them, are no longer required to be disclosed. (See In re T per Lord Wilson at paras 13 15.) Significantly they would not have made any difference to her obligation to disclose her convictions. As Gillen LJ pointed out in para 19, a person such as she, having more than one conviction, would still have to disclose all her convictions to the employer. All her convictions would be set out in the ECRC by AccessNI notwithstanding that none of her offences was a specified offence; did not result in a custodial sentence; and was more than 11 years old. Further scheme changes were introduced by Schedule 4 to the Justice Act (Northern Ireland) 2015. This inserted a new Schedule 8A to the Police Act 1997 which significantly altered the position about data disclosure in Northern Ireland. An independent review mechanism has been introduced to deal with criminal record disclosures. Information which is eligible for review (in broad terms, spent convictions) will not be disclosed where the independent reviewer is satisfied, first, that disclosure would be disproportionate and, second, that non disclosure would not undermine the safeguarding or protection of children and vulnerable adults, or pose a risk of harm to the public. The factors that the independent reviewer must take into account are: (i) The nature of the position being applied for; (ii) The seriousness of the offence(s); (iii) How long ago the offence(s) occurred; (iv) How many offences are being disclosed and, if more than one, whether they arose out of a single court hearing; (v) When the information would fall to be considered for filtering; and (vi) The age of the applicant at the time of the offence(s), including, in those cases where the applicant was under the age of 18 years, the need to have the best interests of children as a primary consideration. R (T) in the Supreme Court In R (T) v Chief Constable of Greater Manchester Police (Liberty intervening), R (B) v Secretary of State for the Home Department (Liberty intervening) [2015] AC 49, (the appeal before this court from the decision of the Court of Appeal), there were, at least so far as concerns the present case, two principal issues. The first was whether disclosure of confidential information regarding an individuals criminal history, constituting, as it did, an interference with the respondents right under article 8.1 of the European Convention on Human Rights and Fundamental Freedoms (ECHR) to respect for a private life met the requirements in article 8.2 of being in accordance with the law and necessary in a democratic society. The second issue was whether, if the legislation could be said to pursue a legitimate aim and was in accordance with law, it was justified. By a majority (Lord Wilson dissenting) this court held that Part V of the 1997 Act was in breach of the requirement of legality because it contained no safeguards against arbitrary interference with the article 8 right. There was no clear legislative framework for the collection and storage of data, no clarity as to the scope, extent and restrictions of the common law powers of the police to retain and disclose caution data; no mechanism for independent review of a decision to retain or disclose data; and no means by which the proportionality of the decision to disclose could be assessed. Although it was necessary to check that persons wishing to work with children or the elderly did not present an unacceptable risk to them, the disclosures required by Part V of the 1997 Act were not based on any rational assessment of risk. They therefore failed the test of being necessary in a democratic society. The most important element of the judgments (for the purposes of the present case) is that there must be adequate safeguards built into a scheme for data disclosure which will allow for a proper evaluation of the proportionality of the interference with article 8 rights. The condemnation of the provisions for the lack of any mechanism for independent review of a decision to disclose data is also important. In fact, of course, the disclosure of data under the current arrangements is entirely automatic, conducted without any regard to the individual circumstances of particular cases within the defined categories. However compelling those circumstances might be, they can never be called into account to displace the disclosure, if the case falls on the wrong side of the so called bright line rule. And therefore, in my view, this is not in any sense merely a bright line rule; it is a rule of inevitably automatic and universal application. It admits of no possible exceptions, if the case comes within one of the categories in which disclosure is preordained. The case of the respondent G graphically illustrates this. Although the data supervisor was anxious to mitigate the effect of the release of information, knowing full well its likely impact, he was powerless to withhold it. On the second issue, this court unanimously held that laws requiring a person to disclose previous convictions or cautions to a potential employer, which affected his or her ability to pursue a chosen career, constituted an interference with their right under article 8.1 of ECHR and thus required justification under article 8.2. While the avowed reason for such disclosure requirements, namely the protection of vulnerable groups of person, was a legitimate aim within article 8.2, there was no rational connection between minor dishonesty as a child and the question whether, as an adult, that person might pose a threat to the safety of children with whom he or she came into contact. The requirement to disclose had not been shown to satisfy the test of necessity and the interference with the article 8 right was therefore not justified. The requirement of legality Article 8 of ECHR provides: 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. On what the requirement of in accordance with the law in article 8.2 demands, Lord Reed gave the principal judgment for the majority in T. He explained the conceptual approach to this requirement in paras 113 119 of his judgment. It is unnecessary to set out those paras verbatim, but I consider that a number of central precepts can be gleaned from them: (1) Any law interfering with a persons article 8 rights must ensure that there is adequate protection against arbitrary interference Malone v United Kingdom (1985) 7 EHRR 14; para 113 of Lord Reeds judgment. (2) To escape the charge of the interference being arbitrary, there must be clear, detailed rules on the circumstances in which it may take place Kopp v Switzerland (1999) 27 EHRR 91 and Amann v Switzerland (2000) 30 EHRR 843; again, para 113 of Lord Reeds judgment. (3) The decision as to whether disclosure is to be made should involve consideration of the nature of the offence; the disposal in the case; the time which has elapsed since the offence took place; and the relevance of the data to the employment sought MM v United Kingdom (Application No 24029/07, decision 29 April 2013) para 119 of Lord Reeds judgment. (4) To be in accordance with the law, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined para 114 of Lord Reeds judgment. (5) There should be a mechanism for independent review of a decision to retain or disclose data, either under common law police powers or pursuant to Part V of the 1997 Act para 206 of MM; para 119 of Lord Reeds judgment. Lord Wilson, in paras 35 39 of his judgment, set out the criticisms made by the SoSs of the judgment in MM and expressed the view that these raise a legitimate concern. His principal reservation about the correctness of the MM decision was that matters which properly fell within the requirement of necessity (in other words, whether the interference was necessary in a democratic society) were being considered as relevant to the question as to whether the interference was in accordance with law. He pointed out (in para 37) that the European Court of Human Rights (ECtHR) had relied on a decision of this court in R (F) (A Child) v Secretary of State for Justice (Lord Advocate intervening) [2011] 1 AC 331 in support of its conclusion that the absence of a mechanism for independent review constituted a failure to observe the legality requirement in article 8.2. In F (A Child), Lord Wilson observed, this courts analysis was specifically conducted in terms of necessity rather than legality. In so far as Lord Wilson might be taken to suggest that a factor relevant to the question of necessity could not also be considered on the issue of legality, I would, with respect, disagree. A factor is either relevant to one of the issues that arise under article 8.2 or it is not. Thus, for instance, the question of the need for a mechanism of independent review is either intrinsically relevant to the issue of legality or is wholly immaterial to that issue. But, if it is relevant, it does not lose that quality simply because it may also affect the judgment as to necessity. As Lord Reed put it in para 114 of his judgment, the question whether the disclosure by the state of personal data is accompanied by adequate safeguards against arbitrary interferences can overlap with the question whether the interference is necessary in a democratic society. Indeed, he accepted that the two issues were interlinked but pointed out that the focus of each was different. He accepted that [d]etermination of whether the collection and use by the state of personal data was necessary in a particular case involves an assessment of the relevancy and sufficiency of the reasons given by the national authorities. But, as he then explained, the other focus, in the context of legality, was on whether there were adequate safeguards against abuse. This is how he put it: As I have explained, the courts focus tends to be on whether there were adequate safeguards against abuse, since the existence of such safeguards should ensure that the national authorities have addressed the issue of the necessity for the interference in a manner which is capable of satisfying the requirements of the Convention. In other words, in order for the interference to be in accordance with the law, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. Whether the interference in a given case was in fact proportionate is a separate question. The questions of necessity and legality do not merely overlap, therefore, they are interlinked. In order to determine whether the interference is proportionate, safeguards have to be in place which demonstrate that the authorities have addressed the issue of necessity and to enable their content to be examined as to their adequacy in satisfying the requirement of proportionality. It is essential that the various elements of the legality analysis be clearly recognised and evaluated. I have set these out at para 148 above and have expressed the view that, for the purposes of this case, the fourth and fifth of these, viz that there must be safeguards which enable the proportionality of the interference to be adequately examined; and that there be a mechanism for independent review of a decision to release data, are the most important see para 149 above. The third element is also significant that there should be consideration of the nature of the offence; the disposal in the case; the time which has elapsed since the offence took place; and the relevance of the data to the employment sought. For reasons that I will discuss, the presence of all of these elements in every scheme for data disclosure is not a prerequisite to the scheme satisfying the requirement that it be in accordance with the law. But the fundamental requirement is that the operation of the safeguards must permit a proper assessment of the proportionality of the interference with the article 8 right. If proportionality cannot be confidently judged, the measure cannot be said to be in accordance with the law. The application of the legality elements to the present case The rules challenged in the cases of P, G and W are the multiple conviction rule and the serious offence rule. These are set out in paras 11(iv) and 11(ii) of Sir Brian Levesons judgment, quoted at para 141 above. In the case of Lorraine Gallagher, the challenge is to the requirement to self declare convictions. Although, as I have said, not every element of the conventional features of a legal interference with a Convention right need be present in order for the requirement of legality to be met, it is essential that, in the final analysis, safeguards intrinsic to the scheme will allow for a proper assessment of proportionality. It is against this critical yardstick that the legality of any scheme must be measured. The other elements in the legality equation can be regarded as a sub set of this basic concept. In my view, neither the scheme in England and Wales introduced by the 2013 reforms nor that in Northern Ireland brought about by the 2014 amendments meets this fundamental requirement. It is not possible to judge whether the operation of either scheme would be proportionate in cases which fall into the categories where disclosure is mandated. In some instances, disclosure might well be proportionate; in others it might be wildly disproportionate. There is simply no way of assessing this if the scheme in England and Wales continues in its present form. Leaving aside the question whether there needs to be individual consideration of particular cases, there is no way of calculating whether the scheme as a whole works in a proportionate way. It is unquestionably true, as the appellants submit, that the examples which these particular cases provide should not be taken as generally representative of the effect of the scheme. But it is equally true that one has no means of knowing that they are not. What the cases show is that there is at least the potential for widespread disproportionate outcomes in the disclosure of data if the present system continues. For that reason, it cannot be said that there are safeguards to the scheme which allow its proportionality to be adequately examined. It is no answer to this central flaw in the scheme to say that it is the inevitable consequence of a bright line rule. That argument might have force if it were possible for the appellants to show that, in general, the scheme operates in a proportionate way and that cases at the margins should not detract from its overall effect. In this instance, the appellants cannot make that claim. It is clear from the deliberations which preceded the introduction of the 2013 reforms (described in paras 117 137 above) that the question of how the scheme could be framed so that the safeguards which it contained would allow for an adequate examination of its proportionality was not addressed. This is perhaps not surprising. Mrs Masons task was to come up with a suggested classification of types of offence rather than to propose how the overall scheme might contain safeguards that would illuminate its proportionality. Moreover, the 2013 reforms were considered before Lord Reeds clear statement on what role safeguards had to play in the assessment of proportionality. That statement now provides authoritative and recent guidance on how the question should be approached. Although there was debate as to its significance, there was no suggestion that we should depart from it. For my part, I consider that its meaning and import are clear. What safeguards might be incorporated into the disclosure scheme which would allow its proportionality to be examined? Sir James Eadie QC, appearing for the SoSs, invited this court, in the event that it dismissed the appeal, to indicate what modifications to the scheme in England and Wales might be made. While it is, of course, not for this court to propose specific changes to legislation (and Sir James did not suggest otherwise), it seems to me that a provision which linked the relevance of the data to be disclosed to the nature of the employment sought might go some way to achieving that goal. At present the scheme makes no provision for consideration of the propriety of disclosing information according to the type of post for which the individual has applied. Two objections to this proposed modification are raised. First, it is suggested that employers are in the best position to make a judgment about the relevance of convictions to the prospective employment and that disclosure should be made so that they can make that judgment. It would be wrong, so the argument goes, to pre empt their consideration of possibly relevant material. Second, it is claimed that to impose such a requirement on DBS would unwarrantably increase its burden in having to evaluate individual cases. The argument that employers are in the best position to make a judgment about the relevance of convictions addresses the question from a single perspective that the standard position should be that disclosure be made of all material that might remotely, even unexpectedly, be relevant. Lord Sumption has said that the evidence available to support the argument that employers cannot be trusted to take an objective view of the true relevance of a conviction, is distinctly thin. Well, the evidence of the four cases involved in this appeal must go some considerable way to support the assertion. And there is certainly no evidence to sustain the notion that these cases are in any sense untypical. It would surely be impossible to quarrel with what Lord Wilson said in T at para 45: In these days of keen competition and defensive decision making will the candidate with the clean record not be placed ahead of the other, however apparently irrelevant his offence and even if otherwise evenly matched? The notion of a killer blow to the prospects of employment resulting from the disclosure of even minor and unrelated offences (cf Lord Neuberger in R (L) v Comr of Police of the Metropolis [2010] 1 AC 410, at para 75 and referred to in para 52 by Lord Sumption) can be overstated. But, in my view, it is wholly unrealistic not to recognise that many employers, faced with a choice of candidates of roughly similar potential, would automatically rule out the one with a criminal record. That consideration simply cannot be ignored by the disclosure authority. Indeed, Lord Sumption accepts as much in the final sentence of para 52. It is, thus, incumbent on those responsible for devising a scheme of disclosure to be aware that at least some employers will regard the existence of a criminal record as an automatic bar to choosing the candidate with the record. Where, therefore, it is abundantly obvious, as in many cases it will be, that the criminal record of an individual could have no conceivable relevance to the position for which he or she applies, a system in which disclosure is not made is not only feasible but essential. As to the second objection, there is no reason to suppose that a system could not be devised whereby a correlation (or, more importantly, the lack of one) between the criminal record and the position applied for could be identified. This would obviate the need for individual consideration of every case. Thus, by way of example, if the position applied for did not involve contact with vulnerable adults or children and the criminal record of the person applying consisted of two convictions for shoplifting, both committed when the applicant for employment was considerably younger, it would undoubtedly be disproportionate to disclose his or her record. Although this is a specific example, a code could surely be devised that would cater for that type of case. As it is, under the present system, more than one conviction will, automatically and unavoidably, require disclosure. Indeed, the current process does not reflect some of the recommendations made by Mrs Mason and her team. As recorded in para 124 above, in her report of 11 February 2011 she said that the government should implement an appropriate form of filtering in the CRB process that removes conviction information that is undeniably minor, and which cannot be classed as anything other than old. This does not happen, as the case of P exemplifies. It is true, of course, that Mrs Mason considered that where there was more than one, even minor, conviction, there should be disclosure. But this was because she felt that more than one conviction might be an indicator of a pattern of offending. The case of P clearly demonstrates that more than one conviction does not, of itself, indicate a pattern of criminal behaviour. Again, without requiring individual examination of every case, it should surely be possible to come up with a system which more reliably tests whether a person who has been found guilty of more than one offence should be considered to have displayed a pattern of offending. Thus, for instance, the age of the offences and/or their wholly disparate nature could act as a filter. If two offences of wholly different character were committed several years before the question of disclosure arose and if neither was remotely relevant to the position that had been applied for, could it possibly be said to be proportionate to disclose them? To exclude such offences as a matter of general filtering, rather than consideration of the individual circumstances of the case would be a sensible, workable system. The suggestion that such offences be included in the disclosure package places far too high a premium on the prospect of an adventitious outcome to the disclosure of material which has no obvious or ready connection with the post that has been applied for. Disclosing apparently irrelevant and ancient criminal convictions comes at a price. That is the undermining of the aims of the 1974 Act. In his judgment in the Court of Appeal in the T case, Lord Dyson MR in para 39 explained why this was so: The disclosure regime was introduced in order to protect children and vulnerable adults. That objective is not furthered by the indiscriminate disclosure of all convictions and cautions to a potential employer, regardless of the circumstances. A blanket requirement of disclosure is inimical to the 1974 Act and the important rehabilitative aims of that legislation. Disclosure that is irrelevant (or at best of marginal relevance) is counter to the interests of re integrating ex offenders into society so that they can lead positive and law abiding lives: see Mrs Masons Phase 2 report, at p 19 Although the reforms of 2013 (in England and Wales) and 2014 (in Northern Ireland) have reduced the categories in which automatic disclosure will be made, the blanket requirement of disclosure within the remaining categories endures. There is no reason to suppose that disclosure that is irrelevant or of marginal relevance will not continue to occur within the fewer categories that are the result of the reforms. The reduction of the number of categories does not eliminate the essential problem. For this reason, the other possible safeguard which might enhance the opportunity for a proper investigation of the proportionality of the interference with article 8 rights is a review mechanism such as that introduced in Northern Ireland in 2016. It has been suggested that this would create an impossible logistical burden for the authorities and, in this regard, reference has been made to the statistics produced by Ms Foulds (referred to at para 136 above). Those statistics were produced to indicate the scale of operation that would be required if every application for data disclosure had to be examined in detail as to its particular circumstances. The experience of the working of the Northern Irish model does not indicate that a substantial percentage of proposed disclosures will prompt applications to the reviewer. At present, therefore, there is no evidence that this is not a perfectly viable option for England and Wales. It is important to point out that I do not propose that every application should be subject to individual review. I accept the reservations expressed by Mr Woodcock (see para 135 above) that to require the authorities to examine every case for its particular circumstances could lead to inconsistency of treatment and be a considerable charge on available resources. The modifications to the present system which I propose do not involve a requirement that every application be considered individually. Lord Sumptions judgment on the question of legality In para 10, Lord Sumption says that the risk of impeding the prospects of employment of ex offenders and the risk that unsuitable persons may be allowed to occupy sensitive positions are not only competing factors, they are incommensurate. Quite so. But this does not relieve the court of its obligation to confront the question whether the interference with citizens article 8 rights which the current system entails is in accordance with the law. The examination of that issue should be no less rigorous on account of the difficulty and sensitivity of the competing factors. It is true that a great deal of thought and expert advice went into the design of the current system. But, for the reasons given above (see para 164) all of that careful preparation did not include consideration of the critical question as to how the safeguards built into the scheme would allow for a proper vouching of its proportionality. As Lord Sumption said in para 13, Sir Brian Leveson P held that the legislation was not in accordance with the law because, although it discriminated between different categories of offence and convictions, the categories were still too broad. In my view, however, the principal reason for finding that the legislation is not in accordance with the law is not because of the width of the categories but because of its inscrutability in terms of assessing the proportionality of the measures which it prescribes. In para 14 Lord Sumption states that the condition of legality relates to the characteristics of the legislation itself, and not just to its application in the present case, citing Kruslin v France (1990) 12 EHRR 547, paras 31 32. And that the declarations which are proposed will mean that, while the current legislation will remain in force as a matter of domestic law until it is amended, it is nevertheless to be regarded as incompatible with article 8, not just as applied to minor offenders like the respondents, but to the entire range of ex offenders including, for example, convicted child molesters, rapists and murderers. Inevitably, reference to serious offenders such as are included in Lord Sumptions account sparks concern. But, as he acknowledges, the legislation remains in force until Parliament, if it decides to, chooses to amend it. There is no realistic prospect of serious offending such as Lord Sumption has instanced coming within the purview of a regime forbidding the disclosure of criminal records. The declarations which have been made by the Courts of Appeal in England and Wales and Northern Ireland, and which I propose should be upheld, do not portend the extension of exemption from the scheme of disclosure to offenders such as these. Quite clearly, under a revised scheme such as is envisaged by this judgment, there is no question that offences such as Lord Sumption has described would continue to be included in the disclosure regime. The proportionality of a scheme requiring offences such as these to be disclosed would not be open to doubt. The prospect of the principle that safeguards sufficient to allow an examination of the proportionality of an interference with an article 8 right being applied to other qualified rights has been raised by Lord Sumption in para 12. I consider that this is a prospect which can be faced with sanguinity. The articles referred to by Lord Sumption, article 5 (right to liberty and security), article 9 (freedom of thought, conscience and religion), article 10 (freedom of expression), and article 11 (freedom of assembly and association), if interfered with by domestic legislation are just as amenable to the incorporation of safeguards capable of establishing their proportionality as is article 8. Lord Sumption suggests that in none of these articles would there be any scope for distinctions based on judgment or discretion or weighing of broader public interests, even on the most compelling grounds, once the relevant measure failed the majoritys exacting test of legality. This, with respect, misses the point. Provided there is a sufficient basis on which the proportionality of the measure can be judged, the debate as to its propriety remains entirely open. It is only where the reason for the interference is unexplained and indiscernible that the exacting test of legality is failed. In paras 16 22 Lord Sumption has traced what he considers to be the contours of Strasbourg jurisprudence in relation to what the expression in accordance with law means. He suggests that in Huvig v France (1990) 12 EHRR 528, para 26 and Kruslin v France (1990) 12 EHRR 547, para 27, the ECtHR has set out the classic definition of law in this context and that a dual test of accessibility and foreseeability for any measure which is required to have the quality of law was established. Accessibility and foreseeability are undoubtedly aspects of the requirement that an intrusive measure be in accordance with law. But they are not comprehensive of that concept. An intervention with a qualified right which cannot on its face be examined for its purpose and proportionality will be equally objectionable to one which cannot be readily accessible or whose application cannot readily be foreseen. At para 37 Lord Sumption expresses the view that the decision in T is treated by the respondents as authority for the proposition that a measure may lack the quality of law even where there is no relevant discretion and the relevant rules are precise and entirely clear, if the categories requiring to be disclosed are simply too broad or insufficiently filtered. This is wrong. The reason for considering that the current legislation is not in accordance with the law is not because the categories are too broad or insufficiently filtered; it is because they do not permit an adequate examination of their proportionality. The requirement that the safeguards provide an opportunity for examination of the proportionality of the interference with a Convention right adds a further dimension to the dual test of accessibility and foreseeability. Lord Sumptions analysis dismisses this essential extra dimension. At para 31 of his judgment, Lord Sumption quotes para 94 of the recent decision of ECtHR in Catt v United Kingdom (Application 43514/15). It should be noted, however, that the Strasbourg court in that case (in paras 106 and 107) made it clear that it did not consider it necessary to decide whether the interference was in accordance with law within the meaning of article 8.2. Moreover, Judge Koskelo, in a separate judgment which concurs with the majority as to outcome, expresses misgivings as to the propriety of that course. At paras 1 4 of Judge Koskelos judgment she said: I agree with the outcome of this case, namely that there 1. has been a violation of the applicants rights under article 8 of the Convention. The majority in the Chamber have reached this conclusion following an analysis as to whether the impugned interference was necessary within the meaning of article 8.2 of the Convention. I do not have any major objections to the essence of that analysis as such. The misgivings I have are in relation to the preceding analysis of whether the interference with the applicants rights under article 8 was in accordance with the law. On this point, the majority do identify a number of concerns but consider that it is not necessary in the present case to reach any firm conclusion as to whether the requirement of lawfulness has been met. Regrettably, I find the approach adopted in this respect lacking in firmness as well as in consistency with existing case law. 2. According to the courts well established case law, the phrase in accordance with the law in article 8.2 of the Convention requires not only that the impugned measure must have a basis in domestic law but that it must also be compatible with the rule of law, which is expressly mentioned in the preamble to the Convention and is inherent in the object and purpose of article 8. Thus, the requirement of lawfulness also refers to the quality of the law in question. This entails that the law should be adequately accessible and foreseeable as to its effects, that is to say formulated with sufficient precision to enable any individual if need be with appropriate advice to regulate his conduct (see, for instance, S and Marper v United Kingdom [GC], nos 30562/04 and 30566/04, para 95, ECHR 2008) 3. For domestic law to meet these requirements, it must afford adequate legal protection against arbitrariness and, accordingly, indicate with sufficient clarity the scope of discretion conferred on the competent authorities and the manner of its exercise. The level of precision required of the domestic law which cannot provide for every eventuality depends to a considerable degree on the context and content of the law in question, such as the field it is designed to cover (ibid para 96). 4. In the field of data protection, the court has considered it essential for the applicable law to provide clear, detailed rules governing the scope and application of the relevant measures as well as sufficient guarantees against the risk of abuse and arbitrariness at each stage of the processing of personal data (see MM v United Kingdom, no 24029/07, para 195, 13 November 2012, and Surikov v Ukraine, no 42788/06, para 74, 26 January 2017; both with further references). These are indeed crucial requirements It is clear that, in Judge Koskelos view, that there must be unambiguous rules which govern the application of the measures under challenge and sufficient guarantees against the risk of abuse and arbitrariness in their application. Even where there is no relevant discretion and the rules are clear, if the categories requiring to be disclosed are too broad or insufficiently filtered (cf Lord Sumptions judgment at para 37), the question remains whether there are sufficient guarantees in place. For the reasons which I have given, I do not consider that there were. On that account Catt does not represent an endorsement of the majoritys position in the present case. In paras 38 40, Lord Sumption seeks to confine the judgment of Lord Reed in T to what he describes as the classic dual test of accessibility and foreseeability. This, I am afraid, cannot be accepted. It is abundantly clear from Lord Reeds judgment in T that he went beyond this dual test by articulating a requirement that the safeguards inherent in the scheme of disclosure should be sufficiently transparent as to allow a judgment as to the proportionality of any interference with a qualified Convention right to be assessed. And I do not consider that Lord Sumptions reference to the judgment in Christian Institute v Lord Advocate [2016] UKSC 51 assists his thesis. In para 80 of that judgment, it is firmly stated that there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined. That is a requirement which is quite independent of the need for accessibility and foreseeability. Proportionality It is common case that, if the current scheme in England and Wales can be regarded as in accordance with law, it nevertheless constitutes an interference with the article 8 rights of the respondents and therefore calls for justification under article 8.2 of ECHR. The claimed justification rests primarily on the assertion that a bright line rule, drawn on the lines of the current policy, is warranted and required. The appeals in this case expose the poverty of that argument. How can it possibly be said that it is necessary to reveal to prospective employers that someone engaged in sexual experimentation at the age of 11, when he has an unblemished record in the many years since? Or that someone was convicted of assault occasioning actual bodily harm at the age of 16, who has led a blameless life since then? Likewise, in the cases of P and Mrs Gallagher. These cases should not be consigned to the category of unfortunate casualties at the margins. They represent the significant impact that the current policy choice has on a potentially substantial number of individuals. It is entirely possible to draw the boundaries for disclosable information at a level that would exclude persons such as the respondents in this case. I consider, therefore, that the disclosure of the criminal records of the four respondents is plainly disproportionate. Conclusion I would dismiss the appeals and affirm the declarations of incompatibility which both Courts of Appeal propose.

UK-Abs

The respondents to these appeals (Mrs Gallagher, P, G and W) have all been convicted or received cautions or reprimands in respect of relatively minor offending. The disclosure of their criminal records to potential employers has made, or may in future make, it more difficult for them to obtain employment. In each case, the relevant convictions and cautions were spent under the legislation designed for the rehabilitation of ex offenders, set out below. Nonetheless, criminal records had to be disclosed if they applied for employment involving contact with children or vulnerable adults. In 1996, Mrs Gallagher was convicted of one count of driving without wearing a seatbelt, for which she was fined 10, and three counts of carrying a child under fourteen years old without a seatbelt, for which she was fined 25 on each count. In 1998, she was again convicted of two counts of the latter offence and fined 40 on each count. Mrs Gallagher has no other convictions. In 2013, having qualified as a social carer, she was admitted to the Northern Ireland Social Care Council Register of Social Care Workers. In 2014, she applied for a permanent position at a day centre for adults with learning difficulties and received a conditional offer of employment. On a disclosure request, she only disclosed the 1996 convictions regarding her children, but not the 1996 conviction as to herself, nor the 1998 convictions. Her job offer was withdrawn after the Enhanced Criminal Record Certificate disclosed all her previous convictions. In 1999, P received a caution for the theft of a sandwich from a shop. In the same year, P was convicted of the theft of a book worth 99p and of failing to surrender to the bail granted to her after her arrest for that offence. She received a conditional discharge for both offences. At the time of the offences, P was 28 years old, homeless and suffering from undiagnosed schizophrenia which is now under control. She has committed no further offences. P is qualified to work as a teaching assistant but has not been able to find employment. She believes this is the result of her disclosure obligations. In 1982, W was convicted of assault occasioning actual bodily harm. He was 16 years old at the time when the assault occurred during a fight between a number of boys on their way home from school. He received a conditional discharge, and has not offended since. In 2013, aged 47, he began a course to obtain a certificate in teaching English to adults. He believes that his chances of obtaining teaching employment will be prejudiced by the need to obtain a criminal record certificate for a job as a teacher. In 2006, G, aged 13, was arrested for sexually assaulting two younger boys. The offences involved sexual touching and attempted anal intercourse. There was exceptional mitigation. The police record indicates that the sexual activity was consensual and seems to have been in the form of dares and is believed to have been a case of sexual curiosity and experimentation on the part of all three boys. The Crown Prosecution Service decided it was not in the public interest to prosecute but suggested a reprimand. G received two police reprimands in September 2006. He has not offended since. In 2011, when working as a library assistant in a local college, he was required to apply for an enhanced criminal record check because his work involved contact with children. The police proposed to disclose the reprimand, with an account of the mitigation. As a result, G withdrew the application and lost his job. He has since felt unable to apply for any job requiring an enhanced criminal record check. In all four of the appeals, the respondents challenge two related statutory disclosure schemes as being incompatible with Article 8 of the European Convention on Human Rights 1950 (ECHR), protecting the right to respect for private and family life. This raises two separate questions, namely whether any interference with Article 8 ECHR is: (1) in accordance with the law (the legality test) and (2) necessary in a democratic society (the proportionality test). The first scheme, governing disclosure by the ex offender, is that under the Rehabilitation of Offenders Act 1974 (the 1974 Act) in England and Wales and the corresponding provisions of the Rehabilitation of Offenders (Northern Ireland) Order 1978 (SI 1978/1908) in Northern Ireland, which are materially the same. By sections 4(2) (3) of the 1974 Act, where a question is put to an ex offender about previous convictions, offences, conduct or circumstances, there is no duty of disclosure. However, for any of thirteen specified purposes in the Rehabilitation of Offenders Act 1974 (Exceptions) Order (SI 1975/1023) (1975 Order) and the Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) (SR(NI) 1979/195) (1979 Order), there is a duty of disclosure. The second scheme, governing disclosure by the Disclosure and Barring Service in England and Wales or Access NI in Northern Ireland, is governed by Part V of the Police Act 1997, as amended (the 1997 Act). Sections 113A and 113B deal with Criminal Record Certificates and Enhanced Criminal Record Certificates. These provisions create a system of mandatory disclosure of all convictions and cautions on a persons record if the conditions for the issue of a certificate were satisfied. In 2014, a more selective system for disclosure was introduced under the second scheme by the Disclosure and Barring Service the Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) (England and Wales) Order (SI 2013/1200) and the Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) (Northern Ireland) Order (SI 2014/100). Broadly corresponding limitations were imposed in relation to the first scheme by the Rehabilitation Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order (SI 2013/1198) and the Rehabilitation Act 1974 (Exceptions) (Amendment) Order (Northern Ireland) Order (SI 2014/27). The Court of Appeal in England and in Northern Ireland (EWCA and NICA), affirming the decisions of the Divisional Court or High Court (except in Ws case), upheld the respondents case. First, the statutory schemes were considered incompatible with Article 8 ECHR for failing the legality test because of the breadth of the categories in the legislation. Secondly, the statutory schemes were considered disproportionate for failing to sufficiently distinguish between convictions and cautions of varying degrees of relevance. The appellants now appeal to the Supreme Court. Ps cross appeal concerns the refusal to quash article 2A(3)(c) of the 1975 Order for breach of Article 8 ECHR. The Supreme Court dismisses the appeals (except in Ws case), but varies parts of the orders below. A majority of the Court (Lord Sumption, Lord Carnwath, Lord Hughes and Lady Hale) reach that result based on a partial breach of the proportionality test. Lord Sumption (with whom Lord Carnwath and Lord Hughes agree) gives the lead judgment. Lady Hale (with whom Lord Carnwath also agrees) gives a concurring judgment. On the cross appeal, the Court varies the order of the Divisional Court by adding a declaration that article 2A(3)(c) of the 1975 Order is incompatible with Article 8 ECHR. Lord Kerr gives a separate judgment, disagreeing with the majoritys approach to the legality test and its application of the proportionality test. Lord Kerr would have dismissed the appeals (including in Ws case) and affirmed the declarations of incompatibility made by the EWCA and NICA. All members of the Supreme Court agree that Article 8 ECHR is engaged and that two conditions thus apply, namely satisfaction of: (1) the legality test and (2) the proportionality test [12], [73], [153]. They also all agree that the legality test requires, at least, accessibility and foreseeability [16], [73], [182]. Majority judgments (Lord Sumption and Lady Hale): Lord Sumption considers that the legality test, whether under Article 8 ECHR or otherwise, does not involve questions of degree [14]. For him, accessibility requires that it must be possible to discover what the provisions of a legal measure are, while foreseeability requires that a measure does not confer an unconstrained discretion [17], [31]. However, if the issue is how much discretion is too much (i.e. a question of degree), only the proportionality test can be used for review [17]. In the ECHR case law, in particular MM v United Kingdom (App. no. 24029/07), the Strasbourg Court has treated the need for safeguards as part of the foreseeability requirement and applied it as part of the legality test in cases where a discretionary power would otherwise be unconstrained and lack certainty of application [24]. There must be sufficient safeguards, exercised on known legal principles, against the arbitrary exercise of a discretion, so as to make its application reasonably foreseeable [31]. Lord Sumption disagrees with the EWCA and NICA as to the effect of the Supreme Courts decision in R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35, concerning the regime governing disclosure of criminal records in England before the changes introduced in March 2014 [15], [35 41]. He does not accept that R (T) decided that a measure may breach the legality test even where there is no relevant discretion and the relevant rules are precise and entirely clear [37]. For Lord Sumption, the rules governing the disclosure of criminal records under both the 1974 Act and the 1997 Act are highly prescriptive, mandatory and leave no discretion [42]. There is thus no real difficulty in assessing the proportionality of the two statutory schemes, so the legality test is satisfied both schemes are in accordance with the law for the purposes of Article 8 ECHR [42 45]. As to proportionality, Lord Sumption considers that two questions arise: (1) whether the legislation can legitimately require disclosure by reference to pre defined categories at all and (2), if so, whether the current boundaries of these categories are acceptable [46]. As to the first question, Lord Sumption considers that legislation by reference to pre defined categories is justified [50]. This is because: (1) the final decision about the relevance of a conviction should be that of the employer, who is best placed to assess the individual circumstances; (2) there is limited evidence that employers cannot be trusted to take an objective view; (3) the 1997 Act scheme is carefully aligned with the disclosure scheme under the 1974 Act, necessitating a category based approach; and (4) it would be impracticable to require a system of individual assessment [51 54]. On the second question, Lord Sumption considers that, with two exceptions, the carefully drawn categories in the legislation are not disproportionate [61 62]. The first exception is the multiple convictions rule, which does not achieve its purpose of indicating propensity as it applies irrespective of the nature, similarity, number or time intervals of offences [63]. The second exception concerns warnings and reprimands for younger offenders, the purpose of which is instructive and specifically designed to avoid damaging effects later in life through disclosure [64]. In Ps case, the disclosure was based on the multiple convictions rule under the 1997 Act, so the appeal against the declaration of incompatibility falls to be dismissed on that limited ground [65]. However, as to Ps cross appeal, article 2A(3)(c) of the 1975 Order is only to be declared incompatible with Article 8 ECHR (rather than quashed) [66]. As Mrs Gallaghers case also concerns the multiple convictions rule, she is also entitled to a declaration of incompatibility both as to the 1997 Act and the 1979 Order [67]. In Gs case, concerning a reprimand against a younger offender, the declaration of incompatibility as to the mandatory disclosure requirement under the 1997 Act is affirmed [68]. In Ws case, the High Courts order is restored since assault occasioning actual bodily harm may be a serious offence and it was appropriate to include it within the category of offences requiring disclosure [69]. Lady Hale agrees with Lord Sumption that, given the changes to the statutory schemes in 2014, the legality test is satisfied [72 73]. She considers that the law in question does not have to contain an individual review mechanism in every case. The requirement is only that it is possible to test, both the law itself and the decisions made under it, for proportionality [73]. The present schemes are not indiscriminate in nature and have been carefully devised to balance the competing public interests in (1) rehabilitation, (2) safeguarding and (3) practicability [75]. Given the need for a practicable and proportionate scheme, bright line rules are necessary [76 77]. She agrees with Lord Sumption that the categories used are proportionate, save as to the two exceptions above, and accordingly agrees with him on the disposal of each appeal and the cross appeal [78 79]. Lord Kerrs minority judgment: Lord Kerr would have dismissed the appeals (including in Ws case) and affirmed the declarations of incompatibility made by the EWCA and NICA. Lord Kerr disagrees with the majority on compliance with the legality test and the proportionality test. He illustrates the issues with the current statutory schemes by reference to a fuller account of the circumstances of each of the respondents [80 100]. He also reviews in detail the operation of the two statutory schemes before and after the 2014 amendments [101 146]. Lord Kerr considers that two important points follow from the Supreme Courts decision in R (T). These are: (1) that there must be adequate safeguards built into a disclosure scheme which allow for a proper evaluation of proportionality and (2) that the provisions then in force were condemned for the lack of any mechanism for independent review [149]. Lord Kerr identifies five central precepts that are relevant to the legality test [153, 158], but adds that not all of these must necessarily be satisfied [159]. He considers that the fundamental requirement is that the operation of the safeguards must permit a proper assessment of the proportionality of the interference with the Article 8 ECHR right [159]. He also clarifies that his approach to the legality test goes beyond only satisfying the two requirements of accessibility and foreseeability, contrary to Lord Sumptions approach [182 187]. Lord Kerr would have found the scheme in England and Wales to fail the legality test since the cases show that there is at least the potential for widespread disproportionate outcomes in disclosure [162]. Therefore, it cannot be said that there are safeguards adequately to examine proportionality [162]. He suggests two potential modifications: (1) a provision which linked the relevance of the data to be disclosed to the nature of the employment sought [165 173] and (2) an individual review mechanism in some cases, such as that introduced in Northern Ireland in 2016 [174 175]. Further, Lord Kerr would have found the scheme disproportionate [188 190].

On 1 January 1973, the United Kingdom became a member of the European Economic Community (the EEC) and certain other associated European organisations. On that date, EEC law took effect as part of the domestic law of the United Kingdom, in accordance with the European Communities Act 1972 which had been passed ten weeks earlier. Over the next 40 years, the EEC expanded from nine to 28 member states, extended its powers or competences, merged with the associated organisations, and changed its name to the European Community in 1993 and to the European Union in 2009. In December 2015, the UK Parliament passed the European Union Referendum Act, and the ensuing referendum on 23 June 2016 produced a majority in favour of leaving the European Union. UK government ministers (whom we will call ministers or the UK government) thereafter announced that they would bring UK membership of the European Union to an end. The question before this Court concerns the steps which are required as a matter of UK domestic law before the process of leaving the European Union can be initiated. The particular issue is whether a formal notice of withdrawal can lawfully be given by ministers without prior legislation passed in both Houses of Parliament and assented to by HM The Queen. It is worth emphasising that nobody has suggested that this is an inappropriate issue for the courts to determine. It is also worth emphasising that this case has nothing to do with issues such as the wisdom of the decision to withdraw from the European Union, the terms of withdrawal, the timetable or arrangements for withdrawal, or the details of any future relationship with the European Union. Those are all political issues which are matters for ministers and Parliament to resolve. They are not issues which are appropriate for resolution by judges, whose duty is to decide issues of law which are brought before them by individuals and entities exercising their rights of access to the courts in a democratic society. Some of the most important issues of law which judges have to decide concern questions relating to the constitutional arrangements of the United Kingdom. These proceedings raise such issues. As already indicated, this is not because they concern the United Kingdoms membership of the European Union; it is because they concern (i) the extent of ministers power to effect changes in domestic law through exercise of their prerogative powers at the international level, and (ii) the relationship between the UK government and Parliament on the one hand and the devolved legislatures and administrations of Scotland, Wales and Northern Ireland on the other. The main issue on this appeal concerns the ability of ministers to bring about changes in domestic law by exercising their powers at the international level, and it arises from two features of the United Kingdoms constitutional arrangements. The first is that ministers generally enjoy a power freely to enter into and to terminate treaties without recourse to Parliament. This prerogative power is said by the Secretary of State for Exiting the European Union to include the right to withdraw from the treaties which govern UK membership of the European Union (the EU Treaties). The second feature is that ministers are not normally entitled to exercise any power they might otherwise have if it results in a change in UK domestic law, unless statute, ie an Act of Parliament, so provides. The argument against the Secretary of State is that this principle prevents ministers withdrawing from the EU Treaties, until effectively authorised to do so by a statute. Most of the devolution issues arise from the contention that the terms on which powers have been statutorily devolved to the administrations of Scotland, Wales and Northern Ireland are such that, unless Parliament provides for such withdrawal by a statute, it would not be possible for formal notice of the United Kingdoms withdrawal from the EU Treaties to be given without first consulting or obtaining the agreement of the devolved legislatures. And, in the case of Northern Ireland, there are certain other arguments of a constitutional nature. The main issue was raised in proceedings brought by Gina Miller and Deir dos Santos (the applicants) against the Secretary of State for Exiting the European Union in the Divisional Court of England and Wales. Those proceedings came before Lord Thomas of Cwmgiedd LCJ, Sir Terence Etherton MR and Sales LJ. They ruled against the Secretary of State in a judgment given on 3 November 2016 R (Miller) v The Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin). This decision now comes to this Court pursuant to an appeal by the Secretary of State. The applicants are supported in their opposition to the appeal by a number of people, including (i) a group deriving rights of residence in the UK under EU law on the basis of their relationship with a British national or with a non British EU national exercising EU Treaty rights to be in the United Kingdom, (ii) a group deriving rights of residence from persons permitted to reside in the UK because of EU rights, including children and carers, (iii) a group mostly of UK citizens residing elsewhere in the European Union, (iv) a group who are mostly non UK EU nationals residing in the United Kingdom, and (v) the Independent Workers Union of Great Britain. The Secretary of States case is supported by Lawyers for Britain Ltd, a group of lawyers. Devolution arguments relating to Northern Ireland were raised in proceedings brought by Steven Agnew and others and by Raymond McCord against the Secretary of State for Exiting the European Union and the Secretary of State for Northern Ireland. Those arguments were rejected by Maguire J in a judgment given in the Northern Ireland High Court on 28 October 2016 Re McCord, Judicial Review [2016] NIQB 85. On application by the Attorney General for Northern Ireland, Maguire J referred four of the issues in the Agnew case to this court for determination. Following an appeal against Maguire Js decision, the Northern Ireland Court of Appeal has also referred one issue to this Court. The Attorney General for Northern Ireland supports the Secretaries of States case that no statute is required before ministers can give notice of withdrawal. In addition, there are interventions on devolution issues by the Lord Advocate on behalf of the Scottish government and the Counsel General for Wales on behalf of the Welsh government; they also rely on the Sewel Convention (as explained in paras 137 to 139 below). They support the argument that a statute is required before ministers can give notice of withdrawal, as do the advocates for Mr McCord and for Mr Agnew. We are grateful to all the advocates and solicitors involved for the clarity and skill with which the respective cases have been presented orally and in writing, and for the efficiency with which the very substantial documentation was organised. We have also been much assisted by a number of illuminating articles written by academics following the handing down of the judgment of the Divisional Court. It is a tribute to those articles that they have resulted in the arguments advanced before this Court being somewhat different from, and more refined than, those before that court. As mentioned in paras 7 and 9 above, the appellant in the English and Welsh appeal is the Secretary of State for Exiting the European Union, and the Northern Irish proceedings were brought against the Secretary of State for Exiting the European Union and the Secretary of State for Northern Ireland. For the sake of simplicity, we will hereafter refer to either or both Secretaries of State simply as the Secretary of State. The United Kingdoms Relationship with the European Union 1971 2016 The relationship between the UK and the EU 1971 1975 From about 1960, the UK government was in negotiations with the then member states of the EEC with a view to the United Kingdom joining the EEC and associated European organisations. In October 1971, when it had become apparent that those negotiations were likely to be successful, and following debates in each House, the House of Lords and the House of Commons each resolved to approve Her Majestys Governments decision of principle to join the European Communities on the basis of the arrangements which have been negotiated. In the course of the debate in the House of Commons, the Prime Minister, Mr Heath, said that he did not think that any Prime Minister has in time of peace asked the House to take a positive decision of such importance as I am asking it to take, and that he could not over emphasise tonight the importance of the vote which is being taken, the importance of the issue, the scale and quality of the decision and the impact that it will have equally inside and outside Britain. In a debate in the House of Commons in January 1972, in which the earlier resolution was effectively re affirmed, Mr Rippon, the Chancellor of the Duchy of Lancaster, said I do not think Parliament in negotiations on a treaty has ever been brought so closely into the process of treaty making as on the present occasion, adding that we all accept the unique character of the Treaty of Accession. On 22 January 1972, two days after that later debate, ministers signed a Treaty of Accession which provided that the United Kingdom would become a member of the EEC on 1 January 1973 and would accordingly be bound by the 1957 Treaty of Rome, which was then the main treaty in relation to the EEC, and by certain other connected treaties. As with most international treaties, the 1972 Accession Treaty was not binding unless and until it was formally ratified by the United Kingdom. A Bill was then laid before Parliament, and after it had been passed by both Houses, it received Royal assent on 17 October 1972, when it became the European Communities Act 1972. The following day, 18 October 1972, ministers ratified the 1972 Accession Treaty on behalf of the United Kingdom, which accordingly became a member of the EEC on 1 January 1973. The long title of the 1972 Act described its purpose as to make provision in connection with the enlargement of the European Communities to include the United Kingdom . Part I of the 1972 Act consisted of sections 1 to 3, which contained its General Provisions, and they are of central importance to these proceedings. Section 1(2) of the 1972 Act contained some important definitions. The Communities meant the EEC and associated communities (now amended to the EU meaning the European Union). And the Treaties and the Community Treaties (now amended to the EU Treaties) were the treaties described in Schedule 1 (which were the existing treaties governing the rules and powers of the EEC at that time), the 1972 Accession Treaty itself, and any other treaty entered into by any of the Communities, with or without any of the member States, or entered into, as a treaty ancillary to any of the Treaties, by the United Kingdom. The use of a capital T in the Treaties and in the EU Treaties was significant. It meant that future treaties which were concerned with changing the membership or redefining the rules of the EEC could only become Treaties and EU Treaties and have effect in UK law as such if they were added to section 1(2) by an amending statute. By contrast, ancillary treaties covered other treaties entered into by the European Union or by the United Kingdom as a treaty ancillary to the EU Treaties. By virtue of section 1(3), even such an ancillary treaty did not take effect in UK law unless and until it was declared to do so by an Order in Council which had first to be approved in draft form by resolution of each House of Parliament. Section 2 of the 1972 Act was headed General Implementation of Treaties. Section 2(1) of the 1972 Act was in these terms: All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly Section 2(2) of the 1972 Act provided that Her Majesty may by Order in Council, and any designated Minister or department may by regulations, make provision (a) for the purpose of implementing any Community [now EU] obligation of the United Kingdom (which is defined as any obligation created or arising by or under the Treaties) or enabling any rights enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised, and (b) for ancillary purposes, including the operation from time to time of subsection (1). Subsection (2) has since been amended, but nothing hangs on the amendments for present purposes. Schedule 2 to the 1972 Act contained Provisions as to Subordinate Legislation in relation to the powers conferred by section 2(2). Section 2(4) provided as follows: The provision that may be made under subsection (2) above includes . any such provision (of any such extent) as might be made by Act of Parliament, and any enactment passed or to be passed, other than one contained in this Part of this Act, shall be construed and have effect subject to the foregoing provisions of this section Section 3 of the 1972 Act provided, among other things, for any question as to the meaning and effect of the Treaties, or as to the validity, meaning or effect of any Community instrument (now EU instrument) to be treated as a question of EU law by the UK courts, and it further provided for such determination to be made in accordance with principles laid down by the European Court of Justice (the Court of Justice) or, if necessary, to be referred to the Court of Justice. Part II of the 1972 Act, which contained sections 4 to 12, and incorporated Schedules 3 and 4, set out a number of statutory repeals and amendments which were needed to enable UK domestic law to comply with the requirements of EU law, that is the law from time to time laid down in the EU Treaties, Directives and Regulations, as interpreted by the Court of Justice. Following a manifesto commitment made during a general election in 1974, the UK government decided to hold a referendum on whether the United Kingdom should remain in the EEC. To that end, it laid a Bill before Parliament which was duly enacted as the Referendum Act 1975. The referendum pursuant to that Act took place on 5 June 1975, and a majority of those who voted were in favour of remaining in the EEC. The relationship between the UK and the EU after 1975 In the past 40 years, over 20 treaties relating to the EEC, the European Community and the European Union were signed on behalf of the member states, in the case of the United Kingdom by ministers. After being signed, each such treaty was then added to the list of Treaties in section 1(2) of the 1972 Act through the medium of an amendment made to that statute by a short appropriately worded statute passed by Parliament, and the treaty was then ratified by the United Kingdom. Some of these Treaties were concerned with redefining and expanding the competences of the EEC, the European Community and the European Union and changing the constitutional role of the European Parliament within the European Community or Union. They included the Single European Act signed in 1986, Titles II, III and IV of the Maastricht Treaty on European Union of 7 February 1992 (the TEU), the 1997 Amsterdam Treaty, the 2001 Treaty of Nice, and the Treaty of Lisbon amending the TEU and the Treaty on the Functioning of the European Union (TFEU), both signed in Lisbon on 13 December 2007 see respectively section 1(2)(j), added by the European Communities (Amendment) Act 1986; section 1(2)(k), added by the European Communities (Amendment) Act 1993; section 1(2)(o), added by the European Communities (Amendment) Act 1998; section 1(2)(p), added by the European Communities (Amendment) Act 2002; and section 1(2)(s), added by the European Union (Amendment) Act 2008. The Treaty of Lisbon introduced into the EU Treaties for the first time an express provision entitling a member state to withdraw from the European Union. It did this by inserting a new article 50 into the TEU. This article (article 50) provides as follows: 1. Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements. 2. A member state which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that state, setting out the arrangements for its withdrawal 3. The Treaties shall cease to apply to the state in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the member state concerned, unanimously decides to extend this period. In these proceedings, it is common ground that notice under article 50(2) (which we shall call Notice) cannot be given in qualified or conditional terms and that, once given, it cannot be withdrawn. Especially as it is the Secretary of States case that, even if this common ground is mistaken, it would make no difference to the outcome of these proceedings, we are content to proceed on the basis that that is correct, without expressing any view of our own on either point. It follows from this that once the United Kingdom gives Notice, it will inevitably cease at a later date to be a member of the European Union and a party to the EU Treaties. After 1975, in addition to the amending statutes referred to in para 24 above, statutes were enacted to give effect to changes in the way that members of the European Parliament were selected. The first was the European Assembly Elections Act 1978, which contained in section 6 a stipulation that no new treaty providing for an increase in the powers of the European Assembly (as it then was) should be ratified unless approved by an Act of Parliament. This provision was re enacted as section 12 of the European Parliamentary Elections Act 2002. Section 1 of the 2002 Act provided for a specific number of Members of the European Parliament (MEPs) for specified regions of the United Kingdom. Section 8 of the 2002 Act stated that a person was entitled to vote in elections to the European Parliament if he or she satisfied certain residence requirements, and section 10 identified the (very limited) categories of people who were disqualified from standing as MEPs. In addition to adding the Treaty of Lisbon and the TFEU to section 1(2) of the 1972 Act, the 2008 Act, referred to at the end of para 24 above, contained certain restrictions on the UK governments agreement to changes in the rules of the European Union. Section 5 provided that any treaty which amended the TEU or the TFEU by altering the competences of the European Union, or which altered the decision making processes of the European Union or its institutions in such a way as to dilute the influence of individual member states, should not be ratified by ministers unless approved by Act of Parliament. Section 6 of the 2008 Act stated that ministers should not support any decision under certain specified articles of the TEU and of the TFEU unless both Houses of Parliament had approved a motion sanctioning that course. Subject to an immaterial exception, the European Union Act 2011 repealed and replaced sections 5 and 6 of the 2008 Act. Part I of the 2011 Act included section 1 which was Introductory, sections 2 to 10, which imposed Restrictions both relating to amendments of TEU and TFEU and relating to other decisions under TEU and TFEU, and sections 11 to 13, which related to the conduct of referendums. Sections 2 to 5 imposed restrictions on the ratification by the United Kingdom of any treaty which amended or replaced TEU or TFEU, and also on ministers approving certain specified types of EU decisions under the so called simplified revision procedure. Those restrictions were that (a) a statement relating to the treaty or decision had to be laid before Parliament, (b) the treaty or decision had to be approved by statute, and, (c) in broad terms, where the treaty or decision increased the competences of the European Union, it had to be approved in a UK wide referendum. Section 6 provided that ministers should not, without prior approval both in a statute and in a UK wide referendum, vote in favour of certain decisions, including those which resulted in a dilution in the influence of individual member states in relation to a number of different articles of the TEU and TFEU including in particular article 50(3). Sections 7 to 10 of the 2011 Act contained further restrictions on ministers voting in favour of certain measures under the TEU and TFEU without the prior approval of Parliament. Section 18 of the 2011 Act provided as follows: Directly applicable or directly effective EU law (that is, the rights, powers, liabilities, obligations, restrictions, remedies and procedures referred to in section 2(1) of the European Communities Act 1972) falls to be recognised and available in law in the United Kingdom only by virtue of that Act or where it is required to be recognised and available in law by virtue of any other Act. Following a manifesto commitment in the 2015 general election to hold a referendum on the issue of EU membership, the UK government laid before Parliament a Bill which became the 2015 Act. Section 1 provided that [a] referendum is to be held on a date no later than 31 December 2017 on whether the United Kingdom should remain a member of the European Union, and it specified the question which should appear on the ballot papers. The remaining sections were concerned with questions such as entitlement to vote, the conduct of the referendum, rules about campaigning and financial controls. The referendum duly took place throughout the United Kingdom on 23 June 2016, and it resulted in a majority in favour of leaving the European Union. Ministers have made it clear that the UK government intends to implement the result of the referendum and to give Notice by the end of March 2017. On 7 December 2016, following a debate, the House of Commons resolved [to recognise] that this House should respect the wishes of the United Kingdom as expressed in the referendum on 23 June; and further [to call] on the Government to invoke article 50 by 31 March 2017. The main issue: the 1972 Act and prerogative powers Summary of the arguments on the main issue The Secretary of States case is based on the existence of the well established prerogative powers of the Crown to enter into and to withdraw from treaties. He contends that ministers are entitled to exercise this power in relation to the EU Treaties, and therefore to give Notice without the need for any prior legislation. Following the giving of Notice by the end of March 2017, ministers intend that a Great Repeal Bill will be laid before Parliament. This will repeal the 1972 Act and, wherever practical, it will convert existing EU law into domestic law at least for a transitional period. Under article 50, withdrawal will occur not more than two years after the Notice is given (unless that period is extended by unanimous agreement among the other member states), and it is intended that the Great Repeal Bill will come into force at that point. As was made clear by Lord Browne Wilkinson in R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513, 552, ministers intentions are not law, and the courts cannot proceed on the assumption that they will necessarily become law. That is a matter for Parliament to decide in due course. The issues before us must be resolved in accordance with the law as it stands, as the Secretary of State rightly accepted. The applicants case in that connection is that when Notice is given, the United Kingdom will have embarked on an irreversible course that will lead to much of EU law ceasing to have effect in the United Kingdom, whether or not Parliament repeals the 1972 Act. As Lord Pannick QC put it for Mrs Miller, when ministers give Notice they will be pulling the trigger which causes the bullet to be fired, with the consequence that the bullet will hit the target and the Treaties will cease to apply. In particular, he said, some of the legal rights which the applicants enjoy under EU law will come to an end. This, he submitted, means that the giving of Notice would pre empt the decision of Parliament on the Great Repeal Bill. It would be tantamount to altering the law by ministerial action, or executive decision, without prior legislation, and that would not be in accordance with our law. Following opening remarks made by HM Attorney General, Mr Eadie QC in his submissions on behalf of the Secretary of State, did not challenge much if any of the factual basis of these assertions, but he did challenge the conclusions that were said to derive from them. He argued that the fact that significant legal changes will follow from withdrawing from the EU Treaties does not prevent the giving of Notice, because the prerogative power to withdraw from treaties was not excluded by the terms of the 1972 Act, and that, in any event, acts of the government in the exercise of the prerogative can alter domestic law. More particularly, he contended that the 1972 Act gave effect to EU law only insofar as the EU Treaties required it, and that that effect was therefore contingent upon the United Kingdom remaining a party to those treaties. Accordingly, he said, in the 1972 Act Parliament had effectively stipulated that, or had sanctioned the result whereby, EU law should cease to have domestic effect in the event that ministers decided to withdraw from the EU Treaties. Mr Eadie also relied on the fact that, while statutes enacted since 1972 have imposed Parliamentary controls over the exercise of prerogative powers in relation to the EU Treaties, they have not touched the prerogative power to withdraw from them. Implicitly, therefore, he contended, Parliament has recognised that the power to withdraw from such treaties exists and is exercisable without prior legislation. Mr Eadie also suggested that the 2015 Act was enacted on the assumption that the result of the referendum would be decisive. Mr Eadies reliance on the legislation since 1972 was largely for the purpose of supporting his argument on the effect of the 1972 Act, but he did raise an argument that the legislation from 1972 to 2015 should be looked at as a whole. Also, in answer to a question from the Court, he adopted a suggestion that, even if Parliamentary authority would otherwise have been required, the 2015 Act and the subsequent referendum dispensed with that requirement, but he did not develop that argument, in our view realistically. Before addressing these arguments, it is right to consider some relevant constitutional principles and in particular the Royal prerogative. The constitutional background Unlike most countries, the United Kingdom does not have a constitution in the sense of a single coherent code of fundamental law which prevails over all other sources of law. Our constitutional arrangements have developed over time in a pragmatic as much as in a principled way, through a combination of statutes, events, conventions, academic writings and judicial decisions. Reflecting its development and its contents, the UK constitution was described by the constitutional scholar, Professor AV Dicey, as the most flexible polity in existence Introduction to the Study of the Law of the Constitution (8th ed, 1915), p 87. Originally, sovereignty was concentrated in the Crown, subject to limitations which were ill defined and which changed with practical exigencies. Accordingly, the Crown largely exercised all the powers of the state (although it appears that even in the 11th century the King rarely attended meetings of his Council, albeit that its membership was at his discretion). However, over the centuries, those prerogative powers, collectively known as the Royal prerogative, were progressively reduced as Parliamentary democracy and the rule of law developed. By the end of the 20th century, the great majority of what had previously been prerogative powers, at least in relation to domestic matters, had become vested in the three principal organs of the state, the legislature (the two Houses of Parliament), the executive (ministers and the government more generally) and the judiciary (the judges). It is possible to identify a number of seminal events in this history, but a series of statutes enacted in the twenty years between 1688 and 1707 were of particular legal importance. Those statutes were the Bill of Rights 1688/9 and the Act of Settlement 1701 in England and Wales, the Claim of Right Act 1689 in Scotland, and the Acts of Union 1706 and 1707 in England and Wales and in Scotland respectively. (Northern Ireland joined the United Kingdom pursuant to the Acts of Union 1800 in Britain and Ireland). The independence of the judiciary was formally recognised in these statutes. In the broadest sense, the role of the judiciary is to uphold and further the rule of law; more particularly, judges impartially identify and apply the law in every case brought before the courts. That is why and how these proceedings are being decided. The law is made in or under statutes, but there are areas where the law has long been laid down and developed by judges themselves: that is the common law. However, it is not open to judges to apply or develop the common law in a way which is inconsistent with the law as laid down in or under statutes, ie by Acts of Parliament. This is because Parliamentary sovereignty is a fundamental principle of the UK constitution, as was conclusively established in the statutes referred to in para 41 above. It was famously summarised by Professor Dicey as meaning that Parliament has the right to make or unmake any law whatsoever; and further, no person or body is recognised by the law as having a right to override or set aside the legislation of Parliament op cit, p 38. The legislative power of the Crown is today exercisable only through Parliament. This power is initiated by the laying of a Bill containing a proposed law before Parliament, and the Bill can only become a statute if it is passed (often with amendments) by Parliament (which normally but not always means both Houses of Parliament) and is then formally assented to by HM The Queen. Thus, Parliament, or more precisely the Crown in Parliament, lays down the law through statutes or primary legislation as it is also known and not in any other way. In the early 17th century Case of Proclamations (1610) 12 Co Rep 74, Sir Edward Coke CJ said that the King by his proclamation or other ways cannot change any part of the common law, or statute law, or the customs of the realm. Although this statement may have been controversial at the time, it had become firmly established by the end of that century. In England and Wales, the Bill of Rights 1688 confirmed that the pretended power of suspending of laws or the execution of laws by regall authority without consent of Parlyament is illegall and that the pretended power of dispensing with laws or the execution of laws by regall authoritie as it hath beene assumed and exercised of late is illegall. In Scotland, the Claim of Right 1689 was to the same effect, providing that all Proclamationes asserting ane absolute power to Cass [ie to quash] annull and Dissable lawes are Contrair to Law. And article 18 of the Acts of Union of 1706 and 1707 provided that (with certain irrelevant exceptions) all laws in Scotland should remain in the same force as before but alterable by the Parliament of Great Britain. The Crowns administrative powers are now exercised by the executive, ie by ministers who are answerable to the UK Parliament. However, consistently with the principles established in the 17th century, the exercise of those powers must be compatible with legislation and the common law. Otherwise, ministers would be changing (or infringing) the law, which, as just explained, they cannot do. A classic statement of the position was given by Lord Parker of Waddington in The Zamora [1916] 2 AC 77, 90: The idea that the King in Council, or indeed any branch of the Executive, has power to prescribe or alter the law to be administered by Courts of law in this country is out of harmony with the principles of our Constitution. It is true that, under a number of modern statutes, various branches of the Executive have power to make rules having the force of statutes, but all such rules derive their validity from the statute which creates the power, and not from the executive body by which they are made. No one would contend that the prerogative involves any power to prescribe or alter the law administered in Courts of Common Law or Equity. It is true that ministers can make laws by issuing regulations and the like, often known as secondary or delegated legislation, but (save in limited areas where a prerogative power survives domestically, as exemplified by the cases mentioned in paras 52 and 53 below) they can do so only if authorised by statute. So, if the regulations are not so authorised, they will be invalid, even if they have been approved by resolutions of both Houses under the provisions of the relevant enabling Act for a recent example see R (The Public Law Project) v Lord Chancellor [2016] AC 1531. The Royal prerogative and Treaties The Royal prerogative encompasses the residue of powers which remain vested in the Crown, and they are exercisable by ministers, provided that the exercise is consistent with Parliamentary legislation. In Burmah Oil Co (Burma Trading) Ltd v Lord Advocate [1965] AC 75, 101, Lord Reid explained that the Royal prerogative is a source of power which is only available for a case not covered by statute. Professor HWR Wade summarised the position in his introduction to the first edition of what is now Wade on Administrative Law (1961), p 13: [T]he residual prerogative is now confined to such matters as summoning and dissolving Parliament, declaring war and peace, regulating the armed forces in some respects, governing certain colonial territories, making treaties (though as such they cannot affect the rights of subjects), and conferring honours. The one drastic internal power of an administrative kind is the power to intern enemy aliens in time of war. Thus, consistently with Parliamentary sovereignty, a prerogative power however well established may be curtailed or abrogated by statute. Indeed, as Professor Wade explained, most of the powers which made up the Royal prerogative have been curtailed or abrogated in this way. The statutory curtailment or abrogation may be by express words or, as has been more common, by necessary implication. It is inherent in its residual nature that a prerogative power will be displaced in a field which becomes occupied by a corresponding power conferred or regulated by statute. This is what happened in the two leading 20th century cases on the topic, Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508 and Fire Brigades Union cited above. As Lord Parmoor explained in De Keyser at p 575, when discussing the prerogative power to take a subjects property in time of war: The constitutional principle is that when the power of the Executive to interfere with the property or liberty of subjects has been placed under Parliamentary control, and directly regulated by statute, the Executive no longer derives its authority from the Royal Prerogative of the Crown but from Parliament, and that in exercising such authority the Executive is bound to observe the restrictions which Parliament has imposed in favour of the subject. In Burmah Oil cited above, at p 101, Lord Reid described prerogative powers as a relic of a past age, but that description should not be understood as implying that the Royal prerogative is either anomalous or anachronistic. There are important areas of governmental activity which, today as in the past, are essential to the effective operation of the state and which are not covered, or at least not completely covered, by statute. Some of them, such as the conduct of diplomacy and war, are by their very nature at least normally best reserved to ministers just as much in modern times as in the past, as indeed Lord Reid himself recognised in Burmah Oil at p 100. Consistently with paras 44 to 46, and the passage quoted from Professor Wade in para 47 above, it is a fundamental principle of the UK constitution that, unless primary legislation permits it, the Royal prerogative does not enable ministers to change statute law or common law. As Lord Hoffmann observed in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, para 44, since the 17th century the prerogative has not empowered the Crown to change English common or statute law. This is, of course, just as true in relation to Scottish, Welsh or Northern Irish law. Exercise of ministers prerogative powers must therefore be consistent both with the common law as laid down by the courts and with statutes as enacted by Parliament. Further, ministers cannot frustrate the purpose of a statute or a statutory provision, for example by emptying it of content or preventing its effectual operation. Thus, ministers could not exercise prerogative powers at the international level to revoke the designation of Laker Airways under an aviation treaty as that would have rendered a licence granted under a statute useless: Laker Airways Ltd v Department of Trade [1977] QB 643 see especially at pp 718 719 and 728 per Roskill LJ and Lawton LJ respectively. And in Fire Brigades Union cited above, at pp 551 552, Lord Browne Wilkinson concluded that ministers could not exercise the prerogative power to set up a scheme of compensation for criminal injuries in such a way as to make a statutory scheme redundant, even though the statute in question was not yet in force. And, as already mentioned in para 35 above, he also stated that it was inappropriate for ministers to base their actions (or to invite the court to make any decision) on the basis of an anticipated repeal of a statutory provision as that would involve ministers (or the court) pre empting Parliaments decision whether to enact that repeal. The fact that the exercise of prerogative powers cannot change the domestic law does not mean that such an exercise is always devoid of domestic legal consequences. There are two categories of case where exercise of the prerogative can have such consequences. The first is where it is inherent in the prerogative power that its exercise will affect the legal rights or duties of others. Thus, the Crown has a prerogative power to decide on the terms of service of its servants, and it is inherent in that power that the Crown can alter those terms so as to remove rights, albeit that such a power is susceptible to judicial review: Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374. The Crown also has a prerogative power to destroy property in wartime in the interests of national defence (although at common law compensation was payable: Burmah Oil cited above). While the exercise of the prerogative power in such cases may affect individual rights, the important point is that it does not change the law, because the law has always authorised the exercise of the power. The second category comprises cases where the effect of an exercise of prerogative powers is to change the facts to which the law applies. Thus, the exercise of the prerogative to declare war will have significant legal consequences: actions which were previously lawful may become treasonable (as in Joyce v Director of Public Prosecutions [1946] AC 347), and some people will become enemy aliens, whose property is liable to confiscation. Likewise, in Post Office v Estuary Radio Ltd [1968] 2 QB 740 the Crowns exercise of its prerogative to extend UK territorial waters resulted in the criminalisation of broadcasts from ships in the extended area, which had previously been lawful. These are examples where the exercise of the prerogative power alters the status of a person, thing or activity so that an existing rule of law comes to apply to it. However, in such cases the exercise has not created or changed the law, merely the extent of its application. The most significant area in which ministers exercise the Royal prerogative is the conduct of the United Kingdoms foreign affairs. This includes diplomatic relations, the deployment of armed forces abroad, and, particularly in point for present purposes, the making of treaties. There is little case law on the power to terminate or withdraw from treaties, but, as a matter of both logic and practical necessity, it must be part of the treaty making prerogative. As Lord Templeman put it in JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 476, [t]he Government may negotiate, conclude, construe, observe, breach, repudiate or terminate a treaty. Subject to any restrictions imposed by primary legislation, the general rule is that the power to make or unmake treaties is exercisable without legislative authority and that the exercise of that power is not reviewable by the courts see Civil Service Unions case cited above, at pp 397 398. Lord Coleridge CJ said that the Queen acts throughout the making of the treaty and in relation to each and every of its stipulations in her sovereign character, and by her own inherent authority Rustomjee v The Queen (1876) 2 QBD 69, 74. This principle rests on the so called dualist theory, which is based on the proposition that international law and domestic law operate in independent spheres. The prerogative power to make treaties depends on two related propositions. The first is that treaties between sovereign states have effect in international law and are not governed by the domestic law of any state. As Lord Kingsdown expressed it in Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22, 75, treaties are governed by other laws than those which municipal courts administer. The second proposition is that, although they are binding on the United Kingdom in international law, treaties are not part of UK law and give rise to no legal rights or obligations in domestic law. It is only on the basis of these two propositions that the exercise of the prerogative power to make and unmake treaties is consistent with the rule that ministers cannot alter UK domestic law. Thus, in Higgs v Minister of National Security [2000] 2 AC 228, 241, Lord Hoffmann pointed out that the fact that treaties are not part of domestic law was the corollary of the Crowns treaty making power. In JH Rayner cited above, at p 500, Lord Oliver of Aylmerton put it thus: As a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Treaties, as it is sometimes expressed, are not self executing. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. So far as individuals are concerned, it is res inter alios acta [ie something done between others], from which they cannot derive rights and by which they cannot be deprived of rights or subjected to obligations; and it is outside the purview of the court not only because it is made in the conduct of foreign relations, which are a prerogative of the Crown, but also because, as a source of rights and obligations, it is irrelevant. It can thus fairly be said that the dualist system is a necessary corollary of Parliamentary sovereignty, or, to put the point another way, it exists to protect Parliament not ministers. Professor Campbell McLachlan in Foreign Relations Law (2014), para 5.20, neatly summarises the position in the following way: If treaties have no effect within domestic law, Parliaments legislative supremacy within its own polity is secure. If the executive must always seek the sanction of Parliament in the event that a proposed action on the international plane will require domestic implementation, parliamentary sovereignty is reinforced at the very point at which the legislative power is engaged. While ministers have in principle an unfettered power to make treaties which do not change domestic law, it had become fairly standard practice by the late 19th century for treaties to be laid before both Houses of Parliament at least 21 days before they were ratified, to enable Parliamentary objections to be heard. In 1924, following an indication by the previous government that it did not regard itself as bound by the practice, Arthur Ponsonby, the Parliamentary Under Secretary of State for Foreign Affairs, assured the House of Commons that ministers would in future adhere to this practice, which became known as the Ponsonby Convention. The convention was superseded and formalised by section 20 of the Constitutional Reform and Governance Act 2010. However, by virtue of section 23(1) of that Act, this section does not apply to new EU Treaties, because they are governed by the more specific statutory controls discussed in paras 28 and 29 above. With that background, we turn to analyse the effect of the 1972 Act and the arguments as to whether, in the absence of prior authority from Parliament in the form of a statute, the giving of Notice by ministers would be ineffective under the United Kingdoms constitutional requirements, as it would otherwise impermissibly result in a change in domestic law. The status and character of the 1972 Act Many statutes give effect to treaties by prescribing the content of domestic law in the areas covered by them. The 1972 Act does this, but it does considerably more as well. It authorises a dynamic process by which, without further primary legislation (and, in some cases, even without any domestic legislation), EU law not only becomes a source of UK law, but actually takes precedence over all domestic sources of UK law, including statutes. This may sound rather dry or technical to many people, but in constitutional terms the effect of the 1972 Act was unprecedented. Indeed, it is fair to say that the legal consequences of the United Kingdoms accession to the EEC were not fully appreciated by many lawyers until the Factortame litigation in the 1990s see the House of Lords decisions in R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603 and (No 5) [2000] 1 AC 524. Of course, consistently with the principle of Parliamentary sovereignty, this unprecedented state of affairs will only last so long as Parliament wishes: the 1972 Act can be repealed like any other statute. For that reason, we would not accept that the so called fundamental rule of recognition (ie the fundamental rule by reference to which all other rules are validated) underlying UK laws has been varied by the 1972 Act or would be varied by its repeal. In one sense, of course, it can be said that the 1972 Act is the source of EU law, in that, without that Act, EU law would have no domestic status. But in a more fundamental sense and, we consider, a more realistic sense, where EU law applies in the United Kingdom, it is the EU institutions which are the relevant source of that law. The legislative institutions of the EU can create or abrogate rules of law which will then apply domestically, without the specific sanction of any UK institution. It is true that the UK government and UK elected members of the European Parliament participate in the EU legislative processes and can influence their outcome, but that does not diminish the point. Further, in the many areas of EU competence which are subject to majority decision, the approval of the United Kingdom is not required for its legislation to take effect domestically. It is also true that EU law enjoys its automatic and overriding effect only by virtue of the 1972 Act, and thus only while it remains in force. That point simply reflects the fact that Parliament was and remains sovereign: so, no new source of law could come into existence without Parliamentary sanction and without being susceptible to being abrogated by Parliament. However, that in no way undermines our view that it is unrealistic to deny that, so long as that Act remains in force, the EU Treaties, EU legislation and the interpretations placed on these instruments by the Court of Justice are direct sources of UK law. The 1972 Act did two things which are relevant to these appeals. First, it provided that rights, duties and rules derived from EU law should apply in the United Kingdom as part of its domestic law. Secondly, it provided for a new constitutional process for making law in the United Kingdom. These things are closely related, but they are legally and conceptually distinct. The content of the rights, duties and rules introduced into our domestic law as a result of the 1972 Act is exclusively a question of EU law. However, the constitutional processes by which the law of the United Kingdom is made is exclusively a question of domestic law. Under the terms of the 1972 Act, EU law may take effect as part of the law of the United Kingdom in one of three ways. First, the EU Treaties themselves are directly applicable by virtue of section 2(1). Some of the provisions of those Treaties create rights (and duties) which are directly applicable in the sense that they are enforceable in UK courts. Secondly, where the effect of the EU Treaties is that EU legislation is directly applicable in domestic law, section 2(1) provides that it is to have direct effect in the United Kingdom without the need for further domestic legislation. This applies to EU Regulations (which are directly applicable by virtue of article 288 of the TFEU). Thirdly, section 2(2) authorises the implementation of EU law by delegated legislation. This applies mainly to EU Directives, which are not, in general, directly applicable but are required (again by article 288) to be transposed into national law. While this is an international law obligation, failure of the United Kingdom to comply with it is justiciable in domestic courts, and some Directives may be enforced by individuals directly against national governments in domestic courts. Further, any serious breach by the UK Parliament, government or judiciary of any rule of EU law intended to confer individual rights will entitle any individual sustaining damage as a direct result to compensation from the UK government: Brasserie du Pcheur SA v Germany; R v Secretary of State for Transport (Ex p Factortame Ltd) (No 4) (Joined Cases C 46/93 and C 48/93) [1996] QB 404 (provided that, where the breach consists in a court decision, the breach is not only serious but also manifest: Kbler v Austria (Case C 224/01) [2004] QB 848). Thus, EU law in EU Treaties and EU legislation will pass into UK law through the medium of section 2(1) or the implementation provisions of section 2(2) of the 1972 Act, so long as the United Kingdom is party to the EU Treaties. Similarly, so long as the United Kingdom is party to the EU Treaties, UK courts are obliged (i) to interpret EU Treaties, Regulations and Directives in accordance with decisions of the Court of Justice, (ii) to refer unclear points of EU law to the Court of Justice, and (iii) to interpret all domestic legislation, if at all possible, so as to comply with EU law (see Marleasing v La Comercial Internacional de Alimentacion SA (Case C 106/89) [1990] ECR I 4135). And, so long as the United Kingdom is party to the EU Treaties, UK citizens are able to recover damages from the UK government in cases where a decision of one of the organs of the state based on a serious error of EU law has caused them loss. In our view, then, although the 1972 Act gives effect to EU law, it is not itself the originating source of that law. It is, as was said on behalf of the Secretary of State echoing the illuminating analysis of Professor Finnis, the conduit pipe by which EU law is introduced into UK domestic law. So long as the 1972 Act remains in force, its effect is to constitute EU law an independent and overriding source of domestic law. Section 18 of the 2011 Act, set out in para 30 above, was enacted in order to make it clear that the primacy of EU law over domestic legislation did not prevent it being repealed by domestic legislation. But that simply confirmed the position as it had been since the beginning of 1973. The primacy of EU law means that, unlike other rules of domestic law, EU law cannot be implicitly displaced by the mere enactment of legislation which is inconsistent with it. That is clear from the second part of section 2(4) of the 1972 Act and Factortame Ltd (No 2) [1991] 1 AC 603. The issue was informatively discussed by Laws LJ in Thoburn v Sunderland City Council [2003] QB 151, paras 37 47. The 1972 Act accordingly has a constitutional character, as discussed by Laws LJ in Thoburn cited above, paras 58 59, and by Lord Reed and Lords Neuberger and Mance in in R (Buckinghamshire County Council) v Secretary of State for Transport [2014] 1 WLR 324, paras 78 to 79 and 206 to 207 respectively. Following the coming into force of the 1972 Act, the normal rule is that any domestic legislation must be consistent with EU law. In such cases, EU law has primacy as a matter of domestic law, and legislation which is inconsistent with EU law from time to time is to that extent ineffective in law. However, legislation which alters the domestic constitutional status of EU institutions or of EU law is not constrained by the need to be consistent with EU law. In the case of such legislation, there is no question of EU law having primacy, so that such legislation will have domestic effect even if it infringes EU law (and that would be true whether or not the 1972 Act remained in force). That is because of the principle of Parliamentary sovereignty which is, as explained above, fundamental to the United Kingdoms constitutional arrangements, and EU law can only enjoy a status in domestic law which that principle allows. It will therefore have that status only for as long as the 1972 Act continues to apply, and that, of course, can only be a matter for Parliament. We should add that, for these reasons, we do not accept the suggestion that, as a source of law, EU law can properly be compared with, delegated legislation. The 1972 Act effectively operates as a partial transfer of law making powers, or an assignment of legislative competences, by Parliament to the EU law making institutions (so long as Parliament wills it), rather than a statutory delegation of the power to make ancillary regulations even under a so called Henry the Eighth clause, as explained in the Public Law Project case, cited above, paras 25 and 26. The 1972 Act cannot be said to constitute EU legislative institutions the delegates of Parliament: they make laws independently of Parliament, and indeed they were doing so before the 1972 Act was passed. If EU law had the same status in domestic law as delegated legislation, the Factortame litigation referred to above would have had a different outcome. A statutory provision which provides that legislative documents and decisions made by EU institutions should be an independent and pre eminent source of UK law is thus quite different from a statutory provision which delegates to ministers and other organs of the executive the right to make regulations and the like. The exceptional nature of the effect of the 1972 Act is well illustrated by the passages quoted by Lord Reed in para 182 below from the decisions of the Court of Justice in Van Gend en Loos (Case C 26/62) [1963] ECR 1, 12 and Costa v ENEL (Case C 6/64) [1964] ECR 585, 593. They demonstrate that rules which would, as Lord Reed says, normally be incompatible with UK constitutional principles, became part of our constitutional arrangements as a result of the 1972 Act and the 1972 Accession Treaty for as long as the 1972 Act remains in force. The Divisional Courts analysis of the effect of the 1972 Act Although article 50 operates on the plane of international law, it is common ground that, because the EU Treaties apply as part of UK law, our domestic law will change as a result of the United Kingdom ceasing to be party to them, and rights enjoyed by UK residents granted through EU law will be affected. The Divisional Court concluded that, because ministers cannot claim prerogative powers to take an action which would result in a change in domestic law, it was not open to ministers to withdraw from the EU Treaties, and therefore to serve Notice, without authorisation in a statute. In that connection, the Divisional Court identified three categories of right: (1) Rights capable of replication in UK law; (2) Rights derived by UK citizens from EU law in other member states; (3) Rights of participation in EU institutions that could not be replicated in UK law. Many current EU rights fall within the first category. They include, for instance, the rights of UK citizens to the benefit of employment protection such as the Working Time Directive, to equal treatment and to the protection of EU competition law, and the right of non residents to the benefit of the four freedoms (free movement of people, goods and capital, and freedom to provide services). Some of these rights have already been embodied in UK law by domestic legislation pursuant to section 2(2) of the 1972 Act, and they will not cease to have effect upon the United Kingdoms withdrawal from the European Union (unless the domestic legislation giving effect to them is repealed in accordance with the law), although the Court of Justice will no longer have any binding role in relation to their scope or interpretation. Other rights, arising under EU Regulations or directly under the EU Treaties, will cease to have effect upon withdrawal (save in relation to rights and liabilities already accrued), but many could be replicated in a new statute eg the proposed Great Repeal Bill. But, as the Divisional Court pointed out, the need for such replication would only arise because withdrawal from the EU Treaties would have abrogated domestic rights created by the 1972 Act of effect, and again the Court of Justice would no longer have any binding role in relation to them. The second category may appear to be irrelevant for present purposes as the rights within it arise from the incorporation of EU law into the law of other member states, and not from UK legislation. However, some rights falling within one category may be closely linked with rights falling within another category. For example, the rights under Council Regulation (EC) No 2201/2003, concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility (known as Brussels II Revised), would be undermined if a domestic judgment governing the residence of a child could not be enforced outside the UK. The rights in the third category will cease when the United Kingdom is no longer a member of the European Union, as they are by their very nature dependent on continued membership. They include the right to stand for selection or later election to the European Parliament, and the right to vote in European elections, as well as the right to invite the Commission to take regulatory action. However, they have the character of what Mr Eadie described as club membership rights, and are of a different nature from the other more freestanding rights in the first and second categories. Given that it is clear that some rights in the first category will be lost on the United Kingdom withdrawing from the EU Treaties, it is unnecessary to consider whether, for the purpose of their present arguments, the applicants can rely on the loss of rights in the second and third categories. If they cannot succeed in their argument based on loss of rights in the first category, then invoking loss of rights in the other categories would not help them; and if they can succeed on the basis of loss of rights in the first category, they would not need to invoke loss of rights in the other categories. Does the 1972 Act preclude the use of prerogative power to withdraw? While accepting that some rights will be lost on withdrawal from the EU Treaties, the Secretary of States case is that the loss of these rights in such circumstances is provided for, and has therefore effectively been sanctioned, by Parliament in the 1972 Act itself. In this connection, Mr Eadie pointed out that the 1972 Act does not simply incorporate the EU Treaties into UK law in the same way as, say, the Carriage of Goods by Sea Act 1971 incorporates the Hague Rules. By contrast, he said, section 2 of the 1972 Act is ambulatory: in other words, it gives effect to whatever may from time to time be the international obligations of the United Kingdom under or pursuant to the EU Treaties. He pointed out that changes in EU law are brought into domestic law through the medium of section 2 of the 1972 Act and that, once the United Kingdom ceases to be bound by the EU Treaties, there will be no rights and remedies etc to which section 2(1) can apply, and no EU obligations which require delegated legislation under section 2(2), and that the possibility of withdrawal from EU Treaties is therefore effectively provided for in the wording of section 2. It is his case that, by providing that EU law rights, remedies etc from time to time provided for by or under the Treaties were to be given effect or used in the United Kingdom, section 2(1) accommodated the possibility of ministers withdrawing from the Treaties without Parliamentary authority. He also contended that it was self evident that Parliament cannot have intended that the variable content of EU law should continue to be part of domestic law after the UK withdraws from the EU Treaties. We accept the proposition that the ambit of the rights and remedies etc which are incorporated into domestic law through section 2 of the 1972 Act varies with the United Kingdoms obligations from time to time under the EU Treaties. This proposition is reflected in the language of subsections (1) and (2) of section 2, which are quoted in paras 18 and 19 above. However, this proposition is also limited in nature. Thus, the provisions of new EU Treaties are not automatically brought into domestic law through section 2: only once they have been statutorily added to the Treaties and the EU Treaties in section 1(2) can section 2 give effect to new EU Treaties. And section 2 can only apply to those rights and remedies which are capable of being given legal effect or used or enjoyed in the United Kingdom. We also accept that Parliament cannot have intended that section 2 should continue to import the variable content of EU law into domestic law, or that the other consequences of the 1972 Act described in paras 62 to 64 above should continue to apply, after the United Kingdom had ceased to be bound by the EU Treaties. However, while acknowledging the force of Lord Reeds powerful judgment, we do not accept that it follows from this that the 1972 Act either contemplates or accommodates the abrogation of EU law upon the United Kingdoms withdrawal from the EU Treaties by prerogative act without prior Parliamentary authorisation. On the contrary: we consider that, by the 1972 Act, Parliament endorsed and gave effect to the United Kingdoms membership of what is now the European Union under the EU Treaties in a way which is inconsistent with the future exercise by ministers of any prerogative power to withdraw from such Treaties. In short, the fact that EU law will no longer be part of UK domestic law if the United Kingdom withdraws from the EU Treaties does not mean that Parliament contemplated or intended that ministers could cause the United Kingdom to withdraw from the EU Treaties without prior Parliamentary approval. There is a vital difference between changes in domestic law resulting from variations in the content of EU law arising from new EU legislation, and changes in domestic law resulting from withdrawal by the United Kingdom from the European Union. The former involves changes in EU law, which are then brought into domestic law through section 2 of the 1972 Act. The latter involves a unilateral action by the relevant constitutional bodies which effects a fundamental change in the constitutional arrangements of the United Kingdom. So far as the interpretation of subsections (1) and (2) of section 2 of the 1972 Act are concerned, any right available under EU law to the United Kingdom to withdraw from the EU Treaties does not, as Mr Eadie rightly accepted, fall within the subsection, as it is not one which would be given legal effect or used in, or which would be enjoyed by the United Kingdom. Further, the fact that section 2(1) envisages EU law rights and procedures applying as in accordance with the Treaties from time to time and without further enactment takes matters no further. Subsection 2(1) and (2) are concerned to ensure that the variable content of EU law as it stands from time to time, is given effect in domestic law, and there was no practical alternative to such an arrangement in a dualist system. However, it does not follow from this that prerogative powers may be used to withdraw from the Treaties and so cut off the source of EU law entirely. One of the most fundamental functions of the constitution of any state is to identify the sources of its law. And, as explained in paras 61 to 66 above, the 1972 Act effectively constitutes EU law as an entirely new, independent and overriding source of domestic law, and the Court of Justice as a source of binding judicial decisions about its meaning. This proposition is indeed inherent in the Secretary of States metaphor of the 1972 Act as a conduit pipe by which EU law is brought into the domestic UK law. Upon the United Kingdoms withdrawal from the European Union, EU law will cease to be a source of domestic law for the future (even if the Great Repeal Bill provides that some legal rules derived from it should remain in force or continue to apply to accrued rights and liabilities), decisions of the Court of Justice will (again depending on the precise terms of the Great Repeal Bill) be of no more than persuasive authority, and there will be no further references to that court from UK courts. Even those legal rules derived from EU law and transposed into UK law by domestic legislation will have a different status. They will no longer be paramount, but will be open to domestic repeal or amendment in ways that may be inconsistent with EU law. Accordingly, the main difficulty with the Secretary of States argument is that it does not answer the objection based on the constitutional implications of withdrawal from the EU. As we have said, withdrawal is fundamentally different from variations in the content of EU law arising from further EU Treaties or legislation. A complete withdrawal represents a change which is different not just in degree but in kind from the abrogation of particular rights, duties or rules derived from EU law. It will constitute as significant a constitutional change as that which occurred when EU law was first incorporated in domestic law by the 1972 Act. And, if Notice is given, this change will occur irrespective of whether Parliament repeals the 1972 Act. It would be inconsistent with long standing and fundamental principle for such a far reaching change to the UK constitutional arrangements to be brought about by ministerial decision or ministerial action alone. All the more so when the source in question was brought into existence by Parliament through primary legislation, which gave that source an overriding supremacy in the hierarchy of domestic law sources. The point may be illustrated by reference to the formula which Lord Reed uses to make the argument about the variable content of EU law. That formula is All such [members of a specified category] as [satisfy a specified condition] shall be [dealt with in accordance with a specified requirement]. In the present case, the specified condition is a continuing obligation under the EU Treaties, and it must be satisfied by EU laws, which are the relevant members of [the] specified category, in order for the specified requirement, namely that those EU laws are binding domestically, to apply. The membership of the specified category has a variable content which is contingent on the decisions of non UK entities, and the contingency may change that content. That much may well be accommodated by the 1972 Act. But the very formula is not itself variable: it is a fixed rule of domestic law, enacted by Parliament. It is nothing to the point that there was, for UK purposes, no content in the specified category until the 1972 Accession Treaty was ratified (on the day after the 1972 Act received the royal assent). As mentioned in para 77 above, by the 1972 Act, Parliament endorsed and gave effect to the UKs future membership of the European Union, and this became a fixed domestic starting point. The question is whether that domestic starting point, introduced by Parliament, can be set aside, or could have been intended to be set aside, by a decision of the UK executive without express Parliamentary authorisation. We cannot accept that a major change to UK constitutional arrangements can be achieved by ministers alone; it must be effected in the only way that the UK constitution recognises, namely by Parliamentary legislation. This conclusion appears to us to follow from the ordinary application of basic concepts of constitutional law to the present issue. While the consequential loss of a source of law is a fundamental legal change which justifies the conclusion that prerogative powers cannot be invoked to withdraw from the EU Treaties, the Divisional Court was also right to hold that changes in domestic rights acquired through that source as summarised in para 70 above, represent another, albeit related, ground for justifying that conclusion. Indeed, the consequences of withdrawal go further than affecting rights acquired pursuant to section 2 of the 1972 Act, as explained in paras 62 to 64 above. More centrally, as explained in paras 76 to 79 above, section 2 of that Act envisages domestic law, and therefore rights of UK citizens, changing as EU law varies, but it does not envisage those rights changing as a result of ministers unilaterally deciding that the United Kingdom should withdraw from the EU Treaties. Mr Eadie also argued that exercise of prerogative powers can change domestic law. While there are circumstances (as described in paras 52 and 53 above) where the exercise of prerogative powers can affect domestic legal rights, they plainly do not apply in the present case. The rights which flow through the conduit pipe of the 1972 Act are contingent on the possibility of their being removed or changed in accordance with decisions taken by EU institutions, as is recognised by the expression from time to time in section 2(1). However, as implied in para 79 above, far from helping the Secretary of States case, the presence of those words in section 2 highlights their absence from the definition of Treaties and EU Treaties in section 1(2). When one reads the two subsections together, the clear implication is that the continued existence of the conduit pipe, as opposed to the contents which flow through it, can be changed only if Parliament changes the law. In the course of his attractively presented submissions, Mr Eadie sought to meet these points with the argument that the 1972 Act (as amended from time to time) effectively incorporates the EU Treaties, and that the applicants cannot point to any provision in the Act which states that the prerogative powers in relation to those treaties are to be abrogated. Given that there is nothing in the 1972 Act which expressly or by necessary implication abrogated ministers prerogative powers to withdraw from the Treaties to which it applied, he contended that it followed that the prerogative to withdraw from the EU Treaties was not precluded by the 1972 Act. In this connection, he relied on dicta in De Keyser cited above (including Lord Parmoors reference to directly regulated by statute in the passage quoted in para 48 above) which suggested that prerogative powers should not be treated as abrogated unless a statute expressly, or by necessary implication, provided for their abrogation. Mr Eadie also relied on R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Rees Mogg [1994] QB 552, in which the Court of Appeal held that ministers could ratify a protocol to the TEU without Parliamentary approval. In the course of his reasons for rejecting an argument based on the proposition that prerogative powers could not be used to alter the law, Lloyd LJ at p 567H appears to have concluded that ministers prerogative powers exist generally in relation to the EU Treaties, apparently on the basis that a prerogative power can be fettered by statute only in express terms. However, as explained above, the EU Treaties not only concern the international relations of the United Kingdom, they are a source of domestic law, and they are a source of domestic legal rights many of which are inextricably linked with domestic law from other sources. Accordingly, the Royal prerogative to make and unmake treaties, which operates wholly on the international plane, cannot be exercised in relation to the EU Treaties, at least in the absence of domestic sanction in appropriate statutory form. It follows that, rather than the Secretary of State being able to rely on the absence in the 1972 Act of any exclusion of the prerogative power to withdraw from the EU Treaties, the proper analysis is that, unless that Act positively created such a power in relation to those Treaties, it does not exist. And, once one rejects the contention that section 2 accommodates a ministerial power to withdraw from the EU Treaties (as to which see paras 79 and 84 above), it is plain that the 1972 Act did not create such a power of withdrawal, as the Secretary of State properly accepts. We accept, of course, that it would have been open to Parliament to provide expressly that the constitutional arrangements and the EU rights introduced by the 1972 Act should themselves only prevail from time to time and for so long as the UK government did not decide otherwise, and in particular did not decide to withdraw from the EU Treaties. But we cannot accept that the 1972 Act did so provide. As Lord Hoffmann explained in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131, the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost, and so [f]undamental rights cannot be overridden by general words in a statute, because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. Had the Bill which became the 1972 Act spelled out that ministers would be free to withdraw the United Kingdom from the EU Treaties, the implications of what Parliament was being asked to endorse would have been clear, and the courts would have so decided. But we must take the legislation as it is, and we cannot accept that, in Part I of the 1972 Act, Parliament squarely confront[ed] the notion that it was clothing ministers with the far reaching and anomalous right to use a treaty making power to remove an important source of domestic law and important domestic rights. In our judgment, far from indicating that ministers had the power to withdraw from the EU Treaties, the provisions of the 1972 Act, particularly when considered in the light of the unusual nature of those Treaties and the Acts unusual legislative history, support the contrary view. As the Divisional Court said, the long title of the 1972 Act stated that its purpose was to make provision in connection with the enlargement of what is now the European Union, which is not easy to reconcile with a prerogative power to achieve the opposite. Similarly, the side note to section 2, General implementation of Treaties, points away from a prerogative to terminate any implementation. In addition, there is the fact that the 1972 Act required ministers not to commit the United Kingdom to any new arrangement, whether it increased or decreased the potential volume and extent of EU law, without first being approved by Parliament by statute in the case of a new EU Treaty and by an approved Order in Council in the case of a treaty ancillary to any existing EU Treaty. It would scarcely be compatible with those provisions if, in reliance on prerogative powers, ministers could unilaterally withdraw from the EU Treaties, thereby reducing the volume and extent of EU law which takes effect domestically to nil without the need for Parliamentary approval. For these reasons, we disagree with Lloyd LJs conclusion in Rees Mogg in so far as he held that ministers could exercise prerogative powers to withdraw from the EU Treaties. It is only right to add that his ultimate decision was nonetheless correct for the reason he gave on p 568, namely that ratification of the particular protocol in that case would not in any significant way alter domestic law. The EU Treaties as implemented pursuant to the 1972 Act were and are unique in their legislative and constitutional implications. In 1972, for the first time in the history of the United Kingdom, a dynamic, international source of law was grafted onto, and above, the well established existing sources of domestic law: Parliament and the courts. And, as explained in paras 13 15 above, before (i) signing and (ii) ratifying the 1972 Accession Treaty, ministers, acting internationally, waited for Parliament, acting domestically, (i) to give clear, if not legally binding, approval in the form of resolutions, and (ii) to enable the Treaty to be effective by passing the 1972 Act. Bearing in mind this unique history and the constitutional principle of Parliamentary sovereignty, it seems most improbable that those two parties had the intention or expectation that ministers, constitutionally the junior partner in that exercise, could subsequently remove the graft without formal appropriate sanction from the constitutionally senior partner in that exercise, Parliament. The improbability of the Secretary of States case is reinforced by the point that, if, as he contends, prerogative powers could be invoked in relation to the EU Treaties despite the provisions of the 1972 Act, it would have been open to ministers to take such a course on or at any time after 2 January 1973 without authorisation by Parliament. It would also follow that ministers could have taken that course even if there had been no referendum or indeed, at least in theory, even if any referendum had resulted in a vote to remain. Those are implausible propositions. To meet this criticism, it was suggested that, if ministers had invoked their prerogative powers to withdraw from the EU Treaties in such circumstances, their decision may have been judicially reviewable. That is rather a bold suggestion, given that it has always been considered that, because they only operate on the international plane, prerogative treaty making powers are not subject to judicial review see para 55 above. It was also suggested that it should not cause surprise if ministers could exercise prerogative powers to withdraw from the EU Treaties, as they would be accountable to Parliament for their actions. This seems to us to be a potentially controversial argument constitutionally. It would justify all sorts of powers being accorded to the executive, on the basis that ministers could always be called to account for their exercise of any power. There is a substantial difference between (i) ministers having a freely exercisable power to do something whose exercise may have to be subsequently explained to Parliament and (ii) ministers having no power to do that thing unless it is first accorded to them by Parliament. The major practical difference between the two categories, in a case such as this where the exercise of the power is irrevocable, is that the exercise of power in the first category pre empts any Parliamentary action. When the power relates to an action of such importance to the UK constitution as withdrawing from the Treaties, it would clearly be appropriate for the power to be in the second category. The fact that ministers are free to issue a declaration of war without first obtaining the sanction of Parliament does not assist the Secretary of States case. Such a declaration, while plainly of fundamental significance in practice, does not change domestic laws or domestic sources of law, although it will lead to new laws provided Parliament decides that it should. Thus, the continued existence of the new source of law created by the 1972 Act, and the continued existence of the rights and other legal incidents which flow therefrom, cannot as a matter of UK law have depended on the fact that to date ministers have refrained from having recourse to the Royal prerogative to eliminate that source and those rights and other incidents. Subsidiary arguments as to the effect of the 1972 Act The Secretary of State relied on the fact that it was inevitable that Parliament would be formally involved in the process of withdrawal from the European Union, in that primary legislation, not least the Great Repeal Bill referred to in para 34 above, would be required to enable the United Kingdom to complete its withdrawal in an orderly and coherent manner. That seems very likely indeed, but it misses the point. If ministers give Notice without Parliament having first authorised them to do so, the die will be cast before Parliament has become formally involved. To adapt Lord Pannicks metaphor, the bullet will have left the gun before Parliament has accorded the necessary leave for the trigger to be pulled. The very fact that Parliament will have to pass legislation once the Notice is served and hits the target highlights the point that the giving of the Notice will change domestic law: otherwise there would be no need for new legislation. It was also argued on behalf of the Secretary of State that, when ministers are participating in EU law making processes and are therefore involved in making EU law, and hence domestic law, they are thereby exercising prerogative powers, and that the giving of Notice would be an equally legitimate exercise of those powers. We readily accept, without formally deciding, that ministerial activity in the EU law making process is effected under the Royal prerogative. However, it does not follow from this that ministers should be entitled to exercise a prerogative power to leave the European Union. When taking part in EU decision making, UK ministers are carrying out the very functions which were envisaged by Parliament when enacting the 1972 Act. Withdrawing from the EU Treaties involves ministers doing the opposite, namely, unilaterally dismantling the very system which they set up in a co ordinated way with Parliament, as explained in paras 13 to 15 above. Consistently with this, article 16 of TEU stipulates that a representative of each member state at ministerial level can commit member states by voting on the European Council, whereas article 50 provides that withdrawal must be effected by a member state in accordance with [its] constitutional requirements. It was further pointed out that unilateral actions by other member states could remove EU law based rights enjoyed by EU nationals (including UK citizens) living in the United Kingdom eg if another member state withdrew from the European Union. We agree, but cannot accept that it has any relevance to the present dispute, which concerns the domestic constitutional arrangements which apply if the UK government wishes to withdraw from the EU Treaties. The fact that it is inevitable that to the extent that they depend on a particular foreign government, EU rights can be abrogated by the withdrawal from EU Treaties by that foreign government gives no guidance as to what is required by the United Kingdoms constitutional arrangements before ministers can cause the United Kingdom to withdraw from those Treaties. Mr Eadie identified two instances which, he contended, showed that there were circumstances in which the UK government could withdraw from treaties without prior Parliamentary sanction, even if such withdrawal changed domestic law. The first was the United Kingdoms withdrawal in 1972 from the European Free Trade Agreement, EFTA. That is of no assistance to the Secretary of State. For, in stark contrast with UK membership of the European Union as a result of the 1972 Act, no directly effective rights had been created as a result of UK membership of EFTA. Moreover, the decision to withdraw from EFTA was an inevitable corollary of joining the EEC, and the formal notice withdrawing from EFTA was only served after both Houses of Parliament had approve[d] the decision of principle to join the European Communities as explained in para 13 above; it was thus an aspect of the exercise which the Prime Minister and the Chancellor of the Duchy of Lancaster respectively described in the House of Commons in October 1971 and January 1972. The second instance given by Mr Eadie was that of bilateral double taxation treaties (DTTs), which were entered into with other states by the UK government under section 788 of the Income and Corporation Taxes Act 1988 (section 788), now replaced by section 2 of the Taxation (International and Other Provisions) Act 2010 (TIOPA). This point was hardly mentioned in the oral argument before us, perhaps because discussions in some of the articles referred to in para 11 above have shown that the DTTs are an unsatisfactory analogy. By section 788 and now by TIOPA, Parliament provided in primary legislation that arrangements agreed by ministers in a DTT at international level will have effect in national law, but only if those arrangements are specified in an Order in Council which is approved by the House of Commons. Thus, unlike EU law which becomes part of UK law automatically as a result of the 1972 Act, the arrangements under a DTT do not take effect automatically as a result of section 788 or, now, TIOPA, but only through a specific Order in Council which has to be approved by Parliament. The conduit pipe metaphor which applies to the 1972 Act in relation to EU law is inapposite for section 788 and TIOPA in relation to DTTs. Before concluding on the effect of the 1972 Act, it is worth mentioning two points. First, eminent judges have taken it for granted that it is a matter for Parliament whether the United Kingdom withdraws from the EU Treaties. In Blackburn v Attorney General [1971] 1 WLR 1037, 1040, Lord Denning MR said that [i]f her Majestys Ministers sign this treaty and Parliament enacts provisions to implement it he did not envisage that Parliament would afterwards go back on it and try to withdraw from it, but if Parliament should do so then the courts would consider it. In Macarthys Ltd v Smith [1981] ICR 785, 789, Lord Denning (albeit in a dissenting judgment) made a constitutional point, and referred to the possibility of our Parliament deliberately pass[ing] an Act with the intention of repudiating the Treaty. In Pham v Secretary of State for the Home Department [2015] 1 WLR 1591, para 80, having stated that EU law [is] part of domestic law because Parliament has so willed, Lord Mance said that [t]he question how far Parliament has so willed is thus determined by construing the 1972 Act. In R (Shindler) v Chancellor of the Duchy of Lancaster [2016] 3 WLR 1196, para 58, Lord Dyson MR said that Parliament agreed to join the EU by exercising sovereign powers untrammelled by EU law and I think it would expect to be able to leave the EU in the exercise of the same untrammelled sovereign power. Secondly, if, as the Secretary of State has argued, it is legitimate to take account of the fact that Parliament will, of necessity, be involved in its legislative capacity as a result of UK withdrawal from the EU Treaties, it would militate in favour of, rather than against, the view that Parliament should have to sanction giving Notice. An inevitable consequence of withdrawing from the EU Treaties will be the need for a large amount of domestic legislation. There is thus a good pragmatic argument that such a burden should not be imposed on Parliament by exercise of prerogative powers and without prior Parliamentary authorisation. We do not rest our decision on that point, but it serves to emphasise the major constitutional change which withdrawal from the European Union will involve, and therefore the constitutional propriety of prior Parliamentary sanction for the process. Conclusion on the effect of the 1972 Act Accordingly, we consider that, in light of the terms and effect of the 1972 Act, and subject to considering the effect of subsequent legislation and events, the prerogative could not be invoked by ministers to justify giving Notice: ministers require the authority of primary legislation before they can take that course. We turn, then, to deal with the impact of legislation and events after 1972. Legislation and events after 1972: from 1973 to 2014 With one exception, the legislation and events between 1973 and 2014 were relied on in argument by the Secretary of State rather than by the applicants. We will first discuss the Secretary of States points in this connection and we will then turn to the applicants point. We start by addressing the fact that the EU Treaties contained no provision entitling a member state to withdraw at the time of the 1972 Act, and that such a provision, article 50, was introduced by the TFEU in 2008. Although its invocation will have the inevitable consequence which Lord Pannick described (as mentioned in para 36 above), article 50 operates only on the international plane, and is not therefore brought into UK law through section 2 of the 1972 Act, as explained in para 79 above. Accordingly, the Secretary of State can derive no domestic authority from the fact that the EU Treaties now include provision for unilateral withdrawal. In any event, article 50 only entitles a member state to withdraw from the EU Treaties in accordance with its own constitutional requirements, which returns one to the issue in the current proceedings. It was suggested that, by incorporating the TFEU, including its introduction of article 50, into section 1(2) of the 1972 Act in 2008, it cannot have been the intention of Parliament to strip ministers of their ability to exercise their powers under article 50. That is not the issue. Nobody doubts but that, under the TFEU and the TEU, ministers can give Notice under article 50(2); the question we have to decide is whether they can do so under prerogative powers or only with Parliamentary authority. So far as the 2008 Act and the 2011 Act are concerned, Mr Eadie rightly did not go so far as to suggest that they conferred power on ministers to withdraw if that power did not exist under the 1972 Act. More subtly, he submitted that these later statutes implicitly, but clearly, recognised the existence of the prerogative power to withdraw from the EU Treaties, unconstrained by Parliamentary control. He pointed out that the two statutes specified in detail the prerogative powers which Parliament intended to control in relation to the EU Treaties, and that they did not include the power to withdraw from those treaties under article 50(2). That omission was said to be particularly striking because, as explained in para 29 above, the 2011 Act covered another aspect of article 50, as it required legislation and a referendum before ministers could vote in favour of a decision under article 50(3) to depart from the need for unanimity in any decision to extend the two year period in the event of another member state seeking to withdraw from the EU Treaties. But it did not seek to control the giving of notice by ministers under article 50(2), for all its fundamental and irreversible consequences. We do not accept this argument. The fact that a statute says nothing about a particular topic can rarely, if ever, justify inferring a fundamental change in the law. As explained in Ex p Simms [2000] 2 AC 115, 131 cited in para 87 above, [f]undamental rights cannot be overridden by general words in a statute, because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. If this is true of general expressions in a statute it must a fortiori be a principle which applies to omissions in a statute. Even if this principle admits of exceptions, they must be rare, and there is no justification for the view that the absence of any reference to article 50(2) in the 2008 and 2011 Acts is such an exception. Those statutes were not attempting to codify the legislative restrictions on the use of the prerogative in relation to the EU Treaties. The restrictions imposed by the two statutes were largely prompted by the fact that the TFEU had both increased the competences of the EU and included provisions which enabled EU institutions to short circuit some of the EUs decision making processes by replacing some of the previous requirements for unanimity or consensus with majority voting or involvement of the European Parliament. (It is fair to add that the restrictions also applied to certain policy issues such as the inclusion of the UK in the Schengen area and the UKs adoption of the Euro, but that does not undermine the point). As explained in paras 5 and 6 of the Explanatory Notes to the 2011 Act, Part 1 of that Act was intended to impose specific restrictions, which in summary terms were as follows. It required a referendum [to] be held before the UK could agree to an amendment of TEU or TFEU, and before the UK could agree to certain decisions already provided for by TEU and TFEU if these would transfer power or competence from the UK to the EU. Further, a referendum and [i]n addition, an Act of Parliament would be required before the UK could agree to a number of other specified decisions provided for in TEU and TFEU. Also, certain other decisions would require a motion to be agreed in both Houses of Parliament before the UK could vote in favour of specified decisions in [EU institutions]. In other words, expressed in broad terms, Part 1 of the 2011 Act was aimed at preventing ministers, without prior Parliamentary approval (plus, in many cases prior approval in a referendum), from supporting any decisions made by the European Union or its institutions which would extend EU competences and the like, or which would dilute the effect of UK voting rights in the EU or any EU institutions. It cannot be inferred from the fact that it was thought necessary to deal with such issues that Parliament intended or assumed that there were no legal limits to the prerogative powers that ministers might exercise in other types of case. Part 1 of the 2011 Act was concerned with decisions of EU institutions in which ministers played a part, not with unilateral decisions of ministers. More broadly, the absence of any Parliamentary controls on article 50(2) in the 2011 Act is entirely consistent with the notion that Parliament assumed that ministers could not withdraw from the EU Treaties without a statute authorising that course and that if and when Parliament had to consider the issue, it would decide whether and if so on what terms, if any, to give such authorisation. If prerogative powers are curtailed by legislation, they may sometimes be reinstated by the repeal of that legislation, depending on the construction of the statutes in question. But if, as we have concluded, there never had been a prerogative power to withdraw from the EU Treaties without statutory authority, there is nothing to be curtailed or reinstated by later legislation. The prerogative power claimed by the Secretary of State can only be created by a subsequent statute if the express language of that statute unequivocally shows that the power was intended to be created see per Lord Hobhouse of Woodborough in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563, para 45. Mr Eadie was right to concede that, however one approaches them, the 2008 and 2011 Acts did not show that. Mr Eadie further submitted that, rather than looking at the question whether ministers could give Notice without statutory authorisation in historical terms starting in 1972, it should be addressed by viewing the effect of the present state of the legislation as a whole, without regard to what the position might have been at some earlier stage. We do not agree. A statute cannot normally be interpreted by reference to a later statute, save in so far as the later statute intends to amend the earlier statute or the two statutes are in pari materia, ie they are given a collective title, are required to be construed as one, have identical short titles, or deal with the same subject matter on similar lines see Bennion on Statutory Interpretation (6th ed, 2013) section 28(13). None of these tests can possibly be said to be satisfied by the 2008 Act or the 2011 Act in relation to the 1972 Act, not least because the later statutes are concerned with a different issue from the 1972 Act. In any event, even if the two later statutes were in pari materia with the 1972 Act, for the reasons given in paras 110 to 112 above we do not consider that they would together yield the interpretation for which the Secretary of State contends. The one feature of the post 1972 history on which the applicants relied was the effect of the 2002 Act. As explained in para 27 above, that Act gave most people of the United Kingdom the right to vote in elections for MEPs, and (albeit by inference) the right to stand for election as an MEP. On the face of it, these are free standing rights outside the ambit of the 1972 Act, in that they are domestically granted in primary legislation passed by Parliament. The Secretary of State cannot argue that these rights are in any sense ambulatory. And they are rights which will inevitably be lost if the United Kingdom withdraws from the EU Treaties and ceases being a member of the European Union. There is therefore some force in the argument that, even if formal Parliamentary sanction to the giving of Notice was not needed on the grounds discussed in paras 74 to 101 above, it would nonetheless be needed because withdrawal from the EU Treaties would deprive UK citizens of the rights given them by Parliament through the 2002 Act. However, there is also force in the Secretary of States response that the rights given by the 2002 Act are simply rights of institutional participation which are contingent on continued UK membership of the European Union. The same sort of arguments might perhaps arise in relation to statutory provisions such as section 4(2) of the Communications Act 2003, which requires OFCOM, the UK telecommunications regulator, to carry out its statutory functions in accordance with the six Community requirements, which are set out in the ensuing subsections and give effect to, and are mandated by, an EU Directive. Given our conclusion that, in the light of the terms and effect of the 1972 Act, ministers cannot give Notice without prior sanction from the UK Parliament, we can limit ourselves to saying that we consider that the arguments based on the 2002 Act do nothing to undermine and may be regarded as reinforcing that conclusion. Legislation and events after 1972: the 2015 Act and the referendum We turn to the 2015 Act and the ensuing referendum. The Attorney General submitted that the traditional view as to the limits of prerogative power should not apply to a ministerial decision authorised by a majority of the members of the electorate who vote in a referendum provided for by Parliament. In effect, he said that, even though it was Parliament which required the referendum, the response to the referendum result should be a matter for ministers, and that it should not be constrained by the legal limitations which would have applied in the absence of the referendum. The referendum is a relatively new feature of UK constitutional practice. There have been three national referendums: on EEC membership in 1975, on the Parliamentary election voting system in 2011 and on EU membership in 2016. There have also been referendums about devolution in Scotland, Wales and Northern Ireland and about independence in Scotland. In 2000, it was considered worth having a legislative framework for the conduct of referendums held in pursuance of any provision made by or under an Act of Parliament see Part VII of the Political Parties, Elections and Referendums Act. The effect of any particular referendum must depend on the terms of the statute which authorises it. Further, legislation authorising a referendum more often than not has provided for the consequences on the result. Thus, the authorising statute may enact a change in the law subject to the proviso that it is not to come into effect unless approved by a majority in the referendum. The Scotland Act 1978 provided for devolution, but stipulated that the minister should bring the Act into force if there was a specified majority in a referendum, and if there was not he was required to lay an order repealing the Act. The Parliamentary Voting System and Constituencies Act 2011 had a provision requiring the alternative vote system to be adopted in Parliamentary elections, but by section 8 stated that the minister should bring this provision into force if it was approved in a referendum, but, if it was not, he should repeal it. Section 1 of the Northern Ireland Act 1998 (the NI Act) provided that if a referendum were to result in a majority for the province to become part of a united Ireland, the Secretary of State should lay appropriate proposals before Parliament. All these statutes stipulated what should happen in response to the referendum result, and what changes in the law were to follow, and how they were to be effected. The same is true of the provisions in Part 1 of the 2011 Act. By contrast, neither the 1975 Act nor the 2015 Act, which authorised referendums about membership of the European Community or European Union, made provision for any consequences of either possible outcome. They provided only that the referendum should be held, and they did so in substantially identical terms. The way in which the proposed referendum was described in public statements by ministers, however, differed in the two cases. The 1975 referendum was described by ministers as advisory, whereas the 2016 referendum was described as advisory by some ministers and as decisive by others, but nothing hangs on that for present purposes. Whether or not they are clear and consistent, such public observations, wherever they are made, are not law: they are statements of political intention. Further, such statements are, at least normally, made by ministers on behalf of the UK government, not on behalf of Parliament. It was suggested on behalf of the Secretary of State that, having referred the question whether to leave or remain to the electorate, Parliament cannot have intended that, upon the electorate voting to leave, the same question would be referred straight back to it. There are two problems with this argument. The first is that it assumes what it seeks to prove, namely that the referendum was intended by Parliament to have a legal effect as well as a political effect. The second problem is that the notion that Parliament would not envisage both a referendum and legislation being required to approve the same step is falsified by sections 2, 3 and 6 of the 2011 Act, which, as the Explanatory Notes (quoted in para 111 above) acknowledge, required just that albeit in the more elegant way of stipulating for legislation whose effectiveness was conditional upon a concurring vote in a referendum. Where, as in this case, implementation of a referendum result requires a change in the law of the land, and statute has not provided for that change, the change in the law must be made in the only way in which the UK constitution permits, namely through Parliamentary legislation. What form such legislation should take is entirely a matter for Parliament. But, in the light of a point made in oral argument, it is right to add that the fact that Parliament may decide to content itself with a very brief statute is nothing to the point. There is no equivalence between the constitutional importance of a statute, or any other document, and its length or complexity. A notice under article 50(2) could no doubt be very short indeed, but that would not undermine its momentous significance. The essential point is that, if, as we consider, what would otherwise be a prerogative act would result in a change in domestic law, the act can only lawfully be carried out with the sanction of primary legislation enacted by the Queen in Parliament. This is why the Secretary of State rightly accepted that the resolution of the House of Commons on 7 December 2016, calling on ministers to give Notice by 31 March 2017, cannot affect the legal issues before this court. A resolution of the House of Commons is an important political act. No doubt, it makes it politically more likely that any necessary legislation enabling ministers to give Notice will be enacted. But if, as we have concluded, ministers cannot give Notice by the exercise of prerogative powers, only legislation which is embodied in a statute will do. A resolution of the House of Commons is not legislation. Thus, the referendum of 2016 did not change the law in a way which would allow ministers to withdraw the United Kingdom from the European Union without legislation. But that in no way means that it is devoid of effect. It means that, unless and until acted on by Parliament, its force is political rather than legal. It has already shown itself to be of great political significance. It is instructive to see how the issue was addressed in ministers response to the 12th Report of Session 2009 10 of the House of Lords Select Committee on the Constitution (Referendums in the United Kingdom). The Committee included the following recommendation in para 197: [B]ecause of the sovereignty of Parliament, referendums cannot be legally binding in the UK, and are therefore advisory. However, it would be difficult for Parliament to ignore a decisive expression of public opinion. The UK governments response as recorded in the Committees Fourth Report of Session 2010 11 was The Government agrees with this recommendation. Under the UKs constitutional arrangements Parliament must be responsible for deciding whether or not to take action in response to a referendum result. The References from Northern Ireland and the devolution questions Introductory As mentioned above, four devolution questions have been referred to this Court by the High Court of Justice in Northern Ireland on the direction of the Attorney General for Northern Ireland, and one has been referred by the Court of Appeal in Northern Ireland on the appeal from Maguire J. The five devolution questions are: If the answer is yes, is the consent of the Northern Ireland Assembly (i) Does any provision of the NI Act, read together with the Belfast Agreement and the British Irish Agreement, have the effect that primary legislation is required before Notice can be given? (ii) required before the relevant legislation is enacted? (iii) If the answer to question (i) is no, does any provision of the NI Act read together with the Belfast Agreement and the British Irish Agreement operate as a restriction on the exercise of the prerogative power to give Notice? (iv) Does section 75 of the NI Act prevent exercise of the power to give Notice in the absence of compliance by the Northern Ireland Office with its obligations under that section? (v) Does the giving of Notice without the consent of the people of Northern Ireland impede the operation of section 1 of the NI Act? Following the hearing, our attention was drawn to the decision of the Northern Irish Court of Appeal in Lee v McArthur and Ashers Baking Co Ltd (No 2) handed down on 22 December 2016. That decision suggests that the High Court may not have had jurisdiction to have made the reference in these proceedings as sought by the Attorney General for Northern Ireland. Given that the issues raised in that reference were fully debated, and that no party to these proceedings has sought belatedly to rely on the decision of the Court of Appeal, we think it appropriate to deal with the reference. The NI Act is the product of the Belfast Agreement and the British Irish Agreement, and is a very important step in the programme designed to achieve reconciliation of the communities of Northern Ireland. It has established institutions and arrangements which are intended to address the unique political history of the province and the island of Ireland. Yet there is also a relevant commonality in the devolution settlements in Northern Ireland, Scotland and Wales (i) in the statutory constraint on the executive and legislative competence of the devolved governments and legislatures that they must not act in breach of EU law (the EU constraints); and (ii) in the operation of the Sewel Convention. (The EU constraints are to be found in sections 29(2)(d), 54 and 57(2) of the Scotland Act 1998; sections 108(6)(c) and 80(8) of the Government of Wales Act 2006; and sections 6(2)(d) and 24(1) of the NI Act). Questions (i), (iii), (iv) and (v) Because we have concluded that primary legislation is required to authorise the giving of Notice, the third question is superseded. The first question is for a similar reason less significant than it otherwise might have been but we address it briefly. When enacting the EU constraints in the NI Act and the other devolution Acts, Parliament proceeded on the assumption that the United Kingdom would be a member of the European Union. That assumption is consistent with the view that Parliament would determine whether the United Kingdom would remain a member of the European Union. But, in imposing the EU constraints and empowering the devolved institutions to observe and implement EU law, the devolution legislation did not go further and require the United Kingdom to remain a member of the European Union. Within the United Kingdom, relations with the European Union, like other matters of foreign affairs, are reserved or excepted in the cases of Scotland and Northern Ireland, and are not devolved in the case of Wales see section 30(1) of, and paragraph 7(1) of Schedule 5 to, the Scotland Act 1998; section 108(4) of, and Part 1 of Schedule 7 to, the Government of Wales Act 2006; and section 4(1) of, and paragraph 3 of Schedule 2 to, the NI Act. Accordingly, the devolved legislatures do not have a parallel legislative competence in relation to withdrawal from the European Union. The EU constraints are a means by which the UK Parliament and government make sure that the devolved democratic institutions do not place the United Kingdom in breach of its EU law obligations. The removal of the EU constraints on withdrawal from the EU Treaties will alter the competence of the devolved institutions unless new legislative constraints are introduced. In the absence of such new restraints, withdrawal from the EU will enhance the devolved competence. We consider the effect of the alteration of competence in our discussion of the Sewel Convention in paras 136 to 151 below. Mr Scoffield QC, who appeared for Mr Agnew, is unquestionably right, however, to claim that the NI Act conferred rights on the citizens of Northern Ireland. Sections 6(2)(d) and 24(1), in imposing the EU constraints, have endowed the people of Northern Ireland with the right to challenge actions of the Executive or the Assembly on the basis that they are in breach of EU law. A recent example of the exercise of such a right is found in the case of Re JR65s Application [2016] NICA 20, where the lifetime ban on men who have had sex with other men from giving blood in Northern Ireland was challenged as being contrary to EU law. As already explained, it is normally impermissible for statutory rights to be removed by the exercise of prerogative powers in the international sphere. It would accordingly be incongruous if constraints imposed on the legislative competence of the devolved administrations by specific statutory provisions were to be removed, thereby enlarging that competence, other than by statute. A related incongruity arises by virtue of the fact that observance and implementation of EU obligations are a transferred matter and therefore the responsibility of the devolved administration in Northern Ireland. The removal of a responsibility imposed by Parliament by ministerial use of prerogative powers might also be considered a constitutional anomaly. In light of our conclusion that a statute is required to authorise the decision to withdraw from the European Union, and therefore the giving of Notice, it is not necessary to reach a definitive view on the first referred question. The EU constraints and the provisions empowering the implementation of EU law are certainly consistent with our interpretation of the 1972 Act but we refrain from deciding whether they impose a discrete requirement for Parliamentary legislation. Section 75(1) of the NI Act obliges a public authority in carrying out its functions in relation to Northern Ireland to have due regard to the need to promote equality of opportunity. By section 75(2), this duty includes an obligation to have regard to the desirability of promoting good relations between persons of different religious belief, political persuasion or radical group. Section 75(3) defines public authority for the purpose of the section and, unlike section 76(7), does not include within the definition a Minister of the Crown. Thus, the Secretary of State does not fall within its ambit. Further, in our view, and in agreement with the Attorney General for Northern Ireland, the decision to withdraw from the European Union and to give Notice is not a function carried out by the Secretary of State for Northern Ireland in relation to Northern Ireland within the meaning of section 75. Because we have held that there is no prerogative power to give Notice, the fourth question is superseded. But in so far as the Secretary of State may have a role in the measures taken by the UK Parliament to give Notice, we are satisfied that section 75 imposes no obligation on him in that context. We also answer the fifth question in the negative. Section 1 of the NI Act is headed Status of Northern Ireland and it provides: (1) It is hereby declared that Northern Ireland in its entirety remains part of the United Kingdom and shall not cease to be so without the consent of a majority of the people of Northern Ireland voting in a poll held for the purposes of this section in accordance with Schedule 1. (2) But if the wish expressed by a majority in such a poll is that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland, the Secretary of State shall lay before Parliament such proposals to give effect to that wish as may be agreed between Her Majestys Government in the United Kingdom and the Government of Ireland. In our view, this important provision, which arose out of the Belfast Agreement, gave the people of Northern Ireland the right to determine whether to remain part of the United Kingdom or to become part of a united Ireland. It neither regulated any other change in the constitutional status of Northern Ireland nor required the consent of a majority of the people of Northern Ireland to the withdrawal of the United Kingdom from the European Union. Contrary to the submission of Mr Lavery QC for Mr McCord, this section cannot support any legitimate expectation to that effect. The Sewel Convention and question (ii) That leaves the second question, which raises in substance the application of the Sewel Convention. The convention was adopted as a means of establishing cooperative relationships between the UK Parliament and the devolved institutions, where there were overlapping legislative competences. In each of the devolution settlements the UK Parliament has preserved its right to legislate on matters which are within the competence of the devolved legislature. Section 5 of the NI Act empowers the Northern Ireland Assembly to make laws, but subsection (6) states that [t]his section does not affect the power of the Parliament of the United Kingdom to make laws for Northern Ireland. Section 28(7) of the Scotland Act 1998 provides that the section empowering the Scottish Parliament to make laws: does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. Substantially identical provision is made for Wales in section 107(5) of the Government of Wales Act 2006. The practical benefits of achieving harmony between legislatures in areas of competing competence, of avoiding duplication of effort, of enabling the UK Parliament to make UK wide legislation where appropriate, such as establishing a single UK implementing body, and of avoiding any risk of legal challenge to the vires of the devolved legislatures were recognised from an early date in the devolution process. The convention takes its name from Lord Sewel, the Minister of State in the Scotland Office in the House of Lords who was responsible for the progress of the Scotland Bill in 1998. In a debate in the House of Lords on the clause which is now section 28 of the Scotland Act 1998, he stated in July 1998 that, while the devolution of legislative competence did not affect the ability of the UK Parliament to legislate for Scotland, we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament. That expectation has been fulfilled. The convention was embodied in a Memorandum of Understanding between the UK government and the devolved governments originally in December 2001 (Cm 5240). Para 14 of the current Memorandum of Understanding, which was published in October 2013, states: The UK Government will proceed in accordance with the convention that the UK Parliament would not normally legislate with regard to devolved matters except with the agreement of the devolved legislature. The devolved administrations will be responsible for seeking such agreement as may be required for this purpose on an approach from the UK Government. Thus, the UK government undertook not to seek or support relevant legislation in the UK Parliament without the prior consent of the devolved legislature. That consent is given by a legislative consent motion which the devolved government introduces into the legislature. Para 2 of the Memorandum of Understanding stated that it was a statement of political intent and that it did not create legal obligations. Over time, devolved legislatures have passed legislative consent motions not only when the UK Parliament has legislated on matters which fall within the legislative competence of a devolved legislature, but also when the UK Parliament has enacted provisions that directly alter the legislative competence of a devolved legislature or amend the executive competence of devolved administrations. Thus, as the Lord Advocate showed in a helpful schedule, legislative consent motions were passed by the Scottish Parliament before the enactment of both the Scotland Act 2012 and the Scotland Act 2016. Similarly, the Welsh Assembly passed a legislative consent motion in relation to the Wales Act 2014, and in November 2016 the Welsh government laid a legislative consent motion before the Assembly in relation to the current Wales Bill 2016. But legislation which implements changes to the competences of EU institutions and thereby affects devolved competences, such as the 2008 Act which incorporated the Treaty of Lisbon amending the TEU and the TFEU into section 1(2) of the 1972 Act, has not been the subject of legislative consent motions in any devolved legislature. Before addressing the more recent legislative recognition of the convention, it is necessary to consider the role of the courts in relation to constitutional conventions. It is well established that the courts of law cannot enforce a political convention. In Re Resolution to Amend the Constitution [1981] 1 SCR 753, the Supreme Court of Canada addressed the nature of political conventions. In the majority judgment the Chief Justice (Laskin) and Dickson, Beetz, Estey, McIntyre, Chouinard and Lamer JJ stated at pp 774 to 775: The very nature of a convention, as political in inception and as depending on a consistent course of political recognition by those for whose benefit and to whose detriment (if any) the convention developed over a considerable period of time is inconsistent with its legal enforcement. In a dissenting judgment on one of the questions before the court, the Chief Justice and Estey and MacIntyre JJ developed their consideration of conventions at p 853: [A] fundamental difference between the legal, that is the statutory and common law rules of the constitution, and the conventional rules is that, while a breach of the legal rules, whether of statutory or common law nature, has a legal consequence in that it will be restrained by the courts, no such sanction exists for breach or non observance of the conventional rules. The observance of constitutional conventions depends upon the acceptance of the obligation of conformance by the actors deemed to be bound thereby. When this consideration is insufficient to compel observance no court may enforce the convention by legal action. The sanction for non observance of a convention is political in that disregard of a convention may lead to political defeat, to loss of office, or to other political consequences, but will not engage the attention of the courts which are limited to matters of law alone. Courts, however, may recognise the existence of conventions Martland, Ritchie, Dickson, Beetz, Chouinard and Lamer JJ made the same point at pp 882 to 883: It is because the sanctions of convention rest with institutions of government other than courts or with public opinion and ultimately, with the electorate, that it is generally said that they are political. Attempts to enforce political conventions in the courts have failed. Thus in Madzimbamuto v Lardner Burke [1969] 1 AC 645, the Judicial Committee of the Privy Council had to consider a submission that legal effect should be given to the convention which applied at that time that the UK Parliament would not legislate without the consent of the government of Southern Rhodesia on matters within the competence of the Legislative Assembly. In its judgment delivered by Lord Reid the Board stated at p 723 that: That is a very important convention but it had no legal effect in limiting the legal power of Parliament. It is often said that it would be unconstitutional for the UK Parliament to do certain things, meaning that the moral, political and other reasons against doing them are so strong that most people would regard it as highly improper if Parliament did these things. But that does not mean that it is beyond the power of Parliament to do such things. If Parliament chose to do any of them the courts could not hold the Act of Parliament invalid. More recently, the political nature of the Sewel Convention was recognised by Lord Reed in a decision of the Inner House of the Court of Session, Imperial Tobacco v Lord Advocate 2012 SC 297, para 71. While the UK government and the devolved executives have agreed the mechanisms for implementing the convention in the Memorandum of Understanding, the convention operates as a political restriction on the activity of the UK Parliament. Article 9 of the Bill of Rights, which provides that Proceedings in Parliament ought not to be impeached or questioned in any Court or Place out of Parliament, provides a further reason why the courts cannot adjudicate on the operation of this convention. Judges therefore are neither the parents nor the guardians of political conventions; they are merely observers. As such, they can recognise the operation of a political convention in the context of deciding a legal question (as in the Crossman diaries case Attorney General v Jonathan Cape Ltd [1976] 1 QB 752), but they cannot give legal rulings on its operation or scope, because those matters are determined within the political world. As Professor Colin Munro has stated, the validity of conventions cannot be the subject of proceedings in a court of law (1975) 91 LQR 218, 228. The evolving nature of devolution has resulted in the Sewel Convention also receiving statutory recognition through section 2 of the Scotland Act 2016, which inserted sub section (8) into section 28 of the Scotland Act 1998 (which empowers the Scottish Parliament to make laws). Thus subsections (7) and (8) now state: (7) This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. (8) But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. A substantially identical provision (clause 2) is proposed in the Wales Bill 2016 2017, which is currently before the UK Parliament. As the Advocate General submitted, by such provisions, the UK Parliament is not seeking to convert the Sewel Convention into a rule which can be interpreted, let alone enforced, by the courts; rather, it is recognising the convention for what it is, namely a political convention, and is effectively declaring that it is a permanent feature of the relevant devolution settlement. That follows from the nature of the content, and is acknowledged by the words (it is recognised and will not normally), of the relevant subsection. We would have expected UK Parliament to have used other words if it were seeking to convert a convention into a legal rule justiciable by the courts. In the Scotland Act 2016, the recognition of the Sewel Convention occurs alongside the provision in section 1 of that Act. That section, by inserting section 63A into the Scotland Act 1998, makes the Scottish Parliament and the Scottish government a permanent part of the United Kingdoms constitutional arrangements, signifies the commitment of the UK Parliament and government to those devolved institutions, and declares that those institutions are not to be abolished except on the basis of a decision of the people of Scotland voting in a referendum. This context supports our view that the purpose of the legislative recognition of the convention was to entrench it as a convention. The Lord Advocate and the Counsel General for Wales were correct to acknowledge that the Scottish Parliament and the Welsh Assembly did not have a legal veto on the United Kingdoms withdrawal from the European Union. Nor in our view has the Northern Ireland Assembly. Therefore, our answer to the second question in para 126 above is that the consent of the Northern Ireland Assembly is not a legal requirement before the relevant Act of the UK Parliament is passed. In reaching this conclusion we do not underestimate the importance of constitutional conventions, some of which play a fundamental role in the operation of our constitution. The Sewel Convention has an important role in facilitating harmonious relationships between the UK Parliament and the devolved legislatures. But the policing of its scope and the manner of its operation does not lie within the constitutional remit of the judiciary, which is to protect the rule of law. Conclusion Accordingly, (i) we dismiss the Secretary of States appeal against the decision of the English and Welsh Divisional Court, (ii) we invite the parties to the reference from the Northern Irish Court of Appeal to agree or, failing agreement, to make written submissions as to the order to be made on the appeal from that Court, and (iii) we answer the second and fifth questions referred by the courts of Northern Ireland as indicated respectively in paras 150 and 134 above, and we do not answer the first, third and fourth questions as they have been superseded. LORD REED: (dissenting) Introduction Article 50 of the Treaty of European Union (TEU) provides: 1. Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements. 2. A member state which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that state, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union 3. The Treaties shall cease to apply to the state in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the member state concerned, unanimously decides to extend this period The cases before the court arise from disputes as to the constitutional requirements which govern a decision by the United Kingdom to withdraw from the European Union under article 50(1): a decision which must be taken before notification can be given under article 50(2). In the case brought by Mrs Miller and Mr Dos Santos (whom I shall refer to as the Miller claimants), the Miller claimants maintain that the Crown cannot lawfully give notification under article 50(2) unless an Act of Parliament authorises it to do so. The Secretary of State for Exiting the European Union, on the other hand, maintains that the decision is one which can lawfully be taken by the Crown in the exercise of prerogative powers. The Divisional Court decided the case in favour of the Miller claimants, and the case now comes before this court as an appeal against that decision. A number of interested parties and interveners have taken part in the Miller appeal. They include the Lord Advocate and the Counsel General for Wales, who as well as presenting arguments in support of those advanced by the Miller claimants, have also argued that, in the event that an Act of Parliament is required, the consent of the Scottish Parliament and the National Assembly for Wales is also required, in accordance with a convention known as the Sewel Convention. Two other cases are also before the court. In the first, an application for leave to apply for judicial review brought by Mr Agnew and others, a number of devolution issues have been referred to this court by the High Court of Northern Ireland. Put shortly, the court is asked to decide whether provisions of the Northern Ireland Act 1998 (the Northern Ireland Act) have the effect that an Act of Parliament is required before notification is given under article 50(2); if so, whether the consent of the Northern Ireland Assembly is required before such an Act of Parliament is enacted, in accordance with the Sewel Convention; and, in any event, whether the Northern Ireland Act prevents or constrains the exercise of the power to give notice. In the second case, an application for leave to apply for judicial review brought by Mr McCord, another devolution issue has been referred to this court by the Court of Appeal of Northern Ireland. The court is asked to decide whether the giving of notification under article 50(2) in the exercise of prerogative powers, without the consent of the people of Northern Ireland, would impede the operation of section 1 of the Northern Ireland Act, which provides that Northern Ireland shall not cease to be part of the United Kingdom without the consent of a majority of the people of Northern Ireland. I shall begin by considering the Miller appeal. The argument of the Secretary of State in the Miller appeal Each side of the argument in the Miller appeal is based on a principle of the British constitution. Counsel on each side cited a librarys worth of authority, but I need mention only a few of the most important cases, as the essence of the relevant principles is clear and well known. The Secretary of State relies on the principle that, as a matter of law, the conduct of the UKs foreign relations falls within the prerogative power of the Crown, advised by its Ministers. This prerogative power includes the power to negotiate international treaties, to amend them, and to withdraw from them. The exercise of that treaty making power is not justiciable by the courts, unless statute has made it so. As Lord Oliver of Aylmerton said in the Tin Council case (JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 499: On the domestic plane, the power of the Crown to conclude treaties with other sovereign states is an exercise of the Royal Prerogative, the validity of which cannot be challenged in municipal law: see Blackburn v Attorney General [1971] 1 WLR 1037. The Sovereign acts throughout the making of the treaty and in relation to each and every of its stipulations in her sovereign character, and by her own inherent authority; and, as in making the treaty, so in performing the treaty, she is beyond the control of municipal law, and her acts are not to be examined in her own courts: Rustomjee v The Queen (1876) 2 QBD 69, 74, per Lord Coleridge CJ. The case of Blackburn v Attorney General, to which Lord Oliver referred, concerned the UKs entry into the European Communities, as the EU was then known. The action was an attempt to prevent the Crown from acceding to the Treaty of Rome. Lord Denning MR stated: The treaty making power of this country rests not in the courts, but in the Crown; that is, Her Majesty acting upon the advice of her Ministers. When her Ministers negotiate and sign a treaty, even a treaty of such paramount importance as this proposed one, they act on behalf of the country as a whole. They exercise the prerogative of the Crown. Their action in so doing cannot be challenged or questioned in these courts. (p 1040) The compelling practical reasons for recognising this prerogative power to manage international relations were identified by Blackstone: This is wisely placed in a single hand by the British constitution, for the sake of unanimity, strength, and despatch. Were it placed in many hands, it would be subject to many wills: many wills, if disunited and drawing different ways, create weakness in a government; and to unite those several wills, and reduce them to one, is a work of more time and delay than the exigencies of state will afford. (Commentaries on the Laws of England (1765 1769), Book I, Chapter 7, Of the Kings Prerogative) The value of unanimity, strength and dispatch in the conduct of foreign affairs are as evident in the 21st century as they were in the 18th. Confiding foreign affairs to the Crown, in the exercise of the prerogative, does not, however, secure their effective conduct at the expense of democratic accountability. Ministers of the Crown are politically accountable to Parliament for the manner in which this prerogative power is exercised, and it is therefore open to Parliament to require its exercise to be debated and even to be authorised by a resolution or legislation: as it has done, for example, in relation to the ratification of certain treaties under the European Union Amendment Act 2008, the Constitutional Reform and Governance Act 2010 and the European Union Act 2011. The Crown can, in addition, seek Parliamentary approval before exercising the prerogative power if it so chooses. There is however no legal requirement for the Crown to seek Parliamentary authorisation for the exercise of the power, except to the extent that Parliament has so provided by statute: that follows from the general principle set out in Blackburn v Attorney General and the Tin Council case. Since there is no statute which requires the decision under article 50(1) to be taken by Parliament, it follows that it can lawfully be taken by the Crown, in the exercise of the prerogative. There is therefore no legal requirement for an Act of Parliament to authorise the giving of notification under article 50(2). So runs the Secretary of States argument. In support of this argument, the Secretary of State points out that there has been considerable Parliamentary scrutiny of Ministers conduct and their plans in relation to article 50. That scrutiny has included inquiries by the House of Commons Select Committee on Exiting the EU and by the House of Lords European Union Committee, as well as Parliamentary questions and debates. The latter have included a debate in the House of Commons on 7 December 2016, following which the following motion was agreed: That this House recognises that leaving the EU is the defining issue facing the UK; notes the resolution on parliamentary scrutiny of the UK leaving the EU agreed by the House on 12 October 2016; recognises that it is Parliaments responsibility to properly scrutinise the Government while respecting the decision of the British people to leave the European Union; confirms that there should be no disclosure of material that could be reasonably judged to damage the UK in any negotiations to depart from the European Union after article 50 has been triggered; and calls on the Prime Minister to commit to publishing the Governments plan for leaving the EU before article 50 is invoked, consistently with the principles agreed without division by this House on 12 October; recognises that this House should respect the wishes of the United Kingdom as expressed in the referendum on 23 June; and further calls on the Government to invoke article 50 by 31 March 2017. The Secretary of State submits that it is for Parliament, not the courts, to determine the nature and extent of its involvement. The Secretary of State also emphasises, in response to the argument of the Miller claimants, that the giving of notification under article 50(2) does not in itself alter any laws in force in the UK: it merely initiates a process of negotiation. If, at the end of those negotiations, a withdrawal agreement is reached, the procedures for Parliamentary approval laid down in the Constitutional Reform and Governance Act 2010 are likely to apply. Parliament will in any event be invited to legislate before the EU treaties cease to apply to the UK, so as to address the issues then arising in relation to rights and obligations under EU law which are currently given effect in the UK through the European Communities Act 1972 as amended (the 1972 Act). The argument of the Miller claimants The Miller claimants, on the other hand, rely on decided cases concerned with the use of prerogative powers in other situations. They argue that those cases establish the existence of legal constraints on the exercise of those powers, and that those constraints are applicable in the admittedly different situation with which we are now concerned. They argue that the effect of those constraints is that Ministers cannot lawfully give notification under article 50(2) unless an Act of Parliament authorises them to do so. The starting point of this argument is the Case of Proclamations (1611) 12 Co Rep 74, which concerned the question whether James I could, by proclamation, prohibit the construction of new buildings in and around London, and prohibit the manufacture of starch from wheat. Coke CJ stated that the King by his proclamation or other ways cannot change any part of the common law, or statute law, or the customs of the realm (p 75). Those three categories were exhaustive of English law: the law of England is divided into three parts, common law, statute law, and custom; but the Kings proclamation is none of them (ibid). It followed that the King cannot create any offence by his prohibition or proclamation, which was not an offence before, for that was to change the law (ibid). The same approach can be seen in more recent cases. For example, in The Zamora [1916] 2 AC 77 an issue arose as to whether the courts were bound, by an Order in Council made under prerogative powers, to decide that a neutral ship found during wartime to have a contraband cargo on board, while ostensibly bound for a neutral port, was lawful prize: an issue which, under established legal principles, depended on whether the ship or its cargo was in reality destined for the enemy. Lord Parker of Waddington stated: The idea that the King in Council, or indeed any branch of the Executive, has power to prescribe or alter the law to be administered by Courts of law in this country is out of harmony with the principles of our Constitution . No one would contend that the prerogative involves any power to prescribe or alter the law administered in Courts of Common Law or Equity. (p 90) These cases were not concerned with the prerogative power to conduct foreign relations. It is however consistent with those cases that, although the Crown can undoubtedly enter into treaties in the exercise of prerogative powers, it cannot, by doing so, alter domestic law. That is known as the dualist approach to international law, in distinction to the monist approach adopted by many other countries, under which treaties automatically take effect in the domestic legal system. In support of the principle that treaties cannot alter domestic law, the Miller claimants rely on the explanations of the relationship between international and domestic law given by Lord Templeman and Lord Oliver in the Tin Council case. The case concerned the question whether a Minister of the Crown was liable under English law for the debts of an international organisation which had been established by a treaty to which the UK was party. Rejecting the contention that the Minister was liable, Lord Templeman said: Lord Oliver said much the same: A treaty is a contract between the governments of two or more sovereign states. International law regulates the relations between sovereign states and determines the validity, the interpretation and the enforcement of treaties. A treaty to which Her Majestys Government is a party does not alter the laws of the United Kingdom. A treaty may be incorporated into and alter the laws of the United Kingdom by means of legislation. Except to the extent that a treaty becomes incorporated into the laws of the United Kingdom by statute, the courts of the United Kingdom have no power to enforce treaty rights and obligations at the behest of a sovereign government or at the behest of a private individual. (pp 476 477) . as a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Treaties, as it is sometimes expressed, are not self executing. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. So far as individuals are concerned, it is res inter alios acta from which they cannot derive rights and by which they cannot be deprived of rights or subjected to obligations; and it is outside the purview of the court not only because it is made in the conduct of foreign relations, which are a prerogative of the Crown, but also because, as a source of rights and obligations, it is irrelevant. (p 500) Similar observations were made by Lord Hoffmann in the Privy Council case of Higgs v Minister of National Security [2000] 2 AC 228, 241, concerned with the impact of the American Convention on Human Rights on the domestic law of the Bahamas, where he stated that treaties cannot alter the law of the land. The principle that the Crown cannot alter the common law or statute by an exercise of the prerogative was developed in the case of Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508, which concerned the requisitioning of a hotel during the First World War for use as the headquarters of the Royal Flying Corps. After the war, a dispute arose over the basis on which the compensation to be paid to the owners should be assessed. There was a statutory scheme for requisitioning, which included a statutory right to compensation, but Ministers argued that the Crown was in any event entitled to requisition the hotel under prerogative powers, in which event compensation was payable ex gratia rather than being assessed in accordance with the statutory scheme. That argument was rejected by the House of Lords on the basis that if the whole ground of something which could be done by the prerogative is covered by the statute, it is the statute that rules (per Lord Dunedin at p 526). As Lord Dunedin reasoned: Inasmuch as the Crown is a party to every Act of Parliament it is logical enough to consider that when the Act deals with something which before the Act could be effected by the prerogative, and specially empowers the Crown to do the same thing, but subject to conditions, the Crown assents to that, and by that Act, to the prerogative being curtailed. (p 526) The case thus established that, to the extent that a matter has been regulated by Parliament, the Crown cannot regulate it differently under the prerogative. The cases of Laker Airways Ltd v Department of Trade [1977] QB 643 and R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513 are cited by the Miller claimants as more recent examples of the application of the same principle, although in the former case only Roskill LJ relied on it (contrast Lord Denning MR at pp 705G 706A and Lawton LJ at p 728A), while the decision in the latter case was based on a different principle (see per Lord Browne Wilkinson at p 553G and Lord Lloyd of Berwick at p 573 C D). In the light of these decided cases, and others to the same effect, the Miller claimants argue that giving notification under article 50(2) will alter domestic law and destroy statutory rights. That is because it will result in the EU treaties ceasing to apply to the UK, in accordance with article 50(3), from the date of the entry into force of the withdrawal agreement or, failing that, from the expiry of a period of two years after notification, or any longer period which may be agreed with the European Council. Since the EU treaties have been given effect in domestic law by the 1972 Act, so as to create rights enforceable before our national courts, it would offend against the principle established in the Case of Proclamations, and explained more recently in the Tin Council case, for that alteration in domestic law to be effected under the prerogative. This argument assumes that, once notification is given under article 50(2), the process of withdrawal from the EU cannot be stopped. It is common ground in all the cases before the court that it should proceed on that assumption. In any event, even if the process might be stopped, it is common ground that Ministers power to give notice under article 50(2) has to be tested on the basis that it may not be stopped. In those circumstances, that is the basis on which this court is proceeding. Furthermore, since the 1972 Act makes provision for the effect of the EU treaties in domestic law, and notification under article 50(2) will sooner or later result in the treaties ceasing to have effect in domestic law, it is argued that there is a conflict between the exercise of the prerogative to give notification and the statutory scheme. Following De Keyser, that conflict should be resolved in favour of the statute, by holding that the prerogative must be constrained. The referendum Both sides of the argument proceed on the basis that the referendum on membership of the EU, held under the European Union Referendum Act 2015 (the 2015 Act), which resulted in a vote to leave the EU, does not provide the answer. The Secretary of States argument proceeds on the basis that the Crown has taken the decision under article 50(1), accepting the result of the referendum. The Miller claimants argue that only Parliament can take that decision. Both the Secretary of State and the Miller claimants proceed on the basis that the referendum result was not itself a decision by the UK to withdraw from the EU, in accordance with the UKs constitutional requirements, and that the 2015 Act did not itself authorise notification under article 50(2). In these circumstances, there is no issue before the court as to the legal effect of the referendum result. Nor is this an appropriate occasion on which to consider the implications for our constitutional law of the developing practice of holding referendums before embarking on major constitutional changes: a matter on which the court has heard no argument. Other arguments In addition to the arguments advanced by the parties to the Miller appeal, the court also has before it the submissions presented on behalf of the interested parties and interveners. They largely provide further elaboration of the arguments presented on behalf of the principal parties. Without intending any discourtesy, I do not think it is necessary to set out their arguments in full, and would generally wish only to acknowledge the assistance which they have provided. It is however appropriate to note the submissions made by the Lord Advocate (which share common ground with those of the first interested party and the fourth interveners), and by the Counsel General for Wales. One argument advanced by the Lord Advocate and by Ms Mountfield QC on behalf of the first interested party is that the UKs withdrawal from the EU will alter the UKs rule of recognition: that is to say, the rule which identifies the sources of law in our legal system and imposes a duty to give effect to laws emanating from those sources. The status of the EU institutions as a recognised source of law will inevitably be revoked, sooner or later, following notification under article 50(2). Since that will be a fundamental alteration in the UKs constitution, it can only be effected by Parliamentary legislation. An Act of Parliament is therefore argued to be necessary before notification can be given. The Lord Advocate also cites material from Scottish sources which is consistent with the principle derived by the Miller claimants from English case law, such as the Case of Proclamations and the Tin Council case. This includes the provision of the Claim of Right Act 1689: That all Proclamationes asserting ane absolute power to Cass annull and Dissable lawes are Contrair to Law. This provision is analogous to the corresponding provisions in sections 1 and 2 of the Bill of Rights 1688, to which the Miller claimants refer: That the pretended power of suspending of laws or the execution of laws by regall authority without consent of Parlyament is illegall. That the pretended power of dispensing with laws or the execution of laws by regall authoritie as it hath beene assumed and exercised of late is illegall. As Lord Denning MR noted, however, in McWhirter v Attorney General [1972] CMLR 882, 886, the Bill of Rights did not restrict the Crowns prerogative powers in relation to foreign affairs: the Crown retained, as fully as ever, the prerogative of the treaty making power. The same appears to be true of the Claim of Right. The Lord Advocate also cites article 18 of the Union with England Act 1707. This provision, like the corresponding provision in the Union with Scotland Act 1706, states that laws in use in Scotland are to be alterable by the Parliament of Great Britain. The Lord Advocate and the Counsel General for Wales have also advanced submissions concerning the Sewel Convention. That convention was originally stated by Lord Sewel, when Parliamentary Under Secretary of State at the Scottish Office, in the House of Lords during the passage of the Scotland Bill. He said that we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament: Hansard (HL Debates), 21 July 1998, col 791. The convention was later embodied in a Memorandum of Understanding between the UK Government and the devolved governments (Cm 5240, 2001). Para 14 of the current Memorandum of Understanding, which was published in October 2013, states: The United Kingdom Parliament retains authority to legislate on any issue, whether devolved or not. It is ultimately for Parliament to decide what use to make of that power. However, the UK Government will proceed in accordance with the convention that the UK Parliament would not normally legislate with regard to devolved matters except with the agreement of the devolved legislature. Para 2 states: This Memorandum is a statement of political intent, and should not be interpreted as a binding agreement. It does not create legal obligations between the parties. In relation to Scotland, the convention was given statutory recognition in section 28(8) of the Scotland Act 1998 (as amended by section 2 of the Scotland Act 2016), which has to be read together with section 28(7): (7) This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. (8) But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. Summary of conclusions It may be helpful to summarise at this stage the conclusions which I have reached in relation to the Miller appeal, before explaining the reasons why I have arrived at them. I entirely accept the importance in our constitutional law of the principle of Parliamentary supremacy over our domestic law, established in the Case of Proclamations, the Tin Council case, and other similar cases such as The Zamora. That principle does not, however, require that Parliament must enact an Act of Parliament before the UK can leave the EU. That is because the effect which Parliament has given to EU law in our domestic law, under the 1972 Act, is inherently conditional on the application of the EU treaties to the UK, and therefore on the UKs membership of the EU. The Act imposes no requirement, and manifests no intention, in respect of the UKs membership of the EU. It does not, therefore, affect the Crowns exercise of prerogative powers in respect of UK membership. For essentially the same reason, the supposed analogy with De Keyser appears to me to be misplaced. Further, since the effect of EU law in the UK is entirely dependent on the 1972 Act, no alteration in the fundamental rule governing the recognition of sources of law has resulted from membership of the EU, or will result from notification under article 50. It follows that Ministers are entitled to give notification under article 50, in the exercise of prerogative powers, without requiring authorisation by a further Act of Parliament. Given that conclusion, the argument in relation to the Sewel Convention does not arise: the convention concerns Parliamentary legislation, not the exercise of prerogative powers. The European Communities Act 1972 The issue which lies at the heart of these cases is the effect of the 1972 Act, as amended. Section 2(1) provides: All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly The expression the Treaties is defined by section 1(2). Put shortly, it includes the pre accession treaties (described in Part 1 of Schedule 1), taken with other treaties listed in section 1(2), and any other treaty entered into by the EU . with or without any of the member States, or entered into, as a treaty ancillary to any of the Treaties, by the United Kingdom. In relation to the treaties in the latter categories, section 1(3) lays down a procedure to be followed: If Her Majesty by Order in Council declares that a treaty specified in the Order is to be regarded as one of the EU Treaties as herein defined, the Order shall be conclusive that it is to be so regarded; but a treaty entered into by the United Kingdom after the 22nd January 1972, other than a pre accession treaty to which the United Kingdom accedes on terms settled on or before that date, shall not be so regarded unless it is so specified, nor be so specified unless a draft of the Order in Council has been approved by resolution of each House of Parliament. The term treaty is defined by section 1(4) as including any international agreement, and any protocol or annex to a treaty or international agreement. Section 1(2) is prospective in scope: it is not confined to treaties existing when the 1972 Act was originally enacted, but envisages treaties being entered into in the future. At the time of accession, the Treaties were relatively few in number, and included the Treaty of Rome. Since then, many other treaties, including the Maastricht Treaty and the Treaty of Lisbon, have been added, either by the amendment of section 1(2) so as to add to the list of specified treaties, or by the making of Orders of Council approved by resolutions of both Houses, under section 1(3). Returning to section 2(1), it is important to understand why it was necessary. It follows from the UKs dualist approach to international law that the Treaties could only be given effect in our domestic law by means of an Act of Parliament. This was so notwithstanding the doctrine of EU law, established by the European Court of Justice in Van Gend en Loos (Case C 26/62) [1963] ECR 1, 12, that the Treaty of Rome was more than an agreement which merely creates mutual obligations between the contracting states, and that independently of the legislation of member states, Community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. This doctrine was reiterated in Costa v ENEL (Case C 6/64) [1964] ECR 585, 593: By contrast with ordinary international treaties, the EEC Treaty has created its own legal system which, on the entry into force of the Treaty, became an integral part of the legal systems of the member states and which their courts are bound to apply. This doctrine is incompatible with the dualist approach of the UK constitution, and ultimately with the fundamental principle of Parliamentary sovereignty. This was explained by Lord Denning MR in two cases decided around the time when the UK joined the European Communities. The first, Blackburn v Attorney General [1971] 1 WLR 1037, was as explained earlier an attempt to prevent the Crown from acceding to the Treaty of Rome by signing the Treaty of Accession. Having been referred to Costa v ENEL, the Master of the Rolls observed: Even if a treaty is signed, it is elementary that these courts take no notice of treaties as such. We take no notice of treaties until they are embodied in laws enacted by Parliament. and then only to the extent that Parliament tells us. (p 1039) The second case, McWhirter v Attorney General, was decided after the UK had signed the Treaty of Accession but before the 1972 Act had been enacted. The Master of the Rolls stated: Even though the Treaty of Rome has been signed, it has no effect, so far as these courts are concerned, until it is made an Act of Parliament. Once it is implemented by an Act of Parliament, these courts must go by the Act of Parliament. Until that day comes, we take no notice of it. (p 886) As will appear, section 2(1) enables EU law to be given direct effect in our domestic law, but within a framework established by Parliament, in which Parliamentary sovereignty remains the fundamental principle. Considering section 2(1) in greater detail, it is a long and densely packed provision, whose syntax is complex, and whose meaning is not immediately clear. It requires to be read with care. Its essential structure can be expressed in this way: All such [members of a specified category] as [satisfy a specified condition] shall be [dealt with in accordance with a specified requirement]. Rules in that form can be used in many contexts: for example, all such prisoners as are charged with conduct contrary to good order and discipline shall be brought before the Governor; all such incoming passengers as are displaying symptoms of ebola shall be placed in quarantine. Two features of such rules should be noted. First, the rule is conditional in nature: the application of the requirement which it imposes depends on there being members of the specified category that satisfy the relevant condition. In the examples just given, for example, the relevant conditions are being charged with conduct contrary to good order and discipline; and displaying symptoms of ebola. Secondly, although a rule in that form contemplates the possibility that the condition may be satisfied, the form of the rule does not convey any intention that the condition will be satisfied. In the examples just given, for example, the rule does not convey an intention that there will be prisoners who are charged, or passengers who display symptoms of ebola. The intention of the rule maker, so far as it can be derived from the rule, would not therefore be thwarted or frustrated if, either immediately, or at some point in the future, there were no members of the relevant category which satisfied the relevant condition. In section 2(1), the relevant category is: rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and . remedies and procedures from time to time provided for by or under the Treaties. The words from time to time, which appear twice, mean that section 2(1) is concerned not only with the Treaties, and the regulations and other legal instruments made under them, as they stood at the time of accession, but also with the Treaties and instruments made under them as they may change over time in the future. This recognises the fact that the rights, powers, liabilities, obligations and restrictions created or arising by or under the Treaties, and the remedies and procedures provided for by or under the Treaties, alter from time to time, as a result of changes to the Treaties or to the laws made under the procedures laid down in the Treaties. This is relevant in the present context, since it demonstrates that Parliament has recognised that rights given effect under the 1972 Act may be added to, altered or revoked without the necessity of a further Act of Parliament (something which is also apparent from section 1(3)). In response to this point, the majority of the court draw a distinction, described as a vital difference, between changes in domestic law resulting from variations in the content of EU law arising from new EU legislation, and changes resulting from withdrawal by the UK from the European Union. There is no basis in the language of the 1972 Act for drawing any such distinction. Under the arrangements established by the Act, alterations in the UKs obligations under the Treaties are automatically reflected in alterations in domestic law. That is equally the position whether the alterations in the UKs obligations under the Treaties result from the Treaties ceasing to apply to the UK, in accordance with article 50, or from changes to the Treaties or to legislation made under the Treaties. The Act simply creates a scheme under which the effect given to EU law in domestic law reflects the UKs international obligations under the Treaties, whatever they may be. There is nothing in the Act to suggest that Parliaments intention to ensure an exact match depends on the reason why they might not match. The requirement imposed by section 2(1) is: shall be recognised and available in law, and be enforced, allowed and followed accordingly. This phrase gives effect in domestic law to all such rights, powers and so forth as satisfy the relevant condition. The condition which must be satisfied, in order for that requirement to apply, is set out in the following phrase: All such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom. This phrase is of particular importance to the resolution of the Miller appeal. It follows from this phrase that rights, powers and so forth created or arising by or under the Treaties are not automatically given effect in domestic law. Legal effect is given only to such rights, powers and so forth arising by or under the Treaties as in accordance with the Treaties are without further enactment to be given legal effect in the United Kingdom. In this respect, once more, the 1972 Act creates a scheme under which the effect given to EU law in domestic law exactly matches the UKs international obligations, whatever they may be. The words without further enactment reflect the EU law concept of direct effect, established by Van Gend en Loos and Costa v ENEL as explained above (and, in so far as it may be regarded as distinct, the concept of direct applicability, established by article 189 of the Treaty of Rome and now stated in article 288 of the Treaty on the Functioning of the European Union (TFEU): see section 18 of the European Union Act 2011). Accordingly, where in accordance with the Treaties, rights, powers and so forth are to be directly applicable or directly effective in the law of the UK, section 2(1) achieves that effect. But there is no obligation in accordance with the Treaties to give effect in the UK to EU rights, powers and so forth merely because they are directly effective under EU law: such an obligation arises only if and for so long as the Treaties apply to the UK. The extent to which the effect given by section 2(1) to rights, powers and so forth arising under EU law is dependent on the Treaties cannot therefore be confined to the question whether the rights, powers and so forth are, under the Treaties, directly effective: it also depends, more fundamentally, on whether the Treaties impose any obligations on the UK to give effect to EU law. Whether rights, powers and so forth are to be given legal effect in the UK, in accordance with the Treaties, therefore depends on whether the Treaties apply to the UK. As the majority of the court state at para 77, Parliament cannot have intended that section 2 should continue to import the variable content of EU law into domestic law, or that the other consequences of the 1972 Act described in paras 62 to 64 above should continue to apply, after the United Kingdom had ceased to be bound by the EU Treaties. If the Treaties do not apply to the UK, then there are no rights, powers and so forth which, in accordance with the Treaties, are to be given legal effect in the UK. This point is illustrated by the fact that, when the 1972 Act came into force on 17 October 1972, the Treaty of Accession had not yet been ratified or entered into force, with the consequence that the Treaties did not apply to the UK. In consequence, section 2(1) initially had no practical application, there being at that time no rights, powers and so forth which, in accordance with the Treaties, were to be given legal effect in the UK. It was not until 1 January 1973, when the Treaty of Accession came into force, following its ratification by the Crown in the exercise of its prerogative powers, that the condition to which section 2(1) subjected the domestic effect of EU law was satisfied. The Miller claimants respond to this point by arguing that the effect of the 1972 Act was to require the Crown to ratify the Treaty of Accession. This is not, in the first place, an answer to the point that the effect of section 2(1) was contingent on the Treatys entering into force. Furthermore, although it is fair to say that the 1972 Act was enacted in anticipation that ratification was likely to occur that is far from saying that ratification was required by statute. In the first place, as explained in para 159 above, it is a basic principle of our constitution that the conduct of foreign relations, including the ratification of treaties, falls within the prerogative powers of the Crown. That principle is so fundamental that it can only be overridden by express provision or necessary implication, as is accepted in the majority judgment at para 48. No such express provision exists in the 1972 Act. Nor do its provisions override that principle as a matter of necessary implication. As Lord Hobhouse of Woodborough explained in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21; [2003]1 AC 563, para 45: A necessary implication is not the same as a reasonable implication A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included and what it is clear that the express language of the statute shows that the statute must have included. A necessary implication is a matter of express language and logic not interpretation. Secondly, it is not difficult to contemplate circumstances in which ratification might not have occurred. The passage of the 1972 Act was hard fought (as the former minister Ken Clarkes memoir, Kind of Blue (2016), pp 66ff, makes clear), and the possibility of a future Labour Government taking the UK out of the European Communities was apparent. When the Labour Government subsequently came to power, in 1974, it proceeded to hold a referendum in accordance with its manifesto commitment. If the Conservative Government had fallen and the Opposition had come to power while the Treaty of Accession remained unratified, the incoming Labour Government would have been unlikely to ratify it without holding a referendum. Indeed, the Opposition continued to oppose ratification following the Parliamentary passage of the 1972 Act, using an adjournment debate on the date of Royal Assent to criticise ratification as being against the wish of the British people (Hansard (HC Debates), 17 October 1972, cols 58 59). The Government won the division by 31 votes; but if it had lost it, would it have been acting unlawfully if it had decided to respect the will of the House of Commons by not ratifying the treaty? Would it have been legally bound by the 1972 Act to ratify the treaty regardless? These questions can only be answered in the negative. The point can also be illustrated by considering what would have happened if some crisis had occurred in the UKs diplomatic relations with one of its intended partners in the European Communities. If, for example, some dispute comparable in gravity to the then current dispute with Iceland, or the subsequent dispute with Argentina, had occurred with one of the other parties to the Treaty of Rome or the Treaty of Accession, is it likely that the UK would then have ratified the Treaty of Accession? The seemingly less ambitious suggestion in the majority judgment at para 78, that it was not contemplated, when the 1972 Act was being passed, that Ministers would not ratify the Treaties or that, having ratified them, would at some point repudiate them, meets the same objection. That ratification was contemplated is clear, but that tells you nothing about whether the operation of the 1972 Act is conditional on continued membership. What individual members of Parliament contemplated, or expected to happen, is on ordinary principles not relevant to the construction of the Act. In any event it is likely to have varied a good deal. The possibility of the UK being taken out of the European Communities if there were a change of government was apparent. Referring to the structure of section 2(1) of the 1972 Act as set out at para 184 above, it is said at para 82 of the majority judgment that the membership of the specified category [viz, the rights, powers and so forth arising under EU law to which domestic effect must be given] has a variable content which is contingent on the decisions of non UK entities. Section 2(1) says nothing, however, which either expressly or impliedly limits the contingency, to which the duty to give domestic effect to EU law is subject, to decisions by non UK entities. The contingency is that the rights, powers and so forth are such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom. It follows from that contingency that the effect given to EU law in our domestic law is conditional on the Treaties application to the UK. That condition was not satisfied when the Act came into force, because the Treaties did not then apply to the UK. The content of the specified category was therefore zero. The satisfaction of the condition, some months later, depended on the decision of a UK entity: it depended on the Crowns exercise of prerogative powers. The content would return to zero if the condition ceased to be satisfied as the result of the UKs invoking article 50. That would be so whether the decision to invoke article 50 had, or had not, been authorised by an Act of Parliament. It is, indeed, accepted by the majority that the condition would cease to be satisfied if the Crown invoked article 50 after being authorised to do so by statute. So the contingency cannot be limited to decisions by non UK entities. The only issue in dispute is whether the action by the Crown, as a result of which the contingency will cease to be satisfied, must be authorised by an Act of Parliament. On that issue, section 2(1) is silent. Neither expressly nor by implication does it require such action to be authorised by Parliament. The fact that section 2(1) is itself a fixed rule of domestic law enacted by Parliament does not affect that conclusion, since a fixed rule which is conditional will necessarily operate only for as long as the condition is satisfied. Nor does it support a conclusion that Parliament has, by necessary implication, deprived the Crown of its prerogative powers: from what words, one might ask, is that implication derived? The amendment of the 1972 Act by section 2 of the European Union (Amendment) Act 2008 I have discussed the position as it stood in 1972. But the real question in the Miller appeal concerns the position following the signing of the Treaty of Lisbon in 2007, and its entry into force in 2009. That is because it was the Treaty of Lisbon which inserted article 50 into the TEU. Parliament addressed the Treaty of Lisbon in the European Union Amendment Act 2008 (the 2008 Act). Section 2 of that Act provides: At the end of the list of treaties in section 1(2) of the European Communities Act 1972 (c 68) add; and (s) the Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community signed at Lisbon on 13 December 2007 (together with its Annex and protocols), excluding any provision that relates to, or in so far as it relates to or could be applied in relation to, the Common Foreign and Security Policy; Section 2 of the 2008 Act thus added the Lisbon Treaty (other than the parts dealing with the Common Foreign and Security Policy) to the Treaties listed in section 1 of the 1972 Act, to which section 2(1) of that Act refers. It follows that the words such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom, in section 2(1) of the 1972 Act, must be read as meaning such . as in accordance with the Treaties, including article 50 TEU, are without further legal enactment to be given legal effect or used in the United Kingdom. The contingency to which the effect of EU law in our domestic law has been subject since the amendment of the 1972 Act by the 2008 Act therefore includes the potential operation of article 50. It is entirely in accordance with the Treaties for article 50 to operate, with the result that, when a withdrawal agreement comes into force, or the time allowed under article 50(3) expires, there may be no rights which, in accordance with the Treaties, are to be given legal effect in the UK. This conclusion is not inconsistent with the statement by the majority of the court, at para 104, that article 50 is not given effect in domestic law by section 2 of the 1972 Act. The majority may be right about that, although the point has not been argued, and the opposite view may be arguable (see, for example, Robert Craig, Casting Aside Clanking Medieval Chains: Prerogative, Statute and Article 50 after the EU Referendum, (2016) MLR 1041, where it is argued that section 2(1) of the 1972 Act has given article 50 domestic effect as a power exercisable by Ministers, superseding the prerogative but also supplying the Parliamentary authorisation desiderated by the Miller claimants). Whether article 50 has direct effect in domestic law does not however affect the question whether its operation forms part of the contingency on which the direct effect given to EU law by the 1972 Act is dependent. The result of section 2 of the 2008 Act is thus that the effect given by section 2(1) of the 1972 Act to EU law, which was always conditional on the Treaties applying to the UK, is now subject to the exercise of the power conferred by article 50 to initiate a particular procedure under which the Treaties will cease to apply to the UK. The Miller claimants respond to these points by arguing that section 2(1) of the 1972 Act impliedly requires the power of withdrawal under article 50 to be exercised by Parliament. In so far as that argument is based on the common law principles established by such authorities as the Case of Proclamations, The Zamora, the Tin Council case and the De Keyser case, I shall discuss those principles later. One can however note at present that, as previously mentioned, there is nothing in section 2(1) which demonstrates that Parliament intended to depart from the fundamental principle that powers relating to the UKs participation in treaty arrangements are exercisable by the Crown. As the majority of the court rightly state at para 108, the fact that a statute says nothing about a particular topic can rarely, if ever, justify inferring a fundamental change in the law. Nor would withdrawal under article 50 be inconsistent with the 1972 Act, any more than a failure to ratify the Treaty of Accession. The result would simply be that there were no rights answering to the description in section 2(1): there would be no rights such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom. This is a point of general importance. If Parliament chooses to give domestic effect to a treaty containing a power of termination, it does not follow that Parliament must have stripped the Crown of its authority to exercise that power. In the present context, the impact of the exercise of the power on EU rights given effect in domestic law is accommodated by the 1972 Act: the rights simply cease to be rights to which section 2(1) applies. Withdrawal under article 50 alters the application of the 1972 Act, but is not inconsistent with it. The application of the 1972 Act after a withdrawal agreement has entered into force (or the applicable time limit has expired) is the same as it was before the Treaty of Accession entered into force. As in the 1972 Act as originally enacted, Parliament has created a scheme under which domestic law tracks the obligations of the UK at the international level, whatever they may be. Other post 1972 legislation Other post 1972 legislation is of only secondary importance. It is however relevant in so far as it demonstrates, first, that Parliament has legislated on the basis that the 1972 Act did not restrict the exercise of the foreign affairs prerogative in relation to other aspects of the EU treaties, and secondly, that Parliament is perfectly capable of making clear its intention to restrict the exercise of the prerogative when it wishes to do so. Several examples can be given. The earliest is section 6(1) of the European Parliamentary Elections Act 1978 (as amended by section 3 of the European Communities (Amendment) Act 1986), which provided: No treaty which provides for any increase in the powers of the European Parliament shall be ratified by the United Kingdom unless it has been approved by an Act of Parliament. That provision was later re enacted in section 12 of the European Parliamentary Elections Act 2002 (the 2002 Act). A further example is the 2008 Act, which imposed numerous restrictions on the exercise of prerogative powers in relation to provisions of the Lisbon Treaty. Section 5 is particularly significant. It provided: (1) A treaty which satisfies the following conditions may not be ratified unless approved by Act of Parliament. (2) Condition 1 is that the treaty amends the Treaty on European Union (signed at (a) Maastricht on 7 February 1992), (b) the Treaty on the Functioning of the European Union (the Treaty establishing (what was then called) the European Economic Community, signed at Rome on 25 March 1957 (renamed by the Treaty of Lisbon)), or the Treaty establishing the European Atomic (c) Energy Community (signed at Rome on 25 March 1957). (3) Condition 2 is that the treaty results from the application of article 48(2) to (5) of the Treaty on European Union (as amended by the Treaty of Lisbon) (Ordinary Revision Procedure for amendment of founding Treaties, including amendments affecting EU competence). Section 5 therefore prohibited the ratification of treaties unless approved by an Act of Parliament, where the treaties amended the TEU or the TFEU, and resulted from the application of article 48(2) to (5) TEU. Article 48 TEU was a provision introduced by the Lisbon Treaty to provide a simplified procedure for the conclusion of treaties amending the TEU or the TFEU. Paragraphs (2) to (5) provided, so far as material: 2. The Government of any member state, the European Parliament or the Commission may submit to the Council proposals for the amendment of the Treaties. These proposals may, inter alia, serve either to increase or to reduce the competences conferred on the Union in the Treaties . If the European Council, after consulting the European 3. Parliament and the Commission, adopts by a simple majority a decision in favour of examining the proposed amendments, the President of the European Council shall convene a Convention composed of representatives of the national Parliaments, of the Heads of State or Government of the member states, of the European Parliament and of the Commission . The Convention shall examine the proposals for amendments and shall adopt by consensus a recommendation to a conference of representatives of the governments of the member states as provided for in paragraph 4. The European Council may decide by a simple majority, after obtaining the consent of the European Parliament, not to convene a Convention should this not be justified by the extent of the proposed amendments . 4. A conference of representatives of the governments of the member states shall be convened by the President of the Council for the purpose of determining by common accord the amendments to be made to the Treaties. The amendments shall enter into force after being ratified by all the member states in accordance with their respective constitutional requirements. 5. If, two years after the signature of a treaty amending the Treaties, four fifths of the member states have ratified it and one or more member states have encountered difficulties in proceeding with ratification, the matter shall be referred to the European Council. The TFEU establishes numerous rights which are given effect in the UK by section 2(1) of the 1972 Act. Those rights could be altered by a treaty concluded by the UK Government and the governments of the other member states, under article 48(2) TFEU. Section 5 of the 2008 Act required an Act of Parliament before such a treaty could be ratified. If the Miller claimants arguments are correct, an Act of Parliament was already necessary before the UK Government could exercise the treaty making prerogative so as to alter those rights. Section 5 of the 2008 Act was, however, understood as introducing a requirement for legislation where none previously existed: that was the mischief intended to be addressed. For example, the House of Lords Select Committee on the Constitution stated: Clause 5 of the Bill seeks to create a new requirement for prior parliamentary authorisation of ratification. It would apply to amendments of the founding treaties the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty Establishing the European Atomic Energy Community when those amendments are made by the ordinary revision procedure. Before examining clause 5 in more detail, it must be noted that the need for express parliamentary approval before the Government ratifies a treaty amending the founding Treaties of the EU has been recognised in one important respect for some time. (6th Report of Session 2007 08, European Union Amendment Bill and the Lisbon Treaty: Implications for the UK Constitution, HL 84, 2008, paras 23 24). The latter sentence referred not to the 1972 Act, but to section 12 of the 2002 Act, discussed at para 206 above. It is also relevant to note section 6(1) of the 2008 Act, which imposed restrictions on the UKs participation in several procedures laid down in the Lisbon Treaty: A Minister of the Crown may not vote in favour of or otherwise support a decision under any of the following unless Parliamentary approval has been given in accordance with this section . The section went on to require Parliamentary approval in the form of a resolution of both Houses. The provisions of the Lisbon Treaty to which section 6 applied did not include article 50 TEU. The Constitutional Reform and Governance Act 2010 (the 2010 Act) is also relevant. It codifies the previous Ponsonby Rule (a convention that treaties, with limited exceptions, would be laid before Parliament before they were ratified), and sets out detailed procedures for Parliamentary scrutiny of new treaties. It does not apply to treaties which are covered by section 5 of the 2008 Act or by the European Union Act 2011 (the 2011 Act), to which I turn next. A withdrawal agreement under article 50(3) would be likely to fall within its scope, but it would have no application to a decision to withdraw from a treaty or to commence the process of withdrawal. The 2011 Act repealed section 12 of the 2002 Act and sections 5 and 6 of the 2008 Act (subject to an immaterial exception), replacing them with a more elaborate system of Parliamentary control. The evident aim was to introduce stronger Parliamentary controls, in relation to matters falling within the scope of the legislation, than were present under the existing law. The power to amend article 50(3), concerning the extension of the two year period for negotiation, or to adopt the ordinary legislative procedure in relation to that provision, was brought within the scope of these controls by sections 4 and 6, read with Schedule 1. Article 50(1) and (2), concerning the decision to withdraw and its notification, were not. As explained earlier, section 5 of the 2008 Act was enacted on the basis that the Crown could exercise its treaty making power so as to alter EU rights given effect in domestic law by the 1972 Act, without necessarily requiring further authorisation by an Act of Parliament. One can also infer from this body of legislation, as the Divisional Court did in the case of R v Secretary of State for Foreign Affairs, Ex p Rees Mogg [1994] QB 552, discussed in paras 235 237 below, that since Parliament has repeatedly placed express restrictions on the exercise of the prerogative in relation to the EU treaties, the absence of a particular restriction in the 1972 Act tends to support the conclusion that no such restriction was intended to arise by implication. It is also necessary to consider the 2015 Act. For the reasons explained in para 171 above, I do not propose to consider the legal implications of the referendum result. It is, however, proper to take note of the judgment of Lord Dyson MR, with whom the other members of the court agreed, in R (Shindler) v Chancellor of the Duchy of Lancaster [2016] EWCA Civ 419; [2016] 3 WLR 1196. That was a case in which a challenge was brought to the franchise rules applicable to the referendum. Having referred to the provision in article 50(1) that any member state may decide to withdraw from the EU in accordance with its own constitutional requirements, the Master of the Rolls stated: The 2015 Act contains part of the constitutional requirements of the UK as to how it may decide to withdraw from the EU . In short, by passing the 2015 Act, Parliament decided that one of the constitutional requirements that had to be satisfied as a condition of a withdrawal from the EU was a referendum. (paras 13 and 19) It follows that, in enacting the 2015 Act, Parliament considered withdrawal from the EU, and made the holding of a referendum part of the process of taking the decision under article 50(1). It laid down no further role for itself in that process. In the absence of any provision requiring Parliamentary authorisation of the decision, it is difficult, against the background of such provisions being laid down in the Acts of 1978, 2002, 2008, 2010 and 2011, to regard such a requirement as being implicit. Using the prerogative to alter the law, or take away statutory rights? In the light of the foregoing discussion, one can return to the arguments advanced by the Miller claimants on the basis of authorities concerned with the common law limits of prerogative powers. The first argument, summarised at paras 165 167 and 169 above, is that the giving of notification under article 50(2) will result in the alteration of the law and the destruction of statutory rights, and therefore cannot be effected in the exercise of prerogative powers, applying the principles established in such cases as the Case of Proclamations, The Zamora, the Tin Council case, and Higgs v Minister of National Security, and reflected also in the Bill of Rights and the Claim of Right. The argument that the 1972 Act created statutory rights which cannot be taken away without a further Act of Parliament starts from a premise which requires examination. The 1972 Act did not create statutory rights in the same sense as other statutes, but gave legal effect in the UK to a body of law now known as EU law. As explained at paras 186 187 above, section 2(1) recognises that the rights arising under that body of law can be altered from time to time, as a result of changes to the Treaties or to the laws made under the procedures laid down in the Treaties, without the necessity of a further Act of Parliament. Such alterations result not only in the creation of EU rights which are consequently given effect in domestic law by the 1972 Act, but also in the repeal and restriction of EU rights previously created, and given effect under domestic law. The successive regulations imposing fishing quotas are an example. To give another example, if Greece were to decide to leave the EU while the UK remained a member, the Treaties would cease to apply to Greece either when a withdrawal agreement entered into force, or in any event after two years had expired. Greek citizens living in the UK would then cease to enjoy the EU rights which continued to be enjoyed here, for example, by French citizens. As these examples illustrate, rights given direct effect by section 2(1) of the 1972 Act are inherently contingent, and can be altered without any further Act of Parliament. This is a very different situation from any contemplated by the judges in the cases relied on, or by the Scottish and English Parliaments at the time of the Glorious Revolution or the Acts of Union. As noted earlier, the majority of the court respond to this point by drawing a distinction between changes which result from the UKs giving notice under article 50, for which a further Act of Parliament is argued to be necessary, and changes which result from any other alteration in the Treaties or in the instruments made under the Treaties, for which no further Act of Parliament is necessarily required. That distinction cannot be derived from the principle established by the Case of Proclamations. It has to be based on an interpretation of the 1972 Act: the matter which was discussed at paras 179 214 above. For the reasons there explained, I see no basis in the 1972 Act for drawing any such distinction. The Act simply creates a scheme under which domestic law reflects the UKs international obligations, whatever they may be. It is equally questionable whether notification under article 50 will alter the law of the land, in the sense in which judges have used that expression. That can be illustrated by reflecting on the effect of notification, and on the ability of Parliament to maintain in force the EU rights currently given effect under section 2(1) of the 1972 Act. The giving of notification does not in itself alter EU rights or the effect given to them in domestic law. Nor does it impinge on Parliaments competence to enact legislation during the intervening period before the treaties cease to have effect. Parliament can enact whatever provisions it sees fit in order to address the consequences of withdrawal from the EU, including provisions designed to protect rights which are currently derived from EU law. Parliament cannot, however, replicate EU law. It cannot establish those elements of it which involve reciprocal arrangements with the other member states, or which involve the participation of EU institutions. Nor can it create rights which have the distinguishing characteristics of EU rights, such as priority over subsequent legislation, and authoritative interpretation by the Court of Justice. The fact that notification alters no law, and that Parliament retains full competence to legislate so as to protect rights before withdrawal occurs, illustrates how different this situation is from those addressed in the cases relied upon. Equally, the fact that the enactment of EU law lies beyond the ability of Parliament illustrates how different it is from the law of the land as usually understood. More fundamentally, however, the argument that withdrawal from the EU would alter domestic law and destroy statutory rights, and therefore cannot be undertaken without a further Act of Parliament, has to be rejected even if one accepts that the 1972 Act creates statutory rights and that withdrawal will alter the law of the land. It has to be rejected because it ignores the conditional basis on which the 1972 Act gives effect to EU law. If Parliament grants rights on the basis, express or implied, that they will expire in certain circumstances, then no further legislation is needed if those circumstances occur. If those circumstances comprise the UKs withdrawal from a treaty, the rights are not revoked by the Crowns exercise of prerogative powers: they are revoked by the operation of the Act of Parliament itself. In so far as the Miller claimants place reliance on rights under EU law as given effect in the legal systems of other member states, such as the right of UK citizens to live and work in Greece, there is no rule which prevents prerogative powers being exercised in a way which alters rights arising under foreign law. In so far as the Miller claimants place reliance on statutes creating rights in respect of EU institutions, such as the right to vote in elections to the European Parliament under the European Parliamentary Elections Act 2002, such statutory rights are obviously conditional on the UKs continued membership of the EU. Parliament cannot have intended them to operate on any other basis. If they cease to be effective following the UKs withdrawal from the EU, that is inherent in the nature of the right which Parliament conferred. The only logical alternative is to hold that Parliament has created a right to remain in the EU, and none of the arguments goes that far. Using the prerogative to revoke a source of law? As explained at para 173 above, it is argued that the 1972 Act created an entirely new, independent and overriding source of domestic law (as it is put in the majority judgment at para 80). Since the identification of a countrys sources of law is one of the most fundamental functions of its constitution, it follows that the Crown cannot lawfully revoke a source of law in the exercise of prerogative powers. So runs the argument. As put by counsel, this argument is based on the concept of the rule of recognition: that is to say, the foundational rule in a legal system which identifies the sources of law in that system and imposes a duty to give effect to laws emanating from those sources. The Lord Advocate and Ms Mountfield QC argue that the rule would be altered by withdrawal from the EU, and therefore, sooner or later, by the giving of notification under article 50. The UKs entry into the EU did not, however, alter its rule of recognition, and neither would its withdrawal. That is because EU law is not a source of law of the relevant kind: that is to say, a source of law whose validity is not dependent on some other, more fundamental, source of law, but depends on the ultimate rule of recognition. The true position was explained by Lord Mance in Pham v Secretary of State for the Home Department [2015] UKSC 19; [2015] 1 WLR 1591, para 80: For a domestic court, the starting point is, in any event, to identify the ultimate legislative authority in its jurisdiction according to the relevant rule of recognition. The search is simple in a country like the United Kingdom with an explicitly dualist approach to obligations undertaken at a supranational level. European law is certainly special and represents a remarkable development in the world's legal history. But, unless and until the rule of recognition by which we shape our decisions is altered, we must view the United Kingdom as independent, Parliament as sovereign and European law as part of domestic law because Parliament has so willed. The question how far Parliament has so willed is thus determined by construing the 1972 Act. As Lord Mance rightly explained, it follows from the UKs dualist approach to international law that EU law is not one of the sources of law identified by the UKs rule of recognition. That was recognised in the cases of Blackburn v Attorney General and McWhirter v Attorney General, as explained in para 183 above. As a source of law, EU law, like legislation enacted by the devolved legislatures, or delegated legislation made by Ministers, is entirely dependent on statute (which is not, of course, to say that EU law has the same effects, as devolved or delegated legislation). It derives its legal authority from a statute, which itself derives its authority from the rule of recognition identifying Parliamentary legislation as a source of law. The recognition of its validity does not alter any fundamental principle of our constitution. The fact that the 1972 Act has a prospective effect, in giving effect to laws made from time to time by the EU institutions, does not affect this analysis. Nor does the limited primacy given to EU law by the 1972 Act alter the position, since that primacy itself derives from the 1972 Act. That was recognised by Lord Bridge of Harwich in R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603: Under the terms of the Act of 1972 it has always been clear that it was the duty of a United Kingdom court, when delivering final judgment, to override any rule of national law found to be in conflict with any directly enforceable rule of Community law. (p 659: emphasis supplied) The source of law which is validated by the rule of recognition therefore remains Parliament, not the EU. Since the effect of EU law is dependent on an Act of Parliament, the rule of recognition is unchanged. Parliament has itself made it clear that EU law has not altered the UKs rule of recognition. Section 18 of the 2011 Act provides: Directly applicable or directly effective EU law (that is, the rights, powers, liabilities, obligations, restrictions, remedies and procedures referred to in section 2(1) of the European Communities Act 1972) falls to be recognised and available in law in the United Kingdom only by virtue of that Act or where it is required to be recognised and available in law by virtue of any other Act. Since EU law has no status in UK law independent of statute, it follows that the only relevant source of law has at all times been statute. This understanding underpins the discussion of the constitutional status of EU law in R (Buckinghamshire County Council) v Secretary of State for Transport [2014] UKSC 3; [2014] 1 WLR 324. The issue raised by a conflict between an EU directive and long established constitutional principles of domestic law was identified as the extent, if any, to which these principles may have been implicitly qualified or abrogated by the European Communities Act 1972 (para 78). The issue, in other words, was one of domestic law, turning on the interpretation of the 1972 Act. It was said: Contrary to the submission made on behalf of the claimants, that question cannot be resolved simply by applying the doctrine developed by the Court of Justice of the supremacy of EU law, since the application of that doctrine in our law itself depends upon the 1972 Act. If there is a conflict between a constitutional principle, such as that embodied in article 9 of the Bill of Rights, and EU law, that conflict has to be resolved by our courts as an issue arising under the constitutional law of the United Kingdom. (para 79) The implication is that EU law is not itself an independent source of domestic law, but depends for its effect in domestic law on the 1972 Act: an Act which does not confer effect upon it automatically and without qualification, but has to be interpreted and applied in the wider context of the constitutional law of the UK. Accordingly, although no one can doubt the importance of EU law, the effect given to it by the 1972 Act has not altered any fundamental constitutional principle in respect of the identification of sources of law. The majority of the court respond that this analysis is unrealistic. Although it is accepted that the effect of EU law in domestic law is dependent on the 1972 Act, they argue that for EU law to cease to have effect in our domestic law would be a major change in the UKs constitution. As I understand it, the argument is concerned with the effect of the 1972 Act. Whether the 1972 Act has that effect depends on its interpretation, which simply takes one back to the issues discussed at paras 179 214 above. A further reason for rejecting the argument that the 1972 Act created a new source of law, which cannot be revoked without further legislation, is one that applies even if it is accepted that the 1972 Act created a new source of law (in some sense or other). Since the 1972 Act gives effect to EU law only as long as the Treaties apply to the UK, as explained at paras 189 204 above, that source of law is inherently contingent on the UKs continued membership of the EU. EU laws ceasing to have effect as a result of the UKs withdrawal from the Treaties is something which follows from the 1972 Act itself, and does not require further legislation. The analogy with the De Keyser case Although the majority judgment does not adopt the Miller claimants argument based on a supposed analogy with the De Keyser case, it is nevertheless necessary to address it. As explained earlier, that case established that where Parliament has regulated a matter by statute, the Crown cannot have recourse to a prerogative power in respect of the same matter. The argument by analogy asserts that, since notification under article 50 will eventually render the 1972 Act redundant, it follows that notification cannot be given in the exercise of prerogative powers. I am unable to accept that argument, for a number of reasons. First, the De Keyser principle denies that prerogative power can be exercised where a parallel statutory scheme exists. It does not follow from that principle that a prerogative power cannot be exercised where the eventual consequence will be that a statutory provision will cease to have a practical application. The latter proposition cannot be derived from De Keyser, but must be derived from some other source. The only obvious candidate is Parliaments intention in enacting the statutory provisions in question: an intention, it has to be argued, to impose a limitation on the exercise of the prerogative power. That simply takes one back to the argument as to whether an intention to strip the Crown of its prerogative powers in respect of adherence to the EU treaties can be derived from the 1972 Act: an argument which was addressed at paras 201 204 above. Secondly, the 1972 Act does not, in any event, regulate withdrawal from the EU: it recognises the existence of article 50, as explained in paras 198 202 above, but it says nothing about how or by whom a decision to invoke article 50 should be taken. Thirdly, the difference between the present situation and that with which the De Keyser principle is concerned is also evident at the level of remedies. In De Keyser itself, the remedy was a declaration that the owners were entitled to compensation under the statutory scheme. The remedy flowed from the logic of the principle: Ministers were obliged to comply with the statutory scheme. No comparable remedy can be granted in the present case, since there is no statutory scheme governing the operation of article 50. The Rees Mogg case Finally, in relation to the Miller claimants arguments, it should be noted that this is not the first time that the courts have had to address these arguments. In R v Secretary of State for Foreign Affairs, Ex p Rees Mogg, one of counsels arguments in support of a challenge to the ratification of the Maastricht Treaty was recorded by Lloyd LJ as follows: He submits that by ratifying the Protocol on Social Policy, the Government would be altering Community law under the EEC Treaty . It is axiomatic that Parliament alone can change the law. Mr Pannick accepts, of course, that treaties are not self executing. They create rights and obligations on the international plane, not on the domestic plane. He accepts also that the treaty making power is part of the Royal Prerogative . But the EEC Treaty is, he says, different. For section 2(1) of the European Communities Act 1972 provides . If the Protocol on Social Policy is ratified by all member states, it will become part of the EEC Treaty, which is one of the Treaties referred to in section 2(1): see the definition of the Treaties in section 1(2) of the Act of 1972. Accordingly the Protocol will have effect not only on the international plane but also, by virtue of section 2(1) of the Act of 1972, on the domestic plane as well. By enacting section 2(1), Parliament must therefore have intended to curtail the prerogative power to amend or add to the EEC Treaty. There is no express provision to that effect. But that is, according to the argument, the necessary implication . Where Parliament has by statute covered the very same ground as was formerly covered by the Royal Prerogative, the Royal Prerogative is to that extent, by necessary implication, held in abeyance: see Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508; Laker Airways Ltd v Department of Trade [1977] QB 643, 718,720, per Roskill LJ. (p 567) So one sees here the same arguments: that the prerogative power in relation to treaties cannot be used to alter rights in domestic law; that the effect of section 2(1) of the 1972 Act is to transform rights arising under the EU treaties into rights in domestic law; that section 2(1) therefore impliedly curtailed the prerogative power in relation to the EU treaties; and the supposed analogy with the De Keyser principle. The Divisional Court rejected this argument: We find ourselves unable to accept this far reaching argument. When Parliament wishes to fetter the Crowns treaty making power in relation to Community law, it does so in express terms, such as one finds in section 6 of the Act of 1978. Indeed, as was pointed out, if the Crowns treaty making power were impliedly excluded by section 2(1) of the Act of 1972, section 6 of the Act of 1978 would not have been necessary. There is in any event insufficient ground to hold that Parliament has by implication curtailed or fettered the Crowns prerogative to alter or add to the EEC Treaty. (p 567) The court also rejected the challenge on the basis that the protocol in question was not, in any event, one of the Treaties to which the 1972 Act applied (p 568). Contrary to counsels submission in the present case, it is plain that these two reasons for rejecting the challenge to ratification were independent of one another. The first reason was that section 2(1) did not impliedly curtail the Crowns treaty making power. The second was that the protocol in question did not in any event fall within the ambit of section 2(1). I agree with the Divisional Courts reasoning in the passage which I have cited, and in particular with the final sentence: even apart from the inference which might be drawn from examples of express provisions restricting the exercise of prerogative powers in relation to EU law, there is in any event insufficient ground to hold that Parliament has by implication curtailed or fettered the Crowns prerogative powers in relation to the Treaties. What if there had been no referendum, or a vote to remain? Finally, in relation to the Miller appeal, it is argued by the majority at para 91 that the Secretary of States contentions cannot be correct since, if they were, it would have been open to Ministers to invoke prerogative powers to withdraw from the EU even if there had been no referendum, or indeed even if any referendum had resulted in a vote to remain. There are two answers to this point. First, it does not necessarily follow from my conclusions that Ministers could properly have invoked article 50 whenever they pleased, or, more specifically, in the event of a vote to remain. As Lord Carnwath makes clear at para 266 below, there has been no discussion in this appeal of the question whether there might be any circumstances in which the exercise of the prerogative power in question might be open to review, such as if the referendum held under the 2015 Act had resulted in a vote to remain, and I express no view on that point. Secondly, and more fundamentally, controls over the exercise of ministerial powers under the British constitution are not solely, or even primarily, of a legal character, as Lord Carnwath explains in his judgment. Courts should not overlook the constitutional importance of ministerial accountability to Parliament. Ministerial decisions in the exercise of prerogative powers, of greater importance than leaving the EU, have been taken without any possibility of judicial control: examples include the declarations of war in 1914 and 1939. For a court to proceed on the basis that if a prerogative power is capable of being exercised arbitrarily or perversely, it must necessarily be subject to judicial control, is to base legal doctrine on an assumption which is foreign to our constitutional traditions. It is important for courts to understand that the legalisation of political issues is not always constitutionally appropriate, and may be fraught with risk, not least for the judiciary. Conclusion in relation to the Miller appeal For all the foregoing reasons, I would have allowed the Secretary of States appeal in the Miller case. The Northern Irish cases Given my disagreement with the decision of the majority of the court as to the necessity for an Act of Parliament before article 50 can be invoked, it follows that I would also have dealt with the devolution issues raised in the Northern Irish cases differently. So far as those cases raise issues which are distinct from those arising in the Miller appeal, however, I agree with the way in which the majority have dealt with them. Nothing in the Northern Ireland Act bears on the question whether the giving of notification under article 50 can be effected under the prerogative or requires authorisation by an Act of Parliament. More specifically, neither section 1 nor section 75 of the Northern Ireland Act has any relevance in the present context. Nor does a political convention, such as the Sewel Convention plainly is in its application to Northern Ireland, give rise to a legally enforceable obligation. LORD CARNWATH: (dissenting) For the reasons given by Lord Reed, I would have allowed the appeal by the Secretary of State in the main proceedings. In view of the importance of the case, and the fact that we are differing from the Divisional Court and the majority in this court, I shall add some comments of my own from a slightly different legal perspective. I agree with the majority judgment in respect of the Northern Irish cases and the other devolution issues. Constitutional principles At the heart of the case is the classic statement of principle by Lord Oliver in the Tin Council case (JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418): as a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament (Lord Oliver pp 499E 500D) In the Tin Council case Lord Oliver was speaking only of the making of treaties, not withdrawal. Lord Templeman had earlier made clear that the prerogative enables the Government to negotiate, conclude, construe, observe, breach, repudiate or terminate a treaty (p 476F H). However, there was no discussion of how the classic statement might need modification or development in the context of termination or withdrawal. In principle the same basic rule should apply. Just as the Executive cannot without statutory authority create new rights or obligations in domestic law by entering into a treaty, so it cannot by termination of a treaty take away rights or obligations which currently exist. However, that tells one nothing about the process by which this result is to be achieved, nor at what stage of that process the intervention of Parliament is required. Precedents are hard to find. Counsel have taken us on an interesting journey through cases and legal sources from four centuries and different parts of the common law world. The only example we were shown of withdrawal from a treaty was a recent decision of the Canadian Federal Court: Turp v Ministry of Justice & Attorney General of Canada 2012 FC 893. That was an unsuccessful challenge by the executive to the use of its prerogative powers to withdraw from the Kyoto Protocol on Climate Change, against the background of a statute (passed against the opposition of government) requiring the preparation of plans giving effect to the Protocol. On its face it is a striking example of the use of the prerogative to frustrate the apparent intention of Parliament as expressed in legislation. However, the authority is of limited assistance in the present context, since it had been held in a previous case (Friends of the Earth v Canada (Governor in Council), 2008 FC 118) that the obligations under the statute were not justiciable in the domestic courts. In the end the search through the authorities tells one little that is not sufficiently expressed by the classic rule. It also confirms the lack of any direct precedent for withdrawal from a treaty previously given effect in domestic law, let alone one which has played such a vital part in the development of our laws over more than 40 years. However, lack of precedent is not a reason for inventing new principles, nor is there a need to do so. The existing principles correctly applied provide a clear and coherent framework for effective resolution of all the competing considerations, including the referendum result. The balance of power In considering that framework it is important to recognise the sensitivity in our constitution of the balance between the respective roles of Parliament, the Executive and the courts. The Divisional Court saw this principally in binary terms: the Executive versus Parliament. Under the general heading, the sovereignty of Parliament and the prerogative powers of the Crown, they referred on the one hand to the most fundamental rule that the Crown in Parliament is sovereign (para 20), and on the other to the general rule that the conduct of international relations and the making and unmaking of treaties are matters for the Crown in the exercise of its prerogative powers (para 30), the balance between the two being as explained by Lord Oliver in the Tin Council case (paras 32 33). Although the Tin Council principles as such are not in doubt, they are only part of the story. It is wrong to see this as a simple choice between Parliamentary sovereignty, exercised through legislation, and the untrammelled exercise of the prerogative by the Executive. Parliamentary sovereignty does not begin or end with the Tin Council principles. No less fundamental to our constitution is the principle of Parliamentary accountability. The Executive is accountable to Parliament for its exercise of the prerogative, including its actions in international law. That account is made through ordinary Parliamentary procedures. Subject to any specific statutory restrictions (such as under the Constitutional Reform and Governance Act 2010), they are a matter for Parliament alone. The courts may not inquire into the methods by which Parliament exercises control over the Executive, nor their adequacy. The FBU case Defining the proper boundaries between the respective responsibilities of Parliament, the Executive and the courts lay at the heart of the dispute in the FBU case (R v Secretary of State for the Home Department Ex p Fire Brigades Union [1995] 2 AC 513). That case concerned statutory provisions (under the Criminal Justice Act 1988) providing for compensation for criminal injuries, intended to replace a previous non statutory scheme established under the prerogative. Section 171 provided that the new scheme should come into force on such day as the Secretary of State may by order appoint. No such date was appointed, but instead after some years the Secretary of State announced that a new non statutory scheme would be introduced, which was inconsistent with the scheme provided for by the Act. The House of Lords held by 3 2 that this action was an abuse of power and so unlawful. In the leading judgment Lord Browne Wilkinson noted that the new scheme was to be brought into effect at a time when Parliament has expressed its will that there should be a scheme based on the tortious measure of damages, such will being expressed in a statute which Parliament has neither repealed nor (for reasons which have not been disclosed) been invited to repeal. , it would be most surprising if, at the present day, prerogative powers could be validly exercised by the executive so as to frustrate the will of Parliament expressed in a statute and, to an extent, to pre empt the decision of Parliament whether or not to continue with the Statutory scheme even though the old scheme has been abandoned. It is not for the executive to state as it did in the White Paper (paragraph 38) that the provisions in the Act of 1988 will accordingly be repealed when a suitable legislative opportunity occurs. It is for Parliament, not the executive, to repeal legislation (p 552D E) He concluded: By introducing the tariff scheme he debars himself from exercising the statutory power for the purposes and on the basis which Parliament intended. For these reasons, in my judgment the decision to introduce the tariff scheme at a time when the statutory provisions and his power under section 171(1) were on the statute book was unlawful and an abuse of the prerogative power. (p 554G) The minority, by contrast, regarded the majoritys decision (in Lord Keiths words p 544) as a most improper intrusion into a field which lies peculiarly within the province of Parliament. In a recent article (A dive into deep constitutional waters: article 50, the Prerogative and Parliament (2016) 79(6) MLR 1064 1089), Professor Gavin Phillipson considers some lessons from that decision for the present case. As he points out (ibid p 1082), the apparently fundamental difference of approach between majority and minority came down ultimately to a narrow issue of statutory construction of section 171: whether the section imposed no duty owed to the public (p 544F per Lord Keith), or rather, as the majority thought (p 551D, per Lord Browne Wilkinson), it imposed a continuing obligation on the Secretary of State to consider whether to bring the statutory scheme into force, which was frustrated by implementation of the inconsistent non statutory scheme. Professor Phillipson also draws attention to the important observations by Lord Mustill on the balance between the three organs of the state, and in particular the means by which Parliament exercises control of the Executive, not restricted to legislative control. Although stated in a minority judgment, the underlying principles are not I believe controversial. Lord Mustill said: It is a feature of the peculiarly British conception of the separation of powers that Parliament, the executive and the courts each have their distinct and largely exclusive domain. Parliament has a legally unchallengeable right to make whatever laws it thinks right. The executive carries on the administration of the country in accordance with the powers conferred on it by law. The courts interpret the laws, and see that they are obeyed. This requires the courts on occasion to step into the territory which belongs to the executive, not only to verify that the powers asserted accord with the substantive law created by Parliament, but also, that the manner in which they are exercised conforms with the standards of fairness which Parliament must have intended. Concurrently with this judicial function Parliament has its own special means of ensuring that the executive, in the exercise of delegated functions, performs in a way which Parliament finds appropriate. Ideally, it is these latter methods which should be used to check executive errors and excesses; for it is the task of Parliament and the executive in tandem, not of the courts, to govern the country (p 567D F, emphasis added) Lord Mustill went on to comment on the development over the previous 30 years of court procedures to fill gaps where the exercise of such specifically Parliamentary remedies has been perceived as falling short, and to avoid a vacuum in which the citizen would be left without protection against a misuse of executive powers. He thought these judicial developments were welcome but not without risks: As the judges themselves constantly remark, it is not they who are appointed to administer the country. Absent a written constitution much sensitivity is required of the parliamentarian, administrator and judge if the delicate balance of the unwritten rules evolved (I believe successfully) in recent years is not to be disturbed (p 567H) Professor Phillipson comments: the British constitution works most effectively when parliamentary and judicial forms of control and accountability, rather than being framed as antagonistic alternatives, or mutually exclusive directions of travel, work together, but with clearly defined, differentiated and mutually complementary roles. (p 1089) That observation is particularly pertinent having regard to the debate which took place on the opposite side of Parliament Square on the last day of the hearing in the Supreme Court. That led to the motion, passed by a large majority of the House of Commons, the terms of which have been set out by Lord Reed (para 163). In particular, it recognised that it is Parliaments responsibility to properly scrutinise the Government while respecting the decision of the British people to leave the European Union, and ended by call(ing) on the Government to invoke article 50 by 31 March 2017. Of course the House of Commons is not the same as the Queen in Parliament, whose will is represented exclusively by primary legislation. However, the motion lends support to the view that, at least at this initial stage of service of a notice under article 50(2), the formality of a Bill is unnecessary to enable Parliament to fulfil its ordinary responsibility for scrutinising the governments conduct of the process of withdrawal. Application of the principles to the present case The logical starting point for consideration of the present case is the power which is in issue: that is, the power under article 50 of the Lisbon treaty to initiate the procedure for withdrawal by a decision in accordance with our constitutional requirements, followed by service of a notice. The existence of that power in international law is not in doubt. The issues for the court are, first, who has the right under UK constitutional principles to exercise it, and, secondly, subject to what constitutional requirements. As to the first, under Tin Council principles the position is clear. In the absence of any statutory provision to the contrary, the power to make or withdraw from an international treaty lies with the Executive, exercising the prerogative power of the Crown. As to the second, it is necessary to consider whether that power is subject to any restrictions by statute, express or implied, or in the common law. In agreement with Lord Reed, and for the same reasons, I find no such restrictions in the EU statutes. I agree with Mr Eadie that this issue must be considered by reference to the statutory scheme as it exists at the time the power in question is to be exercised. The 1972 Act of course provided the framework for what followed. But I find it illogical to search in that Act for a presumed Parliamentary intention in respect of withdrawal, at a time when the treaty contained no express power to withdraw, and there was no reason for Parliament to consider it. The 1972 Act did not remove the Crowns treaty making prerogative in respect of European matters, whether expressly or by implication (as under the De Keyser principle: majority judgment para 48). No one doubts the power of the Executive in 2008 to enter into the Lisbon Treaty, including article 50. The critical issue is how Parliament dealt with that matter for the purposes of domestic law. In the 2008 Act Parliament recognised the Lisbon treaty (including article 50) by its inclusion in the treaties listed in section 1 of the 1972 Act. Thereafter it became (by virtue of 1972 Act section 2(1)) part of the statutory framework in accordance with which, and therefore subject to which, any rights and obligations derived from EU law by virtue of that Act were to be enjoyed in domestic law. Unlike other powers in the treaty, the 2008 Act did not impose any restriction on the exercise of article 50 by the Executive. That position was confirmed by the 2011 Act, which made specific reference to article 50(3) but placed no restriction on article 50(2). There the matter rests today. Turning to the common law, the Tin Council rule is simple and uncontroversial: the prerogative does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Judged by that test the answer again is clear. Service of an article 50(2) notice will not, and does not purport to, change any laws or affect any rights. It is merely the start of an essentially political process of negotiation and decision making within the framework of that article. True it is that it is intended to lead in due course to the removal of EU law as a source of rights and obligations in domestic law. That process will be conducted by the Executive, but it will be accountable to Parliament for the course of those negotiations and the contents of any resulting agreement. Furthermore, whatever the shape of the ultimate agreement, or even in default of agreement, there is no suggestion by the Secretary of State that the process can be completed without primary legislation in some form. This analysis was in substance adopted by Maguire J in the McCord proceedings, in line with the submissions of the Attorney General for Northern Ireland (repeated in this court). He said: In the present case, it seems to the court that there is a distinction to be drawn between what occurs upon the triggering of article 50(2) and what may occur thereafter. As the Attorney General for Northern Ireland put it, the actual notification does not in itself alter the law of the United Kingdom. Rather, it is the beginning of a process which ultimately will probably lead to changes in United Kingdom law. On the day after the notice has been given, the law will in fact be the same as it was the day before it was given. The rights of individual citizens will not have changed though it is, of course, true that in due course the body of EU law as it applies in the United Kingdom will, very likely, become the subject of change. But at the point when this occurs the process necessarily will be one controlled by parliamentary legislation, as this is the mechanism for changing the law in the United Kingdom. (para 105) The Divisional Court (para 17) took a different approach. They in effect adopted the analysis proposed by Lord Pannick, taking account of the agreed (albeit possibly controversial) assumption that the article 50(2) notice is irrevocable. On that footing, even if it has no immediate effect, it will lead inexorably to actual withdrawal at latest two years later (subject to agreement to defer). Lord Pannick drew the analogy of a trigger being pulled (written case para 11 12): it is the giving of the notice which triggers the legal effects under article 50(3). Those effects are that once notification is given, [t]he Treaties shall cease to apply to the state in question, from the date of a withdrawal agreement, or if no such agreement is reached at the latest within two years from notification, unless an extension of time is unanimously agreed by the European Council and the member state concerned. Notification is the pulling of the trigger which causes the bullet to be fired, with the consequence that the bullet will hit the target and the Treaties will cease to apply. Lord Pannicks trigger/bullet analogy is superficially attractive, but (with respect) fallacious. A real bullet does not take two years to reach its target. Nor is its progress accompanied by an intense period of negotiations over the form of protection that should be available to the victim by the time it arrives. The treaties will indeed cease to apply, and domestic law will change; but it is clearly envisaged that the final form of the changes will be governed by legislation. As the Secretary of State has explained, the intention is that the legislation will where possible reproduce existing European based rights in domestic law, but otherwise ensure that there is no legal gap. Although there is no evidence from any government witness on the intended role of Parliament, we were shown without objection or contradiction the statement made by the Secretary of State to Parliament on 10 October 2016 (Hansard Vol 615). Having described the mandate for Britain to leave the European Union as clear, overwhelming and unarguable, he explained the governments plans for a great repeal Bill: We will start by bringing forward a great repeal Bill that will mean the European Communities Act 1972 ceases to apply on the day we leave the EU The great repeal Act will convert existing European Union law into domestic law, wherever practical. That will provide for a calm and orderly exit, and give as much certainty as possible to employers, investors, consumers and workers In all, there is more than 40 years of European Union law in UK law to consider, and some of it simply will not work on exit. We must act to ensure there is no black hole in our statute book. It will then be for this House I repeat, this House to consider changes to our domestic legislation to reflect the outcome of our negotiation and our exit, subject to international treaties and agreements with other countries and the EU on matters such as trade On the assumption that such a Bill becomes law by the time of withdrawal, there will be no breach of the rule in its classic form. The extent to which existing laws are changed or rights taken away will be determined by the legislation. Ultimately of course that result depends on the will of Parliament; it is not in the gift of the executive. But there is no basis for making the opposite assumption. Lord Pannicks argument in effect requires the classic rule to be reformulated: the prerogative does not extend to any act which will necessarily lead to the alteration of the domestic law, or of rights under it, whether or not that alteration is sanctioned by Parliament. We were shown no authority to support a rule as so stated, nor any principled basis for the court to invent it. In any event, that process, like the service of the article 50 notice, will be subject to Parliamentary scrutiny in whatever way Parliament chooses. It will be for Parliament and the Executive acting in partnership to determine the timing and content of the legislative programme. Pre empting the will of Parliament One possible answer to the analysis in the previous paragraph is that it would involve the Executive unlawfully frustrating or pre empting the will of Parliament. This point is touched on in the majority judgment by reference in particular to the Lord Browne Wilkinsons statements in the FBU case (see para 250 above). They are said to establish the principle that ministers cannot frustrate the purpose of a statute for example by emptying it of content or preventing its effectual operation; and that it is inappropriate for ministers to base their actions (or to invite the court to make any decision) on the basis of an anticipated repeal of a statutory provision as that would involve ministers (or the court) pre empting Parliaments decision whether to enact that repeal. (majority judgment para 51) As I understand the majority judgment, however, this line of argument does not ultimately form part of their reasoning, in my view rightly so. In the first place, the FBU case was about abuse, not absence, of power. There was no doubt as to the existence of the prerogative power. But it was held to be an abuse to use it for a purpose inconsistent with the will of Parliament, as expressed in a statute which it had neither repealed nor been invited to repeal. Such issues do not arise in this case. The Miller respondents base their case unequivocally on absence of a prerogative power to nullify the statutory scheme set up by the 1972 Act, rather than abuse (see Lord Pannicks response to Lord Reed: Day 2 Transcript, p 158, lines 8 25). Further, Lord Browne Wilkinson was not purporting to lay down any general principle about the relevance of future legislation in relation to the exercise of the prerogative. His comments were directed to the facts of the particular case, in which the new scheme was being introduced without any reference at all to Parliament. Similar arguments in the present case would have to be seen in a quite different context, which (as Lord Pannick accepts) would include the 2015 Act and the referendum result. It is one thing, as in the FBU case, to use the prerogative to introduce a scheme which is directly contrary to an extant Act, and which Parliament has had no chance to consider. It is quite another to use it to give effect to a decision the manner of which has been determined by Parliament itself, and in the implementation of which Parliament will play a central role. In such circumstances talk of frustrating or pre empting the will of Parliament would be wide of the mark. Conversely, it would be wrong to assume (as the majority appears to do: para 91) that the courts would necessarily have been powerless in the (politically inconceivable) event of the Executive initiating withdrawal entirely of its own motion, or even in defiance of a referendum vote to remain. Protection of individual interests I would not wish to leave the case without acknowledging the important submissions made by the other respondents and interveners, particularly as to the scale and significance of the interests which will be affected by withdrawal. It is not clear, however, how a requirement for statutory authority for the article 50(2) notice will do anything to safeguard those interests, nor indeed to advance the process of Parliamentary scrutiny which will ultimately be critical to their protection. I take as representative the cases for the third and fourth respondents, presented by Ms Mountfield QC and Mr Gill QC. Their submissions provide vivid illustrations of the variety of ways in which individual and group interests will be profoundly affected by implementation of the decision to leave the EU. Ms Mountfield for example provides a detailed breakdown of fundamental and non replicable EU citizenship rights. The list starts with the fundamental status of EU citizenship (Citizens Directive 2004/38/EC preamble), leading to more specific rights, such as the right to move, reside, work and study throughout the member states, the right to vote in European elections, the rights to diplomatic protection, and the right to equal pay, and to non discriminatory healthcare free at the point of use. She categorises the governments case as an assertion of untrammelled prerogative power to do away with the entire corpus of European law rights currently enjoyed under UK law, and render a whole suite of constitutional statutes meaningless, without any Parliamentary authority in the form of a statute. While there is no reason to question her account of the profound effect of the prospective changes, I do not for the reasons already given accept that this can be describe as untrammelled use of executive power, nor that the control of Parliament will be improperly bypassed. Nor does she explain how that impact will be mitigated by a statute which does no more than authorise service of the notice. Similar arguments are made by Mr Gill for the fourth respondents (the AB parties). They are representative, among others, of the very large numbers of EEA nationals and their children living in this country, whose rights to continued residence will be threatened unless adequate arrangements are made to protect them. Mr Gill refers in particular to the important right under the Citizens Directive for those who have lived in the UK for five years to apply for citizenship in the following year, a right which will be lost on withdrawal. Section 7 of the Immigration Act 1988 provides that a person shall not require leave to enter or remain in the United Kingdom in any case in which he is entitled to do so by virtue of an enforceable EU right. Typical is Mrs KK, a Polish national resident and working here since 2014, married to a third country national, with a Polish national child born in the UK in 2015. She feels in a complete state of limbo having received no assurance from the Secretary of State as to what her status will be during and after the withdrawal negotiations, nor how her husband and child will be affected. Such people, says Mr Gill, will have made life changing decisions and moved permanently to the UK with the ultimate intention of acquiring permanent residence. They may also find themselves exposed to criminal liability under the Immigration Act 1971 if their status is removed. Mr Gill recognises that Parliament may prior to actual withdrawal put in place a statutory protection mechanism; but that depends on the will of Parliament, which, he says, the Secretary of State cannot lawfully pre empt. It is, he submits, a misuse of the prerogative to foist such a situation on Parliament; the rights to remain must be addressed by Parliament before the giving of the article 50(2) notice. There are two problems with that submission. First, it is difficult to talk of the Executive foisting on Parliament a chain of events which flows directly from the result of the referendum which it authorised in the 2015 Act. Secondly, however desirable it would be for issues of detail such as those affecting his clients to be addressed at this stage, it is wholly inconsistent with the structure of article 50. That assumes the initiation of the process by a simple notice under article 50(2), to be followed by detailed negotiations leading if possible to an agreement on the terms of withdrawal. The details of the protections available for Mr Gills clients must depend, at least in part, on the outcome of those negotiations. No doubt for this reason such an extreme argument is not adopted by the other respondents. They accept that, at this stage of the article 50 process, they cannot reasonably expect anything more than bare statutory authorisation for the service of the notice. That is realistic. But it also underlines the point that successful defence of the Divisional Courts order will do nothing to resolve the many practical issues which will need to be addressed over the coming period, nor to protect the rights of those directly affected. Those problems, and the need for Parliament to address them, will remain precisely the same with or without statutory authorisation for the article 50 notice. If that is what the law requires, so be it. But some may regard it as an exercise in pure legal formalism. Conclusion Shortly after the 1972 Act came into force, Lord Denning famously spoke of the European Treaty as like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back (Bulmer Ltd v Bollinger [1974] Ch 401, 418F). That process is now to be reversed. Hydrologists may be able to suggest an appropriate analogy. On any view, the legal and practical challenges will be enormous. The respondents have done a great service in bringing these issues before the court at the beginning of the process. The very full debate in the courts has been supplemented by a vigorous and illuminating academic debate conducted on the web (particularly through the UK Constitutional Law Blog site). Unsurprisingly, given the unprecedented nature of the undertaking there are no easy answers. In the end, in respectful disagreement with the majority, I have reached the clear conclusion that the Divisional Court took too narrow a view of the constitutional principles at stake. The article 50 process must and will involve a partnership between Parliament and the Executive. But that does not mean that legislation is required simply to initiate it. Legislation will undoubtedly be required to implement withdrawal, but the process, including the form and timing of any legislation, can and should be determined by Parliament not by the courts. That involves no breach of the constitutional principles which have been entrenched in our law since the 17th century, and no threat to the fundamental principle of Parliamentary sovereignty. LORD HUGHES: (dissenting) Some observers, who have not been provided with the very detailed arguments which have been debated before us (or the something over 20,000 pages of documents which supported those arguments) might easily think that the principal question in this case is: Does the 2016 referendum result not conclude the issue, and mean that the country is bound to leave the EU? In fact, that is not the principal question. No one suggests that the referendum by itself has the legal effect that a Government notice to leave the EU is made lawful. Specifically, that is not the contention of the Government, speaking through the Secretary of State for exiting the EU. The referendum result undoubtedly has enormous political impact, but it is not suggested by the Government that it has direct legal effect. The principal question in this case is not whether the UK ought or ought not to leave the EU. That is a matter for political judgment, which is where the referendum comes in. Courts do not make political judgments. The question in this case is not whether, but how, the UK may lawfully set about leaving the EU, if that is the political decision made. It is about the legal mechanics of leaving. As the foregoing judgments show, this case is capable of stimulating discussion on a number of legally interesting topics. There are also supplementary questions arising out of the legal positions of Scotland, Northern Ireland and Wales. But, at some risk of over simplifying, the main question centres on two very well understood constitutional rules, which in this case apparently point in opposite directions. They are these: Rule 1 the executive (government) cannot change law made by Act of Parliament, nor the common law; and Rule 2 the making and unmaking of treaties is a matter of foreign relations within the competence of the government. Nobody questions either of these two rules. Mrs Miller relies on the first. The government relies on the second. The government contends that Rule 2 operates to recognise its power, as the handler of foreign relations, to unmake the European Treaties. Mrs Miller contends that Rule 1 shows that the power to handle foreign relations stops short at the point where UK statute law is changed. Mrs Millers case is that because there was an Act of Parliament (the European Communities Act 1972) to give effect to our joining the (then) EEC and to make European rules part of UK law, there has to be another Act of Parliament to authorise service of notice to leave. This is the effect, she says, of Rule 1. Thus, she says, Rule 2 is true, but does not apply. The governments case is that the European Communities Act 1972, which did indeed make European rules into laws of the UK, will simply cease to operate if the UK leaves. The Act was only ever designed to have effect whilst we were members of the EU. It agrees that as a government it cannot alter the law of the UK which statute has made, but it says that if it serves notice to leave the EU, and in due course we leave, it would not be altering the statute; the statute would simply cease to apply because there would no longer be rules under treaties to which the UK was a party. Thus, it says, Rule 1 does not apply and Rule 2 does. Which of these arguments is correct depends in the end on the true reading of the European Communities Act 1972. Clearly, either reading is possible. The majority judgment gives cogent expression to the conclusion that it is Mrs Millers reading which is correct. For my part, for the reasons which Lord Reed very clearly sets out, I would have preferred the view that this Act was only ever to be operative for so long as the UK was a member of (first) the EEC, and now the EU. It is not helpful, particularly because this is a minority view, to repeat the analysis which Lord Reed expounds. I agree with his judgment. In short, because of Rule 1 the Act was necessary to convert the UKs international obligations under the various European treaties into law with domestic effect. Without the Act, those European rules would have had effect between States at the international level but would not have been part of domestic UK law and so would not have bound UK citizens individually. But the Act is couched in terms which give legal effect to the obligations and rules which arise under the treaties. If the UK leaves the EU, there are no longer any treaties to which this country is a party. It seems to me to follow that the Act will cease to import any of the rules which presently it does. The Act is not changed; it does, however, cease to operate because there are no longer any treaty rules for it to bite upon. Thus I would, for myself, have allowed the appeal of the Secretary of State from the decision of the (English) Divisional Court. I agree that on either view of the principal Miller appeal, the devolution questions raised should all be answered no, for the reasons set out in the majority judgment. I likewise agree with the majoritys treatment of the Sewel convention. It remains only to add that the arguments before us made it clear that whatever the outcome of the Miller appeal, much the same legislative programme will be required in Parliament, upon the UKs departure from the EU, to deal with the multifarious legal rules presently operative via the 1972 Act. The issues before this court do not touch this exercise, which will be a matter in any event for Parliament. The court is concerned only with the necessary procedure for the service of an article 50 notice to leave.

UK-Abs

Article 50 of the Treaty on the European Union provides, in summary terms, that, if a member state decides to withdraw from the European Union (the EU) in accordance with its own constitutional requirements, it should serve a notice of that intention (a Notice), and that the treaties which govern the EU (the EU Treaties) shall cease to apply to that member state within two years thereafter. Following the June 2016 referendum, the Government proposes to use its prerogative powers to withdraw from the EU by serving a Notice withdrawing the UK from the EU Treaties. The principal issue in these appeals is whether such a Notice can, under the UKs constitutional arrangements, lawfully be given by Government ministers without prior authorisation by an Act of Parliament. Northern Ireland, and interventions by the Lord Advocate for the Scottish Government and the Counsel General for Wales for the Welsh Government, raise the additional issues of whether the terms on which powers have been statutorily devolved require consultation with or the agreement of the devolved legislatures before Notice is served, or otherwise operate to restrict the Governments power to do so (the devolution issues). The UKs constitutional requirements are a matter of domestic law which the parties all agree should be determined by UK judges. The issues in these proceedings have nothing to do with political issues such as the merits of the decision to withdraw, the timetable and terms of so doing, or the details of any future relationship between the UK and the EU. The claimants submit that, owing to the well established rule that prerogative powers may not extend to acts which result in a change to UK domestic law, and withdrawal from the EU Treaties would change domestic law, the Government cannot serve a Notice unless first authorised to do so by an Act of Parliament. Resolution of this dispute depends on the proper interpretation of the European Communities Act 1972 (the ECA), which gave domestic effect to the UKs obligations under the then existing EU Treaties, together with subsequent statutes, which gave effect to and related to later EU Treaties, and the European Union Referendum Act 2015. The devolution issues require the court to consider whether the terms of the Northern Ireland Act 1998 (NIA), and associated agreements, require primary legislation, and the consent of the Northern Ireland Assembly and/or the people of Northern Ireland, before a Notice can be served. Under each of the devolution settlements in Northern Ireland, Scotland and Wales the devolved legislatures have responsibilities to comply with EU law, and there is a convention (the Sewel Convention) that the UK Parliament will not normally exercise its right to legislate with regard to devolved matters without the agreement of the devolved legislature. The principal issue was raised in proceedings brought by Gina Miller and Deir Dos Santos against the Secretary of State for Exiting the European Union. The Divisional Court of England and Wales (Lord Thomas LCJ, Sir Terence Etherton MR and Sales LJ), declared that the Secretary of State did not have power to give Notice, without Parliaments prior authority. The Secretary of State has appealed to the Supreme Court against this decision. The Northern Ireland claims were heard together by Maguire J in the Northern Ireland High Court, who determined and dismissed the devolution issues, and, on an application by the Attorney General for Northern Ireland Maguire J referred four issues to the Supreme Court and the Northern Ireland Court of Appeal referred one further issue. The Supreme Court by a majority of 8 to 3 dismisses the Secretary of States appeal (Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr, Lord Clarke, Lord Wilson, Lord Sumption and Lord Hodge in the majority with Lord Reed, Lord Carnwath and Lord Hughes dissenting). In a joint judgment of the majority, the Supreme Court holds that an Act of Parliament is required to authorise ministers to give Notice of the decision of the UK to withdraw from the European Union. Each of the dissenting justices gives a separate judgment. On the devolution issues, the court unanimously concludes that neither section 1 nor section 75 of the NIA is of assistance in this case, and that the Sewel Convention does not give rise to a legally enforceable obligation. The principal issue Majority judgment The Supreme Court considers that the terms of the ECA, which gave effect to the UKs membership of the EU, are inconsistent with the exercise by ministers of any power to withdraw from the EU Treaties without authorisation by a prior Act of Parliament Section 2 of the ECA authorises a dynamic process by which EU law becomes a source of UK law and takes precedence over all domestic sources of UK law, including statutes [60]. So long as the ECA remains in force its effect is to constitute EU law as an independent and overriding source of domestic law [65]. It operates as a partial transfer of law making powers, an assignment of legislative competences, by Parliament to EU institutions, unless and until Parliament decides otherwise [67 68]. It is common ground that UK domestic law will change as a result of the UK ceasing to be party to the EU treaties and the rights enjoyed by UK residents granted through EU law will be affected [69]. The Government argues that the 1972 Act does not exclude the power for ministers to withdraw from the EU Treaties, and that section 2 of the Act actually caters for the exercise of such a power as it gives effect to EU law only so long as the power of withdrawal is not exercised [75]. However, there is a vital difference between variations in UK law resulting from changes in EU law, and variations in UK law resulting from withdrawal from the EU Treaties. Withdrawal makes a fundamental change to the UKs constitutional arrangements, by cutting off the source of EU law, [78 80]. Such a fundamental change will be the inevitable effect of a Notice being served [81]. The UK constitution requires such changes to be effected by Parliamentary legislation [82]. The fact that withdrawal from the EU would remove some existing domestic rights of UK residents also renders it impermissible for the Government to withdraw from the EU Treaties without prior Parliamentary authority [83]. It would have been open to Parliament when enacting the ECA to authorise ministers to withdraw from the EU Treaties, but clear words would have been required; not only are there no such clear words, but the provisions of the ECA indicate that ministers do not have such power [87, 88]. Withdrawal is not authorised by section 2, which envisages ministers taking part in the EU law making processes: withdrawing from the EU is doing the opposite [95]. The fact that ministers are accountable to Parliament for their actions is no answer constitutionally, if the power to act does not exist in the first place and where (as the court has been asked to assume) the exercise of the power would be irrevocable and pre empt any Parliamentary action [92]. Subsequent EU related legislation and events after 1972, including the introduction of Parliamentary controls in relation to decisions made by UK ministers at EU level relating to the competences of the EU or its decision making processes, but not to the giving of notice under Article 50(2), are entirely consistent with an assumption by Parliament that no power existed to withdraw from the treaties without a statute authorising that course [111]. The 2016 referendum is of great political significance. However, its legal significance is determined by what Parliament included in the statute authorising it, and that statute simply provided for the referendum to be held without specifying the consequences. The change in the law required to implement the referendums outcome must be made in the only way permitted by the UK constitution, namely by legislation. The Government accepts that the resolution of the House of Commons on 7 December 2016 calling on ministers to give notice under Article 50 by 31 March 2017 is a political act which does not affect the issues arising in the appeals [116 124]. Dissenting judgments Lord Reed, with whom Lord Carnwath and Lord Hughes agree, considers that the effect which Parliament has given to EU law under the ECA is inherently conditional on the application of the EU treaties to the UK and therefore on the UKs membership of the EU. The ECA does not impose any requirement or manifest any intention in respect of the UKs membership of the EU. It does not therefore affect the Crowns exercise of prerogative powers in respect of UK membership [177]. Lord Carnwath observes that service of notice under Article 50(2) will not itself change any laws or affect any rights but is merely the start of an essentially political process of negotiating and decision making within the framework of that article. The Government will be accountable to Parliament for those negotiations and the process cannot be completed without the enactment by Parliament of primary legislation in some form [259]. The devolution issues The devolution Acts were passed by Parliament on the assumption that the UK would be a member of the EU, but they do not require the UK to remain a member. Relations with the EU and other foreign affairs matters are reserved to UK Government and parliament, not to the devolved institutions. Withdrawal from the EU will alter the competence of the devolved institutions, and remove the responsibilities to comply with EU law. [129 130]. In view of the decision of the majority of the Justices that primary legislation is required for the UK to withdraw from the EU, it is not necessary for the court to decide if the NIA imposes a discrete requirement for such legislation [132]. The decision to withdraw from the EU is not a function carried out by the Secretary of State for Northern Ireland in relation to Northern Ireland within the meaning of section 75 NIA. Moreover, section 1 NIA, which gave the people of Northern Ireland the right to determine whether to remain part of the UK or to become part of a united Ireland, does not regulate any other change in the constitutional status of Northern Ireland [133 135]. As to the application of the Sewel Convention to the decision to withdraw from the EU given the effect on the devolved competences, the Convention operates as a political constraint on the activity of the UK Parliament. It therefore plays an important role in the operation of the UK constitution. But the policing of its scope and operation is not within the constitutional remit of the courts. The devolved legislatures do not have a veto on the UKs decision to withdraw from the EU [136 151].

These proceedings raise, for the first time in the courts of the United Kingdom, the question how the concepts of sufficiency and infringement are to be applied to a patent relating to a specified medical use of a known pharmaceutical compound. An important objective of modern pharmaceutical research is the discovery of new medical uses for known molecules. This commonly involves expensive research programmes, which will not be rewarded and will therefore not happen unless patent protection is available. Patent protection for second use medical patents is, however, difficult to accommodate within the traditional scheme of patent law. Traditionally, there were two legal obstacles. First, both the product and the process by which it was prepared were known from the original patent and therefore failed the test of novelty. Secondly, its use for a new therapeutic purpose was not itself patentable because article 52(4) of the European Patent Convention (the EPC) and section 4(2) of the UK Patents Act 1977 prevented the grant of patents for a method of treatment of the human or animal body. As is now well known, in 1984 the Swiss Federal Intellectual Property Office issued a statement of practice that it would be prepared to grant patents for second use medical patents in the following form: the use of compound X in the manufacture of a medicament for the treatment of indication Y: [1984] OJ EPO 581. Hence the expression Swiss form patents for patents granted in this form. The Enlarged Board of Appeal of the European Patent Office adopted this approach shortly afterwards in EISAI/Second Medical Indication G 05/83 [1979 85] EPOR B241. It ruled, at para 23, that it was legitimate in principle to allow claims directed to the use of a substance or composition for the manufacture of a medicament for a specified new and inventive therapeutic application, even in a case in which the process of manufacture as such does not differ from known processes using the same active ingredient. Swiss form patents were not product patents, but purpose limited process patents. They surmounted both obstacles because the invention is identified as neither a product nor a method of treatment but a manufacturing process for a novel purpose. This development responded to a real problem, namely the difficulty of obtaining patent protection for second uses that may have been truly inventive and involved costly research. But it has given rise to formidable analytical problems as a result of the need to apply to Swiss form patents a statutory scheme which was not designed to accommodate them. For this reason they were regarded with suspicion as intellectually impure by patent lawyers in the United Kingdom. In John Wyeth and Brother Ltds Application [1985] RPC 545, they were adopted with express misgivings by the Patents Court in the interests of uniformity among states party to the EPC. But in spite of the misgivings, they have achieved a secure place in United Kingdom patent law, and neither party to this appeal challenges them in principle. Some of the difficulties associated with them were resolved when the EPC was revised in November 2000 to provide for (among other things) the grant of purpose limited product patents: see article 54(5) of the revised Convention. Corresponding changes were made to the Patents Act 1977 by the Patents Act 2004. Once these changes came into effect, in 2011, Swiss form patents ceased to be issued by the European Patent Office. EPC 2000 patents give rise to difficulties of their own, some of which are very similar. But this appeal is not concerned with them. The patent in suit Warner Lambert is a company in the Pfizer Group. It is the proprietor of European Patent No 0641330 for Isobutylgaba for the treatment of seizure disorders, notably epilepsy. Pregabalin is a derivative of Isobutylgaba, which is also referred to by its chemical name (S) 3 (aminomethyl) 5 methylhexanoic acid. It is marketed by Warner Lambert under the brand name Lyrica. Patent No 0641330 expired in the United Kingdom on 17 May 2013. The present appeal concerns a second European Patent, EP(UK) No 0934061, entitled Isobutylgaba and its derivatives for the treatment of pain, with a priority date of 24 July 1996 (the Patent). The claims of the Patent are all purpose limited. Those which are principally relevant are Claims 1, 2 and 3, which are in the following terms: 1. Use of (S) 3 (aminomethyl) 5 methylhexanoic acid or a pharmaceutically acceptable salt thereof for the preparation of a pharmaceutical composition for treating pain. 2. Use according to Claim 1 wherein the pain is inflammatory pain. 3. Use according to Claim 1 wherein the pain is neuropathic pain. It is common ground that the skilled person to whom the Patent is deemed to be addressed is a team consisting of a neuroscientist and a clinician specialising in the treatment of pain. To explain what the skilled team would understand by the terms used in the claims, it is necessary to say something about what was known at the priority date about the physiology of pain. The second edition of Classification of Chronic Pain Syndromes and Definitions of Pain Terms, published in 1994 by the International Association for the Study of Pain, defined pain very broadly. It is an unpleasant sensory and emotional experience associated with actual or potential tissue damage or described in terms of such damage. At the priority date, pain was classified into a number of different types. The distinctions between them were neither absolute nor consistently understood. But it was generally recognised that pain fell into two broad categories: nociceptive and neuropathic pain. Nociceptive pain is produced by noxious external stimuli such as heat, extreme cold, intense mechanical pressure or chemicals. These stimuli stimulate fibres known as nociceptors, which transmit impulses via the spinal cord to the brain, where they are perceived as pain. Nociceptive pain has a bio protective function. It alerts the brain to the presence of noxious stimuli so that appropriate avoidance measures can be taken. This type of pain resolves with treatment of the underlying cause. Inflammatory pain is a type of nociceptive pain. The bodys response to an injury involves the release of chemical mediators which increase the sensitivity of nociceptors causing pain both at the site of the injury or in the surrounding area. Like other nociceptive pain, inflammatory pain resolves with the treatment of the underlying cause. In 1996, well known and efficacious treatments were available for treating inflammatory pain. They included analgesics (eg paracetamol), non steroidal anti inflammatory drugs (eg aspirin, ibuprofen) and opioids of various strengths. Neuropathic pain, unlike nociceptive/inflammatory pain, is pathological. It has no bio protective function. It is caused by damage to the nervous system itself. Neuropathic pain was defined in the second edition of the IASPs Classification of Chronic Pain as pain initiated or caused by a primary lesion or dysfunction of the nervous system. The nervous system comprises the central nervous system, ie the brain and spinal cord, and the peripheral nervous system, ie the nerves outside those structures. Critical to the issues in these proceedings is the distinction between peripheral neuropathic pain, which arises from damage or dysfunction of the peripheral nervous system; and central neuropathic pain, which is rarer and arises from damage or dysfunction of the central nervous system, for example as a result of a stroke, multiple sclerosis or spinal cord injury. The symptoms of neuropathic pain (of either kind) are more severe than those of nociceptive/inflammatory pain. They include perceptions of burning, shooting pain and electric shock pain. Moreover, unlike nociceptive/inflammatory pain, neuropathic pain is persistent, sometimes for years or for life. It was in 1996, and still is, notoriously difficult to treat neuropathic pain. In particular, treatments which were efficacious against nociceptive/inflammatory pain, such as non steroidal anti inflammatory drugs, were not regarded as effective for the treatment of neuropathic pain. Finally, it is necessary to mention allodynia and hyperalgesia, two terms which feature prominently in the evidence. Both are symptoms of pain. Allodynia is pain experienced in response to a stimulus that would not normally be expected to cause pain. Hyperalgesia is an increased response to a thermal or mechanical stimulus that one would normally expect to be painful, but less so. It may be primary hyperalgesia (occurring at the site of an injury) or secondary hyperalgesia (occurring in the area surrounding the site of the injury). Lyrica received a marketing authorisation in the European Union for the treatment of peripheral neuropathic pain and epilepsy in July 2004 and for the treatment of central neuropathic pain in September 2006. It is also authorised for the treatment of generalised anxiety disorder (or GAD). Lyrica is one of four first line treatments recommended by NICE for neuropathic pain. It is one of the Pfizer Groups most successful drugs in the United Kingdom. The present proceedings Generics (UK) Ltd (trading as Mylan) and Actavis Group PTC EHF are pharmaceutical companies that are mainly engaged in marketing generic pharmaceutical products. Actavis markets a generic pregabalin product under the brand name Lecaent, which was launched in February 2015. Caduceus Pharma Ltd hold the marketing authorisation for Lecaent in the European Union. For convenience I will refer to Actavis and Caduceus together as Actavis. Lecaent is marketed under a skinny label, ie for the treatment of some indications only. The Summary of Product Characteristics prepared for the purpose of obtaining marketing authorisation and the Patient Information Leaflet included in the packet state that the conditions for which Lecaent is indicated are epilepsy and GAD, for which patent protection has expired. In these proceedings, Mylan and Actavis claimed the revocation of the Patent on the ground of lack of inventive step and insufficiency, and Warner Lambert claimed against Actavis for infringement of Claims 1 and 3. The judge, Arnold J [2015] EWHC 2548 (Pat), rejected the arguments based on lack of inventive step, and these are no longer in issue. But he held that Claim 1 (pain) and Claim 3 (neuropathic pain) were invalid. In summary, this was because he found that there was sufficient disclosure in the specification to support the claim that pregabalin was efficacious in the treatment of inflammatory pain and peripheral neuropathic pain, but not central neuropathic pain. Since the judge construed Claim 1 as extending to all pain and Claim 3 as extending to all neuropathic pain, including central neuropathic pain, both claims failed for insufficiency. It followed that Claim 4 (cancer pain), Claim 6 (phantom limb pain) and Claim 14 (fibromyalgia), all of which in the judges view either were or could involve central neuropathic pain, failed on the same ground. Claim 13 (idiopathic pain, ie pain of unknown origin) failed on a more fundamental ground: there was nothing whatever in the specification which appeared to support it. The result of the judges decision was to remove patent protection for the manufacture of pregabalin for the treatment of neuropathic pain, save for those subsidiary claims directed solely to peripheral neuropathic pain. The judge rejected as an abuse of process an application after judgment to amend the patent by narrowing the claims in terms which would arguably have made them valid. The Court of Appeal (Floyd, Kitchin and Patten LJJ) [2016] EWCA Civ 1006 upheld the judges findings, except that they considered that fibromyalgia was not neuropathic pain but an idiopathic pain. Since they agreed that the claim relating to idiopathic pain was invalid, this made no difference to the outcome. The Court of Appeal upheld his decision on abuse of process. It followed that infringement did not arise, neither of the claims said to have been infringed being valid. The judge and the Court of Appeal differed on the test for infringement in a case where the monopoly conferred by the patent was confined to manufacture for a particular use. The judge held that if Claims 1 and 3 had been valid, they would not have been infringed. The Court of Appeal held that he had applied the wrong test, and declined to decide the point in the absence of the findings of fact which, on their preferred test, would have been required. On the present appeals, Warner Lambert contend that all the claims of the Patent were valid, although they have made no effort to justify Claim 1 (pain), Claim 13 (idiopathic pain) or Claim 14 (fibromyalgia). Their real object is to establish the validity of their claims in relation to neuropathic pain or, if they cannot achieve that, then at least those claims which relate to peripheral neuropathic pain, which is by far the commonest type. Actavis and Mylan for their part cross appeal in support of their case that none of the claims in relation to neuropathic pain are valid. The only claims whose validity they accept are those which are limited to inflammatory pain, for which there is currently no marketing authorisation. In these circumstances, the issues in the present appeal fall under four heads: (1) The construction of the claims, and in particular Claim 3 (neuropathic pain). (2) The sufficiency of the disclosure in the specification. (3) Amendment and abuse of process. (4) The test for infringement of a patent for a manufacturing for a limited use. For reasons which will become apparent, on the view which this court takes of the law, not all of these issues arise in the circumstances of this case. However all of them raise unresolved questions of considerable general importance, which have been fully argued not only by the parties, but by the Secretary of State and other interveners potentially affected by statements of principle in the courts below. It is therefore proposed to deal with all of them. Since we are not all agreed on every point, it may assist if I summarise the conclusions of the court at the outset: (1) The court unanimously affirms the view of both courts below that Claim 1 extends to all pain and Claim 3 to all neuropathic pain, whether peripheral or central. It unanimously affirms Arnold Js decision rejecting Warner Lamberts application to amend the patent so as to limit the scope of these claims. (2) The court holds by a majority (Lord Sumption, Lord Reed and Lord Briggs), that the disclosure in the specification supports the claims so far as they extend to inflammatory pain but not to any kind of neuropathic pain. It follows that Claims 1 and 3 fail for insufficiency, and that Warner Lamberts appeal must be dismissed and Actaviss and Mylans cross appeal allowed. (3) I hold, together with Lord Reed, Lord Hodge and Lord Briggs, that if Claims 1 and 3 had been valid, they would not have been infringed. We differ, however, as to the reasons. I consider, together with Lord Reed, that the intention of the alleged infringer is irrelevant and that the sole criterion of infringement is whether the product as it emerges from the manufacturing process, including any labelling or accompanying leaflet, is presented as suitable for the uses which enjoy patent protection. The judge found (paras 443 447) that Lecaent was sold with patient information leaflets to the effect that it was for the treatment of seizure disorders and GAD. Lord Mance agrees that the test depends on the objective appearance and characteristics of the product as it is prepared, presented and put on the market, but leaves open the possibility (i) that in rare cases the context may make it obvious that these are not to be taken at face value, and (ii) that there may be circumstances in which the generic manufacturer should positively exclude use for the patent protected purpose. Lord Hodge and Lord Briggs prefer the view of Arnold J that the test is whether the alleged infringer subjectively intended to target the patent protected market. Arnold J found (para 661) that they did not. This paragraph has been approved by the authors of all the other judgments. Construction and amendment Claim 3 claims use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain. The question is whether neuropathic pain in its context means all neuropathic pain, including central neuropathic pain (as Actavis and Mylan contend), or only peripheral neuropathic pain (as Warner Lambert say). I will call these the broad and narrow constructions respectively. Both the judge and the Court of Appeal decided without, it seems, much difficulty, in favour of the broad construction. I agree with them. In my opinion they were plainly right about this. Lord Briggs has dealt fully with the reasons, in terms with which I agree, and I shall not lengthen this judgment by repeating them. I also agree, for the reasons which he gives, that the judge was right to reject Warner Lamberts attempt to amend the patent so as to confine Claim 3 to peripheral neuropathic pain. For reasons which will become apparent in the following section, the amendment would not have saved Claim 3 even if it had been allowed. Sufficiency and plausibility Elementary as it is, it is worth reminding oneself at the outset of the juridical basis on which patents are granted, sometimes called the patent bargain. The inventor obtains a monopoly in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired. The point was succinctly made by Lord Mansfield in Liardet v Johnson (1778), quoted in Hulme, On the History of Patent Law, (1902) 18 LQR 280, 285: The condition of giving encouragement is this: that you must specify upon record your invention in such a way as shall teach an artist, when your term is out, to make it and to make it as well by your directions: for then at the end of the term, the public shall have benefit of it. The inventor has the benefit during the term, and the public have the benefit after . The principle remains the foundation of modern patent law, and is recognised in the case law of both the United Kingdom and the European Patent Office. In EXXON/Fuel Oils (T 409/91) [1994] OJ EPO 653, at paras 3.3 and 3.4, the EPO Technical Board of Appeal observed that it was the general legal principle that the extent of the patent monopoly, as defined by the claims should correspond to the technical contribution to the article in order for it to be supported, or justified. This means that the definitions in the claims should essentially correspond to the scope of the invention as disclosed in the description. Although the requirements of articles 83 and 84 are directed to different parts of the patent application, since article 83 relates to the disclosure of the invention, whilst article 84 deals with the definition of the invention by the claims, the underlying purpose of the requirement of support by the description, insofar as its substantive aspect is concerned, and of the requirement of sufficient disclosure is the same, namely to ensure that the patent monopoly should be justified by the actual technical contribution to the article The principal conditions of validity, novelty, inventive step, industrial application and sufficiency are all, in one way or another, directed to satisfying the principle thus expressed. Sufficiency is a condition of validity relating not to the underlying science but to its disclosure in the patent. Section 14 of the Patents Act 1977 provides: (3) The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the article (5) The claim or claims shall (a) define the matter for which the applicant seeks protection; (b) be clear and concise; (c) be supported by the description; and relate to one invention or to a group of inventions (d) which are so linked as to form a single inventive concept. These provisions correspond to EPC articles 83 and 84, which read: 83. The European patent application shall disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the article 84. The claims shall define the matter for which protection is sought. They shall be clear and concise and be supported by the description. Section 72(1) of the Act, which corresponds to EPC article 138, mirrors section 14(3). It provides for the revocation of the patent, inter alia on the ground that the specification of the patent does not disclose the (c) invention clearly enough and completely enough for it to be performed by a person skilled in the article Lord Mance has expressed the view that sufficiency is a rule of judge made law. It would I think be more exact to say that it is a statutory rule, which is fundamental to the public interest that justifies the issue of the patent. The contribution of judges has been to work out principles on which it can be applied to Swiss form patents. Section 14 of the Patents Act and the corresponding provisions of the EPC assume that an invention will be sufficiently disclosed if the specification enables it to be performed. In the case of a patent for a new product or process, that assumption is almost always correct. The skilled person will discover that it works by replicating it in accordance with the specification. But the assumption is not correct in the case of a second use patent. The invention is not the compound or the process of its manufacture. The skilled person already knows how to make the product from the prior art disclosed in the original patent. The invention consists in the new purpose for which the product is to be manufactured. If sections 14(3) and 72(1)(c) are read literally and as an exhaustive statement of the requirement of sufficiency, all that needs to be disclosed is the new purpose, which is enough to enable it to be administered to a patient suffering from the relevant condition. The skilled person does not need to know how or why the invention works in order to replicate it. The result would be that the knowledge which made the identification of the new purpose inventive need not be disclosed at all. The main problem about this result is that it would enable a patent to be obtained on a wholly speculative basis. Without some disclosure of how or why the known product can be expected to work in the new application, it would be possible to patent the manufacture of known compounds for the purpose of treating every conceivably relevant condition without having invented anything at all, in the hope that trial and error might in due course show that the product was efficacious in treating at least some of them. For that reason, both Arnold J and the Court of Appeal concluded that it was not enough simply to refer to a known compound and assert that it was efficacious for treating a specified condition. The patentee must disclose some reason for regarding this assertion as plausible. In their view, this requirement was not exacting. The Court of Appeal (para 46) put the point as follows: The EPO and domestic cases do, however, indicate that the requirement of plausibility is a low, threshold test. It is designed to prohibit speculative claiming, which would otherwise allow the armchair inventor a monopoly over a field of endeavour to which he has made no contribution. It is not designed to prohibit patents for good faith predictions which have some, albeit manifestly incomplete, basis. Such claims may turn out to be insufficient nonetheless if the prediction turns out to be untrue. A patent which accurately predicts that an invention will work is, however, not likely to be revoked on the ground that the prediction was based on the slimmest of evidence. Thus, the claims will easily be seen not to be speculative where the inventor provides a reasonably credible theory as to why the invention will or might work. The same is true where the data in the specification is such that the reader is encouraged to try the invention. Warner Lamberts primary case is that even this undemanding test is an impermissible addition to the text of the Patents Act and the European Patent Convention, and that the sole criterion of sufficiency is that the invention can be performed by the skilled person. Alternatively, they accept that some such test is necessary in order to exclude purely speculative claims, and to that extent they are prepared to add something to the literal language of sections 14(3) and 72(1)(c) of the Patents Act and EPC articles 83 and 138(1)(b). But they take issue with the courts below on two points. First, the courts below held that the patentee must show that his prediction of therapeutic efficacy was plausible in relation to everything falling within the scope of any claim if that claim was to be valid. Secondly, they held that the patentee may not demonstrate the plausibility of his prediction to the required standard by reference only to later published data. Mr Mitcheson QC, who appeared for Warner Lambert, disputed both propositions. The Court of Appeals reference to armchair inventors suggests that what they meant by speculative claiming was claiming by persons who had done nothing new or inventive at all but had simply sought to patent abstract possibilities. That may well be a particular risk in the case of patents for new uses of known compounds, especially when they are commercially successful in their existing use. In reality, however, speculative claiming of this kind is simply one of a number of ways in which a patentee may attempt to claim a monopoly more extensive than anything which is justified by his contribution to the article Other ways in which this can happen include claiming a monopoly wider than the disclosure in the patent can support. An over broad claim will not necessarily be speculative. The inventor may really have invented something corresponding to the full breadth of the claim. Research may subsequently demonstrate this. But the claim will still exceed his contribution to the art if that contribution is not sufficiently disclosed in the patent. The concept of plausibility originates in the case law of the EPO as a response to over broad claims, in particular claims to whole classes of chemical compounds supported by a description which fails to show which compounds can be expected to work. The Technical Board of Appeal treats the condition of sufficiency under EPC article 83 as satisfied if it is possible to work the invention across the scope of the claim from the information in the specification, interpreted in the light of common general knowledge at the priority date. It addresses the broader question whether the disclosed contribution to the art is commensurate with the monopoly claimed under EPC article 56, in the context of inventive step. In that context, its case law requires the formulation of a problem which the claims of the patent could be said to solve: see T 939/92 AGREVO/Triazole sulphonamides [1996] EPOR 171. It imports a requirement that the patent should disclose not just what the invention is and how to replicate it, but some reason for expecting that it will work. Plausibility was the standard to which the patentee was expected to demonstrate this. Thus in JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE/Growth differentiation factor 9 (T 1329/04) [2006] EPOR 8, the hypothetical problem calling for solution was whether a claimed polynucleotide was a member of the TGF beta superfamily. The only evidence to support the contention that it was, consisted of material published after the priority date. The patent was held invalid for want of an inventive step. The Board observed at para 12: The definition of an invention as being a contribution to the art, ie as solving a technical problem and not merely putting forward one, requires that it is at least made plausible by the disclosure in the application that its teaching solves indeed the problem it purports to solve. Therefore, even if supplementary post published evidence may in the proper circumstances also be taken into consideration, it may not serve as the sole basis to establish that the application solves indeed the problem it purports to solve. See also the Boards observations to the same effect in BRISTOL MYERS SQUIBB/Dasatinib (T 0488/16) (1 February 2017, unpublished), at para 4.9. English law diverges from this approach, although the divergence is more a question of labels than of substance. It distinguishes between so called classical insufficiency (where the skilled person is unable to perform the invention from the information disclosed in the specification) and so called Biogen insufficiency (where the claim is said to be too broad, because it exceeds the disclosed contribution to the art). It deals with both under section 14(3), the statutory analogue of EPC article 83. The expression Biogen insufficiency is derived from the decision of the House of Lords in Biogen Inc v Medeva Plc [1997] RPC 1. The patent in suit in that case claimed a class of products, namely a molecule defined partly by the way that it had been made (by recombinant DNA). The trial judge and the EPO Technical Board of Appeal had found that the disclosure was sufficient to enable the invention to be performed across the whole scope of the claim, and the Appellate Committee proceeded on the basis that that was so. But the specification described only one method of making the molecule by recombinant DNA, whereas other methods were possible which owed nothing to the matters disclosed. The patent therefore claimed more than the inventors contribution to the art warranted. The House of Lords imported into section 14(3) of the Act a concept similar to the former requirement of fair basis in section 32(1)(i) of the Patents Act 1949 (that any claim of the complete specification is not fairly based on the matter disclosed in the specification). It held that if the claim extended beyond the technical contribution to the art disclosed in the patent, it failed for insufficiency independently of any objection based on want of an inventive step and notwithstanding that the skilled person could perform the invention across the whole scope of the claim. Lord Hoffmann, delivering the leading speech, said at p 50: But the fact that the skilled man following the teaching of Biogen 1 would have been able to make HBcAg and HBsAg in bacterial cells, or indeed in any cells, does not conclude the matter. I think that in concentrating upon the question of whether Professor Murrays invention could, so to speak, deliver the goods across the full width of the patent or priority document, the courts and the EPO allowed their attention to be diverted from what seems to me in this particular case the critical issue. It is not whether the claimed invention could deliver the goods, but whether the claims cover other ways in which they might be delivered: ways which owe nothing to the teaching of the patent or any principle which it disclosed. He went on to make the same point in the context of the objection of insufficiency. Adopting the statement of principle cited above from EXXON/Fuel oils, he pointed out, at p 54, that the purpose of requiring sufficiency of disclosure could not be limited to enabling the public to work the invention after the patent had expired: Section 72(1)(c) of the 1977 is not only intended to ensure that the public can work the invention after expiration of the monopoly. It is also intended to give the court in revocation proceedings a jurisdiction which mirrors that of the Patent Office under section 14(3) or the EPO under article 83 of the EPC, namely, to hold a patent invalid on the substantive ground that, as the EPO said in Exxon/Fuel Oils (T 409/91) [1994] OJ EPO 653, para 3.3, the extent of the monopoly claimed exceeds the technical contribution to the art made by the invention as described in the specification. Lord Hoffmann was not, in these observations, addressing the question of second use patents. But such patents raise a similar problem. If it is enough to disclose how to make a known compound and for what conditions, the patentee has acquired a monopoly without adding anything to the sum of knowledge. He will have satisfied the condition of sufficiency but without satisfying its purpose. The answer to this anomaly in the case of Swiss form patents was supplied by a series of decisions in which the EPO Technical Board of Appeal held that there was to be implied into a purpose limited claim an assertion of efficacy for the designated purpose, and that this was an intrinsic technical feature of the claim. This proposition was originally established in purpose limited patents for non medical uses. In two decisions published on the same date in 1989, G2/88 MOBIL/Friction reducing additive [1990] OJ EPO 93, at para 9, and G 6/88 BAYER/Plant Growth Regulating Agent [1990] OJ EPO 114, at para 7 the Board drew attention to the Protocol on the Interpretation of EPC article 69, which required a patent to be interpreted as defining a position which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. From this they concluded that with such a claim, where a particular technical effect which underlies such use is described in the patent, having regard to the Protocol, the proper interpretation of the claim will require that a functional feature should be implied into the claim, as a technical feature; for example, that the compound actually achieves the particular effect. The principle was first applied to patents for new medical uses in T 158/96 PFIZER/Obsessive compulsive disorder (28 Oct 1998, unpublished), at para 3.1. In Prendergasts Applications [2000] RPC 446, 448 Neuberger J arrived independently at the same conclusion. It followed that the specification must include some basis for supposing that the claim to therapeutic efficacy was true: In relation to a Swiss type application, it appears to me that, in the absence of any practical evidence of the idea working (that is the idea of using a well established drug for the treatment of a condition for which it has not so far been used), the absence of any evidence of the idea working involves the absence of a description. [W]hether or not there is a description or an adequate description, for the purposes of section 14(5)(c) of the 1977 Act, must be judged by reference to the nature of the application. There is obvious force in the contention that, where you have a claim for the use of a known active ingredient in the preparation of a medicament for the treatment of a particular condition, the specification must provide, by way of description, enough material to enable the relevantly skilled man to say this medicament does treat the condition alleged, and that pure assertion is insufficient. The implications of this approach for sufficiency were considered by the EPO Technical Board of Appeal in SALK INSTITUTE FOR BIOLOGICAL STUDIES/AP I complex (T 609/02) (27 October 2004, unpublished). At para 9, the Board observed: Where a therapeutic application is claimed in the form allowed by the Enlarged Board of Appeal in its decision G 5/83 (OJ EPO 1985, 64), ie in the form of the use of a substance or composition for the manufacture of a medicament for a defined therapeutic application, attaining the claimed therapeutic effect is a functional technical feature of the claim (see G 2/88 and G 6/88, OJ EPO 1993, 93 and 114, Headnote III. And point 9 of the reasons, for non medical applications, see also T 158/96 of 28 October 1998, point 3.1 of the reasons). As a consequence, under article 83 EPC, unless this is already known to the skilled person at the priority date, the application must disclose the suitability of the product to be manufactured for the claimed therapeutic application. The Board went on to mitigate this principle so as to reflect the fact that in the case of purpose limited medical patents definitive evidence of therapeutic effect would not be available until clinical trials had been carried out. Since these would have to be disclosed, it was practically inevitable that the patent application would have to be made before any trials. This implied that sufficiency could be demonstrated by the disclosure of material supporting the claimed therapeutic effect which was less than definitive: The patent system takes account of the intrinsic difficulties for a compound to be officially certified as a drug by not requiring an absolute proof that the compound is approved as a drug before it may be claimed as such. The Boards of Appeal have accepted that for a sufficient disclosure of a therapeutic application, it is not always necessary that results of applying the claimed composition in clinical trials, or at least to animals are reported. Yet, this does not mean that a simple verbal statement in a patent specification that compound X may be used to treat disease Y is enough to ensure sufficiency of disclosure in relation to a claim to a pharmaceutical. It is required that the patent provides some information in the form of, for example, experimental tests, to the avail that the claimed compound has a direct effect on a metabolic mechanism specifically involved in the disease, this mechanism being either known from the prior art or demonstrated in the patent per se. Showing a pharmaceutical effect in vitro may be sufficient if for the skilled person this observed effect directly and unambiguously reflects such a therapeutic application (T 241/95, OJ EPO 2001, 103, point 4.1.2 of the reasons, see also T 158/96 of 28 October 1998, point 3.5.2 of the reasons) or, as decision T 158/96 also put it, if there is a clear and accepted established relationship between the shown physiological activities and the disease (loc cit). After discussing the potential value of in vitro tests for this purpose, the Board observed, at para 10: This means that the skilled person is made aware of the structure of the active ingredient proposed for the pharmaceutical composition as well as, in technical terms, of a definite link between the ingredient and the mechanism allegedly involved in the disease state. The presence of a cause/effect relationship is, thus, made plausible. It was somewhat tentatively suggested to us by Mr Mitcheson that this principle did not justify the application of a plausibility test beyond the application stage, or authorise its use as a ground for revocation. But the correspondence between EPC articles 83 and 138 makes this kind of argument difficult to accept. Mr Mitchesons main submission under this head was a different one. This was that the subsequent case law of the EPO indicates that the SALK principle applies only where the therapeutic effect suggested in the patent is inherently implausible. The argument is that it is necessary for the patentee to disclose reasons for regarding the claimed therapeutic effect as plausible only when the skilled person reading the patent would be sceptical about it in the absence of such disclosure. This submission is consistent with some turns of phrase in the cases. But it would have been a strange thing for the Technical Board of Appeal to have meant. It would be inconsistent with the reason why plausibility of the claimed therapeutic effect is required, namely to support the implied claim to therapeutic efficacy and to justify the monopoly by reference to the patentees contribution to the article If Warner Lamberts argument were sound, it would mean that if nothing was known either for or against the claimed therapeutic effect, no disclosure need be made in support of it. The leading case relied on in the jurisprudence of the EPO is T 0578/06 IPSEN/Pancreatic cells (29 June 2011, unpublished). This concerned a compound for extending the functional life of pancreatic islet cells. The patent comprised no experimental data supporting the drugs claimed therapeutic effect, but it did contain a technical explanation of its effect and an experimental methodology by which this could be verified: see para 11. The Board was concerned with the circumstances in which the specification could be sufficient without experimental data. It held, at paras 14 15: 14. The Boards of Appeal have indeed dealt with cases where, in the context of the assessment of inventive step, there could only be an invention if the application made it at least plausible that its teaching did indeed solve the problem it purported to solve and in which to establish plausibility the disclosure of experimental results in a patent application, or, under certain circumstances, by post published evidence, was considered necessary (see decision T 716/08 of 19 August 2010, points 14 to 16 for a summary of the case law). 15. The board re emphasises in this context however that this case law considers the establishment of plausibility only relevant when examining inventive step if the case at hand allows the substantiation of doubts about the suitability of the claimed invention to solve the technical problem addressed and when it is thus far from straightforward that the claimed invention solves the formulated problem. This decision is authority for the proposition that plausibility can be demonstrated in the specification without experimental evidence, if there is no substantiated doubt about the theoretical case made for the efficacy of the invention. This is the only relevant proposition for which it is authority. As the Board observed in INTERVET/Infectious salmon anaemia virus vaccine (T 0716/08) (19 August 2010, unpublished), para 15, (the case cited in the passage quoted above from IPSEN), common general knowledge at the priority date may be used to interpret the teaching in an application or a patent, but there must be something in the patent to interpret. This is no more than the Board had said in SALK itself. These principles may be illustrated by the decisions of the Board in T 1437/07 ALLERGAN/ Botulinum toxin for treating smooth muscle spasm (26 October 2009, unpublished), and T 950/13 BRISTOL MYERS SQUIBB/Dasatinib in the treatment of chronic myelogenous leukaemia (3 February 2017, unpublished). In ALLERGAN, it is unclear from the report what technical information was disclosed in support of the claim to therapeutic efficacy, except that it did not include any experimental data. The recital of the arguments shows that the sole ground on which the disclosure was said to be insufficient was that the absence of experimental data was alone enough to make the claim to therapeutic efficacy not credible. The Board dealt with this objection as follows: 38. The respondents argue that it was not credible that the therapeutic effect could be achieved because the treatment disclosed in Example 9 had not actually been carried out. 38.1 However, article 83 EPC stipulates that an invention must be disclosed in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art (emphasis added by the board). Thus, article 83 EPC does not stipulate that a claimed invention must have actually been carried out by the applicant or the inventor. Moreover, according to rule 42(1)(e) EPC, even the presence of an example is not mandatory. Therefore, just because a patent discloses an effect which has not in reality been achieved, there is no reason in the absence of convincing evidence that the effect cannot be achieved for the board to doubt that the effect can be achieved. Thus, the respondents argument does not convince the board. The decision, like the decision in IPSEN, is authority for the proposition that experimental data are not essential to sufficiency unless it is being positively alleged with convincing supporting evidence that the invention does not work. In that event it may be necessary for the patentee to point to experimental data to rebut the allegation. But this does not mean that the specification is sufficient if there is neither experimental data nor any other reason to deduce from the specification that the claim to therapeutic efficacy is plausible. The decision is not authority for saying that the objector has the onus of showing that it is implausible. Sufficiency turns on what the patentee has disclosed. It must always be necessary for the patentee to demonstrate that he has included in the specification something that makes the claim to therapeutic efficacy plausible. Otherwise a mere assertion of efficacy would be enough. The same point was made by the Board of Appeal in BRISTOL MYERS SQUIBB. The compound the subject of the patent was dasatinib for the treatment of chronic myelogenous leukaemia. The patent taught that dasatinib worked by inhibiting certain protein tyrosine kinases associated with chronic myelogenous leukaemia. No experimental data were disclosed in the specification. At para 3.6, the Board observed: The disclosure of experimental results in the application is not always required to establish sufficiency, in particular if the application discloses a plausible technical concept and there are no substantiated doubts that the claimed concept can be put into practice. The objection was that there were substantial doubts about the products efficacy for the designated purpose in the absence of either (i) experimental data, or (ii) a coherent theory which could explain such an effect, ie what the Board called a plausible technical concept. The Board of Appeal upheld the patent because it disagreed on point (ii). It thought that there was a coherent theory. This was because it was common general knowledge in the art that the inhibition of certain kinases associated with chronic myelogenous leukaemia was an effective way to treat that condition. Dasatinib had significant functional and chemical affinities with another kinase inhibitor known to be effective. This was more than a mere assertion of efficacy. The patent disclosed a coherent theory to support it in the light of common general knowledge. All of these judgments deal with highly fact specific issues arising from objections or potential objections on the ground of insufficiency. When reading them, it is important not to miss the wood for the trees. The fundamental principle which they illustrate is that the patentee cannot claim a monopoly of a new use for an existing compound unless he not only makes but discloses a contribution to the article None of them casts doubt on the proposition that the disclosure in the patent must demonstrate in the light of the common general knowledge at the priority date that the claimed therapeutic effect is plausible. On the contrary, they affirm it: see ALLERGAN at paras 26, 37, and BRISTOL at para 3.2. The Court of Appeals statement of the effect of the plausibility test has already been quoted (para 20 above). They considered that the threshold was not only low, but that the test could be satisfied by a prediction based on the slimmest of evidence or one based on material which was manifestly incomplete. Consistently with that approach, they considered (paras 40, 130) that the Boards observations in SALK laid down no general principle. I respectfully disagree. The principle is that the specification must disclose some reason for supposing that the implied assertion of efficacy in the claim is true. Plausibility is not a distinct condition of validity with a life of its own, but a standard against which that must be demonstrated. Its adoption is a mitigation of the principle in favour of patentability. It reflects the practical difficulty of demonstrating therapeutic efficacy to any higher standard at the stage when the patent application must in practice be made. The test is relatively undemanding. But it cannot be deprived of all meaning or reduced, as Floyd LJs statement does, to little more than a test of good faith. Indeed, if the threshold were as low as he suggests, it would be unlikely to serve even the limited purpose that he assigns to it of barring speculative or armchair claims. Plausibility is not a term of art, and its content is inevitably influenced by the legal context. In the present context, the following points should be made. First, the proposition that a product is efficacious for the treatment of a given condition must be plausible. Second, it is not made plausible by a bare assertion to that effect, and the disclosure of a mere possibility that it will work is no better than a bare assertion. As Lord Hoffmann observed in Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] RPC 28, para 28, it is hard to see how the notion that something is worth trying or might have some effect can be described as an invention in respect of which anyone would be entitled to a monopoly. But, third, the claimed therapeutic effect may well be rendered plausible by a specification showing that something was worth trying for a reason, ie not just because there was an abstract possibility that it would work but because reasonable scientific grounds were disclosed for expecting that it might well work. The disclosure of those grounds marks the difference between a speculation and a contribution to the article This is in substance what the Technical Board of Appeal has held in the context of article 56, when addressing the sufficiency of disclosure made in support of claims extending beyond the teaching of the patent. In my opinion, there is no reason to apply a lower standard of plausibility when the sufficiency of disclosure arises in the context of EPC articles 83 and 84 and their analogues in section 14 of the Patents Act. In both contexts, the test has the same purpose. Fourth, although the disclosure need not definitively prove the assertion that the product works for the designated purpose, there must be something that would cause the skilled person to think that there was a reasonable prospect that the assertion would prove to be true. Fifth, that reasonable prospect must be based on what the TBA in SALK (para 9) called a direct effect on a metabolic mechanism specifically involved in the disease, this mechanism being either known from the prior art or demonstrated in the patent per se. Sixth, in SALK, this point was made in the context of experimental data. But the effect on the disease process need not necessarily be demonstrated by experimental data. It can be demonstrated by a priori reasoning. For example, and it is no more than an example, the specification may point to some property of the product which would lead the skilled person to expect that it might well produce the claimed therapeutic effect; or to some unifying principle that relates the product or the proposed use to something else which would suggest as much to the skilled person. Seventh, sufficiency is a characteristic of the disclosure, and these matters must appear from the patent. The disclosure may be supplemented or explained by the common general knowledge of the skilled person. But it is not enough that the patentee can prove that the product can reasonably be expected to work in the designated use, if the skilled person would not derive this from the teaching of the patent. principles which I have considered, they can be addressed quite briefly. I turn to Warner Lamberts alternative arguments. In the light of the general The first argument is that whatever standard of plausibility is applied, the Court of Appeal were wrong to say that it had to be demonstrated across the whole scope of the claim. In my opinion, they were not wrong. As I have said, plausibility is not a distinct condition of validity, but one element in the test of sufficiency. As such, its application is governed by the same principles which apply to sufficiency generally. In a case such as this, where the claim is said to exceed the disclosed contribution to the art, it is of the essence that the specification must justify the full extent of the claim to the requisite standard. Where a feature of the claim is an assertion of therapeutic efficacy for a given condition, a monopoly is being claimed for the process of manufacturing the compound for the treatment of that condition. This does not mean that it must work for all patients suffering from that condition, or work on every occasion when it is applied by way of treatment. But it does mean that where the condition identified embraces a number of different pathologies, and the claim is construed as asserting the efficacy of the product for each of them, the assertion must be plausible in relation to them all. It must, as Kitchin LJ put it in Regeneron Pharmaceuticals Inc v Genentech Inc [2013] RPC 28, para 100 be possible to make a reasonable prediction the invention will work with substantially everything falling within the scope of the claim or, put another way, the assertion that the invention will work across the scope of the claim must be plausible or credible. Warner Lamberts second argument is that the courts below were wrong to reject later published data as relevant. This submission also is contrary to the legal basis of this particular head of insufficiency. We know that pregabalin works for the treatment of both peripheral and central neuropathic pain, because like any other medicament on the market, it underwent demanding clinical trials after the priority date, the results of which were made public. On that basis it received marketing authorisation for all neuropathic pain. This is always the case for a commercially valuable medicament, and no other kind will be worth litigating about. The question is not whether it works but whether the contribution to the art consisting in the discovery that it can be expected to work has been sufficiently disclosed in the patent. The inherent difficulty of demonstrating this before clinical trials is taken into account in the modest standard (ie plausibility) which is applied to test it. This point was made by the EPO Technical Board of Appeal in SALK, at para 8: Sufficiency of disclosure must be satisfied at the effective date of the patent, ie on the basis of the information in the patent application together with the common general knowledge then available to the skilled person. Acknowledging sufficiency of disclosure on the basis of relevant technical information produced only after this date would lead to granting a patent for a technical teaching which was achieved, and, thus, for an invention which was made, at a date later than the effective date of the patent. The general principle that the extent of monopoly conferred by a patent should correspond to, and be justified by, the technical contribution to the art, has to be kept in mind. This does not mean that subsequent data is never admissible in a dispute about sufficiency, but the purpose for which it is admitted is strictly limited. Where the asserted therapeutic effect is plausible in the light of the disclosure in the patent, subsequent data may sometimes be admissible either to confirm that or else to refute a challengers contention that it does not actually work: see, for example, ASTRAZENECA/Omeprazole Na (T 1677/11) (27 November 2012, unpublished), MERCK, SHARP & DOHME/Pharmaceutical nanoparticulate composition of a Tachykinin receptor antagonist (T 0210/11) (17 July 2014, unpublished). But it cannot be a substitute for sufficient disclosure in the specification. As the EPO Technical Board of Appeal observed in JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE/Growth differentiation factor 9 (T 1329/04) [2006] EPOR 8 at para 12, (cited above), it cannot be a substitute for sufficient disclosure in the specification. Application to the present case to the judgment of Arnold J. The empirical data disclosed in the patent in support of the claim to therapeutic efficacy consisted of references to a number of pre clinical animal models used to test drugs for various kinds of pain. The following facts about these models are either agreed or found by the judge: In what follows, unless otherwise stated, references to paragraph numbers are 1. The most significant model was the rat paw formalin test. This involves the injection of a noxious agent (formalin) into a rats paw. The rat is monitored for the next hour and the amount of time that it spends licking or biting the paw is recorded. There are two phases. The first phase, which lasts about ten minutes, models the acute nociceptive pain caused by the injection itself. The second phase, which lasts about 45 minutes, models inflammatory pain. Nonsteroidal anti inflammatory drugs were not effective for neuropathic pain, but were known to be efficacious in the second phase. The Patent specification accordingly recorded that the test results showed that pregabalin was effective in treating inflammatory pain. At the trial Warner Lambert contended that nonetheless it was common general knowledge that the second phase could also be predictive of efficacy in treating neuropathic pain. The judge found, at para 235, that the evidence did not establish this. 2. The carrageenin test also models inflammatory pain. Carrageenin, an inflammatory agent, is injected into the sole of a rats paw and tests are carried out to determine the extent of thermal or mechanical hyperalgesia. The Patent specification recorded that test results showed that pregabalin was effective in treating inflammatory pain. There is nothing in the literature to suggest that the carrageenin test could be used to predict efficacy for neuropathic pain, either on its own or in conjunction with the rat paw formalin test. 3. The post operative pain model tests for pain responses following surgery. The rats paws plantaris muscle is incised under anaesthetic. After 24 hours the rat is assessed for mechanical hyperalgesia and tactile allodynia. Both are referred to in the Patent as nociceptive responses. Nothing in the literature suggests that this model can be used to predict efficacy for neuropathic pain, either on its own or in conjunction with the rat paw formalin test. 4. The specification also refers to two well known models for peripheral neuropathy, the Bennett model and the Kim and Chung model. However, no data are presented from either model. It follows that the experimental data in the specification was predictive of efficacy for the treatment of inflammatory pain. But the specification does not claim that the experimental data presented makes it plausible that pregabalin is effective for the treatment of any kind of neuropathic pain. In these circumstances, the specification supported Claim 3 only if it would have suggested to the skilled person that there was some unifying principle which made it plausible that pregabalin would also work with neuropathic pain. The judge had already found, at para 161, in the context of the challenge for obviousness, that the skilled person would not have considered that there was any reasonable basis for thinking that an anticonvulsant like pregabalin, known to be effective for the treatment of epilepsy, would for that reason alone be effective for treating neuropathic pain. Warner Lambert identified the relevant unifying principle as central sensitisation, a phenomenon discovered by Professor Clifford Woolf, one of their expert witnesses at trial, and published by him in 1983. Central sensitisation was a well known concept at the priority date. It refers to the sensitisation of neurons in the dorsal horn to peripheral painful stimuli. For present purposes it is unnecessary to describe the detailed physiological processes involved. Essentially, pain signals originating in injury at the periphery are transmitted to the spine and intensified, resulting in allodynia and secondary hyperalgesia. The experts were agreed that central sensitisation is common to inflammatory pain and peripheral neuropathic pain but was not known to be causative of either (para 191). Moreover, there is no necessary correlation between allodynia and secondary hyperalgesia on the one hand and either central sensitisation or neuropathic pain on the other. The judge found (para 205) that allodynia and secondary hyperalgesia were present in a large majority of patients suffering from neuropathic pain, but there was a significant minority of cases in which they were not present. Moreover, although allodynia and secondary hyperalgesia involved central augmentation, in some cases this would be central sensitisation, in others not. Central sensitisation is not the only mechanism of central augmentation (para 61). A significant part of the evidence at trial was concerned with the role of central sensitisation in the second phase of the rat paw formalin test. This, as I have pointed out, models inflammatory pain. The judge found (para 235) that it was not known to be predictive of efficacy for neuropathic pain. The evidence established that central sensitisation played a role in the pain experienced in the second phase. But the judge found that it was not generally understood to be a dominant role (paras 211, 213 214). By this I understand him to have meant (since this was the issue between the experts) that it amplified but did not cause the pain experienced in the second phase. Against this background, the judge dealt first with central neuropathic pain. He rejected the suggestion that central sensitisation could serve as a unifying principle embracing it. This was because although central sensitisation was understood to contribute to inflammatory pain and peripheral neuropathic pain, both of which originate in the peripheral nervous system, it cannot contribute to central neuropathic pain, which has nothing to do with damage to the peripheral nerves (paras 193, 348). There was an issue at trial about the correct classification of fibromyalgia and phantom limb pain. They were said to be exceptions to this proposition. But the judge (para 194) was not satisfied that this was common general knowledge. These findings are fatal to the argument that central sensitisation can serve as a unifying principle embracing central neuropathic pain. The judges reasons for rejecting that argument seem to me to be unanswerable. The judge refused to allow Warner Lambert to argue by way of alternative that the presence of hyperalgesia or allodynia itself served as a unifying principle embracing central neuropathic pain, because it had not been pleaded, advanced in evidence or put to the relevant witnesses. But in any event he considered (para 349) that the evidence did not support it, mainly because it was difficult to reconcile with the fact that nonsteroidal anti inflammatory drugs were known to be effective for the treatment of inflammatory pain but not neuropathic pain. Turning to peripheral neuropathic pain, which is the subject of Actavis and Mylans cross appeal, the judge evidently found this to be a difficult issue. He considered the evidence to be finely balanced, but concluded on balance (para 351) that the specification enabled a plausible prediction to be made that pregabalin would be effective for treating peripheral neuropathic pain. His reasoning was as follows: In addition to the general points made above, Warner Lamberts case suffers from the problem that it has not been established that it was common general knowledge that the rat paw formalin test was predictive of efficacy for neuropathic pain. Moreover, as discussed above, Professor Woolf accepted that the carrageenin and post operative pain models did not assist in this regard. Nevertheless, I have concluded on balance that, given that plausibility is a relatively low threshold, the data contained in the specification, when read with the common general knowledge, just make it plausible that pregabalin would be effective to treat peripheral neuropathic pain. This is because the common general knowledge as to (i) the involvement of central sensitisation (at least as an amplifying mechanism) in both inflammatory pain and peripheral neuropathic pain and (ii) the role played by central sensitisation in the rat paw formalin test would have suggested to the skilled team that it was possible that a drug which was effective for inflammatory pain, in particular as modelled by the second phase of the formalin test, would also be effective in peripheral neuropathic pain, although this would not necessarily be the case. This conclusion is supported by the evidence not only of Professor Woolf, but also of Dr Scadding and Professor Wood in cross examination. Dr Scadding said that, when he read the Patent, he thought that it could be the case that pregabalin would be effective for (peripheral) neuropathic pain, although a demonstration of that was missing. Professor Wood more or less accepted that it was a credible suggestion, although he made it clear that he would want to test it experimentally. An appellate court should not normally interfere with conclusions of a trial judge which depend on his evaluation of a substantial body of expert evidence: see Biogen Inc v Medeva Plc [1997] RPC 1, 50 (Lord Hoffmann). I consider, however, that Actavis and Mylan are entitled to succeed on their cross appeal, not because there was anything wrong with the judges findings, but because those findings do not support his conclusion that the specification makes it plausible to predict that pregabalin will be efficacious for treating neuropathic pain. The question, it must be remembered, is not whether it is plausible but whether the specification discloses something that would make it so in the eyes of the skilled person. The starting point was pointed out by the judge himself (para 255) in the context of the challenge based on obviousness. Because the only evidence of therapeutic efficacy presented in the specification is the results of the four animal models, the skilled person would understand that the patentee was relying on these as being predictive of efficacy. Those results were, however, predictive only of efficacy for inflammatory pain. The specification does not in terms claim more than this. No data are presented for the two recognised models of neuropathic pain, the Bennett model and the Kim and Chung model. There is no mention of central sensitisation, or indeed of any unifying principle that might embrace any condition other than inflammatory pain. This is an unpromising basis for a submission that there is a unifying principle which enables any kind of conclusion about efficacy for neuropathic pain to be derived from results of the animal models. The judges analysis of the implications for peripheral neuropathic pain of the data presented in the specification was based entirely on the common general knowledge that central sensitisation was involved in both inflammatory and peripheral neuropathic pain. The judge concluded from this that it was possible that a drug which the specification showed to be effective for the first would also be effective for the second, although this would not necessarily be the case. In my opinion this is a logical non sequitur. The reason for seeking a unifying principle embracing neuropathic as well as inflammatory pain is that the unifying principle may suggest a common cause or metabolic mechanism embracing both, whose operation may be affected by the drug. That might in turn suggest that a drug which was effective for one condition might also be effective for the other. The involvement of central sensitisation in both inflammatory and peripheral neuropathic pain does not prove or even suggest that they have a common cause. Indeed, it is clear that they do not. The involvement of central sensitisation in both inflammatory and peripheral neuropathic pain does suggest that there may be a common metabolic mechanism at work, at least in intensifying the pain. But neither the specification nor the common general knowledge of the art supplies any reason for supposing that pregabalin affects the operation of that mechanism or even that it might well do. In particular, there is nothing to suggest, even as a hypothesis, that pregabalin works with peripheral neuropathic pain by blocking central sensitisation. The information presented in the specification about the rat paw formalin test does not assist on this point. The rat paw formalin test, as I have said, models inflammatory pain. It shows a diminution of pain in the second phase, associated with the administration of pregabalin. But in the absence of anything in the specification about the effect of pregabalin on the mechanism of pain, there is no reason to suppose that the diminution of pain is associated with its effect on central sensitisation as opposed to its effect on any other agent of inflammatory pain. The judge had found (paras 211, 214) that central sensitisation was not the dominant factor in the second phase of the test. If, notwithstanding the involvement of central sensitisation in both inflammatory and neuropathic pain, the rat paw formalin model is not predictive of efficacy for neuropathic pain, I find it difficult to see how the model can assist in making such a prediction plausible. The judge was obviously conscious of the logical inconsistency, and believed that he had found a way of resolving it. With respect, I do not think that he had. More generally, it cannot in my view be enough to justify a monopoly that it is possible a priori that a drug which was effective for inflammatory pain would also be effective for neuropathic pain, in the absence of any reason to suppose that the possibility had some scientific basis or that it was more than speculative. Everything is possible that is not impossible, but not impossible is very far from being an acceptable test for sufficiency. Plausibility may be easy to demonstrate, but it calls for more than that. Floyd LJ said (para 133) that he was fortified in his conclusions by a further consideration, which the judge had not relied on, namely that it was established through the evidence that the skilled team would be encouraged by the data in the patent to carry out simple tests (which are themselves identified in the patent) to confirm the suitability of pregabalin for peripheral neuropathic pain. I would have thought, on the basis of that evidence (as I think the judge did) that the specification had thereby made a contribution to the art which would justify a claim to peripheral neuropathic pain. The simple tests that Floyd LJ was referring to were the Bennett and the Kim and Chung tests for peripheral neuropathic pain; and the evidence that he had in mind was that of Dr Scadding, the expert clinician called by Actavis and Mylan: see paras 119 120 and 127. Dr Scadding had accepted that the skilled person would be encouraged by the data in the patent to ask the neuroscientist to test pregabalin for neuropathic pain. Professor Wood, the expert neuroscientist called by Actavis and Mylan who would notionally have been asked to carry out these tests, gave more guarded answers when he was asked to deal with the point in cross examination: Day 2, pp 265 269. His evidence, in summary, was that there were no data whatever about neuropathic pain in the patent, but that he would be encouraged by the broad terms of the claims to try many tests, including the Bennett and the Kim and Chung tests. There were, he said, many different pain mechanisms that can give apparently similar symptoms, for which there were different models, and it would be necessary to test for all of them. Some were difficult to test for. It was put to him that even the Bennett and the Kim and Chung tests would not provide definitive proof of efficacy, because it was a step by step process. His final answers on this point fairly reflect the tenor of his evidence, so far as one can judge from the transcript: A. So one would just carry out an analysis of all these different models, to see where the drug had better utility than present medication. The data in the patent would give you sufficient motivation to carry out further tests and step by step you would reach the stage where you have demonstrated that pregabalin was effective for the treatment of pain? A. It would certainly inspire you to analyse its activity in a broad range of pain models. Of course, this would be useful for the clinician attempting to exploit the drug in treating various different types of human pain. Animal models are not ideal, but they are always a useful pointer for the clinician. Q. A useful starting point? A. Absolutely. I am conscious of the danger of an appellate court analysing extracts from a transcript of evidence on complex and inter related technical questions, where so much depends on the impression that the witnesss evidence as a whole has made on the trial judge. But in the absence of any discussion of this point by the judge, I feel unable to attach the same importance to it as Floyd LJ did. There is, however, a more fundamental objection to it, which is well brought out by the evidence which I have cited from Professor Wood. In classical insufficiency cases, where the question is whether the disclosure in the patent enables the skilled person to perform the invention, the skilled person may be assumed to supplement the disclosure by carrying out simple tests. In cases like this one, where the invention is novel but the objection of insufficiency is that the claim exceeds the disclosed contribution to the art, the role of hypothetical simple tests is necessarily more limited. As the EPO Technical Board of Appeal observed in JOHNS HOPKINS, at para 12, the specification can be said to contribute to the art if it solves a problem, but not if it merely poses one. Or as Lord Hoffmann observed in a passage that I have already quoted, the notion that something is worth trying cannot be enough without more to justify a monopoly. The specification in the present case says nothing about neuropathic pain of any kind. It says nothing about central sensitisation, which is said to provide a link between neuropathic and inflammatory pain. The mere fact that the skilled team, faced with an apparent discrepancy between the breadth of the claims and the absence of supporting data in the specification, would be encouraged to fill the gap by carrying out tests of its own, serves only to confirm the absence of any disclosed contribution to the article I conclude that Claim 3 of the patent and the other claims relating to neuropathic pain were invalid for insufficiency. The disclosure did not contribute any knowledge of the art capable of justifying a claim to a monopoly of the manufacture of pregabalin for the treatment of neuropathic pain of any kind. Decisions in other jurisdictions Mr Mitcheson reminded us more than once in the course of his submissions that if we were to hold Claim 3 insufficient we would be the only court to do so in the various jurisdictions party to the EPC. In issuing the Patent, the EPO had rejected the suggestion that it might be insufficient, albeit without giving detailed reasons. Warner Lambert also rely on decisions of the courts of France, Germany and Sweden, all of which have subsequently upheld Claim 3 as sufficient. This is more than a forensic point. If courts in other jurisdictions have upheld Claim 3, that may serve as a reality check against my own, less favourable conclusions. Other things being equal, it would be unfortunate if different jurisdictions party to the EPC arrived at different conclusions concerning the same patent. However, other things are rarely equal, and the force of this point depends entirely on how far the factual and technical evidence before the foreign court was the same as the material before Arnold J, and how far their domestic statutes were comparable. In France, the Tribunal de Grande Instance of Paris published its judgment on 8 July 2016. They appear to have had before them transcripts of at least part of the evidence given to Arnold J. They held that the Patent was sufficient because the occurrence of allodynia and hyperalgesia provided a unifying principle embracing both neuropathic and nociceptive pain. There are difficulties about this theory, as Arnold J pointed out (para 349), but for present purposes it is enough to say that this was the alternative argument which he refused to allow Warner Lambert to run, a ruling which was not challenged before us. In Germany, the Federal Patent Court ruled on 24 January 2017 that the Patent was invalid for lack of inventive step. It dealt only briefly with the objection of insufficiency, holding that it was probable that the disclosure was sufficient to enable the invention to be carried out. The court does not appear to have grappled with what in England would be called Biogen insufficiency. This judgment is also under appeal. In Sweden, the Stockholm District Court, sitting as a Patent Court, gave judgment on 12 August 2016. This decision is final. The District Court came closer than those of France and Germany to grappling with the issues before us, but it received expert evidence which was not before Arnold J. The court applied the classic sufficiency test, asking whether the claim was plausible across the whole scope of the claim. It considered that the mere mention of Bennett and the Kim and Chung test made the assertion of efficacy for treating neuropathic pain plausible, but it did not distinguish for this purpose between central and peripheral neuropathic pain. The Court of Appeal in the present case disagreed, on the ground that these were tests for peripheral neuropathic pain which could not justify a claim to efficacy for all neuropathic pain. I also disagree, both for that reason and for the wider reasons which I have already given. After the argument was completed, we were supplied with the recent decision of the Full Court of the Federal Court of Australia on 23 February 2018. Australia is not, of course party to the European Patent Convention, and the court expressed reservations about applying the case law of the EPO Technical Board of Appeal or decisions under the United Kingdom Patents Act 1977 in an Australian statutory context. The court analysed the question solely in terms of classical insufficiency. It was therefore concerned only with the question whether the invention could be performed by the skilled man on the basis of the disclosure in the patent. None of these decisions cause me to doubt the conclusions that I have reached as a matter of English law, in the light of the evidence given and the facts found in these proceedings. Infringement: general Patent infringement is a statutory tort. Section 60 of the Patents Act 1977 (so far as is relevant) provides as follows: 60.(1) Subject to the provisions of this section, a person infringes a patent for an invention if, but only if, while the patent is in force, he does any of the following things in the United Kingdom in relation to the invention without the consent of the proprietor of the patent, that is to say (a) where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise; (b) where the invention is a process, he uses the process or he offers it for use in the United Kingdom when he knows, or it is obvious to a reasonable person in the circumstances, that its use there without the consent of the proprietor would be an infringement of the patent; (c) where the invention is a process, he disposes of, offers to dispose of, uses or imports any product obtained directly by means of that process or keeps any such product whether for disposal or otherwise. (2) Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom. Some general points should be made at the outset about section 60 of the Patents Act. First, although liability for infringement is often said to be strict, section 60 of the Patents Act distinguishes between those heads of infringement which require proof of a mental element and those which do not. In short, under section 60(1)(a) and (c), there is no mental element. Liability, as Lord Hoffmann observed in Merrell Dow Pharmaceuticals Inc v HN Norton & Co Ltd [1996] RPC 76, 92, is absolute. It depends upon whether the act in question falls within the claims and pays no attention to the alleged infringers state of mind. On the other hand, an allegation of infringement under section 60(1)(b) (at any rate by offering the process for use in the United Kingdom), or an allegation of indirect infringement under section 60(2), on the other hand, requires proof of knowledge. In both cases, the knowledge required is encapsulated in the phrase when he knows, or it is obvious to a reasonable person in the circumstances . Secondly, section 60 uses a consistent conceptual approach to the relationship between the words product, process and invention. Invention is a class with only two members, product and process, and the invention in question is the subject matter of one or more claims in the patent. Thus, for the purposes of section 60, phrases about using the process, product or invention, or working the invention or putting the invention into effect need to be understood and applied by reference to the claim (or claims) in the patent alleged to be infringed. Direct infringement: section 60(1)(c) It is common ground that Swiss form claims are purpose limited process claims. Claim 3 of the patent in suit is not a product claim, because the product is not novel. It is a process claim because it protects the process of preparation (or manufacture) of a medicament containing pregabalin. It is purpose limited because it only protects that process so far as it is undertaken for treating neuropathic pain. The monopoly claimed is a monopoly of preparation or manufacture of the product for the designated purpose. It is not a monopoly of the subsequent use of the product for that purpose. This is the basis on which Claim 3 is consistent with the prohibition of patents for methods of treatment or diagnosis. It follows that Warner Lamberts allegation of direct infringement is and must be based on section 60(1)(c). Section 60(1)(c) is concerned with cases where a product is obtained directly by means of the patented process. Infringement occurs whenever a person disposes of that product, offers to dispose of it, uses or imports it, or keeps it, whether for disposal or otherwise. The infringer may be, but need not be, the same as the person who makes the product. The section also applies to anyone in the downstream generic market, including wholesalers and pharmacists. Liability is strict. Provided only that the product has been obtained directly by means of the process, it extends to subsequent dealings with all and every such product irrespective of knowledge. The current regime in the United Kingdom for the prescribing and dispensing of medicines is described in admirable detail by the judge, but the following summary will suffice. Unless there is good reason to do otherwise, doctors usually prescribe generically, by reference to the international non proprietary name of the drug (the INN), rather than by brand or proprietary name. Thus, doctors would usually prescribe pregabalin rather than either Lyrica or Lecaent, regardless of whether they were treating a condition for which the original patent had expired, such as epilepsy, or a condition such as neuropathic pain for which patent protection still subsisted. Doctors do not usually include on their prescriptions any description of the condition (or indication) being treated. Pharmacists are free to respond to generic prescriptions by dispensing either a branded or a generic product. Generic products are usually much cheaper than the branded product and, for that and other reasons, pharmacists have an incentive to dispense generic products where possible. They usually do so without knowing the indication for which the drug has been prescribed. Many prescriptions are collected by someone other than the patient. Patients may not know precisely the indication to which the prescription relates, in particular if they are using several drugs to address a combination of indications. It is usually impracticable for the busy pharmacist to contact the busy doctor to find out the indication for which pregabalin was prescribed. The result is that the pharmacist will not know whether the prescription addresses an indication which is patent protected. The manufacturer and the supplier of generic pregabalin is even further removed from any actual knowledge of the use for which his product is being prescribed. He knows only what can be inferred from published statistics about the market for different uses of pregabalin, and his own share of that market. Because doctors commonly prescribe generically and the pharmacist generally does not usually know what indication is being treated, the use of skinny labels specifying the purpose of the generic product cannot reliably prevent the pharmacist from dispensing the generic product for a patent protected use. Dispensing pharmacists know that Lyrica and Lecaent are identical, and the same dosage regime can be used for all indications for which pregabalin has received marketing authorisation. In March 2015, shortly after Lecaent came onto the market, the judge gave directions as a result of which the NHS in England, Wales and Northern Ireland (but not apparently in Scotland) issued guidance to doctors to prescribe Lyrica rather than pregabalin for neuropathic pain, and to pharmacists to dispense Lyrica in response to a prescription for generic pregabalin if told that the prescription was for the treatment of pain. It is by no means clear that it will always be appropriate to meet problems arising in relation to second medical use patents by guidance of this kind. Mr Silverleaf QC for the Secretary of State told us on instructions that the established conventions about prescribing generically had evolved for good reason, and could not lightly be discarded. In particular the use of INNs rather than proprietary names in prescription records served as clear and valuable guidance to other practitioners taking over the care of patients from the prescribing doctor. There was some evidence before the judge at the trial that his guidance had been effective in limiting the scale of the problem. What is, however, clear is that whatever steps are taken to limit the leakage of generic pregabalin into the patent protected market, it is foreseeable that some generic pregabalin will be supplied in good faith by pharmacists to meet prescriptions which are intended by the prescribing doctors for the treatment of neuropathic pain. At the hearing before us, the parties were agreed that there was a mental element in infringement under section 60(1)(c). This was not because of the terms of the section itself, which provides for strict liability. It was said to be because a mental element was intrinsic to the claim said to have been infringed. The preparation of the compound must be for the treatment of the designated condition. This cannot mean suitable for that purpose, for a claim thus framed would lack novelty: the product was just as suitable for the newly discovered purpose before the priority date, even if this was not generally known. Therefore, it was said, it must mean that the manufacturer must make the product with the intention that it be used for that purpose, if the product is to fall within the confines of section 60(1)(c). The difference between the parties concerned the test of intention. Actaviss case was that the test of the manufacturers intention was subjective. The manufacturer must make the product with intent to target the patent protected market. Arnold J accepted that submission. Warner Lamberts primary case was that the test of the manufacturers intention was objective, and that a manufacturer must be taken to intend the foreseeable consequences of his actions. It was therefore enough to support a case of infringement of Claim 3 under section 60(1)(c) that it was foreseeable to the manufacturer that a more than de minimis amount of it would in due course be used for the treatment of neuropathic pain. The Court of Appeal broadly accepted Warner Lamberts submission subject to two qualifications. First, the downstream use for treating pain had to be intentional rather than accidental. By this they meant only that patients would receive the drug for treating their pain, rather than for example for treating epilepsy, with a coincidentally beneficial effect upon pain from which they happened also to suffer. The second qualification was more important. Floyd LJ held that the requisite mental element could be negatived if the manufacturer had taken all reasonable steps to prevent the downstream use of his drug for treating pain. At para 208 Floyd LJ said this: The intention will be negatived where the manufacturer has taken all reasonable steps within his power to prevent the consequences occurring. In such circumstances his true objective is a lawful one, and one would be entitled to say that the foreseen consequences were not intended, but were an unintended incident of his otherwise lawful activity. In his judgments on the application for an interim injunction [2015] EWCA Civ 556 (at paras 74 92) and the substantive appeal (paras 190 191), Floyd LJ considered another possibility, which he called (not entirely accurately) the only packaging will do approach. This approach, which he associated with the case law of the German courts, treats the question whether a product was manufactured for a designated purpose as depending only on whether there was some outward manifestation of that purpose in the manufacture itself, including any information about its purpose contained in the accompanying label or patient information leaflet. He rejected it because he considered that it gave insufficient protection to the patentee. Before us, Warner Lambert maintained their primary case, but adopted the Court of Appeals qualified version of it as a fall back. The Secretary of State, and other interveners with a stake in the market for treating the non patented use, supported Actavis case. No one adopted the only packaging will do approach. But after the hearing, the parties addressed it in writing, at the invitation of the court. Actavis adopted it by way of alternative to their primary case that the test required proof of subjective targeting. Warner Lambert and the Secretary of State maintained their respective original positions. It is clearly correct that this issue depends not on the meaning of section 60(1)(c) of the Patents Act but on the construction of the relevant claims in the patent. The question is what, as a matter of construction, does it mean to claim in a patent the use of pregabalin for the preparation of a medicament for treating neuropathic pain. In my view, most of the difficulty in answering this question arises from the view of both courts below that Claim 3 (and any other purpose limited claim in Swiss form) includes a mental element, namely the intention of the manufacturer, as part of the definition of the monopoly. This view is perhaps invited by the common use of the phrase purpose limited to describe a claim in Swiss form. The expression is convenient, but it elides a number of different concepts, not all of which involve a mental element. I think that a test for infringement which depended on intention, whether objective or subjective, would be contrary to principle and productive of arbitrary and absurd results. It is first necessary to say something about the distinction between subjective and objective intention, which is legally fundamental. Subjective intention is a state of mind, ascertained as a matter of fact. A person may subjectively intend X if, for whatever reason, he deliberately does an act which is liable to bring X about, desiring it to happen. The degree of probability of X occurring may be relevant to the question whether it should be inferred as a fact that such a desire existed, but that is a question of proof and not of principle. Objective intention by comparison is not so much a matter of fact as an artificial construct for attributing legal responsibility. A person is taken to intend the ordinary and natural consequences of his acts. He objectively intends those consequences if they were foreseeable to a reasonable person, whether or not they were actually foreseen by him. Policy considerations may determine the degree of probability with which the consequence must be foreseeable if legal responsibility is to be attributed on that basis. The first point to be made applies to any test of infringement based on intention, whether subjective or objective. A Swiss form patent protects the process of manufacture of a product for the treatment of the designated condition. The hypothesis is that some of a generic manufacturers output will be prescribed or dispensed for the treatment of the patent protected indication and that the manufacturer intends this, subjectively or objectively. But it is not suggested that different parts of his output can be appropriated at the manufacturing stage to distinct therapeutic uses. If the manufacturers intention is the touchstone, then the only intention that can realistically be attributed to him is that his output will be applied to the treatment of neuropathic pain as well as seizure disorders. If that intention is proved, the entire output will be tainted, including that part of it which is in fact prescribed and dispensed for the treatment of seizure disorders for which patent protection has expired. It will all have been prepared with the relevant intention on the part of the manufacturer. It follows that a distributor supplying or a pharmacist dispensing generic pregabalin will be dealing in a product obtained by means of a patented process within the meaning of section 60(1)(c) of the Act, and I deal first with the hypothesis that the test is subjective intention. will incur liability for infringement even if it has been prescribed for epilepsy rather than pain, because of the manufacturers intention that it should be used for either or both. The interventions in the present appeal show that pharmacists are well aware of this risk. Their only safe course will be to refuse to deal with the generic product at all. This will in turn impact on generic manufacturers. They will be dissuaded from producing generic drugs even for treating the original indication which is no longer entitled to patent protection. First, a patent is a public document. It is autonomous, in the sense that it is supposed to define exhaustively what the product or process is which is the subject of the legal monopoly. For the scope of the monopoly to be dependent on some extraneous fact not ascertainable from the patent but dependent on the state of mind of the manufacturer, is an extraordinary concept. It is not easy to see how it could be said to comply with the requirement of section 14(5)(a) of the Act that the claim in the patent application should define the matter for which the applicant seeks protection. The same is true of the corresponding provision of EPC article 84. It is fair to say that a person can infringe a patent under section 60(1)(c) by handling a product obtained by the patented process, although it is not apparent from the product that it was obtained by the patented process. But that cannot be a reason for piling Pelion upon Ossa by holding that the patent need not even exhaustively define what the process is. Secondly, if subjective intention is relevant, then liability under section 60(1)(c) extends to a person who infringes a purpose limited patent by virtue not of his own intentions but of the intention of someone else, namely the generic manufacturer. I know of no other legal context in which the wrongfulness of an act can depend on the state of mind of someone other than the actor, to which the actor is not necessarily privy. Thirdly, subjective intention implies choice. This is in particular true of the form of intention proposed by Actavis as relevant, namely targeting the patent protected market. What the manufacturer of the generic product must intend is its use for the patent protected purpose by prescribing physicians and dispensing pharmacists. Their practices are outside his control. He cannot meaningfully be said to choose that they will prescribe or dispense pregabalin for the treatment of pain merely by manufacturing it. A hope that they will do so is not the same as an intention. Fourthly, the practical problems of applying a test based on subjective intention are striking. Suppose that the generic manufacturer makes pregabalin intending it to be used for (inter alia) the treatment of pain, but that objective is not achieved? Does the mere intention taint the entire production run, even if it is all used for conditions such as epilepsy for which patent protection has expired? Suppose that the manufacturer makes more of the product than he believes can be sold for the treatment of seizure disorders or takes active steps to encourage its use for the treatment of pain. Is the liability of the importer, wholesaler or pharmacist to depend on whether the manufacturer resolved to take those steps at the time of manufacture or afterwards? No rational scheme of law could depend on such considerations as these. And all of this of course assumes that the manufacturers state of mind can be proved. In the great majority of cases it would have to be inferred from his overt acts. In practice, the most that one can usually say is that use for the patent protected purpose is an objectively foreseeable consequence of the manufacture of the product for distribution and sale. I turn therefore to Warner Lamberts hypothesis that that is the test. The foreseeability test has the merit of being objective, but there is in my view little else to commend it. Foreseeability is, as I have pointed out, a device for attributing legal responsibility to the person who should have foreseen the objectionable consequences of his acts, whether or not he actually did so. Its use as the basis for attributing legal responsibility to someone else seems to me to be entirely arbitrary. There are other difficulties about it. Since it is common ground that some more than de minimis leakage of generic pregabalin into the market for treating neuropathic pain is foreseeable whatever reasonable steps are taken, the simple foreseeability test means that all stocks of generic pregabalin will have been manufactured by use of the patented process regardless of the manufacturers subjective intention. Consequently, any subsequent dealing with those stocks by importers, distributors or pharmacists will constitute infringements under section 60(1)(c). The result would be to give the patentee a de facto extension of the expired patent for the original use until the expiry of the patent for the new one. Warner Lambert recognised that this was likely to be an unacceptable result, and submitted that it could be mitigated by a flexible approach to remedies. Injunctions could be refused, they suggested, and financial recovery limited by confining the patentee to an account of the infringers profits, based upon an assessment of the proportion of generic pregabalin dealt with by any infringer which is actually used for the treatment of pain. These concessions to reality may have been forensically necessary, but in my view they are no more satisfactory than the unqualified foreseeability test. First, they assume that dealers in generic pregabalin going about a lawful business of supplying it for its non patented use are infringers. But they are entitled to conduct their trade lawfully, as no doubt most would wish to. The courts cannot properly adopt a solution that makes that impossible. Secondly, while the court may be able to withhold an injunction as a matter of discretion, damages are not a discretionary remedy. The patentee has, in principle, a right to elect between damages and an account of profits. They are alternative remedies, but the choice is not the courts. Thirdly, an election by the patentee for damages would expose the infringer to liability for the loss of the patentees profit margin on lost sales of the branded product. That will generally be much higher than the profit margin on the generic product, since it has to cover the patentees research costs. Warner Lamberts alternative case is that the foreseeability test should be applied subject to the qualification proposed by the Court of Appeal, namely that the infringer had taken all reasonable steps to prevent leakage of generic pregabalin into the market for the patented use. The problem about this is while there are steps available to a manufacturer to limit the scale of the leakage of generic pregabalin into the market for the patent protected use, there are no reasonable steps which will eliminate it entirely. Although the Court of Appeal described the taking of steps by the manufacturer as sufficient to negative intention to manufacture pregabalin for the patent protected purpose, it will not in fact negative it if the test of intention is foreseeability. This is because the manufacturer will be taken to intend the foreseeable leakage notwithstanding the steps taken to reduce its scale. In reality, what the Court of Appeal has proposed is not a way of negativing intention. It is a non statutory defence to infringement. Such a defence may or may not be desirable. But Parliament has not provided for one, and it is not the function of the courts to invent non statutory defences to statutory torts. Least of all is it their function to invent a non statutory defence to a statutory tort of strict liability, which is subject to limited express statutory defences none of which applies. It is right to add that the Court of Appeals compromise is likely to be legally uncertain and practically unworkable. How are distributors or pharmacists to know what steps have been taken by the manufacturer to prevent leakage, or whether they will be regarded by the court as reasonable? Warner Lambert do not suggest that the reasonable steps required of the generic manufacturer will be limited to skinny labelling or some other precaution visible to users of the generic product. The claims fall to be interpreted, in accordance with the Protocol on the interpretation of article 69 EPC, on a basis which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. What is fair or reasonable for these purposes falls to be considered in the light of the central objectives of this area of law. It is possible to identify four such objectives. They are: 1. To provide reasonable protection to the second medical use patentee, so as to reward and to incentivise the complex and expensive processes of research and testing necessary to bring these valuable uses to the market. That protection needs, as far as is consistent with competing policy objectives, to protect the patentee against the invasion of his monopoly by competitors. 2. To allow the public the benefit of the product for its original therapeutic use, unconstrained by any patent rights once the patent covering that use has expired. As Sir Donald Nicholls VC famously observed in Merrell Dow Pharmaceuticals Inc v H N Norton & Co Ltd [1995] RPC 233, 238, patents exist today to reward and thereby encourage inventors; they are not intended to make it possible to take out of public use processes or products already made available to the public. The patentee has had the reward of his invention for the original use and should not obtain, by a side wind, an effective continuing monopoly in relation to the original use after the expiry of the patent protection for it. 3. To provide reasonable legal certainty for those engaged in the manufacture, marketing and prescribing of the generic drug for the non patented use, that their conduct is lawful. This policy objective is expressly recognised by the Protocol and, without it, the second objective is unlikely to be achievable. 4. To protect the autonomy of clinical judgments. The prohibition in EPC article 52(4) (now article 53(c)) and section 4(2) of the Patents Act) of patents for methods of treatment or diagnosis has been described by the EPO Technical Board of Appeal as securing that medical and veterinary practitioners are free to use their skills and knowledge of the best available treatments to achieve the utmost benefit for their patients uninhibited by any worry that some treatment might be covered by a patent: G 0001/07 MEDI PHYSICS/Treatment by surgery [2010] EPOR 25 at para 3.3.6. The foreseeability test, in either its qualified or unqualified form, would achieve objective 1 but frustrate objectives 2, 3 and 4. The subjective targeting test would probably achieve a reasonable balance between objectives 1 and 2, but it would not serve objectives 3 and 4. I conclude that the intention of the manufacturer, whether subjective or objective, is irrelevant to the question of infringement. In my opinion, in a purpose limited process claim, the badge of purpose is the physical characteristics of the product as it emerges from the relevant process, including its formulation and dosage, packaging and labelling and the patient information leaflet which in EU (and other) countries will identify the conditions for whose treatment the product is intended. I shall call this, for want of a better phrase, the outward presentation test. I adopt it for the following reasons. First, it provides an objective test, which is not dependent on proof of the internal cogitations of the manufacturer. The patient information leaflet is not just a public statement of the use for which the product is made, but one which is directly addressed to the potential user, ie to those persons whose acts are potentially within section 60(1)(c), namely importers, distributors, pharmacists and patients. Accordingly, it avoids the unacceptable anomalies associated with a test based on the manufacturers subjective intention. Secondly, as the EPO has recognised (see para 26 above), in a purpose limited claim, the designated purpose is an inherent characteristic of the invention. The outward presentation test is consistent with this notion. A test based on intention is not. This is because the manufacturers state of mind in exploiting the process is not a characteristic of the invention. It is a characteristic of the inventor, coming into being after (usually long after) the invention has been made and the patent granted. Likewise, the market conditions which may make some consequence of manufacture objectively foreseeable are not a characteristic of the invention. They arise from subsequent facts. Third, the outward presentation test properly reflects the critical feature of Swiss form patents, namely that the patent is for the process of manufacture, not for the subsequent use that may be made of the product. The physical presentation of the product is generally part of the process of manufacture. Subsequent activities of the manufacturer in marketing the product are not. Fourth, it provides legal certainty, in particular for those downstream of the manufacturer who deal in the product. Fifth, and critically, it strikes a fair balance between the public interest in rewarding the invention by allowing the patentee to exploit his monopoly and the public interest in the free use of the invention for therapeutic uses which do not have, or no longer have, patent protection. In my opinion, it satisfies all four policy objectives governing the interpretation of patent claims which I summarised at para 82 above. Finally, the outward presentation test derives some support from the case law of the EPO Technical Board of Appeal. The Board does not of course deal with infringement claims, but it has construed purpose limited claims as referring to the purpose identified by reference to the characteristics of the product. In T 1673/11 GENZYME/Treatment of Pompes disease [2016] EPOR 33, the patent claimed use of human acid alpha glucosidase in the manufacture of a medicament for the treatment of infantile Pompes disease. In opposition proceedings, the Board (para 9.1) defined the scope of the claim as limited to the manufactured medicament which contains as an active substance human acid alpha glucosidase in the 100 110 kD form and which is packaged and/or provided with instructions for use in the treatment of infantile Pompes disease. (Emphasis added) Outward presentation is a rough paraphrase of the German sinnfllige Herrichtung which is the major part of the test of infringement applied to purpose limited patent claims by the German courts: see Antivirusmittel (Case X ZR 51/86) (Bundesgerichthof, 16 June 1987), (1987) GRUR 794, at para 18; Chronische Hepatitis C Behandlung/Ribavirin I (Case 4a O 145/12) (Landgericht Dsseldorf, 24 February 2004); Chronische Hepatitis C Behandlung/Ribavirin II (Case 4a O 145/12) (Landgericht Dsseldorf, 14 March 2013); Cistus Incanus (Case I 2 U 53/11) (Oberlandesgericht Dsseldorf, 31 January 2013). This is why Floyd LJ associated what he called the only packaging will do test with German law. It is, however, important to guard against the over ready transfer of concepts from one legal system to another, in which the legal context may be different. For the purpose of determining infringement, German law does not distinguish between product and process claims in the clear cut way that the United Kingdom Patents Act does. In either case, the monopoly claimed may be treated as extending to the use made of the product after its manufacture: Patentgesetz, section 9 and Dexmedetomidin (Case I 2 U 30/17) (Oberlandesgericht Dsseldorf, 1 March 2018), (BeckRS 2018, 2410, at paras 41 43). Moreover, many of the anomalies considered above are avoided in German law by the limitation of monetary remedies for infringement to cases of deliberate or negligent infringement, although negligence will readily be assumed: Patentgesetz, section 139(2). This background explains why the German courts, while applying an objective test, have been prepared on appropriate facts to find infringement of purpose limited claims on a wider basis than the mere presentation of the product: see strogenblocker (Case I 2 W 6/17) (Oberlandesgericht Dsseldorf, 5 May 2017) at para 39, and Dexmedetomidin (Case I 2 U 30/17) (Oberlandesgericht Dsseldorf, 1 March 2018) at para 44. However, whether or not it is soundly based on German law, Floyd LJs objection to the only packaging will do test deserves to be considered on its merits. His main point was that once it was accepted (as it was, by both parties before him) that there was a mental element in a purpose limited claim, there was no reason to limit the evidence of the manufacturers intention to the physical presentation of the product. As he pointed out (para 191), packaging may be a means of demonstrating the necessary mental element, whatever that is, but it cannot possibly be the only means of doing so. I accept that there is force in this point, which is one reason why I reject the importation of a mental element in the claim. It falls away if the mental element is discarded. More pertinent is Floyd LJs objection that an outward presentation test gives insufficient protection to the patentee. One can imagine circumstances in which the labelling and the patient information leaflet of a generic manufacturer might be regarded as a charade. He might, for example, manufacture pregabalin with the intention of supplying an unexceptionable label and patient information leaflet but then encouraging dealers and pharmacists to supply it for the treatment of pain. To the extent that this is a realistic scenario, the outward presentation test may be imperfect. But I cannot regard the existence of such imperfections as decisive, for two reasons. In the first place, the patentees interest, although important, is not the only consideration. As I have pointed out by reference to the Protocol on the interpretation of EPC article 69, the interpretation of a claim requires the court to take account both the reasonable protection to which the patentee is entitled and the need for legal certainty for third parties. Broader policy objectives, including the public interest in the free exploitation of a product for a patent expired use, are also relevant. This may involve, as it does in this case, a compromise between opposing and incommensurate factors. It may be thought anomalous that the manufacturer of the generic product should be free of liability if he markets it for a patent protected use provided that he labels it as being for a non protected use. But to my mind it is a far greater anomaly that in a charade case the generic manufacturers intention exposes to liability not just himself but any pharmacist who handles his product even if he scrupulously supplies it only for a non protected use. Secondly, the imperfect nature of the protection conferred by an outward presentation test arises, as it seems to me, from a limitation inherent in a Swiss form patent. A persons exposure to liability for infringement depends on the purpose for which the patent protected product was manufactured. The patentees protection is therefore necessarily incomplete. A test which treated the claim as extending to the promotion of the product after its manufacture appears on the face of it to ignore this limitation. There is no perfect solution to this problem in the absence of a general defence of good faith available to third parties, such as exists in Germany in the case of claims to monetary remedies. But we are not in a position to add such a defence to the UK Patents Act. I consider that the outward presentation test is less imperfect than any other. The evidence does not enable us to say how serious the problem identified by Floyd LJ really is. The legislation was not drafted with purpose limited products in mind, and if it proves to be serious it must be for the legislature to address it. Indirect infringement: section 60(2) Warner Lamberts alternative case of infringement, based on section 60(2) can be shortly dealt with. Section 60(2) is concerned with indirect infringement, ie with cases where a person incurs liability for infringement by knowingly supplying to a primary infringer the means of putting the invention into effect. There is a mental element in indirect infringement, for knowledge is expressly required. But it is unnecessary on this appeal to explore what that entails. Lecaent is manufactured by Balkanpharma in Bulgaria to the order of Actavis, which then imports and markets it in the United Kingdom. This case has proceeded at all levels on the basis that Actavis can be treated as if they were the manufacturer. The infringement case under section 60(2) is that, in supplying Lecaent in the United Kingdom, Actavis are knowingly supply[ing] in the United Kingdom a person with means, relating to an essential element of the invention, for putting the invention into effect. The argument is that the invention is the use of pregabalin to treat neuropathic pain, and that it is put into effect when a pharmacist dispenses a pack of Lecaent against a prescription written by a doctor for neuropathic pain. Therefore by supplying Lecaent (directly or indirectly) to pharmacists Actavis supply them with the means for putting the invention into effect. The short answer to this is that the invention protected by Claim 3 is the manufacture of pregabalin for the designated use, and not the subsequent use of the product for treating patients. This is what the Court of Appeal decided, correctly in my view, in Menashe Business Mercantile Ltd v William Hill Organisation Ltd [2003] 1 WLR 1462: see para 24 (Aldous LJ). It was the ground on which the judge struck out the indirect infringement claim on the interlocutory application of Actavis. It was re instated by the Court of Appeal as arguable. At trial, Arnold J held that the argument was bad. In the Court of Appeal, Floyd LJ adhered to his earlier view. He accepted that Menashe was authority for the proposition that the invention in section 60(2) was the process identified in the relevant claim. But he considered that the preparation referred to in the claims might still not be put fully into effect until the pharmacist had dispensed the medicament and affixed a sticker with the patients name on it. He warned against the danger of translating section 60(2) into infringement limited to acts upstream of manufacture. In my view Arnold J was right about this. The whole purpose of the Swiss form for purpose limited medical use claims is to avoid the problem of lack of novelty associated with product claims and the statutory provision which makes a method of treatment unpatentable. It is well understood that the degree of protection available from a Swiss form claim may be more limited than that available from standard product claims. These essential features of purpose limited patents are fatal to any attempt to construe Claim 3 as extending to steps taken by the pharmacist. Disposal For these reasons, I would dismiss Warner Lamberts appeal and allow the cross appeal of Actavis and Mylan on insufficiency. LORD BRIGGS: Overview I am grateful to Lord Sumption for his introduction to this difficult appeal. In bare outline, and adopting his classification of the issues, I consider that the Court of Appeal was correct on the issues as to construction, amendment and abuse of process, for reasons which I shall shortly give. I agree with Lord Sumptions reasons for concluding that both the judge and the Court of Appeal were wrong on the issue of sufficiency. But I have reached a different conclusion from his on the issue about infringement. We both agree that the Court of Appeals test for infringement was wrong, as is the test proposed by the appellants. For the reasons given below I have concluded that the judge and the respondents in their primary case were broadly right, on the test for infringement of a patent for a purpose limited process claim. Construction Claim 3 claims use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain. The question is whether neuropathic pain in its context means all neuropathic pain, including central neuropathic pain (as Actavis and Mylan contend), or only peripheral neuropathic pain (as Warner Lambert say). I will call these the broad and narrow constructions respectively. Both the judge and the Court of Appeal decided without, it seems, much difficulty, in favour of the broad construction. I agree with them. There is no issue about the basic principles of construction. Section 125(1) of the Patents Act 1977 provides that the claim must be: interpreted by the description and any drawings contained in that specification, and the extent of the protection conferred by a patent or application for a patent shall be determined accordingly. Section 125(3) provides that: the Protocol on the Interpretation of article 69 of the European Patent Convention (which article contains a provision corresponding to subsection (1) above) shall, as for the time being in force, apply for the purposes of subsection (1) above as it applies for the purposes of that article. The Protocol provides: Article 69 should not be interpreted as meaning that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving an ambiguity found in the claims. Nor should it be taken to mean that the claims serve only as a guideline and that the actual protection conferred may extend to what, from a consideration of the description and the drawings by a person skilled in the art, the patent proprietor has contemplated. On the contrary, it is to be interpreted as defining a position between these extremes which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. The Claims must be construed in their context in the patent as a whole, including its summary and detailed description and the teaching which it discloses. A course must be steered between the Scylla of slavish literalism and the Charybdis of pure purposiveness, a task which recent English cases about construction generally suggest requires a constant hand on the tiller. The object is to interpret them as they would be understood by a person skilled in the art, with all the common general knowledge available to such a person as at the priority date. The only substantial difference between the parties about the principles of construction arose from Lord Pannick QCs submission on behalf of Warner Lambert that patents should be construed on the principle of validating construction. In other words, where possible, a construction should be preferred which results in the relevant claim be treated as valid (ut res magis valeat quam pereat). The principle is well established as applied to the construction of contracts and subordinate legislation. But there is some English authority for its application to patents. In Parkinson v Simon (1895) 12 RPC 403, which was decided long before the Protocol was adopted, Lord Davey observed, at p 411. if the language of a claim be ambiguous, and if it be fairly capable of two constructions, the court would be disposed to adopt that construction which would uphold the patent, and not that which would render it invalid. More recently, the same point was made by Neuberger J in Kirin Amgen Inc v Roche Diagnostics GMBH [2002] RPC 1, para 286. There is also substantial support for it in other common law jurisdictions. It was adopted by the Supreme Court of the United States in Turrill v Michigan Southern Railroad Co (1863) 68 US (1 Wall) 491 and Klein v Russell (1873) 86 US (19 Wall) 433. And more recently by the Full Court of the Federal Court of Australia in H Lundbeck A/S v Alphapham pty Ltd (2009) 177 FCR 151. Emmett J observed in that case, at para 52: A specification must be given a purposive rather than a purely literal construction and must be construed in a practical common sense manner, avoiding a too technical or narrow construction in favour of a construction under which the invention will work, as against one according to which it may not work. In Letourneau v Clearbrook Iron Works Ltd (2005) FC 1229 in the Federal Court of Canada there are dicta to much the same effect, at para 38. Nonetheless, in my opinion, validating construction will not usually have a significant place in modern patent law. The main problems about it were well stated by Sedley LJ (with whom Aldous LJ agreed) in Smithkline Beecham plcs Patent [2003] RPC 49, at para 103. Because the law has historically been suspicious of monopolies for well known reasons of public policy, there is no useful analogy between a patent and a deed or a written contract. The latter two will have been drafted for a purpose which, assuming it not to be illegal or contrary to public policy, the law will do what it properly can to uphold. A patent, by publicising an invention, makes it the patentees sole property for 20 years, so that the patentees immediate interests are in opposition to those of the rest of the world. It is in societys longer term interests that, by setting the two things in balance, genuine innovation should be protected and rewarded without stifling further invention. Lord Daveys approach, and any analogue of it, would reward opaque drafting as objectionably as the infringers defence in cases like Edison Phonograph seeks out opacity where, on a fair minded reading, there is none. The Convention and Protocol place such exercises off limits in a way which, it seems to me, our law well understands and which sits comfortably with the wording and intent of section 125(1). Lord Daveys statement in Parkinson v Simon was a thing of its time. Validating construction was developed as a principle of interpretation during the 19th century as a counter weight to strict grammatical construction at a time when the latter was otherwise the dominant rule. Its importance in modern times has been greatly diminished by the emergence of purposive construction, as applied to contracts and legislation as well as to patents: see Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183, HL(E). Validating construction is now often mentioned as if it were but one aspect of that modern approach. It is also right to remember that until 1919 the courts power to amend a patent was extremely limited and that it did not assume its present wide form until 1977. In Lord Daveys time and for many years thereafter, it was natural to apply to patents the same principle of validating construction which applied to contracts and delegated legislation, neither of which could be saved except by striking out severable provisions (the so called blue pencil test). The principles of construction embodied in the European Patent Convention will not necessarily correspond to those applied in the law of the United States and other common law countries. The Protocol strikes a careful balance between the conflicting interests involved: between literal and purposive construction, between maintaining competition and rewarding invention, and between fair protection for the proprietor and reasonable legal certainty for potential competitors. The latter consideration is reinforced by the express requirements of clarity and definition in section 14(5)(a) and (b) of the Patents Act 1977 and the corresponding provisions of EPC article 84. A presumption in favour of validity would cut across the legal policies underlying patent protection in all of these respects. These considerations apply to all patents, but they are perhaps particularly important in relation to second medical use patents. There is a positive public interest in the active ingredient becoming available to be used freely for the original use after the patent for that use has expired, because that is the quid pro quo for the prior 20 years monopoly granted to the patentee. It follows that there is a particular need for legal certainty in fixing the dividing line between the original use and the new one. There are therefore sound reasons of policy for requiring clarity in the claims of patents of this kind. None of this means that claims are to be construed with a predisposition to find fault, or the description read with a mind that is not willing to learn. But it does require that an issue as to the construction of a claim should be addressed, as far as possible, by deciding what it really does mean, rather than by too easily accepting that there is ambiguity, and resolving it by inventing a meaning which saves the claim from invalidity. construction on the following main grounds: I turn to the meaning of Claim 3. Warner Lambert argues for the narrow 1. There was no settled usage among those skilled in the art at the priority date as between the broad and the narrow meaning, so that its meaning in the context of the Patent has to be derived from its detailed contents. 2. The specification, particularly in paragraphs 3 and 6, points to the narrower construction, both as a matter of definition and because it cites examples of peripheral neuropathic pain only, making no mention of the main examples of central neuropathic pain, so that the phrase neuropathic pain in Claim 3 should be construed eiusdem generis. 3. In the event that (1) and (2) leave the meaning ambiguous, the validating principle should be applied, in favour of the narrow construction. Ground (1) is correct up to a point. It is common ground that the skilled team would at the relevant time have known of the definition of neuropathic pain by the International Association for the Study of Pain (IASP) in its publication The Classification of Chronic Pain as including both peripheral and central neuropathic pain. The note to the definition (Peripheral neuropathic pain occurs when the lesion or dysfunction affects the peripheral nervous system. Central pain may be retained as the term when the lesion or dysfunction affects the central nervous system.) shows that the distinction between the two was well understood. This is not inconsistent with the evidence given by some but not all of the experts that a skilled team might use the phrase neuropathic pain in a broader or narrower sense, depending upon the context. Given the distinction between the two kinds of neuropathic pain, and the need for precision in the drafting of the Claims, the use in Claim 3 of the global expression is significant. Ground (2) calls for a careful examination of paragraphs 3 and 6 of the description against the background of the full list of claims. Paragraphs 3 and 6 of the description are in the following terms: The instant invention is a method of using a [0003] compound identified below in the treatment of pain, especially for treatment of chronic pain disorders. Such disorders include, but are not limited to, inflammatory pain, postoperative pain, osteoarthritis pain associated with metastatic cancer, trigeminal neuralgia, acute herpetic and postherpetic neuralgia, diabetic neuropathy, causalgia, brachial plexus avulsion, occipital neuralgia, reflex sympathetic dystrophy, fibromyalgia, gout, phantom limb pain, burn pain, and other forms of neuralgic, neuropathic, and idiopathic pain syndromes. [0006] The instant invention is a method of using (S) 3 aminomethyl 5 methylhexanoic acid or a pharmaceutically acceptable salt thereof as an analgesic in the treatment of pain as listed above. Pain such as inflammatory pain, neuropathic pain, cancer pain, postoperative pain, and idiopathic pain which is pain of unknown so origin, for example, phantom limb pain are included especially. Neuropathic pain is caused by injury or infection of peripheral sensory nerves. It includes, but is not limited to pain from peripheral nerve trauma, herpes virus infection, diabetes mellitus, causalgia, plexus avulsion, neuroma, limb amputation, and vasculitis. Neuropathic pain is also caused from chronic alcoholism, human by nerve damage immunodeficiency virus infection, hypothyroidism, uraemia, or vitamin deficiencies. Neuropathic pain includes, but is not limited to pain caused by nerve injury such as, for example, the pain diabetics suffer from. The full list of claims is as follows: 1. Use of (S) 3 (aminomethyl) 5 methylhexanoic acid or a pharmaceutically acceptable salt thereof for the preparation of a pharmaceutical composition for treating pain. 2. Use according to Claim 1 wherein the pain is inflammatory pain. 3. Use according to Claim 1 wherein the pain is neuropathic pain. 4. Use according to Claim 1 wherein the pain is cancer pain. 5. Use according to Claim 1 wherein the pain is postoperative pain. 6. Use according to Claim 1 wherein the pain is phantom limb pain. 7. Use according to Claim 1 wherein the pain is burn pain. 8. Use according to Claim 1 wherein the pain is gout pain. 9. Use according to Claim 1 wherein the pain is osteoarthritic pain. 10. Use according to Claim 1 wherein the pain is trigeminal neuralgia pain. 11. Use according to Claim 1 wherein the pain is acute herpetic and postherpetic pain. 12. Use according to Claim 1 wherein the pain is causalgia pain. 13. Use according to Claim 1 wherein the pain is idiopathic pain. 14. Use according to Claim 1, wherein the pain is fibromyalgia pain. Warner Lambert argues that the third sentence of paragraph 6 of the description is a definition of neuropathic pain as peripheral pain, because it identifies the peripheral sensory nerves as the location of its cause. They say that such of the long list of particular types of pain in paragraphs 3 and 6 as can be fitted within neuropathic pain are all examples of peripheral neuropathic pain. They point out that the two best known types of central neuropathic pain, namely stroke and multiple sclerosis, are not mentioned anywhere in the description or the claims. These points are also correct, up to a point. However, I do not accept that the third sentence of paragraph 6 of the description is a general definition of neuropathic pain for the purposes of the remainder of the patent, or that paragraphs 3 and 6 as a whole implicitly limit the invention to peripheral neuropathic pain. My reasons are as follows: 1. The starting point is paragraph 3 of the description, which contains the summary of the invention. The list of conditions to be found there is expressly described as non exclusive (include, but are not limited to). Paragraph 6 of the specification is an expansion of paragraph 3. It is headed Detailed Description and describes an invention for the treatment of pain, as listed above. 2. Although the third sentence of paragraph 6 would support the narrow definition if read on its own, it is in fact one of three descriptions of the causes of neuropathic pain in paragraph 6. Its function is simply to introduce the next sentence which contains illustrative examples of peripheral neuropathic pain. The second place where neuropathic pain is described includes vitamin deficiencies, which can cause both central and peripheral neuropathic pain. The third is deliberately expressed in non exclusive terms (includes, but is not limited to). It is correct that there is no express reference to pain from strokes or multiple sclerosis, but these are by no means the only types of central neuropathic pain. 3. Claim 3 appears in a list of claims which begin at the broadest level of generality and then descends by stages to the more particular. Claim 1 covers all pain, without exception. Claims 2 and 3 then divide pain into two classes of pain which cover substantially the whole field except for idiopathic pain, the subject matter of Claim 13. Thus Claim 2 covers all kinds of inflammatory pain while Claim 3 covers all kinds of neuropathic pain. All the remaining claims, apart from Claim 13, relate to more narrowly defined types of pain which fall within either of Claim 2 or Claim 3. 4. The descriptions in paragraphs 3 and 6 of the specification have to be read as addressing all the claims, rather than focussing on particular claims by way of narrowing their scope. They repeatedly use words of inclusion rather than exclusion. Bearing in mind that the skilled team would have been aware that a well known published classification of neuropathic pain was a broad one which included both central and peripheral elements, they would not be prompted by the language of paragraphs 3 and 6 to look for some sign that neuropathic pain was being used in a narrower sense than it appears to have in the hierarchy of the Claims. 5. Paragraphs 3 and 6 are in my view an example of torrential drafting designed to make the widest possible assertions of the utility of pregabalin for pain relief, ahead of a set of claims deliberately designed to go first for the broadest classes of use monopoly, (Claims 1 to 3), with more narrowly drawn fall back claims (Claim 4 and following) if the broad classes should prove invalid. Turning to Warner Lamberts Ground 3, even if the validating principle has some limited role to play in construing a patent, I would not have regarded Claim 3 as an occasion for applying it, because Claim 3 is not in my view ambiguous. Ambiguity is the necessary condition for applying an interpretative presumption of this kind. The principle does not authorise the construction of the patent so as to create an ambiguity which can then be resolved in favour of validity. In the result, I arrive at the same conclusion as the courts below, even if their emphasis on particular points may not be identical to mine. The judge may have been wrong, as the Court of Appeal said he was, to describe fibromyalgia and phantom limb pain as types of central neuropathic pain, but this does not undermine the central thrust of his analysis of the construction of Claim 3. Amendment and abuse of process Arnold J handed down his trial judgment on 10 September 2015. Warner Lambert responded to their failure on sufficiency in relation to central neuropathic pain by applying on 1 October 2015 to amend Claim 3 by adding to the end the words caused by injury or infection of peripheral sensory nerves. Following previous Court of Appeal guidance that applications to amend a patent should be decided by analogy with the principles applicable to the amendment of pleadings, the judge refused the application. He concluded that it would give rise to issues (of clarity, added matter and sufficiency) requiring a further trial, that this could have been avoided by an application to amend (if necessary in conditional terms) before or even during the trial. He thought that it was an abuse of process to leave the application until after the handing down of judgment. The Court of Appeal agreed. Warner Lambert challenge this decision before us on three main grounds. First, they submitted that the assimilation of the principles governing the amendment of a patent to those governing the amendment of pleadings wrongly denied the patentee the benefit of the right to amend conferred by section 75 of the Act and article 138(3) of the EPC. Secondly, it is said that Claim 3 had been found to be partially valid, so that an amendment should have been allowed as of course, to bring it into line with the judges decision on validity. Thirdly, it is submitted that the judges decision, even applying English procedural jurisprudence concerning the amendment of pleadings, involved a disproportionate penalty, because any prejudice to Actavis and Mylan of having to participate in a second trial could be addressed by an appropriate order for costs. Given our majority conclusion that the patent is insufficient for want of support in the specification for the efficacy of pregabalin for treating any neuropathic pain, it will be apparent that the proposed amendment will not save Claim 3. However, the matter having been argued, I think it right to deal with it. Warner Lamberts first ground raises an important question of law. If they are right, it would be necessary to overrule a number of decisions of the Court of Appeal. There was originally no power in England to amend a patent. A discretionary power of the court to allow amendment of a patent by way of disclaimer in an action for infringement or proceeding for revocation was first introduced by section 21 of the Patents and Designs Act 1907. The power was subsequently extended by the Patents and Designs Act 1919 to include amendment by way of correction or explanation. The power thus conferred was continued by the Patents Act 1949. Meanwhile the EPC, in its original form, introduced a provision for amendment, in article 138(2): (2) If the grounds for revocation only affect the European patent in part, revocation shall be pronounced in the form of a corresponding limitation of the said patent. If the national law so allows, the limitation may be effected in the form of an amendment to the claims, the description or the drawings. Its language reflected the fact that, at that time (in 1973) some contracting states did, but others did not, provide for amendment of patents. Section 75(1) of the Patents Act 1977, responding to the EPC and its ratification by the United Kingdom, continued a discretionary power of amendment in the following terms: In any proceedings before the court or the comptroller in which the validity of a patent is put in issue the court or, as the case may be, the comptroller may, subject to section 76 below, allow the proprietor of the patent to amend the specification of the patent in such manner, and subject to such terms as to advertising the proposed amendment and as to costs, expenses or otherwise, as the court or comptroller thinks fit. The EPC 2000 modernised the convention provision for amendment by adding article 138(2) and (3) as follows: (2) If the grounds for revocation affect the European patent only in part, the patent shall be limited by a corresponding amendment of the claims and revoked in part. (3) In proceedings before the competent court or authority relating to the validity of the European patent, the proprietor of the patent shall have the right to limit the patent by amending the claims. The patent as thus limited shall form the basis for the proceedings. Section 75 of the Patents Act 1977 was then amended by the Patents Act 2004 by the introduction of a new subsection (5): (5) In considering whether or not to allow an amendment proposed under this section, the court or the comptroller shall have regard to any relevant principles applicable under the European Patent Convention. The main change wrought by the EPC 2000 was that amendment was no longer subject to the presence or absence of the necessary power in national law. The amended Convention provided for a Europe wide right to amend. The question is whether that change was intended not merely to require all contracting states to have a power of amendment, or went one stage further, elevating what had previously been a discretionary power in the national court into a right enjoyed by patentees, unqualified by any discretion afforded to national courts by their own law. To that question the Court of Appeal has thus far provided a clear answer. In Nikken Kosakusho Works v Pioneer Trading Co [2005] EWCA Civ 906, [2006] FSR 4, it drew a sharp distinction between (a) pre trial patent amendments, (b) post trial patent amendments to delete claims which had been found invalid, and (c) post trial patent amendments designed to set up a new claim which had not been adjudicated upon at trial. If a type (c) amendment would provoke a validity challenge which required a further trial then, generally, both the principle in Henderson v Henderson (1843) 3 Hare 100 and the Overriding Objective in the Civil Procedure Rules would militate against giving permission to amend, if the new claim could have been put forward by amendment in time for the first trial. In Nokia GmbH v IPCom GmbH & Co KG [2011] EWCA Civ 6; [2011] FSR 15, the Court of Appeal took the opportunity to consider whether either Johnson v Gore Wood & Co [2002] 2 AC 1 or article 138(3) of the EPC (as amended in 2000) required the principles laid down in the Nikken case (the Nikken principles) to be reconsidered. Jacob LJ held, at paras 108 109 that there was nothing in Johnson v Gore Wood inconsistent with the Nikken principles. Although the test was one of abuse of process and the onus on the person alleging abuse, vexing a defendant with two trials about the same patent by means of a post trial amendment was prima facie abusive, if the amendment could have been made in time for all issues about the patent to be adjudicated upon at a single trial. As for article 138(3), the creation of a right to amend was simply designed to ensure that all contracting states provided for amendment of patents. It was not designed to override the national law of each state about the timing, grant or refusal of amendments, and certainly not to legitimise what would otherwise be the abuse of a contracting states process: see paras 127 129. Nikken and Nokia were followed and applied both by the judge and by the Court of Appeal in the present case. Faced with submissions that several European states took a more relaxed view about amendment after a trial at first instance, Arnold J said this [2015] EWHC 3370 (Pat); [2016] RPC 16, para 23: Secondly, and more fundamentally, any assessment of abuse of process must depend upon the procedural rules applicable in the relevant jurisdiction, which will reflect the procedural philosophy applicable in that jurisdiction. But the EPC Contracting States differ not merely in their procedural rules, but also in their procedural philosophies. Thus there are different conceptions of procedural economy. The traditional English conception is that it requires the first instance court to adjudicate upon all essential points in dispute, certainly all points that require findings of fact or evaluation. In that way, if there is an appeal, the Court of Appeal is in a position to deal with any issues of law that may then arise and dispose of the case without either a re hearing or remitting it to the first instance court. By contrast, there are many civil law jurisdictions where the view is taken that the correct approach to procedural economy is for the first instance court only to decide the issues which are sufficient to enable that court to dispose of the case, and to leave other issues undecided. In the following two paragraphs he made similar observations about differing procedural philosophies at the appellate level. An approach which treats procedural issues about amendment in national patent proceedings as turning upon national procedural law and philosophy is not just an English eccentricity. In High Point SARL v KPN BV (15 September 2017) 16/00878 ECLl:NL:HR:2017:2363 the Hoge Raad of the Netherlands held, at [4.1.6 4.1.7] that EPC article 138(3) was designed only to ensure that all contracting states made sure that their national laws made provision for amendment of patents, with no objective to achieve greater harmonisation than that. Procedural requirements for that purpose remained a matter for the national law of each state. Cross reference to passages in the Advocate Generals Opinion cited by the court show that in reaching that conclusion it had in mind the application of the abuse principle by the judge in this very case, following Nokia. It is of course open to this court to adopt a different position on this question than either the series of decisions in the Court of Appeal, or the views of the Supreme Court of the Netherlands. But I can see no good reason why we should do. First, no authority to the contrary, here or elsewhere in Europe, was cited to us. Secondly, I find the analysis of Arnold J of the reasons why different contracting states should have different procedural rules and principles about amendment, cited above, to be compelling. Thirdly, nothing in the language of article 138 suggests that the Court of Appeal and the Supreme Court of the Netherlands have got its purpose and effect wrong. Finally, matters of procedure are pre eminently a matter for the Court of Appeal, and this court is slow to interfere in a consistent development of procedural principle by that court unless persuaded that it is clearly wrong. I can deal briefly with the second ground, namely that this was an amendment to a partly valid patent. That is literally true, even given our conclusions on insufficiency, since the claims relating to different types of inflammatory pain have survived. But it misses the point of the Nikken principles. They distinguish between (i) amendments merely to delete claims and related material which have been found to be invalid, and (ii) amendments designed to make good a claim not thus far advanced in the amended form. The proposed amendment of Claim 3 is not to excise parts found to be invalid. The whole of Claim 3 was held invalid. Furthermore it is common ground that it would require a further trial to test the validity of the amended Claim 3. The submission that the refusal was disproportionate, even applying the Nikken principles and Johnson v Gore Wood, was based on the assumption (shared by the judge) that a further trial need not take longer than two days, that the cost of this would be modest compared with the value of the amended Claim 3, that an order for costs would deal with any prejudice to Actavis and Mylan, and that the amendment, even if late, was a response to a late raising by Actavis and Mylan, shortly before trial, of an invalidity argument based upon the absence of sufficiency in a claim for central neuropathic pain. These are essentially case management points, and all of them were deployed before the judge and the Court of Appeal. Both courts reached the same conclusion in rejecting them. Both courts consisted of judges experienced in the trial of patent cases, three of whom had, in turn, been the judge in charge of the specialist Patents Court. In those circumstances this court would interfere only if the courts below had erred in law, left significant matters out of account, taken into account irrelevant matters, or gone clearly wrong. The submissions made to this court came nowhere near surmounting those steep hurdles. It is plain, as the judge held, that the occasion to consider whether to make an amendment to Claim 3 (which could have been conditional on that claim being found otherwise invalid) occurred at the very latest when Actavis and Mylan raised their plausibility case about central neuropathic pain shortly before trial. Instead Warner Lambert chose to run a case for a narrow construction of Claim 3, to meet exactly the same potential problem. There was ample material upon which the judge and the Court of Appeal could properly have concluded that the attempt to make a post trial amendment was an abuse of process, and no basis upon which this court could properly interfere, harsh though the consequences might have been if the cross appeal had failed. Infringement Infringement was originally alleged in relation to Claims 1 and 3. There has been no attempt to challenge the finding of invalidity in relation to Claim 1. The consistent decisions of the courts below, with which this court agrees, that Claim 3 is invalid and cannot be saved by amendment, mean that the issues about infringement are therefore of no consequence in relation to the Patent. Nonetheless they have been fully and fiercely argued at all levels, and a significant disagreement about the tests for infringement of second medical use patents has divided the courts below. The Secretary of State for Health has intervened in writing and by counsel, and there have been no less than nine written interventions by other stakeholders, large and small, for all of which I wish to express the courts gratitude. The submissions of the parties and the interveners raise an important and difficult question of law, likely to be applicable to all Swiss form patents. The answer may have consequences for all purpose limited claims, but that will have to be decided in future cases, as they arise. Although Swiss form claims are now a closed class (because they have been replaced for the future by purpose limited product claims under article 54(5) of the EPC 2000) there are sufficient still in force for the issues as to infringement to have potentially wide ranging consequences. I therefore propose to deal with the infringement issues in full, on the assumption (contrary to what we have concluded) that Claim 3 is valid in relation to all forms of neuropathic pain. Infringement of a patent is, in the UK, a statutory tort. Both the scope of the tort (ie the conduct of the defendant sufficient to constitute him an infringer) and the nature and extent of the remedies available to the patentee against the infringer are aspects of the national law of each contracting state. Nonetheless the question whether there has been an infringement may, and does in this case, depend critically upon the construction of the relevant claims in the patent, for which purpose Section 125(3) of the Act incorporates reference to the Protocol, as already described in the Construction section of this judgment. The need to strike a fair balance between the need to incentivise and reward inventors on the one hand and the need to provide legal certainty for third parties, to enable them to pursue lawful competition on the other, gives rise to particular difficulties in relation to alleged infringement of Swiss form second medical use patents, to such an extent that the parties were substantially agreed that there is no ideal solution. The choice lies between defining infringement so widely that manufacturers will be dissuaded from producing generic drugs even to fulfil the original (no longer patented) use, and defining it so narrowly that patentees are inadequately protected from the invasion of their newly patented second use by generic manufacturers. Warner Lambert contends for a wide definition which it says can be tempered by the court taking a restrained approach to remedies. Actavis say that any inadequacies for patentees in what they submit is the correct narrower definition are the necessary consequence of the judicial fudge which has enabled Swiss form claims to thrive at all, and must be endured if the generic market for the original use, which is itself an important public good, is not to be killed off altogether. Actavis assert that the modern replacement EPC 2000 patents for second medical use will cure most of the problems associated with the Swiss form in the longer term. Whether that is right remains to be seen. The starting point is (again) the express terms of Claim 3: use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain. It is now common ground, at least between the parties, that this is a purpose limited process claim. It is a process claim because it protects the process of manufacture of a medicament containing pregabalin. It is purpose limited because it only protects that process if it is undertaken for the purpose of treating neuropathic pain. The purpose limitation lies at the heart of the claim, because the use of pregabalin in the manufacture of a medicament lacked novelty at the priority date. It is the discovery that pregabalin based medicaments treat neuropathic pain which was alleged to be (and must for this analysis be assumed to be) the relevant contribution to the article It was also common ground until the end of the hearing in this court that a purpose limitation of this kind necessarily imports some kind of mental element, actual or imputed. It was assumed that doing something for a particular purpose inevitably does. The question whether the manufacturer is an infringer begins by asking for what purpose is he using pregabalin for the preparation of a medicament. In outline, the rival contenders for the requisite mental element on the part of the manufacturer were foreseeability and intention. Warner Lambert and the Court of Appeal favoured foreseeability. Actavis and the judge favoured intention. More recently, and in response to a request from the court for further written submissions, Actavis has suggested, in the alternative, that the search for a mental element should be abandoned, in favour of a test of purpose which depends entirely upon the physical characteristics of the product as it emerged from the manufacturing process, including any information about its purpose contained in the accompanying label or patient information leaflet, an approach described by Floyd LJ in the Court of Appeal as only packaging will do. As will appear, it derives from the jurisprudence of the German courts, where it is labelled sinnfllige Herrichtung, usually translated into English patent jargon as manifest making up. But these are little more than headings for more detailed concepts. Before unwrapping them, it is necessary first to lay out both the context and the statutory definition of infringement. The context consists of the current regime within the UK for the prescribing and dispensing of medicines. It is described in admirable detail by the judge, and I am content to adopt, without repeating, Lord Sumptions summary of it. The end result is that the use of labelling on a generic form of pregabalin stating that it is not for the prevention of pain will not in fact prevent it being dispensed for that purpose, because the pharmacist does not generally know what is the condition for which pregabalin has been prescribed, and the generic manufacturer can be in no better position. Furthermore, as Lord Sumption explains, recent NHS guidance does not constitute a satisfactory long term precedent for resolving the problem, even though it may have been of real assistance in this case. The statutory tort of patent infringement is defined by section 60 of the Patents Act 1977 (so far as is relevant) as follows: 60.(1) Subject to the provisions of this section, a person infringes a patent for an invention if, but only if, while the patent is in force, he does any of the following things in the United Kingdom in relation to the invention without the consent of the proprietor of the patent, that is to say (a) where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise; (b) where the invention is a process, he uses the process or he offers it for use in the United Kingdom when he knows, or it is obvious to a reasonable person in the circumstances, that its use there without the consent of the proprietor would be an infringement of the patent; (c) where the invention is a process, he disposes of, offers to dispose of, uses or imports any product obtained directly by means of that process or keeps any such product whether for disposal or otherwise. (2) Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom. Warner Lambert pursues its infringement case under section 60(1)(c) and, separately, under section 60(2). Each needs to be addressed separately but, at the outset, it is convenient to make some observations about section 60, viewed as a whole. First, although liability for infringement is generally said to be strict, the section makes a clear distinction between those parts of the multi headed definition of infringement which do, and which do not, require proof of a mental element. In short, the definitions in section 60(1)(a) and (c) do not, but section 60(1)(b) does, at least in relation to offer of the process for use in the UK, and 60(2) does as well. In both the latter definitions the knowledge requirement is the same, encapsulated in the phrase when he knows, or it is obvious to a reasonable person in the circumstances . Secondly, section 60 appears to use a consistent conceptual approach to the relationship between the words product, process and invention. It is clear from section 60, read as a whole, that invention is a class with only two members, product and process, and that the invention is the subject matter of one or more claims in the patent. Phrases about using the process, product or invention, or working the invention or putting the invention into effect need to be understood and applied by reference to the claim (or claims) in the patent alleged to be infringed. Thus, while it may be appropriate in other circumstances to refer to the invention, or to putting the invention into effect, in wider or narrower terms than as set out above, it is not appropriate to do so in the context of section 60. Turning to section 60(1)(c), this focuses upon a product obtained directly by means of the patented process. Infringement then occurs, as in section 60(1)(a), whenever a person disposes of that product, offers to dispose of it, uses or imports it, or keeps it, whether for disposal or otherwise. Under section 60(1)(c) the infringer may be, but need not be, the same as the person who makes the product. Liability for the prohibited conduct is strict, provided only that the product has been obtained directly by means of the process, and it then extends to dealings with all and every such product. By contrast with section 60(1)(a), the infringement liability for making the product obtained from the patented process is not addressed by section 60(1)(c). That liability must arise, if at all, from section 60(1)(b), which includes a necessary mental element, when using the process to make the product. But what if the patented process is, according to the relevant claim, one which itself involves a mental element? In the language of section 60(1)(c) a product will not be obtained directly by means of that process if the required mental element is inapplicable to the manufacturer, all the more so if, as with Swiss form claims, it is the manufacture or preparation of the medicament that is sought to be protected. It would appear to follow that if A keeps or disposes of a product manufactured by B without B having the requisite mental element, then A will not infringe even if his intention is to use or dispose of the product with a view to its being used for the purpose identified in the claim. Similarly, A in the above example will not escape liability for infringement if B manufactured the product for the purpose identified in the claim, however innocent A may be of Bs state of mind, and regardless of the use to which A puts the product. This is precisely because section 60(1)(c) imposes strict liability, and is therefore blind to As state of mind. It was not suggested that any of the exceptions in section 60(5)ff could be prayed in aid by A. In short, the question whether dealings with the product after its manufacture give rise to infringement depends entirely on whether the product itself was tainted at the time of manufacture by having been obtained by a process (and therefore in this context for a purpose) within the claim. It may well be doubted whether section 60(1)(c) can have been formulated with purpose limited process claims in mind. It appears to place an unrealistic burden on those wishing to deal in good faith with the relevant product downstream of the manufacturer, such as importers, distributors and dispensing pharmacists, because it may be impossible for the dealer to form any reliable view about the manufacturers state of mind. Furthermore the dealer will not escape liability by distributing or dispensing the product only for indications outside the claim, such as for indications for which earlier patent protection has expired. Their only safe course, as emphasised by many of the intervening stakeholders, will be to refuse to deal with the generic product at all. Section 60(2) does not distinguish between product and process inventions. It applies equally to both. But recognition that the invention is something circumscribed by the scope of the claim means that the critical phrase putting the invention into effect is likewise constrained. If, as here, the claim is to protect the process of manufacture, then the invention is fully put into effect once the process of manufacture is complete. The claim cannot include dispensing pursuant to a prescription or treating, as part of the process, because those activities cannot be patented. In short, Swiss form claims have been deliberately formulated so as to be limited to manufacture, to avoid falling foul of that restriction. The conduct prohibited by section 60(2) is supplying or offering to supply something to someone not entitled to work the invention. I think it plain that, in relation to process claims which are limited to manufacture, section 60(2) is concerned with activity upstream of manufacture, whereas section 60(1)(c) is concerned with conduct downstream of manufacture. These may conveniently be labelled respectively as supplying the means and dealing in the product, provided that those phrases are used for convenience rather than by way of definition. Manufacture itself is caught only by section 60(1)(b), by the phrase uses the process. It is convenient to address Warner Lamberts case under section 60(2) first, because I think that it is susceptible to the relatively easy answer which Lord Sumption provides at the end of his judgment, with which I fully agree. In particular it does not depend upon the answer to the very difficult question about the requisite mental element in a purpose limited process claim. I can therefore return to the issues about mental element which arise from the infringement case under section 60(1)(c). I have explained my view that this has nothing to do with the question whether section 60(1)(c) itself imposes a mental element as a requirement for infringement liability. It plainly does not. The real question is: what, if any, mental element is built into this purpose limited process claim? That is a question of construction of the claim, not a question about UK patent infringement law. I have summarised the rival contentions of intention, foreseeability and (now) no mental element at all, but it is necessary to describe them, and their potential consequences, in more detail. Warner Lambert originally submitted that it was enough to bring manufacture of a drug containing pregabalin within Claim 3 if it was foreseeable to the manufacturer that a more than de minimis amount of it would in due course be used for the treatment of neuropathic pain. The Court of Appeal broadly accepted this submission, subject to two qualifications. First, the downstream use for treating pain had to be intentional rather than accidental. By this it meant only that patients would receive the drug for treating their pain, rather than for example for treating epilepsy, with a coincidentally beneficial effect upon pain from which they happened also to suffer. The second qualification is more important. Floyd LJ held that the requisite mental element could be negatived if the manufacturer had taken all reasonable steps to prevent the downstream use of his drug for treating pain. I refer to pain because the Court of Appeal was proceeding on the hypothetical assumption that both Claims 1 and 3 were valid. At para 208 he said this, at para 44: The intention will be negatived where the manufacturer has taken all reasonable steps within his power to prevent the consequences occurring. In such circumstances his true objective is a lawful one, and one would be entitled to say that the foreseen consequences were not intended, but were an unintended incident of his otherwise lawful activity. Before this court Warner Lambert adhered to their pure foreseeability submission, using the Court of Appeals more nuanced approach as a fall back. On their primary case the taking of reasonable steps might be relevant to remedies but, if leakage of Actavis generic product into the market for relieving neuropathic pain was still foreseeable after the taking of all reasonable steps to prevent it, infringement would still be the consequence. Actavis submission was that the requisite mental element is intention, by which they mean that it must be shown that the manufacturer was targeting the drug for use in treating pain. The Secretary of State, and many of the other interveners with a stake in the market for treating the non patented use, supported Actavis case, pointing out that Warner Lamberts case would cast the net so widely and unpredictably for dealers in, including dispensers of, generic forms of pregabalin that they would be deterred from having anything to do with it, even for the non patented indications. In written submissions responsive to the courts request following the hearing Warner Lambert and the Secretary of State maintained their previous positions, both rejecting the abandonment of any mental element as conceptually wrong, and because it loaded the policy balance unjustly against the Swiss form patentee. Actavis added a no mental element alternative to its original position, without expressing a clear preference for either, on the basis that both intention and manifest making up reflected the requirement to identify the purpose limitation equally well. The parties drew from three main sources in advancing their competing cases. The first was English authority on the meaning of intention in the law of tort. The second was European authority on Swiss form patents. The third was policy considerations. The English common law of tort uses the concept of intention in a spectrum of different ways, depending upon context. Fish & Fish v Sea Shepherd UK [2015] AC 1229 was a case about the liability of joint tortfeasors. This court held that there had to be demonstrated a common design by the persons alleged to be liable to do, or to secure the doing of, the acts which constituted the tort. Dissenting, but not on this point, Lord Sumption said this, at para 44: Intent in the law of tort is commonly relevant as a control mechanism limiting the ambit of a persons obligation to safeguard the rights of others, where this would constrict his freedom to engage in activities which are otherwise lawful. The economic torts are a classic illustration of this. The cases on joint torts have had to grapple with the same problem, and intent performs the same role. What the authorities, taken as a whole, demonstrate is that the additional element which is required to establish liability, over and above mere knowledge that an otherwise lawful act will assist the tort, is a shared intention that it should do so. In OBG Ltd v Allan [2008] AC 1, a case about the economic torts of procuring a breach of contract and causing loss by unlawful means, Lord Hoffmann said this, about the first of those torts, at paras 42 43: 42. The next question is what counts as an intention to procure a breach of contract. It is necessary for this purpose to distinguish between ends, means and consequences. If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach. Mr Gye would very likely have preferred to be able to obtain Miss Wagners services without her having to break her contract. But that did not matter. Again, people seldom knowingly cause loss by unlawful means out of simple disinterested malice. It is usually to achieve the further end of securing an economic advantage to themselves. As I said earlier, the Dunlop employees who took off the tyres in GWK Ltd v Dunlop Rubber Co Ltd 42 TLR 376 intended to advance the interests of the Dunlop company. 43. On the other hand, if the breach of contract is neither an end in itself nor a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended. That, I think, is what judges and writers mean when they say that the claimant must have been targeted or aimed at. Later, at para 62, he applied the same test to the second of those torts. By contrast, in Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] QB 716; [1985] 3 WLR 1027, Oliver LJ said, at 777H: If an act is done deliberately and with knowledge of its consequences, I do not think that the actor can sensibly say that he did not intend the consequences or that the act was not aimed at the person who, it is known, will suffer them. That was a case about breach of statutory duty and misfeasance in public office. Oliver LJs dictum was approved by the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2003] 2 AC 1, which was also a case about misfeasance in public office. I do not derive from this source any compelling guidance for the identification by way of construction of the mental element in a purpose limited process claim, for the following reasons. First, the search is not here for the requisite element in a tort at all. The tort of infringement created by section 60(1)(c) does not require any mental element. Rather the search is for the mental element, if any, by which what would otherwise be an invalid process claim is limited by the requirement that the manufacture be for a purpose. It defines the scope of the monopoly claimed, not (separately at least), the state of mind of the infringer. Secondly, all the various and different types of intention set out by the English authorities are context dependent. They apply in different ways to different torts. Even if this had been a search for the mental element required of an infringer (otherwise than because of the limited scope of the claim) the English authorities give no guidance about where patent infringement lies on the spectrum which they describe. The Court of Appeal conducted its own review of the relevant European authorities about infringement of Swiss form patents, first during the interim appeal in May 2015 and again during the appeal from the trial judgment, in October 2016. Floyd LJ concluded, correctly in my view, that they provide no clear or settled answer to the problem. But they do tend to show that a broad foreseeability test of the kind proposed by Warner Lambert has not found favour. In summary, the German courts have concluded that the patentee will only be able to show that an alleged infringers process is for the patented use if there is some outward manifestation of that purpose in the presentation of the manufactured product, for example in its packaging: see the decision of the German Federal Court of Justice in Carvedilol II (Case X ZR 236/01) (decision of 19 December 2006); the decision of the Landgericht Dusseldorf in Chronic Hepatitis C Treatment (Case 4a O 145/12) (decision of 14 March 2013); the decision of the Oberlandesgericht Dusseldorf in Cistus (Case I 2 U 53/11) (decision of 31 January 2013); and the decision of the Landgericht Hamburg in Warner Lambert Co LLC v Aliud Pharma GmbH (Case 327 O 140/15) (decision of 2 April 2015). Floyd LJ called it the only packaging will do approach. He noted that the recent decision of the EPO in T 1673/11 GENZYME/Treatment of Pompes disease [2016] EPOR 33 appeared to follow the German lead. The underlying rationale of those decisions appears to be that the purpose designated by a Swiss form patent was an inherent property of the product which emerged from the manufacturing process, rather than something to be found in the mind set of the manufacturer. In recent written submissions Warner Lambert point out that the latest decisions of the German courts have modified this rigorous focus upon the packaging by admitting proof of infringement by reference to foreseeability, for example in strogenblocker (Case I 2 W 6/17) (5 May 2017), para 39, and Dexmedetomidin (Case I 2 U 30/17) (1 March 2018), (BeckRS 2018, 2410, paras 42 44). The Spanish courts have taken a slightly more generous approach to patentees, looking for some authorisation or encouragement by the manufacturer directed at strengthening the use of the product for the patented indication: see the decision of the Madrid Court of Appeal in Wyeth v Arafarma Group SA (Case C 539/07) (16 April 2008). In France, Floyd LJ detected a still more flexible approach in the preliminary decision of the Tribunal de Grande Instance dated 26 October 2015 in Warner Lambert Co LLC v SAS Sandoz (Case 15/58725), Vice Presiding Judge Marie Christine Courboulay, whereby the court was prepared to take fully into account steps taken by the defendant generic manufacturer to discourage the use of its product for the patented indication. That was a case about this very Patent. The report of the full merits hearing in the same case, in August 2016 (Case 16/57469) dismissing the infringement claim, was made available to this court. I do not think that it really addresses the question as to the mental element built into the purpose limitation of the claims in this Patent, as a question of construction of the claim. In a helpful appendix to its printed case, Warner Lambert note that the courts of the Netherlands have tended successively to follow the differing leads given by Arnold J and then by the Court of Appeal in this case. They do not therefore provide significant independent guidance. I have not carried out my own intense review of the European authorities on this point, because counsel did not suggest that either the summary of them, or the conclusion that they provided no clear answer, as set out by Floyd LJ, was wrong. There appears to be a spectrum of differing approaches to the question of the relevant mental element built into a purpose limitation in a process claim. It may well be that the courts in different contracting states will reach solutions which differ because the particular aspects of their national law on infringement, and the structure of their relevant markets, mean that striking a fair balance between protection of patentees and legal certainty for the lawful activities of third parties produces a different result in each jurisdiction. That may be unfortunate, since the construction of claims in a European patent ought to be consistent across all contracting states, but there is nothing which this court can do about it, save to proceed with due regard to the decisions of those states courts. We were pressed by counsel for Warner Lambert with dicta about knowledge and intention in the joint judgment of Jacob and Etherton LJJ in Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1110; [2011] FSR 7, at paras 112 114. That was an infringement claim under section 60(2), which has its own built in knowledge requirement. The patent in issue was for a product rather than a process, and was neither medical nor in Swiss form. It therefore provides no assistance in the present context. Policy considerations formed a, if not the, main plank in the submissions both of the parties and of the interveners. I have already summarised the main battle lines above. Policy is, to an extent, a perfectly legitimate factor to be taken into account on what is, for the reasons explained, essentially a question of construction of the purpose limitation in Claim 3. Policy considerations inevitably underlie the striking of the balance required by the Protocol. In my view, the central policy objectives are: 1. Providing reasonable protection to the second medical use patentee, both to reward and to incentivise the complex and expensive processes of research and testing necessary to bring these valuable uses to fruition. That protection needs, as far as is consistent with competing policy objectives, to protect the patentee against the invasion of his monopoly by competitors. 2. Protecting the public against the loss of the patent free use of the relevant drug for treating the indications for which it was originally developed. This means that the patentee for the new use should not obtain, by a side wind, an effective continuing monopoly in relation to the old use, after the expiry of the patent protection for it. This policy objective preserves for the public the enjoyment of the quid pro quo for the grant of the now expired monopoly for the original use, in the form of very much cheaper generic forms of the drug becoming available for those uses. 3. Providing reasonable legal certainty for those engaged in the manufacture, marketing and prescribing of the generic drug for the non patented use, that their conduct is lawful. This policy objective is expressly recognised by the Protocol and, without it, the second objective is unlikely to be achievable. I am satisfied by the evidence, and by the submissions of the parties and the interveners, that the simple foreseeability test primarily contended for by Warner Lambert would prioritise the first policy objective at an unacceptable cost to the achievement of the second objective. This is because, it being common ground that some more than de minimis leakage of generic pregabalin into the market for treating neuropathic pain is foreseeable regardless of the taking of all reasonable steps within the generic manufacturers power to prevent it, all stocks of their generic forms of pregabalin will have been manufactured by use of the patented process, such that any subsequent dealing with those stocks will constitute infringement under section 60(1)(c). For as long as doctors prescribe pregabalin for pain generically, without specifying that the relief of pain is the purpose of the prescription, pharmacists will always risk dispensing a generic form of pregabalin for pain, unless they confine themselves to dispensing Lyrica to meet all pregabalin prescriptions. That is why some leakage is foreseeable. The result is that pharmacists would have to desist from dispensing generic pregabalin at all, if they wish to avoid infringement. This is not merely because of the risk of dispensing the generic product for pain, but, as I have explained above, because all dealings in a generic product (including prescription) will be an infringement under section 60(1)(c), even if the pharmacist knows that the prescription is for treating a non patented indication. If foreseeability is the test, then all generic pregabalin will be tainted product from the point of manufacture, such that any dealing with it will be an infringement. A fair balance between competing policy objectives is not struck by preferring the complete achievement of one by a construction which completely prevents the achievement of the others. Accordingly I consider that policy considerations are strongly opposed to Warner Lamberts main case. In partial recognition of this difficulty counsel for Warner Lambert submitted that the adverse effect of a simple foreseeability test could be mitigated by a flexible approach of the court towards remedies. Injunctions could be refused, and patentees confined to an account of the infringers profits, based upon an assessment of the proportion of generic pregabalin dealt with by any infringer which is actually used for the treatment of pain. I consider that there are a number of insuperable objections to this approach. First, it tacitly assumes that dealers in generic pregabalin going about a lawful business of seeking to supply the market for its non patented use are infringers. The prospect that they would be subjected only to a modest financial sanction is simply no answer to a person who wishes to conduct a lawful trade or profession. Nor would it provide any protection at all from the cost, stress and uncertainty of the litigation of infringement claims. Secondly, while the court may be able to withhold an injunction as a matter of discretion, the patentee has, in principle, a right to elect between damages and an account of profits. They are not alternative discretionary remedies, between which the court is free to choose. Thirdly, an election by the patentee for damages would expose the infringer to the patentees much larger lost profit margin per pack than the profit typically made by a manufacturer of, or dealer in, a generic product. Fourthly, the patentees loss of profit would not be limited to sales lost for the treatment of pain, but to sales lost for all treatment because, as I have explained, sales or dispensing of tainted generic product for non patented treatment would also be acts of infringement. The result therefore is that policy considerations firmly militate against Warner Lamberts primary case. Warner Lamberts secondary case, namely foreseeability tempered by negativing intent by the taking of all reasonable steps, is the compromise solution preferred by the Court of Appeal. While it may go some way towards avoiding the destruction of the second policy objective, at acceptable cost to the achievement of the first, it also faces serious objections, both in principle and practice. First, if the basic test for the requisite mental element is foreseeability, it is simply not the case that the taking of all reasonable steps by the generic manufacturer to prevent leakage into the market for the patented use will necessarily make that leakage unforeseeable. It does not appear to do so at present. Leakage does appear to have been substantially reduced during the period before the trial, but this appears to have been attributable mainly to steps taken by the NHS, at the behest of the court on the application of Warner Lambert, to encourage doctors and pharmacists to prescribe and dispense Lyrica rather than a generic alternative for pain. Although the Court of Appeal described the taking of steps by the manufacturer as sufficient to negative intention to manufacture pregabalin for the patented purpose, in the context of foreseeability it sounds more like the erection of a non statutory defence to infringement. However desirable, that is not the function of the court in the context of a statutory tort. The main practical objection to this apparent compromise between policy objectives 1 and 2 is that it is achieved, if at all, at the expense of objective 3, namely legal certainty for dealers in, and dispensers of, generic pregabalin. How are they to know what steps have been taken by the manufacturer to prevent leakage, or whether the steps taken will eventually be regarded by the court as reasonable? Warner Lambert do not suggest that the reasonable steps requirement will be satisfied merely by skinny labelling, or limited to things visible to all users of the generic package. As noted above, if the mental element test for the purpose limitation gives rise to serious legal uncertainty among dealers and dispensers of the generic drug as to whether the product is or is not tainted by having been manufactured within the scope of the claim in the patent, they will be likely to decline to use the generic drug at all, in order to avoid the risk of infringement. I have considered whether the difficulties in finding an appropriate solution to the infringement issue ought to be regarded as flowing from the parties original concession (now withdrawn by Actavis) that the purpose limitation in this Patent (and in any Swiss form claim) necessarily involves some kind of mental element. The German approach, of treating the purpose of the manufacture of a product as inherent in the physical characteristics of the product, and decisively determined by the form of its presentation in fully manufactured form, well serves the policy objective of providing legal certainty for the market, and mitigates the rigour of the strict liability imposed in the UK upon dealers by section 60(1)(c). Its weakness, on an assumption that a mental element is required, is that it cannot realistically be the only way of proving infringement, namely the manufacture of the product for the patented use. The latest German cases, as described above, appear to acknowledge that weakness by introducing an alternative basis for proving infringement, based upon the mental element of foreseeability. Following the hearing we considered whether an alternative approach would be to abandon the search for an appropriate mental element altogether. It would treat the identification of the purpose for which the product was manufactured as conclusively determined by a review of the fully manufactured product, including its packaging, labelling and enclosed patient instructions, upon the conceptual basis that the relevant purpose was an aspect of the physical characteristics of the product emerging from the manufacturing process. It would place the downstream dealer in a generic product (importer, distributer or pharmacist) in as good a position as the court to determine whether the product was tainted by an illegitimate purpose in its manufacture, and therefore to be avoided for fear of liability under section 60(1)(c). It would maximise legal certainty, and the use of the generic products for the non patented indications. It would have the powerful advantage of avoiding the unusual (perhaps even unique) legal result of penalising a class of users as infringers by reference only to the state of mind of other persons (the manufacturers) of which that class could not reliably be aware. We were of course conscious of the fact that this solution was not proposed either by the parties or by any of the interveners, and that we could not properly adopt it without calling for further submissions, in particular from Warner Lambert, because it would deprive Swiss form patentees even of the protection afforded by their ability to prove the requisite intent on the part of the manufacturer by evidence other than that constituted by the appearance and content of the fully manufactured product. In the event no party other than Actavis favoured that solution, and even they regarded it only as an alternative to their primary case, based upon intention. The Secretary of State considered that it did not strike the appropriate policy balance. I have, not without some reluctance, come to the conclusion that this is not an available alternative. My reasons follow. First and foremost, I think that the original concession that the purpose limitation in a Swiss form claim necessarily involves a mental element of some kind on the part of the manufacturer was rightly made. When we speak of someone making something for a particular use, and conclude as we must that for means something more than suitable for, it must point to something in the mind of the manufacturer. Even if the manufacturer is a corporation using a factory entirely staffed by robots, if the manufacturing process is only protected by the patent if it is carried out for a particular purpose, the requirement to identify a mental element on the part of the manufacturer is simply inescapable. The court is well versed in identifying the governing mind of a corporation and, when the need arises, will no doubt be able to do the same for robots. By contrast I do not think that treating the purpose for which something is manufactured as inherent in the physical characteristics of the resulting product, truly reflects the role which the purpose limitation plays in defining the monopoly created by a Swiss form patent. The fact is that, in its essentials, the Pregabalin based medicament sought to be protected by the Patent has exactly the same physical characteristics as Pregabalin based medicaments used to treat epilepsy and GAD. That is not to say that the form in which the product of a manufacturing process is presented to the market will not often, or indeed usually, be decisive evidence, one way or the other, of the manufacturers intended purpose, leaving aside the occasional cases where other evidence may prove that the presentation is in fact a charade. Subjective intent is routinely proved by objective evidence of conduct. Secondly, I do not consider it safe to conclude that the apparent German lead in this direction can simply be followed in this different jurisdiction. I agree with Lord Sumptions analysis of the way in which German law differs from UK law in making a less significant distinction between purpose and product claims. I have not been able to agree with Lord Mances analysis, which seems to me to follow the German lead in treating the purpose as limiting the product, by focusing solely on the way it is packaged and marketed, while at the same time acknowledging that, in English law, the patent protects the process. I agree that it does, but the purpose limits the process which is protected. We know nothing about the particular features of the German systems for prescribing and dispensing medicines, about its regime for patent infringement, or about the market conditions within which a fair balance has to be struck. The fact that German, French, Spanish and Dutch courts have all taken different approaches to this issue strongly suggests that differing legal, market and structural factors within each jurisdiction have been influential, and perhaps even decisive, but we have no sufficient knowledge of those factors, save within the UK. Thirdly, it is striking that neither Actavis nor those interveners with an interest in maximising generic use for non patented purposes together with legal certainty have put forward this more rigorous solution to their difficulties at any stage in this litigation, until prompted by this court to consider whether to do so, after the hearing. This may be simply because they all acknowledged that some mental element is implicit in a purpose limitation, or because they recognised that it would not strike a fair balance between their interests and those of patentees. Fourthly, I think that this solution would not indeed strike a fair balance. The Court of Appeal regarded the only packaging will do solution as plainly affording inadequate protection for patentees. At para 191 Floyd LJ said: These matters arise as a matter of interpretation of the word for. The parties are agreed that the word imports a mental element. Packaging may be a means of demonstrating the necessary mental element, whatever that is, but it cannot possibly be the only means of doing so. There is force in this objection. A generic manufacturer might well demonstrate the requisite purpose by flooding the market for pregabalin beyond the sector of it which treats the non patented indication, or by covertly encouraging dealers and pharmacists to use it for the treatment of pain, regardless of what appears on the label. Or a smoking gun internal document might reveal that the manufacturers packaging for the non patented use was just a charade, because its corporate purpose was indeed to profit by its distribution and use for the patented indications. All these forms of evidence might prove the requisite intent, even if the packaging did not. Finally, the principal driver towards this alternative is the concern that section 60(1)(c), in conjunction with Swiss form patents, imposes draconian strict liability on dealers in generic products, without giving them the ability to find out whether the manufacturer has an intention that taints its products in their hands. It is tempting to try to fashion an answer to this difficulty by creating some sort of bona fide purchaser defence for dealers in the generic drug, downstream of the manufacturer, so that they could avoid liability for infringement under section 60(1)(c) unless they were on notice of the true (infringing) purpose of the manufacturer, in cases where it was not revealed by the packaging. It would fill a lacuna in legislation which cannot have been drafted with purpose limited product claims in mind. But that would be another illegitimate attempt to create a non statutory defence to a statutory tort. Nonetheless the sense of injustice engendered by that acknowledgment of the potential for unfairness of UK legislation about infringement ought not to lead to straining the essential meaning of a purpose limitation beyond its proper limits, by what is really a legal fiction that it involves no mental element of any kind. The so called subjective intent test favoured by Actavis would I think accommodate all forensic means whereby a purpose of the generic manufacturer to serve (and profit from) the market for neuropathic pain could be proved, including but not limited to the packaging on the product. Anything from which the court could properly find that the manufacturer had such a purpose could be relied upon, including targeted disclosure, during litigation, of documentary records of the manufacturers decision making processes. I call it a so called subjective test because a persons intention is as much a matter of fact as the state of his digestion, and this is true of corporate persons as much as of individuals. It may be proved objectively by words, conduct and even inactivity, and the court is well versed in treating a decision not to enquire about something suspected as probative of blind eye knowledge. I acknowledge that this solution is a compromise like any other. It certainly falls short of providing complete protection to patentees from the invasion of their monopoly. It appears that it would not cause the complete destruction of the generic market for pregabalin for the treatment of the non patented indications, although exposure of pharmacists to strict liability where the manufacturer is proved to have had the requisite intent may still discourage some pharmacists from using the generic product. The departure from the German only packaging will do solution by permitting any means of proof of the manufacturers purpose (but well short of mere foreseeability) will provide less than perfect legal certainty for those who deal in and dispense the generic versions of pregabalin. Nonetheless, as I have said, the packaging, labelling and patient instruction leaflets will in most cases be the best evidence of the manufacturers intention. But the Proviso requires only the striking of a fair balance. It was submitted for Actavis that to the extent that their proposed test for the mental element fell short of providing full protection to patentees, this should be regarded as a necessary consequence of the judicial fudge constituted by the recognition of Swiss form patents in the first place. There is something in this point, but it does not absolve the court from seeking a construction of the purpose limitation which strikes as fair a balance as possible. Nor do policy considerations mean that the court can do otherwise than choose between available meanings of the claim as a matter of construction. The claim cannot just be re written. But I consider that a test for the manufacturers purpose based upon determining his intent, in the manner described above, is well within the ambit of legitimate construction. That is the construction which I consider to be correct. Conclusion I would therefore dismiss the appeal, and allow the cross appeal. LORD HODGE: I agree with Lord Sumption and Lord Briggs on the construction of Claim 3 for the reasons which they give. I also agree with them that Arnold J was entitled to refuse to allow Warner Lambert to amend that claim after he had handed down his trial judgment on 10 September 2015, again for the reasons they give. I therefore would dismiss Warner Lamberts appeal. There are only two matters on which I wish to add any comment. The first is the test for insufficiency in the context of Swiss form patents, and in particular the meaning of the plausibility test which has been developed to take account of the inability of the applicant for such a patent to establish the claimed therapeutic effect of the medicament by clinical trials before applying for the patent. The second relates to the test for direct infringement under section 60(1)(c) of the Patents Act 1977. Sufficiency: the plausibility test The general principle that the extent of a patent monopoly defined by the claims should correspond to, and be justified by, the applicants technical contribution to the art underpins the requirement of sufficiency of disclosure. It justifies the existence of the boundary between an educated and educating prediction of efficacy for the designated therapeutic purpose on the one hand and mere speculation on the other, which is addressed by the plausibility test which the EPO Technical Board of Appeal (the Board) has developed in a series of decisions. But the general principle tells one little about where the plausibility test draws that boundary. It is necessary to look to those decisions to discover that boundary. There are four principal decisions of the Board SALK (27 October 2004), ALLERGAN (26 October 2009), IPSEN (29 June 2011) and BRISTOL MYERS SQUIBB (3 February 2017) which assist in this exercise. I agree with Lord Sumption (paras 33 34) that those decisions do not place an onus on an objector to show that the implied assertion of therapeutic efficacy is implausible. I also agree with his view (paras 35 37) (a) that the patentee must disclose in its patent, when read in the light of the common general knowledge, the contribution to the art which justifies his monopoly and, to that end, (b) that the specification must disclose some scientific reason for thinking that the medicament might well have the claimed therapeutic effect. Where I differ from Lord Sumption is that, in agreement with Lord Mance, who has analysed the three cases of ALLERGAN, IPSEN and BRISTOL MYERS SQUIBB, I do not interpret those principles as requiring the patentee to demonstrate within its patent a prima facie case of therapeutic efficacy. In my view the recent decisions of the Board (a) require that the therapeutic effect of the medication appears plausible from the data in the patent interpreted in the light of the common general knowledge, (b) do not require that the patent discloses experimental evidence to demonstrate that plausibility unless there is an allegation, supported by sufficient evidence, that the invention does not work, but (c) allow the plausibility to be reinforced by considering evidence which post dates the patent (although later published data are not admissible if they alone render the therapeutic effect plausible), (d) take account of the ease with which the therapeutic effect can be ascertained using straightforward tests which are known in the prior art, and (e) where the data in the specification have made the claimed therapeutic effect plausible, place a burden on an objector to substantiate doubt that the desired effect can be achieved. Adopting the lower standard of plausibility which the recent decisions support, I am inclined to think that Arnold J, who heard and analysed the expert evidence on this matter, including that of Professor Woolf, Dr Scadding and Professor Wood, did not err in his evaluation of that evidence when he concluded that Warner Lambert had done just enough to satisfy the plausibility test in relation to peripheral neuropathic pain. The result of the rat paw formalin test demonstrated that pregabalin reduced inflammatory pain at phase 2. There was expert evidence which treated as credible the suggestion that the efficacy of pregabalin in reducing pain which that test revealed would not be confined to inflammatory pain and that the medication would also be effective in relation to peripheral neuropathic pain. As Arnold J stated (para 351), it was common general knowledge that central sensitisation was involved (at least as an amplifying mechanism) both in relation to inflammatory pain and in relation to peripheral neuropathic pain and that it played a role in the rat paw formalin test. The patent had not demonstrated that pregabalin had an effect on central sensitisation and a prima facie case had not been made out. But the plausibility test does not require that standard. The patents contribution to the art, which Arnold J found, was not only the demonstration that pregabalin reduced inflammatory pain but also, because of the involvement of central sensitisation which was common general knowledge, a credible assertion that the drug would also reduce peripheral neuropathic pain. In my view it was not necessary, in order to overcome the relatively low hurdle of plausibility, for the patent to demonstrate by experiment or by scientific theory, that pregabalin blocked or reduced central sensitisation. In agreement with Lord Mance, I do not see the example which the Board gave in para 9 of SALK, which Lord Sumption quotes at para 29 and founds on in his fifth point in para 37, as establishing a sine qua non of plausibility. I would add that the patent also identified the Bennett and Kim tests, which were straightforward tests and were available to the reader of the patent to test the claims that pregabalin was effective to treat peripheral neuropathic pain. The teaching could be tested without undue burden. Subsequent tests established the efficacy of pregabalin in treating pain, including peripheral neuropathic pain. That later evidence is, as I have said, not admissible if there were no data from which one could make predictions about the efficacy of the medication in relation to peripheral neuropathic pain: T 1329/04 JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE/Growth differentiation factor [2006] EPOR 8, para 12. But the plausibility test allows the court to have regard to such later evidence to make good the prediction if there is some basis for the prediction in the patent. Floyd LJ in the leading judgment in the Court of Appeal (para 133) treated the outcome of these tests as fortifying the judges conclusion that the patent had contained a plausible prediction. I agree. I would therefore have dismissed the cross appeal and have upheld Claims 10, 11 and 12. Infringement I agree that Warner Lambert have no claim under section 60(2) of the Patents Act 1977 for the reasons which both Lord Sumption and Lord Briggs give. The difficulty in finding a satisfactory answer to the interpretation of Claim 3 in the context of an infringement claim under section 60(1)(c) is the result of the shoe horning of the judge made law, namely the Swiss form claims, into a statutory scheme in section 60 of the Patents Act which was not framed with such purpose limited process claims in mind. The problems so caused are particularly acute in relation to prescribed medicaments as section 60(1)(c) imposes strict liability on suppliers and pharmacists who may have no reliable knowledge of the intention of the generic manufacturer and who operate in a context in which doctors, for sound therapeutic reasons, normally prescribe drugs generically but also do not usually specify the medical condition or conditions which the medicament is intended to treat. I agree that the test of foreseeability which Warner Lambert promote and the qualified version of foreseeability which the Court of Appeal favoured should not be adopted for the reasons which both Lord Sumption and Lord Briggs advance. The disagreement between Lord Sumption and Lord Briggs is whether, as Lord Sumption advocates, to adopt an approach, which has (at least until recently) found favour in the German courts, confining evidence of the purpose of an alleged infringing manufacturers process to the outward manifestation of that purpose on the product itself, including its packaging, labelling or in an accompanying patient information leaflet, or, as Lord Briggs suggests, to assess that manufacturers actual intention in producing the medicament by taking account also of other manifestations of that manufacturers purpose. The approach of the German courts has the serious disadvantage of giving inadequate protection to the patentee of the Swiss form patent against a generic manufacturer who uses skinny labels and patient information as a charade behind which it exploits the second use market. The approach which Lord Briggs favours may expose dealers in the generic product and dispensing pharmacists to strict liability for infringement as a result of matters over which they may have neither knowledge nor control. Both approaches are far from perfect. I confess to having been strongly attracted by the tidiness and consistency with the principles of tort law which Lord Sumptions approach involves. That approach also reduces the risk that suppliers and pharmacists will decline to deal in generic products after a patent has expired if there is a second medical use patent. But in my view Lord Briggs approach creates a fairer balance between the central policy objectives which he sets out in para 160 of his judgment. Principally for that reason but also for the other reasons which he advances, I agree with Lord Briggs judgment on this matter. If, on this approach, section 60(1)(c) were to cause serious problems to operators in the downstream market for generic products or to pharmacists, which in turn cause them to refuse to handle such generic products, it will be for the legislature to address those problems. LORD MANCE: I have read with benefit the judgments that have been prepared by Lord Sumption and Lord Briggs. Construction I would myself have been tempted by Warner Lamberts case that, on a true construction of the patent, Claim 3 should be understood as limited to peripheral neuropathic pain. I would have been impressed by the statement in para 6 of the description that Neuropathic pain is caused by injury or infection of peripheral sensory nerves, by the instances given which are of peripheral neuropathic pain and by the absence of any reference to any obvious instances of central neuropathic pain, such as pain from strokes and multiple sclerosis. I would also question whether the point made in para 104(3) of Lord Briggs judgment is entirely sound. Claim 2 (use for inflammatory pain) and Claim 3 (use for neuropathic pain) are not sub divisions covering the whole territory of Claim 1 (use for treating pain), since Claim 2 is itself commonly (but not I think necessarily) associated with an unmentioned category viz nociceptive pain. However, interpretation involves ascertaining the meaning of the claims as they would be understood by a person skilled in the art, in accordance with the principles set out in paras 92 to 98 of Lord Briggs judgment, with which I am in agreement. The points made by Lord Briggs in para 104(4) and (5) of his judgment also have some force. All my colleagues are persuaded that the skilled person would understand Claim 3 as extending to central as well as peripheral neuropathic pain. Their reasonable opinion carries weight. I am not in the circumstances prepared to press my reservations to a conclusion that they are wrong. Amendment and disposition of appeal I also agree with Lord Sumption and Lord Briggs, for the reasons they give, that Arnold J was, in the circumstances of this case, entitled to refuse to allow Warner Lambert to amend Claim 3 after he had handed down judgment. It follows that I agree that Warner Lamberts appeal fails. Sufficiency or plausibility and its application Where I do feel it necessary to disagree with the approach taken in Lord Sumptions judgment is in relation to the concept or test of sufficiency adopted in paras 26 to 37 in reaching it. This is a point of general importance. Swiss form claims for the manufacture of a known compound for a novel use are a construct of courts, which was aimed at meeting a commercial need, but was not envisaged by the language of the European Patent Convention (before its 2000 amendment came into force) or of the United Kingdom statutory scheme. Sufficiency or plausibility, in the sense presently relevant, is a court invented pre condition to validity. It has been constructed by courts, principally to attach some limit to the Swiss form claims for manufacture of compounds for uses which could otherwise be presented on a purely speculative basis. In the circumstances, there is every reason why the pre condition should be narrowly understood, and should represent a low threshold to overcome. In my view, Lord Sumptions analysis imposes too high a threshold, and imposes a burden on a patentee which the case law of the Board of Appeal of the European Patent Office does not justify. I prefer the approach advocated by Mr Mitcheson, but rejected by Lord Sumption in para 30 of his judgment. The case law of the Board of Appeal of the European Patent Office also seems to me to establish a reasonably clear position, which cannot be dismissed as some turns of phrase (para 30 of Lord Sumptions judgment). Taking the cases discussed in paras 31 to 34 of Lord Sumptions judgment: 1. T 1437/07 ALLERGAN (26/10/09): The relevant paragraphs in the judgment read: 38. The respondents argue that it was not credible that the therapeutic effect could be achieved because the treatment disclosed in Example 9 had not actually been carried out. 38.1 However, article 83 EPC stipulates that an invention must be disclosed in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art (emphasis added by the board). Thus, article 83 EPC does not stipulate that a claimed invention must have actually been carried out by the applicant or the inventor. Moreover, according to rule 42(1)(e) EPC, even the presence of an example is not mandatory. Therefore, just because a patent discloses an effect which has not in reality been achieved, there is no reason in the absence of convincing evidence that the effect cannot be achieved for the board to doubt that the effect can be achieved. Thus, the respondents argument does not convince the board. Again, it is notable that the Board of Appeal was prepared to proceed on the basis that a claimed effect was sufficiently disclosed in the absence of convincing evidence that it could not be achieved. 2. T 0578/06 IPSEN (29/6/11): Lord Sumption, after quoting paras 14 and 15 of the judgment in IPSEN, concludes: This decision is authority for the proposition that plausibility can be demonstrated in the specification without experimental evidence, if there is no substantiated doubt about the theoretical case made for the efficacy of the invention. This is the only relevant proposition for which it is authority. That is not in my opinion a correct paraphrase of paras 14 and 15 in, or supported by a full reading of, IPSEN. In para 15 the board took pains to re emphasise that the case law considers the establishment of plausibility only relevant when examining inventive step if the case at hand allows the substantiation of doubts about the suitability of the claimed invention to solve the technical problem addressed and when it is thus far from straightforward that the claimed invention solves the formulated problem. Para 13 in IPSEN is also relevant: The board notes that the EPC requires no experimental proof for patentability and considers that the disclosure of experimental data or results in the application as filed and/or post published evidence is not always required to establish that the claimed subject matter solves the objective technical problem. This is in particular true in the absence of any formulated substantiated doubt as is the case here. Paras 20 to 23 of the judgment in IPSEN underline this, by making clear that the onus is on the objector to demonstrate that there are doubts. 3. T 950/13 BRISTOL MYERS SQUIBB (3/2/17): (a) This is the most recent of all decisions, and particularly significant for that reason and because it examines the scope of T 609/02 SALK INSTITUTE FOR BIOLOGICAL STUDIES, relied upon in paras 28 to 29 of Lord Sumptions judgment. Again, in my opinion, the draft undervalues its significance. The principal claims in BRISTOL MYERS SQUIBB related to a compound of a formula for dasatinib or a salt thereof for the manufacture of a medicament for the oral treatment of cancer, wherein the cancer is chronic myelogenous leukaemia (CML) (Claim 1) or for use in the oral treatment of cancer, wherein the cancer is [CML] (Claim 4). Lord Sumption in para 34 explains BRISTOL MYERS SQUIBB as a case where Dasatinib had significant functional and chemical affinities with another kinase inhibitor [viz imatinib] known to be effective. 4. However, the objection was that the functional affinity was no more than an assertion that dasatinib functioned in the same way as imatinib. See in particular the patentees case on Sufficiency of disclosure set out in paragraph IX and the opponents case set out in paragraph X. Ultimately, it appears that, although this was true, the possibility that dasatinib would function in the same way as imatinib and the ease with which this could be ascertained using methods known in the state of the art, supported by post published documents combined to make Claims 1 and 4 plausible. A further claim that dasatinib went further than imatinib, and operated as an inhibitor in imatinib resistant situations was however insufficiently plausible. 5. The Board of Appeal approached BRISTOL MYERS SQUIBB on the basis that it was commonly known in the art that the single causative abnormality in CML was the BRC ABL oncogene, the protein of which was a tyrosine kinase responsible for the malignant transformation, that CML could be treated by inhibiting the BRC ABL kinase and that imatinib did this and had been approved for the treatment of CML (paras 3.4 and 3.5). The application contained no experimental evidence for dasatinibs BRC ABL inhibitory activity, but the disclosure of experimental results in the application is not always required to establish sufficiency, in particular if the application discloses a plausible technical concept and there are no substantiated doubts that the claimed concept can be put into practice. (para 3.6) 6. The application certainly drew an analogy between imatinib and dasatinib (para 3.6), but the Board of Appeals reasoning shows that the furthest the application went in this regard was to point out that there was evidence that dasatinib inhibited certain protein tyrosine kinases (PTKs) other than the BRC ABL kinase, that it was not uncommon for a protein kinase inhibitor to inhibit more than one [PTK] and that this can be explained by the fact that in all [PTKs] the ATP binding site and the transfer domains are to a certain extent similar (para 3.8). The Board of Appeal placed weight on the fact that assays and methods of testing to establish the activity of dasatinib as an inhibitor of PTKs, including BRC ABL were known in the art (para 3.8). The teaching that dasatinib was suitable for the treatment of CML was not rendered implausible by the fact that it may not have been obvious in view of the prior art (para 3.8). Further, at para 3.10.4, in these circumstances: post published documents may be used as evidence that the invention was indeed reproducible without undue burden. 7. The Board of Appeal drew a careful distinction between the position in BRISTOL MYERS SQUIBB and the position in the earlier case of SALK. It pointed out (para 3.9.1) that the Board of Appeal in SALK, at para 11, had summarised the situation as one where the claimed subject matter covers limitless and untried downstream developments in relation to yet to be demonstrated molecular mechanisms. In the boards judgment, it amounts to no more than an invitation to set up further research programs for which no guidance is forthcoming. In contrast, the Board said, the position in BRISTOL MYERS SQUIBB was that a structurally well defined compound and a plausible concept for its suitability in the treatment of CML has been disclosed. Similarly, in rejecting the opponents case that the skilled person was left to guess whether dasatinib exhibited any PTK inhibitory activity, let alone against BCR ABL kinase, the Board pointed out, at para 3.10.2, that this disregards that the present application clearly teaches that dasatinib is suitable in the treatment of CML, which is tantamount to dasatinib being a BRC ABL kinase inhibitor. Hence, . the skilled person was not left to guess, which of the various PTKs was inhibited by dasatinib. Accordingly, no further research programme was necessary in order to carry out the invention. The allegedly observed failure of some compounds according to formula I to inhibit the protein kinase Lck or the poor or reduced oral absorption properties of other compounds falling within the scope of formula I is irrelevant in this context. Equally irrelevant is the low activity of dasatinib on certain other PTKs such as HER1 or HER2 kinase. The [opponents] arguments may have been relevant, if the application had been limited to the general disclosure relied on by the [opponent], ie the provision of an extremely broadly defined group of compounds for the treatment of a plethora of diseases or disorders based on the inhibition of different types of PTKs with no further guidance at all as to which compounds inhibits [sic] which PTK. However, as set out above this is presently not the case. 8. In summary, being told that there was a functional analogy between dasatinib and imatinib in that they both inhibited BRC ABL kinase was sufficient information for the skilled reader to consider dasatinibs suitability in the treatment of CML to be a plausible teaching. For these reasons, I consider that it puts the test too high to suggest that the specification must disclose some reason for supposing that the implied assertion of efficacy in the claim is true (Lord Sumptions judgment, para 36). That amounts on its face to, or certainly risks being read as, a requirement that the plausibility of the claim must appear to be established prima facie through scientifically cogent reasoning or experimental evidence set out in the specification. Admittedly, Lord Sumption goes on in para 36 to suggest that the test is relatively undemanding. But he continues in para 37 to say that it is sufficient if the specification would cause the skilled person to think that there was a reasonable prospect that the assertion would prove to be true, and then that [the] reasonable prospect must be based on what the [Board of Appeal] in SALK (para 9) called a direct effect on a metabolic mechanism specifically involved in the disease, this mechanism being either known from the prior art or demonstrated in the patent per se. It also explains that, in so far as no experimental data is produced, it can be: demonstrated by a priori reasoning. For example, , the specification may point to some property of the product which would lead the skilled person to expect that it might well produce the claimed therapeutic effect; or to some unifying principle that relates the product or the proposed use to something else which would suggest as much to the skilled person. Despite the use of phrases such as reasonable prospect and might well produce, there is a real risk that the test as described by Lord Sumption would amount to, or be understood as, involving a requirement to establish a prima facie case on the material contained in the specification. In my opinion, the authorities analysed above do not put the standard so high. They certainly reject speculative or wide ranging unsubstantiated claims. But they accept as sufficient a tailored claim which appears scientifically possible, even though it cannot be said to be even prima facie established, without for example testing or assays according to the state of the article Only if a person skilled in the art would have significant doubts about the workability of the invention would it, in such a case, fail for insufficiency of disclosure. I therefore consider that Lord Sumptions judgment puts the test of sufficiency of disclosure too high. I agree with the way in which Lord Hodge puts the position in para 181 of his judgment. I am also persuaded that, applying the correct test, Arnold J cannot be said to have erred in concluding there was enough material just [to] make it plausible that pregabalin would be effective to treat peripheral neuropathic pain (para 351). My reasons correspond with those given more fully by Lord Hodge in paras 182 to 184 of his judgment, which I have had the benefit of reading since writing a first draft of my own. Infringement I turn finally to infringement. I need add nothing to what Lord Sumption and Lord Briggs have said on indirect infringement under section 60(2) of the Patents Act 1977. They are agreed that the prescription, dispensing or use of generic pregabalin to treat neuropathic pain does not put into effect the patented invention, or involve any supply to doctors, pharmacists or others of the means of putting it into effect. The patented invention is, under English law, the process completed by manufacture of the composition for the patent protected use. Any subsequent use is not itself patented. On the subject of direct infringement under section 60(1)(c), the other members of the court are however equally divided. Lord Sumption, with whom Lord Reed agrees, is on the one side and Lord Briggs and Lord Hodge are on the other. I am the swing voice, and it is with some unwillingness that I pronounce on the issue at all. All our remarks on it will be obiter, and it is often better to leave a truly contentious and difficult issue to a case where it matters. I also confess that my own view has swung between the two sides. Nevertheless, I will, in the circumstances, express my present conclusions. The issue has been fully argued, and it may at least diminish, though I fear not exclude, the prospect of further litigation if some indication is given to resolve the split of views exposed in this court. The issue remains relevant to old style Swiss patent cases though it will not arise in the same form, and we will not be addressing the position, under article 54(5) of the European Patent Convention. Patentability under article 54(5) is of a product (a substance or composition) for any specific use, whereas English law regards patentability under a Swiss form patent as attaching to a process, namely the process of manufacture of a product for a specific purpose. Both sides agree that the issue whether infringement of a Swiss form patent involves any and if so what mental element depends on the construction of such a patent. Claim 3, which it is in this connection relevant to consider, relates to: use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain. The second word for must under such a claim relate to one of two different subjects. First, it may attach to the process consisting of the use of pregabalin for the preparation of the composition or product. Alternatively, it may attach to the pharmaceutical composition or product, as prepared, presented and put on the market. Whichever approach is taken, some relevance will attach to how the pharmaceutical composition is presented and put on the market. But, if one reads the claim in the first way, it is natural to enquire into the subjective intention of the manufacturer in preparing the composition. If one reads it in the second, it is natural to focus on objective appearances or characteristics, and in particular on the way in which the composition is prepared, presented and marketed. In deciding what protection a Swiss form patent offers and what will constitute infringement, it is appropriate to consider the implications of each interpretation, against the background of the legislative aim of striking a fair balance between the opposing desiderata of incentivising and rewarding inventors and enabling manufacturers to compete lawfully and pharmacists and end users to carry on their affairs without incurring unbargained for liabilities against which they cannot sensibly protect themselves. The risk that anyone will actually pursue any liability claim against any particular pharmacist and/or end user may be slight in any individual case. But, if liability exists, some may well be pursued, to demonstrate the risks of dealing in generic goods, and all will be affected by the resulting deterrent effect. In any event, one would not as a matter of principle expect the law to involve uncovenanted and unavoidable liabilities. Each way of reading the claim identified in para 201 gives rise to questions. What is meant by subjective intention? And what circumstances would fall to be considered, in order to ascertain how a product is prepared, presented and marketed? As to subjective intention, Lord Sumption and Lord Briggs agree that mere foreseeability that some generic pregabalin would be used for treating neuropathic pain could not suffice to render the maker of the composition an infringer. A Swiss form patent entitles the maker to prepare the composition for the new purpose identified in it. The subsequent use of the composition involves persons outside the makers control. Lord Sumption and Lord Briggs also agree in rejecting the Court of Appeals solution of adding a qualification, so that foreseeability would suffice, if a generic manufacturer failed to take reasonable steps to prevent intentional use of the generic pregabalin by downstream prescribers or users for the treatment of neuropathic pain. I have nothing to add to their agreement on these points. So, if subjective intention is the test, it must be found in something more positive than foreseeability, that is in some form of design or desire on the part of the manufacturer. It seems unsatisfactory that patent infringement should depend on investigation of a subjective intention, internal to the manufacturer. That would also leave open the possibility of entirely blameless pharmacists and end users being liable under section 60(1)(c) for, say, disposal or use of generic pregabalin made by a manufacturer, whose subjective intentions the pharmacist and user would have had no means of gauging. It is true that section 60(1)(c) of the Patents Act 1977 has inherent in it the possibility of unwitting liability of a third party for disposing of, offering to dispose of, or using or importing a product made by a manufacturer by an infringing process. But the thinking behind section 60(1)(c) was certainly not focused on the later invented Swiss form patent. Rather it was, one supposes, assumed that the process by which a product was made would generally be obvious or easily ascertainable. In the case of a Swiss form patent, it would be far from obvious or easily ascertainable whether there had been infringement, if the test were whether manufacture (use for the preparation) of the composition had taken place by the manufacturer with the subjective intention that the composition be used for the specific purpose identified in the claim (ie here, for treating neuropathic pain). Further, if subjective intention were the test, what would this mean? Suppose that a manufacturer were deliberately to make more pregabalin than could be required for patent free uses, there would be no means of saying whether any particular batch would be used for patented or for patent free use. Would this mean that all manufactured batches infringed? So it would seem. These and other consequences are discussed by Lord Sumption and, I understand, recognised by Lord Briggs (see his para 171). They are to my mind powerful reasons for rejecting subjective intention as the test in any form. What then of a test focused on the way in which the pharmaceutical composition is prepared, presented and marketed? This must include in particular its packaging and the instructions given for its use, since the actual pharmaceutical composition is by definition identical to that produced by the patented process which it is said to infringe. Again, it is necessary to consider what such a test would mean. Here, some guidance is, in my view, available from German authority, identified by Lord Sumption in para 85 and by Lord Briggs in para 149. The German authority must be read with the understanding that a Swiss form patent is under German law regarded as protecting a purpose limited product, not (as under English law) a purpose limited process. Accordingly, the protection is treated as arising under section 9(1) of the German Patentgesetz, the German equivalent of section 60(1)(a) of the Patents Act 1977 (rather than under section 60(1)(c)): see Pemetrexed (Case No X ZR 29/15) (14 June 2016) in the Bundesgerichtshof (BGH), para 84, strogenblocker (Case I 2/W 6/17) in the Dsseldorf Oberlandesgericht (OLG), para 38 and Dexmedetomidin (Case I 2 U 30/17) (Dsseldorf OLG) (1 March 2018), (BeckRS 2018, 2410, paras 41 to 43). Swiss form patents are therefore treated in Germany on the same basis as the ordinary patents of a product for a specific use (where such patents are otherwise permissible) which were considered in Antivirusmittel (Case X ZR 51/86) (16 June 1987) (BGH): see the reference made to Antivirusmittel in the Swiss form patent case of Chronic Hepatitis C Treatment (Case 4a O 145/12) (14 March 2013) (Dsseldorf OLG), paras 51 to 54. Since the German analysis treats a Swiss form patent as protecting a product, rather than a process, it follows that third parties disposing of or using a generic product for the patented use are potentially exposed to liability under article 9(1) of the Patentgesetz: see also Chapter A, para 342 of Khnen, Handbuch der Patentverletzung, 10th ed (2017), a work extensively cited in Dexmedetomidin. However, under article 139(2) of the German Patentgesetz, damages for patent infringement are only available against a person who has deliberately or negligently committed the infringement. German law could not therefore expose a doctor, pharmacist or end user to potential liability to damages in the way that section 60(1)(c) of the English Act would on Warner Lamberts case. (Such a person could however still be injuncted against further infringement under article 139(1) of the German Patentgesetz.) If the protection sought by a Swiss form claim is treated, as English law treats it, as arising under section 60(1)(c), but is, at the same time, seen as operating in the second way identified in para 201 above (ie as attaching to the pharmaceutical composition as prepared, presented and marketed), then, despite the differences identified above, the German approach appears to me capable of illuminating what it would mean. Essentially, a Swiss form claim would, under English law, still be understood as protecting a process, but the scope of the protection would depend not on the subjective intention with which the process was undertaken, but on the objective characteristics of the resulting composition or product, judged by reference to the way in which it was packaged and marketed. The German authorities originally took a narrow view of what that could embrace, speaking in Chronic Hepatitis C Treatment, Cistus (Case I 2 U 53/11) (31 January 2103) (Dsseldorf OLG) and Warner Lambert Co LLC v Aliud Pharma GmbH (Case 327 O 140/15) (2 April 2015) (Hamburg OLG) of sinnfllige Herrichtung, ie manifest outward presentation. This approach was echoed by the Technical Board of Appeal in GENZYME/Treatment of Pompes disease [2016] EPOR 33, where the Board distinguished purpose limited product claims from Swiss form process claims, treating the latter (contrary to the view taken by the German courts) as falling within article 64(2) of the European Patent Convention (which equates with section 60(1)(c) of the Patents Act 1977). The distinction it drew was that the former offered protection whenever the patented product was used for the patented purpose, whereas the latter offered protection only in respect of a product which was produced by the patented process and was, in the instant case, packaged and/or provided with instructions for use in the treatment of infantile Pompes disease (para 9.1). In drawing this general distinction, the Board of Appeal was not however concerned with the precise limitations of the requirement under a Swiss form claim that, to achieve protection, the product produced by the process should be for the patented use. As Lord Sumption and Lord Briggs point out, the more recent German authorities, strogenblocker and Dexmedetomidin, take a broader view of the protection generated by a Swiss form patent. They do not focus on the external presentation (including the instructions for its use) of the allegedly infringing product, but rather on its inherent suitability for the patented use. However, they underline an additional requirement of any infringement, viz that the distributor needs to take advantage of circumstances which in a similar way to an active obvious preparation ensure that the purpose related therapeutic use of the preparation offered or sold actually takes place. and The latter requires a sufficient and not just occasional use according to the patent in suit, as well as the suppliers respective knowledge, or at least its bad faith ignorance thereof: See strogenblocker para 39 and Dexmedetomidin (BeckRS 2018, 2410, para 44). The example given in the latter case is use in practice of the generic product for the patent protected indication to a considerable extent in most cases due to a corresponding prescription by a doctor, in circumstances of which its supplier is or should have been aware, and which it still exploits for itself by supplying its distributors: para 44. The limitation relating to knowledge, bad faith taking advantage or exploitation, introduced in para 39 of strogenblocker and para 44 of Dexmedetomidin, appears as a pre condition to any infringement, rather than as a reflection of the general limitation of damages claims provided by article 139(2) of the Patentgesetz, to which I have referred in para 209 above. In my view, the preferable starting point under English law is to view a Swiss form claim in the second way identified in para 201 above. In other words, it protects the process of manufacturing a composition or product, which, as prepared, presented and put on the market, can be said objectively to be for the patent protected use. A process leading to a composition or product, which does not make clear that its permitted use is limited will infringe. In the light of submissions received from counsel on this judgment as circulated in draft in the usual way before issue, I prefer however to leave open whether there might be some circumstances in which a generic manufacturer could or should be expected to go further, by a notice positively excluding the patent protected use. All I would say in relation to the present case is that (i) although the parties appear, now, to differ on whether this would be either permissible or permitted, this is only the result of a very belated objection by Warner Lambert to a note filed by Actavis at the courts request as long ago as 23 February 2018 and (ii) at trial and in the admittedly slightly different context of the steps that Actavis should reasonably have taken to avoid being treated as intending to infringe, Warner Lambert did not even pursue any suggestion that such steps should have included the attachment of a notice recording, for example, that the generic product was not authorised, and was not to be used, for the treatment of neuropathic pain: see Arnold Js judgment, paras 526 527 and 586 589. That is a very unpromising basis for any suggestion by Warner Lambert that such a notice could or should have been given on the facts of this case, in order to avoid a conclusion that the generic product Lecaent was for the patent protected use of countering neuropathic pain. The delicate and difficult question is how far surrounding circumstances or general knowledge may be relevant, if in their light it is obvious or easily ascertainable that the process results in a product which, despite packaging and instructions making clear that it is for the non patent protected use, is destined for such use. For reasons already given, neither foreseeability nor subjective intention can be accepted as appropriate tests of liability. The recent German authorities do not appear to give any direct answer to the question what a manufacturer is supposed to do, if it acquires the awareness of a practice of the sort mentioned in para 212 above. Dexmedetomidin (BeckRS 2018, 2410, para 44) says that it will be justified to hold it liable if it still exploits this practice for itself by supplying its distributors. If that means that it must stop manufacturing and supplying any generic product, it involves an extreme solution which is too favourable to the patent holder, since it excludes competition by the generic product even in patent free areas of use. Another possibility is to read the German authorities as implying tacitly that the generic manufacturer should take (presumably, reasonable) steps to ensure that pharmacists and end users do not use the generic product for patented use. That would equate with the Court of Appeals approach in this case, which constructs a pre condition to legitimate manufacture and trade for which no basis, in my view, exists. There is however a further possibility, which appears to have the support of paras 351 and 353 of Khnens work already cited, namely that, since a generic manufacturer has no contractual relationship with and cannot give directions to a third party such as a doctor prescribing drugs, the most that can be expected of such a manufacturer is that it makes clear on the product that it is not for the patent protected use. It would seem to me also appropriate under English law to hold a generic manufacturer responsible in similar circumstances, if it was not made clear, in one way or another, that the product resulting from its manufacturing process was for the non patent protected use. However, although the context was again somewhat different, I note here the rejection by Arnold J, in paras 443 447 of his judgment, of Warner Lamberts submission that Actavis must be taken to have foreseen the use of Lecaent for the treatment of neuropathic pain because of the inclusion of warnings as to adverse effects if it was so used or because of blue box wording to the effect that it might be prescribed to treat other conditions not listed in the leaflet. Because context is all in the law, I also think that we should be careful about committing ourselves in obiter remarks in relation to other extreme cases not now before us. It may be going too far in favour of generic manufacturers to suggest as an absolute rule that a generic product, prepared, presented and put on the market, must always be viewed in isolation by reference only to its own packaging and instructions, and without regard to the realities or of the market for which it is prepared and into which it is being released. Take a situation where the circumstances make it obvious that a product, ostensibly limited in its permitted use by its packaging and instructions, was in fact destined for wider use; suppose that the manufacturer were to point out in separate studies, reports or advertisements that the composition resulting from its manufacturing process was pharmaceutically identical with that made by a manufacturer operating under a Swiss form patent; or suppose a generic manufacturer were to produce and supply quantities of the pharmaceutical composition for a distributor in a context which only made sense if they were destined for the patent protected use. Even then, the question could arise whether it was sufficient that this was obvious as between the generic manufacturer and its buyer or whether it would also have to be obvious more generally, and in particular to persons dealing in or using the composition down the chain in view of their potential exposure in the event of any infringement by the manufacturer. The wide and unqualified grasp of section 60(1)(c) (see para 205 above) might leave third parties with some exposure in a remote situation such as I am currently postulating. I prefer to say no more, and to leave open, the position in this type of remote situation. Normally, a generic manufacturer, and it follows others such as doctors, pharmacists and end users, should be protected from infringement of a Swiss form patent if the manufacturer ensures that the generic product resulting from its manufacturing process is produced, prepared and marketed with a clear limitation to patent free uses. As Khnen observes, a generic manufacturer cannot control the activities of doctors, pharmacists and end users, with which it is in no contractual relationship. The protection afforded by a Swiss form patent, analysed as protecting a process in the way that English law analyses it, is valuable, but necessarily limited.

UK-Abs

This appeal raises the question of how the concepts of sufficiency and infringement are to be applied to a Swiss form patent relating to a specified medical use of a known pharmaceutical compound. The Appellant (Warner Lambert) is part of the Pfizer group of companies. It is the proprietor of European Patent No 0641330 for Isobutylgaba. This is used for the treatment of seizure disorders, including epilepsy. Pregabalin, a derivative compound of Isobutylgaba, is marketed by Warner Lambert under the Lyrica brand. Patent No 0641330 expired on 17 May 2013. This appeal concerns a second European Patent No EP(UK) 0934061 entitled Isobutylgaba and its derivatives for the treatment of pain, with a priority date of 24 July 1996 (the Patent). The claims of the Patent (which define the scope of the patent protection) are all purpose limited. Most relevant are Claims 1 3 on the use of pregabalin for treating (1) pain, (2) inflammatory pain and (3) neuropathic pain. Lyrica has marketing authorisation in the EU for treatment of peripheral and central neuropathic pain, epilepsy and generalised anxiety disorder. It is one of Pfizers most successful drugs in the UK. The First Respondent (Mylan) and the Second Respondent, Actavis Group PTC EHF (Actavis), are pharmaceutical companies mainly engaged in marketing generic pharmaceutical products. Actavis markets a generic pregabalin product under the brand name Lecaent, launched in 2015. In these proceedings, Mylan and Actavis claimed the revocation of the Patent on the grounds of lack of inventive step and insufficiency. Warner Lambert claim that Actavis infringes Claims 1 and 3 above. At first instance, Arnold J rejected the arguments based on lack of inventive step. These are no longer in issue. Further, he held that Claim 1 (pain) and Claim 3 (neuropathic pain) were invalid because he construed Claim 1 as extending to all pain and Claim 3 as extending to all neuropathic pain. He found that there was sufficient disclosure in the specification to support the claim that pregabalin was efficacious in the treatment of inflammatory and peripheral neuropathic pain, but not central neuropathic pain. Both claims therefore failed for insufficiency. The result of the judges decision was to remove patent protection for the manufacture of pregabalin for the treatment of both peripheral and central neuropathic pain. Arnold J also rejected as an abuse of process an application concerning an amendment to narrow the Patent. The Court of Appeal (Floyd, Kitchin and Patten LJJ) upheld the judges findings, so far as relevant to this appeal, and his decision on the amendment application. The judge and Court of Appeal differed in their approach to infringement in patent cases confined to manufacture for a particular use. On appeal to the Supreme Court, Warner Lambert contend that all the claims of the Patent were valid. Their main aim is to establish the validity of their claims relating to neuropathic pain or, at least, peripheral neuropathic pain. Actavis and Mylan cross appeal, arguing that none of the claims as to neuropathic pain are valid. They only accept as valid the claims limited to inflammatory pain, for which there is no marketing authorisation. This gives rise to four issues on appeal: (i) the construction of the claims (in particular, Claim 3 as to neuropathic pain); (ii) the sufficiency of the disclosure in the specification; (iii) amendment and abuse of process; and (iv) the test for infringement of a patent in relation to manufacturing for a limited use. The Supreme Court dismisses the appeal and allows the cross appeal (Lord Mance and Lord Hodge dissenting in part on whether there was sufficient disclosure in the specification for Claims 1 and 3). Lord Sumption gives the leading judgment, with which Lord Reed, Lord Hodge and Lord Briggs agree, save on some issues specified in the separate judgments of Lord Briggs, Lord Hodge and Lord Mance. Issues (i) and (iii) Construction of the claims and amendment/abuse of process: The court unanimously affirms (for reasons given by Lord Briggs): (1) the view of both courts that Claim 1 extends to all pain and Claim 3 to all neuropathic pain, whether peripheral or central, and (2) Arnold Js decision rejecting Warner Lamberts application to amend the Patent to narrow it [15(1), 16 (Lord Sumption); 99 106, 118 120 (Lord Briggs); 181 (Lord Hodge); 195 196 (Lord Mance)]. Issue (ii) Sufficiency of disclosure in specification for Claims 1 and 3: The court holds, by a majority (Lord Sumption, Lord Reed and Lord Briggs), that the disclosure in the specification supports the claims in relation to inflammatory pain, but not neuropathic pain, whether peripheral or central. Claims 1 and 3 therefore fail for insufficiency. Thus, the appeal is dismissed and the cross appeal allowed [15(2), 43 54]. The majoritys approach requires the patentee to demonstrate that the specification discloses some scientific reason why the implied assertion of efficacy in the patent claim may well be true [36 37]. More than a bare assertion or mere possibility of therapeutic efficiency is required, though a priori reasoning (not necessarily only experimental data) may suffice [37]. This respects the principle that the patentee cannot claim a monopoly of new use for an existing compound without real disclosure [35]. Lord Hodge (dissenting) proposes an alternative approach to sufficiency, preferring a lower standard of plausibility, and would have dismissed the cross appeal [186 190]. Lord Mance agrees with Lord Hodge on this issue, concluding that the majoritys approach imposes too high a threshold [198 201]. Issue (iv) Correct test for infringement of patent manufactured for a limited use: The court unanimously holds that if Claims 1 and 3 had been valid, they would not have been infringed by Actavis [15(3)]. The reasons for arriving at this agreed result differ substantially. Lord Sumption and Lord Reed consider that the intention of the alleged infringer, whether subjective or objective, is irrelevant and that the sole criterion of infringement is whether the product as it emerges from the manufacturing process, including any labelling or accompanying leaflet, is presented as suitable for the uses which enjoy patent protection the outward presentation test [15(3), 71 86]. On the facts of this case, it is not disputed that Lecaent was sold with labels and patient information to the effect that it was for the treatment of seizure disorders and general anxiety disorder [8, 15(3)]. Lord Mance agrees that the test depends on the objective appearance and characteristics of the product as it is prepared, presented and put on the market, but considers that in rare cases the context may make it obvious that these are not to be taken at face value [15(3); 218 223]. Lord Briggs and Lord Hodge prefer the view of Arnold J that the test is whether the alleged infringer subjectively intended to target the patent protected market (Arnold J found they had not so intended) [15(3); 170 177 (Lord Briggs); 193 (Lord Hodge)].

This is an appeal concerning a claim for repayment of unduly levied Value Added Tax (VAT) in the context of a VAT group of companies. The question is whether Taylor Clark Leisure PLC (TCL) is to be treated as having made claims for repayment within the time limit set by section 121 of the Finance Act 2008 (FA 2008), namely by 31 March 2009, when another company, which was formerly a member of the VAT group, and not TCL made the relevant claims. As I discuss below, the idea of a VAT group of companies was introduced to simplify the collection of VAT (a) by ignoring intra group transactions and (b) by treating supplies by or to any member of the group in their dealings with entities outside the group as transactions by a single taxable person. Several companies have sought to intervene in this appeal because of concerns that the determination of this appeal would affect their outstanding claims which are due to be heard by the Court of Appeal in January 2019. This court has declined to allow such intervention because this appeal is not directly concerned with questions raised in those appeals as to which company has a right to claim repayment of unduly levied VAT either when a company which has had the economic burden of paying VAT has left a VAT group or where a VAT group has been dissolved. I recognise that, nonetheless, my discussion of the nature of the statutory regime in the United Kingdom (UK) in relation to an extant VAT group will indirectly have a bearing on those issues. Factual background TCL is now a dormant company. It was initially incorporated as Caledonian Associated Cinemas Ltd in 1935 and was reincorporated on change of name on two occasions before it acquired its current name in 1995. Between 1973 and 2009 TCL was the representative member of the Taylor Clark VAT Group (the VAT Group), in accordance with legislation which I discuss under the heading VAT legislation below. From 1973 until 28 February 2009, when the VAT Group was disbanded, the VAT registration number (VRN) of the VAT Group was 265 7918 16. On 16 November 2007, Carlton Clubs Ltd (Carlton) submitted four claims to the Commissioners of HM Revenue and Customs (HMRC) under section 80 of the Value Added Tax Act 1994 (VATA) for repayment of VAT output tax, which TCL as representative member of the VAT Group had accounted for in the years between 1973 and 1998 using its VRN as representative member of the VAT Group. TCL submits that it, as the representative member of the VAT Group, is entitled to rely on Carltons claims because it asserts that those claims are to be regarded as having been submitted on behalf of the VAT Group which EU law treats as a single taxable person entitled to repayment of the unduly levied tax. The dispute has arisen in the following way. In about 1990 TCL undertook a group reorganisation. Part of that reorganisation involved the transfer of its bingo business to Carlton, a member of the VAT Group which had been incorporated for that purpose under the name Leisurebrite Ltd, with effect from 1 April 1990. The transfer was effected by a letter dated 30 March 1990 (the 1990 Asset Transfer Agreement). In 1998 Carlton was sold out of the Taylor Clark group of companies and thus ceased to be part of the VAT Group. Thereafter Carlton accounted under its own VRN for VAT in relation to its bingo hall and other leisure business activities. Until 2005 it had been wrongly assumed that income generated from bingo and gaming machines was to be treated as subject to VAT at the standard rate. But on 17 February 2005 the Court of Justice of the European Union (CJEU) ruled that income from gaming machines was exempt from VAT, whether the machines were operated privately or at licensed public casinos: Finanzamt Gladbeck v Linneweber (Joined Cases C 453/02 and C 462/02) [2005] ECR I 1131; [2008] STC 1069. HMRC initially thought that the Linneweber decision did not apply in the UK as it believed that the UK treatment of gaming machine income did not breach the principle of fiscal neutrality. Nonetheless, HMRC invited claims for the repayment of VAT on income from gaming machines and analogous activities. In 2011 the CJEU decided that, as a result of the application of the principle of fiscal neutrality, bingo was not subject to VAT in the UK: Rank Group PLC v Revenue and Customs Comrs (Joined Cases C 259/10 and C 260/10) [2011] ECR I 10947; [2012] STC 23. In response, HMRC issued a Revenue and Customs Brief 39/11 in which they accepted that claims for repayments relating to bingo would be paid subject to verification. But HMRC, on their interpretation of the Rank Group judgment, continued to contest claims relating to gaming machines. On 23 January 2008 the House of Lords held that UK legislation which imposed a shortened three year time limit on claims for the refund of overpaid VAT in the period from 1973 to 4 December 1996 without providing for an adequate transitional period, which was fixed in advance, was contrary to European law: Fleming (t/a Bodycraft) v Revenue and Customs Comrs [2008] 1 WLR 195. In response to that judgment Parliament enacted section 121 of FA 2008, which disapplied the three year time limit for claims to be made for over declared or overpaid VAT in respect of periods up to 4 December 1996, if a claim was made before 1 April 2009. In anticipation of the judgment of the House of Lords in Fleming, Carlton on 16 November 2007 submitted four protective claims for repayment of output VAT which TCL as representative member of the VAT Group had overpaid in accounting periods between 1973 and the first quarter of 1998. Carlton made the claims, which related to overpaid VAT on (i) mechanised cash bingo takings, (ii) gaming machine takings, (iii) participation fees, and (iv) added prize money and participation fees, on its own letterhead but using the VAT Groups VRN. In claims (i), (ii) and (iv) Carlton headed the claim using TCLs name but in claim (iii) it used its own name in the heading. Carlton submitted the claims without informing TCL. On 8 January 2009 Carlton submitted a revised claim (iv) in which it quoted its own name and VRN as well as TCLs name and the VAT group VRN. In the revised claim, as discussed below, it asserted a right to claim overpaid VAT back to 1973 (ie before its incorporation in 1990) by relying on the 1990 Asset Transfer Agreement, which it claimed had assigned to it the right to make such historic claims. HMRC refused all of Carltons claims and Carlton appealed against the refusal. HMRC then betrayed no little uncertainty as to how to proceed with the claims. Initially, on 27 April 2009 HMRC wrote to TCL as representative member of the VAT Group to confirm that they had processed a repayment of 667,069 together with interest. This was the sum claimed by Carlton in its revised claim (iv), which HMRC paid to TCL on 12 May 2009. HMRC then changed their minds and on 7 July 2009 notified TCL of an assessment for repayment of that sum and interest. HMRC then changed their minds again and withdrew the assessment on 27 October 2009. Thereafter, on 4 May 2010 TCLs advisers wrote to HMRC to assert its right to receive repayment under the other claims. In a lengthy exchange of correspondence, TCL accepted that it had not made the claims but asserted a right to repayment because the claims had been made in respect of VAT for which it, as representative member of the VAT Group, had incorrectly accounted. In a decision letter dated 23 September 2010 HMRC (a) reversed their earlier decision concerning claim (iv) by confirming the assessments which sought repayment of the 667,069 and interest and (b) refused TCLs claim for repayment of the other claims. HMRC gave three reasons for their decision. First, they contended that TCL had not submitted claims before the expiry of the time limit imposed by section 121 of FA 2008. Secondly, HMRC stated that they had taken legal advice and expressed the view that the claims predating 31 March 1990 had been assigned to Carlton by the 1990 Asset Transfer Agreement. Thirdly, they asserted that because the VAT Group had since been disbanded, the claim for over declared output tax must be made by the company whose activities gave rise to the over declaration and Carlton had made that claim. This third reason reflected HMRCs policy at that time; now HMRC assert that the right to repayment remains with the last representative member of a disbanded VAT group. TCL requested a review of the decision and on review HMRC confirmed their decision and maintained their assessments. TCL and Carlton pursued rival appeals against HMRCs refusal to repay the outstanding claims. TCLs appeals, which had been lodged in London, were transferred to Edinburgh so that they could be heard together with Carltons appeals. On 26 January 2012 Carlton withdrew two of its appeals and intimated to the First tier Tribunal (FTT) that HMRC had satisfied those claims. Carltons representative also informed the FTT that Carlton had withdrawn another appeal because HMRC had repaid the claim to Carlton. The remaining appeal remains sisted (stayed). It thus appears that HMRC have paid to Carlton the sums claimed in three of the four appeals. The decisions of the Tribunals and the Inner House The FTT (Judge Gordon Reid QC and Dr Heidi Poon) issued its determination on 19 December 2012, in which it decided three main issues. First, it held that the right to claim repayment of sums due from 1973 to 1990 had been assigned to Carlton by the 1990 Asset Transfer Agreement (the Assignation Issue). Secondly, it held (contrary to the submissions of both parties) that the right to repayment for the claims relating to the period from 1990 to 1996 had been re invested in Carlton when it left the VAT Group in 1998 (the Entitlement Issue). Thirdly, it held that TCL had not made a claim under section 80 of VATA and could not rely on the claims submitted by Carlton, which had not made the claims on TCLs behalf (the Claimant Issue). TCL appealed to the Upper Tribunal (UT) on all three issues. The UT (Lord Doherty) in a determination dated 8 September 2014 dismissed the appeal. On the Claimant Issue he interpreted section 80 of VATA as requiring that the claim be made by or on behalf of the taxpayer seeking repayment. TCL had not made a claim and no claim had been made on its behalf before the end of the limitation period; accordingly TCLs claim was time barred. On the Assignation Issue Lord Doherty reversed the FTTs decision, holding that TCL had not assigned the pre 1990 claims to Carlton in the 1990 Asset Transfer Agreement. On the Entitlement Issue, he recorded that it was common ground between HMRC and TCL that TCL was the appropriate party to seek repayment of tax accounted for between 1990 and 1996, even after the VAT Group had been disbanded on 28 February 2009. TCL sought to appeal only in relation to the Claimant Issue. Lord Doherty refused permission to appeal but on a renewed application to a single judge of the Inner House, Lady Clark of Calton gave permission to appeal on the Claimant Issue by reference to the following question: Can the VAT Group, represented by [TCL], rely on the claims for repayment of VAT overpaid by the VAT Group, when the claims were made in time but were made by another member of the same VAT group? HMRC did not cross appeal on the Assignation or Entitlement Issues. Accordingly the only issue which was before the Inner House and is now before this court is the Claimant Issue. The Extra Division of the Inner House in an opinion dated 14 July 2016 allowed TCLs appeal. The court held that the representative member embodied the VAT group which was a single taxable person, or a quasi persona, so that the acts, rights, powers and liabilities of the individual members of the group were ascribed to the representative member as far as they related to VAT. The Inner House held that, in the context of section 43 of VATA, a claim by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member embodying the group as otherwise the claims would have no meaning. As a result, by adopting a purposive construction of the letters which Carlton sent to HMRC, the claims made by Carlton fell to be regarded as claims made by TCL as representative member of the VAT Group. The parties contentions HMRCs principal argument is that the Inner House erred in holding that a claim for repayment of VAT by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member of that group. Carltons claim was made on its own behalf and TCL cannot rely on it to avoid the statutory time bar. TCLs response, in summary, is that Carltons claims sought to vindicate the rights of the single taxable person, which was the VAT Group. Carlton in EU law had no individual fiscal personality in relation to those rights. The claims must be treated as having been submitted on behalf of the VAT Group, which was the only taxable person recognised by EU law, and TCL, as the representative member of the VAT Group, was entitled to rely on those claims. In any event, TCL submits that it validly ratified the claims which Carlton made on its behalf. The VAT legislation The starting point for consideration of the parties submissions is article 11 of the Principal VAT Directive, Council Directive 2006/112/EEC of 28 November 2006 (the Principal Directive) which provides: After consulting the advisory committee on value added tax (hereafter, the VAT committee), each member state may regard as a single taxable person any persons established in the territory of that member state who, while legally independent, are closely bound to one another by financial, economic and organisational links. A member state exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision. Two points may be made about this provision. First, it is permissive. There is no obligation on a member state to institute such a regime. Secondly, it is not prescriptive. It does not lay down a template as to how a member state will treat a group of persons as a single taxable person. It shares these characteristics with its predecessor, article 4.4 of the Sixth Council Directive of 17 May 1977 (77/388/EEC) (the Sixth Directive). The UK took up the opportunity to establish VAT groups of companies, initially in section 21 of the Finance Act 1972 and later in section 29 of the Value Added Tax Act 1983 (the 1983 Act). The current provision is section 43 of VATA, as amended, which provides, so far as relevant: (1) Where under sections 43A to 43D any bodies corporate are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and any supply of goods or services by a member of (a) the group to another member of the group shall be disregarded; and (b) any supply which is a supply to which paragraph (a) above does not apply and is a supply of goods or services by or to a member of the group shall be treated as a supply by or to the representative member; and all members of the group shall be liable jointly and severally for any VAT due from the representative member. It is clear from the statutory words in section 43(1) of VATA that the UK chose to achieve the end which the Directive authorised not by deeming the group to be a quasi person but by treating the representative member as the person which supplied or received the supply of goods or services. This point was clearly made by the House of Lords in Customs and Excise Comrs v Thorn Materials Supply Ltd [1998] 1 WLR 1106 in their discussion of the predecessor provisions, namely article 4.4 of the Sixth Directive and section 29 of the 1983 Act. Lord Nolan, with whom Lord Browne Wilkinson and Lord Lloyd of Berwick agreed, stated (1113C D) that those provisions were designed to simplify and facilitate the collection of tax by treating the representative member as if it were carrying on all of the businesses of the other members as well as its own, and dealing on behalf of them all with non members. I do not construe Lord Nolans reference to dealing on behalf of the other members of the VAT group as a reference to an agency relationship. Section 43 is not concerned with the intra group legal arrangements of group members. It is concerned with dealings in relation to VAT with entities outside of the VAT group and with HMRC, including the disregard of intra group supplies in relation to liability for VAT. In its dealings with HMRC in relation to VAT the representative member is treated as carrying on the businesses of the other members of the group. Lord Clyde made the same point (1121H) stating that in the UK the single taxable person for which provision was made in article 4.4 of the Directive was the representative member. Lord Hoffmann, while dissenting, agreed on the effect of the provisions. He stated (1118A B): Section 29 does produce a single taxable person, namely, the representative member. But it does so, not by the crude method of deeming all members to be a single person but by the much more limited and specific assumptions which the subsection [now section 43(1)(a) and (b) of VATA] makes. Thus, the single taxable person is the representative member. The joint and several liability of the other members of the group for VAT due by the representative member is the means by which the UK has sought to counter tax evasion and avoidance in accordance with the authority conferred by the second paragraph of article 11 of the Principal Directive. In Ampliscientifica Srl v Ministero dell Economia e delle Finanze (Case C 162/07) [2008] ECR I 4019; [2011] STC 566, the CJEU (paras 19 and 20) explained that article 4.4 of the Sixth Directive, if implemented by a member state, had the effect that companies in a VAT group were no longer treated as separate taxable persons for the purpose of VAT but were to be treated as a single taxable person. This precluded such companies from submitting VAT declarations separately since the single taxable person alone is authorised to submit such declarations. It followed that the national implementing legislation had to provide that the taxable person is a single taxable person and that a single VAT number be allocated to the group. In the UK the model which achieves that result is that of the representative member. The words in section 43(1) are clear beyond question: any business carried on by a member of the group shall be treated as carried on by the representative member. It has not been suggested that the UK failed to consult the VAT committee before adopting this model (as required by Annex A of the Second Council Directive of 11 April 1967 (67/228/EEC) and later by article 4.4 of the Sixth Directive and now by article 11 of the Principal Directive) and no challenge has been made to the effect that the model does not faithfully implement the option which article 11 of the Principal Directive or its predecessor made available to member states. There is no reason to doubt that the model which the UK has adopted is consistent with the EU legislation. Other models have been used to take up the option. Thus, in the Kingdom of Sweden, national legislation, which exercised the option which article 4.4 of the Sixth Directive gave, provided that a VAT group might be regarded as a single operator and the activity in which companies within the group were engaged might be regarded as a single activity. The result was that services supplied to a company within such a VAT group in Sweden were regarded as services supplied to the VAT group: Skandia America Corpn (USA), filial Sverige v Skatteverket (Case C 7/13) [2015] STC 1163, paras 16 and 28 32. Whatever may be the position in the legislation of other member states, there is, in my view, no need to complicate matters by introducing a concept of the VAT group as a quasi persona in an analysis of the UK legislation. While one can, and HMRC does, speak of the registration of a group giving rise to a single taxable person, it is the appointment of a company as representative member of the group which provides the legal person which is the taxable person. The administration of VAT involves giving the representative member of a VAT group a VRN and the establishment of a bank account in its name from which VAT payments may be made to HMRC and into which repayments may be made. A VAT group may change its representative member by applying to HMRC under section 43B(2)(c) of VATA (as inserted by section 16 of, and paragraph 2 of Schedule 2 to, the Finance Act 1999) but the new representative member retains the same VRN and bank account. In Revenue and Customs Comrs v MG Rover Group Ltd [2016] UKUT 434 (TCC); [2017] STC 41, the Upper Tribunal (Warren J and Hellier J) described the position of the representative member in these terms (para 171): [T]he representative member of section 43 must, in our view, be understood as a continuing entity (perhaps akin to a corporation sole whose role is fulfilled by whoever holds the relevant office at any time). Thus actions, liabilities and rights of an old representative member must be ascribed to the new representative member on a change of representative member. In my view that analogy is apt. Section 43 of VATA does not make the group a taxable person but treats the groups supplies and liabilities as those of the representative member for the time being. Section 80 of VATA (as amended by section 3 of the Finance (No 2) Act 2005) provides (so far as relevant): (1) Where a person (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and (b) in doing so, has brought into account as output tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount. (2) The Commissioners shall only be liable to credit or repay an amount under this section on a claim being made for the purpose. It is clear from the words of section 80(1) that HMRCs liability to credit or repay the overpaid output tax is owed to the person who accounted to them for VAT in the relevant accounting period or periods. It is also clear from the concluding words in subsection (2) (for the purpose) that a claim must be made for the credit or repayment to that person before HMRC come under any liability to credit or repay. Other subsections support this view. Section 80(3), which provides HMRC with the defence of unjust enrichment against a claim under subsection (1) or (1A), refers to the enrichment of the claimant and appears to assume that the claimant is the person who has accounted for the VAT. Subsection (4), which imposes a time limit on claims, also is drafted on the basis that the claim will result in the giving of a credit or repayment to the person who accounted for or paid the VAT in the first place. It therefore follows from the operation of section 43 of VATA that where there have been overpayments of VAT by the representative member of a VAT group, the person entitled to submit a claim during the currency of a VAT group, unless the claim has been assigned, is either the current representative member of the VAT group or a person acting as agent of that representative member. I therefore agree with the Extra Division in para 24 of their opinion that it is only the representative member who has any interest in making the claim. My disagreement is simply that one does not need the complication of viewing the group as a quasi persona to reach that conclusion. In this regard I agree with the impressive analysis of the single taxable person in the context of a subsisting VAT group by the FTT (Judge Roger Berner and Mr Nigel Collard) in paras 73 75 of the decision in Standard Chartered plc v Revenue and Customs Comrs [2014] UKFTT 316 (TC); [2014] SFTD 1270. In particular, as Judge Berner stated (para 73): Under UK law, as set out in section 43 VATA, the concept of the single taxable person is properly implemented through the representative member. The representative member is not the agent or trustee of the constituent members of the group. It is the domestic law embodiment of the single taxable person. Mr Scorey on behalf of TCL submits that the only taxable person is the VAT group, which alone has fiscal personality, and that any company within the VAT group can claim repayment of unduly levied VAT on behalf of the group. For the reasons set out above, I do not accept that submission. Nor do I see any basis for the assertion by the Extra Division (para 27) that a claim by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member, as otherwise the claim would have no meaning. An assignee of the representative member may make a valid claim in its own right (as Carlton purported to do in this case). Alternatively, a party may make a claim to which it is not entitled. I therefore approach the construction of Carltons claims without any such preconception. I also have regard to the limitation of an appeal from the UT to errors of law. In my view, for the following four reasons, the FTT did not err in law in so Applying the law to the facts: Carltons claims The FTT concluded (para 78) that it was clear from the text of each of Carltons letters that it was claiming, in its own right, repayment of sums alleged to have been overpaid by way of VAT, and (para 86) that Carlton did not make the claims in 2007 and the revised claim in 2009 on behalf of TCL. holding. First, when Carlton sent the letters to HMRC under its own letterhead, it had long ceased to be a member of the VAT group. This would have been known to HMRC. Even if Carlton had remained a member of the VAT Group, I would not have construed its letter as one on behalf of TCL, in the absence of an assertion that it was acting as TCLs agent, because the statutory scheme, which it was invoking, envisaged that HMRC would deal only with the representative member. Secondly, it appears from the four letters dated 16 November 2007 that Carlton had already presented claims in respect of each of claims (i) (iv) in relation to its own business activities in the period after it had left the VAT Group and it presented the new claims as serving to extend the scope of the previous disclosure. Thirdly, the use of the VAT Groups VRN was necessary in order to identify the original source of the allegedly overpaid VAT. The use of the VRN did not disclose who was entitled to the repayment as it was possible (and later clarified) that Carlton was claiming as assignee. Fourthly, in each of the claims submitted on 16 November 2007, Carlton was claiming repayment of sums paid from 1973, long before its incorporation in 1990, as well as in the period after 1990 when it was a member of the VAT Group. It clarified the basis on which it made those claims in its letter of 8 January 2009 in which it revised its claim (iv) in respect of cash bingo participation fees. In that letter it founded on the 1990 Asset Transfer Agreement and on a decision of the London VAT Tribunal in Triad Timber Components Ltd v Customs and Excise Comrs [1993] VATTR 384 in support of its right to be paid the overpaid VAT. In relation to the former Carlton claimed that it had obtained legal opinion that TCL had transferred to it the right under section 80 of VATA to claim output tax previously over declared. The Triad decision, on which Carlton relied for its post 1990 claim, was that a trading company had the right, after it left a VAT group and that groups registration had ceased, to reclaim VAT which had been overpaid on its supplies whilst it was a member of that group. Carlton claimed that that decision entitled it to claim overpaid output tax for the period that it had been a member of the VAT Group. HMRC at that time also accepted the Triad decision, as their policy then, in relation to claims after a group registration had ceased, was to repay the trading entity which had suffered the economic burden of the overpaid VAT. Both parties would have readily understood Carlton to be claiming repayment in its own interest. TCL sought to neutralise the effect of the letter of 8 January 2009 by arguing that one could not use a subsequent writing to assist in the construction of the earlier letters. I do not accept that submission in the context of these letters. The four letters of 16 November 2007 were in substantially similar terms. The letter of 8 January 2009 expressly revised the earlier claim for overpaid output tax on cash bingo participation fees, thereby superseding the earlier claim to that extent, and expanded on the reasoning behind that claim. That explanation, contained under the heading The right to deduct, applied equally to the other claims made on 16 November 2007, most obviously in relation to the periods in each claim which pre dated Carltons incorporation. In so far as there was any doubt as to the basis on which Carlton was making the claims in the four letters of 16 November 2007, the clarification provided by the latter letter is admissible and relevant evidence of the nature of Carltons claims. To hold otherwise, and have regard to the letter of 9 January 2009 only to the extent that it revised the earlier claim, would in my view be wholly artificial. I am also satisfied that TCLs case of agency cannot get off the ground. Carlton had no actual authority to send the letters on TCLs behalf. The FTTs findings of fact, which were not challenged, destroyed any such assertion. The FTT held (para 55) that TCL neither instructed nor authorised Carlton to submit any of the claims and (para 57) that TCL was unaware that it had a potential claim under section 80 of VATA and that HMRCs payment of 667,069 to it on 27 April 2009 came out of the blue. Similarly, there is no basis for an argument that TCL ratified Carltons claims which had been made on its behalf, thereby conferring retrospective authority. First, Carltons letters to HMRC did not purport to be written as agent of TCL. On the contrary, they were claims which Carlton pursued for its own benefit. That is fatal to the claim of ratification: Keighley, Maxsted & Co v Durant [1901] AC 240, especially Earl of Halsbury LC 243 244 and Lord Macnaghten 246 247. Secondly, there are no findings of fact that TCL ratified Carltons actions as its agent. This is unsurprising as TCLs case before the FTT and UT had not been based on Carlton having acted as its agent. Further, TCLs counsel in addressing the UT acknowledged that Carlton had submitted the letters on its own behalf and not on behalf of TCL. Instead she based her case on an interpretation of section 80 of VATA which allowed TCL to take over Carltons claims. The UT decided the appeal on that basis. As an appeal from the UT to the Inner House or to this court is available only on a point of law arising from the decision of the UT (Tribunals, Courts and Enforcement Act 2007 sections 13 14C (as inserted by section 64 of the Criminal Justice and Courts Act 2015)), it is not open to the appellate courts to find that there was an agency relationship between Carlton and TCL. Further submissions After the court had released this judgment in draft to counsel to enable them to point out any typographical errors and minor inaccuracies in accordance with Practice Directions 6.8.3 and 6.8.4, TCLs counsel applied to the court to make a reference to the CJEU under article 267 of the Treaty on the Functioning of the European Union. The suggested reference would raise the question whether the interpretation of section 43 of the VATA which I favour is compatible with the concept of the single taxable person in article 11 of the Principal Directive. I am satisfied that it is neither necessary nor appropriate to make such a reference because a ruling by the CJEU on the nature of the single taxable person is not necessary for the determination of this appeal: Srl CILFIT v Ministry of Health (Case C 283/81) [1982] ECR 3415. Whether in United Kingdom law the representative member is seen as the single taxable person or as the representative of a quasi person which is the aggregate of the companies in the VAT group and which itself is to be recognised in domestic law, the outcome of this appeal would be the same. This is because Carlton made its claims in its own interest and not on behalf of either the representative member or the extant VAT group of which it had ceased to be a member. A ruling by the CJEU that a member of a VAT group is a member of a single taxable person would not alter that conclusion. TCL also suggested that Schedule 1 to the VATA, which implements the second paragraph of article 11 of the Principal Directive by creating a single taxable person to counter tax avoidance, was inconsistent with the interpretation of section 43 which I favour. I disagree. Paragraphs 1A and 2 of Schedule 1 implement this part of article 11 by empowering HMRC to make a direction that the persons named in that direction are to be treated as a single taxable person, which is registered in respect of taxable supplies. Paragraph 2 provides that on the making of the direction (i) the persons affected by the direction are to give a name in which the taxable person is to be registered, (ii) provisions which are equivalent to section 43(1)(b) and (c), and the tailpiece of section 43(1) imposing joint and several liability on the constituent members, are applied, (iii) a failure by the taxable person to comply with a requirement imposed by of under the VATA is treated as a failure by each of the members severally and (iv) subject to the foregoing, the constituent members are treated as a partnership carrying on the business of the taxable person. Thus paragraph 2 of Schedule 1 implements the second paragraph of article 11 by treating the persons who are named in the direction as members of a partnership carrying on the business of the taxable person. In other words, in domestic law the partnership is the mechanism by which the persons subjected to the direction are treated as a single taxable person and no separate quasi person is required. I see no inconsistency between these provisions in Schedule 1 and the interpretation of section 43 which I favour. Conclusion I would therefore allow the appeal.

UK-Abs

Between 1973 and 2009 the Respondent, Taylor Clark Leisure Plc (TCL) was the representative member of the Taylor Clark VAT Group (the VAT Group) in terms of Article 11 of the Principal VAT Directive 2006/112/EEC (the Principal Directive) and its predecessor, Article 4.4. of the Sixth Council Directive (77/388/EEC) (the Sixth Directive). The idea of a VAT group of companies was introduced to simplify the collection of VAT. In about 1990, TCL undertook a group reorganisation which involved the transfer of its bingo business to another member of the VAT group, Carlton Clubs Ltd (Carlton). The transfer to Carlton was effected by a letter dated 30 March 1990 (the 1990 Asset Transfer Agreement). In 1998 Carlton ceased to be part of the VAT group. In 2008 the House of Lords held that UK legislation that imposed a shortened three year time limit on claims for the refund of overpaid VAT in the period from 1973 to 4 December 1996 without providing for an adequate transitional period, which was fixed in advance, was contrary to European law. In response, the UK Parliament enacted s121 of the Finance Act 2008 (FA 2008) which provides an extended time limit for claims relating to a prescribed accounting period ending before 4 December 1996. Instead of requiring that the claim must be made within the three year time limit, s121 required such a claim to be made before 1 April 2009. On 16 November 2007, Carlton submitted four claims to the Appellant (HMRC) under s80 of the Value Added Tax Act 1994 (VATA) for repayment of VAT output tax, which TCL as representative member for the VAT group had overpaid in accounting periods between 1973 and 1998. Carlton submitted these claims without notifying TCL. These claims related to (i) mechanised cash bingo takings, (ii) gaming machine takings, (iii) participation fees and (iv) added prize money and participation fees. On 8 January 2009, it submitted a revised claim (iv) in which it asserted a right to claim overpaid VAT back to 1973 (i.e. before its incorporation in 1990) by relying on the 1990 Asset Transfer Agreement. After initially refusing all of Carltons claims, HMRC paid the sum claimed by Carlton in its revised claim (iv) to TCL (as representative member of the VAT Group) on 12 May 2009. On 23 September 2010, HMRC confirmed to TCL an assessment for repayment of the sum paid on 12 May 2009 and refused TCLs claim for repayment of the other claims (i.e. claims (i), (ii) and (iii)). HMRC gave three reasons: (i) TCL had not submitted claims before the expiry of the time limit imposed by s121 FA 2008; (ii) the claims predating 31 March 1990 had been assigned to Carlton and (iii) because the VAT group had since been disbanded (on 28 February 2009), the claim for over declared output tax must be made by the company whose activities gave rise to the over declaration and Carlton had made that claim. TCL and Carlton pursued rival appeals against HMRCs decision. The First Tier Tribunal (FTT) held, amongst other things, that TCL had not made a claim under s80 of VATA and could not rely on Carltons claims. On appeal by TCL, the Upper Tribunal (UT) found that TCL had not made a claim and no claim had been made on its behalf before expiry of the time limit. TCLs further appeal to the Inner House of the Court of Session (IH) on this issue was successful. The IH held that the representative member embodied the VAT group which was a single taxable person, or a quasi persona and Carltons claims fell to be construed as claims on behalf of TCL. The Supreme Court unanimously allows HMRCs appeal. Lord Hodge gives the lead judgment with which the other Justices agree. HMRCs principal argument is that the IH erred in holding that a claim for repayment of VAT by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member of that group. HMRC argued that Carltons claim was made on its own behalf and TCL could not rely on it to avoid the statutory time bar. TCL relied on the reasoning of the IH and argued that, as the representative member, it was entitled to rely on Carltons claims [18]. The Court notes that Article 11 of the Principal Directive (like Article 4.4 of the Sixth Directive), is permissive and is not prescriptive; it does not require member states to institute a single taxable person regime and does not lay down a template as to how a member state will treat a group of persons as a single taxable person [19]. It is clear from the words in s43(1) of VATA that the UK chose to achieve the end which the Principal Directive authorised not by deeming the group to be a quasi person but by treating the representative member as the person which supplied or received the supply of goods or services. In UK legislation, the single taxable person is the representative member [21 22]. There is no need to complicate matters by introducing a concept of the VAT group as a quasi persona in an analysis of the UK legislation [26]. Section 43 of VATA does not make the group a taxable person but treats the groups supplies and liabilities as those of the representative member for the time being [27]. It is clear from s80 of VATA that HMRCs liability for overpaid output tax is owed to the person who accounted to them for VAT. It is also clear that a claim must be made for the credit or repayment to that person before HMRC comes under any liability to credit or repay. It follows from the operation of s43 of VATA that where the representative member has overpaid VAT, the person entitled to submit a claim during the currency of a VAT group, unless the claim has been assigned, is either the current representative member of the VAT group or a person acting as the representative members agent [29]. The FTT correctly found that Carlton did not make the claims on behalf of TCL. Four reasons supported this finding. Firstly, when Carlton made the claims, it had long ceased to be a member of the VAT group. Secondly, it appears from the 2007 letters that Carlton had already presented claims in relation to its own business activities in the period after it had left the VAT group. Thirdly, the use by Carlton of the VAT groups VAT registration number was necessary to identify the original source of the allegedly overpaid VAT but did not disclose who was entitled to the repayment. Fourthly, in each of the claims submitted in 2007, Carlton was claiming repayment of sums paid from 1973, long before its incorporation in 1990, as well as in the period after 1990 when it was member of the VAT group. It clarified the basis on which it made those claims in its 2009 revised claim. At the time, both Carlton and HMRC would have readily understood Carlton to be claiming repayment in its own interest [34 36]. The 2009 revised claim provides relevant and admissible evidence concerning the basis upon which Carlton made the 2007 claims [37]. Carlton did not act as TCLs agent. Carlton had no actual authority to send the letter on TCLs behalf. In any case, in circumstances where the UT made its decision on the basis that Carlton had submitted the letters on its own behalf, it was not open to an appellate court to find that there was an agency relationship between Carlton and TCL. Furthermore, there is also no basis for the argument that TCL ratified Carltons claims, thereby conferring retrospective authority upon them. [38 39]. Finally, TCL applied to the Court to make a reference in this case to the Court of Justice of the European Union (CJEU) but this is neither necessary nor appropriate. A ruling by the CJEU on the nature of the single taxable person is not necessary for the determination of this appeal [40 41]. There is also no inconsistency between schedule 1 of VATA and the Courts interpretation of s43 of VATA [42].

This judgment is given in unusual circumstances. The Secretary of State, as respondent to these appeals, has applied pursuant to rule 34(2) of the Supreme Court Rules 2009 for these appeals to be allowed by consent. The appellants of course agree. However, this court took the view that we could not make an order allowing the appeals and setting aside the orders in the courts below without understanding the reasons for doing so and their impact upon the point of law of general public importance raised by the appeals. The Secretary of State has supplied those reasons, with which this court agrees. This judgment is accordingly based upon them. Although there are only two appeals before this court, these cases were heard in the Court of Appeal along with a third case, that of Mr Kaziu, which was decided on the same basis: R (Kaziu) v Secretary of State for the Home Department [2015] EWCA Civ 1195, [2016] 1 WLR 673. The Secretary of State therefore accepts that the principles adopted in this judgment should also apply to him. The issue is whether the misrepresentations made by the appellants in their applications for United Kingdom citizenship made the grant of that citizenship a nullity, rather than rendering them liable to be deprived of that citizenship under sections 40 and 40A of the British Nationality Act 1981. The facts Mr Hysaj was born Dinjan Hysaj in Albania in 1977. He came to this country and claimed asylum in July 1998. He gave his true name, but claimed to have been born in 1981 and thus to be a child at the time of his asylum claim. He also falsely claimed that he was a citizen of the Federal Republic of Yugoslavia from Kosovo, and that he had been persecuted there. He was accepted as a refugee and given indefinite leave to remain (ILR) here in 1999. In 2004 he applied for and was granted naturalisation as a British citizen, using the same false details as he had used in his asylum claim. Thus he obtained British citizenship in his own name but using a false date of birth, a false nationality and a false place of birth. Mr Bakijasi was born Agron Bakijasi in Albania on 22 October 1972. He came to this country and claimed asylum in 1999. He gave a false name, Agron Adjini, a false date of birth, and falsely claimed to be a citizen of the Federal Republic of Yugoslavia from Kosovo, and that he had been persecuted there. His asylum claim was refused on the basis that it was safe for him to return to Kosovo. But his later application for ILR, using the same false details, was granted under the Family ILR exercise in September 2005. Using the same false details, he applied for and was granted naturalisation as a British citizen in November 2006. Thus he obtained British citizenship using a false name, a false date of birth, a false nationality and a false place of birth. When these frauds came to light, the Secretary of State decided that, in each case, the grant of citizenship was a nullity, so that the appellants were not, and never had been, British citizens. They had therefore remained at all times on ILR, which had been validly granted to them. She did so on the basis of binding Court of Appeal authority. In these judicial review proceedings, that decision was upheld, albeit with some reluctance, by Ouseley J in the High Court ([2014] EWHC 832 (Admin), [2015] 1 WLR 945) and by the Court of Appeal ([2015] EWCA Civ 1195, [2016] 1 WLR 673). Sales LJ described the interpretation given by the binding Court of Appeal authorities as problematic in various respects (para 64). The legislation Section 6(1) of the British Nationality Act 1981 provides that: If, on an application for naturalisation as a British citizen made by a person of full age and capacity, the Secretary of State is satisfied that the applicant fulfils the requirements of Schedule 1 for naturalisation as such a citizen under this subsection, he may, if he thinks fit, grant to him a certificate of naturalisation as such a citizen. Section 40 of the 1981 Act makes provision for the Secretary of State to deprive a person of citizenship obtained by registration or naturalisation if satisfied that the registration or naturalisation was obtained by means of fraud, false representation or concealment of a material fact. On the face of it, fraud or false representation would include the sort of misrepresentations as to identity made by the appellants, so that, if the Secretary of State sees fit, they could be deprived of their citizenship under that provision. Section 40A makes provision for a right of appeal against most such deprivations to the First tier Tribunal. The previous case law There are four relevant decisions in the Court of Appeal before this one but none in the House of Lords or Supreme Court. For convenience, the applicant for citizenship is referred to as X and the identity in which he applied for citizenship is referred to as Y. In R v Secretary of State for the Home Department, Ex p Sultan Mahmood [1981] QB 58, decided in 1978, X impersonated Y, a real person, who was his dead brother in law and cousin, to obtain registration as a British citizen under section 5A of the British Nationality Act 1948. Roskill LJ held that there were three possible effects of the purported grant. First, it might have been a grant to Y; but it could not have been, because Y was dead. Second, it might have been a grant to X; but it could not have been, because the Secretary of State had no knowledge of X, believing him to be Y. Third, it might have been of no effect at all; as it could not be the first or the second, it could only be a nullity. Accordingly, X had never become a citizen of the United Kingdom. The next case, decided in 1980, was R v Secretary of State for the Hone Department, Ex p Parvaz Akhtar [1981] QB 46. X was registered as a citizen by his purported father, Z, in the name of Y, under section 7(1) of the 1948 Act, which allows for the registration of a minor child of a British citizen. X was not the son of Z. Applying Mahmood, the Court of Appeal held that the Secretary of State had no power or intention to register X or any Y other than an actual son of Z. Accordingly, X never became a citizen of the United Kingdom. Next came R v Secretary of State for the Home Department, Ex p Ejaz [1994] QB 496. X applied for citizenship in her real name under section 6(2) of the 1981 Act, which provides for the naturalisation of a person who is married to a British citizen. Later, it turned out that Xs husband was not, and never had been, a British citizen, having been granted a British passport in a false identity. The Court of Appeal declined to hold that the grant of citizenship was a nullity, pointing to the uncertainty and injustice which could be caused by holding that a person had never been a citizen, which could have effects upon third parties such as children, and was highly undesirable in matters of status. Deprivation of citizenship, on the other hand, did not have such retrospective effect. Then came Bibi v Entry Clearance Officer, Dhaka [2007] EWCA Civ 740, [2008] INLR 683. X had obtained entry to the United Kingdom by assuming the identity of Y, another real person who had been granted an employment voucher to enable him to enter. After living here for five years, X was registered as a British citizen in the name of Y. The appellants were the wife and four children of X and claimed a right of abode in the United Kingdom based on the purported citizenship of X. The Court of Appeal held that, because X had applied for citizenship in a false identity, Mahmood and Akhtar applied and there never was a grant of citizenship to him. As the Secretary of State points out, these cases demonstrate a gradual expansion of the nullity approach since Mahmood. Thus, Mahmood established that if X adopts the identity of Y, another real person, and Y has the characteristics required to obtain citizenship, the purported grant of citizenship to X in the identity of Y is a nullity. Akhtar decided that if X adopts the identity of Y, where Y is not a real person but a false identity created by X (or someone else for him) having the characteristics required to obtain citizenship, the purported grant of citizenship to X as Y is a nullity. Bibi decided that, if X adopts the identity of Y, another real person, and X acquires the characteristics needed to obtain citizenship by using the identity of Y, the purported grant of citizenship to X as Y is a nullity. The present case went a stage further than Bibi and decided that if X adopts the identity of Y, where Y is a false identity created by X and X acquires the characteristics needed to obtain citizenship by using the identity Y, the purported grant of citizenship to X as Y is a nullity. The Secretary of States position Having reviewed the matter after permission to appeal was granted in this case on 27 February 2017, the Secretary of State has come to the conclusion that the law took a wrong turning after Mahmood. The Mahmood type of case involves two real people, X and Y. X impersonates Y for the purpose of applying for citizenship. Y has the characteristics required for citizenship. Y is considered by the Secretary of State and is granted citizenship. But Y has never applied for it, may not want it, or may even be dead. Thus it cannot be said that citizenship has been granted either to Y or to X. Accordingly there was no grant of citizenship. Mahmood, in the Secretary of States view, remains good law. By contrast, in the later cases, X uses a false identity created by him (or someone on his behalf) and in that identity he acquires the characteristics needed to obtain citizenship. X applies for citizenship using the false identity Y. But X meets the requirements for citizenship albeit having acquired them by using the false identity Y. X is considered for citizenship by the Secretary of State in identity Y and is granted citizenship in that identity. In such a case, in the Secretary of States view, the grant of citizenship is valid, albeit that the person may later be deprived of it under section 40. Ejaz was rightly decided but Akhtar and Bibi were wrongly decided. Those cases, and the Court of Appeals decision in this case, were based on the principle that there is a category of fraud as to identity which is so serious that a purported grant of citizenship is of no effect. But, argues the Secretary of State, the courts have not articulated any clear or principled definition of the types of fraud which will be so serious as to have this consequence. In the current cases, for example, neither appellant pretended to be someone he was not. Mr Hysaj used his real name but put forward a false date of birth, nationality and place of birth in gaining his ILR and gained citizenship on the basis of the ILR that he himself had obtained. Mr Bakijasi used a false name in gaining his ILR but otherwise gained citizenship in the same way. Ouseley J held that the key characteristics of identity for this purpose were the name, date of birth, and nationality or the country and place of birth, because this was the information on the certificate. But he also held that there had to be fraud innocent mistakes or misunderstandings were not enough (paras 46, 47). Such uncertainty means that the law is difficult to apply in practice. It also has a number of illogical and unsatisfactory consequences. Thus it is not clear when the use of a false identity to obtain citizenship by one person will lead to the nullification of the grant of citizenship to those making a derivative claim, whether as a spouse or child. It is not easy to reconcile Akhtar, Ejaz and Bibi. Logically, as Ouseley J pointed out in this case (para 55) either all derivative citizenship should be of no effect if the citizenship from which it is derived is of no effect, or the nullity should be confined to the person who obtained citizenship using the false identity. As Ouseley J also pointed out (para 69) the logic of the position then adopted by the Secretary of State would also nullify the grant of ILR, but the Secretary of State has never contended for this. IN THE SUPREME COURT ON APPEAL FROM THE COURT OF APPEAL (CIVIL DIVISION) BETWEEN: SC/2016/0209 SC/2016/0211 THE QUEEN on the application of DINJAN HYSAJ AGRON BAKIJASI and DRAFT ORDER SECRETARY OF STATE FOR THE HOME DEPARTMENT Appellants Respondent UPON the Respondent accepting that the Appellants are British citizens by naturalisation under section 6(1) of the British Nationality Act 1981 (the 1981 Act), and that that citizenship remains valid unless and until a formal deprivation order is made pursuant to section 40(3) of the 1981 Act AND UPON the Respondent accepting that her decisions, dated 13 February 2013 and 27 June 2013, that the Appellants British citizenships were nullities (i.e. that the Appellants were not, and had never been, British citizens) were wrong in law AND UPON the Respondent agreeing to withdraw the said decisions dated 13 February 2013 and 27 June 2013 AND UPON the Respondent accepting that the elder child of Mr Dinjan Hysaj, born in Albania on 23 November 2010, is a British citizen by virtue of section 2(1) of the 1981 Act AND UPON the Respondent accepting that the younger child of Mr Hysaj, born in the United Kingdom on 19 September 2015, is a British citizen by virtue of section 1(1) of the 1981 Act AND UPON the Respondent accepting that the elder child of Mr Bakijasi, born in the United Kingdom on 23 August 2003, and registered as a British citizen on 11 October 2006, is a British citizen by virtue of section 1(3) of the 1981 Act AND UPON the Respondent accepting that the younger child of Mr Bakijasi, born in the United Kingdom on 14 June 2007, is a British citizen by virtue of section 1(1) of the 1981 Act IT IS ORDERED BY CONSENT THAT: 1. The appeals be allowed. 2. The Order of the Court of Appeal dated 26 November 2015 be set aside. 3. The Respondent do pay the Appellants reasonable costs of the claim, the appeal to the Court of Appeal and the appeal to the Supreme Court on standard basis, to be assessed, if not agreed. 4. The Appellants publicly funded costs be subject to a detailed assessment. 5. The Respondent make a payment to each Appellant on account of that Appellants costs, equivalent to 25% of the relevant Appellants total bill of costs, such payment to be made within 28 days of the relevant bill of costs being served on the Respondent. This court agrees with the reasoning now put forward by the Secretary of State. It follows that the decisions of the Court of Appeal in Akhtar and Bibi must be overruled and that this appeal must be allowed by consent in terms of the detailed order proposed.

UK-Abs

The appellants made false representations in their applications for United Kingdom citizenship. The issue in these appeals is whether those misrepresentations made the subsequent grant of citizenship to them a nullity rather than rendering them liable to be deprived of that citizenship under sections 40 and 40A of the British Nationality Act 1981 (BNA). Mr Hysaj is an Albanian citizen. He claimed asylum in the UK in July 1998, falsely stating he was born in Kosovo, was therefore a citizen of the Federal Republic of Yugoslavia (FRY), and that he was under 18. He was accepted as a refugee and given indefinite leave to remain (ILR). Mr Hysaj was granted naturalisation as a British citizen in 2004. Mr Bakijasi was also born in Albania. He sought asylum under a false name and date of birth, gave a false place of birth in Kosovo and falsely claimed FRY nationality. He was eventually granted ILR under the same false details, and then granted naturalisation as British citizen in 2006. When these frauds came to light the Secretary of State, on the basis of binding Court of Appeal case law, decided that in both cases the grant of citizenship was a nullity, so that the appellants were not and had never been British citizens, albeit that they remained on ILR. The appellants challenged the decisions, submitting that the earlier cases were wrongly decided. The High Court and Court of Appeal, which were also bound by this case law, upheld the Secretary of States decisions. Permission to appeal was granted by the Supreme Court on the ground that the appeals gave rise to an arguable point of law of general public importance. Unusually, the Secretary of State applied pursuant to rule 34(2) of the Supreme Court Rules for the appeals to be allowed by consent, supported with reasons. The Supreme Court unanimously allows the appeals by consent. It agrees with the reasons provided by the Secretary of State and holds that misrepresentations in an application for UK citizenship renders the applicant liable to be deprived of that citizenship pursuant to s 40 BNA. Lady Hale gives the only substantive judgment. S 40 BNA makes provision for the Secretary of State to deprive a person of citizenship if satisfied that the grant was obtained by means of fraud, false representation or concealment of a material fact. There is a right of appeal to the First tier Tribunal against most such deprivations in s 40A [7]. The original decision adopting the nullity approach, rather than a deprivation of citizenship, involved the purported grant of British citizenship to someone who was impersonating another real person (R v Secretary of State for the Home Department ex p Mahmood [1981] QB 58). Subsequent cases, including R v Secretary of State for the Home Department ex p Akhtar [1981] QB 46, Bibi v Entry Clearance Officer, Dhaka [2007] EWCA Civ 740 and the present ones, expanded this approach to persons adopting a false identity through which the characteristics needed to obtain citizenship were acquired [8 14]. The Secretary of State considers that the law took a wrong turning after Mahmood, and the nullity approach should only apply in impersonation cases [15]. The subsequent cases were based on the principle that there is a category of fraud as to identity which is so serious that a purported grant of citizenship is of no effect, but had not articulated a clear definition of such fraud. This uncertainty means the law is difficult to apply in practice and also gives rise to a number of illogical and unsatisfactory consequences. The same principle would also appear to nullify the grant of ILR, but the Secretary of State has never contended for this [16 18]. The Supreme Court agrees with this reasoning. It follows that the decisions of the Court of Appeal in Akhtar and Bibi must be overruled and the present appeals allowed by consent [19].

This is an appeal about an extradition order. The Lord Advocate appeals under paragraph 13 of Schedule 6 to the Scotland Act 1998 against the determination of a devolution issue by the Appeal Court of the High Court of Justiciary (the Appeal Court) on 23 September 2016. That court, by majority, quashed an order for the extradition of the respondent (Mr Dean) to Taiwan. The underlying question is whether his extradition to serve the residue of a prison sentence there would be compatible with his right under article 3 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (the Convention), which, as is well known, provides: No one shall be subjected to torture or to inhuman or degrading treatment or punishment. The Appeal Court held that his extradition would not be compatible with that article of the Convention. The appeal raises two principal questions, namely (a) the competence of the appeal and (b) whether the Appeal Court applied the correct legal test in assessing the risk of harm which Mr Dean might face in the requesting state from non state actors. If the Appeal Court did not apply the correct legal test, it is for this court to apply that test to the factual findings of the Appeal Court. It is important to make clear at the outset that the Lord Advocate argued the Crowns case in a way in which the solicitor advocate who appeared for him in the courts below had not. The Lord Advocate frankly conceded that his argument on what was the correct legal test had not been presented before the Appeal Court. It therefore involved criticising the judges of the Appeal Court for not giving effect to an argument which they did not hear. Background facts Mr Dean, a citizen of the United Kingdom, was born in Manchester. He grew up in Edinburgh but had lived and worked in Taiwan for about 19 years before he was involved in a road traffic accident on 25 March 2010. Following that accident, he was convicted after trial in the District Court of Taipei on 15 March 2011 of driving while under the influence of alcohol, negligent manslaughter and leaving the scene of an accident. The basis of his conviction was that, while under the influence of alcohol, he drove into and killed a man who was driving a motorcycle on a newspaper delivery round, that he did not stop, and that he did not report the accident. He was sentenced to imprisonment for two years and six months. He appealed against his conviction and sentence to the High Court in Taipei, which, having heard further evidence, refused his appeal and increased his sentence of imprisonment to four years. He then appealed to the Supreme Court of Taiwan. He remained on bail before and during his trial and while his appeals were pending. Before the Supreme Court of Taiwan had heard his appeal, he fled Taiwan, using a friends passport, and came to Scotland. The Supreme Court of Taiwan confirmed his conviction and sentence in his absence. The authorities in Taiwan then applied for his extradition. On 9 October 2013 the Ministry of Justice of Taiwan sought a provisional arrest warrant under section 73 of the Extradition Act 2003 (the 2003 Act), which is available if a person is accused in a category 2 territory of the commission of an offence and he is alleged to be unlawfully at large after his conviction. Because there is no extradition treaty between the UK and Taiwan, the Home Office on behalf of the United Kingdom and the judicial authorities in Taiwan entered into a memorandum of understanding in relation to Mr Dean under section 194 of the 2003 Act dated 16 October 2013. This had the result that a certificate by the Scottish Ministers enabled the 2003 Act to apply in relation to Mr Deans extradition as if Taiwan were a category 2 territory under that Act. Mr Dean was arrested in Scotland on 17 October 2013 and remained in custody for almost three years. On 28 October 2013 the Ministry of Justice of Taiwan delivered a written request for Mr Deans extradition to the Secretary of State for the Home Department. The Cabinet Secretary for Justice, Mr Kenny MacAskill, certified the request under section 70(1) of 2003 Act on 18 November 2013 and sent the request to Edinburgh Sheriff Court. An extradition hearing before Sheriff Kenneth Maciver was scheduled to commence in January 2014. Mr Dean mounted numerous challenges and lodged two devolution minutes. The completion of the hearing was delayed by his withdrawal of instructions from his legal representatives, the obtaining of an expert report and the engagement of replacement legal representatives. By Note of Decision dated 11 June 2014, the sheriff decided under section 87(1) of the 2003 Act that Mr Deans extradition would be compatible with his Convention rights within the meaning of Human Rights Act 1998, and refused the two devolution minutes. The Scottish Ministers made the extradition order on 1 August 2014. Mr Dean appealed under section 103 of the 2003 Act against Sheriff Macivers decision and under section 108 of that Act against the extradition order of the Scottish Ministers. The Appeal Court (Lady Paton, Lord Drummond Young and Lady Clark of Calton) heard challenges as to whether Taiwan was a territory within the meaning of the 2003 Act, whether Mr Deans article 6 right to a fair trial had been infringed, and whether, under section 81 of the 2003 Act, extraneous considerations barred extradition in this case whether there was a serious possibility that the request to extradite was for the purpose of punishing him by reason of his race or nationality. In its unanimous opinion dated 24 June 2015, the Appeal Court rejected those challenges. This appeal is not concerned with those issues. On the issue with which this court is concerned, namely the challenge under article 3 of the Convention concerning prison conditions in Taiwan, the Appeal Court ordered an evidential hearing. It reserved its opinion on the section 108 appeal until it had dealt with the article 3 challenge. After hearing evidence on the article 3 challenge, the Appeal Court on 23 September 2016 by a majority (Lord Drummond Young dissenting) held that Mr Deans extradition to Taiwan would not be compatible with his article 3 right and ordered his discharge. The Appeal Court, in assessing the compatibility of the extradition, applied the test set out in Saadi v Italy (2009) 49 EHRR 30, namely whether substantial grounds have been shown for believing that there is a real risk of treatment incompatible with article 3. The majority (Lady Paton and Lady Clark of Calton) concluded that there was such a risk. Because I am satisfied that the Appeal Court applied the wrong legal test and that this court must therefore make its own assessment of the facts found by the Appeal Court, I mean no discourtesy in summarising the majoritys reasoning briefly. The Appeal Court heard evidence from Mr Dean and also two legal academics, Professor Mong Hwa Chin and Dr James McManus, who had been instructed on behalf of the Lord Advocate. That evidence vouched the conclusion that Taiwanese prisons were seriously overcrowded and that Taipei prison, where the Taiwanese authorities proposed to keep Mr Dean, was both overcrowded and understaffed. The Taiwanese authorities had given written assurances to the Lord Advocate in which they undertook that Mr Dean would not be housed in the overcrowded cells in the main prison block but would be housed in a separate building in an adequately sized cell, which had a lavatory and a shower and which he would share with only one other foreign prisoner. The majority of the Appeal Court held that, if the Taiwanese authorities fulfilled their undertakings to the letter, there was still a real risk of ill treatment in accordance with the Saadi test because (a) Mr Dean suffered from some notoriety in Taiwan, the other inmates and prison staff would view the arrangements made for him as wholly exceptional, and this would give rise to animosity from other prisoners, (b) the staffing levels were not sufficient to protect Mr Dean if he were to mix with other prisoners, (c) therefore he was likely to choose to stay in his cell for most of the time and would not be able to work to earn parole, (d) he would also have only limited opportunity for outdoor exercise or interaction with others and solitary confinement was generally harmful to health, (e) the ratio of medical and pharmaceutical staff to prisoners was too low and prisoners had to pay for non emergency medical treatment and non standard drugs, (f) there was no formal system for a UK body or an international body to inspect the prison, (g) United Kingdom consular staff, who visited UK prisoners in Taiwanese prisons, did not assess prison standards, and (h) there were no established procedures by which prisoners could enforce their rights in the Taiwanese courts. Lady Clark also commented on the ad hoc nature of the assurances which the Taiwanese authorities had given and doubted the ability of the British consular staff to monitor those assurances. Lord Drummond Young in his dissenting opinion emphasised the contribution which extradition makes to the rule of law both nationally and internationally. He pointed out that the European Court of Human Rights (ECtHR) had held that article 3 was not a means by which contracting states might impose their own standards on other states: Ahmad v United Kingdom (2012) 56 EHRR 1, para 177. He argued that the court must proceed on the assumption that the Taiwanese authorities would observe in good faith the assurances they had given and he assessed the quality of those assurances against the criteria which the ECtHR set out in Othman v United Kingdom (2012) 55 EHRR 1, paras 177 190. Having assessed the evidence, Lord Drummond Young concluded that Mr Dean had failed to establish that there was any real risk of his being subject to treatment that would infringe article 3 of the Convention. After the Appeal Court (again by majority) refused to give leave to appeal, a panel of this court granted the Lord Advocate permission to appeal on 21 December 2016. Discussion I consider, first, the challenge to the competency of this appeal before discussing the correct legal test for compatibility with article 3 of the ECHR when the threat comes from the acts of third parties and applying that test to the findings of the Appeal Court. The competence of this appeal Mr Bovey, who appears for Mr Dean, challenges the competence of this appeal on the ground that the Appeal Court has not determined a devolution issue. For the reasons set out below I consider that challenge to be misconceived. The decision of the Appeal Court which the Lord Advocate has appealed is a decision whether the persons extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998 (c 42): section 87(1) of the 2003 Act. The decision was made in the context of an appeal under section 103 of the 2003 Act. There is no appeal to this court from a decision of a Scottish court under section 103 because the provision authorising an appeal to this court from decisions made under sections 103 and 108 (among others) does not apply to Scotland: section 114(13) of the 2003 Act. But that is not the end of the matter because an appeal from a decision under section 87(1) of the 2003 Act, which was the subject of this part of Mr Deans section 103 appeal, raises a question of the legal competence of the Scottish Government. Section 57(2) of the Scotland Act 1998 provides A member of the Scottish Government has no power to make any subordinate legislation, or to do any other act, so far as the legislation or act is incompatible with any of the Convention rights The functions carried out by the Lord Advocate and the Scottish Ministers under Part 2 of the 2003 Act are acts that they perform as members of the Scottish Government: BH v Lord Advocate 2012 SC (UKSC) 308, paras 33 34 per Lord Hope, and Kapri v Lord Advocate 2013 SC (UKSC) 311, paras 18 23 per Lord Hope. In Schedule 6 to the Scotland Act 1998 paragraph 1(d) includes within the definition of a devolution issue: a question whether a purported or proposed exercise of a function by a member of the Scottish Executive is, or would be, incompatible with any of the Convention rights The question as to whether the Scottish Governments acts in seeking to extradite Mr Dean to Taiwan are compatible with Convention rights is thus a devolution issue: BH (above), para 34, Kapri (above), para 22. Section 116(1) of the 2003 Act provides the general rule that a decision under Part 2 of the Act by a judge or the Scottish Ministers may be questioned in legal proceedings only by means of an appeal under that Part, but subsection (2) to that section excludes from that limitation an appeal against the determination of a devolution issue. When pursuing his appeal before the Appeal Court to challenge the sheriffs decision under section 87 of the 2003 Act Mr Dean had the option of proceeding either under section 103 of the 2003 Act or by means of raising a devolution issue under the Scotland Act 1998: BH (above), para 26; Kapri (above), para 19. He chose to proceed under section 103 of the 2003 Act and did not raise a devolution minute in relation to his challenge concerning prison conditions in the Appeal Court. The Lord Advocate was the respondent to Mr Deans appeal before the Appeal Court. He therefore did not need to exercise his right under paragraph 4 of Schedule 6 to the Scotland Act 1998 to institute proceedings to determine the devolution issue raised by Mr Deans appeal. Where a devolution issue arises in proceedings, intimation of the issue should be given to the Advocate General for Scotland and the Lord Advocate, unless they are already parties to the proceedings: paragraph 5 of Schedule 6 to the Scotland Act 1998. Neither Mr Deans legal advisers nor the Lord Advocate intimated the issue to the Advocate General for Scotland in relation to the proceedings before the Appeal Court. The Advocate General was thus deprived of his right under paragraph 6 of Schedule 6 to take part in the proceedings in the Appeal Court. That omission, however, does not affect the competence of any appeal to this court. Paragraph 13(a) of Schedule 6 to the Scotland Act 1998 confers a right of appeal to the Supreme Court against a determination of a devolution issue by a court of two or more judges of the High Court of Justiciary. The decision of the Appeal Court is such a determination. The Lord Advocate has informed this court that he had intimated the devolution issue, which he seeks to argue in this court, to the Advocate General for Scotland, who has indicated that he does not intend to take part in the proceedings. There is therefore no bar to this appeal. It may be that the Appeal Court would have determined the other devolution issues, which Mr Dean has raised, if it had been aware that the Lord Advocate might seek to appeal its determination of the article 3 devolution issue to this court. It did not do so. That is unfortunate because it may cause further delay, but that cannot affect the competence of this appeal. The merits of the appeal Article 3 of the Convention: summary The Lord Advocate concedes that, on the findings of fact by the Appeal Court, there are substantial grounds for believing that there is a risk that Mr Dean would suffer harm from other prisoners in Taipei prison if protective measures were not put in place. But, he submits, the ECtHR laid down the appropriate legal test in such a circumstance in HLR v France (1997) 26 EHRR 29, which the House of Lords applied in R (Bagdanavicius) v Secretary of State for the Home Department [2005] 2 AC 668 (Bagdanavicius). As I set out below, the test is whether the state has failed to provide reasonable protection against harm inflicted by non state agents. Mr Bovey acknowledges that test but submits that in substance the Appeal Court has addressed it. I do not accept that submission. In my view, the Appeal Court did not address that test. This is unsurprising, because, as Lady Paton recorded at para 8 of her opinion, counsel were agreed that the correct test was set out in Saadi, to which I have referred in para 9 above. As a result no clear distinction was drawn in her opinion (paras 8, 45, and 50 58) between the underlying threat from other prisoners, which the Appeal Court found to exist, and conduct for which the state was responsible. It is therefore incumbent on this court to apply the correct legal test to the findings of fact of the Appeal Court. In short, the court must assess, first, whether the Taiwanese authorities are undertaking to provide Mr Dean with reasonable protection against violence by third parties while he is in prison, and, secondly, if they are, whether the conditions in which he is to have such protection themselves entail an infringement of article 3. The correct legal test Article 3 of the Convention enshrines one of the fundamental values of a democratic society. It is therefore incumbent on the court to be assiduous in its assessment of a challenge on this ground. A person asserting a breach of this article must show that there are substantial grounds for believing that he faces a real risk of being subjected to treatment contrary to article 3 if he is extradited: Saadi v Italy (above), para 125. In addressing that challenge, the court can have regard to assurances given by the receiving state: Othman v United Kingdom (above), paras 187 189. In particular, the court must assess not only the quality of the assurances given but also whether they can be relied on, having regard to the general situation in that country with regard to respect for human rights. In Othman (para 189) the ECtHR set out eleven factors which, among others, a court could take into account in making that assessment. I discuss several of those factors in para 38 below. In Bagdanavicius, Lord Brown of Eaton under Heywood, who gave the leading speech in the House of Lords, observed (para 7) that it has long been established that article 3 imposes an obligation on the part of a contracting state not to expel someone from its territory where substantial grounds are shown for believing that he will face in the receiving country a real risk of being subjected to treatment contrary to that article. He cited Soering v United Kingdom (1989) 11 EHRR 439 as the initial authority for the principle that the act of expulsion in such a circumstance constitutes the proscribed ill treatment. The expulsion itself breaches article 3 if such risk in the receiving country emanates either from acts of the public authorities of that state or from persons or groups of persons who are not public officials. In the latter circumstance, it is not sufficient to show that there is a real risk of suffering serious harm at the hands of non state agents. In para 24 Lord Brown deprecated a failure in such cases to distinguish between the risk of serious harm on the one hand and the risk of treatment contrary to article 3 on the other. He said: In cases where the risk emanates from intentionally inflicted acts of the public authorities in the receiving country (the language of D v United Kingdom (1997) 24 EHRR 423, 447, para 49) one can use those terms interchangeably: the intentionally inflicted acts would without more constitute the proscribed treatment. Where, however, the risk emanates from non state bodies, that is not so: any harm inflicted by non state agents will not constitute article 3 ill treatment unless in addition the state has failed to provide reasonable protection. Non state agents do not subject people to torture or to the other proscribed forms of ill treatment, however violently they treat them: what, however, would transform such violent treatment into article 3 ill treatment would be the states failure to provide reasonable protection against it. It is this test that the court must apply to the facts of this case in relation to the harm which non state actors might inflict, before asking whether the circumstances of such protection are themselves compatible with article 3. Applying the tests The Appeal Court made findings that there were problems of over crowding and under staffing in the main detention building in Taipei prison which gave rise to uncontrolled bullying of weaker prisoners. There was also evidence, which the Appeal Court accepted, of inadequate ventilation and lavatory facilities which exacerbated the discomfort caused by the over crowding, and inadequate opportunities for the prisoners to exercise in the open air (para 44). There was also a finding that Mr Dean was at particular risk of being the focus of hostility from prisoners within the prison (para 47). As against those findings, it is necessary to assess the undertakings which the Taiwanese authorities have made in support of their application for Mr Deans extradition. Lady Paton in para 10 of her opinion recorded in summary the various undertakings which the Taiwanese authorities have given. I summarise those which are most relevant to prison conditions. First, in a letter dated 25 February 2014, Mrs Chen Wen chi, the Director General of the Department of International and Cross Strait Legal Affairs in the Ministry of Justice of Taiwan and signatory of the memorandum of understanding (para 6 above), undertook that Mr Dean would be supervised by English speaking officers and that he would be housed in an appropriate cell with persons selected from among non violent foreign inmates, to avoid bullying. The authorities would treat Mr Dean as a special assignment, take account of his concerns for his safety, and assess the level of protection which he needed. They would pre screen inmates with ill intent towards him to prevent them having contact with him. If necessary, they would separate Mr Dean from group activities and restrict his interaction with other inmates. By letter dated 14 November 2014, Mr Luo Ying shay, the Minister of Justice of Taiwan, confirmed Mrs Chen Wen chis authority to give undertakings on behalf of his ministry, which supervised the Agency of Corrections which was responsible for managing prisons in Taiwan. Secondly, on 19 August 2015 Mrs Chen Wen chi described and sent photographs of the cell which she undertook to prepare for Mr Dean and which he would share with one other foreign prisoner. The cell was located on the second floor of the 11th disciplinary area in Taipei prison and had an area of 13.76 square metres. The cell was equipped with a desk, a chair, a four shelf cupboard, a bunk bed, and a bathroom with a toilet, a sink, a shower and a shower curtain. There was good natural lighting through a large window, electric lighting, an exhaust fan and an electric fan on the ceiling. Prisoners had the opportunity to spend about nine hours per day out of their cells, which included working, exercise time, rests and meals. Assurances were also given about the quality of drinking water and diet. By letter of the same date Mr Wu Man Ying, the Director General of the Agency of Corrections, confirmed that his agency would abide by those assurances. He confirmed this a second time in a letter dated 2 June 2016. Thirdly, Mrs Chen Wen chi by letter dated 25 December 2015 confirmed that if the United Kingdom consular staff raised an issue concerning a breach of an assurance about prison conditions, the Taiwanese authorities would respond to remedy any breach. Finally, on 31 May 2016, the new Minister of Justice, Mr Chui Tai san, re affirmed Mrs Chen Wen chis authority to provide the assurances and to undertake to put them into practice. Dr McManuss visit to Taipei prison in August 2015 provided further insight into the undertakings. The proposed cell measured 11.05 square metres, excluding the toilet and shower annex, giving 5.5 square metres to each of the proposed occupants. It was on the second floor of a reception area, where there were classrooms for the assessment of new arrivals. On the same floor there was an observation office and a 50 bed convalescent cell. The cell, which was proposed for Mr Dean, had been created in 2013 as a protected cell but had never been used. The proposed exercise area for Mr Dean was a tarmac basketball court adjacent to the building. The basketball court offered ample space for exercise and could be cleared of other prisoners when Mr Dean was using it. Dr McManus concluded that the accommodation met all the standards set by the Committee for the Prevention of Torture (CPT) and the ECtHR in terms of space per prisoner, light, ventilation and toilet facilities. He also recorded that assurances had been given that Mr Dean could have a minimum of one hours outdoor exercise per day and that he would be entitled to access to newspapers, radio and television. There was a work regime in the prison which, if Mr Dean engaged with it, would allow him to mix with other prisoners and to be out of his cell from 8.30 am to 5.30 pm. Understandably, it was not suggested on Mr Deans behalf that the cell accommodation was inadequate or exposed him to overcrowding if he were to share it with one non violent foreign prisoner. Nor was it suggested that he would not be reasonably safe when in that cell. In agreement with the judges of the Appeal Court, I proceed on the basis that the judicial authorities of Taiwan are acting in good faith in entering into the memorandum of understanding and in giving the assurances which they have. I also agree with the judges of the Appeal Court in so far as they proceeded on the assumption that the Taiwanese authorities responsible for the management of Taipei prison would make every effort to fulfil those undertakings. As Lord Drummond Young observed in his dissenting opinion, extradition assists in maintaining the rule of law both nationally and internationally. The United Kingdom Government has chosen to enter into extradition treaties with friendly foreign states or territories giving rise to mutual obligations in international law. In Gomes v Government of Trinidad and Tobago [2009] 1 WLR 1038, Lord Brown stated (para 36): The extradition process, it must be remembered, is only available for returning suspects to friendly foreign states with whom this country has entered into multilateral or bilateral treaty obligations involving mutually agreed and reciprocal commitments. The arrangements are founded on mutual trust and respect. There is a strong public interest in respecting such treaty obligations. The Lord Advocate acknowledges that the memorandum of understanding does not have the status of a treaty enforceable in international law. That notwithstanding, there remains a strong public interest in promoting and maintaining the rule of law by means of extradition. But that strong public interest, while carrying great weight, has no paramountcy in the face of an article 3 challenge. In Othman v United Kingdom (above) the ECtHR stated how it would assess the quality of the assurances given by a receiving country in the context of deportation. The existence of an extradition agreement whether a treaty or a memorandum of understanding does not obviate the need for such an assessment in the context of a human rights challenge. It is possible, for example, that adverse political developments in a friendly foreign state might reduce the confidence which our courts could reasonably have about an extradited persons treatment in that country, notwithstanding the continued existence of an extradition treaty. In my view, it is incumbent on a court, which is addressing an article 3 challenge, to make such an assessment in the context of an extradition; and the existence of the extradition agreement is a factor in that assessment. This is consistent with the ECtHRs guidance in Othman which identified as relevant the length and strength of bilateral relations between the sending and receiving states. In this case the assurances are given on behalf of the central government of Taiwan, which is a developed society with a tradition of respect for the rule of law. There is no suggestion that the Taiwanese authorities ill treated Mr Dean before he fled the country. The assurances are given by a senior responsible official and have been confirmed by two Ministers of Justice and by the Director General of the agency with responsibility for managing prisons. The assurances, and in particular those about his accommodation and separating him from group activities with other prisoners if that is necessary for his safety, are specific rather than general. The assurances envisage that United Kingdom consular staff will have access to Mr Dean in prison and include an undertaking to remedy any breach of the assurances which the consular staff raise with the prison authorities. The memorandum of understanding and the assurances have given a role to the consular staff which they have not had in the past in relation to United Kingdom citizens imprisoned in Taiwan. There is no reason to think that the consular staff would not perform their obligations to monitor the assurances if Mr Dean were to request their help. While there appears to have been no examination of the access which Mr Dean might have to legal advice, Dr McManus recorded the apparently successful operation of a complaints system in the prison and that some prisoners had obtained access to the domestic courts. This is the first occasion on which Taiwan has sought to extradite a United Kingdom citizen and the memorandum of understanding and the assurances are therefore untested; but that novelty is significantly outweighed by the other factors which I have mentioned in this paragraph. Mr Deans case is both that he has gained notoriety in Taiwan as a foreign businessman who was convicted of killing a local man through driving while drunk and also that other prisoners would resent his privileged status in the prison and wish to harm him. As a result, he may not be able to mix with other prisoners and work to earn parole, which in Taiwan depends in part upon a prisoners taking part in work activities in the prison. I cannot judge in advance the extent to which Mr Deans fear of being harmed by other prisoners will prevent him from mixing with them. But there is no evidence to support an inference that the Taiwanese authorities will not give him reasonable protection against harm at the hands of other prisoners: the undertakings would allow him to elect to remain in his cell and exercise outdoors by himself. There is nothing to suggest that such a regime would fail to prevent third parties from harming him. I turn then to the second question, which is whether the confinement which such a regime would entail would risk a breach of article 3. There is no issue about the quality of the cell accommodation or the fact that Mr Dean would share the cell with a non violent foreign prisoner. But the majority of the Appeal Court expressed concern that Mr Dean might have to elect to stay in his cell and thus be subjected to a form of solitary confinement, which might be harmful to his health. In Mr Deans case we are not concerned with complete sensory isolation and total social isolation which the ECtHR has recognised as constituting a form of inhuman treatment. But the Convention looks beyond such isolation. In Ahmad at paras 207 210 the ECtHR stated: 207. Other forms of solitary confinement which fall short of complete sensory isolation may violate article 3. Solitary confinement is one of the most serious measures which can be imposed within a prison and, as the Committee for the Prevention of Torture has stated, all forms of solitary confinement without appropriate mental and physical stimulation are likely, in the long term, to have damaging effects, resulting in deterioration of mental faculties and social abilities. Indeed, as the Committees most recent report makes clear, the damaging effect of solitary confinement can be immediate and increases the longer the measure lasts and the more indeterminate it is. 208. At the same time, however, the Court has found that the prohibition of contact with other prisoners for security, disciplinary or protective reasons does not itself amount to inhuman treatment or punishment. In many states parties to the Convention more stringent security measures, which are intended to prevent the risk of escape, attack or disturbance of the prison community, exist for dangerous prisoners. 209. Thus, whilst prolonged removal from association with others is undesirable, whether such a measure falls within the ambit of article 3 of the Convention depends on the particular conditions, the stringency of the measure, its duration, the objective pursued and its effects on the person concerned. 210. In applying these criteria, the Court has never laid down precise rules governing the operation of solitary confinement. For example, it has never specified a period of time, beyond which solitary confinement will attain the minimum level of severity required for article 3. The Court has, however, emphasised that solitary confinement, even in cases entailing relative isolation, cannot be imposed on a prisoner indefinitely. In Mr Deans case, we are concerned with what the ECtHR has described as relative isolation as he would share his cell with a non violent foreign prisoner and would have access to newspapers, radio and television. There would also be opportunities for people to visit him. That relative isolation would not be imposed on him by the prison authorities but would be at his option, if he were to take the view that the risk of harm at the hands of other prisoners required him to dissociate himself from contact with them. Thus, the objective which might give rise to his relative isolation would be his own protection. Further, the period of Mr Deans imprisonment resulting from his conviction is unlikely to exceed approximately 13 months because the Taiwanese authorities have undertaken to give him credit towards his four year sentence for the period of almost three years which he has spent in prison in Scotland. When one has regard to the decisions of the ECtHR in other cases concerning solitary confinement, such as calan v Turkey (2004) 41 EHRR 45, Ramirez Sanchez v France (2007) 45 EHRR 49 and Ahmad v United Kingdom (above), and the decision of this court in Shahid v Scottish Ministers [2015] UKSC 58; 2016 SC (UKSC) 1; [2016] AC 429, the circumstances of Mr Deans possible relative isolation do not come close to a breach of article 3 of the Convention and do not contribute significantly to his assertion of such a breach when other circumstances are considered. It is necessary, of course, to take a holistic view of the circumstances of his detention in reaching a view as to whether there is a real risk of his being subject to treatment that infringes article 3 of the Convention. But the other factors which influenced the majority of the Appeal Court do not materially advance his case. First, the ratio of medical staff to prisoners, to which Lady Paton referred in para 33 of her opinion, was well below the standard advocated by the CPT, which is one doctor per 350 prisoners. But, as she also recorded, Dr McManus concluded that there appeared to be no great problem for prisoners obtaining medical attention when needed. The fact that prisoners have to pay for non emergency medical and dental treatment and also for non generic drugs is of little significance. It is important to recall that the ECtHR has repeatedly stated that the Convention does not purport to be a means of requiring the Contracting States to impose Convention standards on other states: Al Skeini v United Kingdom (2011) 53 EHRR 18, para 141; Ahmad v United Kingdom (above), para 177. Secondly, I do not infer from the past practice of United Kingdom consular staff of not pressing for the improvement of prison conditions for United Kingdom prisoners that they would not act to protect Mr Dean. As I have said, the existence of the memorandum of understanding and also the assurances by which the Taiwanese authorities have recognised the role of the consular staff in protecting Mr Deans interests have given the consular staff a role which to date they have not had. Thirdly, the majority of the Appeal Court was concerned both by the absence of an international system by which prison conditions in Taiwan were monitored and that there is no established route within the Taiwanese courts whereby a prisoner can seek a remedy in respect of prison conditions (paras 56 and 57). Those are among the factors which the ECtHR has identified as relevant considerations in assessing the quality of the assurances of the receiving state: Othman v United Kingdom (above) para 189. But in my view, those considerations do not outweigh the other factors which point towards accepting the assurances (para 38 above) and the role which the United Kingdom consular staff will undertake in monitoring the assurances. I am therefore satisfied (a) that the assurances of the Taiwanese authorities offer Mr Dean reasonable protection against violence by non state actors and (b) that the circumstances of his confinement, should he be unable to mix with the wider prison population, do not entail a real risk of his being subject to treatment that infringes article 3 of the Convention. Articles 5 and 8 of the Convention Mr Bovey also advances separate challenges under articles 5 and 8 of the Convention, which the Appeal Court did not need to decide. I am satisfied that those challenges are without substance and can deal with them briefly. Article 5: Mr Bovey submits that Mr Deans detention in prison would involve arbitrariness because the Taiwanese authorities would not give him credit for the time spent in custody in Scotland in the calculation of his entitlement to parole. One of the assurances which Mrs Chen Wen chi gave (in a letter dated 23 December 2013) was that all periods of detention in Scotland arising from the extradition request would be deducted from the total period which he would have to serve in Taiwan. That undertaking did not include any reference to entitlement to parole and, contrary to counsels submission, I detect nothing in it that was objectively misleading. In a later letter, dated 1 June 2016, Mrs Chen Wen chi explained that only periods of imprisonment in Taiwan would count towards the service of a minimum part of the sentence for entitlement to parole. It appears therefore that Mr Dean would have to serve two thirds of the residue of his sentence in Taiwan before he would be eligible to be considered for parole. I detect nothing arbitrary in this regime. The Convention does not require United Kingdom courts to expect foreign states to have similar sentencing practices to ours or a particular form of parole system. Article 3 would be breached by extradition to serve a sentence, which the receiving state imposed, only if the sentence was grossly disproportionate: Willcox v United Kingdom (2013) 57 EHRR SE 16, para 74. Mr Deans inability to obtain credit towards parole for the time he has spent in custody in Scotland is the result of his flight from justice in Taiwan. This involves no injustice. Article 8: Counsel also argues that Mr Deans extradition to and imprisonment in Taiwan would interfere with his right to respect for his private life. I agree that there would be such interference but am satisfied that it is justified because it is necessary in a democratic society both for the prevention of crime and for the protection of the rights and freedoms of others (article 8(2)). This court has recognised the strength of the public interest in extradition in the context of an article 8 challenge: Norris v Government of the United States of America (No 2) [2010] 2 AC 487; H (H) v Deputy Prosecutor of the Italian Republic (Official Solicitor intervening) [2013] 1 AC 338. Mr Dean has been convicted of a serious offence committed in Taiwan where he had resided for 19 years. A term of imprisonment for such an offence was clearly justified both as a punishment and to deter such behaviour by others. It may be that the special protective measures which are proposed will prevent Mr Dean from earning credit towards parole while serving the residue of his sentence. But that does not undermine the justification of the extradition. Conclusion I would allow the appeal on the devolution issue and remit the case to the Appeal Court to deal with Mr Deans appeal under section 108 of the 2003 Act and his devolution minute in that appeal.

UK-Abs

The respondent was born in the United Kingdom. He had lived in Taiwan for about 19 years when he was involved in road traffic accident there which killed a man in 2010. He was convicted by the District Court of Taipei of driving under the influence of alcohol, negligent manslaughter and leaving the scene of an accident. He was sentenced to four years imprisonment. While his appeal was pending, he fled Taiwan and came to Scotland. In his absence his conviction was confirmed and the Taiwanese authorities applied for his extradition. The Ministry of Justice of Taiwan obtained a provisional arrest warrant for the respondent under the Extradition Act 2003 (the 2003 Act). The respondent was arrested in Scotland on 17 October 2013 and remained in custody for almost three years. An extradition hearing commenced in January 2014, following which the sheriff decided that the respondents extradition would be compatible with his Convention rights and refused the respondents devolution minutes. The Scottish Ministers made an extradition order on 1 August 2014. The respondent appealed against the sheriffs decision and against the extradition order of the Scottish Ministers. The Appeal Court of the High Court of Justiciary (the Appeal Court), ordered an evidential hearing to determine whether prison conditions in Taiwan were such that to extradite the respondent would breach his right under article 3 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) not to be subjected to torture or to inhuman or degrading treatment or punishment. It reserved its opinion on the extradition order appeal until it had dealt with the article 3 challenge. The Appeal Court, by majority, found that even if the written assurances given by the Taiwanese authorities to the Lord Advocate in respect of the conditions in which the respondent would be held were fulfilled, a real risk of ill treatment would remain and thus the respondents extradition to Taiwan would be incompatible with article 3 ECHR. The Lord Advocate appeals the judgment of the Appeal Court, on the ground that it had not applied the correct legal test in assessing the risk of harm which the respondent might face in Taiwan from non state actors. The respondent raises a separate issue: whether the Appeal Court determined a devolution issue and, therefore, whether the Supreme Court has jurisdiction to hear the Lord Advocates appeal. The respondent also advanced challenges under articles 5 and 8 ECHR. The Supreme Court unanimously rejects the respondents challenge to the competency of the appeal and allows the Lord Advocates appeal on the devolution issue. The Court remits the case to the Appeal Court to deal with the respondents appeal against the extradition order of the Scottish Ministers and his devolution minute in that appeal. Lord Hodge gives the judgment, with which the other Justices agree. The competency of the appeal to the Supreme Court The challenge to the competency of the appeal is misconceived [14]. An appeal from the sheriffs decision under section 87(1) of the 2003 Act as to whether extradition would be compatible with the respondents Convention rights raises a question of the legal competence of the Scottish Government [15]. Schedule 6 to the Scotland Act 1998 paragraph 1(d) includes within the definition of a devolution issue a question whether a [] proposed exercise of a function of the Scottish Executive [] would be, incompatible with any of the Convention rights [18]. Therefore, the question whether the Scottish Governments acts in seeking to extradite the respondent are compatible with Convention rights is a devolution issue which was determined by the Appeal Court [19, 22]. Neither party to the appeal intimated the devolution issue to the Advocate General for Scotland thus depriving him of his right to take part in the Appeal Court proceedings. That omission, however, does not affect the competence of any appeal of the determination of the devolution issue to this court [21]. The correct legal test The Appeal Court, in assessing the compatibility of the extradition with article 3 ECHR, applied the wrong legal test [9]. The correct legal test when the threat comes from the acts of third parties is whether the state has failed to provide reasonable protection against harm inflicted by non state agents. The Appeal Court did not address that test and no clear distinction was drawn between the threat from other prisoners, and the conduct for which the state was responsible. The court must assess, first, whether the Taiwanese authorities are undertaking to provide the respondent with reasonable protection against violence by third parties while in prison, and, secondly, if they are, whether the conditions in which he is to have such protection would infringe article 3 [24]. There is no evidence that the Taiwanese authorities will not give the respondent reasonable protection against harm at the hands of other prisoners: the undertakings would allow him to elect to remain in his cell and exercise outdoors alone [39]. As to whether the confinement which such a regime would entail would risk a breach of article 3, the relative isolation which the respondent may elect for his own protection does not come close to a breach of article 3. Further, the other factors which influenced the majority of the Appeal Court, including the ratio of medical staff to prisoners and the monitoring of the assurances by UK consular staff, do not outweigh the other factors which point towards accepting the assurances [40 47]. The assurances offer the respondent reasonable protection against violence by non state actors and the circumstances of his confinement, should he be unable to mix with the wider prison population, do not entail a real risk of his being subject to treatment that infringes article 3 [48]. Article 5 and Article 8 The article 5 and article 8 challenges are without substance [49]. There is nothing arbitrary for the purposes of article 5 in the respondent serving two thirds of the remainder of his sentence in Taiwan before he would be eligible for parole. The respondents inability to obtain credit toward parole in Taiwan for the time spent in custody in Scotland is the result of his flight from justice in Taiwan. This involves no injustice [50]. The interference with the respondents article 8 right to private life which arises from his extradition and imprisonment in Taiwan is justified because it is necessary for both the prevention of crime and for the protection of the rights and freedoms of others [51].

The financial crisis of 2007 2008 revealed systemic weaknesses in the European banking system and the lack of an adequate legal framework for rescuing failing banks in some member states of the European Union. The result, after a long period of deliberation, was the European Bank Recovery and Resolution Directive 2014/59/EU (or EBRRD). The directive required member states to confer on their domestic Resolution Authorities (usually the Central Bank) certain minimum powers (or tools) for reconstructing the businesses of failing credit institutions and investment firms. One of the tools was the bridge institution tool, which is dealt with in section 3 (articles 40 41) of the EBRRD. This required designated national Resolution Authorities to have the power to transfer to a bridge institution any assets, rights or liabilities of a failing credit institution. The present appeal is about the recognition in the United Kingdom of measures by a foreign Resolution Authority in accordance with its own national legislation implementing the EBRRD. Any pan European scheme for dealing with the systemic risks of bank failures must depend for its efficacy on the widest possible recognition of a home states measures in other jurisdictions where banks in the course of reorganisation may have interests or assets or under whose laws it may have contracted. The EBRRD dealt with this issue mainly by amending the earlier Directive 2001/24/EC on the Reorganisation and Winding up of Credit Institutions (which I shall call the Reorganisation Directive). The Reorganisation Directive applied to credit institutions in the course of reorganisation or winding up in a member state. It provided for their assets and liabilities to be dealt with in a single process under the law of the home member state, and for the legal consequences to be recognised in all other member states, irrespective of any other relevant law. The EBRRD amended the Reorganisation Directive so that it applied to measures taken in accordance with the new tools with which member states were required to equip themselves. In addition, the EBRRD made supplementary provision for co operation among member states in giving effect to those measures. Oak Finance and Banco Esprito Santo SA The appellants sue as the assignees of the rights of Oak Finance Luxembourg SA. On 30 June 2014, Oak entered into a facility agreement with a Portuguese commercial bank, Banco Esprito Santo SA (BES), through the latters Luxembourg branch, under which it agreed to lend it about $835m. The facility agreement was governed by English law and provided for the English courts to have exclusive jurisdiction in respect of any dispute arising out of or in connection with this Agreement. The entire facility was drawn down on 3 July 2014. The first scheduled repayment, amounting to $52,860,814.22, was due on 29 December 2014. It shortly became clear, however, that BES was in serious financial difficulties. On 30 July 2014, BES reported losses for the first half of 2014 exceeding $3.5 billion, and on the following day applied to Banco de Portugal, the Central Bank of Portugal, for emergency liquidity assistance. Banco de Portugal is the designated Resolution Authority for Portugal for the purpose of the EBRRD. The relevant terms of the EBRRD had been incorporated into Portuguese law by various provisions added by amendment to the Banking Law (Regime Geral das Instituies de Crdito e Sociedades Financeiras). Articles 145 G, 145 H and 145 I of the Banking Law (as amended) implemented the provisions concerning the bridge institution tool. On 3 August 2014, the Central Bank decided to invoke these provisions in order to protect depositors funds. By a Deliberation published on that date it incorporated Novo Banco SA to serve as the bridge institution, and transferred to it the assets and liabilities of BES specified in Annexes 2 and 2A. Annex 2 specified all assets and liabilities recorded in its accounts with certain exceptions. Under article 145 H(2) of the Banking Law, no liability could be transferred to a bridge institution if it was owed to an entity holding more than 2% of the original credit institutions share capital. An exception to that effect was accordingly included as paragraph (b)(i)(a) of Annex 2 of the Central Banks decision. Annex 2A was the balance sheet of BES as at 30 June 2014 adjusted to the time of transfer to show what was then understood to be the value of the transferred assets and liabilities. The Oak liability was not mentioned there by name, but it was included in the totals for liabilities. There followed a number of further decisions of the Central Bank adjusting the transfer of both assets and liabilities as investigation of BESs affairs proceeded. One of these concerned the Oak liability. On 22 December 2014, a week before the due date of the first scheduled repayment of the Oak loan, an internal memorandum addressed to the Board of the Central Bank recorded that although it had originally been thought that the Oak liability was eligible for transfer to Novo Banco, subsequent investigations suggested (i) that Oak had entered into the facility agreement on behalf of Goldman Sachs, and (ii) that Goldman Sachs held more than 2% of BESs share capital. In these circumstances, the Board of the Central Bank reached a decision later that day. The document recording the decision recites that: there are serious and grounded reasons to justify the understanding that Oak Finance, in granting this loan, acted on account of Goldman Sachs International, an entity in relation to which serious and grounded reasons also exist to consider that it falls under paragraph a) of no 2 of article 145 H of the [Banking Law]. The operative part of the decision, which follows, is in these terms: (a) Banco Esprito Santos liability towards Oak Finance pursuant to the loan agreement of 30 June 2014 was not transferred to Novo Banco; (b) This decision is effective as of 3 August 2014; (c) Novo Banco and Banco Esprito Santo must adapt their accounting records to the present decision and act in accordance with it. Goldman Sachs objected. They contended that while they had arranged the facility agreement they were not the true lenders. Nor were they holders of more than 2% of BESs share capital. The Central Bank did not accept either point. On 11 February 2015, its Board resolved to maintain its decision of 22 December 2014. The minutes record Goldman Sachs objection and the Central Banks view that it disclosed no grounds for departing from the decision. But it recites that any issue as to the eligibility of the Oak loan for transfer to Novo Banco would ultimately have to be resolved by a court of law. There are current administrative law proceedings in Portugal in which the appellants challenge the Central Banks decision of 22 December 2014. These have not yet been resolved. The present proceedings On 26 February 2015, the appellants commenced the present actions against Novo Banco in the High Court in England for sums due in respect of the Oak loan. The basis of their claims was that liability on the Oak facility had been transferred to Novo Banco by the Central Banks decision of 3 August 2014. On that footing, Novo Banco was bound by the jurisdiction clause in the facility agreement. Novo Banco countered by applying to set aside service of the claim forms in both actions for want of jurisdiction, on the ground that it had not been transferred, principally because the decision of 22 December 2014 conclusively determined that that was so. This is, accordingly, a case in which the fact on which jurisdiction depends is also likely to be decisive of the action itself if it proceeds. For the purpose of determining an issue about jurisdiction, the traditional test has been whether the claimant had the better of the argument on the facts going to jurisdiction. In Brownlie v Four Seasons Holdings Inc [2018] 1 WLR 192, para 7, this court reformulated the effect of that test as follows: (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. It is common ground that the test must be satisfied on the evidence relating to the position as at the date when the proceedings were commenced. Portuguese law There is, at least for the purposes of the jurisdiction issue, a large measure of common ground about the powers of the Central Bank and the legal status of its successive decisions as a matter of Portuguese law. The decisions of 3 August and 22 December 2014 were administrative acts governed by rules of administrative law which, as in other civil law systems, are distinct from the rules which govern civil matters. It is agreed that both decisions were valid acts establishing legal rights and obligations of third parties in accordance with their terms. It is agreed that a public authority may amend its own administrative act prospectively or interpret it with effect from the time it was made. It is agreed that a public authority may by a subsequent decision implement its own administrative act or apply it to a particular case. Finally, it is agreed that administrative acts are reviewable by the courts of Portugal, which may annul them on the ground that they were based on an erroneous factual assumption or on an error of law. But unless and until they are annulled, they remain binding and directly effective as a matter of law. The parties are not agreed about the meaning of the December decision. They are, however, agreed that it took effect according to its terms from 3 August 2014 and that subject to annulment by a Portuguese court it conclusively determined as a matter of Portuguese law that the Oak liability was not transferred to Novo Banco. The appellants case is that while the legal effect of the August decision in Portugal falls to be recognised in England, the legal effect of the December decision does not. Recognition: the Directives The rescue of failing financial institutions commonly involves measures affecting the rights of their creditors and other third parties. Depending on the law under which the rescue is being carried out, these measures may include the suspension of payments, the writing down of liabilities, moratoria on their enforcement, and transfers of assets and liabilities to other institutions. At common law measures of this kind taken under a foreign law have only limited effect on contractual liabilities governed by English law. This is because the discharge or modification of a contractual liability is treated in English law as being governed only by its proper law, so that measures taken under another law, such as that of a contracting partys domicile, are normally disregarded: Adams v National Bank of Greece SA [1961] AC 255. By way of exception, however, the assumption of contractual liabilities by another entity by way of universal succession may be recognised in England: National Bank of Greece & Athens SA v Metliss [1958] AC 509. The National Bank of Greece litigation arose out of the reconstruction under Greek law of the liabilities of an insolvent Greek bank which had issued bonds governed by English law, a context very similar to that of the present appeal. As regards banks, however, the law declared in those two decisions of the House of Lords was superseded by the Credit Institutions (Reorganisation and Winding Up) Regulations (SI 2004/1045), which gave effect in English law to the Reorganisation Directive, and by the Bank Recovery and Resolution (No 2) Order (SI 2014/3348) which amended the 2004 order to reflect the changes made to the Reorganisation Directive by the EBRRD. The purpose of the Reorganisation Directive is apparent from its recitals. Recitals (6), (7) and (16) are in the following terms: (6) The administrative or judicial authorities of the home member state must have sole power to decide upon and to implement the reorganisation measures provided for in the law and practices in force in that member state. Owing to the difficulty of harmonising member states laws and practices, it is necessary to establish mutual recognition by the member states of the measures taken by each of them to restore to viability the credit institutions which it has authorised. It is essential to guarantee that the reorganisation (7) measures adopted by the administrative or judicial authorities of the home member state and the measures adopted by persons or bodies appointed by those authorities to administer those reorganisation measures, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims and any other measure which could affect third parties existing rights, are effective in all member states. (16) Equal treatment of creditors requires that the credit institution is wound up according to the principles of unity and universality, which require the administrative or judicial authorities of the home member state to have sole jurisdiction and their decisions to be recognised and to be capable of producing in all the other member states, without any formality, the effects ascribed to them by the law of the home member state, except where this Directive provides otherwise. The relevant substantive provision is article 3, which provides: Article 3 Adoption of reorganisation measures applicable law 1. The administrative or judicial authorities of the home member state shall alone be empowered to decide on the implementation of one or more reorganisation measures in a credit institution, including branches established in other member states. 2. The reorganisation measures shall be applied in accordance with the laws, regulations and procedures applicable in the home member state, unless otherwise provided in this Directive. They shall be fully effective in accordance with the legislation of that member state throughout the Community without any further formalities, including as against third parties in other member states, even where the rules of the host member state applicable to them do not provide for such measures or make their implementation subject to conditions which are not fulfilled. The reorganisation measures shall be effective throughout the Community once they become effective in the member state where they have been taken. Article 3 governs the recognition of reorganisation measures. Article 2, as amended by article 117(2) of the EBRRD, defines these as follows: reorganisation measures shall mean measures which are intended to preserve or restore the financial situation of a credit institution or an investment firm as defined in article 4(1), point (2) of Regulation (EU) No 575/2013 and which could affect third parties pre existing rights, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims; those measures include the application of the resolution tools and the exercise of resolution powers provided for in Directive 2014/59/EU. Since it is not disputed that Banco de Portugal had power under Portuguese law to employ the bridge institution tool as it did, it is unnecessary to examine the detailed provisions of the EBRRD relating to the reconstruction of bank liabilities. For present purposes, the relevant provisions are those dealing with mutual recognition of the legal effects of measures taken in accordance with the tools and the provisions dealing with challenges to those measures in the courts of the home member state. As far as mutual recognition is concerned, recital (119) recites: (119) Directive 2001/24/EC of the European Parliament and of the Council provides for the mutual recognition and enforcement in all member states of decisions concerning the reorganisation or winding up of institutions having branches in member states other than those in which they have their head offices. That Directive ensures that all assets and liabilities of the institution, regardless of the country in which they are situated, are dealt with in a single process in the home member state and that creditors in the host member states are treated in the same way as creditors in the home member state. In order to achieve an effective resolution, Directive 2001/24/EC should apply in the event of use of the resolution tools both when those instruments are applied to institutions and when they are applied to other entities covered by the resolution regime. Directive 2001/24/EC should therefore be amended accordingly. Article 66 is a supplementary recognition provision dealing with (among other things) dispositions of assets and liabilities in the course of a reorganisation of a credit institution in its home state. It provides: Article 66 Power to enforce crisis management measures or crisis prevention measures by other member states. 1. Member states shall ensure that, where a transfer of shares, other instruments of ownership, or assets, rights or liabilities includes assets that are located in a member state other than the state of the resolution authority or rights or liabilities under the law of a member state other than the State of the resolution authority, the transfer has effect in or under the law of that other member state. 3. Member states shall ensure that shareholders, creditors and third parties that are affected by the transfer of shares, other instruments of ownership, assets, rights or liabilities referred to in paragraph 1 are not entitled to prevent, challenge, or set aside the transfer under any provision of law of the member state where the assets are located or of the law governing the shares, other instruments of ownership, rights or liabilities. Turning to proceedings to challenge measures taken in accordance with the tools, recitals (88) and (89) of the EBRRD recite the need for the decisions of a Resolution Authority to be subject to appeal to the courts on the ground (among others) of insufficient factual basis. Recitals (90) and (91) are in the following terms: (90) Since this Directive aims to cover situations of extreme urgency, and since the suspension of any decision of the resolution authorities might impede the continuity of critical functions, it is necessary to provide that the lodging of any appeal should not result in automatic suspension of the effects of the challenged decision and that the decision of the resolution authority should be immediately enforceable with a presumption that its suspension would be against the public interest. (91) In addition, where necessary in order to protect third parties who have acquired assets, rights and liabilities of the institution under resolution in good faith by virtue of the exercise of the resolution powers by the authorities and to ensure the stability of the financial markets, a right of appeal should not affect any subsequent administrative act or transaction concluded on the basis of an annulled decision. In such cases, remedies for a wrongful decision should therefore be limited to the award of compensation for the damages suffered by the affected persons. The corresponding substantive provision is article 85, which provides: Article 85 Ex ante judicial approval and rights to challenge decisions 1. Member states may require that a decision to take a crisis prevention measure or a crisis management measure is subject to ex ante judicial approval, provided that in respect of a decision to take a crisis management measure, according to national law, the procedure relating to the application for approval and the courts consideration are expeditious. 3. Member states shall ensure that all persons affected by a decision to take a crisis management measure, have the right to appeal against that decision. Member states shall ensure that the review is expeditious and that national courts use the complex economic assessments of the facts carried out by the resolution authority as a basis for their own assessment. 4. The right to appeal referred to in paragraph 3 shall be subject to the following provisions: (a) the lodging of an appeal shall not entail any automatic suspension of the effects of the challenged decision; (b) the decision of the resolution authority shall be immediately enforceable and it shall give rise to a rebuttable presumption that a suspension of its enforcement would be against the public interest. In paragraphs 3 and 4, a crisis management measure includes a resolution action: article 2(102). A resolution action includes the application of a resolution tool, or the exercise of one or more resolution powers: article 2(40). A resolution power refers to the powers under national law which are required in order to apply the resolution tools: articles 2(20) and 63. The judgments below Before Hamblen J, Novo Bancos case was that the effect of the December decision fell to be recognised in an English court by virtue of article 66 of the EBRRD. They did not rely on article 3 of the Reorganisation Directive. The judge approached the question in two stages: [2015] EWHC 2371 (Comm). He held, first, that it was sufficiently established for the purpose of jurisdiction (ie the claimants had the better of the argument) that Goldman Sachs held less than 2% of the share capital of BES and was not the real lender under the facility agreement. It followed that for the purpose of jurisdiction, it must be assumed that the Oak liability had been transferred to Novo Banco by the decision of 3 August 2014, there being (on that footing) no relevant exception covering it. That being so, he considered, secondly, that Novo Banco became party to the jurisdiction clause in the facility agreement on 3 August 2014. Novo Banco was therefore bound to submit to the English court any dispute arising out of or in connection with this Agreement, including the dispute about the effect of the December decision. On that footing he did not need to decide what the effect of the latter decision was, nor whether it fell to be recognised under article 66 of the EBRRD. These would be matters for trial. But in case he was wrong about that, he also held that article 66 did not require the recognition of the December decision in England because, whatever else it was, the December decision was not itself a transfer of assets. In the Court of Appeal the argument took a different turn as a result of the intervention of Banco de Portugal. Mr Howard QC, who appeared for them both in the Court of Appeal and before us, put at the forefront of his case on recognition article 3 of the Reorganisation Directive, which had received hardly any attention before Hamblen J. The significance of this is that article 3, unlike article 66 of the EBRRD, is not limited to requiring the mutual recognition of transfers. Mr Howards primary submission was, in summary, that the Directives required the recognition of the entire process of reorganisation under the EBRRD and that it was in principle wrong to consider the effect of the August decision independently of the December decision. Whatever the correct legal analysis of the December decision, an English court was bound to recognise its effect as a matter of Portuguese law, which was to determine conclusively that the Oak liability had not been transferred. The Court of Appeal allowed the appeal, substantially on that ground: [2016] EWCA Civ 1092; [2017] 2 BCLC 277. Application of the recognition provisions of the Directives The first thing that strikes one about the appellants submission is its inherent implausibility. The appellants accept, indeed assert, (i) that the August decision was a reorganisation measure entitled to recognition in England under article 3 of the Reorganisation Directive and (ii) that it was a transfer for the purpose of article 66 of the EBRRD. The result of separating the August decision from the December decision and giving effect only to the former is that in the eyes of an English court Portuguese law must be treated as having transferred the Oak liability to Novo Banco although it would not be so treated in the eyes of a Portuguese court. Since the ordinary purpose of any choice of law rule is to ascertain which legal rules should be applied in the relevant foreign jurisdiction, this is a paradoxical result. In assessing the appellants submission, the provision which is primarily relevant is article 3 of the Reorganisation Directive, as amended by the EBRRD to apply to reorganisation measures taken in the exercise of its various tools. Article 3 of the Reorganisation Directive, as its title declares, determines the applicable law to be applied to a reorganisation measure in England. Article 66 of the EBRRD is a more specific provision. Although its language may suggest some overlap with article 3 of the Reorganisation Directive it is, as its title declares, about enforcement. Its main purpose is to require other member states to take active steps to enforce transfers of assets or liabilities made in the course of a reorganisation in the home state and to prevent challenges to such transfers in their own jurisdictions. Two points need to be made about the Reorganisation Directive, and in particular about article 3. The first is that its purpose, as recital (119) of the EBRRD records, is to ensure that all assets and liabilities of the institution, regardless of the country in which they are situated, are dealt with in a single process in the home member state and that creditors in the host member states are treated in the same way as creditors in the home member state. This can be achieved only by taking the process as a whole and applying the legal effects attaching to it under the law of the home state in every other member state. It is not consistent with either the language or the purpose of article 3 that an administrative act such as the December decision, which affects the operation of a reorganisation measure under the law of the home state, should have legal consequences as regards a credit institutions debts which are recognised in the home state but not in other member states. This was the basis of both of the decisions of the Court of Justice on article 3 of the Reorganisation Directive. LBI hf v Kepler Capital Markets SA (Case C 85/12) (Judgment delivered on 24 October 2013) arose out of proceedings in France brought by a creditor of an insolvent Icelandic bank in the course of winding up in Iceland to attach a debt owed to the bank by Kepler. One of the questions referred to the CJEU was whether article 3 applied to an automatic statutory moratorium retrospectively introduced under the transitional provisions of an Icelandic statute, given that article 3 referred only to decisions of the home states administrative or judicial authorities. The CJEU answered that question by reference to the purpose of the Reorganisation Directive. The Court described that purpose as follows at para 22: At the outset, it must be borne in mind that, as is apparent from recital 6 in its preamble, Directive 2001/24 seeks to establish mutual recognition by the member states of the measures taken by each of them to restore to viability the credit institutions which it has authorised. That objective, and that of guaranteeing equal treatment of creditors, laid down in recital 16 to that directive, require that the reorganisation and winding up measures taken by the authorities of the home member state have, in all the other member states, the effects which the law of the home member state confers on them. The court went on, at para 39, to describe the Directive as establishing a system of mutual recognition of national reorganisation and winding up measures, without seeking to harmonise national legislation on that subject. It answered the question in the affirmative, because the effect of the transitional provisions was retrospectively to treat the judicial declaration of insolvency as ordering the moratorium. Similarly, in Kotnik v Dravni Zbor Republike Slovenije (Case C 526/14) [2017] 1 CMLR 753, one of the issues concerned the application of article 3 to a decision of the Slovenian central bank reconstructing the share and loan capital of an insolvent commercial bank. After referring to its analysis of the purpose of the Reorganisation Directive in LBI, the Court observed, at para 105: That objective entails that the reorganisation measures taken by the administrative or judicial authorities of the home member state, that is, the member state in which a credit institution has been authorised, must have, in all the other member states, the effects which the law of the home member state confers on them (see, to that effect, LBI EU:C:2013:697 at para 22). Secondly, an administrative act such as the August decision does not occur in a legal vacuum. It occurs in the context of a broader framework of public law. Article 3 does not only give effect to reorganisation measures throughout the Union. It requires them to be applied in accordance with the laws, regulations and procedures applicable in the home member state, unless otherwise provided in this Directive, and to be fully effective in accordance with the legislation of that member state. In this legal scheme, it cannot make sense for the courts of another member state to give effect to a reorganisation measure but not to other provisions of the law of the home state affecting the operation of a reorganisation measure. That is so, whether or not that other provision is itself a reorganisation measure. For these reasons I reject the proposition, which was fundamental to both the Judges analysis and the appellants case, that the effect of the August decision can be recognised without regard to the December decision. On the face of it, the December decision was not an interpretation of the August decision or an amendment of it, retrospective or otherwise. Nor was it a retransfer of a liability previously transferred to Novo Banco. It was a ruling that under the terms of article 145 H(2) of the Banking Law and paragraph (b)(i)(a) of Annexe 2 of the August decision, the Oak liability had never been transferred. But, like the courts below, I do not think that it matters what the correct analysis of the December decision is, provided that it is accepted (as it is) that as a matter of Portuguese law it is conclusive of that point unless and until annulled by a Portuguese administrative court. It follows from the agreed propositions of Portuguese law and from the requirement of article 3.2 of the Reorganisation Directive that an English court must treat the Oak liability as never having been transferred to Novo Banco. It was therefore never party to the jurisdiction clause. This makes it unnecessary to consider the alternative case advanced by Banco de Portugal and Novo Banco to the effect that the December decision was itself a reorganisation measure or an implied retransfer of the Oak liability to BES. A provisional decision? The appellants have an alternative case that even if the December decision is otherwise entitled to recognition in England, it should be disregarded on the ground that it was a provisional decision pending the final decision of a Portuguese administrative court on the questions whether Goldman Sachs was the true lender or a 2% shareholder in BES. The argument is that an English court should look to what the Portuguese administrative court would decide about those questions and not what the Central Bank has actually decided. Mr Rabinowitz QC, who appeared for Guardians of New Zealand Superannuation Fund and others, submitted that the Judges finding that the appellants had the better of the argument on those questions meant that we must assume that a Portuguese administrative court would decide them in the appellants favour. The first point to be made is that the December decision was not in terms a provisional decision. The Judge thought that Banco de Portugal had not stated or purported to find that the Oak liability is an Excluded Liability. He considered that the December decision simply asserted that there are serious and well grounded reasons so to conclude, while recognising that that was ultimately a matter for a court of law to determine. I respectfully disagree. He was referring to the recitals and not to the operative part of the decision. The minutes recited the Central Banks reasons for the decision, which were based on its current view of the facts. But the operative section determined that the Oak liability was not transferred to Novo Banco and directed that the accounting records of Novo Banco should be restated accordingly. It follows that the Appellants submission must be based on the mere fact that like any other administrative decision it was subject to review by a Portuguese administrative court. The appellants submission to this effect is based on the decision of the Court of Appeal in Guaranty Trust of New York v Hannay & Co [1918] 2 KB 623. The question at issue in this case was whether as a matter of New York law a particular bill of exchange was conditional. In previous proceedings on the same issue between the same parties a New York judge had held on demurrer that it was. Bailhache J and the Court of Appeal held that it was not. The ground of the decision was that the judgment was no more than evidence of New York law, and expert evidence put before the English courts showed it to be mistaken. The point was put with characteristic clarity by Scrutton LJ at p 667: Foreign law is a question of fact to an English Court; the judgment of a foreign judge is not binding on an English Court, but is the opinion of an expert on the fact, to be treated with respect, but not necessarily conclusive. In my opinion, this decision has no bearing on the present appeal. The issue in Guaranty Trust was not about the legal status of the New York judgment as a matter of New York law. The question was what the relevant rule of New York law was. That was a question of fact. In the present case, there is no issue about either the relevant content of Portuguese law or the status of the December decision, because it is agreed that as a matter of Portuguese law it determines creditors rights. The present issue is quite different, namely whether that decision is to be recognised as affecting rights under an English law contract. That is not a question of fact, but a question of private international law. True it is that the December decision was based on a factual premise which is being challenged in Portugal. But it does not matter for present purposes whether its factual premise was right or wrong. It is binding in Portuguese law in either case, unless and until it is set aside by a Portuguese court. No other conclusion would, as it seems to me, be consistent with the Directives. In the first place, it is not for an English court to decide what would amount to an appeal from an administrative act of the Portuguese Central Bank. Article 3(1) of the Reorganisation Directive provides that the implementation of a reorganisation measure such as the August decision is a matter for the administrative or judicial authorities of the home state alone. Consistently with that approach, article 85 of the EBRRD assigns appeals to the courts of the home state responsible for the reorganisation. Secondly, article 85(4) provides that an appeal is not to entail any automatic suspension of the challenged decision. This is because a banking reconstruction under the EBRRD requires decisive steps to be taken, often as a matter of urgency, which the authorities in other member states can act on. The scheme of the Directives would be undermined if the acts of a designated national Resolution Authority were open to challenge in every other member state simply because they were open to challenge in the home state. Reference to the Court of Justice of the European Union The relevant propositions of EU law are to my mind beyond serious argument. The decisive questions are questions of Portuguese domestic law, on which the parties are agreed. There is therefore no proper basis for a reference. Disposal I would dismiss the appeal.

UK-Abs

The European Bank Recovery and Resolution Directive 2014/59/EU (EBRRD) amended Directive 2001/24/EC on the Reorganisation and Winding up of Credit Institutions (the Reorganisation Directive), so as to require member states to confer on their domestic Resolution Authorities certain tools for reconstructing failing credit institutions. One of the tools was the bridge institution tool, which required designated national Resolution Authorities to have the power to transfer to a bridge institution any assets, rights or liabilities of a failing credit institution. The Appellants are the assignees of the rights of Oak Finance Luxembourg SA (Oak). In June 2014, Oak entered into a facility agreement with a Portuguese bank, Banco Esprito Santo SA (BES), under which it agreed to lend BES approximately $835m (the Oak liability). The facility agreement was governed by English law and provided for the English courts to have exclusive jurisdiction over any dispute. The entire loan was advanced on 3 July 2014. BES made one scheduled payment of approximately $53m, but it shortly became clear that BES was in serious financial difficulties. The Central Bank of Portugal, which is the designated Resolution Authority for Portugal for the purposes of the EBRRD, decided to invoke the bridge institution tool to protect depositors funds in BES. By a decision dated 3 August 2014 (the August decision), it incorporated the Respondent (Novo Banco) to serve as the bridge institution and transferred specified assets and liabilities of BES to it, purportedly including the Oak liability. Under article 145H(2) of the Portuguese Banking Law, however, no liability could be transferred to a bridge institution if it was owed to an entity holding more than 2% of the original credit institutions share capital. By a decision dated 22 December 2014 (the December decision), the Central Bank determined that the Oak liability had never been transferred to Novo Banco, as it fell within the article 145H(2) prohibition. There are ongoing administrative law proceedings in Portugal in which the Appellants challenge the December decision, which have not yet been resolved. The Appellants commenced an action in the English courts for sums due in respect of the Oak loan, on the basis that the Oak liability had been transferred to Novo Banco by the August decision, and that Novo Banco was bound by the jurisdiction clause in the facility agreement. Novo Banco countered that the December decision conclusively determined that the liability had not been transferred to it. At first instance, relying on article 66 EBRRD, the judge found that the Oak liability had been transferred to Novo Banco by the August decision and that Novo Banco became party to the jurisdiction clause. The Court of Appeal allowed Novo Bancos appeal. Relying instead on article 3 of the Reorganisation Directive, it held that an English court was bound to recognise the effect of the December decision as a matter of Portuguese law, which was to determine conclusively that the Oak liability had not been transferred. The Supreme Court unanimously dismisses the appeal. Lord Sumption gives the lead judgment, with which the rest of the Court agrees. An English court is required by article 3 of the Recognition Directive to recognise the December decision, and must therefore treat the Oak liability as never having been transferred to Novo Banco. Novo Banco was therefore never party to the jurisdiction clause in the facility agreement. The provision which is primarily relevant to this appeal is article 3 of the Reorganisation Directive, which determines the applicable law to be applied to a reorganisation measure in England. Article 66 of the EBRRD is a more specific provision which concerns enforcement [22]. Lord Sumption makes two points about the Reorganisation Directive, particularly article 3. First, its purpose is to ensure that all assets and liabilities of the institution, regardless of the country in which they are situated, are dealt with in a single process in the home member state. This can be achieved only by taking the process as a whole and applying the legal effects attaching to it under the law of the home state in every other member state. It is not consistent with the language or the purpose of article 3 that an administrative act such as the December decision, which affects the operation of a reorganisation measure under the law of the home state, should have legal consequences as regards a credit institutions debts which are recognised in the home state but not in other member states. [24 26]. Second, article 3 does not only give effect to reorganisation measures throughout the Union, but requires them to be applied in accordance with the laws, regulations and procedures applicable in the home member state, unless otherwise provided in this Directive, and to be fully effective in accordance with the legislation of that member state. In this legal scheme, it cannot make sense for the courts of another member state to give effect to a reorganisation measure but not to other provisions of the law of the home state affecting its operation [27]. For these reasons, Lord Sumption rejects the proposition that the effect of the August decision can be recognised without regard to the December decision. It does not matter what the correct analysis of the December decision is, provided that it is accepted (as it is) that unless and until it is set aside, it is conclusive as a matter of Portuguese law that the Oak liability had never been transferred. It follows from the agreed propositions of Portuguese law and from the requirements of article 3(2) of the Reorganisation Directive that an English court must treat the Oak liability as never having been transferred to Novo Banco. Novo Banco was therefore never party to the jurisdiction clause [28]. Lord Sumption also rejects the Appellants alternative case that, even if the December decision is otherwise entitled to recognition in England, it should be disregarded on the ground that it was a provisional decision pending the final decision of a Portuguese administrative court. As a matter of Portuguese law, the December decision is binding in Portuguese law unless and until it is set aside by a Portuguese court [31 33]. Further, no other conclusion would be consistent with the Directives, particularly article 3 of the Reorganisation Directive, which provides that the implementation of a reorganisation measure such as the August decision is a matter for the administrative or judicial authorities of the home state alone, and article 85 of the EBRRD, which provides that an appeal is not to entail any automatic suspension of the challenged decision [34]. There is no basis for a reference to the CJEU, as the relevant propositions of EU law are beyond serious argument [35].

When a person is facing insolvency, a possible alternative to sequestration is a voluntary arrangement with his creditors. Under Scots law, this usually takes the form of a deed granted by the debtor, conveying his property to a trustee for the benefit of his creditors. The trustee is given powers to collect and realise assets, to rank claims, and to distribute the estate among the creditors according to their respective rights and preferences. The trust deed will usually contain provisions relating to the discharge of the debtor from his debts, the restoration to him of any surplus, and the discharge of the trustee. At common law, the trust deed is binding on creditors who accede to it. As will be explained, it may also, under statute, affect the rights of non acceding creditors. This appeal concerns a situation in which, after the debtors estate so far as known had been distributed in partial payment of his debts, and he and his trustee had received their discharges, additional property was discovered, of which his trustee had not previously been aware. There is no suggestion that it had been concealed, or that the debtor was even aware of its existence. The question raised in the appeal is whether the trustee (or former trustee, depending on the view one takes) is entitled to the property, and can distribute it among the creditors (or former creditors) in further payment of the debts (or former debts). As will appear, the form in which the case has been brought presents the court with a narrow issue, and it has been unable to consider wider aspects of the question which it might otherwise have addressed. The facts On 29 September 2006 Mr Davidson, the second respondent, granted a trust deed for his creditors. It was in a standard form, and was a protected trust deed to which the provisions of the Bankruptcy (Scotland) Act 1985 (the 1985 Act), Schedule 5, paragraphs 5 10, as amended by section 11(3) of, and paragraph 32 of Schedule 1 to, the Bankruptcy (Scotland) Act 1993, applied. Put briefly, those provisions have the effect of restricting the rights of non acceding creditors and conferring on the trust deed some protection against being superseded by the sequestration of the debtors estate. In accordance with paragraph 5(1) of Schedule 5 to the 1985 Act, the trust deed was sent to all known creditors, notice of it was published in the Edinburgh Gazette, and it was registered in the Register of Insolvencies. The material provisions of the trust deed can be summarised as follows. Clause 1 provided that Mr Davidson transferred to a named insolvency practitioner, as trustee for his creditors, the rights and assets which would vest in a permanent trustee in terms of sections 31, 32 and 33 of [the 1985 Act]. Those rights and assets were described as Mr Davidsons estate. They included any right of action and any estate acquired by the debtor during the currency of the trust, in accordance with section 32(6) and (10) of the 1985 Act. Under Clauses 2 and 3, the trustee was entitled to receive, during the period of the trust, the amount of Mr Davidsons income which exceeded a suitable amount to allow for his aliment and relevant obligations as defined in section 32(3) of the 1985 Act. Under Clause 7, headed Distribution of my Estate, the estate was to be distributed first in payment of the expenses of the trust deed and the trustees remuneration, secondly in payment of creditors, and thirdly so as to re convey any remaining surplus to Mr Davidson. In relation to the payment of creditors, Clause 7 (Second) provided, so far as material: My Trustee shall determine as he thinks fit the time(s) when payment should be made, what notice of payment should be given and whether payment should be made by way of interim or final dividend(s). Clause 10 provided: This Trust Deed is granted by me on condition that the creditors acceding to the Trust Deed shall discharge me of all my debts due to them on the termination of this Trust Deed unless: (i) My Trustee reports that in his opinion I have not made fair and full surrender of my Estate or; (ii) The Trust Deed terminates on an award of sequestration of my Estate being made. Clause 11 provided that the trust deed would terminate on the earliest of the following events: (i) An award of sequestration of my Estate . (ii) The final distribution of my Estate (which shall for the avoidance of doubt include a nil distribution) by my Trustee in accordance with this Trust Deed. (iii) The acceptance by my creditors of any composition offered by me. Clause 12 provided for the discharge of the trustee: When my Trustee considers it appropriate to wind up this trust created by the Trust Deed, he shall summon a final meeting of my creditors by issuing a notice sent by first class post and confirmed by a certificate of posting and shall include with such notice a copy of the accounts of his transactions and intromissions with my Estate. At the meeting of my creditors he can seek his discharge from my creditors. Mr Mond, the appellant, was assumed as the trustee in July 2010. On 16 September 2010 he wrote to the creditors, stating: I am now in a position to complete the administration of the case and make payment of the first and final dividend. All the assets in the Trust Deed have been realised . Creditors had been invited to submit their claims. They exceeded the known estate. On 5 November 2010 Mr Mond paid the creditors a dividend of 22.41 pence in the pound. On 19 November 2010 he received his discharge. On 5 April 2011 he sent the Accountant in Bankruptcy, for registration in the Register of Insolvencies, a statement indicating how the estate was realised and distributed, and a certificate to the effect that the distribution was in accordance with the trust deed, as required by paragraph 9 of Schedule 5 to the 1985 Act. That provision applies where the trustee under a protected trust deed has made the final distribution of the estate among the creditors, and requires the trustee to submit the statement and certificate not more than 28 days after the final distribution. The certificate was made expressly in terms of paragraph 9, and stated that a full distribution of the debtors estate has now been made in accordance with the terms of the Trust Deed. At the same time, Mr Mond also requested the Accountant in Bankruptcy to register his discharge in the Register of Insolvencies in accordance with paragraph 10 of Schedule 5. Unbeknown to Mr Mond, before Mr Davidson entered into the trust deed he had been mis sold payment protection insurance (PPI) which he had taken out in respect of various loans from the Bank of Scotland (the Bank). In January 2015 he appointed Dooneen Ltd, the first respondent, as his agent for the purpose of making a claim against the Bank for the mis selling of the PPI, and assigned to Dooneen 30% of the value of any compensation received. Dooneen made a claim, and in April 2015 the Bank agreed to pay compensation of around 56,000. Mr Mond claimed that he was entitled to payment of that sum, on the basis that the right to compensation had vested in him as part of the estate subject to the trust deed and remained vested in him as trustee. The Bank paid the compensation to Mr Mond. The present proceedings In the present action, Dooneen and Mr Davidson seek declarator that the compensation had not vested in Mr Mond together with payment of the compensation from Mr Mond. They accept that Mr Davidsons right to compensation formed part of the estate transferred to his trustee for the benefit of his creditors, but argue that his radical right to it became disburdened of the trust when the avowedly final distribution was made, since the trust then came to an end in accordance with Clause 11(ii). Mr Mond, on the other hand, argues that there was no final distribution within the meaning of the trust deed, since a distribution cannot be final if, as a result of ignorance, it leaves part of the trust estate out of account. That, he argues, is clearly the position in a statutory sequestration: Whyte v Northern Heritable Securities Investment Co Ltd (1891) 18 R (HL) 37; [1891] AC 608. The same, he argues, should follow under a voluntary trust deed, which should be construed so as to prevent the debtor from receiving a windfall at the expense of his creditors. The Lord Ordinary, Lord Jones, found in favour of Dooneen and Mr Davidson: [2016] CSOH 23. That decision was upheld by the Second Division of the Inner House (Lady Dorrian, the Lord Justice Clerk, Lord Malcolm and Lord McGhie): [2016] CSIH 59; [2017] SCLR 199; [2017] BPIR 380. The Inner House considered that, on a proper construction of the trust deed, a final dividend within the meaning of Clause 7 (Second), and the equivalent expression final distribution in Clause 11(ii), meant a dividend or distribution declared to be such by the trustee. The distribution on 5 November 2010 was made on the basis that the trustee had determined that a final dividend should be paid. It was therefore a final distribution within the meaning of the trust deed, notwithstanding the existence of an asset which was unknown to the trustee. The trust therefore came to an end on that date, in accordance with Clause 11(ii), and the debtor was discharged of his debts, in accordance with Clause 10. The essence of the Second Divisions reasoning was set out in para 18 of its Opinion, delivered by the Lord Justice Clerk: This interpretation is necessary because the termination of the trust deed, as we have noted, is tied to, amongst other things, final distribution. The final distribution acts not only as the trigger for a discharge of the debtor by creditors, but, in effect, a composition, whereby the trust deed (the voluntary equivalent of a sequestration) is ended and the debtor is entitled to be re invested in any remaining trust estate. As was explained in Flett v Mustard [1936 SC 269] (Lord President Normand, p 275): If abandonment is out of the way, the only other mode by which retrocession can be established, short of full payment of the creditors, is by showing that there was a discharge on composition Northern Heritable Securities Investment Co, Lord Watson at p 39. There may be a discharge of a debtor under a trust deed for creditors which does not expressly bear to be a discharge on composition but which is intended to have that effect, and that intention may be found in the terms of the trust deed and of the discharge. That was the view taken by Lord Trayner (at p 570) in Kinmond, Luke & Co v James Finlay & Co [(1904) 6 F 564]. In Kinmond, where there was a provision in similar terms to clause 11(ii), Lord Trayner had said (p 570): Under the trust deed, to which the pursuers creditors acceded, it was made matter of contract that on receiving a final dividend (as declared by the trustee) the pursuers should, ipso facto, stand discharged of all claims ranked on their estate. Such a dividend has been paid and the discharge given. In my opinion, that operated practically as a discharge on a composition would have done, and had the effect of reinvesting the pursuers. The discharge in the present case has the same effect, terminating the trust and reinvesting the truster in any unrealised estate, which includes the PPI payment. Discussion In my respectful opinion, the Inner House reached the correct conclusion as to the construction of the trust deed. It provides in effect for a composition between the debtor and the acceding creditors, as the Lord Justice Clerk explained under reference to the dicta in Kinmond, Luke & Co v James Finlay & Co and Flett v Mustard. The composition is conditional on the final distribution of the estate by the trustee (subject to the contingencies mentioned in Clause 10(i) and (ii)). It is for the trustee, acting in accordance with his fiduciary duty towards the creditors, to determine when a final distribution should take place. Those considerations do not in themselves entail that a final distribution, within the meaning of the trust deed, can take place even though a part of the estate of which the trustee was unaware has not been distributed in payment of the debts. But the contrary argument that a final distribution only occurs, in the absence of full payment of the debts, when all the assets transferred to the trustee under the trust deed have in fact been distributed, whether or not the trustee is aware of their existence would have consequences which the debtor cannot reasonably be taken to have intended when granting the deed. First, since one could never be certain that any distribution was a final distribution in that sense, one could never be certain that the trust had terminated. It would potentially be of indeterminate duration. The consequent uncertainty as to whether the trust had terminated or not is particularly difficult to reconcile with the provisions of Clause 1, vesting acquirenda in the trustee, and Clause 2, requiring the debtor to pay part of his income to the trustee, so long as the trust subsists. Secondly, if one cannot be certain whether the trust has terminated, it follows that the debtor cannot be certain that he has been discharged of his debts under Clause 10. This could have serious practical consequences not only for the debtor but also for anyone else doing business with him after his apparent discharge and the apparent termination of the trust, since he might nevertheless prove to be an undischarged bankrupt. Thirdly, if the discovery of previously unknown assets signifies that there has not been a final distribution, even though the certificate required by paragraph 9 of Schedule 5 to the 1985 Act has already been registered, then it follows that reliance cannot be placed on the accuracy of the public Register of Insolvencies. It is inherently unlikely that the trust deed was intended to have that result. Counsels response was that Clause 1 defines the trust estate by reference inter alia to section 32 of the 1985 Act, which refers to estate acquired by the debtor on a relevant date, defined by section 32(10) as meaning a date after the sequestration and before the date on which the debtors discharge becomes effective. Under section 54 of the 1985 Act, a debtor automatically obtains his discharge three years after the date of sequestration. On that basis, it was argued that the definition of the trust estate in Clause 1 does not include acquirenda acquired more than three years after the commencement of the trust. This argument cannot be accepted. The incorporation into Clause 1 of section 32 of the 1985 Act, for the purpose of defining the trust estate, does not entail the incorporation of section 54 for the purpose of determining whether property was acquired before the date of the debtors discharge. On the contrary, the trust deed itself makes provision for the date of the debtors discharge in Clause 10, so giving content to section 32(10) as applied to the trust. Furthermore, the terms of Clause 10, read together with Clause 11, are inconsistent with section 54: discharge does not occur automatically after three years, but on the termination of the trust, which takes place on the earliest of the three events listed in Clause 11(i) to (iii), all of which can occur more than three years after the commencement of the trust. Counsel also relied on the case of Whyte v Northern Heritable Securities. That case was concerned with a similar factual situation to that in the present case, but it arose in a materially different legal context. The debtor had been sequestrated under the Bankruptcy (Scotland) Act 1856 (19 & 20 Vict, c 79). Section 102 vested his property in the trustee for behoof of the creditors, absolutely and irredeemably. Section 132 required the payment of dividends from time to time until the whole funds of the bankrupt shall be divided. Section 152 provided a procedure for the trustee to obtain his discharge after a final division of the funds. Section 155 provided for any surplus of the bankrupts estate remaining after payment of his debts to be paid to him. The case arose because the creditors discovered, after both the debtor and the trustee had been discharged, that part of the estate had not been distributed. The House of Lords concluded that, under the legislation, the remaining estate could only vest in the debtor upon a composition or other transaction with his creditors, or upon payment in full of his debts. Since none of these events had occurred, it followed that the process of sequestration under the Act had not been completed, and that a new trustee should be appointed for the purpose of distributing the remaining estate. Lord Watson explained at pp 39 and 614 615: According to my view of the statute, he [the debtor] can only get back the property which has been taken from him absolutely and irredeemably by the force of the statute in one of three ways; either, first, by his discharge upon payment of a composition to his creditors; secondly, by receiving a part of it as surplus after satisfying their claims to the extent of 20 shillings in the pound; or, in the third place, by a transaction with the trustee and creditors of the bankrupts estate I think the final close of the sequestration contemplated by the statute was the discharge of the trustee after the final distribution after the whole of the funds vested in him by force of the statute had been applied to their proper purpose, namely, payment of the debts ranked in the sequestration. When I speak of final distribution, I mean distribution of what were in fact the last funds available for the purpose. Now in this case there was no doubt a discharge of the trustee upon the footing that the available funds had been distributed. That was the footing upon which the discharge of the trustee proceeded, so far as I can see. But it proves to have been in face of the fact that there were funds extant at that date which were available, and might have been made available by the trustee for division among the creditors. Now it appears to me that the discharge of a trustee upon that footing before final distribution, either in ignorance or by inadvertence, cannot possibly alter the provisions of the Act, and that by force of the Act the sequestration notwithstanding subsists for behoof of the creditors. Counsel relied on the second paragraph of that passage as defining the meaning of the words final distribution. But Lord Watson was merely explaining the sense in which he was using those words in his speech, rather than defining a term of article The decision in the case turned on the relevant statutory provisions, in particular sections 132 and 155 of the 1856 Act. In the present case, by contrast, the trust deed contains no comparable provisions. Furthermore, in the present case the debtor has been discharged on the basis of what is in effect a composition with his creditors: a situation in which Lord Watson accepted that the position would have been different. It might also be observed that the proceedings in that case were brought by the creditors, in order to have a new trustee appointed to the undistributed estate. Although the point was not raised in the courts below, and it is unnecessary to decide it, one might question on what basis the present action, even if well founded in law, could be brought by a former trustee who had received his discharge. Conclusion For the foregoing reasons, a decision that a distribution is final, taken by the trustee under the present trust deed in accordance with his fiduciary duty, must be regarded as definitive, subject to the possibility, discussed below, of its being reduced (ie set aside). It follows, in the present case, that the trust came to an end on 5 November 2010, that the debtor was then discharged of his debts, and that the former trustee, discharged later the same month, has no entitlement to the asset discovered in 2015. The appeal should therefore be dismissed. Postscript This is scarcely a satisfactory outcome. An asset which vested in the trustee for the benefit of the creditors and ought to have been applied to payment of the debts due to them, will instead be paid to the debtor, merely because the trust was administered in ignorance of its existence. One might question whether the law is powerless to provide a remedy in this situation. Prior to the hearing of the appeal, the court informed the parties that it would be assisted by discussion of the legal consequences of a mistake in this context: in particular, whether the relevant acts of the trustee might be reduced if they were the result of an error as to the extent of the trust estate. In posing that question, the court had it in mind that on the construction of the trust deed which it has now upheld, the acceding creditors effectively conferred on the trustee a power to extinguish their rights as against the debtor by determining that a dividend should be a final distribution; and that the determination in the present case had been made in ignorance of a relevant indeed, critical consideration. It also had it in mind that reduction is a discretionary remedy, which may be granted on terms, or withheld, where that is appropriate to protect the rights of third parties. The court drew the attention of the parties to the Scottish Law Commission Discussion Paper on Supplementary and Miscellaneous Issues relating to Trust Law (2011) (No 148), Chapter 14, Error and other defects in trustees exercise of discretionary powers, and the Scottish Law Commission Report on Trust Law (2014) (Scot Law Com No 239), Chapter 19, Defects in the exercise of trustees powers, where relevant authorities are discussed. Those authorities include the decisions of the House of Lords in Dundee General Hospitals Board of Management v Bells Trustees 1952 SC (HL) 78; [1952] 1 All ER 896 and Hunter v Bradford Property Trust Ltd 1970 SLT 173, to which one might add the case of Whyte v Knox (1858) 20 D 970. In the event, the parties declined to make submissions on these matters. In those circumstances, it would be inappropriate for the court to consider them further on this occasion.

UK-Abs

In September 2006, Mr Davidson (the Second Respondent) entered into a trust deed for the benefit of his creditors. It was a protected trust deed to which provisions of the Bankruptcy (Scotland) Act 1985 (1985 Act) applied. Clause 11 of the deed provided for the deeds termination on the occurrence of one of three events, one of which was a final distribution of the estate. Before he entered into the deed, Mr Davidson had been mis sold payment protection insurance (PPI), for which the bank agreed to pay him compensation of around 56,000 in April 2015. Dooneen Ltd (the First Respondent) was Mr Davidsons agent for the purpose of making the claim and Mr Davidson had assigned 30% of any compensation received to Dooneen. The dispute between the parties was about whether Mr Mond (the Appellant), as trustee, or the Respondents were entitled to the compensation. This turned on whether Mr Mond had made a final distribution when he distributed what he called a first and final dividend of 22.41 pence in the pound to the creditors in November 2010 and was discharged accordingly in circumstances where he did not know at the time that Mr Davidson had been mis sold PPI in respect of which he was entitled to compensation. The Lord Ordinary, Lord Jones, found in favour of the Respondents, and that decision was upheld by the Inner House. Mr Mond now appeals to the Supreme Court on the ground that the courts below had misinterpreted final distribution. The Supreme Court unanimously dismisses the appeal with the result that Dooneen and Mr Davidson are entitled to the payment of compensation. Lord Reed, with whom the rest of the Court agrees, delivers the judgment. Mr Mond argued that, regardless of whether or not the trustee knew of all of the assets, a final distribution can only occur when either all assets are distributed or enough assets are distributed so as to pay all creditors in full. This construction is rejected because it would have consequences which the debtor cannot have intended when granting the deed [12]. First, one could never be certain whether any distribution was in fact final so that the deed would potentially be of indeterminate duration. This would be particularly difficult to reconcile with other parts of the deed that vest in the trustee assets and income acquired by the debtor during the currency of the trust deed [13]. Second, it would make it impossible for the debtor or anyone doing business with him to know whether or not the debtor has been finally discharged [14]. Third, it would undermine the purpose of the public Register of Insolvencies, where certificates are registered under the 1985 Act signifying that a final distribution has been made, as it could no longer be relied on as accurate [15]. Lord Reed observes that the outcome of the case is scarcely satisfactory, and notes that the Court raised with the parties the question whether the relevant acts of the trustee might be reduced (set aside) if they were the result of an error as to the extent of the trust estate. Although the parties were invited to make submissions on this, they declined to do so, and it would accordingly not have been appropriate for the Court to consider these matters on this occasion [23].